Firstrand Limited · JSE:FSR
Firstrand — Debt Investor Presentation (November 2020)
21 slides from Firstrand's debt investor presentation, November 2020
Slide 1: Capital and Funding Update
investor presentation CAPITAL AND FUNDING UPDATE 11 – 13 November
Slide 2: Financial resource management
financial resource CAPITAL AND FUNDING UPDATE management 11 – 13 November
Slide 3: Group crisis response framework to protect shareholder value
3 Group crisis response framework to protect shareholder value • FirstRand implemented specific actions in March to weather the storm and ensure the group can fully capitalise on recovery • Anchored business to financial resource management principles for next 18 to 24 months: • Carefully price for
Slide 4: Bank has protected its balance sheet
4 Bank has protected its balance sheet ACTUAL TREND Assets in marketable format >R335 billion Increased (improved liquidity) Liquid assets as % total assets 23.8% Increased (improved liquidity) LCR: 124% The group entered COVID-19 in a strong liquidity LCR and NSFR* position, which has been maintain
Slide 5: Funding and liquidity
funding and liquidity CAPITAL AND FUNDING UPDATE 11 – 13 November
Slide 6: The economic crisis and subsequent response has had a profound effect on funding and liquidity conditions
6 The economic crisis and subsequent response has had a profound effect on funding and liquidity conditions Private sector Economic crisis • Lower credit demand and appetite Global policy actions have spanned all • Increased uncertainty channels Public sector • Increased borrowing requirement Econom
Slide 7: Flows to banking sector reflects precautionary savings amidst uncertainty
7 Flows to banking sector reflects precautionary savings amidst uncertainty Changes in deposits SA banks 6m to Aug 20 All-in cost of 12m NCDs 1.6% Other -3 1.4% Foreign currency -67 Mostly revaluations 1.2% Debt securities -8 1.0% Institutional funding 3 0.8% Housholds 67 0.6% SME 9 0.4% 0.2% Corpor
Slide 8: Elevated government financing spreads across bonds and treasury bills
8 Elevated government financing spreads across bonds and treasury bills 12-month SA T-Bill spread SAGB Z-spreads across nominal and ILB bps bps 400 105 350 85 300 65 250 45 200 25 150 5 100 -15 50 -35 0 -55 0 50 100 150 200 250 300 Tenor (m) -75 Apr 17 Sep 17 May 14 May 19 Mar 15 Mar 20 Jan 16 Jul 1
Slide 9: Economic forces have not cleared – reflected in a very steep yield curve
9 Economic forces have not cleared – reflected in a very steep yield curve • Increased precautionary savings Levels households and corporate “liquidity hoarding” • Intertemporal - demand high liquidity • Allocation to issuers of par on demand “money claims” • Banks credit and regulatory liquidity de
Slide 10: Capital
capital CAPITAL AND FUNDING UPDATE 11 – 13 November
Slide 11: Healthy capital position
11 Healthy capital position CET1 RATIO 14% 12.3% 12% Current CET1 capacity above capital conservation: CET1 target 11% – 12% R34.3 billion 10% • Surplus above target: R10.0 billion • Demonstrates dividend affordability for the group 8% 7.75% • Surplus sufficient to support ongoing regulatory changes
Slide 12: Ongoing optimisation of the capital stack
12 Ongoing optimisation of the capital stack % 18.0 16.0 15.7 • D-SIB disclosure of 1.5% provides additional >14.25 2.9 transparency around minimum requirements 14.0 2.3 0.5 12.0 • Optimisation of Additional Tier 1 (AT1) 12.0 1.0 2.3 • To meet internal targets 10.0 • Support proposed large exposure
Slide 13: Regulatory update
13 Regulatory update • Finalisation of Basel III reforms • Guidance note 7/2020 – proposed implementation dates for specified regulatory reforms • Discussion paper, South Africa’s intended approach to bank resolution (July 2019) • Objectives of the resolution framework, and planning and conducting a
Slide 14: Issuance anchored to a 'multiple point of entry' strategy
14 Issuance anchored to a ‘multiple point of entry’ strategy Listed holding company (FirstRand Limited, JSE: FSR) 100% 100% 100% 100% 100% 100% FirstRand EMA FirstRand FirstRand Investment FirstRand Investment Entities FirstRand Bank FirstRand Insurance Holdings (Pty) Ltd International Limited Holdi
Slide 15: Appendix
appendix CAPITAL AND FUNDING UPDATE 11 – 13 November
Slide 16: FRB exceeds LCR and NSFR requirement
16 FRB exceeds LCR and NSFR requirement Liquidity coverage ratio (LCR) Net stable funding ratio (NSFR) • June 2020: 124% • June 2020: 116% • Effective 1 April 2020, temporary COVID-19 relief • In addressing the LCR, the bank adopted strategies measures introduced, reducing the LCR minimum to reduce
Slide 17: Continued focus on optimising the funding base
17 Continued focus on optimising the funding base SOURCES OF FUNDING FUNDING INSTRUMENTS R826bn R885bn R974bn R1 065bn R1 095bn 37% 36% 35% 36% 32% Deposit franchise*: 72% 22% 20% 21% 21% 21% June 2020 19% 20% 20% 21% 23% 10% 11% 11% 11% 11% 6% 5% 5% 5% 6% 7% 6% 8% 6% 6% 1% 1% Current and savings ac
Slide 18: Resolution blueprint – key elements
18 Resolution blueprint – key elements Key elements of resolution planning Identification of resolution groups and resolution Interconnectedness entities Critical functions and services (for financial Liability structure and loss-absorbing capacity stability) – operational continuity per institution
Slide 19: Resolution blueprint - key considerations for banks
19 Resolution blueprint - key considerations for banks • Flac calibration/requirement • Awaiting finalisation of PwC/World Bank flac survey • Level, cost and timeframes • Structure changes and its effect on new issuance • Finalisation of financial conglomerate framework • Preparing for operational c
Slide 20: FRB credit ratings
20 FRB credit ratings SOUTH AFRICA FIRSTRAND BANK LIMITED SOVEREIGN RATINGS CREDIT RATINGS FOREIGN CURRENCY LOCAL AND FOREIGN CURRENCY Long term/ Long term/ Long-term Standalone outlook outlook national scale credit rating* S&P Global BB-/Stable BB-/Stable zaAA bbb- Moody’s Ba1/Negative Ba1/Negative
Slide 21: Disclaimer
21 Disclaimer This presentation does not constitute an offer or invitation to subscribe for or purchase any securities and nothing contained herein shall form the basis of any contract or commitment whatsoever. Any decision to purchase securities in the context of a proposed offering of securities,
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