Housing Finance Summit Amelia Island, Florida Annual discussion of Housing Market : Investing, Origination and Public Policy 04 – 06 April 2005

South African Mortgage Market Overview Sophisticated mature – R300billion Dichotomous Dominated by Big 4 Banks Sound legal structure – title & foreclosure Wide margins – no real competition No non bank lending Banks “cash rich” – no shortage of capital Credit data good

Total = R 307 bn Source: SARB DI900 Residential SA mortgage loans by lenders South African Mortgage Market Outstanding balance, R bns The SA Mortgage Market Source: SARB Source: SAHL R millions per month The rate of growth of the SA Home Loans book has been exponential On a monthly basis SA Home Loans now originates up to R1billion in new mortgages This represents approximately 15% of monthly originations Source: Standard Bank

Number of clients : Monthly increase in clients : Value of loans approved : R20billion Securitised Portfolio : Thekwini Fund 1 - R1.25billion (December 2001) Thekwini Fund 2 - R1.1billion (December 2002) Thekwini Fund 3 - R2billion (December 2003) Thekwini Fund 4 - R2.5billion (July 2004) Thekwini Fund 5 - R3billion (February 2005) Single Seller Conduit programme - R15billion (launch July 2005) SA Home Loans Activities since launch: February 1999

Why No Securitisation prior to December 2001? Big is best Rating agencies Exposure to international markets Legal framework not securitisation friendly Little incentive for banks to securitise No ability to reinsure first loss position

S A Home Loans The product Its positioning Funding

20 year, variable rate, reducing term mortgage No prepayment or redemption penalties Discounted legal and administrative switch fees No ongoing administrative charges Re-advance facility/access bond Fixed margin above cost of money Switch re-finance proposition The Product

Positioning

Thekwini 4 Summary Size of Issue : R2,500,000,000 Originator and Servicer : SA Home Loans (Pty) Ltd Standby Servicer : Standard Bank of SA (Home Loan Division) Arranger & Bookrunner : Standard Bank of SA (Corporate & Investment Banking) Substitution Period : 2.5 years Final Legal Maturity : 21 Nov 2029 Call Date : 21 Nov 2009 Listing : BESA Class A1 R 1,585 m JIBAR % Class B – R 115 m JIBAR % Additional Capital [0.5]% Class A2 - R 643 m JIBAR % Class A3 – R 107 m 10.34% % Class C – R 50 m JIBAR % Tranching Capital [0.6]% BBB Rating AAA A Not rated WAL 5 yrs 4.18 to 5 yrs In brief

Growth in SA Securitisation Market Public Issuance Deal List SA Home Loans launched the securitisation market in 2001 Since then issuance volumes have grow to R 14 billion in 2003 Source: Standard Bank

Investor support to date…

Relative Value South Africa has seen dramatic growth the capital market since the 1 st bond issue by Telkom in 1999 Spreads on each subsequent transaction have improved SA Home Loans transactions are the benchmark in the securitisation market Source: Standard Bank

Securitisation – Cost of Funds History

Securitisation - A Practical Guide Some Lessons Learned Size does count Quality of data System reporting ability Time, money, personnel Timing – Market conditions Ratings Pricing “Build it they will come …….”

Thank You Simon Stockley