Nedbank Group · JSE:NED
Nedbank — UBS Global Financial Services Conference 2009
29 slides from Nedbank's conference presentation, May 13, 2009
Slide 1: Nedbank Group UBS Global Financial Services Conference
NEDBANK GROUP ANNUAL FINANCIAL UBS GLOBAL RESULTS CONFERENCE YEAR ENDED Corporate 31 DECEMBER & Business 2008 Banking 13 May 2009 Graham G h D Dempster t Managing Executive : Nedbank Corporate Ingrid Johnson Managing Executive : Business Banking 1
Slide 2: Overview
Overview • South African economic & banking context – Information on Nedbank – Economic environment – Nedbank – core metrics • Nedbank Corporate – Profile – Property Finance – African expansion – a key strategic change thrust • Nedbank Business Banking – Profile – Business Banking – a key strategic
Slide 3: Nedbank Group
Nedbank Group • South African based financial services group – Head quarters in Johannesburg – Listed on JSE – 55% owned by Old Mutual plc – listed on LSE – Market capitalisation approx. R45 billion ($5 billion) – 110 year history in SA • Focused on southern Africa (SADC) growth – SADC has 65 - 75%
Slide 4: SA banking industry
SA banking industry • Robust macro-economic policy framework • Big 5 banks have strong deposit franchises (focus on customers) • Exposure of SA banks to foreign deposits low (< 3 % of total deposits) • Immaterial exposure to sub-prime assets • Strongg & well functioningg SA interbank market • SA rel
Slide 5: SA differentiators
SA differentiators • Sound regulation of financial services, especially banking sector • Interest rates did not fall so low for so long as in USA to encourage excessive borrowing - no negative real interest rates • Basel II successfully implemented & embraced in SA • “Originate & sell” approach & co
Slide 6: Current macro-economic indicators
Current macro-economic indicators 2009 Indicators 2008 Forecast GDP 3 1% 3,1% (0 2)% (0,2)% Inflation 11,3% 6,7% Current account deficit 7,4% 6,0% Prime overdraft rate (year end) 15,0% 10,0% Exchange rate Rand / US $ (year average) 8 26 8,26 9 25 9,25 …difficult market conditions expected in 2009 6
Slide 7: Public sector infrastructure spend underpin
Public sector infrastructure spend underpin 7
Slide 8: Nedbank highlights – 2008 & 2009
Nedbank highlights – 2008 & 2009 • Resilient performance in challenging environment (FY 2008) – 15,7% 15 7% growth in tangible NAV – R5,8 bn headline earnings - down 2,6% • Capital p adequacy q y increased significantly g y & continues to strengthen g Dec ’08 Mar ‘09 – Core tier 1 8,2% , 8,6% , – Ti
Slide 9: Group capital adequacy (Basel II)
Group capital adequacy (Basel II) Target 14% ranges 12% Total 10% Tier 1 8% 13..2% % 11.4% 6% 10.0% 9.6% 12.4% March ’09 surplus: 8.6% 8.2% 8.2% 7.2% 4% • Tier 1 R10,5bn 2% • Total R12,0bn 0% 2007 D Dec 2008 D Dec 2009 M Mar Core Tier1 Tier 1 Total Reg min Tier 1 Reg min Total
Slide 10: NAV & ROE
NAV & ROE 4 year CAGR: NAV excluding goodwill 19,4% cents 24.8% 12 000 25% 22.1% 10 000 18.9% 20 1% 20.1% 20% 8 000 14.3% 15% 6 000 10% 7 571 4 000 543 5 427 7 65 4 680 3 721 5% 2 000 0 0% 2004 2005 2006 2007 2008 NAV excluding goodwill ROE excluding goodwill 10
Slide 11: Nedbank Corporate
NEDBANK GROUP Nedbank ANNUAL Corporate FINANCIAL RESULTS YEAR ENDED 31 DECEMBER 2008 Graham Dempster 11
Slide 12: Nedbank Corporate profile
Nedbank Corporate profile • Corporate Banking – top two player in lending & deposit-taking Property Finance – market leader in commercial property lending Nedbank Africa – selected growth in sub-Saharan Africa • Key financial metrics (at Dec ’08) 08) Economic capital usage (Rm) 5 875 Assets (Rm) 117
Slide 13: Nedbank Corporate growth strategy
Nedbank Corporate growth strategy • Continue to drive growth through – Growing public sector market share – Selective expansion into rest of Africa – Increasing primary banker market share • Focus on client service – Enhanced sales capability & size – Culture a competitive advantage • Roll out of el
Slide 14: Property Finance
Property Finance • Market leader – 25% market share • Key differentiator – highly experienced property professionals • Assisted by Mercer Oliver Wyman – Detailed portfolio review to assess risk profile • Selected growth / smart origination strategy – Manage for value to drive economic profit • Entre
Slide 15: African expansion – key strategic change thrust
African expansion – key strategic change thrust Acquisitions/expansion High in southern, east & west Africa impact, Tier 3 complex, costly Low-cost entry - selected countries 3 TIER (resource rich) STRATEGY Tier 2 • Global trade • Advisory boutiques across Quick to Africa (Nedbank Capital) achieve,
Slide 16: African expansion rationale
African expansion rationale • Economic growth in sub-Saharan Africa revised downward by IMF but least affected & still reasonably strong • Inflation in sub-Saharan Africa adjusted upward, but expected to decline again • Closing infrastructure gap in Africa will require sizeable investments • Clients
Slide 17: Nedbank / Ecobank strategic alliance
Nedbank / Ecobank strategic alliance SADC region below • Creates emerging African Champion through Ecobank footprint significant geographic spread & size, providing Nedbank footprint p g opportunities Expanding pp clients with a ‘One ‘O Bank’ experience • Low cost, low risk with significant g in p c
Slide 18: Ecobank
Ecobank • Established in 1985 • Africa’s leadingg independent p p pan African banking gggroup p – In 26 African countries • Parent company (ETI) – 32 operating subsidiaries involved in commercial banking, investment banking & information technology • Over O 8 000 professionals f i l ffrom 27 Af Afri
Slide 19: Nedbank Business Banking
NEDBANKNedbank NGROUP db k Business ANNUAL FINANCIALBanking RESULTS YEAR ENDED 31 DECEMBER 2008 Ingrid Johnson 19
Slide 20: Nedbank Business Banking profile
Nedbank Business Banking profile • Target market - medium sized businesses turnover of R7m-400m (~$1m-50m) • Full spectrum financial services, services including lending lending, investments & transactional banking, insurance, wealth management & other value-add products • Relationship driven, decen
Slide 21: Nedbank Business Banking – key strategic change thrust
Nedbank Business Banking – key strategic change thrust Aspiration to be leader in Business Banking for SA • Mid market commercial segment g attractive in SA economy y due to size, growth prospects, depth of client relationships & deep product penetration leading to attractive returns on capital • Im
Slide 22: Nedbank Business Banking – good progress so far
Nedbank Business Banking – good progress so far Strategic roadmap “A S C E N T ” guided our efforts • Major turnaround since 2005: – Decentralised business was overlaid with clear accountability – Significantly transformed organisational culture with focus on performance, leadership & teamwork – Ste
Slide 23: Summary – Corporate & Business Banking markets
Summary – Corporate & Business Banking markets Delivering quality performance through the cycle, while continuingg to build our franchise • Lower endowment earnings & higher impairments will impact 2009 performance • Differentiators – Right leadership & teams in place – Business models in place & cl
Slide 24: Nedbank Group – Future focus
Nedbank Group – Future focus • To understand our clients needs in difficult times – Step change in client service – Flexible collections arrangements – Continued focus on affordable banking g – Focus on economic profit & remain alert to opportunities • Conservative management of the bank • To mainta
Slide 25: Ancillary slides
NEDBANK GROUP AncillaryRESULTS ANNUAL FINANCIAL slides YEAR ENDED 31 DECEMBER 2008 25
Slide 26: GDP Growth
GDP Growth % GDP growth 8.0 6.0 4.0 2.0 0.0 -2.0 Gdp growth y-o-y Gdp growth q-o-q -4.0 40 -6.0 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 26
Slide 27: Consumer inflation
Consumer inflation Consumer inflation Y-o-y % change 14 12 New CPI CPIX 10 8 6 4 2 0 -2 -4 98 99 00 01 02 03 04 05 06 07 08 09 27
Slide 28: Inflation
Inflation Y-o-y % change 19 17 Producer Consumer 15 13 11 9 7 5 3 1 -1 -3 03 04 05 06 07 08 09 28
Slide 29: Current account
Current account Current account (saar as % gdp) Exports and imports as % gdp 4 48 3 Current account 46 2 Exports 44 1 Imports 42 0 40 -1 38 -2 36 -3 34 -4 32 -5 30 -6 28 -7 26 -8 24 -9 22 -10 20 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 29
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