Absa Group Limited · JSE:ABG
Absa — UBS Financial Services Conference 2018
18 slides from Absa's conference presentation, Oct 18, 2018
Slide 1: Absa Group UBS Financial Services Conference: Beyond the Euphoria
Absa Group UBS Financial Services Conference Beyond the Euphoria 18 October 2018 Jason Quinn
Slide 2: Beyond the euphoria
Beyond the euphoria South Africa real GDP growth (%) 2.5 2.2 2.1 1.8 1.4 1.3 1.3 0.6 0.5 2012 2013 2014 2015 2016 2017 2018F 2019F 2020F 2
Slide 3: New strategy focused on growth and returns
New strategy focused on growth and returns 3
Slide 4: We benefit from a well-diversified portfolio
We benefit from a well-diversified portfolio Normalised headline earnings 1H18 (%) * Retail Banking SA earnings 1H18 (%) 8 6 12 15 32 37 5 22 21 15 28 Retail Banking SA Business Banking SA Transactional and Deposits Home Loans CIB SA RBB Rest of Africa Card and Payments CIB Rest of Africa WIMI Vehic
Slide 5: Regaining RBB SA leadership a group priority
Regaining RBB SA leadership a group priority Headline earnings (Rm) Return on regulatory capital (%) 10% 25.5 4 611 23.0 21.9 4% (12%) 4 209 4 039 1H16 1H17 1H18 1H16 1H17 1H18 5
Slide 6: Retail SA maintains production momentum …
Retail SA maintains production momentum … Retail SA YoY loan production (%) Retail loan market share, August 2018 (%, ranking) 29 #1 1H17 2H17 1H18 27 #2 22 23 19 #3 16 15 19 14 12 9 #5 5 2 11 (1) (11) Home Loans Vehicle and Personal Card Credit card * Mortgages Vehicle Personal Asset Finance Loans
Slide 7: … which was evident in WIMI’s new business
… which was evident in WIMI’s new business Return on equity (%) Growth in embedded value of new business (%) 19 22.5 21.1 20.3 14 2 1H16 1H17 1H18 1H17 2H17 1H18 7
Slide 8: CIB SA growth has been balance sheet led
CIB SA growth has been balance sheet led Customer loans (Rbn) Return on regulatory capital (%) 14% 233 6% 26% 205 193 17.3 15.9 10.3 1H16 1H17 1H18 1H16 1H17 1H18 8
Slide 9: Strong CPF growth off low base
Strong CPF growth off low base Commercial property finance revenue Commercial property finance loans (Rbn) (Rm) 20% 473 23% 48 46 395 320 28 1H16 1H17 1H18 FY10 FY14 FY17 9
Slide 10: Corporate an attractive growth story
Corporate an attractive growth story Corporate headline earnings (Rm) Total CIB 1H18 earnings (%) 9% 35% 556 573 24% 49 51 380 940 798 604 Corporate Investment Banking 1H16 1H17 1H18 10 Rest of Africa South Africa
Slide 11: Mozambique offers opportunity …
Rest of Africa offers opportunity … Expected real GDP growth (%) Rest of Africa Banking 1H18 earnings (%) 8 2018 2019 7 6 5 4 3 2 1 0 Ghana Mauritius Kenya South Africa Kenya Uganda Mauritius Seychelles Botswana Ghana Mozambique Tanzania Zambia Zambia Botswana Uganda Mozambique Tanzania Seychelles 1
Slide 12: … and continues to enhance our growth …
… and continues to enhance our growth … Rest of Africa contribution to Group (%) Headline earnings growth (%) FY12 1H18 South Africa 19 21 Rest of Africa Banking 20 8 3 6 -3 2 Revenue Earnings 1H17 1H18 12
Slide 13: … while its returns improve steadily
… while its returns improve steadily Rest of Africa Banking return on equity RBB cost to income ratio (%) (%) 19.6 1H17 1H18 70.9 70.5 16.6 15.1 13.5 12.6 12.6 58.3 56.6 FY13 FY14 FY15 FY16 FY17 1H18 South Africa Rest of Africa 13
Slide 14: Separation on track; impacts ROA and CIB
Separation on track; impacts ROA and CIB Finish rebranding 24 material services terminated in line rest of Africa with Transitional Services Agreement Corporate channels Rest of Africa FX core banking trading 102 projects completed in line with plan India IT CLS resource Back office payments outsour
Slide 15: Demonstrated track record of containing costs
Demonstrated track record of containing costs Group operating expenses (Rbn) Normalised constant currency growth (%) 12 4% 6% 5% 41.4 7% 40.0 10 Revenue 37.7 35.8 Operating expenses 8 6 4 2 0 FY14 FY15 FY16 FY17* 1H16 1H17 1H18 15 Note: * normalised for separation from Barclays PLC
Slide 16: Maintained strong capital levels
Maintained strong capital levels CET1 ratio (%) Separation Normalised • CET1 remains above Board target range 1.4 1.1 • Group generates >2% CET1 a year Board target range • Supports current dividend payout ratio • Scope to optimize risk-weighted assets 12.1 12.1 12.2 • Capital restack opportunities
Slide 17: Absa is well positioned for a tough SA environment
Absa is well positioned for a tough SA environment • We have a well diversified portfolio of businesses • Our new strategy focuses on growth and returns • We see some SA growth opportunities irrespective of whether the ‘pie’ grows • Regaining RBB leadership • Reducing underweight in CIB • Rest of Af
Slide 18: Disclaimer
Disclaimer Forward-looking statements Certain statements (words such as ‘anticipates’, ‘estimates’, ‘expects’, ‘projects’, ‘believes’, ‘intends’, ‘plans’, ‘may’, ‘will’ and ‘should’ and similar expressions in this document are forward looking. These relate to, among other things, the plans, objectiv