2021 - firstrand.co.za

1 2021. annual integrated report Owner-manager philosophy Innovation Entrepreneurship Franchise value about this report This integrated report describes the operational and financial performance and activities of FirstRand Limited (FirstRand or the group) for the year ended 30 June 2021. The group continues to present both new and existing content in an accessible and diagrammatical style. OF PARTICULAR NOTE: In the CEO's report, there is a detailed unpack of the group's strategy across jurisdictions. There is also an explanation of its platform enablement journey, including an example of a customer ecosystem.. Infographics on pages 08 to 11 demonstrate how the operations of the group positively impact a broad range of stakeholders. The commentary and financial results in the chairman's, CEO's and CFO's reports, and the operational reviews are based on the normalised results of the group.

2 The normalised results have been derived from the IFRS financial results. A detailed description of the differences between normalised and IFRS results and detailed reconciliation between normalised and IFRS results are provided on pages 178 to 183. 1966/010753/06. Certain entities within the FirstRand group are authorised financial services and credit providers. This report is available on the group's website: Email questions to FirstRand annual integrated report 2021 01. contents FirstRand group FirstRand group summary About the group 03 consolidated financial statements integrated highlights 04 Directors' responsibility statement and 123. approval of the summary consolidated FirstRand's integrated reporting framework 06 financial statements Measuring social impact 08 I ndependent auditors' report on the summary 124. Chairman's report 12 consolidated financial statements CEO's report 18 Company secretary's certification 125.

3 CFO's report 28 Summary consolidated financial statements 126. Selected notes to the summary consolidated 135. Review of operations financial statements FNB 48. Definitions, abbreviations and 169. RMB 54 supplementary information WesBank 58. Aldermore 61 Shareholders' information Simplified group structure 63 analysis of ordinary shareholders 187. Five-year review normalised 64 analysis of B preference shareholders 188. Performance on the JSE 188. Corporate governance Company information 189. Governance outcomes 70. Listed financial instruments of the group 190. Ethical foundation and culture 71. Governance structure 72 Notice of annual general meeting 193. Board of directors 78. Board committees 87. Large exposures committee 87. D. irectors' affairs and governance 89. committee R. isk, capital management and 91. compliance committee I nformation technology risk and 94.

4 Governance committee Remuneration committee 97. Audit committee 105. ocial, ethics and transformation S 111. committee Responsible corporate citizenship 115. Stakeholder engagement 117. Independent assurance report on selected 118. non-financial information to the directors of FirstRand Limited 02 FIRSTRAND GROUP. integrated reporting suite ANNUAL integrated REPORT. Describes the operational and financial performance and activities of the group. It includes the chairman's, CEO's and CFO's reports, operational reviews, King IV corporate governance disclosures, group summary consolidated statements and notice of the annual general meeting. ANNUAL FINANCIAL STATEMENTS. > FirstRand group audited consolidated annual financial statements > FirstRand Limited company audited financial statements analysis OF FINANCIAL RESULTS AND RESULTS PRESENTATION. Cover the audited summary consolidated financial results of the group based on International Financial Reporting Standards (IFRS) and provide an in-depth analysis of the group's financial results, presented on a normalised basis as the group believes this most accurately reflects its economic performance.

5 The analysis of financial results and results presentation are provided for interim and year-end results. BASEL PILLAR 3 DISCLOSURE. In accordance with the Basel Committee on Banking Supervision (BCBS) Pillar 3 framework and Regulation 43 of the amended Regulations relating to Banks, the group is required to publish standardised disclosure templates that provide users with key quantitative and qualitative information that is comparable and consistent. Reports are provided on a biannual basis. MATERIAL RISK FACTORS. In terms of the JSE Listings Requirements, FirstRand is required to disclose risk factors in terms of paragraph (description of material risks which are specific to the issuer, its industry and/or its securities). REPORT TO SOCIETY. Provides deeper insight into the social impact of the group's operational and financial performance. REMUNERATION REPORT.

6 The remuneration report details FirstRand's remuneration philosophy and policy, and how they were implemented in the current year. Disclosures are aligned to the requirements of section 64C of the Banks Act, the FSB's Principles for Sound Compensation Practices and its Implementation Standards, the BCBS's Pillar 3 disclosure requirements standard updated framework (December 2018) and Directive 1/2019 issued by the Prudential Authority, and the recommended practices of King IV, where appropriate. TCFD REPORT. The Task Force on Climate-related Financial Disclosures (TCFD) was constituted by the Financial Stability Board (FSB) in response to the Paris Agreement. Through recommendations for clear, comparable and consistent information, it promotes transparent disclosure of climate risks and opportunities. FirstRand is a TCFD signatory, and this report represents the group's first TCFD disclosure.

7 This disclosure will enable stakeholders to understand and track FirstRand's progress against its climate roadmap and approach to climate risks and opportunities, as well as short-, medium- and long-term targets. FirstRand annual integrated report 2021 03. about the group PURPOSE FirstRand commits to building a future of shared prosperity through enriching the lives of its customers, employees and the societies it serves. This is the foundation to a sustainable future and will preserve the group's enduring promise to create superior returns for shareholders. PORTFOLIO FirstRand is a portfolio of integrated financial services businesses operating in South Africa, certain markets in sub-Saharan Africa and the UK. Many of these businesses are leaders in their respective segments and markets, and offer a broad range of transactional, lending, investment and insurance products and services.

8 STRATEGY The group's strategy in its domestic market is to deliver platform-based integrated financial services to customers. In the rest of Africa, the group is focused on growing its presence in certain key markets where it believes it can build competitive advantage and scale over time. The UK operations present an opportunity to build a more valuable business in a large market with lower risk. TRACK Consistent execution on strategy and a disciplined approach to allocating scarce financial resources have RECORD delivered a long track record of superior economic profits, returns and dividends to shareholders. 04 FIRSTRAND GROUP. integrated highlights financial normalised Dividend per share earnings Normalised earnings Interim: 110 cents bn 2020: 146 cents 25%. 2020: 54% Final: 153 cents 2020: n/a Net asset value bn 2020: 10%. Return on equity %. 2020: CET1 ratio %.

9 2020: 200 bps 132m*. * Reflects combined Aldermore and MotoNovo (UK operations). FirstRand annual integrated report 2021 05. social Total employees B-BBEE status Carbon emissions (SA operations) (tonnes). 47 413 Level 1 166 964. 2020: 49 233 4% 2020: Level 1 2020: 199 168 16%. Procurement from Economic value added South African employees black-owned companies to society 38 854 2020: 40 668 4% 2020: 11% 2020: % ACI employees (SA operations) Education grants 80% R295m 2020: 80% 2020: R286m 3%. operational FNB active customer base RMB provided 2020: 5% of finance to BEE transactions Digitally active customers RMB won 81. 2020: 3% new primary-banked relationships Number of lives covered by FNB Life WesBank partners 24 out of 36. 2020: 5% original equipment manufacturers (OEMs) active in SA. 06 FIRSTRAND GROUP. FirstRand has carefully considered the principles and objectives of integrated reporting.

10 The group's aim is to apply best reporting practice, in so far as it FirstRand's assists in explaining the group's strategy, operations and performance. It does not seek to tick all the boxes, but rather provide stakeholders with enough integrated relevant information to take an informed view on the quality of its leadership's strategic thinking, execution of strategy and utilisation of operating platforms, financial resources and risk capacity. The approach is fundamentally reporting designed to present substance over form. framework Depicted here is FirstRand's reporting framework, which represents the five key pillars of the group's approach to delivering superior and sustainable returns to its stakeholders. It indicates some key sections or pages in this report where the reader can find narrative and data that substantiate the statement of intent. PURPOSE Measurement Build a future of shared prosperity through enriching The group measures shareholder NIACC, ROE and cost of equity the lives of its customers, employees and the value creation through return on societies it serves.