2010 2010 Debt investor presentation London, 26 March 2010 , 2 - PowerPoint PPT Presentation

29 Corporate SA tentatively optimistic Investment Employment % q/q saa Index 20 10.0 60 Private sector GDP PMI: Employment p y investment i t t growth th 15 7.5 spending (Lhs) (Rhs) 55 10 5.0 5 2.5 50 0 0.0 45 45 -5 5 -2.5 2 5 -10 -5.0 40 -15 -7.5 35 -20 -10.0 00 01 02 03 04 05 06 07 08 09 03 03 04 04 05 05 06 06 07 07 08 08 09 09 10 10 Sources: SARB, FirstRand Source: SARB Corporate credit growth Business confidence % y/y % y/y Credit extension to Credit extension to Inde Index Business 40 corporates 100 confidence 35 30 80 25 20 60 15 10 40 Business 5 cycle 0 20 downswings -5 0 0 -10 10 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 Sources: INet Bridge, SARB, FirstRand Sources: SARB, FirstRand

30 Advances growth to lag economic activity Private sector credit Private sector credit / GDP % y/y Ratio 30 Credit growth 85 85 25 20 75 15 65 10 10 5 Nom GDP growth 55 0 45 -5 82 86 90 94 98 02 06 10 82 82 85 85 88 88 91 91 94 94 97 97 00 00 03 03 06 06 09 09 12 12 Sources: SARB, FirstRand Source: SARB, FirstRand

31 SA government debt servicing cost still manageable still manageable % % 20 20 45 45 17 36 36 Gov debt/GDP (rhs) Gov debt/GDP (rhs) 14 27 Gov debt servicing 11 18 cost/expenditure cost/expenditure (lhs) 8 9 5 0 2002/03 2002/03 2004/05 2004/05 2006/07 2006/07 2008/09 2008/09 2010/11 2010/11 2012/13 2012/13 Sources: National Treasury, FirstRand

32 SA fiscal stimulus to counter recession % of total expenditure % GDP Fiscal balance Fi l b l 10 -8 (rhs) 9 -7 8 8 -6 6 7 -5 Govt investment spending (lhs) 6 6 -4 4 5 -3 4 -2 3 -1 2 0 1 1 0 2 2002/03 2002/03 2004/05 2004/05 2006/07 2006/07 2008/09 2008/09 2010/11 2010/11 2012/13 2012/13 Sources: National Treasury, FirstRand

33 Appendix pp

34 South Africa fact sheet Population (millions) 49.1 Labour force (millions) Labour force (millions) 17 1 17.1 Employed (millions) 13.8 Unemployment rate 24.3% N Nominal GDP (ZAR billions) i l GDP (ZAR billi ) 2 431 2,431 Nominal GDP (USD billions) 324 GDP per capita (ZAR) 36 951 GDP per capita (USD) 4 926 Budget deficit 7.3% Government debt to GDP ratio 28.2% External government debt to GDP ratio 3.8% External bank debt to GDP ratio 3.2% Foreign exchange reserves (USD billions) Foreign exchange reserves (USD billions) 32 3 32.3 Current account deficit (% GDP) 3.2% Inflation 6.2% Sovereign debt rating BBB+ (S&P); BBB+ (Fitch); A3 (Moodys)

35 SA GDP fact sheet GDP growth (y/y) -1.4% GDP growth (q/q annualised) GDP growth (q/q annualised) 3 2% 3.2% Nominal GDP growth (y/y) 6.9% Nominal GDP growth (q/q annualised) 2.4% Savings (% GDP) 17% Investment (% GDP) 25% Consumption (% GDP) Consumption (% GDP) 62% 62% Government spending to GDP ratio 21% Remuneration to employees (% GDP) 47% Gross operating surplus (% GDP) 42% Mining (% GDP) 9% Manufacturing (% GDP) Manufacturing (% GDP) 14% 14% Construction (% GDP) 3% Wholesale and retail trade (% GDP) 13% Finance and real estate (% GDP) 19%

36 Financial market summary 2yr – 10yr rates Rand & NEER ZAR/$ Index Index, Jan07 = 100 % 10-year government 16 200 13 Nominal effective bond yield bond yield exchange rate (lhs) ZAR/$ 160 11 14 (rhs) 120 9 12 80 80 7 7 10 40 5 8 0 3 6 94 96 98 00 02 04 06 08 10 00 00 01 01 02 02 03 03 04 04 04 04 05 05 06 06 07 07 08 08 09 09 Source: Bloomberg, Sources: Bloomberg, FirstRand Sovereign spread Equity market I d Index Spread (bps) S d (b ) 35 000 700 JSE All Share 600 30 000 500 25 000 400 400 20 000 300 15 000 SA sovereign spread 200 10 000 100 5 000 0 00 01 02 03 04 04 05 06 07 08 09 03 04 05 06 07 08 09 Sources: Bloomberg, FirstRand Sources: Bloomberg, FirstRand

Overview of FirstRand: Structure, results & strategy Johan Burger g

38 Current structure Listed entity (FirstRand Limited, JSE: FSR) 100% 100% 100% 100% 100% 100% FirstRand Investment FirstRand Bank Momentum Holdings Limited Holdings Limited Group Limited Unregulated Banking Insurance & asset management 100% FirstRand International Ltd FirstRand Bank Limited FNB Africa 100% 100% 100% 100% 100% 100% Investment banking division Commercial banking division Instalment finance division

39 Proposed structure Consolidated supervision Bank controlling company, listed entity (FirstRand Limited, JSE: FSR) FirstRand FirstRand FirstRand Momentum Bank Bank Africa Africa Other Other Group Group FNB Botswana Non-banking activities: Insurance & FNB Namibia FNB Namibia - FR International FR I t ti l asset management t t FNB Swaziland - OUTsurance FNB Lesotho - Other FNB Mozambique FNB Zambia FNB Zambia

40 Financial review Johan Burger g

41 Macro remains challenging • Weak GDP growth • Continuing job losses • Lower interest rates • High levels of consumer leverage, but some de-risking taking place • Corporate sector cautious about recovery • Recovery in equity markets

42 High-level impact on performance – Negative balance sheet growth – Lower growth in transaction volumes – Negative endowment effect + Reduction in retail bad debts + Level of losses from legacy portfolios reducing + Increase in fees earned on investment business

43 Despite challenges, profitability improving Normalised earnings* R millions 6 000 6 000 5 990 ROE = 17% 5 953 5 319 5 000 1% 4 605 4 576 4 445 4 000 79% 3 000 2 575 2 575 2 000 1 000 0 Dec '06 Jun '07 Dec '07 Jun '08 Dec '08 Jun '09 Dec '09 * December 2006 to December 2007 normalised earnings exclude contributions from Discovery

44 Franchises show mixed performance year on year but trend positive year-on-year, but trend positive 6 months 6 months Change 6 months Change Profit before tax t to Dec ’09 D ’09 to Jun ’09 t J ’09 (6 (6m/6m) /6 ) to Dec ’08 t D ’08 (y/y) ( / ) R millions R illi   FNB 2 895 2 185 32% 2 875 1%     FNB Africa FNB Africa 643 643 564 564 14% 14% 658 658 (2%) (2%)   RMB 1 403 151 >100% 1 904 (26%)     WesBank WesBank* 470 470 244 244 93% 93% 168 168 >100% >100%   OUTsurance 216 213 1% 227 (5%)     Momentum** Momentum 850 850 909 909 (6%) (6%) 740 740 15% 15% * Normalised profit before tax (i.e. excl. loss on sale of Motor One and goodwill impairments) ** Figures shown for Momentum are normalised earnings (not PBT)

45 Earnings diversification B f By franchise hi B By segment t 17% 17% 37% 7% 46% 23% 23% 23% 7% FNB Retail Retail FNB Africa Corporate RMB Investment banking WesBank WesBank Insurance Momentum

46 Banking Group key financial ratios Dec ’09 Dec ’08 Change  Normalised earnings (R millions) 4 038 4 149 (3%)   Return on equity (%) Return on equity (%) 17 17 18 18  Return on assets (%) 1.26 1.23  Credit loss ratio (%) 1.51 1.64   Cost to income ratio Cost to income ratio – normalised (%) normalised (%) 55.5 55 5 52 9 52.9  Tier 1 capital ratio* (%) 12.7 11.3  Interest margin – normalised (%) 5.02 5.17   Advances (R billions) Advances** (R billions) 458 458 442 442 4% 4% * Ratio calculated for FRBH including unappropriated profits

47 Diversification ratios (interest vs non-interest) (interest vs non-interest) Current Current Current adjusted for endowment Current adjusted for endowment Interest 40% 48% Non-interest 60% 52% NIR composition Current Client activities 90% Investment/risk (secondary markets) 10% Composition of NIR from client activities Current Transactional income (commercial and retail banking) 70% Interest spread on corporate lending activities in RMB (fair value accounted) 12%

48 Net interest income

49 Bad debt unwind drives recovery in retail NII after impairments NII after impairments Net interest income after bad debts Dec ’09 Dec 09 Dec ’08 Dec 08 Change Change R millions Bad de  (80%) HomeLoans (138) (705) ebt decrease  >100% WesBank 779 109  (>100%) Card 92 (18)  1% 745 FNB Africa 736 Endowme  (16%) Other consumer banking 853 1 013 ent  (43%) Mass 262 458 Advan grow  4% Wealth* 313 302 wth ces  (>100%) FNB other and support (80) 24  47%  47% 2 826 2 826 Retail net interest income after bad debts Retail net interest income after bad debts 1 919 1 919 * Wealth NII driven by advances growth after increase in bad debts

50 Corporate and commercial net interest income reflects endowment income reflects endowment Net interest income after bad debts Dec ’09 Dec ‘08 Change R millions End dowment  (32%) FNB Commercial 1 191 1 761  48% FNB Corporate 313 212 de B ecrease ad debt  (>100%) RMB 5 (113) Ba in ad debt crease  (87%) WesBank 42 332  (29%) Corporate net interest income after bad debts* p 1 551 2 192 ( ) * Excluding Corporate Centre

51 Margin hit by endowment, but partly offset by asset pricing offset by asset pricing Percentage of average interest-earning banking assets % 5 17 5.17 D Dec ’08 normalised ’08 li d Asset price movement 0.50 Capital and deposit endowment effect Capital and deposit endowment effect (0 91) (0.91) Retail deposit pricing (0.04) Wholesale liquidity pricing Wholesale liquidity pricing (0 05) (0.05) BSM hedges 0.35 Dec ’09 normalised 5.02

52 Bad debts

53 Bad debts have peaked, but NPLs sticky 6.0 2.0 5 6 5.6 1 8 1.8 1.8 5.4 5.0 1.6 1.4 1.5 1.4 4.0 4.2 1.3 1.2 1.3 1.1 1.0 3.4 3.0 1.0 Long-run expected loss: 0.9 2.9 2.8 0.8 0.8 2.6 0.8 2.3 0.5 0.5 2.0 2 0 0.4 0.6 0.3 1.5 1.5 0.4 1.0 1.2 1.1 0.2 0.0 0.0 Jun '99 Jun '00 Jun '01 Jun '02 Jun '03 Jun '04 Jun '05 Jun '06 Jun '07 Jun '08 Jun '09 Dec '09 NPLs (%) Impairment charge (%) Long-run expected loss

54 Retail NPL flows decline Retail NPL quarterly flows R millions 4 000 3 000 2 000 1 000 0 -1 000 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

55 All retail lending books improving and corporate more robust than expected corporate more robust than expected Bad debts 6 months 6 months 6 months to Dec ’09 to Jun ’09 to Dec ’08 Percentage of average advances Retail 2.08 2.97 2.63 - Residential mortgages g g 1.17 1.77 1.48 - Credit card 8.14 12.51 9.77 2.54 - Vehicle and asset finance (SA) 2.12 2.96 Wholesale* 0.71 0.90 0.67 Total bad debt ratio 1.51 1.99 1.64 * Includes WesBank Business and Corporate

56 HomeLoans’ new credit origination strategies improving quality of business written improving quality of business written HomeLoans vintage analysis H L i t l i 15% 10% 5% 5% 0% 200606 200609 200612 200703 200706 200709 200712 200803 200806 200809 200812 200903 200906 200909 3 6 12 months Time since registration:

57 Non interest revenue

58 NIR driven by organic growth and turnaround and turnaround R millions R millions Dec ’09 Dec ’09 Dec ’08 Dec ’08 Change Change  5% Client activities/primary markets 11 493 10 964  7%  7% - Transactional income T ti l i 8 555 8 555 7 964 7 964  9% - Annuity fair value income 1 469 1 343  (3%)  (3%) - Operational associates income - Operational associates income 422 422 434 434  (14%) - Other primary income 1 047 1 223  (>100%) Investment/risk activities/secondary markets y 1 044 (44) ( ) ( )  (>100%) - Fair value risk income 439 (767)  (>100%) - Private equity (4) 1 313  (>100%) - Other investment income* 609 (590)  15% Total normalised non interest revenue ** 12 537 10 920 * Revenue earned on assets held against employee liabilities, the RMB Resources portfolio, and other

59 Reasonable growth in transactional volumes despite tough conditions volumes despite tough conditions Transactional revenue R millions 7% 2009 breakdown by franchise* 7 500 5 000 2 500 FNB FNB FNBAf i FNB Africa RMB RMB W WesBank B k 0 Dec '08 Dec '09 * Excluding Corporate Centre

60 Sustained performance from lending business dampened by lower market activity business dampened by lower market activity Fair value annuity revenue R millions 1 500 9% R millions Dec ’09 Dec ’08 Change  9% Annuity 1 469 1 343  26% - Lending 1 092 868 1 000  (21%) 377 - Client flows 475  (21%)  (21%) Client flows Client flo s 377 377 475 475  (27%) - Forex 209 286 500  (14%) - Debt 128 148 ( )  (2%) - Equity 40 41 0 Dec '08 Dec '09

61 Turnaround in risk income Fair value risk R millions 1 000 R millions Dec ’09 Dec ’08 Change g  (>100%) 439 (767) Risk 500 (>100%)  (>100%) 127 ( (1 101) ) ( ) - Equities q  (76%) 22 91 - Commodities 0  (41%) - Interest rates 226 384  (>100%) - Credit 35 (336)  (85%) - Forex 29 195 - 500 500 -1 000 Dec '08 Dec '09

62 Private equity reflecting current cycle R millions Dec ’09 Dec ’08 Change  (47%) Annuity income 229 431  (>100%) Realisations and impairments p (233) ( ) 882 ( )  (>100%) Total private equity income (4) 1 313 Unrealised profits at R1.5 billion (Dec ’08: R1 billion)

63 Costs

64 Normalised cost growth below inflation R millions 14 000 14 000 (2%) (2%) 12 000 (8%) 1% 11 751 10 543 10 000 10 438 8 000 6 000 4 000 2 000 0 As per Fund liabilities New Revenue Comparable Normalised normalised subsidiaries related cost base cost Dec '08 i income and expansion d i expenses D Dec '09 '09 statement

65 Results in a nutshell

66 Operational performance reflects underlying franchise strength underlying franchise strength Profit before tax R millions 7 000 10% 6 000 6 000 8% 5 955 5 421 5 000 18% (19%) 9% (19%) (19%) 12% 4 000 3 000 FirstRand specific Market 2 000 1 000 1 000 0 Dec 08 Endowment Decrease in Private equity q y Legacy g y Other Organic g Dec 09 bad debts portfolios investment growth income

67 Capital

68 Banking Group’s capital position remains robust remains robust FRBH Tier 1% Total % FRBH capital adequacy (%) 14.34 Capital adequacy ratio 12.19 14.34 12.97 2 15 2.15 Regulatory minimum 7.00 9.50* 1.89 0.9 0.86 Target 10.00 12.00 – 13.50 FRB Tier 1% Total % 11.29 10 22 10.22 Capital adequacy ratio 10.55 12.83 Regulatory minimum Regulatory minimum 7 00 7.00 9 50* 9.50 Dec '09 Dec '08 Target 9.50 11.50 – 13.00 Core Tier 1 Core Tier 1 Tier 1 pref shares Tier 1 pref shares Tier 2 Tier 2 * Excludes bank-specific (Pillar 2b) add-on ** Ratios exclude unappropriated profits of R1.6bn and R1.7bn for FRB and FRBH respectively

69 Banking ROEs continue to recover 30% 20% 10% Jun '04 Jun '05 Jun '06 Jun '07 Jun '08 Jun '09 Dec '09 Return on equity (actual) Return on equity (adjusted for the cycle) Average cost of equity Average ROE through the cycle

70 Johan Burger Strategy g

71 Strategy & growth opportunities • SADC strategies • Rest of Africa strategies

72 FirstRand’s refocused strategy (S (South Africa) th Af i ) • Group’s portfolio already has • Diverse revenue streams • Strong operating franchises • Asset origination and distribution capabilities • Building blocks for access to profit pools in SA financial services • Increase organic growth opportunities that currently exist between franchises • Expand into other profit pools in financial services E d i h fi l i fi i l i

73 Opportunities in retail space • Leverage off FNB’s continued investment in footprint and innovation • Utilising telecommunications and cellphone platforms • Growing electronic customer channels Growing electronic customer channels • Mass segment a key area of growth for FNB • Easy Plan • Continued focus on deposit franchise • • WesBank’s further alliance opportunities WesBank s further alliance opportunities

74 Opportunities in the corporate and i investment banking space b ki • Integrate CIB approach to grow in corporate space • Ali Aligned FNB Corporate with RMB and integrated client coverage team d FNB C t ith RMB d i t t d li t t • Enhanced service offering • Improve our share of revenues across corporate and investment banking activities

75 Strategy & growth opportunities • SADC strategies • Rest of Africa strategies

76 Update on international strategy • Operate in markets that strengthen the Group’s position as a leading African financial services group – key growth markets are: • Nigeria • Staffing Nigeria rep office • Investigating acquisition opportunities g g q pp • Zambia • Tanzania • Awaiting regulatory approval Awaiting regulatory approval • Angola • Received regulatory approval for rep office • Focus on Africa and key African-Asian corridors • CCB co-operation resulted in deal flow • India platform gains traction • Increased focus on leveraging existing African platforms

77 FirstRand rebalancing its portfolio • Retail vs corporate (CIB alignment) • Retail portfolio (mass vs consumer segments) • SADC vs rest of Africa • Client franchises vs secondary market businesses • Asset pools vs savings pools • Bottom-up strategies vs top-down strategies Maintain sound financial position

78 FirstRand growth prospects • • Short term recovery story Short term recovery story • Unwind of the cycle will positively impact earnings to 2011 • Reducing negative impact of legacy portfolios • Medium term • • Subdued GDP recovery expected to put pressure on top line growth Subdued GDP recovery expected to put pressure on top line growth • Continued focus on unlocking synergies and managing costs • Long term • Delivery on domestic and international strategy • • Regulatory changes coming but impact uncertain Regulatory changes coming, but impact uncertain

79 Capital management Samantha Balsdon

80 Providing resources to back the Group’s strategy FirstRand Group Setting the Portfolio strategy Today’s portfolio Ensure Growth, , Identifying trends, opportunities and Id tif i t d t iti d resources are demographic, Business and action plans threats available to technological, provide for the regulatory, etc. strategy Align with Optimise Target portfolio mix growth, return Target performance characteristics portfolio to and volatility provide these targets characteristics Target portfolio

81 Contextualising capital strategy g p gy Earnings Solvency / Tail risk - Residual risks to Capital p earnings earnings Expected scenario Good scenario Severe scenario Cost base Cost base Very severe Catastrophic Outstanding scenario scenario year Revenue Loss Expected earnings Zero profit Zero revenue Loss at 99.9% Earnings Residual Risks Capital  Operating businesses seek to maximise returns within acceptable earnings  Operating businesses seek to maximise returns within acceptable earnings  Capital as buffer against  Capital as buffer against volatility constraints catastrophic outcomes  Earnings act as the first buffer  Group functions manage and mitigate against losses and financial these where economically feasible  “Tail risk to earnings underperformance underperformance Tail risk to earnings resilience/sustainability”

82 Strengthening capital position over time FirstRand Bank Holdings Ltd (R million) 14.6% 14 6% 14 3% 14.3% 13 8% 13.8% 13.6% % 12.8% 55,000 15.0% 50,000 9 816 7 446 10.0% 7 410 45,000 10 222 40,000 5.0% 35,000 0.0% 10 373 30,000 25,000 -5.0% 42 173 42 173 41 566 41 566 40 612 40 612 20,000 36 754 -10.0% 15,000 24 129 10,000 -15.0% 5,000 - -20.0% Jun 06 Jun 07 Jun 08 Jun 09 Dec 09 Tier 1 capital Tier 1 capital Tier 2 capital Tier 2 capital Capital adequacy % Capital adequacy %

83 A similar picture for the bank FirstRand Bank Ltd (R million) 13.1% 12.8% 12.3% 12.0% 40,000 15.0% 11.4% 6 751 35,000 10.0% 6 706 8 202 30,000 5.0% 8 577 25,000 0.0% 9 026 20,000 -5.0% 31 117 29 721 29 721 15,000 27 356 27 356 22 666 -10.0% 10,000 16 507 -15.0% 5,000 - -20.0% Jun 06 Jun 07 Jun 08 Jun 09 Dec 09 Tier 1 capital p Tier 2 capital p Capital adequacy % p q y

84 Capital levels exceed targets and quality i is good d Minimum capital adequacy Minimum capital adequacy Capital adequacy December 2009 Capital adequacy December 2009 14.34% Max 50% 12.0%-13.5% f Primary 2.15% Lower Tier 2 11.5% - 13.0% 12.83% Max 100% M of of Primary Secondary and 0.90% 2.28% Tertiary 3.5% 2.5% 3.5% 1.02% Upper Tier 2 pp 1.75% % 9 5%* 9.5%* Pillar 1 and 1.75% 2.5% Pillar 2 ax 15% Primary rimary x 25% @ 9.5%* Hybrid debt instruments instruments Ma Max 11 29% 11.29% of of P 1.75% 9.53% Non-redeemable non-cumulative 8.25% preference shares 5.25% 7.75% Primary min 7% i 7% of Primary Min 75% Ordinary shares and defined reserve funds (core equity) SARB FRB FRB FRBH FRBH target actual target actual minimum * Excludes Pillar 2b add-on

85 The Group backs economic capital with Tier 1 with Tier 1 42 173 41 566 40 612 40 008 36 754 36 754 39 115 35 947 35 716 35 491 25 154 Jun 07 Jun 08 Dec 08 Jun 09 Dec 09 Economic capital (R million) Tier 1

86 Economic profit returns to positive territory 7,000 7,000 15.0 15.0 14.6 14.3 6,000 14.5 14.1 5 639 5,000 14.0 4,000 13.5 13.1 3 971 3,000 13.2 13.0 3 164 2 719 2,000 12.5 12.4 1,000 12.0 632 - 11.5 - 474 -1,000 11.0 Jun 05 Jun 06 Jun 07 Jun 08 June 09 Dec 09 Net income after cost of capital (R million) Average cost of equity (%)

87 Key conclusions on capital • Capital levels are strong and the outlook for capital generation is robust p g p g • Continue to focus on quality loss absorbing capital • Capital is available to back the current strategy and expansion initiatives • • “Basel III” proposals are attainable if implemented in current form Basel III proposals are attainable if implemented in current form • Regulatory changes will lead to continued pressure on ROEs

88 Funding and liquidity management Andries du Toit

89 Agenda • Funding and liquidity management philosophy F di d li idit t hil h • Funding & liquidity risk management • FirstRand’s strategy • Macro factors impacting funding • FirstRand’s risk profile FirstRand s risk profile • Regulatory impact • Fi FirstRand’s response to the challenges of funding and liquidity tR d’ t th h ll f f di d li idit

90 Funding and liquidity management philosophy t hil h

91 Funding & liquidity risk management philosophy philosophy • Liquidity risk is the risk that the bank will not be able to meet all payment obligations as liabilities fall due (normally a consequential risk) • Funding liquidity risk Funding liquidity risk • Market liquidity risk • Context • FirstRand Limited’s board principles and limits • South African banking and exchange control system South African banking and exchange control system • Moral Hazard risk • Subsidiaries within FirstRand Group • Hi h Highest rated South African banking group t t d S th Af i b ki • This is managed as part of Group Treasury g p p y

92 Liquidity risk management philosophy • Continuous funding and liquidity cycle • Forward Looking Forward Looking Funds Target • Integrated across transfer risk pricing profile • Macro economic environment • All business units • All financial risk disciplines • Financial markets outlook Financial markets outlook Risk Funding framework profile • Ensure compliance with • Internal risk appetite • Regulatory requirements • Rating agencies requirements Liquidity Stress buffer buffer testing testing • • Output Output • Efficient, diversified, flexible funding • Built upon strong relationship

93 Funding & liquidity management FirstRand’s strategy FirstRand s strategy

94 Funding platforms to support international strategy international strategy United Kingdom - Greece London Cyprus China Iraq Iran Middle East Qatar Taiwan United Arab Emirates India - Dschibuti Nigeria Indo-Africa trade Ghana Kenya - Tanzania Africa-China trade Angola Malawi Zambia Mozambique Namibia Zimbabwe Overlap of Banking Group and Momentum footprint Botswana Australia Momentum footprint Swaziland Lesotho Representative office South Africa Branch

95 Funding & liquidity management Macro factors impacting funding Macro factors impacting funding

96 South Africa’s ratings by World Economic Forum Forum Category Rankings 5 th Financial market sophistication 2 nd Regulations of securities exchange 1 st Strength of auditing and reporting standards 1 st Private monitoring of the banking industry 2 nd Efficiency of corporate boards 55 th Quality of math and science education y 53 rd Brain drain and ease of hiring foreign labour 9 th External debt to GDP (developing economies) 27 th Non-performing bank loans to total loans Non performing bank loans to total loans 27 24 th Securitisation to GDP 53 rd Change in real effective exchange rate 19 th 19 th Banking system stability financial strengths indicator Banking system stability financial strengths indicator 33 rd Risk of sovereign debt crises (Foreign currency) Source: World Economic Forum, The Financial Development Report 2009, 55 Countries

97 Growing balance sheets in excess of income income Private Credit to GDP 200% United States Switzerland 150% Spain Germany 100% South Africa South Africa De-leveraging 50% has begun Credit growth in United Kingdom excess of GDP growth 0% ec-60 ec-65 ec-70 ec-75 ec-80 ec-85 ec-90 ec-95 ec-00 ec-05 ec-10 De De De De De De De De De De De Source: World Bank Data

98 Funding pressures – shift from households to public sector households to public sector Private credit/GDP ratio Government debt/GDP ratio 95% % 55 90% 50 50 85% 45 80% 75% 75% 40 70% 35 65% 30 60% 25 55% 20 50% Mar-98 Mar-00 Mar-02 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Private Sector Credit/ GDP Government debt/GDP National Treasury forecast Source: iNet Data Service

99 SA Banks monetised foreign liquidity Current account deficit & PCE Foreign investment & PCE 10 - 600 600 250 250 - 500 50 200 200 -10 400 100 -20 150 300 -30 150 200 100 -40 -40 200 100 -50 50 0 -60 250 Mar-90 Mar-92 Mar-94 Mar-96 Mar-98 Mar-00 Mar-02 Mar-04 Mar-06 Mar-08 Mar-10 Mar-90 Mar-92 Mar-94 Mar-96 Mar-98 Mar-00 Mar-02 Mar-04 Mar-06 Mar-08 Mar-10 -100 - Current Account Total Private Credit Extension (RHS) Cumulative FDI & Portfolio Investment Total Private Credit Extension (RHS) Source: iNet Data Service

100 Comparing SA to international 1-year funding spreads funding spreads • Comparing the 1-year bank funding spreads to mid- 1-year US v SA bank spreads y swaps in SA vs the US swaps in SA vs the US 250 • Spreads in the US initially widened more severely than 200 200 in SA, however the US spreads have also contracted more 150 aggressively aggressively s pread to Swaps • This highlights a divergence 100 in funding pressure between Sp ZAR and USD liquidity 50 • Internationally central banks have been providing have been providing 0 excessive liquidity in the Sep-02 Jan-04 May-05 Oct-06 Feb-08 Jul-09 Nov-10 short end, while in SA the central bank and national -50 treasury have in fact drained f US Banks AA 1-Yr Spread MA SA 1-Yr Spread MA liquidity Source: Bloomberg & iNet Data Serivece