results presentation FOR THE SIX MONTHS ENDED 31 DECEMBER 2010

Transcription

1 results presentation FOR THE SIX MONTHS ENDED 31 DECEMBER 21

2 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 1 FirstRand Limited results for the six months ended 31 December 21 Introduction Sizwe Nxasana

3 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 2 Recovery in ROE and earnings continues 6-monthly pro forma normalised earnings* R million ROE = 19% +2% y/y Dec '6 Jun '7 Dec '7 Jun '8 Dec '8 Jun '9 Dec '9 Jun '1 Dec '1 * Excludes contributions from Momentum (Dec 6 to Dec 1 ) and Discovery (Dec 6 to Dec 7) Achieved against mixed macros SA GDP growth recovery continued Inflation bottomed Interest t rates decreased d 1bps to historically i low levelsl Good disposable income growth Continued improvement in consumer affordability, but household debt remained high Employment growth turned positive House prices dipped after a strong showing in 1H1 Corporate and commercial market subdued

4 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 3 Strong performance from all franchises Profit before tax R million 6 months to 31 Dec 1 6 months to 31 Dec 9 Change (y/y) FNB % FNB Africa % RMB % WesBank >1% Consistent strategic fundamentals Our strategic intent remains To be the African financial services group of choice By creating long-term franchise value Through delivering superior and sustainable returns Within acceptable levels of earnings volatility Underpinned by alignment of shareholder value creation and management remuneration... driven by two growth strategies In South Africa, focus on existing markets and areas currently under-represented Further grow African franchises in key markets and mine the corridors Strategy executed through operating franchises

5 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 4 Financial review Johan Burger All of the data contained in the Financial review section of this presentation are presented on a normalised basis, for continuing operations (excluding Momentum). A reconciliation between the normalised income statement in the Circular to shareholders and this presentation is shown in the Appendix.

6 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 5 Macro influences bank earnings GDP cycle Earnings benefited from high Earnings Despite low GDP, Top-line growth GDP fuelled by credit boom negatively earnings positively constrained by impacted by impacted by unwind of expected moderate increasing bad credit risk cost GDP growth debts At Actual cycle Typical cycle Anticipated cycle Highlights of Group performance actual R million (normalised) Dec 1 Dec 9 Change Earnings Group % Earnings Banking Group * % Earnings Momentum (2%) Diluted EPS (cents) Group % Return on equity (%) Group Net asset value per share (cents) Group (6%) Dividend per share (cents) FSR % Dividend per share (cents) MMI? * Banking Group includes NCNR preference shares and FirstRand Limited (company) Dec 1 Momentum earnings includes 5 months contribution, vs 6 months contribution in the Dec 9 Momentum earnings

7 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 6 Highlights of Group performance pro forma R million (normalised) Dec 1 Dec 9 Change Earnings Group % Diluted EPS (cents) % Return on equity (%) Net asset value per share (cents) % Dividend per share (cents) % Key ratios pro forma Dec 1 Dec 9 Change Return on equity (%) Return on assets (%) Credit loss ratio (%) Cost to income ratio (%) Tier 1 capital adequacy ratio * (%) Core Tier 1 capital adequacy ratio * (%) Net interest margin (%) Gross advances (R billion) % * Comparative value for Dec 9 is shown for FirstRand Bank Holdings (the bank controlling company at that time). FirstRand Limited became the bank controlling company effective Jul 1. Capital ratios shown here exclude unappropriated profits.

8 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 7 Income statement pro forma Normalised (R million) Dec 1 Dec 9 % change Net interest income before impairment of advances % Impairment losses on loans and advances (2 84) (3 225) (35%) Net interest income after impairment of advances % Non-interest t revenue * % Income from operations % Operating expenses (13 78) (11 819) 11% Income before tax % Indirect tax ( 385) ( 236) 63% Profit before tax % Direct tax (2 92) (1 655) 26% NCNR prefs ( 16) ( 19) (16%) Minorities ( 364) ( 31) 17% FirstRand pro forma normalised earnings % * NIR is adjusted for private equity subsidiaries costs, and includes share of profit from associates and joint ventures. Operating expenses exclude costs from private equity subsidiaries. Refer to Appendix for a reconciliation of normalised pro forma income statement shown above with that shown in the Circular to shareholders. Client franchise contributes 92% of gross revenue NIR breakdown Gross revenue breakdown 41% 63% Transactional income 59% 8% 2% 1% RMB client flows OUTsurance WesBank associates Client activity 87% 8% Insurance 5% Other client NII before impairments Non-interest revenue 1% 4% 4% Private equity Resources Other investment Investment & trading 13% 4% Trading

9 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 8 Income statement pro forma Normalised (R million) Dec 1 Dec 9 % change Net interest income before impairment of advances % Impairment losses on loans and advances (2 84) (3 225) (35%) Net interest income after impairment of advances % Non-interest revenue % Income from operations % Operating expenses (13 78) (11 819) 11% Income before tax % Indirect tax ( 385) ( 236) 63% Profit before tax % Direct tax (2 92) (1 655) 26% NCNR prefs ( 16) ( 19) (16%) Minorities ( 364) ( 31) 17% FirstRand pro forma normalised earnings % Unpacking NII Dec 9 Dec 1 8% 1% 24% Lending Deposit-taking 19% 14% 54% Endowment/Group Treasury FNB Africa 14% 57% Based on net interest income before impairment of advances

10 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 9 Unpacking NII Lending Dec 9 Dec 1 54% Lending 57% Based on net interest income before impairment of advances Retail * advances +4%, however growing in targeted segments Advances (R billion) Change mortgages Residential FNB HomeLoans Wealth (secured) Affordable housing (2%) Market and origination 12% Targeted segment 32% Targeted segment VAF 51.1 WesBank Motor 1% Market and origination Carlyle Finance 11% Origination 5. Unsecured Card Smart & Personal loans (5%) Focus on transactionsti 12% Targeted segment Dec '9 Dec '1 * Excluding FNB Africa

11 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 1 Commercial advances growing in targeted segments Advances (R billion) Change Medium corporate % Targeted sub-segment FNB Com mmercial Business Agric Property term (4%) Market 16% Targeted segment 14% Targeted segment Residential development (17%) Market VAF 31.5 WesBank Corporate (6%) Market 29.7 Dec '9 Dec '1 Growth in corporate advances reflects strategy Advances (R billion) Change 9.2 Corporate banking 4% Market Investment banking 11% 9.6 Targeted defensive investment grade counters & adjusted risk appetite 26.6 Repos 51% Short duration 4.3 Dec '9 Dec '1

12 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 11 Unpacking NII Deposit-taking Dec 9 Dec 1 Deposit-taking 14% 14% Liability profile reflects structural funding in SA Inc, Basel III a challenge R billion 6 Lengthened term profile and increased liquidity buffer by R4.6bn y/y Months months 7% 19.1 months months 12 months 38% % % Jun '9 Dec '9 Jun '1 Dec '1 Retail deposit franchise Corporate & commercial deposit franchise Institutional Institutional weighted avg term (RHS) Securitisation & conduit Source: FRB SARB BA9 returns

13 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 12 Liquidity premium reducing bps 8 9-month liquidity premium over JIBAR (mid rate) H1 FY1 57 bps average H1 FY11 44 bps average Dec '7 Jun '8 Dec '8 Jun '9 Dec '9 Jun '1 Dec '1 Unpacking NII Endowment/Group Treasury Dec 9 Dec 1 24% Endowment/Group Treasury 19%

14 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 13 Endowment impact R65 million per 1 bps per annum 3m Jibar (%) 8.% 75% 7.5% Average Jibar 7.3% 7.% 6.5% Endowment book R71bn * 6.% Average Jibar 6% 5.5% 5.% Jun-9 Dec-9 Jun-1 Dec-1 * Average endowment book for the current financial year. Sensitivity as at 31 Dec 1 for 12 months, assuming parallel shift in rates. Margin impacted by MTM timing differences Percentage of average interest-earning banking assets % Dec 9 * 4.45 Asset price movement.15 Retail deposit pricing (.3) Endowment effect (.15) Wholesale liquidity pricing (.2) Increase in liquidity buffer (.6) 6) Interest rate risk hedges.7 Timing differences on MTM of certain funding instruments (.27) Dec * Dec 9 adjusted for the inclusion of RMB fair value advances

15 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 14 MTM accounting treatment creates volatility in margin 1% 9% 8% 1% 3% 97% 16% 4% 84% 6 5 7% 6% 5% 6% 4 3 4% 3% 2 2% 1% 1 % Jun '9 Dec '9 Jun '1 Dec '1 % of institutional funding - fair valued % of institutional funding - accrual Market liquidity premium (RHS) Actual liquidity premium (RHS) Income statement pro forma Normalised (R million) Dec 1 Dec 9 % change Net interest income before impairment of advances % Impairment losses on loans and advances (2 84) (3 225) (35%) Net interest income after impairment of advances % Non-interest revenue % Income from operations % Operating expenses (13 78) (11 819) 11% Income before tax % Indirect tax ( 385) ( 236) 63% Profit before tax % Direct tax (2 92) (1 655) 26% NCNR prefs ( 16) ( 19) (16%) Minorities ( 364) ( 31) 17% FirstRand pro forma normalised earnings %

16 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 15 Bad debts within long-run average range Impairment charge (%) Retail Total Corporate Jun '5 Jun '6 Jun '7 Jun '8 Jun '9 Dec '9 Jun '1 Dec '1 Impairment charge numbers for Jun 5 to Jun 9 are for FirstRand Banking Group. Dec 9 to Dec 1 numbers are for FirstRand Limited (pro forma) Bad debt unwind continued Bad debts Percentage of average advances 6 months to Dec 1 6 months to Jun 1 6 months to Dec 9 Retail Residential mortgages Credit card Vehicle and asset finance (SA) Wholesale * Total bad debt ratio * Includes WesBank Business and Corporate

17 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 16 NPLs remain sticky Jun '99 Jun ' Jun '1 Jun '2 Jun '3 Jun '4 Jun '5 Jun '6 Jun '7 Jun '8 Jun '9 Dec '9 Jun '1 Dec '1 Total NPLs (%) Debt counselling (%) and levels remain high NPL Percentage of advances Dec 1 Jun 1 Dec 9 Retail Residential mortgages Credit card Vehicle and asset finance (SA) Wholesale * Total NPL ratio * Includes WesBank Business and Corporate

18 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 17 Ageing NPLs impact LGDs FNB HomeLoans NPL book Average time in NPL (months) New inflows Write-offs Average time in NPL (RHS) Lower NPL inflows drive bad debt charge FNB HomeLoans New NPLs (value) WesBank New NPLs (number of accounts)

19 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 18 Income statement pro forma Normalised (R million) Dec 1 Dec 9 % change Net interest income before impairment of advances % Impairment losses on loans and advances (2 84) (3 225) (35%) Net interest income after impairment of advances % Non-interest revenue % Income from operations % Operating expenses (13 78) (11 819) 11% Income before tax % Indirect tax ( 385) ( 236) 63% Profit before tax % Direct tax (2 92) (1 655) 26% NCNR prefs ( 16) ( 19) (16%) Minorities ( 364) ( 31) 17% FirstRand pro forma normalised earnings % Unpacking NIR 6% Dec 9 3% 9% Dec 1 4% Client Investment Trading & other fair value 91% 87%

20 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 19 Sustainability of NIR driven by strength of client franchises Normalised NIR (R million) Dec 1 Dec 9 Change y/y Dec 1 mix Client % 87% Investment % 9% Trading & other fair value % 4% Total normalised non interest revenue * % 1% * Normalised NIR is adjusted for costs associated with private equity consolidated subsidiaries and includes share of profit from associates and joint ventures and is shown post-headline earnings adjustments. Refer to Appendix for reconciliation. Unpacking NIR client Dec 9 Dec 1 Client 91% 87%

21 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 2 Increased activity provides annuity Normalised (R million) Dec 1 Dec 9 Change - Transactional income % - RMB client activity % - OUTsurance % - WesBank associates % - Insurance % - Other * (32%) Client activities/primary markets % * Dec 9 included income from Worldmark and Norman Bisset, which were sold in Feb 1 Increased volumes and customer numbers continue to drive transactional revenue Transactional revenue R million 1 8 8% Dec 1 breakdown by franchise * % 2 Dec '9 Dec '1 FNB FNB Africa WesBank RMB * Excluding Corporate Centre

22 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 21 Investment banking driving profitability in RMB client activity R million % R million Dec 1 Dec 9 % change FICC (4%) - Forex (11%) - Debt % Equity (32%) 4 Investment banking % 2 Dec '9 9 Dec '1 1 Other (27) (128) (79%) RMB client activity % Unpacking NIR Investment Dec 9 Dec 1 6% 9% Investment

23 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 22 Resources portfolio drives growth in investment NIR Normalised (R million) Dec 1 Dec 9 Change - Private equity activities % - Resources >1% - ELI returns % - Other * % Investment NIR % * Includes non-private equity dividends and realisations Private equity activities influenced by impairments R million Dec 1 Dec 9 Change RMB Private Equity division (5%) - Realisations and dividends (56%) - Attributable/equity accounted income * % - Impairments (28) (6) >1% Legacy (8) (255) (97%) - Equity accounted income (65) (12) >1% - Impairments 57 (243) (>1%) Private equity activities % Unrealised profits in RMB private equity portfolio R1.7 billion (Jun 1: R1.4 billion) * Shown net of operating expenses of consolidated private equity subsidiaries

24 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 23 Unpacking NIR Trading & other fair value Dec 9 3% Dec 1 4% Trading & other fair value Strong performance from equity trading Trading and other fair value R million R million Dec 1 Dec 9 Change 5 22% RMB trading % Equities % Dec '9 Dec '1 - Commodities 6 22 (73%) - Interest rates (6%) - Credit (7) 35 (>1%) - Forex % Other fair value 24 (36) (>1%) Trading & other fair value %

25 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 24 Income statement pro forma Normalised (R million) Dec 1 Dec 9 % change Net interest income before impairment of advances % Impairment losses on loans and advances (2 84) (3 225) (35%) Net interest income after impairment of advances % Non-interest revenue % Income from operations % Operating expenses (13 78) (11 819) 11% Income before tax % Indirect tax ( 385) ( 236) 63% Profit before tax % Direct tax (2 92) (1 655) 26% NCNR prefs ( 16) ( 19) (16%) Minorities ( 364) ( 31) 17% FirstRand pro forma normalised earnings % Cost-to-income ratio increased, but R million 25 FirstRand Banking Group Supersegment FirstRand Group 6% 2 7% 5% % 4% 3% 2% 5 1% - % Costs Banking Group top line Cost-to-income to ratio (RHS) FirstRand Group top line Top line and costs are calculated on a normalised basis

26 FIRSTRAND INTERIM RESULTS PRESENTATION 1/ core cost growth +8% 13 5 R million % Dec '1 Share-based Expansion Co-operation WesBank Dec '1 core Dec '9 normalised payments costs agreements & disposed costs normalised costs JVs businesses costs Results in a nutshell R million 8 21% % 4% 12% 7, ,11 6% 25% 5 5 1% Dec '9 PBT Endowment Timing Bad debts Legacy Share-based Organic Dec '1 PBT differences on MTM funding instruments payments growth

27 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 26 Capital Strong capital position FirstRand Group Core Tier 1 % Tier 1% Capital adequacy ratio Regulatory minimum Target FirstRand Bank Core Tier 1 % Tier 1% Capital adequacy ratio Regulatory minimum Target FirstRand Bank FirstRand Group Core Tier 1 Other Tier 1 Tier 2 Ratios include unappropriated profits for the period

28 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 27 Can already absorb impact of regulatory changes Draft regulations Basel III * (.75%) (1% ) 13% 12% 12.4% (.75%) 11% 1% (.75%) (.25%).8% 1.65% 11.45% 9% 8% Internal target of 8.25% 7% Current Core Tier 1 6% scalar, market risk, resecuritisations Quality of capital, incl. minorities Risk coverage, incl. counterparty credit risk Projected Core Tier 1 Reserves currently disallowed, to be included under Basel III Common Equity Tier 1 * Basel III deductions to be phased in over 5-year period, immediate impact on Dec 1 capital position shown here ROE returns to target range 35% FirstRand Banking Group Supersegment FirstRand Group 3% ROE * 25% 2% Target range 15% Average cost of equity 1% Jun '4 Jun '5 Jun '6 Jun '7 Jun '8 Jun '9 Dec '9 Jun '1 Dec '1 * ROE from Dec 9 onwards is on a pro forma basis for FirstRand Ltd

29 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 28 Strong capital position is drag on South African ROE Average NAV split Africa * ROE 28% Other ROE 23% South Africa ROE 18% * ROE for African subsidiaries (includes FNB Africa and RMB Africa) Strong capital position provides flexibility Available for organic growth, expansion and regulatory changes NAV split FNB ROE 35% Africa * ROE 28% WesBank ROE 22% RMB ROE 25% * ROE and NAV for African subsidiaries (includes FNB Africa and RMB Africa)

30 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 29 Understanding diversity of revenue Geography * Activity * SA Africa & corridors International Client Investing Trading FirstRand Segment Franchise Retail Commercial Corporate FNB Africa FNB FNB Africa RMB WesBank * Based on gross revenue Based on PBT, excluding Corporate Centre & consolidation adjustments Segmental diversification Dec 9 Dec 1 11% 1% Retail 39% Commercial 34% Corporate FNB Africa 33% 41% 16% 16% Based on normalised PBT, excluding Corporate Centre and consolidation adjustments

31 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 3 Investment banking franchise drives corporate segment profits PBT (R million) 2 5 R million Dec 1 Dec 9 Change Segment PBT % 2 6m to Dec m to Dec Investment banking Corporate banking & asset finance Corporate segment comprises RMB, FNB Corporate and WesBank corporate activities Good performance across all activities in investment banking PBT (R million) m to Dec 1 6m to Dec 9 Advisory Finance Capital raising Hedging & Client execution Trading Investing* and structuring underwriting Client Investing Trading * Excluding legacy

32 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 31 Commercial segment presents diverse range of growth opportunities R million Dec 1 Dec 9 Change PBT (R million) Segment PBT % ( 5) (1 ) (1 5) (2 ) 6m to Dec 9 (2 5) 6m to Dec 1 (3 ) Lending interest Bad debts Deposit-taking Non-interest Expenses interest revenue Commercial segment comprises FNB Commercial and WesBank corporate activities Consumer remains most significant contributor, but wealth and mass growing Dec 9 Dec 1 7% 7% 29% Mass Consumer 31% 64% Wealth 62% Based on normalised gross revenue Mass segment comprises FNB Mass and WesBank Loans Consumer segment comprises FNB Consumer and WesBank Retail

33 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 32 Diversity of profit streams in mass segment PBT (R million) Lending interest Bad debts R million Dec 1 Dec 9 Change Segment PBT % Deposit-taking interest Non-interest revenue Insurance Expenses Mass segment comprises FNB Mass and WesBank Loans 6m to Dec 9 6m to Dec 1 Bad debt improvement driving turnaround in consumer segment PBT (R million) 4 R million Dec 1 Dec 9 Change Segment PBT % Lending interest Bad debts Deposit-taking interest Non-interest revenue Insurance Expenses 6m to Dec 9 Consumer segment comprises FNB Consumer and WesBank Retail 6m to Dec 1

34 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 33 Operating review Sizwe Nxasana Results reflect resilience of FNB s franchise Profit before tax * R million % ROE * = 35% Characterised by: + Improving bad debts contributed to performance + Customers up 3% since Dec 9 + Transactional volumes still growing, but mix changing + Good growth in retail deposits + Improved quality of new business and credit repricing Negative endowment effect, particularly in Commercial 5 Deterioration in cost to income ratio * FNB South Africa Subdued performance from Dec '8 Dec '9 Dec '1 Corporate

35 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 34 Good growth across diversified portfolio Profit before tax R million Mass Consumer Wealth Commercial Corporate FNB Africa Dec '9 Dec '1 Stabilising trend in FNB HomeLoans Profit before tax * 6m to 6m to 6m to 6m to 6m to R million Dec 8 Jun 9 Dec 9 Jun 1 Dec 1 FNB HomeLoans (977) (777) (285) (33) (96) * Endowment earnings on capital reported in Corporate Centre and excluded from business units results Year-on-year improvement of R19 million mainly attributed to: Improved bad debts Decreasing NPLs Increased NIR Improving margins Rolling 6 months performance reflects increase in bad debt charge as a result of: Aggressive approach to NPL reduction resulting in higher write-offs Increase in implied LGD

36 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 35 FNB Card benefits from transaction strategy and improving bad debts Profit before tax* R million 6m to Dec 8 6m to Jun 9 6m to Dec 9 6m to Jun 1 6m to Dec 1 FNB Card 38 (146) * Endowment earnings on capital reported in Corporate Centre and excluded from business units results Year-on-year improvement of R271 million mainly attributed to: Improved post write-off recoveries Lower arrears and non performing loans Turnover growth of 9% and NIR growing despite account attrition due to bad debts HY1 29 HY2 29 HY1 21 HY2 21 HY HY1 29 HY2 29 HY1 21 HY2 21 HY Rand value of NPL (R'm) Impairment charge (R'm) Turnover per active account NIR per active account Strong volume growth, but NIR reflects migration to electronic channels Transaction volumes (millions) 7 17% 6 2% CAGR: 31% CAGR: 2% - Dec '8 (6 months) Dec '9 (6 months) Dec '1 (6 months) * Manual Transactions Cash, Cheques ** Electronic Transactions Online, Card, Mobile, etc. Electronic Transactions** Manual Transactions*

37 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 36 Cost management focus whilst investing for growth Benefited from lower cost base resulting from below-inflation growth over the past two years Core cost increase at 7%, now closer to inflation despite absorbing above-inflation salary increases Total cost increase 11% Significant investment in EasyPlan, cellphone banking and infrastructure Substantial increases in cash conveyance cost, significantly impacting corporate and commercial business Process and system efficiencies still a focus Excellent performance from FNB Africa despite continued investment spend Profit before tax R million Characterised by: ROE* = 25% + Good performances from 8 Namibia, Botswana and 7 24% Swaziland Ongoing investment in Zambia and Mozambique subsidiaries + Overall success of credit strategies + Awaiting in-country regulatory approval for Tanzania Dec '8 Dec '9 Dec '1 * ROE for FNB Africa (excludes RMB Africa)

38 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 37 Progress on strategy Executing growth strategies in: Mass (EasyPlan roll-out, ewallet, cellphone banking) Wealth (BJM acquisition finalised) integration commencing Commercial instant accounting and commercial property finance Continued investment in South African infrastructure Branch upgrades and relocation to growth nodes All electronic channels Continued focus on innovative platforms, products, and services e.g. FNB Fuel Rewards Programme and Krugerrands Expanding operating platform in Africa Quality of RMB franchise delivers in subdued corporate market Profit before tax R million ROE = 25% 48% Characterised by: + All units exceeding prior year except Private Equity + Positive balance sheet growth + Strong in advisory and capital markets + Improved trading performance Client flows subdued 5 Dec '8 Dec '9 Dec '1

39 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 38 Good performance across portfolio Profit before tax R million ( 34) ( 44) - 6 Investment Banking FICC Private Equity Equity Trading Other Dec '9 Dec '1 Excellent performance from IBD, FICC grew profits in tough market Investment Banking Division +32% Good performance given base and despite slow recovery in corporate activity Significant contributions from advisory, leveraged finance, property financing, DCM and ECM Improved African and Asian corridor deal flow particularly in resources and infrastructure sectors RMB won 6 of 8 awards at annual DealMakers Awards FICC +8% Growth in profits year-on-year Good trading performance despite low market volatility but client flows lacklustre both in SA and Africa

40 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 39 Strong Equity Trading performance, impairments impact Private Equity Equity Trading +96% Trading performance good Agency businesses held up well despite little improvement in volumes Private Equity * (33%) Income from Private Equity investments impacted by impairments Unrealised value of R1.7 billion at Dec 1 (Jun 1: R1.4 billion) No major realisations Legacy Losses minimal * Figures shown are for the RMB Private Equity divisional performance Progress on strategy rebalancing portfolio and improving quality of earnings Dec 9 Dec 1 1% 1% 25% 65% Client activities Investment activities Trading activities 22% 68% * Based on gross revenue (excluding Legacy)

41 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 4 Progress on strategy: Wholesale credit grew above market Advances * R million 1 1% Dec '9 Dec '1 * Wholesale advances excluding repos Wholesale credit growth improved quality Growth in investment grade counters Improved rating distribution Jun 9 Dec 1 12% 11% 26% 62% Investment grade BB B+ and below 24% 66%

42 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 41 Wholesale credit growth improved quality Grew in low volatility industries Jun 9 Dec 1 25% 26% 49% Low volatility Medium volatility High volatility 31% 2% 49% Progress on strategy CIB and corridors gaining traction Corporate and Investment Banking (CIB) coverage Team bedded down and generating opportunities African and Asian corridor strategies gaining traction RMB skills deployed to build investment banking on FNB s existing platforms Indian platform delivering good pipeline and profitable niches Increased deal activity in the corridors

43 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 42 Strong earnings recovery continues at WesBank Normalised profit before tax* R millions 1 2 ROE = 22% Characterised by: + Continued bad debt charge unwind 1 >1% + Improved interest margins across all portfolios + Excellent personal loans performance 8 p Dec '6 Dec '7 Dec '8 Dec '9 Dec '1 * Excludes loss on the sale of Motor One and goodwill impairments + Good cost management + Strong performance from Carlyle + Non-recurrence of losses in certain non-lending operations Pressure on time-to-recovery and recovery values Asset growth gathering momentum Overall new business production up 27% year-on-year Retail new business production up 32% year-on-year Corporate new business production up 8% year-on-year Local advances increased 4% year on year, due to run-off R million R million Advances Motor new business (RHS) Corporate new business (RHS)

44 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 43 Provisions the unwind gathers pace Retail arrears and repossessions reducing at good pace Corporate failures down and arrears on the road to recovery Continued but gradual unwind of bad debts expected Pressure on recovery values and time to recover R million 9 Motor 3.5% R million 9 Corporate 3.5% % 3.% 2.5% 2.% 1.5% 1.%.5% % 3.% 2.5% 2.% 1.5% 1.%.5%.%.% % 6-monthly bad debt charge Bad debt ratio 6-monthly bad debt charge Bad debt ratio Progress on strategy Executing on growth strategies in segments where under-represented Fleet management and full maintenance rental Asset finance in large corporate sector Additional alliances Working with FNB Africa to further grow asset finance capability

45 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 44 Strategy and prospects Sizwe Nxasana Top-line pressure will remain in the second half due to macros Macro GDP growth remains subdued Interest rates remain unchanged Credit costs Subdued asset growth Limited endowment impact Positive impact will reduce

46 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 45 Strategic plans on track South Africa Strategies in domestic growth segments should deliver modest growth above nominal GDP Strategic investment in SA and Africa will place pressure on cost to income ratio Continue to focus on efficiencies Base in second half of FY1 Africa and corridors Nigeria i rep office established and still pursuing potential ti acquisition opportunities Zambia looking for opportunities to scale-up pplatform Tanzania only awaiting in-country regulatory approval Angola rep office established India and China providing deal flow for RMB in SA and Africa Appendix

47 FIRSTRAND INTERIM RESULTS PRESENTATION 1/11 46 Recon: normalised pro forma income statement Normalised (R million) Dec 1 normalised per circular Headline earnings adjustments Dec 1 normalised Net interest income before impairment of advances Impairment losses on loans and advances (2 84) (2 84) Net interest income after impairment of advances Non-interest revenue (178) Income from operations 21 9 (178) Operating expenses 2 (13 19) 31 (13 78) Income before tax 7 9 (147) Indirect tax ( 385) ( 385) Profit before tax (147) 7368 Direct tax (2 8) (12) (2 92) Headline adjustments (159) 159 NCNR prefs (16) ( 16) Minorities (364) ( 364) FirstRand pro forma normalised earnings NIR is adjusted for private equity subsidiaries costs, and includes share of profit of associates and joint ventures. 2 Operating expenses exclude costs from private equity subsidiaries. The majority of headline earnings adjustments relate to a gain on available-for-sale assets and impairment of goodwill (refer page 13 of Circular to shareholders) Recon: normalised pro forma income statement Normalised (R million) Dec 9 normalised per circular Headline earnings adjustments Dec 9 normalised Net interest income before impairment of advances Impairment losses on loans and advances (3 225) (3 225) Net interest income after impairment of advances Non-interest revenue (136) Income from operations (136) Operating expenses 2 (11 897) 78 (11 819) Income before tax (58) Indirect tax ( 236) ( 236) Profit before tax (58) 6 11 Direct tax (1 68) 25 (1 655) Headline adjustments (33) 33 NCNR prefs (19) ( 19) Minorities (31) ( 31) FirstRand pro forma normalised earnings NIR is adjusted for private equity subsidiaries costs, and includes share of profit of associates and joint ventures. 2 Operating expenses exclude costs from private equity subsidiaries. The majority of headline earnings adjustments relate to a gain on available-for-sale assets and impairment of goodwill (refer page 13 of Circular to shareholders)