19 September 2016 INTRODUCTION Christopher Gilmour WELCOME Roy - PowerPoint PPT Presentation

19 September 2016

INTRODUCTION Christopher Gilmour WELCOME Roy Andersen ECONOMIC AND BUSINESS ENVIRONMENT Tyrone Soondarjee GROUP REVIEW Tyrone Soondarjee TREASURY Tyrone Soondarjee BUSINESS BANKING Linda Fröhlich TRANSACTIONAL BANKING Michael Sassoon WEALTH Michael Sassoon CAPITAL Michael Sassoon COMMERCIAL SOLUTIONS David Edwards STRATEGY Roland Sassoon QUESTIONS 2

Christopher Gilmour Chairman – Investment Analysts Society

Roy Andersen Chair

Tyrone Soondarjee

GLOBAL • China’s industrial growth has slowed, resulting in a rapid fall in commodity prices • Europe and Japan have stepped up monetary stimulus • The USA deferred further interest rate increases to maintain growth SOUTH AFRICA • A significant commodity producer with a wide wealth gap • Chronic unemployment and a high level of consumer indebtedness • Negatively affected by the weak global economy and declining commodity prices • Political uncertainty continues to result in increased market volatility • Banking industry – under pressure from the weak economy, escalating regulation, technological disruption and cybercrime SASFIN • Improved credit rating (Global Credit Rating) up two notches to A1-(ZA) • Fintech acquisition being bedded down well • Capital division showed a positive turnaround 6

Tyrone Soondarjee

• Headline earnings and Headline earnings per share increase of 29.0% • Total assets grew marginally to R11.004 billion from R10.866 billion in 2015 • Loans and advances to customers grew by 20.6% to R6.449 billion (2015: R5.345 billion) • Expanded and diversified its funding base • Surplus liquidity position of R1.910 billion, lower than the R2.618 billion in 2015 • Total income growth of 25.1% driven by impressive revenue generation in the Business Banking and Wealth divisions • The weak credit environment and sluggish economy led to the credit loss ratio increasing to 108 bps (2015: 77 bps) • Group costs increased by 19.8% to R828.316 million (2015: R691.352 million) › inclusion of the Fintech cost base › increased investment in Risk, Compliance and Information Technology • Cost-to-income ratio improved to 68.89% from 71.07% in 2015 • JAWS ratio of 3.79% (2015: 1.11%) 8

2016 2015 Growth Headline earnings per share (cents) 731.27 566.74 29.0% ▲ Headline earnings (Rm) 232.080 179.864 29.0% ▲ Dividends per ordinary share (cents) 287.39 222.73 29.0% ▲ Total assets (Rbn) 11.004 10.866 1.3% ▲ Gross loans and advances (Rbn) 6.449 5.345 20.7% ▲ Total funding base (Rbn) * 7.303 6.892 6.0% ▲ Deposits (Rbn) 3.207 3.276 -2.1% ▼ Total equity (Rbn) * 1.404 1.243 12.9% ▲ Funds under advisement and management (Rbn) 108 117 -7.7% ▼ Credit loss ratio (bps) 108 77 31 bps ▲ Group Cost-to-income ratio (%) 68.89 71.07 ▼ 218 bps Return on average shareholders equity (%) 17.54 15.21 ▲ 233 bps Return on average assets (%) 2.12 1.89 23 bps ▲ Group capital adequacy (%) (unaudited) 19.20 20.86 ▼ 166 bps * Preference shares are included as part of the Total funding base 9

30 June 2016 30 June 2015 R’000 R’000 Growth Cash and short-term negotiable securities 1 910 584 2 618 366 ▼ -27.0% Loans and advances to customers 6 254 891 5 242 460 19.3% ▲ Financial assets held for trade facilitation and repurchase agreements ▼ -32.0% 1 147 227 1 687 221 Investment securities 586 359 435 007 34.8% ▲ Other receivables 772 209 688 057 Investment property, Property, plant and equipment, Taxation, Intangible assets and 332 790 195 001 goodwill TOTAL 11 004 060 10 866 112 10

30 June 2016 30 June 2015 R’000 R’000 Growth Funding under repurchase agreements and interbank 85.6% 999 184 538 340 ▲ Deposits from customers 3 206 527 3 275 866 Debt securities issues 2 470 428 2 344 167 Long-term loans 433 889 538 071 TOTAL FUNDING 7 110 028 6 696 444 6.2% ▲ Financial liabilities held for trade facilitation and repurchase agreements ▼ -31.4% 1 131 942 1 650 789 Other payables 1 023 354 975 204 Taxation 142 187 105 484 TOTAL LIABILITIES 9 407 511 9 427 921 Ordinary share capital and reserves 1 403 680 1 242 741 12.9% ▲ Preference share capital 192 869 195 450 TOTAL LIABILITIES AND EQUITY 11 004 060 10 866 112 11

30 June 2016 30 June 2015 R’000 R’000 Growth NET INTEREST INCOME 406 486 292 613 38.9% ▲ Non-interest income 790 357 664 021 19.0% ▲ TOTAL INCOME 1 196 843 956 634 25.1% ▲ Impairment charges on loans and advances 63 912 32 771 95.0% ▲ NET INCOME AFTER IMPAIRMENTS 1 132 931 923 863 Operating costs 828 316 691 352 19.8% ▲ Staff costs 434 339 382 115 13.7% ▲ Other operating expenses 380 888 308 045 23.6% ▲ Goodwill and intangible impairments 13 089 1 192 PROFIT FROM OPERATIONS 304 615 232 511 31.0% ▲ Share of associate income 2 383 2500 Income tax expense 68 210 42 037 62.3% ▲ PROFIT FOR THE YEAR 238 788 192 974 23.7% ▲ Preference dividends 14 369 14 272 Headline adjustable items 7 661 1 162 HEADLINE EARNINGS 232 080 179 864 29.0% ▲ 12

300 000 20 17.54 250 000 232 080 15.21 14.00 14.00 15 200 000 179 864 12.00 154 325 R’000 135 455 150 000 10 % 110 941 125 943 100 000 99 623 83 969 71 511 5 58 485 50 000 52 456 63 944 70 356 80 241 106 137 0 0 2012 2013 2014 2015 2016 H1 H2 Return on equity 13

80 72.00 72.00 72.00 71.07 68.89 70 64.00 % 62.43 62.00 62.00 61.18 60 50 2012 2013 2014 2015 2016 Group Banking Group 14

9 000 3.5 3.30 3.10 3.00 3.0 2.40 2.5 2.20 6 000 2.0 R ’Million % 1.5 1.08 3 000 1.0 0.80 0.77 0.70 0.60 0.5 2 931 3 416 3 981 5 345 6 449 0 0.0 2012 2013 2014 2015 2016 Gross loans and advances Group credit loss ratio Provisions:advances 15

8 000 7 303 6 892 6 000 5 381 4 421 R ’Million 3 207 3 961 4 000 3 276 2 707 2 161 1 787 2 000 2 470 2 345 1 574 434 1 379 1 298 538 652 539 538 999 538 0 2012 2013 2014 2015 2016 Preference shares (2016: R193m) Funding under repurchase and interbank Long-term funding Debt securities Deposits 16

2016 R’000 2015 R’000 164 200 6 559 117 857 76 406 10 390 20 344 64 425 24 865 12 691 23 106 (60 294) (48 605) 232 080 179 864 Business Banking Transactional Banking and Treasury Wealth Capital Commercial Solutions Group 17

9 35 8 30 26.47 25.60 7 23.71 25 6 20.86 19.20 20 5 R’Billion % 4 15 12.375 12.00 12.00 11.50 11.50 3 10 2 5 1 3.70 4.47 5.31 6.44 7.63 0 0 2012 2013 2014 2015 2016* Risk weighted assets Capital adequacy Regulatory capital * 2016 Provisional and unaudited 18

Tyrone Soondarjee

14 000 • Strong performance 12 249 • Deposit base of: 12 000 10 390 › Group  R3.207 billion 10 006 10 000 › Bank Solo  R3.708 billion 2 504 8 000 • Improved returns on R’000 6 559 5 621 surplus liquidity 5 856 6 000 • Active in repo trading 2 526 market 4 000 8 211 2 000 5 182 1 795 6 628 7 886 4 033 674 0 2012 2013 2014 2015 2016 H1 H2 20

4 000 3 708 3 500 3 328 3 276 3 000 3 207 2 750 2 500 2 707 2 181 R ’Million 2 000 1 830 1 873 2 161 1 827 1 787 1 355 1 500 1 065 1 000 1 283 500 547 1 116 1 395 1 501 1 835 0 2012 2013 2014 2015 2016 Term - Bank Solo Call - Bank Solo Group 21

• Attract wholesale term depositors following improved rating with competitive rates • Increase yield on surplus cash • Drive operational efficiencies • Enhance client value propositions together with Transactional Banking • Raise new longer-term funding • Maintain LCR and NSFR ratios in excess of regulatory minimums 22

Linda Fröhlich

180 000 • Integration benefits arising 156 294 from Fintech acquisition 150 000 • Strong revenue growth of 41.06% driven by a 117 857 19.3% growth in loans and 120 000 advances 101 491 • Offset by a sharp increase 90 561 89 844 R’000 70 051 90 000 in divisional credit loss ratio to 101 bps (2015: 70 bps) 60 000 41 732 70 207 54 189 • Weaker performance in the 48 015 second half of the year due 30 000 to increased impairments • Positive growth in Capital 42 546 48 112 47 302 47 650 86 243 Equipment Finance 0 2012 2013 2014 2015 2016 • Trade and Debtor Finance performed well H1 H2 • Now the leading office automation financier 24

8 000 6 220 6 000 5 215 R ’Million 3 732 4 000 3 212 2 742 4 035 2 000 3 711 1 194 2 534 2 317 813 2 104 749 775 613 459 628 445 282 179 0 2012 2013 2014 2015 2016 Taxi (2016: R216m) Capital Equipment Trade and Debtor Equipment Finance 25

• Monitor credit performance closely • Bespoke solutions with a high personal touch • Focus on technology to enhance customer and supplier experience • Grow Capital Equipment Finance • Complete integration of Fintech • Explore acquisition opportunities 26

Michael Sassoon