UBS conference Integrated financial services 2 Integrated - - PowerPoint PPT Presentation

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UBS conference Integrated financial services 2 Integrated - - PowerPoint PPT Presentation

May 08, 2023 448 likes •723 views

UBS conference Integrated financial services 2 Integrated financial services Matching demand (assets) and supply (liabilities) Right to compete Group model Asset management Insurance Conclusion 3 Existing models: banks vs

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SLIDE 1

UBS conference

Integrated financial services

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SLIDE 2

Matching demand (assets) and supply (liabilities) Right to compete

  • Group model
  • Asset management
  • Insurance

Conclusion

Integrated financial services

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SLIDE 3

Existing models: banks vs insurers vs asset managers

DEMAND FOR MONEY INSURANCE BANKING SUPPLY OF MONEY INVESTMENT PRODUCTS LENDING PRODUCTS

Deposits Short/long-term insurance

SEGREGATED PLATFORMS

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SLIDE 4

Existing models: banks vs insurers vs asset managers

DEMAND FOR MONEY INSURANCE BANKING SUPPLY OF MONEY INVESTMENT PRODUCTS LENDING PRODUCTS

Deposits Short/long-term insurance

SEGREGATED PLATFORMS

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Insurance company uses bank’s sales channel Bank’s sales channels Insurance company’s sales channels Partnership or one owns the other BANK INSURANCE COMPANY

BANCASSURANCE MODEL

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SLIDE 5

Integrated platforms required for customer-centric approach

DEMAND FOR MONEY SUPPLY OF MONEY

ASSETS LIABILITIES

VAF AUM MORTGAGES CORPORATE/CIB INSURANCE BANKING ASSET MANAGEMENT SHADOW BANKING UNSECURED

INTEGRATED PLATFORMS

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SLIDE 6

ASSETS

DEMAND FOR MONEY VAF MORTGAGES CORPORATE/CIB UNSECURED AUM

LIABILITIES

SHADOW BANKING INSURANCE BANKING ASSET MANAGEMENT SUPPLY OF MONEY

Requires sophisticated asset and liability matching

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CLEARING HOUSE

Optimise matching of assets and liabilities through treasury, ALM and structuring capabilities

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SLIDE 7

Clearing house allows us to capture more of the value chain

Reduce funding costs through better matching

  • f assets and liabilities

Create better value propositions to capture full customer value chain Originate on most efficient platform

CLEARING HOUSE

1 2 3

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Matching demand (assets) and supply (liabilities) Right to compete

  • Group model
  • Asset management
  • Insurance

Conclusion

Integrated financial services

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SLIDE 9

FNB RMB FNB WesBank

GTSY

RMB RMB FNB WesBank FNB WesBank Ashburton Investments GTSY Ashburton Investments GTSY

ASSETS

DEMAND FOR MONEY VAF MORTGAGES CORPORATE/CIB UNSECURED AUM

LIABILITIES

SHADOW BANKING INSURANCE BANKING ASSET MANAGEMENT SUPPLY OF MONEY

FirstRand already a large player on both demand and supply sides

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SLIDE 10

Enabled by platform- and franchise-neutral business model

Distribution channels Customer bases Systems, data, operating platforms Clearing house MADE AVAILABLE TO ALL

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Licences

Asset management Life insurance Short-term insurance Banking

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SLIDE 11

Customer

Supports a customer-centric approach

* Underwriting management agencies 11

  • Single view of the customer
  • Identifying and meeting needs
  • Provide appropriate customer

solutions and access

  • Transparency and single point
  • f accountability
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SLIDE 12

Matching demand (assets) and supply (liabilities) Right to compete

  • Group model
  • Asset management
  • Insurance

Conclusion

Integrated financial services

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SLIDE 13
  • Origination and structuring franchises supply attractive assets previously not available in

fund format

  • Customer base
  • Distribution
  • Balance sheet and liquidity
  • Optimisation of asset liability matching and risk management

Asset management strategy leverages innovative utilisation of existing building blocks

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What drives growth in AUM?

TRUST/TIME INVESTMENT PERFORMANCE MARKET DYNAMICS TIED DISTRIBUTION

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Prerequisites

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SLIDE 15

What drives growth in AUM?

TRUST/TIME INVESTMENT PERFORMANCE

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MARKET DYNAMICS TIED DISTRIBUTION

  • Regulatory changes
  • Search for alternative sources of return
  • Liability-driven investing
  • All of the above have driven demand for alternative

asset classes

  • RMB origination capabilities (credit, private equity,

infrastructure, renewables, real estate)

  • Provides protection for RMB’s origination franchise

and leverages RMB’s structuring capabilities

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SLIDE 16

What drives growth in AUM?

TRUST/TIME INVESTMENT PERFORMANCE

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MARKET DYNAMICS TIED DISTRIBUTION

  • Ability to distribute is key
  • Tied distribution forces provide distinct advantage
  • FNB channels
  • Digital
  • Face-to-face
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SLIDE 17
  • Distribution
  • Building own solutions for customers
  • Capture flows currently going to third parties
  • Protecting customer franchise
  • Cost-effective for FNB and client
  • Positions the group for new retail distribution review (RDR) regulations

WIM business has now been integrated into FNB

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SLIDE 18

50 100 150 200 250 2014 2015 2016 2017 AM traditional AUM AM alternative AUM WIM AUM WIM AUE WIM AUA

Traction in AUM reflects success

  • FNB distribution channels
  • Alternatives – R52 billion AUM
  • Credit funds
  • Structured notes (GMFS)
  • LDI
  • Westport (African real estate)
  • Private equity, renewables
  • Traditional – R51billion AUM
  • Fixed income
  • Equity
  • Multi-asset

* AUM excludes conduits.

R billion 60 72 88 103

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SLIDE 19

Matching demand (assets) and supply (liabilities) Right to compete

  • Group model
  • Asset management
  • Insurance

Conclusion

Integrated financial services

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Our right to compete in the insurance space

Group customers are buying insurance products Through FNB Insurance brokers – third party products Debit orders to product providers Sell own products to our customers Offer better products at better price Supported by rewards programme Use data analytics to offer product to customer when required

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Significant opportunity in our own customer base

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Jun 16 Jul 16 Aug 16 Sep 16 Oct 16 Nov 16 Dec 16 Jan 17 Feb 17 Mar 17 Apr 17 May 17 Jun 17 Jul 17 Aug 17 Sep 17

FNB share of ST premium flow Debit orders to short-term insurers

Short-term insurance: the real opportunity is in comprehensive (underwriting)

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How do we capture the opportunity in this space?

ORGANIC BUY PARTNER

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Good traction in FNB insurance –increased penetration of customer base utilising all channels

Channel % of sales Branch 75 Call centres 13 Digital 8 Other 4 Sales channels

2 343 3 459

500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 2016 2017

Value creation

Embedded value – life products R million

+48%

Penetration

50 100 150 200 250

Premium Consumer

In-force annualised premium on standalone life products R million

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Matching demand (assets) and supply (liabilities) Right to compete

  • Group model
  • Asset management
  • Insurance

Conclusion

Integrated financial services

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  • We have the building blocks:
  • Customer base
  • Distribution channels
  • Product manufacturing capabilities/skills
  • Data analytics
  • Platforms
  • Sizeable profit pools
  • Group’s current revenue contribution from these activities is small
  • Presents opportunity for growth and diversification
  • ROE enhancing
  • Asset management business – capital light
  • Attractive returns in insurance

Conclusion

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www.firstrand.co.za