DOCSLIB.ORG

Capital and Funding Update

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Capital and Funding Update CAPITAL AND FUNDING UPDATE May 2019 2 Presentation team • Frikkie Kleinhans Head: Capital Management • Amit Mohanlal Head: Funding and Liquidity 3 Financial resource management 4 Disciplined financial resource management supports strategy Regulatory Macro environment environment Return Competitive FRM Rating environment FRM agency target Growth Risk Aspirations/ Risk business constraints plans Stress testing * FRM is defined as capital, funding and liquidity, as well as risk appetite. 5 FirstRand philosophy on capital and funding CAPITAL FUNDING • Capital planning performed on a forward- • Diversify across business segments, markets, looking basis, not point-in-time currencies, maturities and instrument types • Targets aligned to end-state minimums, • Flexibility across markets, products and including countercyclical buffer requirements investors • Frequent issuer, managing rollover profile • Focus on alignment of funding strategies to asset growth and composition, incorporating • View Additional Tier 1 (AT1) and Tier 2 as risk-adjusted pricing sources of funding, i.e. not used to support economic risk • Continued evolution of funding instruments and mix to reduce regulatory volatility and optimise asset/liability matching 6 Capital 7 Ongoing optimisation of the capital stack % 18.0 16.9 16.0 14.8 3.3 >14.0 14.0 2.2 0.5 2.0 12.0 0.6 1.0 10.0 8.0 13.1 6.0 12.0 11.0 4.0 2.0 0.0 FirstRand FRB Target CET1 AT1 Tier 2 Note: Ratios as at 31 December 2018 including unappropriated profits. FirstRand Bank Limited (FRB) includes foreign branches. 8 FirstRand favours 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 FirstRand Bank FirstRand Insurance Holdings (Pty) Ltd International Limited Holdings (Pty) Ltd Management Holdings Limited (FRB) Holdings (Pty) Ltd Entities (FREMA) (Guernsey) (FRI) (FRIHL) Limited SA banking Rest of Africa UK banking and hard Other activities Investment management Insurance currency platform Namibia Aldermore Botswana Enabled by flexible issuance platforms – most suitable entity to be considered on a case-by-case basis Existing platforms 9 Optimal level of capital issuance for the bank ADDITIONAL TIER 1 TIER 2 • Focus on AT1 issuance in FY2019 • US dollar issuance in April 2018 R million • Dollar capital to support cross-border November 2018 2 265 lending and diversify funding base March 2019 2 477 • Remaining old-style Tier 2 instruments April 2019 223 called in December 2018 • Positive from a ratings perspective • Future issuances to manage rollover risk of Basel III-compliant instruments • IFC dollar Tier 2 redeemed in April 2019, no further instruments with contractual conversion feature Planned Tier 2 issuance to coincide with FRB12 redemption 10 Regulatory update • Basel IV reforms • Guidance note 6 of 2018 – Proposed implementation dates for specified regulatory reforms • Draft Financial Sector Laws Amendment Bill published for comment by National Treasury in October 2018 • Proposed amendments to various acts to support and empower the resolution regime • Insolvency Act, South African Reserve Bank Act, Banks Act, Mutual Banks Act, Competition Act, Financial Markets Act and Insurance Act • More specifically, new chapter (12A – Resolution of Designated Institutions) builds on the draft resolution framework released to the banking industry in January 2018 • Establishment of the Corporation of Deposit Insurance • Designed to protect depositors’ funds and enhance financial stability (also covered in chapter 12A) • Financial conglomerate framework 11 Funding and liquidity 12 Funding spreads remain elevated, with minor curve flattening FRB floating rate note spreads (offer bps, transaction size <=R100 million) 250 200 150 100 50 0 12m 24m 36m 60m 120m Spreads have drifted lower (± 20 bps over the 36m to 120m) since April 2017, shorter-dated spreads remain high relative to historical levels Source: Bloomberg, <RMBP3>. 13 Maturity profile of capital market instruments R billion 22 20 18 16 14 12 10 8 6 4 2 - 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2038 2042 2045 2046 2050 Senior Senior inflation-linked Subordinated debt* Credit-linked notes EMTN senior issuance EMTN subordinated debt R1.8 billion maturing in November 2019 – provides issuance flexibility for remainder of the calendar year * Includes Tier 2 and AT1 capital instruments. 14 The bank’s focus remains on building a diversified funding base Sources of funding Funding instruments R857bn R885bn R939bn R974bn R1 028bn Deposit franchise: 68% 34% 36% 37% 35% 36% Dec 18 22% 21% 21% 22% 21% 20% 20% 20% 20% 21% 11% 11% 9% 11% 10% 6% 5% 5% 5% 5% Current and savings accounts Call accounts 6% 6% 7% 8% 7% 1% 1% Customer fixed and notice deposits Institutional funding instruments Dec 16 Jun 17 Dec 17 Jun 18 Dec 18 Capital market issuance Collateral received Other Foreign SMEs Public sector Repo Other Retail Corporate Institutional Subordinated debt 15 Funding strategy continues to be anchored in the deposit franchise… R billion Subordinated Deposit franchise +8% Institutional +14% Other funding debt 239 232 228 217 207 196 142 141 128 119 63 52 19 26 Retail Commercial Corporate and Group Treasury Debt Other Subordinated investment deposits securities deposits debt banking Dec 17 Dec 18 Seek to protect and grow the deposit franchise across all segments, with increased emphasis on savings and investment products 16 …enabling robust deposit growth and market performance Deposit growth vs money supply Market share of retail deposits 2.0 35% 1.9 30% 1.8 1.7 25% 1.6 20% 1.5 15% 1.4 1.3 10% 1.2 5% 1.1 1.0 0% Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 Jun 11 Jun 12 Jun 13 Jun 14 Jun 15 Jun 16 Jun 17 Jun 18 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Dec 18 FRB Standard Bank ABSA FRB Standard Bank ABSA Nedbank M3 Nedbank Investec Capitec Source: SARB BA900 – South Africa operations only, February 2019. 17 Funding issuance considerations • Continued focus on optimisation of maturity and liquidity profile to ensure regulatory compliance and efficient funding of the business • Funding levels in the SA market remain elevated • Areas of focus: • Senior issuance • Simple, transparent and comparable securitisations, e.g. Nitro 7 • Institutional funding, e.g. prime-linked notes, fixed deposits, floating-rate notes and negotiable certificate of deposits 18 Annexures 19 FirstRand Bank’s 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 Baa3/Stable Baa3/Stable Aaa.za* baa3 * Highest rated in South Africa. Sovereign rating is a ceiling to standalone credit rating and credit profile Credit ratings as at 15 May 2019. Sources: S&P Global Ratings and Moody’s Investors Service. 20 Resolution planning - key elements • Legal obligation on the SARB/Resolution Authority (RA) to develop resolution plans for all banks and non-bank systemically important financial institutions (SIFIs) • Standards and information requirements are being developed • More detailed standards and directives for industry/public comment expected once the Financial Sector Laws Amendment Bill (Bill) is promulgated, as well as the establishment of the RA Key elements of resolution planning Identification of resolution groups and resolution entities Interconnectedness Liability structure and loss-absorbing capacity per Critical functions and services (for financial stability) – institution – new first loss after capital (FLAC) operational continuity requirements Asset structure and valuations (liquidation/resolution values Resolution strategies (MPE/SPE*, open vs closed) for no creditor worse off in liquidation (NCWOL)) Funding in resolution Cross-border regulation * MPE – multiple point of entry, SPE – single point of entry. Detailed and mature recovery plan sets foundation for a resolution plan Note: the above is dependent on final promulgation of the Bill and still subject to finalisation. 21 Resolution blueprint expected in second half of 2019 • Bill awaiting promulgation • SARB is working on the completion of a “resolution blueprint” with engagement from international consultants and likely to cover, amongst others: • More context and detail around the elements included in future resolution standards/directives • Definition of resolution strategies and SARB/RA requirements to create individual resolution strategies • Key criteria to be considered to determine most appropriate strategy • Multiple vs single point of entry, open vs closed market resolution • FLAC • Instrument criteria to qualify as FLAC • Resolvability methodology to determine level of FLAC for designated institutions • Early indications point to a small base minimum requirement • Bank-specific add-on imposed on larger banks based on individual resolvability • Point of resolution/point of non-viability - amendment suggested to FSR Act • Resolution blueprint expected to be released for public comment in third quarter of 2019 calendar year • To be followed by a public workshop hosted by RA Note: the above is dependent on final promulgation of the Bill and still subject to finalisation. 22 Optimise institutional funding Institutional funding as a % of total funding Institutional funding by term 50%
Load more

Recommended publications
  • Transformation in Banking Report 2019
    February 2020 TRANSFORMATION in banking 2016 - 2018 Contents 1. Foreword 2 2. Highlights 3 3. Introduction 4 4. Methodology 5 5. Data and analysis 6 About this report Ownership 7 This report is produced by Intellidex (Pty) Ltd Management 8 1st Floor, Building 3 Skills development 12 Inanda Greens Office Park 54 Wierda Road West Socioeconomic development 14 Sandton South Africa Procurement 14 Email: [email protected] Consumer education 15 Web: www.intellidex.co.za Tel: +27 (0)10 072 0472 Empowerment financing 17 Disclaimer Intellidex was commissioned by the Banking While Intellidex believes all information in this report to be accurate, Intellidex makes no representations Transformational infrastructure 17 Association South Africa (BASA) to produce or warranties regarding the completeness, accuracy this report from data supplied from member or reliability of any information, facts, estimates, forecasts or opinions contained in this document. The Black agricultural financing 18 banks. information and opinions could change at any time without prior notice. Intellidex, its directors, officers, The report reflects transformation in the staff, agents or associates shall have no liability for Black SME financing 18 any loss or damage of any nature arising from the use banking industry and its progress towards of this document. achieving the targets set out in the Financial Affordable housing 19 Sector Code. Copyright Supplier development contribution 20 ©2020. This document is copyrighted to the Banking The publication serves as a report to society Association South Africa. It may be distributed in on the contribution of the banking industry this form without prior permission, but prior written B-BBEE transaction financing 20 permission must be obtained before using the to the development of the country, and content in another form.
    [Show full text]
  • A STRATEGIC ANALYSIS of CAPITEC BANK LIMITED WITHIN the SOUTH AFRICAN BANKING INDUSTRY by Michael Coenraad De Lange
    A STRATEGIC ANALYSIS OF CAPITEC BANK LIMITED WITHIN THE SOUTH AFRICAN BANKING INDUSTRY By Michael Coenraad de Lange Submitted in partial fulfilment of the requirements for the degree of MAGISTER IN BUSINESS ADMINISTRATION at the Nelson Mandela Metropolitan University Business School Research Supervisor: Prof JA Jonker November 2013 DECLARATION I hereby declare that the above-mentioned treatise is my own work and that it has not previously been submitted for assessment to another University or for another qualification. I further declare that I followed all the applicable ethical guidelines in the conducting the research. Signed: Michael de Lange Date: November 2013 i ACKNOWLEDGEMENTS This research study would not have been possible to complete without the valuable contributions and support of the following people: To my research supervisor, Professor Kobus Jonker, for his dedication, support and professional advice in helping me complete this study; To my girlfriend Jess, for all her understanding and willingness, her support, undying love and dedication in helping me throughout the duration of my MBA; To my family, for believing in me and providing the necessary support and for raising me to be a dedicated and disciplined individual in order to reach my goals and complete this research study. DEDICATION This research treatise is dedicated to my late father who tragically passed away last year. He was an inspiration to us all and my hero. Gone but never forgotten. Thank you Dad. ii ABSTRACT The South African banking industry is well regulated and oligopolistic by nature. The financial sector in South Africa is of a world class standard, comparing favourably to that of developed economies i.e.
    [Show full text]
  • Financial Cooperatives Indaba 2012”
    “Financial Cooperatives Indaba 2012” Fikile Kuhlase, Senior GM, Socio-Economic Growth and Development The Banking Association South Africa Durban – 19 October 2012 SETTING THE SCENE… 2 “A journey of a thousand miles begins with a single step”. (Lao-tzu) The Banking Association SA - not-for-profit voluntary industry body representing all registered banks operating in SA - currently has 34 member banks. VOICE of the industry. Role of banks is financial intermediation – facilitating the flow of funds from savers to borrowers. Financial Intermediation – process performed by banks of taking in depositor funds and on-lending to borrowers. SA rated 2nd in soundness of banking system after Canada. “Big 4”: ABSA, FirstRand, Nedbank, Standard Bank – 85% of total banking assets Continuum of financial institutions for diversification, depth and reach SA Financial sector comprises of R6trillion in assets; 10.5% of GDP. Misnomer that banking is amongst most hated professions Exploring expected role of banking industry in coop. banking (Kenya study tour etc.) ROLE & GOVERNANCE STRUCTURE… 3 Broad role of The Banking Association SA is to establish and maintain the best possible platform on which banks can do progressive, responsible, competitive, profitable and sustainable banking. Main Board – CEOs of ‘Big 4’ ABSA, FirstRand, Nedbank, Standard Bank and Investec. 2 Intl. Bank reps. – Citi and Standard Chartered, 2 Independent banks – African Bank and Ubank . Board Exco – EXCO – MANCO MD, 4 Divisions - Banking & Financial Services, Socio-Economic Growth & Development, Strategy & Stakeholder Management and Shared Services. SEGD – Financial Inclusion, Financial Literacy, SME Development, CSI and Draft Financial Sector Code for transformation. SADC BA Role of the banking industry in the real economy – poverty alleviation, job creation etc.
    [Show full text]
  • “Bank Stability in South Africa: What Matters?”
    “Bank stability in South Africa: what matters?” Syden Mishi https://orcid.org/0000-0002-7727-8946 AUTHORS Sibanisezwe Alwyn Khumalo https://orcid.org/0000-0002-4330-9249 Syden Mishi and Sibanisezwe Alwyn Khumalo (2019). Bank stability in South ARTICLE INFO Africa: what matters?. Banks and Bank Systems, 14(1), 122-136. doi:10.21511/bbs.14(1).2019.11 DOI http://dx.doi.org/10.21511/bbs.14(1).2019.11 RELEASED ON Wednesday, 27 February 2019 RECEIVED ON Monday, 02 July 2018 ACCEPTED ON Monday, 21 January 2019 LICENSE This work is licensed under a Creative Commons Attribution 4.0 International License JOURNAL "Banks and Bank Systems" ISSN PRINT 1816-7403 ISSN ONLINE 1991-7074 PUBLISHER LLC “Consulting Publishing Company “Business Perspectives” FOUNDER LLC “Consulting Publishing Company “Business Perspectives” NUMBER OF REFERENCES NUMBER OF FIGURES NUMBER OF TABLES 75 4 3 © The author(s) 2021. This publication is an open access article. businessperspectives.org Banks and Bank Systems, Volume 14, Issue 1, 2019 Syden Mishi (South Africa), Sibanisezwe Alwyn Khumalo (South Africa) Bank stability in South Africa: what matters? BUSINESS PERSPECTIVES Abstract The study examined the determinants of bank stability within the South African bank- ing sector. By controlling for individual bank characteristics and market characteris- tics, the study determined possible determinants of solvency, a proxy for bank stabil- ity, measured by z-score within the South African financial sector. The South African LLC “СPС “Business Perspectives” financial sector is highly concentrated but with a significantly large number of banks, Hryhorii Skovoroda lane, 10, Sumy, the greater portion being foreign owned banks.
    [Show full text]
  • Annual Report for the Year Ended 30 June a a a a a Report This About the Annualfinancialstatements
    19 annual report for the year ended 30 June A Overview of FirstRand Bank and analysis of financial about results (normalised) this report B The annual report covers the following: Summary risk and capital A overview of FirstRand Bank; management report A a detailed analysis of the bank’s normalised financial results, as the bank believes this most accurately reflects its economic performance (normalised results have been derived from the audited financial results); A a summary risk and capital management report; contents the audited annual financial statements; and C A A supplementary information. Annual financial statements A detailed description on the differences between normalised and IFRS results and a detailed reconciliation between normalised and IFRS results is provided on page A116 and pages A118 and A119. Jaco van Wyk, CA(SA), supervised the preparation of the annual financial statements. D Supplementary information 1929/001225/06 Certain entities within the FirstRand group are Authorised Financial Services and Credit Providers. This analysis is available on the group’s website: www.firstrand.co.za Email questions to [email protected] FIRSTRAND BANK LIMITED :: 01 :: A FirstRand Bank (FRB or the bank) is a wholly-owned subsidiary of FirstRand Limited (FirstRand or the group), which is listed on the Johannesburg Stock Exchange (JSE) and the Namibian Stock Exchange (NSX). The bank provides a comprehensive range of retail, commercial, corporate and investment banking services in South Africa and offers niche products in certain international markets. The bank has three major divisions, which are separately branded: First National Bank (FNB), Rand Merchant Bank (RMB) and WesBank.
    [Show full text]
  • Conduct Risk in South African Banks: Aligning Regulatory Compliance with Business Sustainability
    Article Conduct Risk in South African Banks: Aligning Regulatory Compliance with Business Sustainability Antje Hargarter Gary van Vuuren https://orcid.org/0000-0003-0064-751X https://orcid.org/0000-0001-6811-0538 North West University, South Africa North West University, South Africa [email protected] Abstract Regulators have imposed heavy penalties on banks for conduct failures since the global financial crisis occurred in 2007/2008. Banks play an important role in the economy, and it is therefore in the interests of both the public and government that banks have an effective conduct-risk approach in place; one that complies with reg- ulation and ensures business sustainability. Current conduct-risk approaches are in- adequate, and literature is sparse—especially regarding developing economies. The goal of this research was to explore ways in which banks can manage and mitigate conduct risk, while ensuring sustainability. The qualitative design of this study used South Africa as an example of a developing market; and it employed primary and secondary data. The analysis shows that banks have been focused on developing a suitable high-level strategy but have neglected the lower level (where employees and customers meet). Consequently, they have exposed themselves to conduct risk. Based on these findings, this article suggests that banks’ strategies should be tackled in a top-down fashion, while they simultaneously pursue customer outcomes from the bottom-up. This study is crucial, as banks must prepare for new legislation, avoid fines, and strategically position themselves to satisfy clients and remain sus- tainable. Since the last self-assessment by the (then called) Financial Services Board in 2013, no formal assessment of conduct risk in the South African banking industry has taken place.
    [Show full text]
  • ANALYSIS of FINANCIAL RESULTS for the Year Ended 30 June 2017 About This 01 OVERVIEW of BANK RESULTS Simplified Group and Shareholding Structure
    ANALYSIS OF FINANCIAL RESULTS for the year ended 30 June 2017 about OVERVIEW OF BANK RESULTS this 01 Simplified group and shareholding structure ..... 01 report Track record ..... 03 Key financial results, ratios and statistics – normalised ..... 04 Summary financial statements – normalised ..... 05 This report covers the audited summary Flow of funds analysis – normalised ..... 08 financial results of FirstRand Bank Overview of results ..... 09 Limited based on International Financial Segment report ..... 18 Reporting Standards (IFRS) for the year Additional activity disclosure – RMB ..... 26 ended 30 June 2017. The primary Additional segmental disclosure – WesBank ..... 27 results and accompanying commentary are presented on a normalised basis as the bank 02 INCOME STATEMENT ANALYSIS believes this most accurately Net interest income (before impairment of advances) ..... 30 reflects its economic performance. Credit highlights ..... 35 The normalised results have been Non-interest revenue ..... 38 derived from the IFRS financial results. Operating expenses ..... 41 Normalised results include a summary income statement, statement of BALANCE SHEET ANALYSIS AND FINANCIAL comprehensive income and statement of financial position. 03 RESOURCE MANAGEMENT Economic view of the balance sheet ..... 44 A detailed description of the difference Advances ..... 45 between normalised and IFRS results is Credit ..... 47 provided on pages 78 and 79. Detailed Deposits ..... 62 reconciliations of normalised to IFRS Funding and liquidity ..... 63 results are provided on pages 88 to 89. Capital ..... 71 Commentary is based on normalised Credit ratings ..... 76 results, unless indicated otherwise. Jaco van Wyk, CA(SA), supervised the preparation of the summary financial 04 IFRS INFORMATION results. Presentation ..... 78 FirstRand Bank’s annual financial Independent auditors’ report on summary financial statements ....
    [Show full text]
  • First National Bank Appoints First Ghanaian CEO
    First National Bank Appoints First Ghanaian CEO Press Release First National Bank Appoints First Ghanaian Chief Executive Officer Accra, Ghana – 26 June 2020 – First National Bank Ghana has announced the appointment of Dominic Adu as its first Ghanaian Chief Executive Officer, effective Wednesday July 01, 2020. Dominic takes over from Richard Hudson who has served in this position since the inception of the bank five years ago. Mr. Adu was the Chief Executive Officer of the erstwhile GHL Bank, which was recently acquired by First National Bank Ghana. “On behalf of the Board of Directors, we are excited to welcome Dominic to lead the First National Bank Ghana team. He has a wealth of experience in domestic and international Finance, private equity, entrepreneurship and leadership which will add great value to our team,” the chairman of the board of directors of First National Bank Ghana, Mr. Joseph Tetteh says. “Notably, this appointment marks another milestone in the history of First National Bank Ghana to have a Ghanaian citizen as CEO. We are confident that his leadership capabilities, coupled with his astute financial and economic management expertise, will enable the bank to further expand its product offering to all Ghanaians while contributing significantly to the growth the business. His experience will help unlock further value in our banking services and expand our existing offering to help the average Ghanaian fulfill their financial aspirations” Dominic Adu co-founded Ghana Home Loans, Ghana’s foremost mortgage finance institution in 2006. In June 2017 he led Ghana Home Loans through a transition to become a universal bank after obtaining a banking license under the name GHL Bank Plc.
    [Show full text]
  • Customer Satisfaction Survey 2014 Final Report
    Customer Satisfaction Survey 2014 Final Report Version: v1.00 Date: February 2015 Author: Redflank BANKSETA Customer Satisfaction Survey APPROVALS Sign-off signifies acceptance of the content. Conditional signature can be made, with space provided to express conditions. Name Designation Organisation Date Signature Conditions/Comments Zandile Skosana Manager: BANKSETA Marketing and Communications 2 BANKSETA Customer Satisfaction Survey Contents Table of Figures ....................................................................................................................................... 4 List of Tables ........................................................................................................................................... 5 List of Acronyms ...................................................................................................................................... 6 1. Executive Summary ......................................................................................................................... 7 1.1. Introduction ............................................................................................................................ 7 1.2. Research Design ...................................................................................................................... 7 1.2.1. Overview of Data Collection Process .............................................................................. 7 1.3. Key Findings ...........................................................................................................................
    [Show full text]
  • South African Peer Bank Analysis - H1:21 an EY Banking & Capital Markets Benchmark Report (Summarised) August 2021 Executive Summary Banks Benchmark Report 2021
    South African Peer Bank Analysis - H1:21 An EY Banking & Capital Markets Benchmark Report (summarised) August 2021 Executive summary Banks benchmark report 2021 While we have learned much about COVID-19 and its according to the SA Property Owners Association and has implications, the situation continues to evolve, and led to downward revisions to the economic outlook for the heightened uncertainty remains. Countries that were year. Over and above this, trade has been affected by the thought to be over the worst are seeing rising COVID-19 recent cyber-attack at Transnet at the end of July. cases - such as China, Israel and the United States. South Africa, which has been emerging from the worst recession The developing international and local events underline in a century in 2020, continues to battle the third wave with the continued importance of considering economic risk. future waves of the pandemic likely. Although it is difficult to know the future unknowns, or accurately quantify their effects, having considered the In addition, poor economic conditions, worsened by the possible impacts is better than being completely caught pandemic and a delicate political situation, resulted in the unaware. riots in July which caused R50bn in property damages, Strategic themes noted in H1:21 Challenging and volatile macroeconomic environment Weak GDP growth, COVID-19 third wave, low demand, low consumer confidence and electricity supply Key focus disruptions created Recent South on strategy uncertain economy African civil unrest outlook Customer
    [Show full text]
  • Review of Operations 2020
    REVIEW OF OPERATIONS 56 | FIRSTRAND GROUP | Review of operations Jacques Celliers | CEO | FNB Normalised earnings FNB’s results were materially affected by ROE 31% the COVID-19 pandemic and 25.8 % R12.3 billion resultant lockdown Significant Deterioration in Significant debt relief slowdown in customer income and requested across all affordability levels key growth segments drivers Low transactional activity and credit turnover in customer accounts The balance sheet grew, particularly deposits Deposits Advances RETAIL RETAIL 16 % 4% COMMERCIAL COMMERCIAL 19 % 3% SA customer numbers remained stable: • Ongoing migration from consumer to premium segment • Commercial customers increased 6% FIRSTRAND ANNUAL INTEGRATED REPORT 2020 | 57 Despite ongoing investment in: Operating APP Digitisation TRANSACTIONAL expenses well Platform VOLUMES contained at Insurance and 4% wealth management % strategies 28 eWallet transacting base Interest rate cuts Subdued NIR growth 39% Negative Lower absolute endowment impact volumes during FNB’s DIGITAL and margin pressure lockdown STRATEGY and PLATFORM FULFILMENT Impact of IFRS 9 enabled the forward-looking successful information due to provision of cash Impairment COVID-19 flow relief during charge doubled lockdown year-on-year Higher NPLs Increased stress in debt counselling portfolios Higher actual New business Growth in and expected insurance volumes underwritten life insurance claims impacted insurance policies 32% • Retrenchments • Slowdown in • Fulfilment on INSURANCE • Loss of income credit advances digital
    [Show full text]
  • Shaping the Bank of the Future South African Banking Survey 2013
    Shaping the bank of the future South African banking survey 2013 www.pwc.co.za/banking Contents Foreword 4 Executive summary 6 Introduction 12 Evaluating trends shaping the industry and banks’ responses 16 1 External developments 16 2 Macro trends 34 3 Internal responses 44 4 Stakeholder expectations 58 5 Level of preparedness 66 Appendix 1: Peer analysis 76 Appendix 2: Additional survey results 84 Appendix 3: Research methodology 88 Appendix 4: BA 900 data 90 Contacts 98 PwC | 3 Foreword 4 | Shaping the Bank of the Future We are pleased to launch the 13th edition of the PwC survey on banking in South Africa – Shaping the bank of the future. The banking industry is dynamic and has evolved significantly since our last survey in 2011 as banking chief executives have adapted their strategies in response to regulatory changes and global economic pressures. Our aim is to highlight the challenges and opportunities faced by CEOs as they position their banks to succeed in the future. We also explore industry trends to provide perspectives on how banking in South Africa may evolve over the next three years. We have grouped these challenges and opportunities faced by banks into four broad themes, namely external developments, macro trends, internal responses and stakeholder expectations. Central to all themes is how CEOs are planning to maintain asolid return on equity given the challenges they are facing. Our foremost findings include: • External developments: Regulatory reform coupled with an uncertain economic environment remains the most pressing issue facing CEOs; • Macro trends: The rise and interconnectivity of emerging markets is a significant opportunity for our banks; • Internal responses: Cost containment, leveraging technology in all aspects of banking and a renewed focus on being client centric are some of the internal tactics CEOs are using to stay on top; and • Stakeholder expectations: Although CEOs are positive about their ability to adapt, ROE levels will be lower than in the past.
    [Show full text]