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Financial Review and Strategic Partnerships in Banking Operations

An in-depth review of financial performance in banking operations, strategic partnerships, technology, and operations, presenting key figures and growth insights from industry experts Richard Laubscher, Stuart Morris, Derek Muller, Mike Leeming, and Barry Hore.

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Financial Review and Strategic Partnerships in Banking Operations

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  1. Introduction Financial Review Banking Operations Strategic Partnerships and Channels Technology & Operations Strategic Review Richard Laubscher Stuart Morris Derek Muller Mike Leeming Barry Hore Richard Laubscher PROGRAMME

  2. AN EVENTFUL YEAR • Economy • Tough banking environment, improving • Strength and diversity delivers results • Subsidiaries • Acquired ENF, FBC and Emirates book • Merged Peoples into FBC • Empowerment Group takes 20% of Peoples • Sold 50% of NIBAM to Franklin Templeton • Alliances • Old Mutual, Capital One, JD Group, Pick ‘n Pay, Imperial, Virgin Active

  3. AN EVENTFUL YEAR • Associates and Investments • Outlaid R2,5bn to acquire more DDIL, Internet Solution, IQ, Aplitec, Nihilent, Miraculum and Kagiso • Exchanged DDIL for Didata plc, surplus R3,6bn, recouped R1,8bn cash • New Accounting Standards • Implemented effects of Goodwill, Pension Funds, Software Development, accelerated Hardware Depreciation, Deferred Tax Assets, Investments and Headline Earnings

  4. INCOME STATEMENT

  5. Financial Review Stuart Morris

  6. ASSET GROWTH

  7. NET INTEREST INCOME TO INTEREST-EARNING ASSETS 4.17% 4.01% 4.17% 3.79% 3.79% 3.73% 4.00% 3.70% 3.64% 3.46% 4,732 4,359 3,925 3,555 3,077 Dec 96 Dec 97 Dec 98 Dec 99 Dec 00 NII (Rm) NII to IEA (%) NII (Incl.'s Assoc. Inc. Gross-up) to IEA (%)

  8. 3,211 2,611 2,087 NON-INTEREST REVENUE TO TOTAL INCOME 47.56% 44.99% 44.43% 4,292 42.34% 3,486 40.41% Dec 96 Dec 97 Dec 98 Dec 99 Dec 00 Non Interest Revenue N I R to Total Income (%)

  9. 910 869 511 348 SPECIFIC AND GENERAL PROVISIONS CHARGE 19.93% 19.22% 17.79% 14.38% 11.33% 698 Dec 96 Dec 97 Dec 98 Dec 99 Dec 00 Specific & General Provisions Charge (Rm) % of Net Interest Income

  10. PROVISIONS

  11. NON-PERFORMING LOANS

  12. EXPENSES 61.27% 58.41% 4,516 4,054 4,008 3,601 3,164 51.68% 56.16% 50.04% Dec 96 Dec 97 Dec 98 Dec 99 Dec 00 Expenses (Rm) Expense to Income Ratio (%)

  13. HEADLINE EARNINGS 30.39% 26.05% 24.57% 23.60% 3,027 2,406 23.68% 1,900 1,492 1,266 1,145 1,024 822 665 528 Dec 96 Dec 97 Dec 98 Dec 99 Dec 00 Headline Earnings (Rm) Growth in E P S (%) E P S (cents)

  14. SHAREHOLDERS’ FUNDS

  15. RETURN ON ASSETS 2.10% 1.95% 1.74% 1.63% 1.51% 144,052 123,686 109,190 91,272 75,635 Dec 96 Dec 97 Dec 98 Dec 99 Dec 00 Average Total Assets (Rm) Return on Assets (%)

  16. SEGMENTAL ANALYSIS Business transfers in process & transfer pricing under review

  17. GEOGRAPHIC ANALYSIS

  18. Banking Operations Derek Muller

  19. Reconfigured the Business Peoples Bank Business Direct Branch Rationalisation Credit Technology Asia Reasonable Growth Strong Corporate Performance Commercial Market Share Up Robust Homeloan growth ABF Improvement 2000 REVIEW

  20. Customer Service Retail Initiatives Channel Management Muscle Building Customer Acquisition / Retention Old Mutual JV Greater Homeloan Focus Datamining / X-sales Nedtreasury 2001 PRIORITIES

  21. Strategic Partnerships and Channels Mike Leeming

  22. EXPANDING THE UNIVERSE

  23. IMPLICATIONS • Low acquisition cost i.t.o. NAV and goodwill • Hitting the road running • Low increase in expenditure • Non-linear revenue growth vs. expense growth limitation with T&O momentum in place

  24. Technology and Operations Barry Hore

  25. TECHNOLOGY & OPERATIONS • Back office restructured into "service factory" • Ongoing productivity gains from e-process • Significant delivery on new technology projects • Leveraging technology investments • Commercialisation

  26. Strategic Review Richard Laubscher

  27. FUNDAMENTALS OF GROWTH IN BANKING

  28. GROWTH CONSTRAINTS • Large-scale acquisition problematic • Africa - selective - trade, aid and GDFI • International • No to Investment Banking • No to High-street Banking • No to Global Treasury

  29. GROWTH OPTIONS • Possibly yes to: • Private Banking • Insourced Processing • Investment in Banking Enabling Technologies • Convergence of Direct with e- and i- Commerce

  30. CONCLUSION • Emphasis is on: • Local Retail Banking • Local Commercial Banking • Aided by Process-cost Reduction • Database Power • 9 million potential customers • Capital One expertise • Affinity Partnership of Unparalleled Quality

  31. Q & A

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