FirstRand Wealth Segment History RMB 1995 1997 FNB established - PDF document

FirstRand Wealth Segment

History RMB 1995 1997 FNB established FNB Private Bank established ORIGIN FNB Private Bank changed to 1999 Henry Ansbacher April Ansbacher and Origin combined to form RMB Private Bank 2003 Oct 2004 “One FNB” and ONE Wealth Segment Executive committee RMB Private Bank FNB Private Clients

FirstRand’s positioning Focus of FNB Focus of RMB Private Clients Private Bank 30 000 FNB Clients Portfolio of brands enables niche focus.

The segment in context FNB main bank share (2004) 77,084 Wealth (Multi-banked) R750K + 20% 837,862 – 250,593 Premier Personal Banking previously 18% R350K – R750k (Multi-banked) est. 400k- 600k Upper middle 510,185 17% R200k – R350k (97% banked) Lower middle 2,019,592 (97% banked) 19% R60k – R200k Smart Solutions Mainstream 11,622,512 (52% banked) 21% R6k – R60k Low Income 18% 15,559,628 (19% banked) R0k – R6k Total Retail Total Adult Population 30 Million Market Total Banked Population 11,5 Million Source: AMPS 2002a – 2004, Market Tracker November 2004

Total segment - client numbers 3 000 Net Asset Value (R Million) 50 * * 37 000 * 80 000 to 150 000 7 0.75 * Source: AMPS 2002 a – 2004, Market Tracker November 2004 * * 2005 Cap Gemini and Merill Lynch World Wealth Report

Total segment - product usage Structured and Financial Planning and Asset Succession Corporate Finance Fiduciary Services Management Planning Net Asset Value (R Million) Structured Transactional Risk/ Lending Banking Assurance 50 Financial Planning and Asset Fiduciary Services Management Structured Transactional Risk/ Lending Banking Assurance 7 Structured Transactional Risk/ Lending Banking Assurance 0.75

Total segment - revenue distribution Transactional banking income Margin income Financial Planning and Asset Management fee income Lending Structuring fee income Based on RMB Private Bank actuals

Total segment - revenue potential Net Asset Value (R Million) R 0.8 billion 50 R 3.0 billion 7 R 3.4 billion 0.75 3.4 6.4 7.72 Revenue (R Billion)

Competitive landscape IFA’S StockBrokers Private Bank Net Asset Value (R Million) PRIVATE BANK Private Bank 50 IFA’S StockBrokers Private Bank Personal Financial Services Private Bank Priority Suite 7 Personal Financial Services Private Bank 0.75 Priority Suite

Other insights 74% 30% is business Net Asset Value (R Million) is black owners 58% Fastest black is under growth segment 45 years of age Low penetration Multi-banked 7 of investment products 0.75

The key issues • Client numbers are small and clients are multi- banked. • Fierce competition. • Biggest revenue potential is in lending and combined financial planning and asset management. • Most clients are business owners. • It is the fastest growing black sector.

The key issues • Client numbers are small and clients are multi- banked. • Fierce competition. • Biggest revenue potential is in lending and combined financial planning and asset management. • Most clients are business owners. • It is the fastest growing black sector.

FirstRand – customer base FNB 30 000 Mostly using only transactional banking at FNB FNB 20% RMB PB RMB Private Bank 15 000 10% Financial 150 000 planning, asset individuals management and structured finance in “seedling” phase FirstRand’s base provides huge opportunity

The key issues • Client numbers are small and clients are multi- banked. • Fierce competition. • Biggest revenue potential is in lending and combined financial planning and asset management. • Most clients are business owners. • It is the fastest growing black sector.

RMB Private Bank – leader in structured lending CC Natural Person Can be PTY in any Structured Facility legal Trust entity Partnerships Property Investments Can be in any legal entity

Strong growth in advances 11.7 12 10 8.3 8 R billion 5.9 6 4.8 4 2.8 2.1 2 36% 53% 40% 39% 41% 0 2000 2001 2002 2003 2004 2005 Loan book growth

RMB Private Bank - leader in wealth management Client needs Estate planning I nvestm ent planning fulfilled Cash flow Income Defensive Growth analysis Tax structure My wealth is portfolio portfolio Portfolio preserved Advice Disciplined Succession planning Asset Allocation My wealth is Investment growing * All asset classes Product comparison approach My ability to grow Global my wealth is protected Co-Piloting the Client & W ealth Advisor My wealth will be Client Solution correctly distributed RMB Branded FirstRand Group Outside My dependants are protected Multi- Direct Best of breed Deposit manager investment Insurance I am informed of products products platforms Solutions into shares license investment • Life assurance opportunities Local/ London • Disability RMB Asset • Investment Trust services Unit Management products Different for every Trusts Local & Off-shore client Ashburton

Good track record 10 10 9 8 6.7 7 6.2 5.7 6 5.1 5 4 3 2 8% 17% 31% 50% 1 0 2001 2002 2003 2004 2005 Assets under management growth

The key issues • Client numbers are small and clients are multi- banked. • Fierce competition. • Biggest revenue potential is in lending and combined financial planning and asset management. • Most clients are business owners. • It is the fastest growing black sector.

FirstRand well positioned RMB Private Bank FNB • FNB’s 30 000 wealth • RMB Private Bank is a clients is not yet using leader in structured FirstRand for these lending. offerings. • In financial planning and asset management, RMB Private Bank has a sound basis for growth. • Structured Finance will be enhanced using the close link with Rand Merchant Bank. Huge opportunity for growth

Key issues • Client numbers are small and clients are multi- banked. • Fierce competition. • Biggest revenue potential is in lending and combined financial planning and asset management. • Most clients are business owners. • It is the fastest growing black sector.

FirstRand well positioned RMB Private Bank FNB • Structured lending is a key • Wealth Segment and value offering for business business segment has owners. agreed to service this segment with one combined offering. • Successful history of collaboration between RMB Private Bank and the • Launched Personal Business commercial segment is a Banking. sound foundation. FirstRand is leading with a combined Business Banking and Private Banking offerings

The key issues • Client numbers are small and clients are multi- banked. • Fierce competition. • Biggest revenue potential is in lending and combined financial planning and asset management. • Most clients are business owners. • It is the fastest growing black sector

FNB has strong pipeline Race profile of market segments: Note: n = 1,650. Other banks = ABSA, Nedcor and Standard Bank Source: Consumer Tracker Research November 2004 and Amps 2004

Overall segment strategy • Compete with 2 brands

Overall segment strategy • Compete with 2 brands • Continue to enhance RMB Private Bank’s Value offering

Overall segment strategy • Compete with 2 brands • Continue to enhance RMB Private Bank’s Value offering • White-label RMB Private Bank Products and introduce them to the 30 000 FNB Wealth segment clients.

Overall segment strategy • Compete with 2 brands • Continue to enhance RMB Private Bank’s Value offering • White-label RMB Private Bank Products and introduce them to the 30 000 FNB Wealth segment clients. � Share support infra- structure. � Eliminate pricing arbitrage.

Implementing two brand strategy FNB Private Clients RMB Private Bank All delivery Channels All delivery Channels Client facing Stratco Stratco Credit and valuations Contact centre Shared infrastructure Project implementation Financial planning, asset management and structured lending operations Wealth Exco Common purpose and no destructive competition

Go to market strategy for FNB Private Clients Existing relationships • Leverage existing • Someone in a branch relationships • Relationships • No client migration managers • Revenue growth • Structured lending specialists • 10 to 50 • Wealth management specialists • 8 to 15

Strategy = growth RMB Private Bank is a FNB has 30 000 leader in structured Wealth Clients who have lending and limited comprehensive Wealth exposure to these value Management offerings Growth Leverage RMB Private out Bank value offerings into performance FNB Rand Merchant Bank is a Leverage RMB’s skill base leader in Structured into the top end of RMB Finance and Investment Private Bank Banking