Winning Strategies in Winning Strategies in a Brave New World RMB - - PowerPoint PPT Presentation

Winning Strategies in Winning Strategies in a Brave New World

RMB Morgan Stanley conference

15 September 2010

Index

• Core economic view
• Conventional responses
• Innovative growth
• Conclusion

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Our core economic view consistent with pressures on top-line banking growth

2010 2011 2012 2013

GDP growth

3.0 3.0 3.3 3.3

Inflation (year-end)

3.8 5.0 5.5 5.5

(y ) Nominal disposable income (year -end)

8.5 8.5 8.8 8.8

Repo rate (year-end)

6.0 6.5 7.5 8.0

Rand/ dollar (average value)

7.5 8.0 8.3 8.5

House prices (year-end)

8.0 6.0 5.5 5.5

Total private sector credit extension (year-end)

5.0 7.5 8.8 8.8

We get it!!

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We get it!!

Repricing transactional banking Repricing credit Realigning b i d l transactional banking business models

Conventional/ Generic strategies

Changing balance sheet composition Geographic diversification Containing cost

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Repricing credit

Weighted average discount to Prime & change in risk distribution at registration

80% 90% 100%

als

Weighted average discount to Prime & change in risk distribution at registration

50% 60% 70% 80%

egistered dea

10% 20% 30% 40%

% of re

0% 10% Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10

A B C D E F G H I WAD New Reg Business Average discount new business Low risk High risk 5

Repricing transactional banking

90 110

Smart Transmission

R 124 95 120 140

Silver Cheque

86.37 75.65 72.60 88.50 50 70 R 87.05 R 72.55 R 124.95 R 100.73 R 105.50 R 91.50 60 80 100 23.65 33.00 10 30 20 40

Smart Easy Plan Silver Smart Cheque Achiever Classic

220 270

Gold Cheque

299.95 270 320

Platinum Cheque

Plan q

135.80 212.95 146.73 181.50 120 170 220 173.85 299.95 248.52 269.25 170 220 270 20 70 20 70 120

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Changing balance sheet composition

HomeLoans Smart Loans

Advances (R billi ) Advances 113 114 9 000 9 500 (R billions) R millions 111 112 8 000 8 500 109 110 7 000 7 500 107 108 5 500 6 000 6 500 106 Jul '08 Jan '09 Jul '09 Jan '10 5 000 5 500 Jul '08 Jan '09 Jul '09 Jan '10 7

Cost containment

FNB headcount (18 month trend)

Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10

H d t h d d 5 4% /

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Headcount has dropped 5.4% y/y

FNB branch distribution in relation to GDP

2010 distribution 2009 distribution GDP Free State 8% 11% 5% Northern Cape 4% 5% 2% Eastern Cape 12% 11% 8% Western Cape 15% 14% 15% North West 6% 6% 6% Limpopo 7% 6% 7% KZN 17% 16% 16% KZN 17% 16% 16% Mpumalanga 8% 8% 6% Gauteng 24% 23% 35% Gauteng 24% % 35% Total 100% 100% 100%

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Africa – expected GDP 2011

Swaziland 2.4% Lesotho 3.0%

Existing subsidiaries

Nigeria 3.0% South Africa 3.0%

subsidiaries

• Botswana
• Namibia
• Mozambique

Namibia 4.5% Botswana 5 0%

• Lesotho
• Swaziland
• Zambia

Botswana 5.0% Angola 6.2% Z bi 6 5%

Representative

• ffices
• Angola

Zambia 6.5% Tanzania 7.1%

go a

• Nigeria

New countries

Mozambique 7.3% Uganda 8.0%

• Tanzania
• Ghana
• Uganda

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Ghana 14.0%

CIB Coverage within Group

Corporate and Investment Banking Group (CIB)

RMB Manbo FNB CBG EXCO FNB CBG EXCO

Business Development Unit Relationship Mgmt

CIB Client Co erage Proprietary Board Wholesale Credit

Business Development Unit Relationship Mgmt

CIB Client Coverage

Corporate Transactional Banking

Private Equity Equities Trading Investment Banking FICC

Banking

Finance & Compliance O ti

Finance Risk & Compliance O ti

Operations IT HR

Operations IT Human Capital 11

eWallet Owner-manager EasyPlan Innovative culture mindset

Innovative growth

BJM Quicksell

growth

Cellphone Banking Transaction volumes A t i Account opening

• ptimisation

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Innovative culture

2005 2006 2007 2008 2009 2010 Ideas originated 3 120 3 606 6 346 6 845 6 227 8528 Ideas implemented 222 359 530 733 641 779

• 26 347 staff
• 15 465 registered users

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QuickSell

350 400 Number of properties 250 300 350 150 200 250 50 100 150 50 May 09 Aug 09 Nov 09 Feb 10 May 10 Aug 10

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Account opening

• Key objectives:
• Significantly reduce the time and simplify the process to set up a customer
• Significantly reduce the time and simplify the process to set up a customer

and open accounts

• Pre-populate and print rationalised, simplified customer agreements
• Cross-sell appropriate services and value adds as part of the process
• One standard process for account opening
• Key drivers being: Speed, Simplicity, Accuracy & Cost Reduction
• Benefits:

Reduction in Consumer Commercial

• Screens

40% 44%

• Time (estimated)

25% 45%

• Customer agreement (# pages)

15% 79%

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Customer initiated financial transactions

1 100 Customer initiated financial transactions (millions) 1,000 1,100

16%

900

13%

800 600 700 500 June 2008 June 2009 June 2010

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Customer numbers still growing and cross-sell still increasing

Customers Cross sell 2.1 7 (millions) ratio 1 9 2 5 6 1.8 1.9 3 4 1.7 1 2 1.6 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10

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BJM Strategic Rationale

Portfolio M t



FNB Wealth building blocks

Management Wealth



FNB Wealth building blocks

Stockbroking Management

 

Stockbroking



• Stockbroking adds additional building block to FNB Wealth offering

Stockbroking adds additional building block to FNB Wealth offering

• Acquiring stockbroking businesses means by which competitors grew their wealth businesses
• Cost of growing the business organically estimated at R400m – R500m

Cost of growing the business organically estimated at R400m R500m

• BJM Private Client segmentation will enhance FNB Wealth coverage and offering

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Owner-manager philosophy

Traditional branches Associate branch Measures:

Direct cost growth 8% 5%  NIR growth 9% 10% 



Cost to income 72% 63% 

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EasyPlan branch rollout

100

Number of branches (actual vs budget)

80 60 40 20 Aug 09 Nov 09 Feb 10 May 10 Aug 10 Nov 10 Feb 11 May 11

Actual Target

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Actual Target

Cellphone banking

Cellphone banking

Users 2 000 000 2 500 000 1 500 000 2 000 000 1 000 000 500 000 Jun 06 Jun 07 Jun 08 Jun 09 Jun 10

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eWallet

Monthly original send values R millions Onsend volumes 80 000 90,000 100,000

R 30,000,000.00 R 35,000,000.00

30 35 60,000 70,000 80,000

R 20,000,000.00 R 25,000,000.00

20 25 30 000 40,000 50,000

R 10 000 000 00 R 15,000,000.00

10 15 10,000 20,000 30,000

R 5,000,000.00 R 10,000,000.00

5 10

R ‐ OCT 2009 NOV 2009 DEC 2009 JAN 2010 FEB 2010 MAR 2010 APR 2010 MAY 2010 JUN 2010 JUL 2010 AUG 2010

ORIGINAL SEND VALUES ORIGINAL SEND VOLUMES 22 ORIGINAL SEND VALUES ORIGINAL SEND VOLUMES

More innovations…

• best reward programme in financial services
• FNB Connect provides customers with free data
• Slow lounge very popular
• PayPal
• Instant Accounting now free
• Watch the reward space

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Conclusion

• The economy is not going to make it easy to grow banking revenues

The economy is not going to make it easy to grow banking revenues

• We have successfully implemented a range of conventional initiatives

We have successfully implemented a range of conventional initiatives

• Tough times create great growth opportunities if you have an

Tough times create great growth opportunities if you have an innovative mindset

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