18 results presentation for the year ended 30 June RESULTS - PDF document

18 results presentation ’ for the year ended 30 June

RESULTS PRESENTATION – JUNE 2018 01 Introduction results ‘ for the year ended 30 June 18 presentation The group continued to deliver real earnings growth and strong returns Cents 23.0% ROE . 500 +8% 450 470.8 436.2 400 407.4 378.5 350 331.0 300 +8% 275.0 250 255.0 226.0 200 210.0 150 174.0 100 50 0 2014 2015 2016 2017 2018 Diluted normalised earnings per share Dividend per share

02 FIRSTRAND GROUP | Introduction continued Good growth in NIACC, the group’s primary measure of shareholder value creation NIACC * ROE and COE R million 24.7% 24.2% 24.0% 12 000 25% 23.4% 23.0% 10 000 20% 9 968 9 694 9 548 9 086 8 000 8 172 15% 14.5% 14.3% 14.3% 6 000 13.6% 13.5% 10% 4 000 5% 2 000 0 0% 2014 2015 2016 2017 2018 NIACC ROE Cost of equity (COE) * Net income after cost of capital. Performance mapped to mixed and volatile macros • South Africa – a tale of two halves • First half: • Policy ambiguity and political uncertainty (pre-ANC electoral conference) weighed on economic activity and sentiment • S&P local currency rating downgrade below investment grade • Second half: • Marked improvement in foreign and domestic confidence in SA • Avoided further downgrades • New board and management appointments at key SOEs • However, meaningful structural reform will be difficult and slow • Rest of Africa macro backdrop was more supportive • UK growth remained resilient despite Brexit uncertainty

RESULTS PRESENTATION – JUNE 2018 03 Against this backdrop, FirstRand has continued to deliver above-system growth Growth in NAV + DPS Index, 2015 = 100 140 135 FirstRand 10.0% CAGR 130 125 Nominal GDP 6.7% CAGR 120 115 110 105 100 95 2015 2016 2017 2018 Structure of portfolio underpins ROA % 8 7 6 3.41 3.30 3.32 3.25 3.50 3.05 5 4 3 2.12 2.06 2.07 2.07 2.03 1.92 2 1 3.69 3.85 3.96 3.94 3.89 3.73 0 (1) (3.47) (3.67) (3.66) (3.71) (3.70) (3.65) (2) (3) (0.62) (4) (0.61) (0.58) (0.66) (0.65) (0.68) (5) 2014 2015 2016 2017 2018 excl. ALD 2018 incl. ALD NIR as % of assets Operating expenses as % of assets ROA % NII as % of assets Impairments as % of assets The graph shows each item before taxation and non-controlling interests as a percentage of average assets. ROA reflects normalised earnings after tax and non-controlling interests as a percentage of average assets.

04 FIRSTRAND GROUP | Introduction continued Strategic actions should underpin future sustainability of ROA • Relative size of transactional franchise (contributes approximately half of gross revenue * ) • Relative advances mix delivers higher risk-adjusted margins • Credit underwriting and pricing anchored to preserve return profile • Disciplined allocation and pricing of capital, funding and liquidity, and risk capacity • Market-leading private equity franchise has remained consistent generator of high returns, although currently in an investment cycle • Recognise the need to further diversify NIR • Potential disruption from regulatory intervention and new competitors • Therefore, strategies to broaden financial services offering (insurance, and save and invest) remain key to maintaining return profile * Excludes Aldermore. Current breakdown of portfolio – activity, geography and franchise UK Other (incl. Aldermore – 3 months) Investing 1% Aldermore (3 months) Transact Rest of Insure WesBank Africa 5% Save 14% FNB and invest ** 11% Revenue split Geographic Franchise split of by activity * PBT mix # normalised earnings † 57% 28% RMB Lend 84% Transact and lend = 84% South Africa and other * Based on gross revenue excluding consolidation adjustments. Excludes Aldermore. ** Includes deposit taking and investment management. # Includes Group Treasury, excludes remainder of FCC, FirstRand company, consolidation adjustments and NCNR preference dividend. † Excludes FCC (incl. Group Treasury), FirstRand company, consolidation adjustments and NCNR preference dividend.

RESULTS PRESENTATION – JUNE 2018 05 FNB and RMB performed well, WesBank had a tough year Normalised earnings Contribution * 2018 2017 % change ROE % R million 16  40.7 FNB 57% 14 877 12 801 6  25.3 RMB 28% 7 327 6 918 (9)  17.4 WesBank 3 996 14% 3 626 12.1 ** Aldermore (3 months) 1% 276 n/a n/a * Excludes FCC (incl. Group Treasury), FirstRand company, consolidation adjustments and NCNR preference dividend. ** 12.9% in pound terms. FNB – strong growth in pre-tax profits and superior return profile maintained Normalised PBT ROE R million % 30 000 45 40.7 % 39.7 % 38.4 % 40 37.3 % 36.9 % 25 000 35 +15% 20 000 21 416 30 18 624 25 17 883 16 536 15 000 20 14 459 10 000 15 10 5 000 5 - 0 2014 2015 2016 2017 2018 Years prior to 2015 have not been restated for refined rest of Africa segmentation.

06 FIRSTRAND GROUP | Introduction continued Excellent domestic performance, rest of Africa remains under pressure Normalised PBT R million 16 000 +17% 14 000 12 000 10 000 8 000 6 000 +25% 4 000 (6%) +33% (11%) 2 000 0 (2 000) (31%) (4 000) * Transactional Term lending Save and invest ** Insurance # Rest of Africa Other † 2017 2018 * Transactional includes transactional deposit products and deposit endowment, overdrafts and credit cards. ** Save and invest includes non-transactional deposits. # Insurance includes embedded credit protection. † Includes India (FNB activities in India have been discontinued). RMB – growth and returns underpinned by quality portfolio Normalised PBT ROE R million % 12 000 27.5 25.8 % 25.7 % 25.3 % 25.2 % 24.2 % 25.0 +6% 10 000 1 721 22.5 1 315 (+31%) 20.0 8 918 8 629 8 000 8 466 17.5 8 136 (+2%) 7 687 15.0 6 000 12.5 10.0 4 000 7.5 5.0 2 000 2.5 - 0.0 2014 2015 2016 2017 2018 Rest of Africa * Total RMB SA and other Years prior to 2015 have not been restated for refined rest of Africa segmentation. * Strategy view.

RESULTS PRESENTATION – JUNE 2018 07 RMB’s portfolio is well diversified Rest of Africa * normalised PBT RMB South Africa and other normalised PBT R million R million 9 000 1 900 +2% >100% 1 750 8 000 +31% +27% 1 600 (12%) 7 000 1 450 1 300 6 000 1 150 +7% (11%) 5 000 1 000 850 +8% 4 000 700 3 000 550 400 +74% 2 000 250 +14% 100 1 000 -50 59% - -200 2017 2018 2017 2018 Other ** IB&A C&TB M&S Investing * Strategy view. ** Includes investment management and other central portfolios. WesBank had a tough year Normalised PBT ROE R million % 8 500 27 26.6 % 7 650 24 21.9 % 21.1 % 6 800 20.0 % 21 5 950 17.4 % 18 5 612 5 518 5 100 (9%) 5 130 15 4 250 4 643 4 315 12 3 400 9 2 550 6 1 700 3 850 - 0 2014 2015 2016 2017 2018 Years prior to 2015 have not been restated for refined rest of Africa segmentation.

08 FIRSTRAND GROUP | Introduction continued Decline in SA retail VAF and MotoNovo partially offset by better performances in corporate and personal loans Normalised PBT R million 3 000 (16%) 2 500 2 000 +9% (14%) in rand terms 1 500 (15%) in pound terms 1 000 +19% 500 (>100%) 0 Retail VAF SA* Corporate and Personal loans MotoNovo (UK) Rest of Africa commercial ( 500) 2017 2018 * Retail VAF SA includes MotoVantage. Unpacking performance against strategy results ‘ presentation 18 for the year ended 30 June

RESULTS PRESENTATION – JUNE 2018 09 Group strategic framework FirstRand aims to create long-term franchise value, ensure sustainable and superior returns for shareholders within acceptable levels of volatility and maintain balance sheet strength DELIVERED THROUGH CURRENT STRATEGIES: Increase diversification – activity and geography Protect and grow Broaden financial Portfolio approach Build a sustainable banking businesses services offering to the rest of Africa UK business SOUTH AFRICA REST OF AFRICA UK Build a truly integrated Better leverage Integrate, financial services business existing portfolio scale and grow Underpinned by disciplined management of financial resources Enabled by disruptive digital and data platforms Measuring execution on strategic priorities Protect and grow Broaden financial Portfolio approach Build a sustainable banking businesses services offering to the rest of Africa UK business SOUTH AFRICA REST OF AFRICA UK Underpinned by disciplined management of financial resources