Nedbank Group · JSE:NED
Nedbank — FY2005 Earnings Presentation
88 slides from Nedbank's earnings presentation, 2006
Slide 1: 2005 annual results
NEDBANK GROUP 2005 annual results MAKE THI@®)as HAPPEN
Slide 2: Agenda
2005 annual results presentation Agenda Highlights Financial overview Operating review Conclusion
Slide 3: Highlights
2005 annual results presentation Highlights Headline earnings up 81,7% ROE up from 11,0% to 15,5% Efficiency ratio improved from 71,8% to 65,1% Capital strengthened – dividend cover reduced Reduced earnings volatility Unique BEE deal implemented Strong turnaround in Retail Nedbank / Peoples Bank int
Slide 4: Highlights – BEE deal
2005 annual results presentation Highlights – BEE deal Broad-based BEE deal implemented (11,5% of SA businesses) 15 251 new shareholders Employees & Management (9 729 black & 6 249 women) 47 523 retail applications (R741m) Clients 21 corporate clients (incl. Aka) 55 business banking clients Strategi
Slide 5: Highlights – BEE deal (continued)
2005 annual results presentation Highlights – BEE deal (continued) Broad-based BEE deal implemented (11,5% of SA businesses) Eyethu Khulisa Welkom Phutuma Ikageng Phutuma (Nedbank) (Telkom) (Naspers) Futhi (Johnnic) (M-Net) Launch date 2005 2004 1998 1998 1997 1995 % total shares 2,17% <1% 1,77% 10,
Slide 6: Highlights – switch of focus
2005 annual results presentation Highlights – switch of focus Internal focus More external focus • Set the base • Client service • Reduced the risk • Product innovation • Increased accountability • Systems enhancements • Clarified vision • Channel improvements • Set strategy • Market share • Fixed t
Slide 7: Financial overview
Financial overview Mike Brown
Slide 8: Key financial indicators
2005 annual results presentation Key financial indicators For the year ended 2005 2004 Headline earnings Rm 3 167 1 743 Headline EPS cents 797 483 Fully diluted HEPS cents 791 482 ROE % 15,5 11,0 ROA % 0,93 0,54 Margin % 3,55 3,18 Efficiency ratio % 65,1 71,8 Total assets Rbn 352,3 327,8 Tangible NA
Slide 9: Income statement
2005 annual results presentation Income statement Rm – year ended % ch 2005 2004 Net interest income 19,4 8 529 7 145 Impairments (2,3) (1 189) (1 217) Income from lending activities 23,8 7 340 5 928 Non-interest revenue 1,2 8 483 8 379 Foreign currency translation gains 126 (280) Total expenses 2,0
Slide 10: ROE drivers
2005 annual results presentation ROE drivers % - year ended 2005 2004 NII / Int-earning assets 3,55 3,18 Impairments / Int-earning assets 0,49 0,54 NIR / NII 99,46 117,27 Expenses / Int-earning assets 4,64 4,87 Efficiency ratio 65,10 71,76 Forex / Int-earning assets 0,05 (0,12) Int-earning assets /
Slide 11: Headline earnings
2005 annual results presentation Headline earnings Rm 2 600 2 400 2 200 2 000 1 800 1 600 1 400 1 200 1 000 800 600 400 200 0 1st half 2004 2nd half 2004 1st half 2005 2nd half 2005 Headline earnings Headline earnings Attributable earnings excl FX & BEE … showing continuous improvement
Slide 12: Segmental performance
2005 annual results presentation Segmental performance Headline earnings ROE Rm - year ended % ch 2005 2004 2005 Excl 2004 BEE Nedbank Capital 17,8 1 017 863 29,2 29,3 29,3 Nedbank Corporate 11,8 1 984 1 775 19,7 20,0 18,7 Nedbank Retail 66,3 938 564 18,4 19,8 12,1 Imperial Bank 102,8 144 71 12,4 12
Slide 13: Shared Services & Central Costs
2005 annual results presentation Shared Services & Central Costs Shared Services (Rm) 2005 2004 Merger costs (post tax) (113) (232) Other central costs 78 85 (35) (147) Central Management (Rm) Excess cost of subordinated debt (229) (226) Preference share dividends (228) (229) Funding cost of group g
Slide 14: NII - margin analysis
2005 annual results presentation NII - margin analysis % of daily average interest-earning assets % Rm December 2004 3,18 7 145 2005 asset growth 508 Net endowment effect 0,15 358 Margin compression (0,09) (218) Improvement in product mix & pricing 0,13 312 Other 0,18 424 December 2005 3,55 8 529
Slide 15: NII - margin analysis continued
2005 annual results presentation NII - margin analysis continued % of daily average interest-earning assets % Rm December 2004 3,18 7 145 2005 asset growth 508 Net endowment effect 0,15 358 Rights issue 0,05 97 Other 0,10 261 Current & savings accounts margin compression (0,05) (120) Market margin c
Slide 16: Interest rate sensitivity
2005 annual results presentation Interest rate sensitivity Continued low interest rate risk sensitivity ALCO & Executive Risk Committee continued with: - Hedging strategies - Managing & reducing interest rate risk generated by daily banking activities - Maintaining interest rate risk within board-ap
Slide 17: Balance sheet endowment
2005 annual results presentation Balance sheet endowment Rm Major components of improvement 3 940 5 827 R11 378m Added 1 167 change in R1 009m net average to NII over B/S 2 years 4 936 endowment ( 5 551) 2003 net Rights Non-core Retained 2005 net average B/S offer (net asset profit average B/S endow
Slide 18: Endowment (continued)
2005 annual results presentation Endowment (continued) Endowment = ordinary shareholders’ funds - non-earning assets less non-paying liabilities (e.g. notes & coins, sundry debtors, fixed assets & sundry creditors) Daily average balances summarised: Rm 2005 2004 2003 Endowment assets 53 828 52 883 3
Slide 19: Impairment charge
2005 annual results presentation Impairment charge Rm 2005 2004 Impairment charge 1 189 1 217 As % of advances (%) 0,49 0,55 As % of NII (%) 13,9 17,0 … favourable credit environment continues
Slide 20: Non-performing advances
2005 annual results presentation Non-performing advances Non-performing advances 9 000 8 000 7 000 Rm 6 000 5 000 4 000 3 000 2000 2001 2002 2003 2004 2005 … reduction in NPAs
Slide 21: NPLs & impairments
2005 annual results presentation NPLs & impairments 2005 2004 Rm % adv Rm % adv Non-performing loans 3 994 6 729 PIPs 309 761 Non-performing advances 4 303 1,7 7 490 3,3 Expected recoveries 1 780 3 002 Expected losses 2 523 4 488 Impairments provision Non-performing advances 2 523 4 488 Performing &
Slide 22: Non-interest revenue
2005 annual results presentation Non-interest revenue Actual Comparable Rm 2005 2004 % % change change Commission & fees 5 770 5 460 5,7 8,4 Trading revenue 1 431 1 369 4,5 4,5 Exchange & non- 334 511 (34,6) (1,8) interest dealings Dividends received 140 51 174,5 174,5 Rents received 65 106 (38,7) (
Slide 23: Large moves in NIR 2005
2005 annual results presentation Large moves in NIR 2005 1st time Bond Net Private Comparable Rm 2005 consol / Choice IAS39 equity 2005 pro-rata net of elim income Commission 5 770 (7) (338) 5 425 & fees Trading revenue 1 431 1 431 Exchange & non-interest 334 (1) 162 (385) 110 dealings Dividends 140
Slide 24: Large moves in NIR 2004
2005 annual results presentation Large moves in NIR 2004 Pro-rata Disposals Bond Net Private Compar- Rm 2004 consol Choice IAS39 equity able net of elim income 2004 Commission 5 460 (302) (154) 5 004 & fees Trading revenue 1 369 1 369 Exchange & non-interest 511 (1) (147) (251) 112 dealings Dividend
Slide 25: Net FX-sensitive exposure
2005 annual results presentation Net FX-sensitive exposure Offshore capital now largely in-line with offshore business requirements Capital FX gains / (losses) Closing R/$ $m Rm rate 2002 8,60 2003 1 080 (1 597) 6,63 2004 469 (428) 5,63 2005 235 221 6,33 FCTR 209 95 I/S 26 126 … earnings volatility
Slide 26: Expenses
2005 annual results presentation Expenses Rm Actual Comparable 2005 2004 % change % change Employee expenses 5 312 5 176 2,6 7,1 Computer processing 1 330 1 234 7,8 8,8 Accommodation 897 924 (2,9) (0,9) Marketing 565 502 12,5 13,1 Fees & insurance 1 365 1 225 11,4 5,0 Alliance partner fees 19 70 (72
Slide 27: Large moves in operating expenses 2005
2005 annual results presentation Large moves in operating expenses 2005 1st time Bond Choice Comparable Rm 2005 consol / net of 2005 pro-rata eliminations Employee expenses 5 312 (10) (29) 5 273 Computer process 1 330 (4) 1 326 Comms & travel 459 (11) 448 Accommodation 897 (2) (4) 891 Marketing & PR
Slide 28: Large moves in operating expenses 2004
2005 annual results presentation Large moves in operating expenses 2004 Pro-rata Dispo- 03 under Bond Choice Comparable Rm 2004 2004 consol sals accrual net of elim Employee expenses 5 176 (22) (172) (38) (19) 4 925 Computer process 1 234 (7) (7) (1) 1 219 Comms & travel 448 (9) (9) 430 Accommodatio
Slide 29: Merger
2005 annual results presentation Merger Q1 Q2 Q3 Q4 Cashbank client migration PEP Bank integration into Peoples Bank Property Asset Finance systems migration 2004 Wealth International strategic review PEP Bank client migration BoE Business Banking client migration NBS client migration BoE card migra
Slide 30: Merger completed
2005 annual results presentation Merger completed 900 800 700 600 Rm (Pre tax) 500 868 831 400 700 714 300 200 100 0 Committed Actual Committed Actual Synergies committed Synergies actual Merger costs committed Merger costs actual
Slide 31: Taxation
2005 annual results presentation Taxation Rm – year ended December 2005 % 2004 % Total tax 1 108 23 668 24 Tax – business operations 1 313 27 1 049 37 Rate change 33 1 - - Tax – structured deals (237) (5) (342) (12) STC (1) - (39) (1)
Slide 32: Attributable income
2005 annual results presentation Attributable income Rm 2005 2004 Headline earnings 3 167 1 743 Capital items 669 (215) Profit on disposal of subsidiaries, investments & property & equipment 904 (74) Investment impairments (202) (93) Goodwill impairment (1) (87) Tax on capital items (32) 39 Attribut
Slide 33: Sale of non-core assets
2005 annual results presentation Sale of non-core assets Non-core asset disposal programme largely complete Rm Total 2005 2004 Total proceeds 3 974 1 947 2 027 Total book value 2 880 826 2 054 Total after tax profit / (loss) 1 094 1 121 (27) … now can focus on core business
Slide 34: Reduction in vacant property
2005 annual results presentation Reduction in vacant property 2005 transactions include: - Sub-leasing portion of V&A Waterfront - Completed sales of R109m - Contracted sales pending transfer of R61m m² 2005 Vacant space – beginning of year 94 025 Reduction (33 303) Vacant space – end of year 60 722
Slide 35: Balance sheet
2005 annual results presentation Balance sheet Rm % ch 2005 2004 Cash & securities 7,6 56 561 52 584 Advances 12,4 248 408 221 008 Investments 7 532 7 580 Property & equipment 3 095 2 828 Computer software (7,0) 1 320 1 419 Goodwill 3 687 3 676 Derivatives (40,7) 16 176 27 276 Other 15 479 11 469 To
Slide 36: Advances
2005 annual results presentation Advances Rm % change 2005 2004 Home loans 24,5 75 333 60 509 Commercial mortgages 8,3 37 993 35 072 Properties in possession (59,4) 309 761 Term loans (5,5) 25 314 26 786 Credit cards 17,0 4 074 3 483 Overdrafts 3,3 11 604 11 228 Other loans to clients 7,8 49 120 45
Slide 37: Intangible assets
2005 annual results presentation Intangible assets Rm 2005 2004 Total assets 352 258 327 840 Ordinary shareholders’ equity 22 490 18 337 Intangible assets 5 007 5 095 Goodwill 3 687 3 676 Capitalised software 1 320 1 419 Intangible assets / Total assets (%) 1,42 1,55 Intangible assets / Ord s/hs’ eq
Slide 38: Deposits
2005 annual results presentation Deposits Rm % change 2005 2004 Current accounts 4,2 35 830 34 401 Savings accounts 6,2 11 188 10 532 Term deposits 8,5 167 723 154 600 Credit card balances 12,4 824 733 Foreign currency liabilities (11,0) 8 832 9 928 NCDs 20,8 33 682 27 882 Deposit repurchase agreeme
Slide 39: BEE deal - financial impact vs forecast
2005 annual results presentation BEE deal - financial impact vs forecast Financial Scheme (Rm) Revised Change effects Black Business Partners 174,0 214,6 40,6 Non-exec Directors 16,3 34,9 18,6 Retail 188,7 211,0 22,3 Corporate 248,0 359,3 111,3 Black Executives 69,3 111,0 41,7 Black Management 130,4
Slide 40: BEE deal - financial impact vs forecast (contd)
2005 annual results presentation BEE deal - financial impact vs forecast (contd) Changes in Original financial Revised assumptions effects Timing of initial grant * May 05 Aug 05 R87,90 for initial grants Share price R74,75 R100 at Dec 2005 + 10% p.a. for future allocations Greater number of Greater
Slide 41: BEE deal - financial impact vs forecast (contd)
2005 annual results presentation BEE deal - financial impact vs forecast (contd) Amortised cost per year – based on current estimates Financial Year (Rm) Revised Change effects 2005 156,4 371,2 214,8 2006 154,4 163,6 9,2 2007 167,4 203,3 35,9 2008 153,2 203,8 50,6 2009 108,2 137,9 29,7 2010 82,4 112
Slide 42: BEE deal – IFRS dilution of EPS
2005 annual results presentation BEE deal – IFRS dilution of EPS ‘m 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 At 10% Ave. no. of 397,2 404,0 406,7 410,8 419,8 429,7 441,4 453,8 460,3 464,9 473,4 shares Dilutive no. of 1,4 8,0 10,9 12,9 9,7 10,3 7,1 3,8 2,4 2,4 - shares - BEE Dilutive no
Slide 43: BEE deal
2005 annual results presentation BEE deal Example of potential economic dilution at end of deal No. of shares (‘m) Share price growth of: 10% 15% Total shares per initial allocation 41,3 41,3 To remain in Community & Evergreen Trusts (2,5) (2,5) Initial shares expected to vest 38,8 38,8 Expected cap
Slide 44: Group capital adequacy
2005 annual results presentation Group capital adequacy 14% 12.9% 12.1% 12% 10.1% 10% 9.4% 8.1% 8% 6% 5.0% 4% 2% 0% 2003 2004 2005 Tier 1 Total
Slide 45: Group capital position
2005 annual results presentation Group capital position Regulatory capital (Rm) Tier 1 Tier 2 Tier 3 Total RW assets 2004 17 274 8 095 294 25 663 212 459 Group capital adequacy (%) 8,1 3,8 0,1 12,1 IFRS opening adjustment (164) (164) Attributable income (excl FX) 3 710 3 710 Ordinary dividend (727)
Slide 46: Capital management
2005 annual results presentation Capital management Capital Management Framework integrated into 3-year plans - Including ECap, RAPM & Risk Appetite Improved measurement & long-term planning Basel II framework finalisation - Impact analysis well refined - Sufficient capital levels forecast … activel
Slide 47: Strategic capital plan
2005 annual results presentation Strategic capital plan Capital ratios strong - Non-core asset sales - Scrip dividend take-up & retained profits Economically capitalised to A- target debt rating Dividend cover 2,5 - 3 times (previously 3 - 3,5 times) (H1 2005 3,37 + H2 2005 2,38 = full year 2,75) Sh
Slide 48: Basel II
2005 annual results presentation Basel II On track following significant effort & investment Significant enhancements to credit risk, ALM & Capital management All new credit models being used & various new management functions operationalised (e.g. cluster risk labs, group credit ratings & validatio
Slide 49: Cost of capital
2005 annual results presentation Cost of capital 31 December 2005 Cost of capital is the weighted average of the cost of the two equity components: ordinary & preference shares (WACC) Weighting Cost WACC Cost of ordinary shares (after tax) 89% 12,60%* - Capital Asset Pricing Model (CAPM) Cost of pre
Slide 50: Significant reduction in risk profile
2005 annual results presentation Significant reduction in risk profile NII - reduced interest rate risk Foreign exchange currency risk - reduced Non-core asset sales - largely complete, reduced market risk Capital - risk substantially reduced Earnings volatility reduced
Slide 51: Financial drivers - 2006
2005 annual results presentation Financial drivers - 2006 Retail advances growth expected to remain strong Potential for further margin uplift Improved transactional revenue (NIR) expected 2006 / 2007 Further improvement in impairments ratios in Retail Additional operational efficiencies No recovery
Slide 52: Operating split
2005 annual results presentation Operating split % of 2005 operating 25% divisions’ headline earnings 4% Nedbank Capital Nedbank Corporate 23% Nedbank Retail Imperial Bank 48%
Slide 53: Nedbank Retail
Nedbank Retail Rob Shuter
Slide 54: Nedbank Retail - financial highlights
2005 annual results presentation Nedbank Retail - financial highlights Year ended 2005 2004 Operating income (Rm) 7 208 6 686 Margin 5,4% 5,2% Efficiency ratio 71,7% 77,6% Impairments charge / average advances 1,14% 1,05% Headline earnings (Rm) 938 564 Allocated capital (Rm) 5 101 4 641 ROE 18,4% 12
Slide 55: Nedbank Retail - segmental analysis
2005 annual results presentation Nedbank Retail - segmental analysis 2005 Banc- Home TOTAL Card assurance Other *** loans * & Wealth ** Interest earning advances (Rbn) 84,7 47,5 3,7 4,0 29,5 Home loans 64,4 47,5 - 0,5 16,4 Card 4,0 - - - 0,3 Term loans 4,2 - - 1,5 2,7 Overdrafts 1,8 - - - 1,8 Other
Slide 56: Nedbank Retail - operational review
2005 annual results presentation Nedbank Retail - operational review Re-organised & re-focused - strong financial results delivered Branch environment stabilised & sales & service focus entrenched Strong financial performance in both Home Loans & Card Bancassurance delivering on group synergies - 40
Slide 57: Nedbank Retail - operational review
2005 annual results presentation Nedbank Retail - operational review Nedbank Peoples Bank integration - Branches: 144 rebrands, 69 closures & 24 openings in 2005 - 1,5m clients migrated - no account changes - Increases scale & optimises cross-sell potential & footprint planning - R52m one-off rebran
Slide 58: Nedbank Retail - SA branch footprint
2005 annual results presentation Nedbank Retail - SA branch footprint Legend: Old Mutual Bank Nedbank
Slide 59: Nedbank Retail - Bancassurance
2005 annual results presentation Nedbank Retail - Bancassurance New business premiums % change 2005 2004 (Rm) Old Mutual 95 2 408 1 233 NedIC 2 384 375 Mutual & Federal 35 55 41 NedLife * (8) 261 283 NedGroup Investments 20 1 059 886 Total group new business 48 4 166 2 818 Non-group entities 7 674 6
Slide 60: Nedbank Retail - Bancassurance
2005 annual results presentation Nedbank Retail - Bancassurance Contribution to wider Old Mutual Group NedGroup Investments to Group | R3,8bn AUM | R10,8m revenue | R5m commission NedIC to Mutual & Federal | R198m premium NGIB to Mutual & Federal | R55m premium NGIB to Nedbank | R135m commission Ned
Slide 61: Nedbank Retail - home loan market share
2005 annual results presentation Nedbank Retail - home loan market share 35.0% 0.30% 30.0% 0.20% 25.0% 0.10% 20.0% 0.00% 15.0% (0.10%) 10.0% (0.20%) 5.0% (0.30%) Jan- Mar- May- Jul- Sep- Nov- Jan- Mar- May- Jul- Sep- Nov- Gain/ M/share (loss) 04 04 04 04 04 04 05 05 05 05 05 05 Change in market shar
Slide 62: Nedbank Retail - future focus areas
2005 annual results presentation Nedbank Retail - future focus areas CClient lient OOurur UUnleash nleash RReduce educe AAsset sset&& GGrowth rowth EEfficiency fficiency service service people people liability liability && growth growth expense expense World World-- Morale Morale&& Banc - Banc- Impa
Slide 63: Nedbank Corporate
Nedbank Corporate Graham Dempster
Slide 64: Nedbank Corporate - financial highlights
2005 annual results presentation Nedbank Corporate - financial highlights Year ended 2005 2004 Operating income (Rm) 6 223 5 845 Margin 3,2% 3,3% Efficiency ratio 54,7% 55,8% Impairments charge / average advances 0,23% 0,27% Headline earnings (Rm) 1 984 1 775 Allocated capital (Rm) 10 049 9 496 ROE
Slide 65: Nedbank Corporate – segmental analysis
2005 annual results presentation Nedbank Corporate – segmental analysis 2005 Corporate Business Property Africa Rm Banking Banking Finance Advances 28 038 35 428 33 128 4 132 Allocated capital 3 358 3 043 3 256 347 Headline earnings 395 707 883 54 ROE(%) 11,8 23,3 27,1 15,6 Employees 298 2 016 778 1
Slide 66: Nedbank Corporate - BU contribution (contd)
2005 annual results presentation Nedbank Corporate - BU contribution (contd) % of 2005 headline 19% earnings 3% Corporate Banking Business 35% Banking Property Finance 43% Africa
Slide 67: Nedbank Corporate - operational review
2005 annual results presentation Nedbank Corporate - operational review Changes to executive team - settled down well Property Finance - Headline earnings up 8,7% - Good revaluations & realisations in property portfolio - Competitive - top-end client funding with some margin squeeze - Stronger focus
Slide 68: Nedbank Corporate - op review (contd)
2005 annual results presentation Nedbank Corporate - op review (contd) Corporate Banking - Headline earnings down 7,7% - Loan growth muted – cash flush, disintermediation & low capex - Innovative solutions for transactional banking (cash, electronic banking) - Improvement in primary banker profile -
Slide 69: Nedbank Corporate - future focus areas
2005 annual results presentation Nedbank Corporate - future focus areas Client-centred regionally-based business model in Business Banking - Improving service & decision-making Quality asset growth in Corporate Banking & Property Finance Continue to - Grow transactional revenues - being primary bank
Slide 70: Nedbank Capital
Nedbank Capital Brian Kennedy
Slide 71: Nedbank Capital - financial highlights
2005 annual results presentation Nedbank Capital - financial highlights Year ended 2005 2004 Operating income (Rm) 2 442 2 454 Efficiency ratio 44,5% 48,0% Headline earnings (Rm) 1 017 863 Allocated capital (Rm) 3 478 2 947 ROE 29,2% 29,3% 25% Assets Headline 33% earnings Nedbank Capital Other
Slide 72: Nedbank Capital - operational review
2005 annual results presentation Nedbank Capital - operational review Strong earnings growth - Involved in major deals (pipeline remains strong) - Improved equity trading – FX trading flat – overall up 6,0% Growth negatively impacted by: - R65m increase in impairments - Private equity revaluation R1
Slide 73: Nedbank Capital - collaborative model
2005 annual results presentation Nedbank Capital - collaborative model Combines Capital & Corporate client coverage, products & expertise Increase revenue with existing clients & aids client acquisition Some recent successes: Counterparty Deal size Telkom – joint advisor to Elephant Consortium R3,5b
Slide 74: Nedbank Capital - operating statistics
2005 annual results presentation Nedbank Capital - operating statistics 2005 2004 Revenue / employee (R000) 4 195 4 204 Operating profit / employee (R000) 2 026 1 990 Total assets (Rbn) 117 111 Dealmakers ranking (up to Q3 2005) - M&A by deal flow – ranked 3rd - M&A by value – ranked 8th Nedcor Secu
Slide 75: Nedbank Capital - future focus areas
2005 annual results presentation Nedbank Capital - future focus areas Integrated investment bank Ö creating solutions Focus on infrastructure & energy investment Continued focus on BEE Continued improvements to trading systems Increased focus on forex & debt trading Building blocks in place to lever
Slide 76: Operating review (continued)
Operating review (continued) Tom Boardman
Slide 77: Roadmap as announced in Dec 2004
2005 annual results presentation Roadmap as announced in Dec 2004 Maintain market share (H2 ’05) Total income growth > expense growth by at least 9% (CAGR) Focus on transactional revenue - NIR growth Build Nedbank Retail Transformation beyond the FSC targets 2007 targets Efficiency ratio 55% ROE 20%
Slide 78: Progress on 2005 to 2007 roadmap
2005 annual results presentation Progress on 2005 to 2007 roadmap Maintain market share 8 Market share stabilising (H2 2005) Income growth > expense 9 On track – 2005 income growth 7,4% > growth 9%+ (CAGR on 2004) expense growth (11,2% excl BEE) Focus on transactional 9 Started to grow - 2005 commis
Slide 79: Nedbank employee survey - 2005 vs 2004
2005 annual results presentation Nedbank employee survey - 2005 vs 2004 2004 Mean 38% (all statements) 2005 Mean 50% (all statements) 0% 20% 40% 60% 80% 100% Direction July 05 69% 19% 12% July 04 43% 23% 34% July 05 68% 20% 12% Management style July 04 66% 19% 15% Leadership July 05 67% 22% 11% July
Slide 80: Transformation beyond FSC targets
2005 annual results presentation Transformation beyond FSC targets Improvements in employment equity Human resources More focus required on skills development Good progress Procurement Approximately 1/3 qualified spend now from BEE companies Access to financial Improved performance in 2005 services
Slide 81: A sustainable Nedbank Group
2005 annual results presentation A sustainable Nedbank Group ‘Best emerging markets corporate social responsibility bank’ – The Banker awards (London) In top 20% of JSE SRI index 1 of only 3 SA only listed companies included in Dow Jones World Sustainability Index 2nd place - Ernst & Young Excellenc
Slide 82: Employee profile - black management
2005 annual results presentation Employee profile - black management % 2005 2004 Black management EXCO 18,2 25,0 Senior management 15,0 10,9 Mid management 27,0 19,5 Management 38,1 33,4 30,2 24,5
Slide 83: Group performance scorecard
2005 annual results presentation Group performance scorecard 2005 Objectives % weighting 2006 Objectives % weighting Financial (ROE, 69 Financial (ROE, Efficiency, 40 Efficiency, CAR) CAR) Nedbank’s image 3 World-class service 5 Fix Retail 6 Profitable asset growth 5 Bancassurance 3 Unleash group sy
Slide 84: Outlook
2005 annual results presentation Outlook Transforming from… To… • Financial underperformance • Acceptable performance • High earnings volatility • Low earnings volatility • Centralised business model • Decentralised business model • Low staff morale • Improved staff morale • Poor financial disclosur
Slide 85: Conclusion
2005 annual results presentation Conclusion Financial performance on track Strong capital base Morale improving Outwardly focused Disciplined execution 2007 targets ROE 20% Efficiency ratio 55%
Slide 86: “There is no miracle moment. Small incremental wins in one common direction will
“There is no miracle moment. Small incremental wins in one common direction will restore Nedbank Group to a highly rated & respected financial institution.”
Slide 87: Questions?
Questions?
Slide 88: Thank you
Thank you