#1Absa Group Limited Investor Presentation Merrill Lynch Conference 23-25 March 2009 Member of the BARCLAYS Group 6b ABSA 1#2Introduction • Leading retail bank in South Africa • • • Total Assets R773,8 billion Market capitalisation R61,9 billion 1; free float 41,4% Over 10 million customers bank with Absa • Largest distribution footprint • • Leading banking brand Number of staffed outlets 1 192; Number of ATMs 9 104 1 As at 19 March 2009 ↓#3Group Structure Absa Bank Limited 100% Absa Group Limited Absa Financial Services Limited 100% Other subsidiaries Associated undertakings and other interests Retail banking • Absa Wealth • Retail Bank • Absa Home Loans Absa Card • Absa Vehicle and Asset Finance Corporate and commercial banking • Absa Corporate and Business Bank (ACBB) • Commercial Asset Finance Investment banking • Absa Capital Insurance • Absa Life Limited • Absa Insurance Company Limited Fiduciary • Absa Trust Limited ⚫ Absa Consultants and Actuaries (Proprietary) Limited ⚫ Absa Health Care Consultants (Proprietary) Limited Investments • Absa Investment Management Services (Proprietary) Limited • Absa Fund Managers Limited • Absa Mortgage Fund Managers (Proprietary) Limited Other • Absa Financial and Insurance Advisers (Proprietary) Limited Banking • Barclays Bank Mozambique S.A. (80%) • National Bank of Commerce Limited (Tanzania) (55%) • Meeg Bank Limited (100%) Financial services • Absa Stockbrokers (Proprietary) Limited • Absa Portfolio Managers (Proprietary) Limited • Absa Manx Insurance Company Limited • Absa Asset Management (Proprietary) Limited Other • Absa Development Company Holdings (Proprietary) Limited • AllPay Consolidated Investment Holdings (Proprietary) Limited • Absa Trading and Investment Solutions Holdings Limited Banking • Banco Comercial Angolano (Angola) (50%) ⚫ FFS Finance South Africa (Proprietary) Limited (50%) • MAN Financial Services (S.A.) (Proprietary) Limited (50%) * Virgin Money South Africa (Proprietary) Limited (50%) • Sanlam Home Loans (Proprietary) Limited (50%) • Woolworths Financial Services (Proprietary) Limited (50% +1 share) 3#4Contribution by Business Area Profit Contribution by business area² Breakdown of Advances Book 35.80% 27.10% Bancassurance ABCap ACBB Retail 15.40% 21.70% 65% 12% 2. Calculated after the allocation of capital, funding and corporate centre if the VISA profit of R636m is included in December 2008, the contributions will be as follows: Retail-33.7%, ACBB-25.5%, Absa Capital-20.5% and Bancassurance-14.5% 23% 4#5Strategy 5#6Near Term Priorities • Focus on liability management Profitability vs market share . Maintain Profitability • Maximise cross selling • Transaction volumes and asset pricing. • Specific capital demand targets • Free cash flow generation Preserve Capital • RWA relief initiatives • Higher hurdle rates Risk and Cost Focus • • • Disciplined management of book quality Scorecard criteria and collections Risk limits Further cost efficiency initiatives 6#7Long Term Strategy Remains on Track To be the Best Financial Services Provider in South Africa and Selected African markets Build a well diversified business Embed market leadership in retail financial services Build the leading investment bank Accelerate growth in commercial business Grow and build wealth management 7#8Financial Performance 2008 8#9FY08 Financial Highlights • Attributable earnings of R10,6bn (↑ 10%) • • • • • • Headline earnings of R9,9 billion (↑ 5%) Diluted headline earnings per share of 1 412 cents (↑ 7%) Dividends per share of 595 cents (↑ 6%) Net asset value per share of 6 950 cents (↑ 26%) Return on equity of 23.4% Tier 1 capital ratio of 11.6% ఆ#10Strong Growth From Commercial & Investment Banking Earnings Earnings Rm growth Earnings composition RoE % % % Retail Bank 3 706 (25) 35 20 Commercial Bank 2 806 30 26 26 25 Absa Capital 2 249 30 24 21 221 21 Bancassurance 1 597 6 15 40 Corporate Centre Preference Dividends Absa Group 691 7 (457) (46) (4) 10 592 10 100 23 10 10#11A Resilient Performance 2008 2007 Change Rm Rm % Net interest income 21 795 18 890 ↑15 Non-interest income 21 115 16 756 ↑26 Top line revenue 42 910 35 646 ↑ 20 Impairment charge (5 839) (2433) 140 Operating expenditure (21935) (19 209) ↑ 14 Taxation (3 966) (4052) -> 2 Attributable earnings 10 592 9 595 ↑ 10 Headline earnings 9 908 9413 个 5 11#12Advances Growth Slowing, 32% rise in Deposits Gross Loans and Advances (RM) Mortgage loans Vehicle finance Card advances Instalment loans Dec Dec Change Market 2008 2007 % share1 252 704 225 713 12 → 1 47 798 47 159 1 → 3 19 522 13 831 41 ↑ 2 14 665 12 459 18 ↓2 Total net loans and advances Rm 347 084 311 803 11 → 1 Deposits due to customers Rm 134 985 101 944 32 个1 1 Market share per BA900 Jan 08 to Nov08 12#13Strong Growth in Non-interest Income 2008 Change Mix Rm % % Net fee and commission income 13 343 15 66 Net trading income 2 111 ↑ 92 10 Bancassurance - premium income and policyholders' benefits 2 156 ↑ 12 11 Hedging activities and other income 1 062 ↑21 5 Investment income 1 703 ↑ 6 8 Non-interest income (excl. Visa IPO) 20 375 ↑22 100 13#14Interest Margin Remains Under Pressure Basis Points Decline in margin on total assets · Increase in non-interest earning assets Decline in margin on interest-earnings assets Represented by: . • Advances pricing and composition • Endowment impact on capital • • Deposit pricing and composition Cost of wholesale funding · Hedging activities . Other Margin Compression 35 (15) 20 20 3 7 2 (16) (14) (2) 14#15Prolonged Higher Rates Impact on Recovery Values NPLs Impairment Ratios 2008 2007 2008 2007 2008 Impairments % % % % H1 % Retail Bank 5.0 2.2 1.68 0.74 1.21 · Home loans 5.4 2.2 1.19 0.26 0.81 • AVAF 3.3 1.5 2.31 1.14 1.57 . Card 7.5 7.6 5.65 3.50 4.46 • Instalment products 9.8 6.5 8.15 5.34 8.01 • Transactional products 3.8 3.4 0.82 0.97 0.85 Commercial Banking 0.9 0.9 0.28 0.37 0.35 Total 3.5 1.8 1.19 0.58 0.93 15#16Strong Capital Position 2008 Mix Capital Demand Capital Adequacy (%) Bank Group Rbn % Credit risk 294 77 Core Tier I 9.7 10.3 Tier I 11.0 11.6 Retail 141 48 Tier II 3.0 2.5 • ACBB 69 23 Total 14.0 14.1 ● Absa Capital 55 19 • Africa and other 29 assets 29 10 Capital Generation (Rbn) Operational risk 45 12 Profit for the period 11.2 Market risk 5 1 Growth in RWA (5.1) Equity risk 37 10 Dividends (4.4) Total RWA's 381 100 Free cash flow 1.7 • Rigorous focus on capital demand and ROEC • Batho Bonke conversion - June 2009 16#17Outlook 17#18Prospects • • • • Rising Impairments will remain a challenge - - Corporate and Commercial Banking Retail Slowing volume growth Margins under pressure Key drivers — Unemployment Global macro conditions Rand volatility 18#19Conclusion • Protect our earnings • Selectively grow our market share • Maintain ongoing focus on cost reduction • Efficient management and allocation of capital 19#20Addendum Financial Results For the year ended 31 December 2008 Member of the BARCLAYS Group 6b ABSA 20 20#21Retail Bank Financial Highlights Attributable Earnings (Rm) 6000 5000 4000 3000 2000 3 706 4 943 1000 0 Dec 2008 Dec 2007 Revenue of R24.9 billion (↑ 15%) Attributable earnings of R3.7billion (25%) Contribution to Group earnings of 35.8% (F07 contribution: 47.8%) Sharp rise in impairments of 159% Cost to income ratio declines to 54% 21 24#22Quality Long Dated Home Loans Book Age Analysis 60% 16% 23% I Less than 1 year Between 1 & 2 years More than 2 years Loan to Value 11% 48% • 13% • 15% 13% 100%+ 90-100% 80-90% 70-80% <70% 60% of book older than 2 years Less than 1 year granted under more stringent criteria - Loan to value caps - Affordability - Ability to repay 76% of book has less than 90% LTV LTV ratio's will continue to improve with more stringent lending criteria 22 22#23Key Highlights - ACBB Attributable Earnings (Rm) 3000 2500 2000 1500 . 1000 2 806 2 167 1 384 • 500 Attributable earnings of R2.8billion (↑ 30%) • Revenue of R8.7billion (20%) • Transaction volumes up 10% • Impairments well controlled, impairment ratio of 0.28% • Cost to income ratio improves from 51.8% to 49.8% Contribution to Group earnings of 27.1% (F07 contribution: 20.9%) Growth in advances of 33.1% 0 2008 2007 20064 • Deposits up 29.0% 4 excl CAF & Africa 23#24ACBB Product and Sector Diversification % 100 80 60 60 60 26 23 37 38 37 40 40 20 20 0 48 48 50 8% 9% 17% 39% 7% 20% Large Medium CPF CAF Term Africa Cheque accounts Specfin Other* 8 6 Dec 2008 Dec 2007 CPF Equities Corporate 24 24#25AFS Financial Highlights Business Unit Earnings Mix (%) 29 29 Growth • ↓28% . 19 Attributable earnings of R1 597m (6.3%) Operational earnings (↑ 16.4%) . 14 ↑ 47% 10 14 ↓4% 15 18 16 ↑ 16% • 30 35 35 ↑ 22% Investment income contribution to earnings of 19% (FY07: 29%) Net inflow of non- money market mandates of R9,4bn (↑ 17%) Short term Insurance gross premium income (↑ 19%) 2007 2008 Investment Income Investments Fiduciary and other Insurance Life . Embedded value of new business at R331m (2007: R213m) (↑ 55%) 25#26Absa Capital Revenue breakdown Revenue (Rm6) CAGR 46% ('06-'08) • Revenue of R5.3billion (38%) 5 348 • Attributable earnings of R2.2billion (30%) • 3 869 2 098 1 638 2519 1 092 3 250 2 231 1 427 Dec 06 Dec 07 Dec 08 Non-Interest Income Interest Income 6 Gross of impairment losses on loans and advances . Contribution to Group earnings of 21.7% (F07 contribution: 16.8%) Growth in non-interest income mainly due to continued strength in Secondary Markets 26#27Acquisitions as a result of Single Stock Futures Defaults Share Name Number of shares (million) % of Issued Ordinary Acquisition Cost Accounting basis Shares Rm Pinnacle Point Group 1 259.6 Sekunjalo Investments 28 931.4 Equity accounted 84.9 17 36.5 Equity accounted Blue Financial Services 95.9 16 389.9 Available for sale ConvergeNet Holdings8 86.2 10 86.2 Available for sale Total • Acquisition cost is the market value at date of acquisition 1 444.0 • Acquisition cost per share of Blue Financial Services has been reduced as a result of an additional 23 million shares received from the client in settlement of the default claim All default claims have been fully provided against; resulting in a R 52 m charge to the income statement relating to margin shortfalls 8 Sekunjalo is equity accounted as Absa Corporate and Business Bank already held 9%, taking the total holding to 26% 9 ConvergeNet Holdings was acquired in early 2009 27 27#28Absa's profile • • • • Absa Group Limited (Absa), listed on the JSE Limited, is one of South Africa's largest financial services groups, offering a complete range of banking, bancassurance and wealth management products and services Absa's business is conducted primarily in South Africa. In addition, the Group has equity holdings in banks in Mozambique, Angola and Tanzania Absa employs a customer-centric business model with business units serving specific market segments. The Group interacts with its customers through a combination of physical and electronic channels Absa became a subsidiary of Barclays Bank PLC on 27 July 2005, when Barclays acquired a controlling stake in the Absa Group. Barclays is a global financial services provider, engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management services 28#29Contact Details Contacts Telephone Telefax (+2711) (+2711) Head: Investor Relations • Nerina Bodasing 350 2598 3505924 Manager Investor Relations 350 5926 350 5924 Registered Address: 3rd Floor, Absa Towers East, 170 Main Street, Johannesburg, 2001 • Nwabisa Piki Transfer secretaries Computershare Investor Services 2004 (Proprietary) Limited PO Box 61051, Marshalltown, Johannesburg, 2107 Telephone: +2711 370 5000 Absa's ADR depositary bank The Bank of New York Postal address: 101 Barclay Street, 22W, New York, NY, 10286 Web site: www.adrbny.com 29 29#30DISCLAIMER This document contains certain forward-looking statements within the meaning of Section 21E of the US Securities Exchange Act of 1934, as amended and Section 27A of the US Securities Act of 1933, as amended with respect to certain of the plans, current goals and expectations of Absa Group Limited (Absa) relating to its future financial condition and performance. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements sometimes use words such as "aim", "anticipate", "target", "expect", "estimate", "intend", "plan", "objective", "believe", or other words of similar meaning. Examples of forward-looking statements include, among others, statements regarding Absa's future financial position, income growth, impairment charges, business strategy, projected levels of growth in the banking and financial markets, projected costs, estimates of capital expenditures, and plans and objectives for future operation. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances including, but not limited to, the further development of standards and interpretations under International Financial Reporting Standards (IFRS) applicable to past, current and future periods, evolving practices with regard to the interpretation and application of standards under IFRS and pending tax elections with regard to certain subsidiaries, as well as South African domestic and global economic and business conditions, market related risks such as changes in interest rates and exchange rates, the policies and actions of government and regulatory authorities, changes in legislation, the outcome of pending and future litigation, the impact of competition, and Absa's ability to increase earnings per share from acquisitions, which may be affected, among other things, by the ability to realise expected synergies, integrate businesses, and costs associated with the acquisition and integration - a number of which factors are beyond Absa's control. As a result, Absa's actual future results may differ materially from the plans, goals, and expectations set forth in Absa's forward-looking statements. Any forward-looking statements made by or on behalf of Absa speak only as of the date they are made. Absa does not undertake to update forward-looking statements to reflect any changes in its expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. The reader should, however, consult any additional disclosures that Absa has made or may make in documents it has filed or may file with South African regulatory authorities including its most recent annual report. Member of the BARCLAYS Group ab ABSA