RESULTS PRESENTATION for the six months ended 31 December 2017 - PDF document

RESULTS PRESENTATION for the six months ended 31 December 2017

FirstRand continued to deliver real earnings growth and superior returns… Cents 22.5% ROE 250 . +7% 222.1 200 207.6 194.6 177.3 150 154.2 +9% 130.0 119.0 100 108.0 93.0 77.0 50 0 Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Diluted normalised earnings per share Dividend per share 01

FIRSTRAND GROUP Introduction continued …despite difficult macroeconomic backdrop • SA operating environment was characterised by: • Political uncertainty • Low GDP growth • Depressed business and consumer confidence • Rest of Africa macro backdrop was more supportive: • Improved rainfall and commodity prices allowed some countries to recover • Countries with links to SA, however, weighed down by low growth causing activity levels to remain subdued • UK growth remained resilient despite Brexit uncertainty Good growth in NIACC, the group’s primary measure of shareholder value creation NIACC * R million ROE and COE 24.0% 5 500 25% 23.4% 23.4% 22.9% 22.5% +10% 20% 4 528 4 475 4 383 4 129 3 500 3 645 15% 14.8% 14.3% 13.8% 13.6% 13.5% 10% 1 500 5% ( 500) 0% Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 NI ACC ROE Cost of equity (COE) * Net income after cost of capital. 02

Return profile underpinned by sustainably higher ROA… % 8 7 6 3.50 3.11 3.19 3.40 3.22 5 4 3 2.07 1.97 1.99 2.00 1.99 2 1 3.72 3.95 3.79 3.99 3.92 0 (1) (3.58) (3.70) (3.65) (3.67) (3.79) (2) (3) (0.57) (0.64) (4) (0.55) (0.65) (0.64) (5) Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 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. …structurally higher due to portfolio mix and strategic choices • Relative size of transactional franchise (50% of gross revenue and >70% of NIR) • Relative advances mix delivers higher risk-adjusted margins • VAF (37% of retail advances, average margin 4.34%) • Unsecured (16% of retail advances, average margin 11.96%) • Lower relative market share of lower margin, lower risk lending business (i.e. mortgages at 47% of retail advances with average margin of 1.88%) • Discipline in generating appropriate returns in corporate lending • 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 • Incremental benefit of insurance, and save and invest franchises Average margins are net of funds transfer pricing. 03

FIRSTRAND GROUP Introduction continued Current breakdown of portfolio – activity, geography and franchise UK Other Investing Rest of WesBank Transact Insure Africa 3% Save 10% 16% and invest † FNB Revenue split Geographic Franchise split of by activity * PBT mix ** normalised earnings # 26% 58% RMB Lend 87% Transact and lend = 85% South Africa and other * Based on gross revenue excluding consolidation adjustments. ** Based on PBT (incl. GTSY), excluding FCC, FirstRand company, consolidation adjustments and NCNR preference dividend. # Excludes FCC (incl. GTSY), FirstRand company, consolidation adjustments and NCNR preference dividend. † Includes deposit taking and investment management. FNB and RMB performed well, WesBank had a tough six months Normalised earnings Contribution * Dec 17 Dec 16 % change ROE % R million 12  40.6 FNB 58% 7 160 6 409 11  22.9 RMB 26% 3 139 2 821 (1)  18.6 WesBank 16% 1 915 1 944 * Contribution to total normalised earnings excluding FCC (incl. GTSY), FirstRand company, consolidation adjustments and NCNR preference dividend. 04

Good growth in pre-tax profits and superior returns maintained Normalised PBT R million 40.6% ROE 12 000 . +11% 10 000 10 430 9 367 9 137 8 000 8 245 7 248 6 000 4 000 2 000 - Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Periods prior to 2015 have not been restated for refined rest of Africa segmentation. Periods prior to 2014 have not been restated for allocation of FCC costs and return on capital. 05

REVIEW OF OPERATIONS FNB continued Strong domestic performance, rest of Africa remains under pressure Normalised PBT R million 8 000 7 000 +18% Dec 16 Dec 17 6 000 5 000 4 000 3 000 +21% 2 000 +6% (5%) +46% 1 000 0 (1 000) (>100%) (2 000) * ** # † Transactional Term lending Save and invest Insurance Rest of Africa Other * 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. Key ratios and statistics demonstrate quality of operational performance… INCOME STATEMENT OPERATING STATISTICS • NIR growth +11% Segment % change • Customer growth NII growth +7% • Improvement in cost-to-income ratio to 53.6% Consumer +1 (2016: 54.0%) Premium +12 BALANCE SHEET Commercial +7 Advances Deposits Channel % change Segment % change Segment % change ATM/ADT +5 Consumer +3 Consumer +10 Volume growth Internet -1 Premium +5 Premium +14 Banking app +66 Commercial +8 Commercial +11 Mobile +3 Total customer growth of 3% with Point-of-sale +13 increase in cross-sell VSI from 2.72 to 2.88 06

…reflecting success of consistent strategy • Grow and retain core transactional accounts • Leverage customer relationships, ecosystems and FinTech • Provide digital platforms to deliver cost effective and innovative transactional volume propositions to customers • Use rewards programme, customer relationships and data analytics to cross-sell and up-sell broad range of financial services products (particularly insurance and investment products) • Apply disciplined origination strategies • Provide innovative savings products to grow retail deposit franchise • Right-size physical infrastructure to achieve efficiencies 07

REVIEW OF OPERATIONS RMB continued Return and growth demonstrate quality and diversity of portfolio Normalised PBT R million 22.9% ROE 5 000 . 4 500 +11% 4 450 4 000 4 011 3 956 3 500 3 488 3 000 2 500 2 622 2 000 1 500 1 000 500 0 Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Periods prior to 2015 have not been restated for refined rest of Africa segmentation. Periods prior to 2014 have not been restated for allocation of FCC costs and return on capital. Focus on clients and disciplined cost management underpinned performance Normalised PBT * R million 2 500 +18% 1 500 +10% – (5%) 500 >+100% Investment banking and Corporate and Markets and structuring Investing Investment (500) advisory (IB&A) transactional banking (M&S) management (C&TB) INVESTMENT CLIENT = 85% INVESTING = 14% MANAGEMENT = 1% Dec 16 Dec 17 * Excludes RMB Resources, legacy and head office portfolios. 08

Strong operational performance • IB&A delivered solid results underpinned by: • Good lending income supported by prior period advances growth • Resilient fee income on the back of advisory and capital market mandates • Proactive provisioning shielding impact of sovereign downgrade • C&TB’s continued focus on leveraging platforms and expanding product offerings contributed to good profit growth, particularly in the rest of Africa • M&S successfully navigated volatile markets to offset impact of lower equity flows, and a softer performance in the credit trading and hard commodities portfolios • Investing performance supported by realisations, but pressure on annuity income given prior period realisations and a tough macroeconomic environment • Disciplined cost management driving positive jaws 09

REVIEW OF OPERATIONS WesBank continued Resilient performance in difficult environment Normalised PBT R million 18.6% ROE . 3 000 (2%) 2 755 2 705 2 500 2 518 2 287 2 149 2 000 1 500 1 000 500 0 Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Periods prior to 2015 have not been restated for refined rest of Africa segmentation. Periods prior to 2014 have not been restated for allocation of FCC costs and return on capital. Decline in SA retail VAF partially offset by good performances in corporate and personal loans Normalised PBT R million 1 750 (15%) 1 250 +2% ZAR +18% +3% GBP 750 +17% 250 (16%) Retail VAF SA* MotoNovo (UK) Corporate and Personal loans Rest of Africa ( 250) commercial Dec 16 Dec 17 * Retail VAF SA includes MotoVantage. 10