Absa Group Limited · JSE:ABG
Absa — Non-Deal Roadshow (November 2019)
25 slides from Absa's roadshow presentation, November 2019
Slide 1: Absa Group Limited Asia Non-deal Fixed Income Investor Roadshow
Absa Group Limited Asia Non-deal Fixed Income Investor Roadshow
Slide 2: Table of Contents
Table of Contents 1. Overview of the Group 2. Group Performance Update 3. Liquidity and Capital Position 4. Proposed Regulation 5. Appendix 2 | Absa Group Limited Fixed Income Non-deal Investor Roadshow | November 2019
Slide 3: Overview of the Group
Overview of the | 1 Group
Slide 4: Absa Group Limited at a glance
Absa Group Limited at a glance We are a regional African banking group headquartered in South Africa, offering diversified financial services through an integrated set of products and services, across personal and business banking, corporate and investment banking, wealth, investment management and
Slide 5: A pan-African group with diverse shareholders and earnings mix
A pan-African group with diverse shareholders and earnings mix Top 10 Ordinary Shareholders Group Exposure Split (Rbn and %) Barclays Bank PLC (UK) Public Investment Corporation Absa Group Limited 15% (SA) Absa Bank Limited (Holding Company) Deutsche Securities (SA) 6% Old Mutual Plc (SA) Amount (R’
Slide 6: Macroeconomic environment
Macroeconomic environment GDP growth likely to remain weak in the medium-term Headline inflation likely to peak at 5.2% y/y in Q1 20 6 Real GDP growth % q/q, saar (lhs) 6 % y/y 7.5 Core CPI Headline CPI 5 Real GDP growth % y/y (rhs) 5 7.0 4 4 6.5 3 3 6.0 2 2 5.5 1 1 0 0 5.0 -1 -1 4.5 -2 -2 4.0 -3 -3
Slide 7: Immediate Strategy
Immediate Strategy To get back to sustained above-market growth, we agreed to prioritise certain areas of our strategy in 2019 Our immediate priorities are to… 1. Regain franchise health in RBB and better serve customers across their life stages to retain them. 2. Deliver Separation successfully in
Slide 8: Separation to date
Separation to date ae rx. 193 0f 272" projects| | 140 of 198 services have delivered have terminated 60% 50% 30 June 2019 — i Z Z 184 of 266 project: | 13701 198 servioas 8301277" projects || 85 of 98 sermons havedeliered"havotermansiod hhavedslversdhavetermroted todate nae ‘\ Todste toate 30June 20
Slide 9: Group Performance Update
Group Performance 2? Update
Slide 10: Normalised performance in line with guidance
Normalised performance in line with guidance Change Normalisation 1H181 1H191 Rm (%) adjustments Net interest income 20 874 22 667 9 113 Non-interest income 15 854 16 404 3 (32) Total income 36 728 39 071 6 81 Impairment losses 3 117 3 695 19 - Operating expenses 20 834 22 136 6 (863) Other* 832 760
Slide 11: Loan growth momentum maintained
Loan growth momentum maintained Gross customer loans (Rbn) 600 7% 1H18 1H19 500 400 23% 300 200 100 14% 16% 0 RBB CIB RBB CIB South Africa Absa Regional Operations Source: Absa Group Limited Results Booklet 30 June 2019 11 | Absa Group Limited Fixed Income Non-deal Investor Roadshow | November 2019
Slide 12: Credit impairments trended upward off a low base
Credit impairments trended upward off a low base Stage 3 loans (%) Credit loss ratio (%) 1H18 1H19 5.3 5.1 RBB SA 0.99 1.12 4.8 Everyday Banking 4.58 4.93 VAF 1.42 1.39 Home Loans 0.05 0.13 Relationship Banking 0.28 0.32 1H18 FY18 1H19 Expected range through-the cycle (bps): CIB SA 0.30 0.18 • RBB S
Slide 13: Liquidity and Capital Position
Liquidity and Capital Position 3
Slide 14: Asset and liability management position in line with risk appetite
Asset and liability management position in line with risk appetite Absa Group Key Risk Metrics1 HY 19 HY 18 o The liquidity position of the Group remained healthy, in line with Net Stable Funding Ratio (NSFR) (%) 111.4 106.0 risk appetite, and above the minimum regulatory requirements. o LCR was con
Slide 15: Capitalised in excess of regulatory requirements
Capitalised in excess of regulatory requirements Absa Group Limited can optimise its capital position further through the issuance of AT1 18% 16.0% 16% 15.4% 13.3% 14% 12.5% 12.7% 12% 11.9% 10% 11.5% 11.1% 8% 8.9% 9.3% 6.7 6% 7.4% 7.5% 4% 4% 2% 4% 0% 1,3 4 2 ,5 CET 1 Tier 1 CAR Leverage Barclays Con
Slide 16: Excess loss absorption capacity c. 8% of RWA
Excess loss absorption capacity c. 8% of RWA Impairments, Operating profit before income tax and impairments and Payout ratio* 35 70% Rbn 30 60% 25 50% 20 40% 15 30% 10 20% 5 10% 0 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Impairment Losses Opertating profit before income tax and Imp
Slide 17: Proposed Regulation
Proposed mA Regulation
Slide 18: Resolution Authority proposed changes to creditor hierarchy (NCWO)
The Resolution Authority has proposed changes to amend current regulation including a detailed creditor hierarchy based on no creditor worse-off (NCWO) Existing (simplified insolvency hierarchy) Proposed (simplified insolvency hierarchy) Discussion points Other eg tax Other eg tax SARB issued draft
Slide 19: Proceeds from Issuance at the Group entity invested in Absa Bank Issuance
Proceeds from Issuance at the Group entity is currently invested in Absa Bank Issuance o Due to minority interest rules under Basel III, Absa Group is expected to continue capital issuances at a Holding Company level. All capital issuance at Group are down-streamed to operating entities, on a back-t
Slide 20: SA Capital market instrument pricing
SA Capital market instrument pricing Pricing Points for 5year Senior, Tier II and AT1 Floating Rate Notes1 Bps over Jibar 700 650 600 550 500 450 Idiosyncratic stress 400 Cabinet ABL Reshuffle 350 Introduction to curatorship Basel III Draft Recovery & 300 Resolution Regime National ANC Elective Gove
Slide 21: Appendix
Appendix 5
Slide 22: Additional Tier I vs. Tier II Comparison under SA regulations
Additional Tier I vs. Tier II Comparison under SA regulations Shared Features Additional Tier 1 & Tier II • After 5 years, and every interest payment date thereafter Callable • No explicit or implicit indications that the instruments would or might be called, redeemed or purchased Coupon step-up • N
Slide 23: Quick Links
Quick Links • Liquidity Coverage Ratio (Jan 2013) - http://www.bis.org/publ/bcbs238.htm • Net Stable Funding Ratio (Oct 2014) - http://www.bis.org/bcbs/publ/d295.htm • TLAC - http://www.financialstabilityboard.org/wp-content/uploads/TLAC-Condoc-6-Nov-2014-FINAL.pdf Basel / FSB / EBA • MREL - https:/
Slide 24: Contacts
Contacts Absa Group Limited Deon Raju – Absa Group Treasurer Tel no. 011- 895 7107 / deon.raju@absacapital.com Rolf van den Heever – Head, Capital Market Execution & BSM Tel no. 011- 895 6381/ rolf.vandenheever@absacapital.com Richard Favis – Capital Market Execution Tel no. 011- 895 7661/ richard.f
Slide 25: Disclaimer
Disclaimer This document has been compiled by Absa Corporate and Investment Bank (“Absa CIB”), a division of Absa Bank Limited, a registered bank in the Republic of South Africa (Registration number 1986/04794/06) and with its registered office at Absa Towers East, 170 Main Street, Johannesburg ("Ab