Nedbank Group · JSE:NED
Nedbank — UBS 15th SA Financial Services Conference 2012
20 slides from Nedbank's conference presentation, Oct 11, 2012
Slide 1: Business models for a brave new world
NEDBANK GROUP Business models for a brave new world Ingrid Johnson, Group Managing Executive: Retail & Business Banking 11 October 2012 NED
Slide 2: Disclaimer
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 le
Slide 3: A brave new world…
A brave new world… Fragile & uncertain Increased Rise of the savvy, Increased macro environment regulation connected consumer competition • Low GDP growth – • Increased capital & • Demographic shifts • New technologies Emerging markets > liquidity requirements enabling new Developed world • Increase
Slide 4: … impacting the profitability of banks…
… impacting the profitability of banks… Evolution of return on equity (high performing international banks) 26% 5% Higher capital 6% Strategic levels cost reduction 1% 15% De- leveraging 6% 5% Effective risk Higher 2% management 3% cost of 1% funding Reduced 3% 4% income 1% Effective NPL Pricing cus
Slide 5: … and returns for shareholders
… and returns for shareholders MSCI World Banks index 180 US bank ROEs European bank ROEs $6,1tr 160 Global Banks market capitalisation ($ trillion) 140 120 16,3% 100 14,5% (55%) 80 60 8,9% $4,2tr 40 7,9% 7,4% 20 7,2% 0 2006 2007 2008 2009 2010 2011 2012 Source: Inet, McKinsey, UBS 5
Slide 6: SA bank profitability & expectations have also adjusted
SA bank profitability & expectations have also adjusted South African Bank ROE & ROAs1 30% 1.8% 1.7% 25% Pre-crisis ROEs 1.6% Post-crisis ROEs 1.5% 20% 1.4% 15% 1.3% Cost of equity 1.2% 10% Leverage: 15,0x 11,6x 1.1% 1.0% 5% Nedbank ROE excl GW target: Nedbank ROE excl GW target: 0.9% COE + 10% COE
Slide 7: In response, the global banking industry has reacted in various ways to restore earnings sustainability
In response, the global banking industry has reacted in various ways to restore earnings sustainability Deleveraging Retrenchments Fee transparency driving re-pricing Top 25 Western EU banks: Leverage (x) 25.5 25.0 25.2 19.9 19.2 19.3 18.8 2006 2007 2008 2009 2010 2011 H1 2012 Branch closures & Mult
Slide 8: Since 2004 Nedbank Group has sought to deliver sustainably for all stakeholders
Since 2004 Nedbank Group has sought to deliver sustainably for all stakeholders 2 Imperial Bank Investment in product & teams for quality acquisition of remaining 49.9% NIR growth 3 Lower risk, Repositioning integrated Nedbank Retail investment 1 bank Basel II & focus on world class 3 risk managemen
Slide 9: Consistently strengthening the balance sheet to ensure resilience through the cycle
1 Consistently strengthening the balance sheet to ensure resilience through the cycle Nedbank Group core tier 1 CAR, % Capital: 10,6% o ~ +25bps for Imperial Bank AIRB 7,2% o Transition to Basel III: net 0% impact o Operating a lower market risk appetite ‒ Trading market risk only 1% of RWA ‒ Ave da
Slide 10: World class risk management an imperative
1 World class risk management an imperative SA bank earnings drivers Nedbank Group Indexed to 2006 (pre-crisis) o Excellent asset quality in wholesale, 500 consistently within TTC credit loss ratios 450 o Risk skills transfer to Nedbank Retail 400 310 o Selected growth in products & segments 350 wit
Slide 11: Portfolio Tilt to strategically important, higher EP activities
2 Portfolio Tilt to strategically important, higher EP activities & to optimise scarce resources including capital & liquidity Example: Selective growth Example: Faster growth Advances, Rbn NIR to Expense growth 2007 - 2011 163,5 150,6 CAGR 59,8 8,3% 79.1 +1.4% -3.2% CPF 90,8 (2,1%) 84.4 10.2% HL 9.
Slide 12: Repositioning Nedbank Retail – delivering sustainable growth
3 Repositioning Nedbank Retail – delivering sustainable growth while evolving to a more client-centred, integrated business Delivering sustainable growth… STRATEGIC INTENT Headline earnings (Rm) & RoE (%) Build deep enduring banking relationships with all in South Africa 11.8% 9.3% by delivering a c
Slide 13: Repositioning Nedbank Retail – delivering sustainable growth
3 Repositioning Nedbank Retail – delivering sustainable growth while evolving to a more client-centred, integrated business Evolving to a client-centred, integrated business STRATEGIC INTENT Total clients Branches & ATMs Build deep enduring banking (mill) Outlets (# ) (# ) relationships with all in
Slide 14: Repositioning Nedbank Retail – re-building the client franchise will take time
3 Repositioning Nedbank Retail – re-building the client franchise will take time Adult1 Primary1 banking customers Annual client Millions growth % +6.1% p.a. 4 100% = 14.3 15.9 19.0 20.1 19.6 21.0 20.5 12% 7% 8% 8% 10% 11% 11% 4% 6% 7% 3% 9% 9% 10% 31% 30% 27% 25% 30% 24% 22% 21% 0% 22% 24% 23% 24%
Slide 15: Repositioning Nedbank Retail – strong personal loans growth
3 Repositioning Nedbank Retail – strong personal loans growth leveraged for primary client gains across key segments Strategic principles for Personal Loans Offered as part of an holistic Selective origination by Strong lever to unlock client value proposition, segment to align with primary client g
Slide 16: Creative innovation around new products, channels & solutions
3 Creative innovation around new products, channels & solutions 16
Slide 17: Repositioning Nedbank Retail – integrated channels & micro markets focus
3 Repositioning Nedbank Retail – translating smaller scale to a strength through integrated channels & micro markets focus Nedbank Integrated Channels Strategy Implementation progress Branch Clients move easily & o Social media listening centre seamlessly between launched their choice of channels o
Slide 18: A risk mitigated, capital efficient, longer-term expansion strategy into Rest of Africa
4 A risk mitigated, capital efficient, longer-term expansion strategy into Rest of Africa Rest of Africa1 ROEs, 2006 - 2012 o Partnership approach with Ecobank in 27.9% West & Central Africa: 24.4% 17.9% ‒ Creating a banking network 12.3% 12.3% 8.9% 9.7% ‒ One bank customer experience across 36 coun
Slide 19: Building a business that is admired by all stakeholders, underpinned by sustainability
5 Building a business that is admired by all stakeholders, underpinned by sustainability o Vision-led, values-driven by our.. Staff o Organisational culture a key differentiator Clients o Significant investment in leadership Building programmes (L4DG) Africa’s o Early adopter of corporate most Share
Slide 20: Nedbank Group strategy delivering results in a brave new world
Nedbank Group strategy delivering results in a brave new world 5 year - share price relative (US $) 200 MSCI World Banks Index MSCI Emerging Market Index Nedbank FINI 15 121 100 95 83 47 0 2007 2008 2009 2010 2011 2012 20
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