IR Results ’17 - Nedbank · 2018-05-10 · IR NEDBANK GROUP LIMITED –Interim Results '17 9 Net interest margin –driven by endowment & asset mix Net interest margin (bps) 1 Rebased

IR

Using our financial expertise to do good

Interim

Results ’17

for the six months ended 30 June 2017

2NEDBANK GROUP LIMITED – Interim Results '17IR

Creating value in a challenging

political & economic

environment

OVERVIEW

MIKE BROWN


Political & policy uncertainty leading to sovereign-credit-ratings down-

grades, lower levels of confidence & recessionary economic conditions

Nedbank & client business impacts

Clients

– Delayed investment & strong repayment behaviours

– Increased savings with focus on lower risk assets/cash

– Liquidations & insolvencies down

– Slower transactional activity & increasing levels of in-bundle behaviour

Balance sheet

– Wholesale pipelines strong, but conversion slower & early repayments

increased, leading to slower wholesale advances growth

– Muted retail advances growth

– Strong deposit growth & excellent liquidity metrics

– Strong organic capital generation

Income statement

– Slower revenue & expense growth

– Improvement in impairments – particularly wholesale

– Currently no material impact of sovereign-credit downgrades on

funding costs

Assets under management

– Good growth, particularly in cash & offshore

Reduced confidence

As at Jul 16 Feb 17 Jul 17

SA GDP 1.0% 0.7% 0.6%

Ave prime rate 10.3% 10.4% 10.3%

Ave inflation (CPI) 6.5% 5.7% 5.3%

Pvt sector credit growth 8.0% 6.2% 5.2%

Key indicators – 2017 forecasts

Jun 16 Dec 16 Jun 17

SACCI BCI1 95.1 93.8 94.9

RMB/BER BCI2 32 38 29

FNB/BER CCI3 -9 -10 -9

1 SACCI Business Confidence Index.2 RMB/BER Business Confidence Index (50 indicates neutral position, 100 extremely positive).3 FNB/BER Consumer Confidence Index (+10 very positive | -10 very negative).


Delivering value to shareholders

NAV per share1 (cents)

12

18

0

13

59

6

14

42

8

15

82

6

16

20

0

13 14 15 16 17

390

460

537

570

610

13 14 15 16 17

16.1 16.5

17.3

15.715.1

13.013.5

13.0

14.4 13.9

18.418.9

13 14 15 16 17

ROE (excl GW)COEROE (excl GW & ETI)

ROE & cost of equity (%) Dividend per share (cents)

NAV ROE > COE Dividends

+2.4% +7.0%CAGR: +7.4% CAGR: +11.8%

H1 H1 H1

1 NAV per share excluding ETI: CAGR +8.8% & +6.6% yoy.


Our role in society – contributing by delivering value to all our stakeholders

STAFF

CLIENTS

SHAREHOLDERS

REGULATORS

COMMUNITIES

Paid R7.8bn in salaries & benefits to support our 32 349 staffmembers & their families

Facilitated transfer of R2.4bn payroll taxes on behalf of staff to government

Leadership & culture change programme supporting strategy

Transforming our workforce towards SA demographics (> 77% black employees)

R76bn new loan payouts to enable clients to finance their homes, vehicles, education & grow their businesses

Enhance client convenience – 74 new Intelligent Depositors, reformatted 303 digitally focused branches to date & added 234 video-banking stations

Infrastructure financing – over R50bn drawn & committed

Safeguarded R763bn deposits at competitive interest rates

Top 3 SA asset manager for nine consecutive years –managing our clients’ investments

Increased NAV per share to 162 00 cents

Paid R3.1bn dividends to shareholders who represent pension funds & investments of all South Africans (incl GEPF, a 6.5% shareholder in Nedbank)

Supportive outcomes at 50th AGM – all resolutions passed with > 90% votes of approval

Maintained a strong balance sheet to support a safe & stable banking system

Paid R5.5bn direct, indirect & other taxes

Invested more than R100bn in government & public sector bonds to support the funding needs of government

Procured 75% of our goods & services locally

Contributed R66m to socioeconomic development (50% spent on education)

Maintained level 2 BBBEE status for eight consecutive years

Paid out R14.9bn in renewable-energy financing to date

TO BE THE MOST ADMIRED

FINANCIAL SERVICES PROVIDER IN AFRICA

BY OUR STAKEHOLDERS

Our purpose - to use our financial expertise to do good for individuals, families, businesses & society


Solid performance from managed

operations underpinned by good

cost management & high-quality

advances book

FINANCIAL

OVERVIEW

RAISIBE MORATHI


Key performance indicators – solid performance from managed

operations

H1

2017

H1

2016

H1

2017¹

H1

2016¹

Headline earnings (Rm) (2.9%) 5 271 5 427 6.7% 6 433 6 030

ROE (excl goodwill) 15.1% 15.7% 18.9% 18.4%

Diluted HEPS growth (3.7%) 1.6% 5.9% 19.7%

Preprovisioning operating profit growth (5.7%) 1.5% (0.1%) 11.6%

Net interest margin2 3.58% 3.52%

CLR 0.47% 0.67%

NIR-to-expenses ratio 81.6% 83.0%

CET1 CAR 12.3% 11.6%

Assets under management (Rbn) 15.2% 295 256

Dividend per share (cents) 7.0% 610 5701 Excluding associate income/losses, as well as funding costs. | 2 H1 2016 rebased.

Managed operations


Headline earnings – solid performance from managed operations

Headline earnings (Rm)

5 427 5 427 5 947

6 320 6 254 5 632

5 271 5 271

520

373

617 (683)

(622)

(361)

H12016

NII NIR Impairments Expenses Associateincome

Direct tax& other

H12017

+4.0% (27.9%)+3.3% +5.0% (>100.0%)

(2.9)

6.7

Group Managedoperations

HE growth (%)

15.118.9

Group Managedoperations

ROE excl GW (%)


Net interest margin – driven by endowment & asset mix

Net interest margin (bps)

1 Rebased NIM for six months ended 30 June 2016 would have been 352 bps & AIEA of R745m, had HQLA been removed from the banking book & included in the trading book from 1 January 2016.2 HQLA -1 bps included in Other.

2

Average interest-earning banking assets1 +2.4%

337

352358

15

96

(5)(1) (4)

1

H12016

TradingLAP

RebasedH1 2016

Endowmentimpact

Assetmix

Assetpricing

Liabilitypricing& mix

Net prime -JIBARimpact

Other H120171 1


H1 2016 H1 2017

Net interest margin – narrowing of prime - JIBAR spread in H2 2016

Prime – 3-month average JIBAR spread (bps)

H2 2016

Ave: 345 bps Ave: 320 bps Ave: 320 bps

3.00

3.10

3.20

3.30

3.40

3.50

3.60

Jan 16 Mar 16 May 16 Jul 16 Sep 16 Nov 16 Jan 17 Mar 17 May 17

Narrowing of the prime - JIBAR spread H1 2017 vs

H1 2016 as short end JIBAR rates priced in prime

interest rate hikes that have not materialised in

H2 2016 & H1 2017


142

158

127

144

101 1

8

15

154

156

122

148

107 1

9

16

Commercialproperty

Termloans

Otherloans

Homeloans

Vehiclefinance

Personalloans

Card

H1 2016 H1 2017

21

Share3 Trend

Commercial

property40.3

Core corporate4 21.2

Home loans 14.5

Vehicle finance 27.6

Personal loans 10.8

Card 14.1

Selective origination

& unique positioning

Gross advances (Rbn)

Mostly

ST &

volatile

Wholesale

Advances up 2.4% – solid growth across retail portfolios driving mix benefit

in NIM

BA900 market share

+8.3% +2.8%(1.1%)

(4.0%)

+6.0%

+5.1% +6.9%

Leveraging

relationships &

pipeline

Retail

1 Terms loans & other longer-dated loans in CIB.2 Other loans include overdrafts, overnight loans, preference shares, deposits placed under reverse repurchase agreements & other smaller corporate loans. 3 BA900 – May 2017 (Compared to June 2016).4 Core corporate loans comprise commercial mortgages, corporate overdrafts, corporate credit cards, corporate instalment credit, foreign sector loans, public sector loans, preference shares, factoring accounts &

. other corporate loans (other loans and advances excluding household personal loans). | Negative impact of ~R4bn on CIB loan book as a result of ZAR strength.


BA900 market share

Share3 Trend

Wholesale 22.0

Commercial 17.1

Household 19.1

Foreign

currency 13.9

Deposits (Rbn)

Deposits up 2.8% – good transactional & Basel III deposit growth,

particularly in RBB, up 8.8%, evident in ongoing market share gains

1 Nedbank’s market share of medium- & long-term wholesale funding is 25% and 26% respectively (May 2017). The favourable Basel III treatment of longer-term funding reduces the need to hold HQLA, thereby

. positively impacting the all-in marginal cost of longer-term wholesale funding vs short-term wholesale funds. Including NCDs with tenure of > 30 days.2 Includes foreign currency liabilities, deposits received under repurchase agreements & other.3 BA900 – May 2017 (Compared to June 2016).

10

2

64

89 52

50

27

7

16

0

10

8

67

81

56

55

29

4

15

7

Current &savings acc

CashMgmt

NCDs L/Tdebt

Fixeddeposits

Call &term

Other

H1 2016 H1 2017

Driven by client

behaviour in the

cycle

Increasing

contractual

tenure

(+ for Basel III)

Transactional

franchise

+6.1%

+8.0%+5.4%(8.6%)

+9.2%

+6.3%

(1.9%)

Increasing

behavioural tenure

(+ for Basel III)

Lengthen funding

profile

Linked to

trading

activities

2

1


4 1

(2) (6)(1)

13 14 15 16 17

Endowment (bps)

HQLA (bps)Total liability mix change & pricing (bps)

(4)

6 5

15

9

(6) (2) (1)

13 14 15 16 17

1

(17)

(11)(13)

6

Net interest margin – driven by endowment, asset mix

change & enhancing the funding profile

Asset mix change (bps)

BOOKLET SLIDE

H1 H1


Funding

sources

Funding

base mix

Foreign currency

downgrade

(what we expected1)

Foreign currency

downgrade

(what actually happened2)

Local currency

downgrade

(what we expect3)

Mild stress Mild stress High stress

Households 20%Limited impact – closed

domestic market

Limited impact – closed

domestic market

Limited impact – closed

domestic market

Commercial 25%Cost of new term funding:

+ 5 bps

Wholesale 40% Reprice marginallyCost of new term funding:

+ 5−8 bps

Cost of new term funding:

+ 10 bps

Capital markets 8% Reprice on new issuances

Down 25−35 bps

(having overshot events of

Nenegate)

Cost of new capital markets

funding: + 25 bps

Foreign – asset matched 6%Matched to US$ lending – no

material impact

Matched to US$ lending – no

material impact

Matched to US$ lending – no

material impact

Foreign – general funding

pool1%

Reprice on contractual

repricing date

Cost of new foreign funding:

+ 15−25 bps (1 year)

Cost of new foreign funding:

+ 25−50 bps (1 year)

Volume-weighted total 100% circa 0 bps circa +5 bps

Net interest margin – impact of sovereign-credit-ratings

downgrades on funding costs not materialBOOKLET SLIDE

Total funding (deposits + long-term debt) at 30 June 2017: R819bn.1 From Dec 2016 year-end presentation | 2 Post sovereign-credit-ratings downgrades in April 2017 (S&P & Fitch to subinvestment grade) | Volume-weighted increase would have been an additional +4 bps if capital

markets increased by + 25 bps | 3 Downgrade to subinvestment grade by Moody’s and S&P (impact over & above initial foreign currency downgrade). Overall impact remains immaterial at + 5 bps for scenarios.


Sovereign

downgradesNenegateABIL

-

50

100

150

200

250

300

350

400

450

Feb12

Aug12

Jul13

Nov13

Mar14

Apr14

Jun14

Oct14

Nov14

Feb15

Apr15

May15

Jun15

Jul15

Nov15

Feb16

May16

Jul16

Sep16

Feb17

Mar17

May17

Jun17

3-year SUD 5-year SUD 7-year SUD 10- to 12-year SUD Tier 2

Net interest margin – evolution of Tier 2 & SUD pricing BOOKLET SLIDE

Pricing (bps above JIBAR)


8 436

2 006

776

203

309

Commission& fees

Tradingincome

Insuranceincome

Privateequity

Other¹

Non-interest revenue up 3.3% – resilient performance in a challenging environment

NIR growth per cluster (%)Non-interest revenue (Rm)

+3.1%

+13.3%

(15.7%)

(52.8%)

1 Represents sundry income, investment income & fair-value adjustments. | 2 C&F 72% of NIR. Growth > 5% ▲ Decline (> 5%) ▼

CIB RBB Wealth RoA

H1 16 H1 17 H1 16 H1 17 H1 16 H1 17 H1 16 H1 17

14.1 (3.9) 7.4 5.6 9.1 (7.9) (12.9) 30.9

▲72.8

▼(53.0)

▼(11.6)

▼(8.0)

▲12.7

▼(16.8)

▲5.5

▲11.6

▲25.3

▼(6.6)

▲7.7

▲5.2

▼(9.5)

▲9.22


131

8377

67

47

13 14 15 16 17

Credit loss ratio – decrease underpinned by a quality portfolio across all

clusters

Group CLR1 (bps) Cluster CLR (bps)

Banking

advances1 Nedbank through-the-cycle target range: 60–100 bps.

H1

48.7% 44.2% 4.3% 3.0%

31

123

16

76

(3)

114

9

80

CIB RBB Wealth RoA

H1 2016 H1 2017


564 578

16 17

701 409

350

350

16 17

RBB Centre

Specific coverage (%) Portfolio coverage (%)

Overlays & central

provision (Rm)

Defaulted advances – maintained prudent levels of coverage & overlays

Defaulted advances (Rbn, %)

36.2 37.2

16 17

0.71 0.65

16 17

18.4 20.2 16.6 16.6

2.62.8

2.3 2.3

0

1

2

3

0

10

20

30

16 17 16 17

Defaulted advances Defaulted advances as % of book

+9.5%

+0.3%

H1

H1 H1

H1

Postwriteoff

recoveries (Rm)

H1

Defaulted advances Defaulted advances

(excl performing

defaults)1

1 Defaulted advances, excluding performing defaults, is defined as Retail advances held in default due to regulatory requirements but are otherwise performing.


86%76%

14%24%

Specificimpairment

NPLs

10 largest exposures Other

CPF12%

Other88%

CIB – CLR improvement underpinned by resolution of stressed counters &

resultant provision reversals

Top 10 client contribution (%)

CLR driven by large recoveries & underpinned by

quality book (bps)

4

10 31

(3)20

4

5

(3)

June 2017Performing

portfolio

(1)

Resolutions

(11)

New

defaults

Existing

defaults

Dec 2016 to June 2017

Dec 2015 to June 2016

June 2016Performing

portfolioResolutionsNew

defaults

Existing

defaults


RBB – CLR underpinned by quality origination

HL new business – low-risk clients proportion1 (%) Vehicle finance 3- months+ arrears benchmarking3

HL new business – low-risk properties proportion² (%) PL market share of new business by risk band4 (%)

40%

50%

60%

70%

80%

09 10 11 12 13 14 15 16 17

30%

40%

50%

60%

70%

09 10 11 12 13 14 15 16 17

Nedbank Competitors

11 12 13 14 15 16 170.00

1.00

2.00

3.00

4.00

5.00

6.006%

5%

4%

3%

2%

1%

0%

1 Source: Experian Delphi Score.2 Source: Lightstone Risk Quality Grade.

3 Source: TransUnion.4 Source: Experian.

**Nedbank Tier 1 Tier 2

High riskMedium riskLow to medium riskLow risk *

20%

15%

10%

5%

0%

14 171615

80%

60%

40%

20%

0%

17161514

80%

60%

40%

20%

0%

17161514

* Low risk (Bureau score >= 658); low-medium risk (Bureau score 644-657); medium risk (Bureau score 626-643); high risk (Bureau score <= 625).

** Tier 1 refers to big 4 banks, excluding Nedbank, while Tier 2 refers to remaining material providers of unsecured personal loans.


0

20

40

60

80

100

120

Group CIB Home loans Vehicle finance Personal loans Card

Nedbank (Jun 17) Nedbank (Dec 16) Bank A Bank B Bank C

Specific coverage – reflecting wholesale & retail asset mix profile

Big 4 banks’ specific coverage ratios1 (%)

1 Peer information from last reported financials (Dec 2016).

Wholesale advances contribution

Selective origination

since 2010 & high-

quality book

CPF 37% of CIB book (higher levels of

security) & coverage in CIB less relevant as

provisions individually determined

Total retail coverage 41.8 42.9 36.3 ND

61% 47% 49% 47%


Expenses – focus on discretionary costs in a slowing revenue growth

environment

Expense growth (%)

8.0

8.9

7.4

8.8

5.0

6.5

8.4

3.4

5.76.2

4.4

6.4 5.4

13 14 15 16 17

Expense growth Excl RoA Inflation

H1

Expenses by cluster (Rm, % growth)

2 911 9 374 1 404 1 092

CIB RBB Wealth RoA

+8.1%

+4.7%

+28.5%+0.4%

2

1 Excluding the consolidation of Banco Único, RoA increased 13%. | 2 Rest of Africa cluster disclosures from 2015.

1


Expenses – focus on discretionary costs in a slowing revenue growth

environment

Expenses (Rm) Key drivers

1 Investments, including IT projects, branch reformatting costs, etc.

13

68

6

13 9

10

14

36

9

566 342 265 66 128

H12016

BAUgrowth

Efficiencies BAUgrowth

Investments Regulatory BancoÚnico

H12017

+1.6% +3.4% Headcount reduction since

Dec ̓16

Discretionary spend well

controlled

Focus on cost-efficiencies

Investment in IT systems/

digital innovation & outlets to

grow the franchise

Additional cost of regulatory

compliance

Consolidation impact of Banco

Único


11.2

8.1

6.1

18.8

1.7

8.8

12.7

5.4

8.5

6.9

(7.6)

5.9

Fees &insurances

Occupation& accommodation

Marketing

Computerprocessing

Incentives

Staff costs

H1 2017 H1 2016

Expense growth – slower growth driven by discretionary spend

Key initiatives driving positive jaws

into the futureExpense growth drivers (%)

Contribution

to total (%)

46.0

8.5

14.8

6.1

8.1

10.8

Headcount optimisation primarily

through natural attrition (~ 10% pa)

Digitisation & integrated channels –

lower cost to serve & revenue

benefits

Target operating model synergies of

R1bn by 2019

Managed evolution IT core systems

replacement

Automation, robotics & artificial

intelligence

Shared services model, including

procurement & property strategy


Expense growth – Target operating model implementation on track to

contribute to meeting medium-to-long-term efficiency target of 50–53%

Target operating model

2019

Shared services

cost optimisation

RBB cost

optimisation

Revenue

opportunities

R1bn pretax

synergies

Removing duplication across

shared services functions (eg

finance, HR, risk, compliance)

Automation & robotics

Marketing spend

optimisation

RoA headoffice cost

optimisation

221 initiatives across 5 broad areas

Credit

Evolved distribution

Operational excellence

Organisational simplification

Procurement

New digital technologies/products/services through partnerships

with accelerators/incubators/Fintechs

Innovation integration & delivery, eg Digital Fast Lane

Data-driven intelligence

± 30%

± 40%

± 30%


0.91.0 1.0

1.2

1.7

12 13 14 15 16 17 18 19

Expenses – replacing core systems in a cost-efficient manner

to create a more agile & digital IT architecture

Nedbank IT cashflow spend1 (Rbn)

1 Costs including software & development costs, as well as computer equipment | Note: Increased amortisation costs more than offset by reduction in licence fees, maintenance costs & process benefits ensuring all

IT projects are NPV positive, apart from a few regulatory driven IT implementations.

Projected to reduce by

2018/19 as regulatory

projects complete

Illustrative only

Core systems (#)

Target

211194

176166

145138

60

12 13 14 15 16 H117

20

BOOKLET SLIDE


Associate income – ETI performance reflective of tough environment,

particularly in Nigeria

Associate income from ETI1 (Rm)

148 278 292 152

(676)

230 171 150

(1 203)

142

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

870 (125)

15 16 17

(1 061)

ETI FY 2016 results (announced

on 18 April 2017)

More difficult operating

environment in Nigeria &

adverse currency movements

Full impairment charge against

legacy loan portfolio

ETI H1 ̓17

expected

around

24 Aug ̓17

1 ETI accounted for one quarter in arrear


ETI carrying value – closed gap to market value as macro conditions in

Nigeria gradually improved in H1 2017

7 808

3 978 3 083 3 045

4 586

(2 830)

(895)

(1 000)

Carrying valueDec 2015

Carrying valueDec 2016

Carrying valueJun 2017

Market valueJun 2017

Share of ETINAV Mar 2017

Associate income/(loss), FCTR, OCI & dividends

Carrying value drivers vs market value (Rm)

Impairment provision

0

50

100

150

200

250

300

350

400

450

Dec 16 Feb 17 Apr 17 Jun 17

ETI share price Nigerian Bank Index

ETI share price vs Nigerian bank index398

14274

10

FY16

results: 7

Note: R895m negative adjustment made up of R1 061m associate loss & R166m positive FCTR and OCI movements.


12.1 12.3

13.0

1.0 (0.6)(0.2) 13.2

Dec2016

Organicprofits

Dividendspaid

RWAincrease

Jun2017

RWA growth vs yoy change in CET1 (excl ETI) (%)

Capital – strong capital generation given slower RWA growth enabling

sustainable dividend payments

CET1 & Tier 1 capital ratio (%)

CET1: 10.5–12.5%

SARB minimum CET1: 7.25%

CET1

Tier 1

Note: Capital adequacy ratios are underpinned by ongoing organic profit generation & RWA optimisation opportunities. IFRS 9 is not anticipated to have a significant impact on capital adequacy.

CAR enhancing

RWA < Capital growth

0%

2%

4%

6%

8%

10%

10%

11%

12%

13%

14%

H113

H213

H114

H214

H115

H215

H116

H216

H117

CET1 ratio (LHS) CET1 ratio, excl ETI (LHS)

RWA growth (RHS)


Capital – fully loss-absorbent capital adequacy BOOKLET SLIDE

Fully loss-absorbent capital adequacy ratios1 (%)

13.9

11.8

13.6 13.0 12.8

Bank A Bank B Bank C Nedbank Nedbank

Tier 1 Tier 2

15.6

13.0

14.415.3

Mar 2017 Jun 2017

1 Nedbank analysis based on peer disclosures. Fully loss-absorbent capital excludes old-style capital instruments & therefore represents fully loss-absorbent capacity before gone concern.

AT 1 issuances (Rbn, bps above JIBAR)

1 500 500 600

700625

565

May 16 Nov 16 Jun 17

Value issued Pricing above JIBAR

15.2

Dec 2016


Dividend – targeting dividend cover at the midpoint of our target range

given strong capital generation

Dividend cover (x times) Dividend yield1 (%)

1.93

2.162.20

2.18 2.162.10

1.99

1.80

13 14 15 16 17

Dividend cover excluding ETI associate income

Dividend cover

Board-approved target range:

1.75–2.25x

5.8

2.9

13 14 15 16 17

NED JSE All-share index

1 Source: I-Net

H1


Earnings contribution (Rm)Headline earnings (Rm)

61%

48%

10%

1%

(22%)2%

CIB RBB Wealth Rest of Africa ETI Centre

3 0

04

2 3

71

61

4

53

(12)

3 2

11

2 5

44

519

70 89

CIB RBB Wealth Rest ofAfrica

(SADC)

Centre

H1 2016 H1 2017

Solid performance from managed operations

+6.9%

+7.3%

(15.5%)

+32.1%


Good headline earnings growth

supported by impairment

recoveries

NEDBANK CORPORATE

& INVESTMENT

BANKING

BRIAN KENNEDY


Growth in headline earnings despite challenging economic

environment

Despite NII & NIR pressures, HE increased 7%

Enabling greater client flow & increased product

penetration

Proactive risk management resulting in lower

impairments

ROE maintained above 20%

Renewed focus on cost management, including

investment in disruptive technologies

Key drivers1 8

70

2 2

12

2 4

85

3 0

04

3 2

11

26.9 26.3

22.921.3 20.8

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

-

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

13 14 15 16 17

Headline earnings (Rm) ROE (%)

Headline earnings, ROE

+7%

H1

4.3% 4.5% 5.4% 6.1% 6.4%

Capitalisation rates:


60.9%39.1%

Headline earnings

49.6%50.4%

Assets

Nedbank CIB Other clustersSix months ended % change H1 2017 H1 2016

Headline earnings (Rm) 6.9 3 211 3 004

Operating income (Rm) 5.3 7 041 6 688

PPOP (Rm) (8.4) 4 059 4 431

Net interest margin (%) 2.13 1.97

NIR-to-expense ratio (%) 115.8 130.1

Efficiency ratio (%) 41.6 37.5

CLR (%) (0.03) 0.31

Average banking advances (Rm) 2.2 331 599 324 519

Average deposits (Rm) (0.1) 339 930 340 140

Headline economic profit (Rm) 11.1 1 065 959

Allocated capital (Rm)1 9.7 31 071 28 329

ROE (%) 20.8 21.3

Corporate & Investment Banking – financial highlights BOOKLET SLIDE

1 Cost of equity H1 2016: 14.4%. | H1 2017: 13.9%.


-

50

100

150

200

250

300

350

13 14 15 16 17

Total Banking Total Property Finance Other

Despite muted average advances growth, quality of book pays

off, while future pipeline remains steady

Average loans & advances (Rbn)

2%

1 Total banking defined as Investment Banking & Client Coverage combined.

1

Investment grade & NIM

H1

(1%) 71% 72% 70% 70% 74%

1.92% 1.92%1.99% 1.97%

2.13%

1.91%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

0%

20%

40%

60%

80%

100%

13 14 15 16 17

Investment Grade (LHS) NIM (RHS)2 H1 2017 NIM would have been 1.91% if adjusted for liquid asset portfolio (like-for-like to H1 16).

2

H1

10%


42

15

38 31

(3)

13 14 15 16 17

CIB sector exposures

22.3 21.618.1

14.8

24.6

13 14 15 16 17

Proactive risk management yielding results

Specific coverage (%)

CLR (bps)

Target range (15−45 bps)

Migration

risk

Down-

side

risk

Change

H1

33.2%

1.8%

1.1%

3.3%

3.5%

1.9%

7.4%

32.5%

2.1%

1.0%

3.5%

4.0%

1.3%

7.7%

Property Finance

Oil & Gas

Construction

Equity

Mining

Retailers

State OwnedEntities

2016 2017

Change in risk profile on the prior period:

▼[ ] Risk decrease [ ] No change [ ] Risk increase- ▲

H

H

M

L

M

L

L L ▼

H -

-

-

-

H M -

M M -

L

H1 16 H1 17


-

1 000

2 000

3 000

4 000

13 14 15 16 17

Trading Income Fees & Comms Private Equity & Other

H1

NIR impacted by subdued client activity, down 3,8%

Key drivers

Good trading income growth as the Market’s

business continues to focus on providing

solutions to all our clients

Commission & fees decreased as a result of

lower corporate activity

Private-equity valuations impacted by the current

economic conditions & high base in prior years

Embedded client intelligence platforms to

enhance our value proposition to clients

Successful primary transactional account wins &

retention of top-tier clients to contribute to

commission & fee growth in H2 2017 & expand

our deposit base

NIR (Rm)

(7%)

11%

(60%)

Comm & fees


Client solutions leading to significant wins

2017 2017

2017

2017

2017

2017

Co-mandated lead arranger, underwriter &

lender of a R3.3bn debt facilityConcluded innovative R2bn debt facility

R1.5bn preference share facility

Co-mandated lead arranger, underwriter &

lender of US$43m in senior debt &

US$10m fuel L/C facility

Mandated lead arranger of R1.6bn funding

package & maintained its position as

primary banker

TBC

Maintained its position as the primary

banker to & funder of Growthpoint

Properties Ltd by concluding an innovative

R2.4bn debt refinancing facility

Preferred supplier of cash-handling

solutions to Tsogo Sun Group, maintained

current primary banker status as well as

addition of Sun 1 Hotels Group

Reappointed as the primary banker to the

Western Cape Government (WCG) for a

third consecutive five-year term

2017

20172017

Concluded successful leveraged

Management buy-out (MBO)


Prospects for Corporate & Investment Banking

A powerful wholesale business focused on its clients

Continued revenue pressure given subdued economy in SA, and corporate & government

investment slowdown to persist in H2 2017

Ongoing commitment to expanding our African focus

Proactive risk management & supporting our clients during difficult periods

Investment in disruptive technologies that deliver enhanced client experiences, revenue growth

& efficiencies over the long term

Proactively acquiring & building top talent at all levels

Continue to create unique client solutions by synergistically combining the strong platforms in

Investment Banking, Markets, Property, Coverage & Transactional


Improving ROE & good

earnings growth in a difficult

environment

NEDBANK RETAIL

& BUSINESS

BANKING

CIKO THOMAS


1 4

03

1 8

31

2 1

32

2 3

71

2 5

44

11.0

13.915.9

18.3 18.7

-2.0

3.0

8.0

13.0

18.0

23.0

28.0

-

1 000

2 000

3 000

4 000

5 000

6 000

13 14 15 16 17

Headline earnings (Rm) ROE (%)

Improving ROE & good earnings growth in a difficult

environment

Key drivers

PPOP + 3.1%

− NII: Solid advances & strong deposit growth, offset

by NIM compression

− NIR growth robust despite weak economic growth

impacting transactional volumes

− Ongoing active cost management, balancing

investments in digital & distribution

CLR benefitting from quality book & collections, &

release of overlays no longer required

RWA reductions reflective of selective origination


7.3%

H1


48.3%51.7%

Headline earnings

32.3%

67.7%

Assets

Nedbank RBB Other clustersSix months ended % change H1 2017 H1 2016

Headline earnings (Rm) 7.3 2 544 2 371

Operating income (Rm) 4.9 13 086 12 477

PPOP (Rm) 3.1 5 248 5 088




CLR (%) 1.14 1.23


Average deposits (Rm) 9.1 274 012 251 187

Headline economic profit (Rm) 32.4 650 491


ROE (%) 18.7 18.3

Retail & Business Banking – financial highlights BOOKLET SLIDE

1 Cost of equity H1 2016: 14.4%. | H1 2017: 13.9%.


1 542 1 702 1 781

916 942

1 064

2 049 2 230

2 306

15 16 17

Retail transactional NIR growth ahead of client growth

Total retail client base (000s) Retail NIR (Rm)

4 512 4 617 4 829

2 526 2 712 2 702

15 16 17

Retail excl

main-

banked

Total7 531

7 3297 038

+4.1%

+7.3%

(0.3%)

Main-

banked

+2.8%

Transactional

Other

Total

4 874

4 507

+5.7%

+8.2%

+6.2%

+7.0%

5 151

H1 H1

Consumer

Card Issuing


Client-centred strategy intact but measure impacted

by macro environment

Main-banked (000s)K

ids &

yo

uth

En

try le

ve

lM

idd

le

Pro

fessio

na

lS

ma

ll b

usin

ess

Bu

sin

ess

bankin

gNote: Non-resident, non-individual segment not shown.

Jun 17

761

Jun 16

757

Jun 15

714

10910397

696764376 409 383

(6%)

Jun 17Jun 15 Jun 16

21.7 21.922.0

1 267 1 3741 369

+9%

+0%+8%

+1%+6%

+3%+5%

+6%+6%

(0%)+1%


Accelerated digitisation of technology & operations

Change in 2017

Devices

Intelligent Depositors (ID)

ATMs

Video bankers

Self service kiosks

Interactive tellers

Volumes

Internet usage

App Suite usage

ATM & ID withdrawals

ID deposits

Teller activity

Digital clients1 (000s) Deposit volumes (000s)

>100%

1 Digitally enabled & active clients have been restated to include all digital channels & to allow for only last 90 days of recent activity.2 Growth largely as a result of the Digital Activation programme run in Q4 2016.

+39%

Enabled

3 861

2 936

5 6802

Jun 15 Jun 16 Jun 17

829748

Active

+8%

869

(3%)

38%

48%

Launched 2016

12%

(6%)

3%

32%

33%

20%

H1 2015

13 460

H1 2017

+5%

42%

14 79314 691

H1 2016

32%

Self Service DepositsTraditional Deposits


Non-performing defaulted advances & specific coverage stable

ProductsJun

2017

Jun

2016

Dec

2016

Home loans 25.0 25.5 25.7

Vehicle asset finance2 60.2 63.4 61.4

Personal loans 71.5 70.4 72.4

Card 92.8 94.6 95.6

Other loans 96.2 95.9 96.2

Total Retail 52.7 52.7 52.9

Business Banking 37.1 38.7 37.6

Total RBB 49.6 49.7 49.9

0%

5%

10%

15%

2011 2012 2013 2014 2015 2016 2017

Home loans Personal loans

Vehicle asset finance Card

Retail total Business Banking

Non-performing default % of total advances1 Non-performing specific coverage (%)

1 Excludes performing defaulted advances2 Vehicle asset finance includes MFC & vehicle loans in RRB.

2


Floor space saved

(m2)

639 593

453391

324

171

255304

303

2010 2014 2015 2016 2017H1

Traditional New image

Integrated channels – efficient use of space & staff, optimising

branch footprint

2010 2014 2015 2016 2017H1

Outlets format mix

(#)

Total & new-image outlets

(#)

Floor space

saved since

2014

13 695

18 743

764708 695

7 273

Target > 30 000 m2 by 2020

639

452 500 504 507 512

4371 55 40 0

144

193149 148

115

2010 2014 2015 2016 2017H1

Branches Personal loans

Inretailers

764708 695

63924 819627 627


Cost initiatives – contributor to ongoing efficiencies & savings

221 initiatives in five areas

Credit

Evolved distribution

Organisation simplification

Procurement

Operational excellence

Distribution slowdown of branch rollouts & refurbishments

Servicing programme – branch headcount reduction

Sales & service integration & reducing layers of management

Inretailer outlet strategy optimisation

Automation of middle office & onboarding in personal loans

Self-service websites

Video banker

Electronic communication optimisation

Credit function simplification in Business Banking

Operational improvements in recoveries & debt collections

Robotic automation

Support function optimisation

Guarding & armed response

Marketing

Telephony & mobile costs

Real estate management: Turnkey supplier model

RBB initiatives


Prospects for Retail & Business Banking

Building sustainable, profitable businesses through the cycle

Grow transactional clients faster than the market through focus on acquisition, retention & cross-sell,

enabled by:

− Digital First, First in Digital

− Disruptive CVPs

− Sales & service excellence

− Loyalty & rewards

Continued quality origination to drive relative CLR outperformance through the cycle

Ongoing focus on expenses with optimisation initiatives

Acceleration of the digital journey to drive improved client experience & operational efficiency

H2 2017 to remain challenging, but benefit from H1 2017 momentum


Challenging first half of the year

NEDBANK

WEALTH

IOLANDA RUGGIERO


42

1

46

4

51

9

61

4

51

9

35.933.9

38.935.9

27.8

-3.0

2.0

7.0

12.0

17.0

22.0

27.0

32.0

37.0

42.0

0

200

400

600

800

1000

1200

13 14 15 16 17

Headline Earnings ROE (%)

Growth impacted by tough economic conditions

Key drivers

Steady growth in Wealth & Asset Management, offset

by weaker Insurance earnings & currency impact

NII supported by good balance sheet growth both

locally & internationally

Decline in impairments driving low CLR

NIR impacted by increase in weather-related claims in

Insurance & subdued market activity

Expense growth well contained

Decline in ROE impacted by prevailing economic

conditions as well as an increase in allocated capital


(15.5%)

H1

Headline earnings


9.8%

90.2%

Headline earnings

Wealth Other clustersSix months ended % change H1 2017 H1 2016

Headline earnings (Rm) (15.5) 519 614

Operating income (Rm) (4.9) 2 137 2 247

PPOP (Rm) (16.1) 685 816




CLR (%) 0.09 0.16

Assets under management (Rbn) 15.2 295 323 256 325

Life embedded value (Rm) (9.8) 2 805 3 110

Life value of new business (Rm) (14.0) 148 172

Headline economic profit (Rm) (29.2) 259 366


ROE (%) 27.8 35.9

Nedbank Wealth – financial highlights

Net inflows R15.6bn

Life APE (11.2%)

Non-life GWP +4,1%

BOOKLET SLIDE

1 Cost of equity H1 2016: 14.4% | H1 2017: 13.9%


Wealth Management – steady growth

Key drivers

Integrated international proposition attracting new

clients & NCCF

Portfolio management & brokerage fees impacted

by subdued investor sentiment

Recognised as a top wealth manager

Nedbank Private Wealth app rated top mobile

banking app

Liabilities & advances (Rbn)

Wealth Management Intl

H1

H1

+4

.2%

(0.7%)

13 14 15 16 17

Liabilities Advances

+34

.1%

27%

13 14 15 16 17

SA client flows SA clients %

1 December numbers, all other periods at June

1


Asset management – excellent investment performance

Key drivers

Best of Breed™ rated top 3 SA manager for 9th

consecutive year & top offshore manager for 3rd year

5th largest unit trust manager & 4th largest offshore

manager in SA

Overall AUM growth of 15.2%

Industry-leading net flows driven by international,

income, passive & cash solutions, resulting in market

share growth

Leading provider of low-cost unitised multi-asset

solutions

Assets under management (Rbn)

167.2 209.5233.5 256.3

295.3

-

50 000

100 000

150 000

200 000

250 000

300 000

350 000

13 14 15 16 17

Local International

H1

15.2%

8%

12%

0%

5%

10%

15%

09 10 11 12 13 14 15 16

SA unit trust

FSB approved offshore unit trust

Market share1 (%)

Quarterly 1 Source: ASISA

17


172

148

-

50

100

150

200

250

13 14 15 16 17

58

3

60

7

400

450

500

550

600

13 14 15 16 17

Insurance – building a client-centred business

Key drivers

Insurance earnings impacted by increased claims

partially offset by a release of reserves

Life VNB decrease driven by lower credit life volumes

& an increase in lapses in credit life & funeral policies

Marginal non-life gross written premium growth

impacted by lower-than-expected homeowner’s cover

volumes

Life value of new business (Rm)

Non-life gross written premiums (Rm)

H1

H1

(14.0%)

4.1%


Prospects for Nedbank Wealth

Continued focus on driving sustainable growth

Client-centred focus through value propositions, brand positioning, systems & accelerated digital

innovation

Continued top investment performance & market share growth

Explore new opportunities for growth & deepen group collaboration

Improved performance expected during H2 2017


SADC – investing for growth

ETI – risks remain, but outlook

improving

REST OF AFRICA

MFUNDO NKUHLU


Rest of Africa – growth in SADC subsidiaries off a low base, offset

by ETI Q4 2016 loss

Key drivers

ETI

Rest of Africa results impacted by ETI Q4 2016 loss

previously reported on 18 April 2017

ETI Q1 2017 profits in line with expectation – driven

by treasury, fixed income & cash management

SADC

SADC subsidiaries grew profits by 32% off a low

base

Allocated capital up 20%

ROE of 3,0% well below the cost of equity

-15

-10

-5

0

5

10

-1400.0

-1200.0

-1000.0

-800.0

-600.0

-400.0

-200.0

0.0

200.0

400.0

600.0

16 17

HE SADC HE ETI

Headline earnings

+32.1%

(550)

(1 092)

H1

(92.7%)

(98.5%)


(20.7%)

120.7%

Headline earnings

3.7%

96.3%

Assets

Rest of Africa Other clustersSix months ended % change H1 2017 H1 2016

SADC

Headline earnings (Rm) 32.1 70 53

Operating income (Rm) 35.5 1 260 930

PPOP (Rm) 46.8 182 124




CLR (%) 0.80 0.76


Average deposits (Rm) 22.9 27 462 22 345

Economic profit (Rm)1 (10.4) (254) (230)

Allocated capital (Rm) 20.3 4 691 3 901

ROE (%) 3.0 2.7

ETI investment

Headline earnings (Rm)(92.7) (1 162) (603)

Total headline earnings (98.5) (1 092) (550)

Total ROE (%) (32.4) (15.2)

Rest of Africa – financial highlights BOOKLET SLIDE

1 Cost of equity H1 2016: 14.4%. | H1 2017: 13.9%.


NamibiaMozambique

Malawi

Zimbabwe

Swaziland

Lesotho

SADC – growth in clients as we invest in infrastructure

+28%

Clients (# 000) Digital activation (# 000)

+33%

Branches (#)

+25%

ATMs (#)Core system & product rollout

Flexcube/Core banking system

Mobile

Card

Rolled out to date

Note: Banco Único operates on its own new core banking system.

>100 %

69

20

H1 17

89

H1 16

67

Other SubsidiariesBanco Único

162

30

H1 16

154

H1 17

192

246

292

H1 17

314

22

H1 16

6 20

11

H1 16 H1 17

31


SADC – investing in core banking, digital & risk management to offer

clients enhanced value

Leading to improved client

value propositions

Deployment of new core

banking system

Enabling mobile & value-added

services

Investment in improved risk management with a focus on financial crime, market conduct & other regulatory risks


ETI strategic investment – turning the tide

Challenging but improving environment

− Commodity exporters under pressure but promising recovery in GDP growth off a low base

− Foreign currency liquidity improving in Nigeria

ETI board-led strategic turnaround underway

− $400m convertible bond approved by shareholders & expected to be fully subscribed

− Funding of resolution vehicle for legacy assets in Nigeria & the restructuring of the profile of maturing debt

obligations

− Strategic turnaround focusing on:

• Client expectations, competitor dynamics and shifts in regulation

• Digitisation to drive client experience & operational efficiencies

• Enhanced risk & compliance culture

Nedbank a supportive & engaged shareholder

− Good progress in strengthening governance & shareholder representation on the ETI board

− Brian Kennedy (CIB) to join Mfundo Nkuhlu (nominated Chair: Risk Committee) on ETI board1

1 Subject to regulatory approval


Prospects for Rest of Africa

SADC

Drive business benefits from enhanced client value propositions from investments made in core

banking, card, digital, distribution & people

Leverage SA capabilities

Review operating model to drive revenue growth & reduction in headoffice costs

Enhance risk management to respond effectively to increased regulation

ETI investment

Economic conditions in West Africa recovering & foreign currency liquidity in Nigeria improving

ETI is an important strategic investment

Risks remain, but the outlook for ETI is improving

For the full year, Rest of Africa is expected to show a significant improvement in H2 2017

compared to H1 2017 (reducing the effect of the Q4 2016 ETI associate loss)


Remaining focused on long-

term strategic delivery to build

the franchise while navigating

the current environment

STRATEGY & 2017

GUIDANCE

MIKE BROWN


Old Mutual managed separation – 25 May 2017 update

Listing of a new South African holding company – ‘Old Mutual Limited’ (OML)

− Initially consist of OMEM, the Group’s Nedbank shareholding & Old Mutual plc

− Subsequent distribution of a significant proportion of the shareholding in Nedbank from OML

− OML will retain an appropriate strategic minority shareholding in Nedbank to underpin the ongoing

commercial relationship

Timing

− Managed Separation materially complete by the end of 2018

− Anticipate the listing of the SA holding company (OML) – at the earliest opportunity in 2018 after Old

Mutual plc’s 2017 full-year results

Business as usual for Nedbank

− No impact on strategy, day-to-day management or operations, nor on staff or clients

− Technology, brand & businesses have not been integrated

− Engagements have been at arm’s length – overseen by independent board structures

− R1,0bn joint synergies will continue


Old Mutual managed separation BOOKLET SLIDE

Old Mutual plc(listed on the LSE & JSE)

Old Mutual Life AssuranceCompany (SA) Ltd

Nedbank Group Ltd(listed on the JSE)

~ 16%

Old Mutual Group Holdings (SA) (Pty) Ltd

OM Portfolio Holdings(SA) (Pty) Ltd

~ 37%

Old Mutual Emerging Markets (SA) Ltd

Strategic minority: % shareholding

to be determined

Old Mutual Ltd*(listed on the JSE & LSE)

Nedbank Group Ltd(listed on the JSE)

Current shareholding structure Envisaged shareholding structure

To be finalised

~ 53%**

Old Mutual Life AssuranceCompany (SA) Ltd

Old Mutual Group Holdings (SA) (Pty) Ltd

OM Portfolio Holdings(SA) (Pty) Ltd

Old Mutual Emerging Markets (SA) Ltd

Distribution of Nedbank shares to shareholders of new SA holding company

in an orderly manner, at an appropriate time

* Shareholders of this company will

receive Nedbank shares to be

distributed

** Additional < 1% included from

managing third party funds


Managing in a difficult political & economic environment – balancing

the short term & the long term

Rigorous management of all discretionary expenditure

− Initiatives in place to drive positive JAWS

High-quality advances book

− Selective origination & strong collections expected to result in ongoing relative

outperformance on credit losses

− Appropriately conservative provisioning (R578m recoveries in H1 2017)

Strong balance sheet

− Capital: well above regulatory requirements & at the top end of board-approved target ranges

− Liquidity: surplus liquidity, low foreign currency reliance, extended tenure & Basel III compliant

Stress testing & managing the economic tail risk

− Well positioned to manage the impact of a local currency downgrade (high-stress event)

Short-to-medium-term focus


2017 guidance (revised)

Growth in DHEPS for full-year 2017 to be positive,

but less than or equal to growth in nominal GDP

Average interest-earning banking asset1 growth below nominal GDP growth

NIM to be slightly above the rebased 2016 level of 3.54%NII

Increase from June 2017 level of 47 bps towards the bottom end of our target

range of 60–100 bps

Mid-single-digit growth (excluding fair-value adjustments)

Mid-single-digit growth

CLR

NIR

Expenses

Full-year associate loss lower than H1 2017 lossAssociate income2

1 To align with industry practice from November 2016 average balances of R6bn in the CIB liquid-asset portfolio were included in our trading book and removed from average interest-earning banking assets used as the denominator in the NIM

calculation. A like-for-like H1 2016 AIEBA base would have been R745bn. 2 Based on ETI FY 2017 guidance.

Note: 2017 guidance based on current economic forecasts.


Managing in a difficult political & economic environment – balancing

the short term & the long term

Ongoing investment in IT to create an agile, competitive & more digital bank to drive

revenue growth & unlock efficiencies

Launched Digital Fast Lane capability to fast-track delivery of new digital products

Focus on growing clients & main-banked market share across all businesses,

enabling NIR growth & market share gains in key deposit categories

Reduce efficiency ratios in RBB & Rest of Africa

Managed evolution benefits & R1bn pre-tax target operating model synergies

Excellent risk management & selective origination should lead to relative impairment

outperformance

Strong balance sheet & capital generative to support dividend growth

SADC – building scale & optimise costs to drive ROE > COE

ETI – remains an important long-term strategic investment | Increased Nedbank

board representation & involvement | Risks remain, but the outlook is improving

Delivering innovative

market-leading client

experiences

Growing transactional

banking franchise

faster than the market

Being operationally

excellent in all we do

Providing our clients

access to the best

financial services

network in Africa

Managing scarce

resources to optimise

economic outcomes

Medium-to-long-term focus


Strategies in place to support meeting our medium-to-long-term

targets

Metric

H1

2017

Medium-to-long-term

target1

Anticipated trajectory over

the medium-to-long-term

ROE (excl goodwill) 15.1% 5% above COE

Diluted HEPS growth (3.7%) ≥ CPI + GDP growth + 5%

CLR 47 bps 60–100 bps

NIR-to-expenses ratio 81.6% > 85%

Efficiency ratio 59.3% 50–53%

CET1 CAR

Tier 1 CAR

Total CAR

12.3%

13.2%

15.7%

Basel III basis:

10.5–12.5%

> 12%

> 14%

Dividend cover 1.80x 1.75 to 2.25 times

An update on our strategy & timing of targets to be provided at FY 2017 year end

Note: Guidance & targets based on current economic forecasts.


Medium-to-long-term targets

Metric H1 2017 vs MLT

Medium-to-long-term

target 2017 outlook1

ROE (excl goodwill) 15.1% ▼ 5% above COE Below target

Diluted HEPS growth (3.7%) ▼ ≥ CPI + GDP growth + 5% Below target

CLR 47 bps ▼ 60–100 bpsAround lower end

of target range

NIR-to-expenses ratio 81.6% ▼ > 85% Below target

Efficiency ratio2 59.3% ▲ 50–53% Above target

CET1 CAR

Tier 1 CAR

Total CAR

12.3%

13.2%

15.7%

▲

▲

▲

Basel III basis3:

10.5–12.5%

> 12%

> 14%

Within

target

Dividend cover 1.80x ▼ 1.75 to 2.25 timesWithin

target range

1 2017 outlook based on current economic forecasts. 2 Efficiency ratio includes associate income.3 Tier 1 & total CAR targets were revised in 2016 from 11.5–13.0% & 14.0–15.0% respectively.

BOOKLET SLIDE


5 9

21

5 7

65

4 2

77

10

83

1

11 4

65

05 06 07 08 09 10 11 12 13 14 15 16

Nedbank Group in a strong position

16.3

6.3

20.1

4.8

06–08 13–H1 17

Wholesale Retail

0.50.6

1.4

08 09 H1 17

(28%)

Global

financial

crisis

Headline earnings (Rm) Loan growth (CAGR %)

Endowment benefit for 1% change

in interest rates (Rbn)

BOOKLET SLIDE


1 Core equity tier 1.

Nedbank Group in a strong position

Number of clients (m) NIR income contribution (%) Defaulted advances (%)

CET1 ratio (%) Funding tenor (%) Coverage (%)

4.4 4.2

7.8

08 09 H1 17

39.8%

42.2%

46.4%

08 09 H1 17

3.9

5.9

2.8

08 09 H1 17

8.21

9.91

12.3

08 09 H1 17

60.9 57.9 51.2

19.9 21.015.7

19.2 21.133.1

08 09 Q2 17

32.0 33.9 37.2

08 09 H1 17

86%

ST

MT

LT

4.2%(53%)

BOOKLET SLIDE

24% 0.45 0.470.65

08 09 H1 17

Sp

ecific

Po

rtfo

lio


33

(19)

23

(2) (1)

Nedbank Retail & Business BankingNet interest margin – mainly due to the compressed spread between

prime and the JIBAR-linked cost of funding

Funding cost impact (bps) Liability (bps)Endowment impact (bps)

Mix & volume change

impact (bps)

Asset pricing impact (bps)Net interest margin (bps)

557 557 578 612 593

5

(2)

615

(25)

(11)

13 10

29 6

2013 2014 2015 2016 2017

(5) (6)

(1) 7 1

2013 2014 2015 2016 2017

(2)

13

(22)(15) (0)

2013 2014 2015 2016 2017

BOOKLET SLIDE

H1 H1 H1


158

104

22138 (131)

48

(8) (12)

320

Trans-actional

Card Securedlending

Priceincreases

Mix &activity

Other Cardmargin

Personalloans

Yoy NIRgrowth

1

Nedbank Retail & Business BankingNIR growth support by good volume growth, but muted by strategic choices & other factors

NIR growth (Rm)

2016 NIR growth (Rm)

2

Volume-related

+105 +182 +18 +111 +28 +35 (72) (13) +394

BOOKLET SLIDE

1 Includes average price increase of 4.6% implemented on 1 January 2017.2 Includes R23m fees received on the MTN Zakhele Futhi shares, R23m unclaimed balances recognised in income in HL & BB non-transactional banking offset by fair-value swaps in MFC of -R16m.3 Includes interchange impact of R88m in 2016 and R261m in 20154 Includes average price increase of 4.3% implemented on 1 January 2016 and 5.6% in January 2015

3 4


Nedbank Retail & Business BankingBuilding more enduring client relationships through transactional product cross-sell

+1.0

Card1

Personal loans

MFC (vehicle

finance)

Home loans

Total retail clients

Investments

Transactional

products

1.5

8.1

2.5

(5.8)

(2.8)

3.6

% YOY growth000s

Transactional clients with product line

74%74%

55% 59%

50% 52%

24% 24%

38% 39%

27%27%

Number of product line clients

with transactional products

1 Prior-year card client numbers restated to align with a definition change implemented in 2016.

917

1 406

1 521

940

486

458

310

553

562

302

5 847

6 055

% YOY growth

Jun ̓̓17Jun ̓16

Jun ̓16 Jun ̓17

+0.2

(0.7)

+4.0

+2.6

+0.5

BOOKLET SLIDE


Nedbank Retail & Business BankingClient-centred strategy intact, but measure impacted by macro with

less client activity

More entrenched

Jun 16 Jun 17

Clients (000s)

78k fewer clients active than prior year

87k fewer clients falling out of definition due to debit activity

+4.7% growth in consistent main banked clients

285

Active < 3 months

266603

3,591

Credits fine, debits

not qualifying

3,669

(2.1%)

1,760

(0.3%)

(12.6%)

Consistent

main-banked

=12 months

1,681

2,7022,712

Main-banked

+4.7%

+7.0%

No credits,

debits fine

690

BOOKLET SLIDE


4.64.8 4.6 4.8 4.7

1.9 2.12.4 3.0 3.2

0.5 0.6 0.6 0.8 0.8

7.07.5 7.7

8.6 8.8

2013 2014 2015 2016 2017

LendingFundingNotionalTotal

25.8

26.727.0

26.0

27.4

189.7

212.2228.9

256.7

279.3

2013 2014 2015 2016 2017

27.0 27.630.1

35.5

43.0

97.9

115.1124.6

141.9153.4

2013 2014 2015 2016 2017

56.059.0

63.667.3

70.2

Fixed deposits (Rbn) Average capital allocation (Rbn)

Total client deposits (Rbn) Interest income (Rbn)Call & term (Rbn)

Current & savings (Rbn)

Nedbank Retail & Business BankingDeposit growth driving increases in NII & market share

5.8%

CAGR 2013 to 2017

12.4% 1.5%

11.9% 10.2% 5.7%

%

BOOKLET SLIDE

H1 H1 H1


15

8

14

7

15

4

26

9

2014 2015 2016 2017

7 7

56

8 2

50

8 9

56

9 3

74

2014 2015 2016 2017

Nedbank Retail & Business BankingRBB historic expense growth – efficiencies offsetting investment

Efficiencies (Rm)Expenses (Rm)

64% of total RBB capital spend related to technology investments.

Integration of Retail &

Business Banking

backoffice

CAGR 6,5%

CAGR 4,6% (core expenses)

Distribution & sales-related

cost growth (Rm)

60

71

95

56

44

13

7

88

42

2014 2015 2016 2017

Sales-related Distribution

BOOKLET SLIDE


Disclaimer

Nedbank Group has acted in good faith and has made every reasonable effort to ensure the accuracy and

completeness of the information contained in this document, including all information that may be defined as

'forward-looking statements' within the meaning of United States securities legislation.

Forward-looking statements may be identified by words such as 'believe', 'anticipate', 'expect', 'plan',

'estimate', 'intend', 'project', 'target', 'predict' and 'hope'.

Forward-looking statements are not statements of fact, but statements by the management of Nedbank

Group based on its current estimates, projections, expectations, beliefs and assumptions regarding the

group's future performance.

No assurance can be given that forward-looking statements will prove to be correct and undue reliance

should not be placed on such statements.

The risks and uncertainties inherent in the forward-looking statements contained in this document include,

but are not limited to: changes to IFRS and the interpretations, applications and practices subject thereto as

they apply to past, present and future periods; domestic and international business and market conditions

such as exchange rate and interest rate movements; changes in the domestic and international regulatory

and legislative environments; changes to domestic and international operational, social, economic and

political risks; and the effects of both current and future litigation.

Nedbank Group does not undertake to update any forward-looking statements contained in this document

and does not assume responsibility for any loss or damage whatsoever and howsoever arising as a result of

the reliance by any party thereon, including, but not limited to, loss of earnings, profits, or consequential loss

or damage.

Documents

IR Results ’17 - Nedbank · 2018-05-10 · IR NEDBANK GROUP LIMITED –Interim Results '17 9 Net interest margin –driven by endowment & asset mix Net interest margin (bps) 1 Rebased