Slide 1: Aldermore update to FirstRand shareholders
Aldermore update to FirstRand shareholders May 2023
Slide 2: Aldermore's purpose
Aldermore’s purpose Purpose • Aldermore’s purpose guides everything we do and extends beyond just the products and services we offer • Our aim is to seek out more undervalued and underserved people and do good by helping them take the action needed to move forward in life, ensuring we meet the needs
Slide 3: Aldermore growth trajectory reflects maturation of business
Aldermore growth trajectory reflects maturation of business 2010 2017 Acquires 48% equity 2018 Residential Mortgage stake in AFS Group Acquired by 2021 Business launch Holdings Ltd. FirstRand Change of CEO 2009 2012 2017 2019 Acquisition of Ruffler SME Business FirstRand agreement MotoNovo integrati
Slide 4: Strategy launched in 2022 aimed to 'Modernise and Focus' the business
Strategy launched in 2022 aimed to ‘Modernise and Focus’ the business, whilst continuing to be a multi-specialist lending and savings provider Property Motor finance Structured and Savings Organised into finance Specialist finance three similar Stop the decline and Double down on growth in Leverage
Slide 5: Diversified lending portfolio and diversifying funding base
Diversified lending portfolio and diversifying funding base £14.7 bn £16.8 bn Deposit funding Owner Occupied (16%) Predominantly customer deposit led funding model, complemented by wholesale funding Property Award-winning franchise across the savings business Finance Growing corporate deposit
Slide 6: UK macroeconomic environment has shifted since the strategy was launched
UK macroeconomic environment has shifted since the strategy was launched in March 2022 however, the longer term outlook remains strong and steady GDP (Indexed, Q4 21 = 100) CPI (Inflation; %) 106 Latest actual: Latest actual: 10.8 Mar-23 = 10.4% Feb-23 = 0.0% m/m 103 102 4.9 3.5 2.2 100 Dec-21 Jun-2
Slide 7: Despite the tough environment, we've seen solid green shoots of success
Despite the tough environment, we’ve seen solid green shoots of success as our strategy has developed and started to embed across the businesses for customers Property Finance Structured & Specialist Finance Doubled application capacity Average deal size up £40k Launch of Platinum Broker Progress be
Slide 8: We reshaped our organisation around the updated strategy
…and we reshaped our organisation around the updated strategy which, together, is driving renewed success for the Group Organisation refresh Group Executive team – 80% of the team joined in the PBT has grown to £200m+ from mid £100m’s past 15 months Reset organisational shape to drive efficiencies;
Slide 9: But there is more to do…
But there is more to do… From To Diversify Broaden savings target market and introduce Primarily personal savings in narrow market products attractive to these segments. Achieve funding segment, plus business savings, simple corporate credit rating to access wider wholesale options and sources depos
Slide 10: Financial highlights for financial year 2022
Financial highlights for financial year 2022 Profit Before Tax Pre-provision Operating Profit Net Interest Margin £204.7m £262.1m 3.8% (HY2023: £111.9m) (HY2023: £166.5m) (HY2023: 3.9%) Cost-to-Income ratio1 Return On Equity CET 1 Ratio2 54% 12.5% 14.0% (HY2023: 47%) (HY2023: 12.2%) (HY2023: 14.0%)
Slide 11: Track record of sustainable, profitable growth and strong financial position
Track record of sustainable, profitable growth and strong financial position Net loans and customer deposits (£bn) Profit before tax (£m) Net loans Customer Deposits Strategically pulled back from the market due to market uncertainty 205 15.5 15.2 regarding COVID and higher 14.7 14.1 impairment char
Slide 12: Simple mortgage products that meet the needs of borrowers
Simple mortgage products that meet the needs of borrowers Residential mortgage balance composition (Dec 22) Standard OO 19% 28% High LTV OO Help to Buy 9% 3% Other OO 0% Retail BTL 41% Specialist BTL Gross originations (£m) 631 484 336 639 666 624 474 339 FY20 FY21 FY22 HY23 Owner Occupied Buy To Le
Slide 13: Owner-Occupied Property Market Comparison
Property Market Comparison • Following uncertainty around the macro environment in 2020/21 Aldermore tightened lending standards. The conservative growth in new originations was more than off-set by very strong traction with our retention offering. • A revamped proposition was re-launched in the lat
Slide 14: Tightening of underwriting criteria for mortgages
Tightening of underwriting criteria for mortgages • There were a number of changes made since June 2021 to tighten underwriting criteria, the majority of which were a result of the enhanced approach to risk appetite and portfolio management • On residential mortgages, we have implemented: – Tighter
Slide 15: Hard work in executing our 'Modernise and Focus' strategy provides good growth trajectory
Hard work in executing our ‘Modernise and Focus’ strategy provides good growth trajectory We have reorganised our business around the ‘Modernise and Focus’ strategy and delivery is progressing ahead of plan, driving a significant improvement in performance as well as greater contribution to FirstRan