19 analysis of financial results for the six months ended 31 December FIRSTRAND GROUP :: 01 about this report contents This report covers the unaudited condensed consolidated financial results of FirstRand Limited (FirstRand 01 03 or the group) based on International Financial Reporting Standards (IFRS) for the six months ended 31 December Overview Balance sheet analysis 2019. Some of the information relating to the statement of financial position as of results and financial resource at 1 July 2019 was restated following 03 Simplified group and management the adoption of new and revised shareholding structure IFRS. Refer to pages 165 to 176 of 92 Economic view of the section 04 IFRS information, included 05 Track record balance sheet in the full Analysis of financial results 06 Key financial results, ratios 93 Gross advances booklet for the six months ended and statistics – normalised 94 Credit 31 December 2019. The full booklet is 08 Condensed consolidated available on the group’s website at 125 Deposits financial statements – www.firstrand.co.za/investors/financial- normalised 126 Funding and liquidity results. 14 Overview of results 134 Capital The primary results and accompanying Regulatory update commentary are presented on a normalised 34 Segment report 140 basis as the group believes this most 46 Additional segmental 141 Performance measurement accurately reflects its economic performance. disclosure – WesBank 144 Credit ratings The normalised results have been derived 47 Additional segmental from the IFRS financial results. disclosure – Aldermore Normalised results include a condensed consolidated income statement, statement of 49 Additional segmental comprehensive income, statement of financial disclosure – MotoNovo position and a statement of changes in equity. standalone 04 A detailed description of the difference 50 Additional disclosure – between normalised and IFRS results is insurance activities provided on pages 146 and 147 of the full Supplementary booklet. Detailed reconciliations of normalised to IFRS results are provided on pages 156 to information 164 of the full booklet. Commentary is based 146 Company information on normalised results, unless indicated 147 Definitions otherwise. 02 Jaco van Wyk, CA(SA), supervised the 148 Abbreviations preparation of the condensed consolidated 149 Abbreviations of financial financial results. Income statement reporting standards analysis 54 Net interest income (before impairment of advances) 1966/010753/06 61 Credit highlights Certain entities within the FirstRand group are 78 Non-interest revenue Authorised Financial Services and Credit Providers. This analysis is available on the group’s website: 87 Operating expenses www.firstrand.co.za Email questions to [email protected] 01 overview of results FIRSTRAND GROUP :: 03 Simplified group and shareholding structure Remgro Limited* RMH directors Royal Bafokeng Holdings (Pty) Ltd 3.9% 28.2% 6.2% 12.5% RMB Holdings Limited (RMH)* 34.1% BEE partners 5.2% LISTED HOLDING COMPANY (FIRSTRAND LIMITED, JSE: FSR) 100% 100% 100% 100% 100% 100% FirstRand Bank FirstRand EMA FirstRand International FirstRand Investment FirstRand Investment FirstRand Insurance Limited Holdings (Pty) Ltd Limited (Guernsey) Management Holdings (Pty) Ltd Holdings (Pty) Ltd (FRB) (FREMA) (FRI) Holdings Limited (FRIHL) UK banking and Investment SA banking Rest of Africa hard currency Insurance Other activities platform management First National Bank1 58% FirstRand Namibia 100% Aldermore 100% FirstRand Life 100% Ashburton Fund 98% RMB Private Group plc Assurance Managers Equity Holdings Rand Merchant Bank1 70% FNB Botswana 100% MotoNovo 100% FirstRand 100% FNB Investor 97% RMB Private Equity WesBank1 100% FNB Eswatini Finance# Short-Term Services 100% RMB Securities FirstRand Bank India2 Insurance Ltd 94% FNB Mozambique 100% RMB International 100% Ashburton 50% RMB Morgan FirstRand Bank London2 Mauritius 100% FirstRand Management 100% FNB Zambia Stanley FirstRand Bank Insurance Services Company (RF) 100% FNB Lesotho Company 100% RMB Investments Guernsey2,** 100% Ashburton 100% FNB Tanzania (FRISCOL) and Advisory FirstRand Bank Kenya3 Investments 100% First National International 100% RMB Australia 3 FirstRand Bank Angola Bank Ghana Holdings Holdings 3 FirstRand Bank Shanghai 100% RMB Nigeria 100% FNB CIS 100% FNB Stockbroking Management and Portfolio Company (RF) Management 100% Various general 81% MotoVantage partners† 100% FirstRand Securities 100% Hyphen Technology 1. Division * On 19 November 2019, Remgro Limited and RMH announced their intention to unbundle 2. Branch and distribute their shareholdings in FirstRand Limited to Remgro and RMH shareholders, respectively. 3. Representative office ** Trading as FNB Channel Islands. DirectAxis is a business unit of FirstRand Bank Limited. # Wholly-owned subsidiary of Aldermore Group plc. † Ashburton Investments has a number of general partners for fund seeding purposes. All of these entities fall under FirstRand Investment Management Holdings Limited. Structure shows effective consolidated shareholding For segmental analysis purposes entities included in FRIHL, FREMA, FRI, FirstRand Investment Management Holdings Limited and FirstRand Insurance Holdings (Pty) Ltd are reported as part of the results of the managing business (i.e. FNB, RMB, WesBank or FCC). The group’s securitisations and conduits are in FRIHL, FRI and FRB. 04 :: FIRSTRAND GROUP | Overview of results continued FIRSTRAND’S PORTFOLIO of integrated financial services businesses comprises FNB, RMB, WesBank, Aldermore and Ashburton Investments. The group operates in South Africa, certain markets in sub-Saharan Africa and the UK, and offers a universal set of transactional, lending, investment and insurance products and services. Normalised Dividend Normalised return earnings per share on equity 5% 5% 21.2% Dec 18: 7% Dec 18: 7% Dec 18: 22.3% Normalised net asset Normalised earnings CET1 value per share per share ratio 9% 5% 12.4% Dec 18: 9% Dec 18: 7% Dec 18: 12.0% FIRSTRAND GROUP :: 05 Track record NORMALISED EARNINGS (R million) DILUTED NORMALISED AND ROE (%) EARNINGS PER SHARE (cents) CAGR 6% CAGR 6% 23.4 22.9 22.5 22.3 21.2 14 009 249.7 13 342 237.8 12 461 222.1 11 646 207.6 10 915 194.6 Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec 15 16 17 18 19 15 16 17 18 19 DIVIDEND NORMALISED NET ASSET PER SHARE (cents) VALUE PER SHARE (cents) CAGR 8% CAGR 9% 139 146 2 402.2 130 2 202.2 119 2 014.2 108 1 843.0 1 709.2 Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec 15 16 17 18 19 15 16 17 18 19 Note: December 2015 to December 2017 figures are based on IAS 39 and December 2018 to December 2019 figures on IFRS 9. 06 :: FIRSTRAND GROUP | Overview of results continued Key financial results, ratios and statistics – normalised This section is based on normalised results. A detailed reconciliation between IFRS and normalised results is set out on pages 156 to 164 of the full booklet. Six months ended Year ended 31 December 30 June R million 2019 2018 % change 2019 Earnings performance Normalised earnings per share (cents) – Basic 249.7 237.8 5 497.3 – Diluted 249.7 237.8 5 497.3 Headline earnings per share (cents) – Basic 249.4 237.9 5 497.2 – Diluted 249.4 237.9 5 497.2 Earnings per share (cents) – IFRS* – Basic 249.3 280.5 (11) 538.6 – Diluted 249.3 280.5 (11) 538.6 Attributable earnings – IFRS (refer page 148 of the full booklet)* 13 982 15 732 (11) 30 211 Headline earnings 13 987 13 344 5 27 887 Normalised earnings 14 009 13 342 5 27 894 Normalised net asset value 134 751 123 530 9 129 650 Normalised net asset value per share (cents) 2 402.2 2 202.2 9 2 311.3 Average normalised net asset value 132 201 119 546 11 122 606 Market capitalisation 352 170 367 758 (4) 384 530 Ordinary dividend per share (cents) 146 139 5 291 Dividend cover (times) 1.71 1.71 1.71 NCNR B preference dividend – paid (cents per share)** 384.2 378.3 2 760.0 Ratios and key statistics ROE (%) 21.2 22.3 22.8 ROA (%) 1.66 1.71 1.75 Price earnings ratio (times) 12.6 13.8 13.8 Price-to-book ratio (times) 2.6 3.0 3.0 Diversity ratio (%) 41.5 42.1 42.2 Credit impairment charge 5 934 5 021 18 10 500 Credit loss ratio (%) 0.95 0.86 0.88 Stage 3/NPLs as a % of advances 3.58 3.20 3.33 Total impairment coverage ratio (%) 79.0 84.4 82.6 Specific coverage ratio (%) 44.0 46.3 44.7 Performing book coverage ratio (%) 1.30 1.26 1.31 Credit loss ratio (%) – excluding Aldermore 1.05 0.96 0.99 Stage 3/NPLs as % of advances – excluding Aldermore 4.09 3.57 3.72 Total impairment coverage ratio (%) – excluding Aldermore 80.8 86.3 85.1 Specific coverage ratio (%) – excluding Aldermore 45.4 47.7 46.3 Performing book coverage ratio (%) – excluding Aldermore 1.51 1.43 1.50 Cost-to-income ratio (%) 52.1 52.3 51.6 Effective tax rate (%) 23.1 24.2 23.7 Share price (closing – rand) 62.80 65.56 (4) 68.55 Number of employees 49 867 47 334 5 48 780 * Prior period attributable earnings and earnings per share include the after-tax profit on sale of R2.3 billion on the Discovery card transaction, which is excluded from headline and normalised earnings. ** 75.56% of FNB prime lending rate. FIRSTRAND GROUP :: 07 As at As at 31 December 30 June R million 2019 2018 % change 2019 Balance sheet Normalised total assets 1 716 385 1 589 462 8 1 669 039 Advances (net of credit impairment) 1 223 764 1 172 544 4 1 205 752 Average gross loan-to-deposit ratio (%) 88.3 90.1 89.5 Deposits 1 438 588 1 338 621 7 1 393 104 Capital adequacy – IFRS* Capital adequacy ratio (%) 15.6 14.8 15.2 Tier 1 ratio (%) 13.2 12.6 12.9 Common Equity Tier 1 ratio (%) 12.4 12.0 12.1 Leverage – IFRS* Leverage ratio (%) 7.7 7.4 7.5 Liquidity – IFRS Liquidity coverage ratio (%) 148 122 122 Net stable funding ratio (%) 119 112 118 * Ratios include unappropriated profits and the transitional impact of IFRS 9.