#1Absa Group FY22 results presentation 13 March 2023 (absa#2Arrie Rautenbach Chief Executive#3Operating environment remained uncertain • • Global environment Rising geopolitical tension - Russia/Ukraine conflict US/China tension Supply chain disruption • Elevated inflation • Tighter monetary policy 3 | Pressure on financial assets Sub-Saharan Africa • Inflationary pressures • Increased policy rates • • Higher country risk premium Some sovereign debt challenges Portfolio diversity supported growth • South Africa Commodity price benefits • Slowing GDP growth • Rate increases exceeded expectations • Higher inflation • Power and infrastructure challenges • Consumer strain building • FATF grey listing#4Headwinds continue to build in South Africa SA real GDP growth (%) SA headline CPI (%) 3.0 3.2 2.4 2.5 1.4 1.3 0.7 1.2 1.5 0.3 (6.3) 4.9 6.1 6.3 5.6 5.7 2.0 5.3 5.0 4.6 4.6 4.6 4.2 4.1 3.3 10 11 12 13 14 15 16 17 18 19 SA end of period repo rate (%) 20 21 6.9 22 22 10 11 12 13 14 15 16 17 18 19 20 21 22 7.0 7.0 6.8 6.8 6.5 6.3 5.8 5.5 5.5 5.0 5.0 3.5 3.8 Loadshedding GWh (k) 11.7 0.2 0.6 1.7 2.5 10 11 12 13 14 15 16 17 18 19 20 21 22 2018 2019 2020 2021 2022 Source: Stats SA, SARB, Eskom, Bureau for Economic Research, Absa Research 4 |#5Building the foundation for sustainable growth • Successfully navigated Barclays separation and Covid-19 Evolved our group structure • Diverse leadership team in place • With the right group strategy • Consistent execution showing results Strong balance sheet (capital, coverage, liquidity) • Investing for growth • Redefined our purpose statement, putting it at the centre of everything we do A Leading African Bank A diversified franchise deliberate, market-leading growth for good in everything we do An active force 5 2 The primary partner for our clients Empowering Africa's tomorrow, together .one story at a time шә әәлір pue panuele BบเบนเM H Entering 2023 with solid momentum 4 A digitally-powered business 5 | 3#6Digitally-powered business 6 | A diversified franchise with deliberate, market-leading An active force for good in everything we do The primary partner for our clients Empowering Africa's tomorrow, together ... one story at a time шеә әәлір pue pequeler 'BนเนนเM V A digitally-powered business • Digitally active customer numbers increased: 11% growth in South Africa 60% of ARO customers now digitally active Over 75% of Core Middle Market and Retail Affluent customers entirely digital More than two-thirds of CIB customers on Absa Access • Digitised insurance product suite • c.20% of Home Loan and Personal Loan sales on the Absa App Continued to lead in digital payments#77 Winning, talented and diverse team A diversified franchise with deliberate, market-leading growth An active force for good in everything we do The primary partner for our clients Empowering Africa's tomorrow, together ... one story 7 at a time шкә әәлр рие рәие "билим A digitally-powered business • • • • Developed strong Employee Value Proposition Fair pay principles Invested R590m in employee training Employee Net Promoter Score almost doubled Attracting and retaining top talent Certified a Top Employer for second year running Top African company in the Forbes 2022 World Top Female-Friendly Companies survey#8Active force for good in everything we do. 8 | A diversified franchise with deliberate, market-le growth An active force for good in everything we op The primary partner for our clients Empowering Africa's tomorrow, together ... one story at a time шеә әәлір pue pequeler 'Bนเนนเพ A digitally-powered business · Elevated ESG as a strategic priority with focus on: Climate change Financial Inclusion 。 Diversity and Inclusion • Continue to lead in South African renewable finance ● • . Leaders in agriculture finance Promoting inclusive finance across the continent Issued inaugural Green Bond and sustainability- linked syndicated loan Increased community investment 37%, with focus on education and skills development#9Diversified franchise with deliberate market leading growth A diversified franchise with deliberate, market-leading growth An active force for good in everything we do The primary partner for our clients Empowering Africa's tomorrow, together ... one story at a time A digitally-powered business • . • • Leveraging the full Absa ecosystem Bancassurance product set fully integrated into product journeys Customer numbers growing in key segments SMEs a key opportunity Higher contribution from underlying ARO business Momentum maintained in Corporate transactional franchise 91 шеә әәлір pue pequeler 'Bนเนนเพ#10Primary partner of our clients A diversified franchise with deliberate, market-leading An active force for good in everything we do The primary partner for our clients Empowering Africa's tomorrow, together ... one story at a time A digitally-powered business • Deepened retail customer relationships: Lowest Ombudsman complaints for 3 years o Converting Reward customers o Improved average product holding Absa Life 1st in the SA-csi Consulta survey for second year running Relationship Banking shifted to a customer- centric segment model >100 new to bank CIB customers in SA 10 | шеә әәлір pue pequeler 'Bนเนนเพ#11Maintained our positive momentum Pre-provision profit (Rbn) 7% 7% 5% 33.6 38.5 35.8 Diluted normalised HEPS (c) 132% 25% 13% 48.0 1% 2 482 2 193 1 923 (51%) 946 11 | FY19 FY20 15.8 7.2 ROE (%) FY21 FY22 FY19 FY20 FY21 FY22 NAV per share (c) 13% 16.6 15.8 5% 4% 5% 15 556 14 868 12 605 13 103 FY19 FY20 FY21 FY22 FY19 FY20 FY21 FY22#12Jason Quinn Financial Director#13Earnings growth underpinned by very strong revenue Normalised headline earnings (Rbn) Pre-provision profit up 25% (26% CCY) 18.6 18% 5.9 13% 7.1 7% (7% CCY) (3.5) 61% (5.2) 17% 13% (1.9) 21.0 FY21 Net interest income Non-interest income Operating expenses Credit impairments Other* FY22 Revenue up 15% (15% CCY) Note: * Includes other expenses, JVs and associates, taxation, non-controlling interests, headline earnings adjustments; CCY refers to in constant currency 13 |#14Margin benefited from pricing and higher interest rates Change in net interest margin* (basis points) 417 FY20 9 (14) 8 9 (5) 1 (5) 10 456 29 7 446 Loans 8 Deposits 12 FY21 Pricing Mix Pricing Mix Endowment Capital ** Hedge *** Other FY22 *** group equity endowment; interest rate risk management Note: * average interest bearing assets; 14 |#15Well diversified loan growth ... Net customer loans (Rbn) 9% 400 368 Product Solutions Cluster ■FY21 FY22 7% 135 126 12% 60 67 Everyday Banking 13% 72 64 Relationship Banking ARO RBB Note: ARO RBB grew 16% and CIB 9% in constant currency. Including loans to banks, CIB grew 14% to R514bn. 15 8% 432 399 CIB#16... with competitive retail loan growth South Africa retail banking net customer loans (Rbn) 16 | 9% 293 270 9% 107 98 Home Loans Vehicle and Asset Finance 39 Credit card 13% FY21 FY22 44 19 10% 20 Personal loans#17Deposit growth slowed Customer deposits (Rbn) 4% FY21 FY22 290 278 Everyday Banking 7% 201 188 Relationship Banking Note: In constant currency, ARO RBB grew 13% and CIB was flat. Including bank deposits CIB grew 4% to R500bn. 17 | 9% 110 101 (0%) 409 407 ARO RBB CIB#18Insurance SA drove non-interest income rebound Non-interest income (Rbn) Non-interest income by division (Rbn) 38.4 18% 9% FY21 FY22 32.6 32.6 7.0 105% 12.1 11% 3.4 5.0 11.1 10.3 7.7 9% 7.1 9.3 6.0 23.7 7% 21.6 22.1 FY20 3.2 60% 3% 5.2 4.9 5.1 27% 4.1 3.3 FY21 FY22 Product Solutions Everyday Banking Relationship Banking ARO RBB CIB ■Net trading ■ Other Fees and commission Note: Net trading excludes the impact of hedge accounting 18 |#19Costs well controlled as we continue to invest Cost-to-income ratio (%) FY22 Change Mix Rm % % Staff 27 873 7 55 58.0 57.7 Property 1 862 (1) 4 Technology 5 541 12 11 Depreciation 3 133 (10) 6 Professional fees 2 884 22 6 Marketing 1 720 34 3 Communication * 1 486 3 3 3 Cash transportation 1 123 (1) 2 Amortisation 1 668 15 3 Other ** 3 617 9 7 Total 50 907 7 100 FY18 FY19 Note: * printing and stationery plus telephone and postage; ** includes administration fees, equipment costs, fraud, travel and entertainment, auditors, other costs etc. 19 | 56.0 55.2 51.5 FY20 FY21 FY22#20Credit loss ratio increased off a relatively low base Credit impairments (Rbn) 61% Credit loss ratio (%) FY21 FY22 2.2 13.7 87% 33% (29%) (8%) Product Solutions 0.35 0.65 0.6 100% 1.4 (0.2) (0.1) Home Loans (0.05) 0.24 1.3 8.5 Vehicle and Asset Finance 1.45 1.76 Everyday Banking 4.99 6.45 Relationship Banking 0.67 0.45 ARO RBB 2.03 1.64 CIB 0.17 0.27 FY22 Group 0.77 0.96 20 |#21NPLs improved and stage 3 coverage increased Non-performing loans (%) Stage 3 coverage (%) 21 | 4.7 6.3 5.4 5.3 46.1 44.6 43.7 42.5 FY19 FY20 FY21 FY22 FY19 FY20 FY21 FY22#22Performance broad-based, benefitting from diversification Headline earnings (Rbn) ■FY21 FY22 (0%) 8% 26% 4.1 4.1 4.0 3.7 3.5 2.8 908% 0.1 1.1 9% 9.0 8.3 Product Solutions Pre-provision 42% Everyday Banking 17% Relationship Banking ARO RBB CIB 4% 30% 13% profit growth: 22 | 72% (0.4) (0.7) Head Office, Treasury, other#23Large businesses all generated returns well above CoE Group earnings mix (%) Return on regulatory capital (%) 23 | 41 5 LO 19 16 19 ■ Product Solutions ■ Relationship Banking ■ CIB ■ Everyday Banking ARO RBB 16.2 14.4 34.5 32.0 27.2 23.9 10.5 FY21 FY22 21.4 20.6 Product Solutions Everyday Relationship ARO RBB Banking Banking CIB#24Insurance SA rebound drives strong PSC growth Headline earnings (Rm) ■FY21 ■FY22 2 692 (17%) 2 230 1 891% 1 354 (27%) 672 493 68 (15%) Home Loans Vehicle and Asset Finance Insurance SA (639) Non-Banking Financial Services and Other (546) Pre-provision profit growth: 5% 13% 485% 24 | 26% 3 531 2 793 Product Solutions Cluster 42%#25Credit impairments dampen Everyday Banking earnings. Headline earnings (Rm) Pre-provision profit growth: 25 | ■FY21 ■FY22 6% 3 306 3 110 (149%) 54 981 (13%) 856 146 (174%) (108) (111) Card Personal Loans Transactions and Deposits Other 14% 26% 9% (0%) 4 126 4 108 Everyday Banking 17%#26Relationship Banking generates strong returns 6.3 Pre-provision profit (Rbn) Loans and deposits (Rbn) 7% 4% 6.5 201 188 26 | FY21 3.7 7% 135 126 FY22 Deposits Loans RoRC (%) 27.2 Headline earnings (Rbn) 8% 23.9 4.0 FY21 FY22 FY21 FY22#27CIB benefits from its improving scale and diversification Headline earnings (Rm) ■FY21 FY22 2 651 30% 3 451 (1%) 5 599 5 526 8 250 9% 8 977 6% 6 070 5 716 15% 2 907 2 534 Corporate Bank Investment Bank Total CIB South Africa ARO Pre-provision 36% 1% 13% 2% 33% profit growth: 27 |#28ARO RBB revenue drives strong earnings growth Pre-provision profit (Rbn) 28 | 3.1 FY21 1.1 RoRC (%) 30% 4.1 0.1 FY22 FY21 Headline earnings (Rbn) 908% 1.1 Cost-to-income ratio (%) 73.0 10.5 FY22 70.6 FY21 FY22 FY21 FY22#29Ghana sovereign charge reduced Africa regions earnings Revenue (Rbn) Normalised headline earnings (Rm) 29 | 65.6 13% 74.2 FY21 ■FY22 15 762 21% 24.6 20.3 16% 18 297 ■FY21 ■FY22 South Africa Africa regions South Africa 2 829 (4%) 2 719 Africa regions#30CET1 ratio remains strong and above Board target range Group common equity tier 1 ratio (%) 30 | (1.1) 12.8 2.0 (0.9) Board target range 11.0% 12.5% - 12.8 FY21 Capital demand Profit Dividend FY22#31We remain well positioned for a tougher macro backdrop Group capital ratios (%) Total loan coverage (%) 31 | 17.0 16.6 15.5 15.0 2.4 2.2 2.8 2.8 1.8 1.6 0.9 1.0 12.8 12.8 11.8 11.2 3.3 4.5 4.1 3.9 FY19 FY20 FY21 FY22 FY19 FY20 FY21 CET1 Other tier 1 ■ Tier 2 FY22#322023 outlook 32 | Revenue Balance sheet Credit impairments Operating expenses Returns Capital Impact of 2022 base effects 2023 expectations High single digit revenue growth, driven by net interest income given balance sheet growth and higher policy rates. High single digit growth in customer loans and deposits. Credit loss ratio (CLR) likely to be at top end of our through-the-cycle target range of 75 to 100 basis points. Mid- to high single digit growth in operating expenses, resulting in a similar cost-to- income ratio to 2022. Mid- to high single digit pre-provision profit (PPP) growth. Return on equity around 17%. Group CET1 ratio at top end of board target range of 11.0% to 12.5%. Dividend payout ratio at least 52%. Given 2022 base effects, stronger revenue and PPP growth in first half, although CLR likely to exceed target range and dampen earnings growth off a relatively high base. Slower second half revenue growth off a high base, but impairments expected to decline substantially YoY and support stronger second half earnings growth.#33Disclaimer Certain statements (words such as 'anticipates', 'estimates', 'expects', 'projects', 'believes', 'intends', 'plans', 'may', 'will' and 'should' and similar expressions in this document are forward looking. These relate to, among other things, the plans, objectives, goals, strategies, future operations and performance of Absa Group Limited and its subsidiaries. These statements are not guarantees of future operating, financial or other results and involve certain risks, uncertainties and assumptions and so actual results and outcomes may differ materially from these expressed or implied by such statements. We make no express or implied representation or warranty that the results we anticipated by such forward-looking statements will be achieved. These statements represent one of many possible scenarios and should not be viewed as the most likely or standard scenario. We are not obligated to update the historical information or forward looking statements in this document. 33 |