Agenda Introduction The numbers Banking Group Momentum Looking - - PowerPoint PPT Presentation

Agenda

Introduction The numbers Banking Group Momentum Looking forward

Another excellent performance

2005 %∆ Headline earnings 7 602 32% Headline earnings 7 338 20%

(excl foreign currency translation)

Headline EPS 146.2 32% ROE 26.7% NAV 26 864 14% DPS 55.1 20%

A favourable economic environment

R6.4bn from the bank

Strong retail loans and advances growth Margin protection from hedges Further reduction in credit losses plus recoveries Transaction volume growth Positive “jaws” despite investment strategies Good trading and investment realisations Strong top line growth

Strong growth in new business Excellent cost control Slight increase in margins Strong performance of underlying investments (shareholders’ funds)

R1.6bn from insurance

Strong top line growth

Consistent growth strategy

Acquisitions

Organic growth continues

“Natural” market growth “Man made” growth

• Innovation
• Collaboration

Quantifying organic growth

76% 18% 21% 41% 32% 91% 32% FirstRand Consumer investment products Discovery Life new business Momentum recurring new business RMB Private Bank advances FNB Card advances FNB HomeLoans new business WesBank new business 11% 4% 4% 20-25% 30% 57% 24% Market

A culture of innovation

FNB

One Account – R1.3bn book value Million-a-month-account – 155 000 accounts Cellphone banking – 74 000 customers Travel Card FNB Private Clients launched in March 2005

RMB

BEE deals eg Afrox, Makalani

WesBank

Islamic financing – total new business since May 2004

• f R169m

R

50000 100000 150000 200000 250000 300000 350000 400000 S e p

• 4

O c t

• 4

N

• v
• 4

D e c

• 4

J a n

• 5

F e b

• 5

M a r

• 5

A p r

• 5

M a y

• 5

J u n

• 5

J u l

• 5

A u g

• 5

Actual monthly payout to customers

…particularly in banking products

FNB

One Account – R1.3bn book value Million-a-month-account – 155 000 accounts Cellphone banking – 74 000 customers Travel Card FNB Private Clients launched in March 2005

RMB

BEE deals eg Afrox, Makalani

WesBank

Islamic financing – total new business since May 2004

• f R169m

…and insurance products

Momentum

Save thru spend

Discovery

Discovery Card – over 200 000 registered card holders in total New generation RAs

Consistent growth strategy

Acquisitions

Collaboration still driving growth

Momentum/FNB Consultants

• Sales through FNB consultants have
• vertaken sales through ABSA brokers
• 34% increase in new business

Momentum/FNB Life

• New recurring API sold by FNB Life increased

from R73.2m to R83.5m

At all levels

R852m to R1.4bn R44m to R100m R329m to R450m R922m to R1.5bn June 2004 to 2005 Growth (YOY) Mid corporates 68% RMB Property Finance (Revenue) >100% RMB Structured Finance (Average assets) 37% RMB Private Bank (new facilities) 64% WesBank (Pay

• uts)

Bancassurance remains meaningful

19% 671 563 Total 53% 49 32 FNB Consultants >100% 20 9 FNB Life 13% 63 56 HomeLoans 9% 267 245 WesBank 0% 60 60 FirstLink 32% 212 161 OUTsurance % change YOY June 05 (R’m) June 04 (R’m) Retail NPBT from insurance operations up 19% year-on-year

Consistent growth strategy

Acquisitions

Momentum continues to consolidate

Load: Sage Holdings Strategic: Advantage Asset Management Sovereign Health African Life Health

Critical mass for Momentum

Consistent growth strategy

Acquisitions

Another new age business launched

New short term insurance license for Momentum Exclusive distribution through Momentum Optimising FirstRand back office Alternative revenue source for intermediaries Pilot September 2005 Launch January 2006

Using the building blocks

FirstRand STI Holdings Insurance Company Limited Short-term Insurance Company WesBank Coverplus WesBank Motor Warrantee FNB Legal Admin services Admin services

100% 100% 50% 50%

Group FirstRand STI Administrator

(Insurance license) (Insurance license)

Factors influencing the numbers

Previous period currency losses turned into profits this year Further 1.6% cost of BEE transaction will be reflected in 2005/2006 earnings IFRS will only impact the 2006 financial year

Key numbers

Headline earnings Diluted headline earnings per share

excluding impact of foreign currency translations

Dividend per share 32% 20% Diluted headline earnings per share 33% 20% Return on equity 28%

A track record of top line growth

54.1 63.4 76.9 100.7 114.7 137.8 45.6 54.1 67.7 86.9 90.7 107.7 145.9 45.6

30 50 70 90 110 130 150 170 1999 2000 2001 2002 2003 2004 2005 Headline earnings (excluding impact of foreign currency translations) Headline earnings

CAGR +20%

R

CAGR +21%

…and dividend growth

15.50 19.00 23.75 28.50 35.00 46.00 55.10

10 20 30 40 50 60 1999 2000 2001 2002 2003 2004 2005

CAGR +23%

R

The component parts

78% 18% 4% FirstRand Banking Group Momentum Discovery 79% 17% 4%

2004 2005

10% 15% 20% 25% 30% 35% 0% 10% 20% 30% 40%

Financial targets met

ROE Headline earnings growth

10% plus FirstRand WACC 10% real growth

+20% +32% FirstRand Bank Momentum Discovery +19%

Banking Group

Building blocks of growth + = +

Revenue Growth Operational Leverage Capital Efficiency 10% Real EPS Growth ROE = WACC plus 10%

+ = +

Revenue Growth Operational Leverage Capital Efficiency 10% Real EPS Growth ROE = WACC plus 10%

Building blocks of growth

Key revenue drivers

Interest income Non interest income Income from associates 6.6% 33.8% Revenue growth 22.9% Bad debts 15.2% 49.9%

Interest income Non interest income Income from associates Revenue growth Bad debts 6.6% 33.8% 22.9% 15.2% 49.9%

Key revenue drivers

6 24 4 18 14 4 2

180 190 200 210 220 230 240 250 260 2004 Commercial Wealth FNB HomeLoans WesBank Other RMB Ansbacher 2005

Exceptional growth in buoyant markets +31% (New business +91%) 41% Growth Decrease in CDO portfolio, low margin yielding assets

Strong organic growth in advances

Ansbacher sale

D e c r e a s e

• f

1 3 . 8 % Increase of 25.4%

Increase of 8%

210 226 Continued buoyant market+29% (New business +32%)

Unpacking the margin

(0.15%)

2004 2005

Interest income Volume effect Endowment deposits Endowment capital 4.47% (0.10%) 4.35%

Margin

Hedges 0.21% (0.07%) Other

8 907 9 497

9% 5% (2%) (2%) (4%) 0%

Unpacking the margin

(0.15%)

2004 2005

Interest income Volume effect Endowment deposits Endowment capital 4.47% (0.10%) 4.35%

Margin

Hedges 0.21% (0.07%) Other

8 907 9 497

9% 5% (2%) (2%) (4%) 0%

Asset margins under pressure

0.53 1.10 3% Other advances 2.64 2.82 30% Cash & short term funds

100%

9% 5% 3% 21% 30% Weighting 2005 6.84 6.31 Personal loans

3.21 3.14 Total

4.47 5.17 Overdraft & other loans 8.12 7.48 Card debtors 4.04 3.69 Instalment sales & lease debtors 2.94 2.55 Asset-backed mortgages 2004 2005

Funding the asset backed growth

3.3 Corporate 15.7 Professional

Funded by:

6.9 Retail 25.9

Advances growth

2005 R’bn Securitisation – better option

Deposit endowment effect

55% Group Treasury 100% 6% 6% 9% 24% Weighting 2005 1.21 1.15 Total 0.49 0.55 Fixed deposits 0.91 1.11 Notice deposits 1.26 1.07 Call accounts 4.16 3.93 Current & savings 2004 2005

Key revenue drivers

Interest income Non interest income Income from associates Revenue growth Bad debts 6.6% 33.8% 22.9% 15.2% 49.9%

5.6 4.3 3.6 2.4 2.6 2.1 2.0 1.7 1.7 1.4 1.1 3.5 1.6 1.3 1.5 1.3 0.9 1.1 0.4 0.8 0.3

0.4 1999 2000 2001 2002 2003 2004 2005

NPLs (%) Provisions (%) Bad debts (%) Line 4

Bad debts & NPLs bottom out

Ignoring the effect

• f listed investment

transactions

Long run expected loss

5.6 4.3 3.6 2.4 2.6 2.1 2.0 1.7 1.7 1.4 1.1 3.5 1.6 1.3 1.5 1.3 0.9 1.1 0.4 0.8 0.3 0.74 1999 2000 2001 2002 2003 2004 2005 NPLs (%) Provisions (%) Bad debts (%) Expected loss

Key revenue drivers

Interest income Non interest income Income from associates Revenue growth Bad debts 6.6% 33.8% 22.9% 15.2% 49.9%

Key revenue drivers

Interest income Non interest income Income from associates 6.6% 33.8% Revenue growth 22.9% Bad debts 15.2% 49.9% Non interest income (excl foreign currency) 25.7%

WesBank 9% RMB 19% Other 1% Africa 5% FNB 66%

WesBank 8% RMB 18% Other 1% Africa 5% FNB 68%

2004 2005 +26%

Non interest income growth across the board

Strong NIR growth

1 2 3 4 5 6 7 8 Transactional Trading Investment Insurance Knowledge Other 2004 2005

25% 79% 17% 14% 37% 16% R’bn

Driven by FNB

1 2 3 4 5 6 7 8 Transactional Trading Investment Insurance Knowledge Other 2004 2005

25% 79% 17% 14% 37% 11% R’bn

FNB 82% WesBank 9% Africa 9%

Transaction & customer volumes driving fee income

4.5 3.5 5 8 3.5 7.1 2 4 6 8 10 12 14 16 18 20 2004 2005 Price New client volume Volumes

% Inflation Inflation

Bank commissions and fees

Diverse trading income

1 2 3 4 5 6 7 8 Transactional Trading Investment Insurance Knowledge Other 2004 2005

25% 79% 17% 14% 37% 16% R’bn

Equity & financial markets 71% Forex business 29%

Equity related earnings

1 2 3 4 5 6 7 8 Transactional Trading Investment Insurance Knowledge Other 2004 2005

25% 79% 17% 14% 37% 16% R’bn

Private equity 77% Shareholder funds 23%

Private Equity – value added

200 400 600 800 1000 1200

2002 2003 2004 2005

Profit before tax Unrealised profit

R’m CAGR + 19%

Insurance income continues to grow

1 2 3 4 5 6 7 8 Transact ional Trading I nvest ment I nsurance Knowledge Ot her 2004 2005

25% 79% 17% 14% 37% 16% R’bn

WesBank 67% FNB 33%

Key revenue drivers

Interest income Non interest income Income from associates Revenue growth Bad debts 6.6% 33.8% 22.9% 15.2% 49.9%

100 200 300 400 OUTsurance WesBank Private Equity Listed investments Other 2004 2005

+ 34% + > 100% + 58% + > 100%

R’m

(13% )

Associate income up 50%

Key revenue drivers

Interest income Non interest income Income from associates Revenue growth Bad debts 6.6% 33.8% 22.9% 15.2% 49.9%

+ = +

Revenue Growth Operational Leverage Capital Efficiency 10% Real EPS Growth ROE = WACC plus 10%

Building blocks of growth

Operating expenditure Taxation Expenses growth 18.0% 20.1% 18.3%

Operational leverage drivers

WesBank 12% RMB 5% Other 5% Africa 6% FNB 72%

2004 2005 + 18%

RMB 5% WesBank 12% Other 6% Africa 5% FNB 72%

Operating expenditure

1207 156 339 191 10503 12389 225

2004 FNB RMB WesBank Ot her divisions Ansbacher 2005

+ 18%

Investing for growth

FNB + 16%

• Origination costs

+ 2%

• Infrastructure + 3%
• Advertising + 1%

WesBank + 20%

• Origination costs + 2%
• Advertising + 2%
• Profit share + 7%

RMB + 32%

• Infrastructure + 7%
• New business growth

+ 12%

New business + 8% Base costs + 6% Ansbacher – 2% Infrastructure + 6%

62 60 60 58 55 56 56

1999 2000 2001 2002 2003 2004 2005 Cost to income

Operational leverage – a challenge

The challenge

Operating expenditure Taxation Expenses growth

Operational leverage drivers

18.0% 20.1% 18.3%

24.0% 24.6% 5.3% 4.5%

0% 15% 30% 2004 2005 Direct tax Indirect tax

Effective tax rates

+ = +

Revenue Growth Operational Leverage Capital Efficiency 10% Real EPS Growth ROE = WACC plus 10%

Building blocks of growth

Superior ROE and economic value

Return on assets Return on equity Gearing multiple Cost of equity Shareholder value add

2004 2005

15.7 15.0 26.3 27.6 13.6 12.7 12.7 14.9 1.67 1.84 X X

• Continued shareholder value creation

Momentum Group

Key numbers

Headline earnings Return on equity Return on EV 19% 28% 25%

Headline earnings Return on equity Return on EV 19% 28% 25%

Key numbers

1 081 311 770 175 595 2004 19 1 287 Group headline earnings 14 355 Investment income on shareholders’ assets 21 932 Group operating profit 41 247 Asset management operations 15 685 Insurance operations % 2005 R’m

All divisions perform well

1 081 311 770 175 595 2004 19 1 287 Group headline earnings 14 355 Investment income on shareholders’ assets 21 932 Group operating profit 41 247 Asset management operations 15 685 Insurance operations % 2005 R’m

All divisions perform well

Positive gearing on local earnings

Strong market growth Retail new business + 25% Expenses + 5% Positive gearing

Local insurance operations + 19%

400 500 600 700 800 900

2004 Existing businesses Mom entum International New ventures New business growth 2005

R’m

(5% ) 3% 29% 19% (8% )

1 081 311 770 175 595 2004 19 1 287 Group headline earnings 14 355 Investment income on shareholders’ assets 21 932 Group operating profit 41 247 Asset management operations 15 685 Insurance operations % 2005 R’m

All divisions perform well

Strong performance from domestic asset management

41 175 247 Headline earnings 5 66 69 International operations 63 109 178 Local operations % 2004 2005 R’m

Strong growth in funds under management

100 110 120 130 140 150

2003 2004 2005 Institutional

R'bn

R20 bn

2 4 6 8 10 12

2003 2004 2005

R'bn

Retail

R4.6 bn 15% 63%

Key numbers

Headline earnings Return on equity Return on EV 19% 28% 25%

Return on embedded value growth + 28%

EV growth Shareholder assets + 7% “In-force” business + 7% Earnings + 14%

Discovery Group

Increased diversification

91 78 72 65 64

4 2 2 2 2

4 11 12 18 17 1 9 14 15 18 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2001 2002 2003 2004 2005 Health Vitality Life Destiny Pru

New business growth of 35% : R4342m

SA operations exceed R1bn

(18) (106) (87) Destiny Health 55 271 421 Discovery Life 708 (28) 842 50 521 2004 11 786 Operating profit

• (148)

PruHealth 21 1 022 SA Operations (24) 38 Vitality 8 562 Discovery Health % 2005 R’m

Operating profit

(87) (62) (8) Forex loss - unrealised (3) (299) (307) Taxation 31 121 159 Investment income & realised profits 418 (3) 720 (47) 708 2004 40 585 Net profit attributable to shareholders

• 9

Minority share of loss 23 883 Profit before tax 15 (54) Financing costs 11 786 Operating profit % 2005 R’m

Capital Management

6.7% 17.8% 75.6% 0% 20% 40% 60% 80% 100% Discovery Momentum Banking Group

25% 19% 28% ROE

Capital in context

Split of main operating companies of capital

4400 500 2300 1400 500 1500 1200 1000 2000 3000 4000 5000 6000 7000

Dec- 04 Preference share BEE Impairment Debt Redeem Growt h requirement Moment um requirement Dec- 05

Application of the excess

R’m

“True” excess is R500m as at 30 June 2005

Capital Management Banking Group

Capital by risk type

Credit 79% Operational 9% Investm ent 7% Interest rate 3% Market 2%

Capital for growth and dividend

(11.3% ) (9.2% ) Less: Dividend (2.5x cover) 28.3% 23.0% ROE Actual Expected FirstRand Banking Group 17.0% 13.8% Capital available for growth Therefore (5.0% ) Difference 22.0% Actual growth in requirements Surplus used for organic growth

20 40 60 80 Jun- 04 Jul- 04 Aug- 04 Sep- 04 Oct - 04 Nov- 04 Dec- 04 Jan- 05 Feb- 05 Mar- 05 Apr- 05 May- 05 Jun- 05

Growth in RWA of 19%

R’bn FNB WesBank RMB

+ 27% + 29% + 10% + 17% + 12% + 17%

Capital invested in growth

Capital Management Momentum Group

Capital invested in strategic acquisitions

1.9x 0.2x Add: Non cumulative non redeemable preference share 1.7X Net 0.1x Add: Aflife transactions (0.6x) Less: Sage 2.2x As at 30 June 2005 CAR cover Within Momentum CAR cover target range

In summary

Maintain the dividend cover of 2.5 times Board approved share buy-in program as part of capital management Current excess R500million Capacity created for further Tier 2 issue

WesBank Finance, Risk and Audit RMB FNB Banking Group Treasury

Simplified structure

RMB

PBT

R2.2bn

Growth

36%

% of Group

22%

Strong financial performance

RMB

RMB

50 100 150 200 250

2002 2003 2004 2005

RMBAM back on track

+ 68% R’m 223

Positive inflow of funds

100 110 120 130 140 150

2003 2004 2005 R'bn

Institutional

R20 bn

2 4 6 8 10 12

2003 2004 2005 R'bn

Retail

R4.6 bn

Sound investment performance

Source : Alexander Forbes – Global Large Manager Watch

Global BIV 3 years to 30 June 2005

13.9% 14.7% 15.6% 15.8% 21.1% 17.7% 17.5% 17.2% 18.0% 16.4% 16.1% 0% 5% 10% 15% 20% 25% Stanlib Metropolitan SI M I nvestec AM Median Average Prudential Coronation OMAM RMB Asset Management Allan Gray

% p.a.

RMB

250 750 1250 1750

2001 2002 2003 2004 2005 R’m

Excellent performance

+ 33% Themes:

• Sustainability
• Investing in

growth

• Emergence as

an equity house 1 900

51% 50% 4% 17% 25% 36% 8% 9% 0% 20% 40% 60% 80% 100% 2004 2005

Diversity of earnings - total

25% 70% 5% 0% 20% 40% 60% 80% 100%

1992

Annuity New asset income Risk based Fee income

The portfolio effect

100 200 300 400 500 600 700 Private Equity Corporate Finance SPJI Treasury Trading Equity Trading Project Finance Structured Finance

Investment Fee Trading Structuring Credit

Net income by division

R’m

The portfolio effect

100 200 300 400 500 600 700 Private Equity Corporate Finance SPJI Treasury Trading Equity Trading Project Finance Structured Finance

Investment Fee Trading Structuring Credit R’m

Divisional income by driver

The portfolio effect

100 200 300 400 500 600 700 800

Investment Fee Trading Structuring Credit

Net income by driver

R’m 30% 8% 29% 5% 28%

Investing in growth

Costs up 32%

People Technology

200 400 600 800 1000 1200

2002 2003 2004 2005 Debt Equity

Emergence as equity house

R’m

100 200 300 400 500 600

Equit y Trading Corporat e Finance Privat e Equit y Act ual 2004 Act ual 2005

Equity businesses outperform

R’m

Corporate Finance - leaders in BEE

Disposal of a R7,9bn equity stake to a BEE consortium consisting

• f Kagiso Trust, MIT and WDB

Adviser to FirstRand

R600m acquisition of 7% of ABIL by a BEE consortium Adviser and funder to ABIL Creation and listing of a R2,5bn BEE financier Merchant bank, lead arranger and sponsor

R4.1bn acquisition by Bidco of Afrox Healthcare Limited

Adviser to Brimstone

R1,4bn acquisition of 7.25% of Imperial Holdings by a BEE consortium including Lereko Mobility Adviser to Imperial

Disposal of an equity stake to a BEE consortium led by Andile Ngcaba

Adviser to DiData

Private Equity – value added

200 400 600 800 1000 1200

2002 2003 2004 2005

Profit before tax Unrealised profit

R’m

RMB has exciting prospects

BEE Infrastructure finance

1 2 3 4 5 6

2001 2002 2003 2004 2005 2006 2007

• Gautrain
• 2010, etc

PPP debt funding

R’bn

RMB has dominated the PPP

market

8 6 10 Grand total

1

Accommodation

1 1 2

Prisons

1 1 1

Hospitals

1 1 1

Power stations

5 3 5

Toll roads Deals in which RMB has participated Deals led by RMB Total number of deals

BEE Infrastructure finance

RMB has exciting prospects

BEE Infrastructure finance Private equity assets

500 1,000 1,500 2,000 2,500

2002 2003 2004 2005

Profit before tax Unrealised profit Assets R’m

RMB has exciting prospects

BEE Infrastructure finance Private equity assets Relationships

Survey 2005

Deutsche Investec ABSA

RMB

Std Bank Bonds & Derivates Barclays Nedbank Brait Nedbank Std Bank JPM Chase Investec 5 Nedbank Deutsche Std Bank Investec Deutsche Std Bank ABSA 4

RMB

ABSA Investec ABSA Investec Investec JPM Chase 3 ABSA

RMB

Std Bank Deutsche Std Bank 2 Std Bank Std Bank

RMB

& Ethos

RMB RMB

& JPM

RMB RMB

1 Money Market Forex Private Equity Structured & Project Finance M & A Listings BEE Deals

RMB has exciting prospects

BEE Infrastructure finance Private equity assets Relationships Strong equity markets

FNB aligned around one brand

Sharpened segment focus Investment in growth

Financial highlights

PBT + 18% Excellent advances growth of 26% , particularly in second half Continued reduction in bad debts -20% Strong NIR growth + 22%

Still investing in growth

10% 40% 13% 13% 16% 9%

• 21%

21% 19% 21%

• 4%
• 30%
• 20%
• 10%

0% 10% 20% 30% 40% 50% Total Advances Overdrafts Corporate term loans Personal loans Credit card loans Hom e loans 1st Half growth 2nd Half growth

Advances – still growing

• ur share

+ 26% Total advances

+ 21% + 32% + 34% + 19% + 5%

(includes microloans and business loans) (includes Wealth)

Segment focus

Primary segments

Wealth Public Sector Commercial Corporate Consumer Mass

Branches, Brand, CIO and CFO

Shared Services

Banking the emerging market

1.9 2.2

• 1.0

2.0 3.0

• No. of accounts (m)

Active account base

Source: FNB Merchant Acquiring

0% 10% 20% 30% 40% 50% 60% Jul-04 Sep-04 Nov-04 Jan-05 Mar-05 May-05

Absa FNB Nedbank St andard

Debit card turnover market share

2004 2005

… and deepening the relationship

100 200 300

Production Microloans

2004 2005 R’m

50 100 150 200

R’m

Smart Housing Plan

2004 2005

Prepaid

2004 2005

Gross value

Total payout Prepaid revenue

+182% +75% +90%

Leader in cellphone banking

1.9 million InContact customers

Segment focus

Primary segments

Wealth Public Sector Commercial Corporate Mass

Branches, Brand, CIO and CFO

Shared Services Consumer

HomeLoans picking up the pace

10 20 30 40 50

Total payout New business market share

Payout

1 0% 20% 30% Jul-04 Sep-04 Nov-04 Jan-05 Mar-05 May-05

Absa Nedbank FirstRand Standard

Source: Deeds Office

R’bn 2004 2005

+78%

Remarkable performance from Card

31% growth in advances

• 10

20 30 40

Cardholder turnover Turnover

10% 20% 30% 40%

Jul-04 Sep-04 Nov-04 Jan-05 Mar-05 May-05 Absa FNB Nedbank Standard

Card turnover market share

Source: FNB Merchant Acquiring

R’bn 2004 2005

+28%

… with a little help from our friends

Who wants to be a millionaire?

Segment focus

Primary segments

Public Sector Commercial Corporate Consumer Mass

Branches, Brand, CIO and CFO

Shared Services Wealth

Leverage structured lending and asset management

• f into

A wealth of opportunity

Strong pipeline in FNB Private Clients

• 4

8 12 16 20

Advances Assets under management

2004 2005 2004 2005

R’bn

+41% +49%

Segment focus

Primary segments

Public Sector Corporate Consumer Mass

Branches, Brand, CIO and CFO

Shared Services Wealth Commercial

A future growth engine

Mid Corporate segment profit growth of 46% Aligned business model behind Business and Agric segments Commercial Property Finance payout of R364m and breakeven

Segment focus

Primary segments

Wealth Public Sector Commercial Consumer Mass

Branches, Brand, CIO and CFO

Shared Services Corporate

A mixed picture in Corporate

Lending

• Subdued market growth
• Not chasing market share

Transactional

• Established dedicated new business team
• Most improved electronic banking platform (BMI Tech

05) and 35% market share

• Leaders in Merchant Acquiring with 31% market share

Primary focus remoulded to transactional revenue

Segment focus

Primary segments

Wealth Commercial Corporate Consumer Mass

Branches, Brand, CIO and CFO

Shared Services Public Sector

Banking the public sector

Segment focus

Primary segments

Wealth Public Sector Commercial Corporate Consumer Mass

Branches, Brand, CIO and CFO

Shared Services

Branches - extreme makeover

Repositioning branch infrastructure

• 24 new traditional and 21 new portable

branches

• 12 closures

Improving retail design

• 121 revamps

Creating sales and service specialisation Mobile sales Performance-based remuneration

Prospects

High base created, but…

• Organic growth will be strong
• Volume growth should offset reduction in

endowment

• Well positioned in growing black market

Other banks = STD, ABSA,and Nedcor Source: Consumer and Business Tracker Research November 2004 and AMPS 2004

Well-positioned in growing black market

Mass R0-60K 84% 76% 37% 46% 39% 22% 16% 24% 52% 62% 63% 54% 61% 78% 48% 38% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% FNB Ot her Banks FNB Ot her Banks FNB Ot her Banks FNB Ot her Banks White Black Wealth R750K+ Consumer R60 – R750K Business R60k – R400m

Prospects

High base created, but…

• Organic growth will be strong
• Volume growth should offset reduction in

endowment

• Well positioned in growing black market

Still investing for growth with a cost focus

7658 8865

A balancing act

2002 2003 2004 2005 Revenue Opex CAGR 17% CAGR 16%

Bad debt benefit ending 3-year plan to improve CIR ’06: Still investing for growth

7658 8865

152 97 129 319 72 436

2004 Originat ion I ncrease in st aff Ot her growt h cost s Salaries & benefit s Advert ising Ot her

• perat ing

cost s 2005

Adverts 1% Salary 4% Growth costs 5% Other 6%

Investing in growth

7660 8865

5% of cost growth from investment in growth (R378m)

Prospects

High base created, but…

• Organic growth will be strong
• Volume growth should offset reduction in

endowment

• Well positioned in growing black market

Still investing for growth with an increased cost focus Positioned at lower end of fee range

Positioned at lower end of fee range

WesBank still in a sweet spot

PBT + 34% Advances + 29% New business written + 31.6% R4bn new business written in June NIR increased 34% Cost-to-assets down 5.5% (from 2.72% to 2.57% ) Cost to income down from 48.8% to 46.8%

Still the market leader at 33%

What has happened to costs?

2.2 2.4 2.6 2.8 3 3.2 2001 2002 2003 2004 2005 2006 Budget

Cost to Assets %

40 45 50 55

Cost to I ncom e % Cost to Assets Cost to I ncome

So what drove performance?

New partners in the corporate and motor markets Innovation continues (in our DNA) Process efficiency Performance-linked remuneration

Business confidence riding wave Slowdown in economic growth – no? Robust economy will ensure growth in car sales – You can do nothing without wheels! Black middle class boosts incremental new vehicle sales

Where to from here?

200 220 240 260 280 300 320 2005 2009

GDFI

400000 500000 600000 700000 800000 900000 1000000 2005 2010

Total new vehicle market

Opportunity 1: A new market has emerged

2 4 6 8 10 12 14 16 18 1994 2004 2005 2010

21 fold growth

R’bn Projection of black market

Shifting the mix

10 20 30 40 50 60 70 80 90

Whit e Black

1998 2005 2010 %

% 85 75 60 15 25 40

Opportunity 2: Funding transformation in the motor industry

0.5 1 1.5 2 2.5 3

2005 2010

R’bn

Projected

Opportunity 3: International

Strong Partnerships Leverage off existing structures Differentiated value proposition

The beginnings of international

Australia

• Motor One
• WorldMark

(Net consolidated PBT contribution of R19m)

United Kingdom

• Broking operation

Exploring Africa

WesBank in neighbouring territories Penetrate corporate markets through

• ur partners

Funding secured (RMB) Deal flow $35m

• Zambia
• Zambia
• Nigeria
• Angola
• Kenya
• Gabon
• Angola
• Zambia

OUTsurance OUTperforms

Growth in headline earnings of 46% to R297 million Continued strong organic growth

• gained good traction
• was successfully launched

Still significant market share to be gained in SA

E S S E N T I A L

B U S I N E S S

Strong organic growth

New recurring premium business + 21% Linked product inflows + 65% Single premium endowments + 18% Strong market growth Business mix improved profit margin from 17.3% to 18.7%

Positive gearing on earnings

Strong stock market growth Retail new business + 25% Expenses + 5% Positive gearing

Effective expense control

Consolidation – a core competency

Sage Cost per policy Revenue Increase in recurring new business due to agents Advantage Assets under management Operational costs as % of AUM Sovereign and ALH Principal members + 240 000

• 15%

+ 225% + 15% + 10%

• 10%

Value for money

Past legacies Future solutions Innovation

Past legacies

Historically RA penetration modest New age products increased our market share Launched Investo in 2000

Future solutions

The right new age products Switching legacy customers to Investo range Latest innovation: Save Thru Spend As and when commission ensures sustainability Situation on RA’s is still fluid

Growth themes

Middle market JV with FNB Consolidation in healthcare market Short term insurance offering Turnaround of investment in start-up

• perations

Momentum and FNB go for middle market

Middle market

Product skills Distribution

Fragmented health market

100% 136

Total

33% 120

< 100 000 beneficiaries

27% 12

Between 100 000 and 200 000 beneficiaries

40% 4

> 200 000 beneficiaries % of total beneficiaries

• No. of

schemes

2005 Investment International R59m Funds at Work R11m Health initiative R9m Multiply R12m Other R5m ______ Total R96m

Turnaround in start-ups

Break-even budgeted for 2006

Future focus

Strong top line growth Provide value for money

• Continued innovation required
• Good cost control
• Consolidation and integration skills

Prepared to confront issues

Looking forward

Looking forward

International Challenges Cyclical vs structural Conclusion

Our international end game

Cannot replicate FirstRand internationally Key principles apply

• JVs
• Brand and distribution
• Long time horizon

Driven at business unit level – working reasonably well, but… Centre needs to play a more active role Emerging markets remain attractive

Africa opportunistic entry strategy

Conventional where appropriate Unconventional wherever possible

• Celpay
• AIFH

FNB Africa – getting more focus

Satisfactory results + 16% PBT Performance can be improved through better alignment with FNB Appointment of Africa and EM CEO will fast track this

Looking forward

International Challenges Cyclical vs structural Conclusion

There are significant challenges

Consumerism

• Onslaught on insurance companies
• Bank charges
• Provide value for money

Bad debt improvement “as good as it gets” Overseas competition – “bar has been lifted” Regulatory and compliance costs Greater efficiency required

Looking forward

International Challenges Cyclical vs structural Conclusion

Cyclical vs structural How long will the party last?

Looking forward

International Challenges Cyclical vs structural Conclusion

We’re in good shape

Group’s well diversified earnings base Robust economy will provide good natural growth Achieving good market share gains Continue to invest for the future Focus on value for money through innovation and cost control Pursue international – patience and discipline required