19 results presentation for the six months ended 31 December - PDF document

19 results presentation for the six months ended 31 December

RESULTS PRESENTATION – DECEMBER 2019 :: 01 Introduction Introduction results presentation for the six months ended 31 December The group delivered real growth in earnings… Cents 21.2% ROE 300 .  5% 250 249.7 237.8 222.1 200 207.6 194.6  5% 150 146.0 139.0 130.0 119.0 100 108.0 50 0 Dec 15 Dec 16 Dec 17 Dec 18 Dec 19 Diluted normalised earnings per share Dividend per share

02 :: FIRSTRAND GROUP | Introduction continued …against an ever-deteriorating macro backdrop % 2.0 1.8 2H 2019: 1.6 Growth expectations for 2019 1.4 revised lower on account of: • Weak business confidence 1.2 • Severe load shedding in Dec 19 1.0 2H 2018: Mid-2019: 0.8 Consensus expectation Growth expectations for 2019 that GDP will grow by revised lower on account of: 0.6 • Surprisingly weak global more than 1.5% in 2019 growth 0.4 • Surprisingly weak domestic business confidence 0.2 • Load shedding 0.0 Jul 18 Aug 18 Sep 18 Oct 18 Nov 18 Dec 18 Jan 19 Feb 19 Mar 19 Apr 19 May 19 Jun 19 Jul 19 Aug 19 Sep 19 Oct 19 Nov 19 Dec 19 Actual GDP growth in 2019 Consensus expectations for GDP growth in 2019 Firstrand's expectations for GDP growth in 2019 Nominal GDP growth rate at worst level since 1957 % 35 30 25 20 15 10 5 0 1947 1950 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019

RESULTS PRESENTATION – DECEMBER 2019 :: 03 Value creation continued, NIACC reflects lower gearing and reduction in ROA NIACC * ROE and COE R million 23.4% 22.9% 6 000 22.5% 24% 22.3% 21.2%  4% 20% 4 974 4 500 4 755 4 129 4 528 4 475 16% 14.8% 14.3% 14.0% 14.0% 13.8% 3 000 12% 8% 1 500 4% 0 0% Dec 15 Dec 16 Dec 17 Dec 18 Dec 19 NIACC ROE Cost of equity (COE) * Net income after cost of capital. NAV demonstrates consistent shareholder value creation NET ASSET VALUE (NAV) R million 150 000  9% 134 751 120 000 123 530 112 985 103 381 90 000 95 878 60 000 30 000 0 Dec 15 Dec 16 Dec 17 Dec 18 Dec 19

04 :: FIRSTRAND GROUP | Introduction continued Current portfolio mix – activity, geography and business Other Investing UK UK operations ‡ Transact Insure Rest of Save 7% WesBank Africa 8% and invest ** 7% 11% Geographic Normalised earnings Revenue split PBT mix # per operating by activity * 23% (i.e. pre-minorities) business † 62% RMB 82% Lend FNB South Africa Transact and lend = 86% and other * Based on gross revenue excluding consolidation adjustments. Excludes Aldermore. ** Includes deposit taking and investment management. # Includes Group Treasury and Ashburton, excludes remainder of FCC, FirstRand company and consolidation adjustments. † Excludes FCC (incl. Group Treasury), FirstRand company, consolidation adjustments and dividends on other equity instruments. ‡ Includes Aldermore group and MotoNovo standalone (i.e. new and back book). FNB PBT growth trend slowing NORMALISED PBT ROE R million % 18 000 45 42.4% 40.0% 39.9% 38.6% 38.1% 40  5% 35 13 500  13% 13 221 30  19% 12 581 11 137 25 9 000 9 367 9 137 20 15 4 500 10 5 - 0 * Dec 15 Dec 16 Dec 17 Dec 18 Dec 19 * Dec 18 figures have been restated for intergroup cost recoveries and funding.

RESULTS PRESENTATION – DECEMBER 2019 :: 05 Transactional slowing, pleasing growth from diversification strategies NORMALISED PBT R million 9 000  4% 8 000 7 000 6 000 5 000 4 000  2% 3 000 2 000  12%  15%  7% 1 000 0 (1 000)  5% (2 000) * # ** † Transactional Term lending Save and invest Insurance Rest of Africa Other Dec 18 † Dec 19 * Transactional includes transactional deposit products and deposit endowment, overdrafts and credit cards. ** Save and invest includes non-transactional deposits. # Insurance includes embedded credit life. † Dec 18 figures have been restated for intergroup cost recoveries and funding. RMB performance driven by growth in client activities NORMALISED PBT ROE R million % 8 000 27 22.9% 22.2% 24 20.8% 20.2% 20.0% 21 6 000  6% 18 4 901 4 641  29% 15 1 138 880 4 471 4 000 4 011 3 956 12 9 – 2 000 3 761 3 763 6 3 - 0 * Dec 15 Dec 16 Dec 17 Dec 18 Dec 19 Total RMB SA and other Rest of Africa ** * Dec 18 figures have been restated for intergroup cost recoveries and funding. ** Strategy view including in-country and cross-border activities.

06 :: FIRSTRAND GROUP | Introduction continued Strong performance from portfolio despite non-repeat of Private Equity realisations NORMALISED PBT R million 3 000  11% 2 500 2 000 1 500  7%  22% 1 000 500  46%  74% 0 Investment banking Corporate and Markets and Investing Other* and advisory transactional banking structuring Dec 18 Dec 19 * Includes investment management and other central portfolios. SA flat, growth in rest of Africa underpinned by markets and structuring REST OF AFRICA * NORMALISED PBT RMB SOUTH AFRICA AND OTHER NORMALISED PBT R million R million  29% 4 000 – 1 150  46%  19% 950  >100% 3 000 750  16% 2 000 550  11% 350  14% 1 000  6% 150 ( 50) - Dec 18 Dec 19 Dec 18 Dec 19 Investing Other ** IB&A C&TB M&S * Strategy view including in-country and cross-border activities. ** Includes investment management and other central portfolios.

RESULTS PRESENTATION – DECEMBER 2019 :: 07 WesBank’s performance reflects declining vehicle sales and risk cuts NORMALISED PBT ROE R million % 19.3 1 750 20 18.4 18.3 18 1 500  1% 16 1 373 1 361 1 353 1 250 14 12 1 000 10 750 8 6 500 4 250 2 - 0 Dec 17 Dec 18 Dec 19 Aldermore produced a solid operational performance UK OPERATIONS NORMALISED PBT £ million • Aldermore 100 95.3  8% 88.0 • Strong advances growth across portfolio 20.6 20.8  1% 75 • Credit loss ratio within appetite • Fair value hedge impact 50 68.3 • Aldermore excl. MotoNovo ROE 12.4%  5% 71.6 in pound terms 25 6.4 0 • MotoNovo performance stabilised (4.4)  >100% Dec 18 Dec 19 (25) MotoNovo (standalone) Aldermore group excl. MotoNovo Fair value hedge

08 :: FIRSTRAND GROUP Unpacking Unpacking performance performance against against strategy strategy results presentation for the six months ended 31 December Group strategic framework FirstRand commits to building a future of SHARED PROSPERITY through enriching the lives of its customers, employees and the societies it serves. This is the foundation to a sustainable future and will preserve the group’s enduring promise to create long-term value and superior returns for its shareholders. DELIVERED THROUGH CURRENT STRATEGIES: Increase diversification – activity and geography Protect and grow Broaden financial Portfolio approach Grow a more valuable banking businesses services offering to the rest of Africa UK business SOUTH AFRICA REST OF AFRICA UK Better leverage Scale, disrupt Build a platform-based integrated existing portfolio financial services business and digitise Enabled by disruptive digital platforms Underpinned by disciplined management of financial resources and empowered people

RESULTS PRESENTATION – DECEMBER 2019 :: 09 Measuring execution on strategic priorities Protect and grow Broaden financial Portfolio approach Grow a more valuable banking businesses services offering to the rest of Africa UK business SOUTH AFRICA REST OF AFRICA UK Enabled by disruptive digital platforms Underpinned by disciplined management of financial resources Transactional reflects macro pressures and competition NORMALISED PBT • Continue to focus on core transactional accounts R million 9 000 • Improving vertical sales index (VSI):  4% 8 000 Dec 18: 2.69, Jun 19: 2.86, Dec 19: 2.92 7 000 • Continued generosity on rewards remains key to 6 000 value proposition (increased 18% to R1.1 billion) 5 000 4 000 • Fee rationalisation (R270 million) to improve value 3 000 proposition 2 000 • Free business banking for entry-level SMEs 1 000 0 • Credit impairments rising * Transactional Dec 18 Dec 19 * Transactional includes transactional deposit products and deposit endowment, overdrafts and credit cards.

10 :: FIRSTRAND GROUP | Unpacking performance against strategy continued Slowdown in FNB’s term lending business NORMALISED PBT R million • Targeted and segment-specific origination strategies • 3 000 Defending core transactional relationships  2% • Unsecured still focused on main-banked 2 500 customers, mainly in premium 2 000 • Continued growth in key commercial subsegments and product lines 1 500 1 000 • Strain evident across lending portfolios 500 • Adjustments to scorecards lagged speed of deterioration in macros 0 Term lending • Collections performance below expectations Dec 18 Dec 19 Customer growth – different segmental trends Customer * growth = +1% • Consumer segment impacted by competitive pressures and migration to premium Segment % change • Growth in premium – more than half from Consumer (3) upward migration from consumer segment Premium +15 Commercial +8 • Commercial still growing base • 47% over last 5 years demonstrates eWallets active base +16% significant market share gains • Free banking to wallet holders • Potential for up-sell to consumer • Supports value prop for all segments * Excludes DirectAxis non-banked customers.