Results presentation For the six months ended 30 I 09 I 2012
Proviso Please note that matters discussed in today's presentation may contain forward looking statements which are subject to various risks and uncertainties and other factors including, but not limited to: the further development of standards and interpretations under IFRS applicable to past, current and future periods evolving practices with regard to the interpretation and application of standards under IFRS domestic and global economic and business conditions market related trends A number of these factors are beyond the group’s control These factors may cause the group’s actual future results, performance or achievements in markets in which it operates to differ from those expressed or implied Any forward looking statements made are based on knowledge of the group at 15 November 2012 2
The six months in review 3
Difficult operating environment has continued Equity markets Equity markets Interest rates Interest rates 8 130 Since Since Mar-12 Sep-11 7 120 +6.6% +20.5% 6 Rebased to 100 5 -0.1% +13.0% 110 4 % -0.3% +8.3% 100 3 2 90 1 0 80 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Sep 11 Nov 11 Jan 12 Mar 12 May 12 Jul 12 Sep 12 R £ A$ U$ JSE FTSE ASX Exchange rates Exchange rates Since Since Change on average 120 Mar-12 Sep-11 Since Sep-11 +4.6% +8.1% +9.7% 110 Rebased to 100 +8.7% +6.4% +15.2% +1.0% +3.3% -3.1% 100 +1.1% -2.6% +0.7% + depreciation 90 - appreciation 80 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Rand/£ Euro/£ US$/£ A$/£ Source: Datastream 4
Summary Results negatively impacted by: Results negatively impacted by: Results highlights include: Results highlights include: Difficult operating environment Solid net inflows and moderate loan growth Depreciation of the Rand Recurring income of 69.3% Lower investment income earned in the UK Improvement in SA business benefiting from business growth in revenue and cost containment … resulting in a decrease of 2.5% in Strong improvement in Australia as revenues (increase in stable currency) impairments significantly down 5
Operating profit impacted by the Rand … with the asset and wealth management businesses accounting for 40% Operating profit before tax* Operating profit before tax* By business By geography 100% 100% 90% 90% 80% 80% 70% 70% 60% 60% Specialist SA & Other 50% 50% Banking 40% 40% Wealth & 30% 30% Investment UK, Europe, Australia & Other 20% 20% Asset Management 10% 10% 0% 0% Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 *Before goodwill, acquired intangibles, non-operating items and after non-controlling interests 6
Continued growth in net inflows and loans … up in stable currency Third party assets under management Third party assets under management Customer accounts (deposits) and loans Customer accounts (deposits) and loans FUM up 6.7 %* Customer accounts up 2.3%* Core loans and advances up 2.5%* Net inflows of £ 2 b n £’bn £’bn 120 30 120% 100 25 100% 80 20 80% 60 15 60% 40 10 40% 20 5 20% 0 - 0% Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Sep-12 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Sep-12 Asset Management Customer deposits (LHS) Core loans and advances to customers (LHS) Wealth & Investment Core loans (excluding own originated securitised assets) Other to customer deposits (RHS) *On a stable currency basis 7
Significantly improved impairment position Impairment analysis Impairment analysis £’mn 225 200 175 150 125 Australia 100 75 UK & Other 50 South Africa 25 0 1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 8
… particularly in Australia South Africa South Africa UK & Europe (ex Kensington) UK & Europe (ex Kensington) Australia Australia R’bn £’bn A$’bn 8 5% 4.0 12% 160 5% 7 3.5 140 10% 4% 4% 6 3.0 120 8% 5 2.5 100 3% 3% 4 2.0 6% 80 2% 2% 3 1.5 60 4% 2 40 1.0 1% 1% 2% 1 20 0.5 - 0% - 0% 0.0 0% Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Net core loans (LHS) Credit loss ratio (RHS) Net defaults (before collateral) as a % of core advances (RHS) 9
Headcount stable (excluding acquisitions) Headcount analysis (permanent employees) Headcount analysis (permanent employees) By business By geography 8000 8000 Alliance Australia Equipment 7000 7000 Finance 6000 6000 NCB Holdings UK & Europe 5000 5000 Specialist 4000 4000 Banking SA & Other 3000 3000 Wealth & Investment 2000 2000 Asset 1000 1000 Management 0 0 Note: Includes Rensburg Sheppards from June 2010 10
Costs slightly up … largely due to acquisitions Jaws ratio Jaws ratio Cost to income ratio Cost to income ratio By business Target 2015: 63-65 70-72 <55 60-62 £’mn % Sep-11 Sep-12 100 1200 80.7 Operating income 75.7 80 64.7 65.0 64.7 CAGR since 2003: 16.0 % 62.6 61.7 60.4 60 1000 40 20 800 0 Asset Management Wealth & Investment Specialist Bank Group By geography 600 Target 2015: <60 <55 <65 60-62 % 400 Sep-11 Sep-12 100 Expenses (excl. depreciation) 80.5 81.4 80 68.8 CAGR since 2003: 14.3 % 65.6 62.6 64.7 200 56.7 56.6 60 40 0 20 0 UK & Europe SA & Other Australia Group 11
Resulting in a stable group performance Stable currency Sep-12 Sep-11 % change Sep-12 Pounds Operating profit* before tax (£ ’000) 223,629 2.6% 259,080 229,419 Adjusted earnings attributable to ordinary 162,867 3.5% shareholders before goodwill, acquired 198,658 168,575 intangibles and non-operating items (£ ’000) Adjusted EPS* (pence) 20.6 (4.4%) 21.6 19.7 DPS (pence) 8.0 0% NA 8.0 Net tangible asset value per share (pence) 321.0 (2.9%) 326.3 311.6 *Before goodwill, acquired intangibles, non-operating items, taxation and after non-controlling interests 12
…and an improved Rand performance Sep-12 Sep-11 % change Rands Operating profit* before tax (R ’ mn) 2,825 2,462 14.7% Adjusted earnings attributable to ordinary shareholders before goodwill, acquired intangibles and non-operating items 2,185 1,832 19.2% (R ’ mn) Adjusted EPS* (cents) 255.4 232.7 9.8% DPS (cents) 112.0 103.0 8.7% Net tangible asset value per share (cents) 4,172.2 4,051.6 3.0% *Before goodwill, acquired intangibles, non-operating items, taxation and after non-controlling interests 13
Financial Targets Capital ratios remain stable Sep-12 Mar-12 Sep-11 Target 10.1% 7.8% 10.1% Actual ROE ROE 12%-16% over a rolling 5-year period** 12.8% 14.2% 14.3% Adjusted* EPS growth 10% > UKRPI (4.4%) (26.4%) (6.8%) Cost to income 64.7% 64.7% 62.6% < 65% Dividend cover (times) 1.7 - 3.5 times 2.5x 1.9x 2.6x Capital adequacy 17.2% 16.1% 15.7% 15-18% ** Limited 17.2% 17.5% 17.1% plc Tier 1 ratio 11.6% 11.6% 12.0% 11%-12% Limited 11.3% 11.6% 11.6% plc Notes : *As determined in accordance with IFRS. Adjusted EPS is before goodwill, non-operating items and after the accrual of dividends attributable to perpetual preference shareholders **As revised in Mar 2012 14
Divisional highlights 15
Stable performance across the three key businesses Operating profit* by business Operating profit* by business £’mn 250 200 150 100 50 0 Asset Management Wealth & Investment Specialist Banking Investec Group Sep-11 Sep-12 *Before goodwill, acquired intangibles, non-operating items, taxation and after non-controlling interests 16
Asset Management Overview of performance Overview of performance Financial summary Financial summary % Higher average funds under management (£) Sep-12 Sep-11 change Positive net inflows of £1.5bn Operating profit* (mn) 67.2 65.6 2.5% Competitive investment performance over Cost to income 65.0% 64.7% all periods % Sep-12 Mar-12 change Assets under management 62.4 61.5 1.3% (£’ bn) Net flows (£’ mn) 1,520 5,170 Outlook Outlook Assets under management by asset group (£’ bn) Assets under management by asset group (£’ bn) Positive momentum but flat markets combined with uncertainty will put 15.6 15.6 pressure on inflows 27.0 27.0 Mar-12 Sep-12 Strategy remains unchanged 18.9 19.8 Equities and commodities Fixed income Multi-asset *Before goodwill, acquired intangibles, non-operating items, taxation and after non-controlling interests 17
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