#1Absa Group 1H22 results presentation 15 August 2022 (absa#2Arrie Rautenbach Chief Executive#3Consistent execution delivering strong performance • Strong results reaffirm the strategic choices made in 2018 . Turnaround phase of the execution journey is completed • Strong, experienced and stable leadership team in place · Evolved the operating model Laid a strong foundation for the next phase of the journey, despite a challenging operating environment#4Strategy to regain RBB leadership gaining traction "Fix" phase ... • Delayered the business . End-to-end accountability in business • Integrated bancassurance model • Improved customer experience • the next phase Smart growth with targeted customer acquisition Deliver superior customer experience with a focus on primacy 4 | Stabilised and invested in the digital estate • Accelerate digitisation#5CIB has a solid foundation for further growth Successful Barclays separation ... ... the next phase • Rebuilt core capabilities • . 5 | Shift from a balance sheet-led strategy Digital migration • Primary partner for clients Stable and experienced management team . Growing the CIB ARO franchise Embedded the Pan-African business model Focus on ESG#6Divisions grew earnings and improved returns Normalised headline earnings (Rm) Return on regulatory capital (%) 61 4 161 RBB 34% 5 593 4 059 1H21 1H22 1H21 1H22 24.1 22.8 5% 4 279 15.2 19.9 CIB RBB CIB#7Maintained our positive momentum Pre-provision profit (Rbn) 7 | 23% 9% 1% 22.8 7% 3% 18.5 18.6 16.9 976 1H19 1H20 16.4 ROE (%) Diluted normalised HEPS (c) 27% 487% 1296 1018 (82%) 173 1H21 1H22 1H19 1H20 1H21 1H22 17.7 3% 15.3 505 Dividend per share (c) 110% 650 310 2.6 nil 1H19 1H20 1H21 1H22 1H19 1H20 1H21 1H22#8Jason Quinn Financial Director#9Revenue growth drove strong increase in earnings Normalised headline earnings (Rbn) Pre-provision profit up 23% (23% CCY) 8.6 18% 2.8 7% (6% CCY) (1.5) 10% 26% 12% 3.0 27% (0.5) (1.4) 11.0 1H21 Net interest income Non-interest income Operating expenses Credit impairments Other* 1H22 Revenue up 14% (13% CCY) Note: * Includes other expenses, JVs and associates, Taxation, non-controlling interests, headline earnings adjustments; CCY refers to in constant currency 91#10Net interest margin recovery continued Change in net interest margin* (basis points) 423 1H20 (1) 6 0 1 7 18 441 1H21 Note: * average interest bearing assets; 10 | Pricing Loans 7 Mix Deposits 6 CO 6 (4) (2) 13 454 Pricing Mix Endowment Capital ** *** Hedge Other 1H22 *** group equity endowment; interest rate risk management#11Broad-based loan growth 410 9% 447 Retail SA 7% 133 124 Net customer loans (Rbn) 17% 66 57 Relationship Banking SA RBB ARO Note: In constant currency, RBB ARO grew 10% and CIB ARO 9% 11 5% 341 324 1H21 1H22 18% 63 53 CIB SA CIB ARO#12Consistent loan growth across Retail Banking SA Retail Banking South Africa net customer loans (Rbn) 12 | 257 9% 282 8% 102 94 Home Loans Vehicle and Asset Finance 38 Credit card 1H21 ■1H22 10% 42 18 8% 19 Personal loans#13Continued deposit momentum across the board Customer deposits (Rbn) 263 1H21 1H22 7% 281 Retail SA 11% 190 170 16% 102 88 1% 332 336 17% 80 68 Relationship Banking RBB ARO CIB SA CIB ARO SA Note: In constant currency, RBB ARO grew 7% and CIB ARO 7% 13 |#14Substantial deposit growth improved liquidity Total deposits (Rbn) Group funding mix (%) 14 | 14% 914 1H19 10% 15.2 12.6 7% 1 214 12% 9.2 1 105 10.8 1 028 78.2 74.0 1H19 1H22 1H20 1H21 1H22 ■Customer deposits ■Bank deposits ■Debt securities#15Insurance drove non-interest income rebound Non-interest income (Rbn) Non-interest income by division (Rbn) 18.4 18% 12.8 22% 16.0 2.7 130% 1.5 721% 15.6 Insurance SA 10.4 2.3 1.2 11.3 10% 0.2 ■1H22 4.1 12% 3.7 10.2 1H21 3.1 11.6 7% 10.6 10.8 1H20 6% 5.2 4.9 1H21 1H22 1H21 1H22 1H21 1H22 ■Net trading ■ Other RBB CIB Fees and commission Note: Net trading excludes the impact of hedge accounting 15 |#16Costs well managed as we continue to invest Cost-to-income ratio (%) 1H22 Change Mix Rm % % Staff 13 189 4 55 56.7 56.7 Property 895 (1) 4 Technology 2 643 12 11 Depreciation 1 563 (8) 6 Professional fees 1 334 35 6 Marketing 771 48 3 Communication * 720 4 3 3 Cash transportation 574 (5) 2 Amortisation 736 15 3 Other ** 1 707 11 7 Total 24 132 7 100 1H18 1H19 Note: * printing and stationery plus telephone and postage; ** includes administration fees, equipment costs, fraud, travel and entertainment, auditors, other costs etc. 16 | 54.9 53.9 51.4 1H20 1H21 1H22#17Credit loss ratio increased slightly Credit impairments (Rbn) Credit loss ratio (%) 1H21 1H22 RBB 16% (42%) 10% 0.7 (0.2) 5.2 1.33 1.44 4.7 5.72 6.01 Everyday Banking Vehicle and Asset Finance 1.58 2.24 Home Loans (0.22) 0.19 Relationship Banking 1.14 0.34 RBB ARO 1.74 1.70 CIB 0.24 0.13 Group 0.88 0.91 1H21 RBB CIB 1H22 17 |#18Coverage of declining NPLs remains robust Non-performing loans (%) Stage 3 loan coverage (%) 18 | 6.3 5.6 5.4 5.3 47.4 47.1 FY21 1H22 45.4 44.6 30.8 37.0 FY20 1H21 FY21 1H22 RBB CIB Total#19Broad-based earnings and pre-provision profit growth Headline earnings (Rm) 1H21 1H22 4.2 34% 5.6 5% 4.3 4.1 8.6 173% 0.4 1.1 RBB CIB Head offic, Treasury and other Group 23% Pre-provision 24% 6% profit growth: 19 | 27% 11.0#20RBB franchises all grew pre-provision profit Headline earnings (Rm) 1H21 ■1H22 1 400 (23%) 1 080 248 (90%) 26 4% 1 658 1 598 (316%) 642 1 501 34% 2016 869% 523 54 (297) Home Loans Vehicle and Asset Finance Everyday Banking Insurance SA Relationship Banking RBB ARO Pre-provision profit growth: 6% 11% 8% 469% 7% 42% 20 |#21CIB benefits from its diversity Headline earnings (Rm) 1H21 1H22 1 069 22% 1 305 Corporate Bank Pre-provision 29% profit growth: 21 | (1%) 2 990 2 974 4 059 5% 4 279 2 766 7% 2 955 2% 1 293 1 324 Investment Bank Total CIB South Africa ARO (2%) 6% 2% 15%#22Africa regions improved revenue and earnings growth Revenue (Rbn) 13% 35.7 Normalised headline earnings (Rm) 26% 9 215 22 | 31.6 1H21 1H22 7 286 17% 11.2 9.6 South Africa Africa regions South Africa 1 342 1H21 1H22 32% 1 769 Africa regions#23Common equity tier 1 ratio above Board target range Group common equity tier 1 ratio (%) 23 | 12.4 (0.7) 2.1 (0.7) 13.1 Board target range 11.0% 12.5% - 1H21 RWA movement Profit Dividend 1H22#24Modest GDP growth expectations, with downside risk South Africa real GDP growth (%) 24 6 4 2 0.3 0 -2 -4 4.9 2.3 1.8 2.0 1.3 -6.3 -6 -8 2019 2020 2021 2022F 2023F 2024F 2025F Source: Absa Research#2511.5 11.0 10.5 10.0 9.5 9.0 8.5 8.0 7.5 7.0 1Q22 2Q22 3Q22 4Q22 1Q23 Source: Absa Research 25 | February view 2Q23 Rates rising faster with increased inflationary pressure South Africa prime rate forecast (%) South Africa inflation forecast (%) 3Q23 4Q23 1Q24 2Q24 Current 3Q24 4Q24 8.5 8.0 7.5 7.0 6.5 6.0 5.5 5.0 4.5 4.0 3.5 February view 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 ⚫Current#26We are well positioned for a tougher macro backdrop Group capital ratios (%) Total loan coverage (%) 26 | 16.9 17.0 16.0 14.9 2.2 2.7 2.7 1.7 3.0 1.8 0.8 0.9 13.1 12.5 12.4 11.0 3.3 4.5 4.5 4.5 4.1 4.0 1H19 1H20 1H21 1H22 FY19 1H20 FY20 1H21 FY21 1H22 CET1 Other tier 1 ■Tier 2#272022 outlook • Low double-digit revenue growth likely, with non-interest income slightly higher than net interest income High single digit customer loan growth and low to mid-single digit increase in customer deposits. Net interest margin benefits from rising rates • Credit loss ratio likely to increase to the upper half of 75 to 100bp through-the-cycle range, broadly in line with 1H22 • We expect low to mid-single digit operating expense growth, resulting in positive operating JAWS with growth in pre-provision profit in the teens - Cost to income ratio to improve from FY21, but increase slightly from 1H22 • Consequently, RoE expected to improve to around 17% • Group CET1 capital ratio expected to remain strong and dividend payout ratio increasing to at least 50% 27|#28Medium-term targets Cost-to-income ratio (%) 28 | 55.2 Low 50s 15.8 ROE (%) Sustainably > 17.0 FY21 FY24 FY21 FY24#29Disclaimer 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. 29 |