BEYOND THE EUPHORIA: Growing shareholder value despite challenging macros

BEYOND THE EUPHORIA: Growing shareholder value despite challenging macros Alan Pullinger, CEO: FirstRand UBS conference, Cape Town 18 October 2018

Group strategic framework FirstRand aims to create long-term franchise value, ensure sustainable and superior returns for shareholders within acceptable levels of volatility and maintain balance sheet strength DELIVERED THROUGH CURRENT STRATEGIES: Protect and grow banking businesses Broaden financial services offering Increase diversification activity and geography Portfolio approach to the rest of Africa Build a sustainable UK business SOUTH AFRICA REST OF AFRICA UK Build a truly integrated financial services business Better leverage existing portfolio Integrate, scale and grow Underpinned by disciplined management of financial resources (FRM) Enabled by disruptive digital and data platforms

Protecting and growing SA banking businesses has delivered outperformance and shareholder value Grew and retained customers across all segments Advances and deposit growth in retail and commercial driven by cross-sell and up-sell E-migration underpinned sustainability of transactional franchise and delivered rich data Targeted origination strategies across all portfolios delivered good risk-adjusted margins Continued disciplined allocation of financial resources Rewards programme supported customer value proposition

Strategy has played out in structurally higher ROA % 8 7 6 5 4 3 2 1 0 (1) (2) (3) (4) (5) 3.50 3.41 3.30 3.32 3.25 3.05 2.06 2.12 2.07 2.07 2.03 1.92 3.69 3.85 3.96 3.94 3.89 3.73 (3.67) (3.66) (3.71) (3.70) (3.65) (3.47) (0.61) (0.58) (0.65) (0.68) (0.66) (0.62) 2014 2015 2016 2017 2018 excl. ALD 2018 incl. ALD NIR as % of assets NII as % of assets Operating expenses as % of assets Impairments as % of assets ROA % 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.

and enabled the group to deliver above-system growth Growth in NAV + DPS Index, 2015 = 100 140 135 130 125 120 FirstRand 10.0% CAGR Nominal GDP 6.7% CAGR 115 110 105 100 95 2015 2016 2017 2018

Integrated financial services is not bancassurance BANCASSURANCE MODEL INTEGRATED MODEL Partnership or one owns the other SUPPLY OF MONEY (LIABILITIES) BANK INSURANCE COMPANY INSURANCE BANKING ASSET MANAGEMENT OTHER Insurance company uses bank s sales channel INTEGRATED FRM Bank s sales channels Insurance company s sales channels VAF MORTGAGES CORPORATE/CIB UNSECURED DEMAND FOR MONEY (ASSETS) OTHER

What does an integrated model look like? CUSTOMERS (retail, commercial, corporate and institutional)

What does an integrated model look like? CUSTOMERS (retail, commercial, corporate and institutional) Identify CUSTOMER NEEDS/understand CONTEXT

Understanding customer context WEALTH Short-term insurance (protect assets), life insurance (protect family) Structure financial affairs for continuity Retire comfortably Save for retirement Ensure family welfare Save for children s education Buy a house (mortgage) Buy a car Student loan Student/early career Building wealth (asset accumulation) Preserving wealth (asset protection/distribution) LIFE STAGES

What does an integrated model look like? CUSTOMERS (retail, commercial, corporate and institutional) Identify CUSTOMER NEEDS/understand CONTEXT Capture full customer value chain through integrated ecosystem Provide PRODUCTS AND SERVICES to meet customer needs (transact, lend, insure, save and invest) Delivered through appropriate CHANNELS (banking app, ATMs, branches, mobile, online, dealer network, direct marketing, advice, etc.) Using appropriate BRANDS DATA (storage and analytics) PEOPLE OPERATING PLATFORMS (IT systems, risk management, governance)

What does an integrated model look like? CUSTOMERS (retail, commercial, corporate and institutional) Identify CUSTOMER NEEDS/understand CONTEXT Capture full customer value chain through integrated ecosystem Provide PRODUCTS AND SERVICES to meet customer needs (transact, lend, insure, save and invest) Delivered through appropriate CHANNELS (banking app, ATMs, branches, mobile, online, dealer network, direct marketing, advice, etc.) Using appropriate BRANDS INTEGRATED FINANCIAL RESOURCE MANAGEMENT Funding and liquidity, capital, risk appetite Utilise most efficient platforms (i.e. banking, short-term insurance, life insurance or asset management licences) DATA (storage and analytics) PEOPLE OPERATING PLATFORMS (IT systems, risk management, governance)

Our right to compete in the save, invest and insure space Banking businesses provide deep and loyal customer bases, distribution, product capabilities, data and platforms

Significant opportunity in our customer base Monthly insurance debit order flows from FNB customers (life and short-term insurance) Sep 17 Oct 17 Nov 17 Dec 17 Jan 18 Feb 18 Mar 18 Apr 18 May 18 Jun 18 Jul 18 Aug 18 Sep 18 FNB share of insurance premium flows Debit order premiums to other insurers

Our right to compete in the save, invest and insure space Banking businesses provide deep and loyal customer bases, distribution, product capabilities, data and platforms Group customers are already buying investment and insurance products from insurance providers (including us) Use data analytics to offer product to customer when required Offer better products at better price

E-migration strategy enables integrated financial services through rich data and low-cost distribution Success of FNB s strategy to migrate customers from physical to digital Digital 32% 29% Physical 2009 2018 68% Physical 71% Digital results in rich transactional data Collected and stored digitally Data analytics Understand and anticipate client needs = CONTEXT targeted value proposition (e.g. Big 3) through existing channels (low distribution cost)

Insurance industry survey shows FNB Life is scaling fast #1 in growth in new business in 2017 Change in market share by sum insured 5% 0% -5% -10% Overall growth (all lines of business) 2.2% Growth in mortality classes 2.9% 4.2% All Risk Credit Assitance Funeral 3.5% #1 Digital direct market share #1 Banks market share #1 Growth in overall market share #1 Growth in mortality market share for risk products, credit and funeral -15% FNB Life Other participants Source: Swiss Re Individual Risk Market New Business Volume Survey 2018. Market share and change in market share are by sum assured for the 2017 calendar year.

Save and invest strong growth in deposit franchise and good traction in AUM Index June 2012 = 100 Assets under management * R billion 175 165 155 FirstRand s domestic deposit franchise Outperformance >R100 billion over 6 years 120 100 145 135 125 M3 money supply 80 60 40 29 37 43 46 52 115 105 20 31 35 44 48 50 95 Jun 12 Jun 13 Jun 14 Jun 15 Jun 16 Jun 17 Jun 18 0 2014 2015 2016 2017 2018 Traditional AUM Alternative AUM

SA strategy will drive outperformance and deliver sustainable shareholder value Banking businesses already outperforming system growth Targeted origination strategies and liability focus provide underpin to superior risk-adjusted margin and momentum to NII Focus on core transactional relationship, e-migration and customer acquisition driving NIR Enabling integrated financial services customer bases, distribution, product capabilities, data, platforms Integrated financial services underpins sustainable outperformance Further entrenches customer relationships Targeted offerings on the back of data analytics will drive better take-up and higher cross-sell Digital channels will result in low distribution costs for all products Efficiencies Insurance and investment revenue streams will provide further diversification of NIR and sustain superior ROE Ongoing disciplined financial resource management remains key to execution and value creation