Interim results presentation

For the period ended 31 March 2004

2

Features

►Headline earnings per share of 69,2 cents vs 67,6 cents  ►Headline earnings of R326,9 m vs R331,6 m ► Return on equity of 27,4% vs 25,9% and return on assets of 10,5% vs 10,3% ►Interim dividend increased to 35 cents from 25 cents  ►Free cash reserves of R723 m

3

►Increased sales and improved margins lift total revenues  ►Credit performance and market conditions remain positive ►Cost reduction initiatives proving successful with further

benefits expected in second half ►Profit before tax up 16% from R522 million to R607 million ►R60 million STC on special dividend increases total

tax charge from 37% to 47%

Features

4

RoA and RoE

10,5

13,9

8,9 10,310,8

0

2

4

6

8

10

12

14

16

2001 2002 H1-03

H2-03

H1-04

%

RoA Target

Return on assets

31,6

23,225,9 25,8

27,4

0

5

10

15

20

25

30

35

2001 2002 H1-03

H2-03

H1-04

%

RoE Target

Return on equity

5

Dividends per share

1015 12

1825

35

100

31

0

20

40

60

80

100

120

H1-01 H2-01 H1-02 H2-02 H1-03 H2-03 H1-04

Ce

nts

DPS Special DPS

6

FeaturesImpact of changes in drivers on earnings

Deterioration Improvement

66,9

224,5

(155,6)

-200 -150 -100 -50 0 50 100 150 200 250

Change y-on-y in Rm

Interest-bearing assets

Total yield

Revenue

Bad debts

Operating costs

Net funding costs

Net income before taxation

Value added tax and STC

Taxation

Net income after taxation

7

Features

Deterioration Improvement

85,1

2,0

34,8

(18,5)

66,9

224,5

(155,6)

-200 -150 -100 -50 0 50 100 150 200 250

Change y-on-y in Rm

Interest-bearing assets

Total yield

Revenue

Bad debts

Operating costs

Net funding costs

Net income before taxation

Value added tax and STC

Taxation

Net income after taxation

Impact of changes in drivers on earnings

8

FeaturesImpact of changes in drivers on earnings

Deterioration Improvement

(6,9)

(21,3)

(70,7)

85,1

2,0

34,8

(18,5)

66,9

224,5

(155,6)

-200 -150 -100 -50 0 50 100 150 200 250

Change y-on-y in Rm

Interest-bearing assets

Total yield

Revenue

Bad debts

Operating costs

Net funding costs

Net income before taxation

Value added tax and STC

Taxation

Net income after taxation

9

RoE – impact of the special dividend

R change 2004 2003

Headline earnings (5) 327 332

Shareholders’ capital (174) 2 384 2 558

Return on equity (%) 1,5 27,4 25,9

10

RoE model

Margin/advances

Assurance/advances

Other income/advances

Total yield

Bad debts/advances

Opex/advances

Financing costs/advances

Operating margin

Tax rate

Advances/total assets

Return on assets

Gearing

Return on equity

6 mths ended 31 Mar 04

48,2% Bad debts/margin 19,3%

5,5% Cost/income 33,5%

5,7%

59,5%

less

(9,3%)

(19,9%)

(6,5%)

equals 23,8%

less

46,8%

equals 12,7%less

(2,1%)

equals

10,5%multiply

2,6equals

27,4%

6 mths ended 30 Sep 03

44,7% Bad debts/margin 19,8%

5,0% Cost/income 34,9%

5,6%

55,4%

less

(8,8%)

(19,3%)

(6,0%)

equals 21,3%

less

38,1%

equals 13,2%less

(2,4%)

equals

10,8%multiply

2,4equals

25,8%

6 mths ended 31 Mar 03

40,3% Bad debts/margin 19,0%

4,1% Cost/income 37,4%

6,3%

50,7%

less

(7,7%)

(19,0%)

(5,9%)

equals 18,3%

less

36,7%

equals 11,5%less

(1,2%)

equals

10,3%multiply

2,5equals

25,9%

11

299

65

-14

307

116

-16-100

-50

050

100

150

200

250300

350

400

African BankRetail

SpecialisedLending

Discontinuedbusinesses

Rm

Segmental earnings

31 March 2003 31 March 2004

Advances, sales and clients

13

Advances, sales and clientsAdvances analysis

Rm% yoy

growthMarch

2004%

growthSept2003

%growth

March2003

Lending books 18 4 494 9 4 136 8 3 813

African Bank Retail 13 3 595 6 3 381 6 3 181

Specialised Lending 42 899 19 755 19 633

Paydown books (38) 1 778 (18) 2 178 (24) 2 849

African Bank Retail (39) 1 559 (19) 1 931 (24) 2 556

Specialised Lending (25) 219 (11) 247 (16) 293

Gross advances (6) 6 272 (1) 6 314 (5) 6 662

Less: Non-interest-bearing advances 12 (1 135) (20) (1 415) 39 (1 016)

Gross interest-bearing advances (9) 5 136 5 4 899 (13) 5 646

14

Advances, sales and clients

5 136

4 899

5 646

4 400

4 600

4 800

5 000

5 200

5 400

5 600

5 800

H1-03 H2-03 H1-04

Rm

Gross interest-bearing advances

15

Advances, sales and clients

72%66%57%

28%34%43%

0

20

40

60

80

100

March 2003 September 2003 March 2004

%

Lending books Paydown books

Gross advances portfolio mix

16

Advances, sales and clientsSales history

80

120

160

200

240

280

Se

p-0

2

No

v-0

2

Ja

n-0

3

Ma

r-0

3

Ma

y-0

3

Ju

l-0

3

Se

p-0

3

No

v-0

3

Ja

n-0

4

Ma

r-0

4

African Bank Retail Specialised Lending

Rm

17

Advances, sales and clients

►Sales for six months increased by 34% to R2 197 m

►African Bank Retail (up 35%)

►32% increase in number of loans

►2% increase in loan size

►Specialised Lending (up 32%)

►4% decrease in number of loans

►38% increase in loan size

►710 000 new loans advanced

Clients

18

Advances, sales and clients

►Stage 1 – 3rd quarter 2003 differential between highest and lowest interest rate increased by further 9% to 27%

►Stage 2 – 3rd quarter 2004 new scoring models incorporating behavioural, operational and individual risk information and a new set of products

Price differentiation

Impact of stage one since November 2003

34%

30%

36%

Reduced rate Constant rate Higher rate

Underwriting margin and costs

20

Underwriting margin and costsOperating margin analysis

% a

ve

rag

e g

ros

s i

nte

res

t-b

ea

rin

g a

dv

an

ce

s

16,116,8

9,6 11,513,2

12,752,7

48,2 49,0 50,755,4

59,5

6,90,1

10,6 7,78,8

9,3

18,514,0

19,9

17,9 19,019,3

8,1 4,65,8 5,9

6,06,5

8,16,75,18,27,6 11,1

2000 2001 2002 H1-03 H2-03 H1-04

Total yield

After tax operating margins

Charge for bad debts

Operating expenses

Net financing costs

Tax charges

21

Underwriting margin and costsCost-to-income ratio

33,534,9

37,436,6

20

22

24

26

28

30

32

34

36

38

40

2002 H1-03 H2-03 H1-04

%

Asset quality – NPLs and provisions

23

Asset quality – NPLs and provisionsAdvances and provisions analysis

R millions H1-04%

change H2-03%

change H1-03

Advances

Performing 3 852 4 3 689 (5) 3 882

Non-performing 2 419 (8) 2 625 (6) 2 780

Total 6 272 (1) 6 314 (5) 6 662

Ratios

NPLs as a % of total advances 38,6 41,6 41,7

Total provisions as % of NPLs (NPL cover) 74,4 74,7 78,8

Bad debt write-offs as % of average gross advances 13,7 14,2 12,2

24

Asset quality – NPLs and provisionsBad debt charge

%March

2004Sept2003

March2003

Interest yield 48,2 44,7 40,3

Bad debt charge 9,3 8,8 7,7

Bad debt/margin 19,3 19,8 19,0

25

Asset quality – NPLs and provisionsAdvances and provisions analysis

31 March 2004Gross

advances NPLs Total provisionsProvision coverage

Rm Rm

% of gross

advances Rm

% of gross

advances %

Lending books 4 494 1 101 24,5 856 19,1 77,7

African Bank Retail 3 595 986 27,4 738 20,5 74,8

Specialised Lending 899 115 12,8 118 13,1 102,6

Paydown books 1 778 1 318 74,1 944 53,1 71,6

African Bank Retail 1 559 1 135 72,8 789 50,6 69,5

Discontinued businesses 219 183 83,6 154 70,4 84,2

Total 6 272 2 419 38,6 1 800 28,7 74,4

26

Asset quality – NPLs and provisionsVintage chart for African Bank Retail

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

3 4 5 6 7 8 9 10 11 12 13 14

Jan 03 Feb 03 Mar 03 Apr 03 May 03 Jun 03

Jul 03 Aug 03 Sep 03 Oct 03 Nov 03 Dec 03

No

n-p

erf

orm

ing

lo

an

s a

s %

of

ori

gin

al

pri

nc

ipa

l d

eb

t

VINTAGE GRAPH – African Bank RetailMore than two instalments missed

Months on book

27

►AC133: NPLs are valued at the present value of future cash flows Rm

Non-performing loans 2 419

Less provisions (1 800)

Residual NPLs (NAV) 620

►R162,3 million collected in African Bank Retail in last 6 months

►annualised 52,3% of residual NPLs (nominal) or

►average 30 months to collect residual NPLs (NPV)

Asset quality – NPLs and provisionsCollections

Capital, cash flow and funding

29

Capital, cash flow and fundingCapital adequacy

CA-Ratings credit rating affirmed May 2004:A– (long-term) A1 (short-term)

36,8

44,543,6

38,1

0

5

10

15

20

25

30

35

40

45

50

2002 H1-03 H2-03 H1-04

%

Sept 2002 March 2003 Sept 2003 March 2004

30

Capital, cash flow and fundingCapital adequacy model

* Three times average bad debt charge

Balance sheet

R million Capital %

Required capital

R million

Non-performing loans 2 419

Less: Provisions (1 800)

Net book value 620 100,0 620

Performing loans 3 852 27,2* 1 046

Cash reserves 1 221 4,0 49

Goodwill 17 100,0 17

Other assets 408 20,0 82

Off-balance sheet assets 126 20,0 25

Insurance Company CAR 103

Total assets 6 244

Group risk weighted assets 6 499 29,9 1 941

Actual capital 36,8 2 391

Surplus capital 6,9 450

31

Capital, cash flow and fundingMaturity profile of assets and liabilities

Free cash reserves of R723 million

0

500

1 000

1 500

2 000

2 500C

all

1m

2m

3m

4 –

6m

7 –

12

m

13

– 2

4m

25

– 3

6m

37

– 4

8m

49

+

Rm

Assets Liabilities Cumulative net position

32

Capital, cash flow and fundingCash flow analysis

Rm

6 months to31 March

2004

6 months to30 September

2003

6 months to31 March

2003

Cash generated from operations 935 861 806

(Increase)/decrease in gross advances (391) (105) 82

Other (271) (236) (575)

Increase in cash from business activities 273 520 313

Shareholder payments (729) (219) (84)

(Decrease)/increase in total cash (456) 301 229

Cash at the beginning of the period 1 346 1 045 816

Cash at the end of the period 890 1 346 1 045

Made up as follows:

Short-term deposits and cash 723 1 149 808

Bank overdraft (2) (4)

Statutory cash reserves – Insurance 170 197 240

33

Regulatory changes

► Usury Act and Credit Agreements Act to be replaced

► Independent regulatory body to be established

► Consumer protection to be improved► Improve disclosure of cost of credit► Prohibit undesirable credit terms and practices► Regulate the behaviour of intermediaries

► Consumer education to be improved

► Complaints resolution and debt counselling framework to be implemented

► Provisions on reckless lending to be introduced

► Credit bureau activity to be regulated

► Weaknesses in regulation of debt collection to be addressed

Credit law review – summary of proposed framework

34

Looking ahead

►Sales growth to outpace the decline in the

paydown books

►Gross margins to increase moderately based on changes to portfolio mix

►Bad debt charges steady at current levels

►Operating costs to benefit from initiatives implemented

►Continued focus on optimal capital levels

The outlook for both RoA and RoE remain positive.

Thank you