Absa Group Limited · JSE:ABG
Absa — Barclays Africa Group — FY2014 Earnings Presentation
29 slides from Absa's earnings presentation, Mar 3, 2015
Slide 1: FY14 results presentation
Barclays Africa Group Limited FY14 results presentation 3 March 2015
Slide 2: Strategic update
Strategic update Maria Ramos
Slide 3: Financial review
Financial review David Hodnett
Slide 4: Pre-provision profit drove earnings growth
Pre-provision profit drove earnings growth FY14 FY13 Change Pre-provision profit (Rbn) Rm Rm % 5% Net interest income 35 601 32 351 10 5% 27.3 Non-interest income 27 524 27 055 2 26.0 24.6 Total revenue 63 125 59 406 6 Credit losses (6 290) (6 987) (10) Operating expenses (35 848) (33 420) 7 Other (
Slide 5: Solid loan growth outside of property
Solid loan growth outside of property Change in gross customer loans (Rbn) 15% 5% 5% 20.2 0.2 652.5 10% 10% 2% 8.0 (2%) 9% (8%) 0.4 622.3 6.0 3.7 (4.6) (3.7) FY13 Retail CPF * VAF ** Credit Personal RBB CIB **** Other FY14 mortgages Cards Loans other *** Note: * Commercial property finance, includes
Slide 6: Deposits drive wider margin
Deposits drive wider margin Change in net interest margin* (basis points) 10 465 3 (6) 2 2 6 6 (2) 446 (2) Loans (4) Deposits +14 FY13 Pricing Mix Pricing Mix Endowment FY13 Pricing Mix Pricing Mix Endowment Capital Capital Hedge ** Hedge ** Rest of Rest of Other Other FY14 FY14 Africa Africa Note:
Slide 7: Non-interest income growth remains moderate
Non-interest income growth remains moderate FY14 Change Mix Transactional and Deposits Rm % % non-interest income (Rm) * Business units 27 543 2 100 4% 3 343 RBB 16 642 4 60 CIB 6 272 (4) 23 (1%) 3 229 3 225 WIMI 4 629 2 17 3 208 Equities (CPF and PE) 193 (67) 1 Head Office and other (212) (65) (1)
Slide 8: Credit quality improves further
Credit quality improves further Group credit loss ratio (%) 2.2 2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 FY02 FY03 FY00 FY01 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 Note: Excludes Unifer FY00-FY02; grey is Barclays Africa Group 8
Slide 9: Credit loss ratio and NPL cover improved
Credit loss ratio and NPL cover improved FY14 FY13 FY14 FY13 Credit loss ratio (bps) NPL cover (%) Retail and Business Banking 132 150 44.4 41.4 Retail Banking South Africa 135 149 43.1 39.1 Cards * 619 563 71.5 71.4 Vehicle and Asset Finance 102 90 46.1 50.0 Mortgages ** 38 76 25.3 27.8 Personal Lo
Slide 10: Low cost growth without compromising investment
Low cost growth without compromising investment FY14 Change Mix Cost to income ratio (%) Rm % % 56.8 Staff costs 19 334 10 54 56.3 55.2 Property-related costs 5 257 4 15 Information technology 2 156 4 6 Communication 1 432 3 4 Marketing costs 1 616 19 5 Professional fees* 1 877 2 5 Cash transportati
Slide 11: Deposit growth funded lending to customers
Deposit growth funded lending to customers Sources of funds (Rbn) Use of funds (Rbn) 5.7 (5.3) (7.9) (8.4) 6.8 36.0 30.1 6.8 Customer Equity Long-term Other funding Loans and Other assets Customer loans deposits funding advances to banks 11
Slide 12: Solid growth in most deposit franchises
Solid growth in most deposit franchises • Customer deposits 80% of total Customer deposits (Rbn) funding • Corporate the largest component CIB 2% • Substantial rise in SA retail WIMI 8% investment products • Slower growth in RBB Rest of Africa Retail Banking SA 11% • Business Banking SA customers sh
Slide 13: Capital levels remain strong
Capital levels remain strong Barclays Africa Group Common Equity Tier 1 ratio (%) 2.2 (1.2) 12.1 (1.8) 11.9 0.6 Top end of Board range 9.5% - 11.0% 0.0 FY13 RWA growth RWA optimisation Profit Dividend FY14 13
Slide 14: Highest returns in 6 years
Highest returns in 6 years 20% RoE RoA (RHS) 1.40% 19% 1.35% 18% 1.30% 17% 1.25% 16% 1.20% 15% 1.15% 14% 1.10% 13% 1.05% 12% 11% 1.00% 10% 0.95% FY09 FY10 FY11 FY12 * FY13 * FY14 * Note: * Barclays Africa Group 14
Slide 15: Well diversified earnings
Well diversified earnings Headline earnings growth (Rm) 16% (3%) (2%) 10% 9% 539 (37) (11)0 13 032 698 11 843 14% FY13 RBB CIB WIMI Head office and FY14 other FY14 pre-provision profit growth 1% 14% (3%) 5% 15
Slide 16: Retail Banking SA turnaround continues…
Retail Banking SA turnaround continues… • Home Loans drove earnings growth Headline earnings* (Rm) • Positive underlying revenue 0% momentum FY13 FY14 2 843 2 840 • Continued investment in marketing and distribution (17%) • Improved credit quality and cover 78% 1 980 • Solid loan growth in target ar
Slide 17: …with customer trends turning
…with customer trends turning HoH change in customer numbers* (%) Customers (m) 12% 2H13 1H14 2H14 2.0 FY13 27% 9% FY14 1.8 6% 1.6 3% 17% 0% 1.4 -3% 1.2 -6% 1.0 -9% 0.8 -12% -15% 0.6 Mass Middle Affluent Total Rewards Internet Banking Note: * Excludes cards in issue (Woolworths Financial Services an
Slide 18: Strong Business Banking improvement …
Strong Business Banking improvement … • Significant 2H earnings growth Headline earnings (Rm) • Large fall in credit charge 25% 34% • Internal cost efficiency funds growth 2 070 2 002 initiatives 1 657 • Reduced equity portfolio materially 1 492 • Solid deposit growth FY13 • Attractive returns FY14
Slide 19: … as momentum grows in transactional franchise
… as momentum grows in transactional franchise • Transactions migrating to cheaper Transactional revenue from banking channels activities (Rm) • Launched new platforms 9% • Hired relationship managers 1 527 • Commercial cheque accounts and customer groups flat 2% 1 399 1 383 1 357 1H13 2H13 1H14 2H1
Slide 20: Strong performance from CIB …
Strong performance from CIB … • Balance sheet growth drove Headline earnings (Rm) revenue 10% 7% • Costs contained while 1 171 (458) 14% investing for growth 1% 16% (168) (6) 3 887 • Rest of Africa fully integrated 3 348 • Solid returns, benefit from reduced Private Equity book FY13 Net Expenses Tax
Slide 21: … benefiting from client-centered approach
… benefiting from client-centered approach • Momentum across all core Net revenue by business (Rm) businesses 12% 5 935 • Strong Rest of Africa growth 17% 5 282 21% FY13 FY14 • Refocused client-centric 4 766 Rest of Africa strategy 4 089 22% South Africa • System delivery on track 15% 7% across cont
Slide 22: Bancassurance investing for sustainable growth…
Bancassurance investing for sustainable growth… • Implemented pro-active structural Change in headline earnings (Rm) changes: 37% (10%) – Customer initiatives in Life 44 72 36% – Investing in sales capacity 16% 3% 16 13 (>100%) – Completed WIM integration 12 50 1 420 (3%) – Improved RBB collaboratio
Slide 23: … growing new business and sales
… growing new business and sales Embedded value of new business SA sales volume (number, k) (Rm) 6% 500 Other channels 11% 1 025 Rest of Africa 15% 450 Branch sales 970 49% 18% 400 (2%) (2%) 863 842 350 300 250 200 FY11 FY12 FY13 FY14 FY11 FY12 FY13 FY14 23
Slide 24: Rest of Africa enhances Group growth
Rest of Africa enhances Group growth • Transformational acquisition Headline earnings (Rm) 14% • Focus on revenue growth 1 965 • CIB and WIMI performing well FY13 1 723 • Need to change RBB momentum FY14 • Clear path to increase RoE 38% (19%) 1 154 966 839 785 36% 36 49 RBB CIB WIMI Total 24
Slide 25: Our commitments
Our commitments Top 3 by revenue in our 5 biggest markets - South Africa, Kenya, Ghana, Botswana and Zambia RoE 18% to 20% Cost to income ratio in the low 50s Rest of Africa 20% to 25% of total revenue 25
Slide 26: Appendix
Appendix @ BARCLAYS
Slide 27: Well diversified revenue…
Well diversified revenue… Net revenue by type Revenue by segment (FY14) (FY14) 8% 20% 45% 48% 52% 13% 14% Non-interest income Retail Banking SA Business Banking SA Net-interest income after impairments RBB Rest of Africa CIB WIMI 27
Slide 28: … and earnings
… and earnings Headline earnings by segment * Headline earnings by geography (FY14) (FY14) 10% 15% 8% 41% 20% 6% 85% 15% Retail Banking SA Business Banking SA South Africa Rest of Africa RBB Rest of Africa CIB SA CIB Rest of Africa WIMI Note: * Excludes head office, inter-segment eliminations and ot
Slide 29: 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