#1Absa Group FY18 results presentation 11 March 2019 Jason Quinn (absa#2Normalised salient features FY17 FY18 % % Diluted headline EPS growth 4 4 Dividend per share growth 4 4 Net asset value per share growth 5 4 Return on equity 16.5 16.8 Profit after regulatory capital charge (Rbn) 2.6 2.7 Net interest margin 4.83 4.64 Operating JAWS (3) (2) Cost to income ratio Credit loss ratio 56.7 57.7 0.87 0.73 21#3Shape of income statement in line with guidance Change Normalisation FY17 FY18 Rm (%) adjustments Net interest income 42 319 43 425 3 330 Non-interest income 30 671 32 235 5 525 Total income 72 990 75 660 4 855 Impairment losses 7 022 6 324 (10) Operating expenses 41 403 43 642 5 (3 161) Other* (1 706) (1 653) (3) (194) Taxation 6 290 6 766 8 484 Non-controlling interest 1 199 1 372 14 14 (30) Headline earnings 15 623 16 128 3 (2016) Note: * includes other impairments, indirect tax and associates' and JVs share of post tax results 31#4IFRS 9 reduced net interest margin Change in net interest margin* (basis points) (12) 483 (3) 3 (3) (3) (2) (3) 3 (2) 3 464 Loans 0 Deposits (8) FY17 IFRS 9 Pricing Mix Pricing Mix Endowment Capital Hedge ** ARO *** Other FY18 Note: * average interest bearing assets; ** interest rate risk management; ***Absa Regional Operations 4#5Group loan growth momentum continued Gross customer loans (Rbn) Retail SA gross customer loans (Rbn) 5 | 450 5% 400 350 300 25% 250 200 150 100 11% 50 0 Retail Business CIB South Africa 2% 232 FY17 FY18 228 12% 115 103 FY17 FY18 4% 26% 25% 42 44 12% 19 21 RBB Absa Regional Operations CIB Home Loans Vehicle & Asset Finance Card Personal Loans#6Improvement in RBB deposits while lower in CIB SA Deposits (Rbn) 61 187 11% 208 114 177 10% 125 Retail Banking Business Banking CIB (2%) 174 South Africa up 4% FY17 ■ FY18 23% 134 (8%) 109 98 91 (1%) WIMI Treasury and other Absa Regional Operations#7Broad-based momentum building in non-interest income Non-interest income by division (Rbn) 5% 18.1 Retail Banking SA fee & commission growth (%) 7 | 17.2 FY17 FY18 6% 6% 7% 5.2 5.2 5.5 4.9 4.6 4.3 4 2 3 7 6 CO 6 RBB South Africa CIB South Africa Absa Regional Operations WIMI 1H16 2H16 1H17 2H17 1H18 2H18#8Continued to manage costs while investing FY18 Change Mix Rm % YoY constant currency growth (%) % 12 Staff 24 031 4 55 Property-related 3 365 1 8 10 Technology 3 194 2 7 Revenue -Operating expenses 8 Depreciation 2 320 17 5 LO Professional fees 2 151 9 5 6 Marketing 1 595 (7) 4 Communication 1 404 0 3 4 Cash transportation 1 266 16 3 2 Amortisation 815 25 2 * Other Total 3.501 18 8 0 43 642 5 100 FY16 FY17 FY18 Note: * includes administration fees, equipment costs, fraud, travel and entertainment, other costs etc. 8 |#9Credit impairments improved further Credit impairments (Rbn) Credit loss ratio (%) FY17 FY18 Underlying FY18 * RBB SA 1.10 0.94 1.06 Retail Banking 1.20 1.04 1.15 Card 4.53 3.42 3.58 VAF 0.87 1.02 1.11 Home Loans 0.30 0.05 0.16 Personal Loans 6.09 5.51 5.80 Business Banking 0.43 0.35 0.53 26% 8.8 (20%) 7.0 (10%) 6.3 CIB SA 0.24 0.36 0.36 Absa Regional Operations 1.34 0.77 0.77 Group 0.87 0.73 0.80 FY16 FY17 FY18 Note: * Excluding impact of International Financial Reporting Interpretations Committee reclassification. 9 |#10Maintained strong capital levels Absa Group Common Equity Tier 1 ratio (%) 12.1 (0.9) 2.0 (1.2) Board target range 10.0% - 11.5% 12.8 0.8 12.0 FY17 normalised RWA movement Profit Dividend FY18 normalised Barclays Plc contribution FY18 IFRS 10 |#11Stable underlying divisional returns Divisional return on regulatory capital (%) 24.0 23.1 Note: * return on equity 11 | FY17 ■ FY18 21.7 20.8 18.5 16.3 16.6 15.6 RBB SA CIB SA Absa Regional Operations * WIMI *#12We benefit from a well-diversified portfolio Divisional headline earnings (Rm) Headline earnings mix FY18 (%) 12 | 2% 8 748 8 880 (1%) ■FY17 ■ FY18 8 5 14 9% 3 411 3 367 3 218 2 954 20 15 3% 1 231 1 268 ■ Retail Banking SA CIB SA RBB SA CIB SA Absa Regional Operations WIMI ■ RBB ARO 38 * ■ Business Banking SA ■ CIB ARO ■WIMI Note: * excluding Group centre and adjusting CIB and RBB ARO for ARO centre#13Regaining RBB leadership in SA a priority . Returns remain healthy, while we aim to improve Headline earnings drivers (Rm) • • • revenue and earnings growth Grow consumer finance business Regain retail deposit market share Deliver best in class customer experience with compelling products • Build a scalable and digitally-led business . (10%) 5% 2% (1 294) 984 483 1% 2% 8 748 (41) 8 880 FY17 Revenue Credit Expenses Other* costs FY18 Note: * Includes other operating expenses, taxation, associates and JVs share of post tax results, non-controlling interest and non-headline items. 13 |#14Strong retail loan production while improving pricing Retail SA YOY loan production (%) New business pricing YoY change (bps) 14 | (1) 1H17 2H17 1H18 2H18 29 22 19 19 16 15 14 13 12 7 9 9 5 2 12 70 (11) 6 0 Home Loans Home Loans Vehicle and Personal Loans Asset Finance Card Vehicle and Asset Finance Personal Loans Credit card#15Card and Payments underpinned RBB SA growth Headline earnings (Rm) 15 | FY17 ■ FY18 0% 1735 1736 15% 1723 1497 966 (9%) 877 1% 2375 (3%) 2311 2508 2521 7% 430 461 Home Loans Vehicle and Asset Card and Payments Finance Transactional and Deposits Personal Loans Business Banking#16Underlying momentum in WIMI Solid growth in SA and continuing line earnings Embedded value of new business (Rm) • Enhanced collaboration with RBB SA 15% 690 • Strong growth in Life embedded value of new 10% 21% 599 business 547 • Strong growth in SA Short-term Insurance • Improved 2H flows in Investment Cluster • Sold more non-core operations . Focus on turning around loss making Africa regions 16 | FY16 FY17 FY18#17Corporate drove CIB's earnings growth 17 | FY17 FY18 CIB headline earnings (Rm) 2 287 (4%) 2 196 21% 2003 4% 1 652 1 124 1 171 Corporate 5 759 2% 5 875 696 (27%) 505 Investment Banking Corporate Investment Banking Total CIB CIB ARO up 7% CIB SA down 1% 17#18Lower interest rates across portfolio, spot Rand weaker 0.0 -1.0 -2.0 -3.0 -4.0 -5.0 -6.0 18 | Change in average interest rates YoY (%) Change in currency versus the Rand (%)* 15 I Average FY18 ■Spot YoY ידו 10 5 0 -5 -10 -15 -20 - | | | | | | | | | | | | | | | | Note: * Negative denotes Rand depreciation, positive is a stronger Rand.#19Absa Regional Operations enhanced our growth Headline earnings growth (%) Absa Regional Operations RoE (%) 19 | ■Additional constant currency growth 3 2 FY17 FY18 24 * 17 18.5 16.6 15.1 13.5 13 * 12.6 12.6 4 9 7 FY17 FY18 FY13 FY14 FY15 FY16 FY17 FY18 Absa Regional Operations South Africa Note: * constant currency growth, excluding impact of stronger average Rand (in red)#20Maintained separation progress Services termination profile 103 of 198 services terminated in line with Transitional Services Agreement 20 | 140 of 266 projects completed in line with plan, including 5 of 24 platinum projects Anti-money laundering (Group) 2017 Planning/mobilisation India IT resource Core Treasury application (CIB) CLS Clients migrated off Barclays.Net (CIB) outsourcing (ARO) Back office processing functions (ARO) payments solution (CIB) 2018 Cumulative project delivery FX trading (CIB) Complete rebranding (ARO) Core Corporate channels (CIB) Acquiring (debit card) migration (ARO) Fincrime systems Issuing migration (ARO) (credit card) Front end (Group) Core Retail application (ARO) banking (ARO) Online banking, mobile application and Hello Money (ARO) Human capital management (Group) 2019 2020 Execution and delivery#21Separation remains on track Spend to date • Project execution and support R7.6bn Separation spend and remaining contribution. (Rbn) Group systems rebuild (HR re-platform, Corporate 12.6 7.6 channels and financial crime) • Technology infrastructure replacement . Localizing contracts Removing 'Member of Barclays' in SA and holding company name change • Transitional Service Agreement (TSA) payments R1.5bn Interest on capital contributions and other benefits 1.5 3.8 7.3 • Interest on capital contribution, FX gains on contribution received and other benefits PLC Separation contribution execution costs TSA Estimated Remaining interest on portion • Separation expected to be capital and cash flow neutral capital contribution and other benefits 21 |#22Outlook for 2019 • Improved deposit growth to exceed loan growth Net interest margin is expected to decline slightly • Costs will remain well controlled, with positive JAWS for the full year, although challenging in the first half • Credit loss ratio is expected to increase • RoE is likely to improve slightly • 22 | Comfortable with dividend cover#23Disclaimer Forward-looking statements 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. 23 |