Nedbank Group · JSE:NED
Nedbank — FY2001 Earnings Presentation
41 slides from Nedbank's earnings presentation, 2001
Slide 1: Final Results Presentation 2001
Final Results Presentation 2001
Slide 2: Introduction
Introduction Chris Liebenberg Chairman
Slide 3: Nedcor versus inflation
Nedcor versus inflation 70% 20/10 year CAGR: 60% Inflation: 11.0% / 7.4% 50% Nedcor earnings: 21.6% / 27.1% 40% 30% 20% 10% 0% -10% -20% 1981 1984 1987 1990 1993 1996 1999 Growth in Income Attributable to Shareholders Inflation rate %
Slide 4: Programme
Programme • Highlights Richard Laubscher • Financial review Stuart Morris • Operational review Derek Muller • Conclusion Richard Laubscher
Slide 5: Highlights
Highlights Richard Laubscher Chief Executive
Slide 6: Financial highlights
Financial highlights • Headline eps up 25% to 1576c • Earnings excluding translation gains up 18% • Total advances up 26% • Organic advances up 16% • 2,1% gain in 5-year domestic market share
Slide 7: Strategic highlights
Strategic highlights • Peoples’ empowerment partners introduced • T&O maintains 5-year trend of low cost growth & improved service • Swisscard processing opportunity • Bancassurance implemented across all customer segments • OMBS fills retail mid-market positioning • Strategic alliances on track
Slide 8: Other highlights
Other highlights • Secondary capital raising successful • Capital currency unit diversified • Proven credit management model • Tight risk & cost control maintained
Slide 9: Financial Review
Financial Review Stuart Morris Group Financial Director
Slide 10: Key messages
Key messages • Core businesses performing well • Quality of earnings • Improved disclosure and transparency
Slide 11: Accounting issues
Accounting issues • Translation gains – Foreign entities – directly to reserves – Integrated operations – through income statement • Exceptional • Exceptional general risk provision • Investments – Fairly valued • Leave pay provision • Pension fund surpluses
Slide 12: Income statement
Income statement year ended 31 December % % change* change* 2001 2001 2000 2000 Rm Rm Rm Rm Net Net interest interest income income 11 11 5,268 5,268 4,732 4,732 Non-interest Non-interest revenue revenue 33 33 6,150 6,150 4,292 4,292 Total Total income income 27 27 11,418 11,418 9,024 9,024 Provisio
Slide 13: Earnings excluding translation gains
Earnings excluding translation gains year ended 31 December % % change change 2001 2001 2000 2000 Rm Rm Rm Rm Headline earnings 26 3,794 3,012 Less: Translation gains -1,096 -375 Add: Exceptional provision 400 - 18 3,098 2,637
Slide 14: Currency balance sheet
Currency balance sheet at 31 December Rand Rand Foreign Foreign Total Total Rm Rm Rm Rm Rm Rm Cash Cash && securities securities 21,641 21,641 13,336 13,336 34,977 34,977 Advances Advances 118,534 118,534 32,795 32,795 151,329 151,329 Associates Associates & & investments investments 1,545 1,545 4,2
Slide 15: Growth in advances
Growth in advances % 30 25 20 10.0 5.3 15 10 16.0 16.3 5 0 Average advances Total advances Organic Acquired
Slide 16: Net interest income
Net interest income Rm % 5,500 +11.3% +11.3% 4.5 5,000 +8.6% +8.6% 4.0 +11.1% +11.1% 4,500 3.5 4,000 +10.4% +10.4% +15.5% +15.5% 3.0 3,500 3,000 2.5 2,500 2.0 1997 1998 1999 2000 2001 NII (Rm) Margin (%) Margin incl. trans. gains (%) Margin after prov. (%)
Slide 17: Non-interest revenue
Non-interest revenue Rm % 6,000 +33.0% +33.0% 55 5,000 +23.1% +23.1% 50 4,000 +8.6% +8.6% +23.0% +23.0% 45 3,000 +25.1% +25.1% 2,000 40 1997 1998 1999 2000 2001 NIR (Rm) NIR: Total income (% excl. trans. gains) NIR: Total income (%)
Slide 18: Analysis of non-interest revenue
Analysis of non-interest revenue % change 2001 2000 1999 Rm Rm Rm Commission & fees 20 3,211 2,684 2,256 Securities & exchange income 37 1,125 810 780 Other 70 718 423 359 29 5,054 3,917 3,395 Translation gains 75 655 375 91 Total 33 5,709 4,292 3,486
Slide 19: Translation gains
Translation gains 2001 2000 1999 Integrated operations: Rm Rm Rm – Non-interest revenue 655 375 91 – Exceptional 441 - - Foreign entities: – Direct to reserves 263 120 - Total 1,359 495 91
Slide 20: Provisions charged against income
Provisions charged against income Rm % 1,200 1 1,100 +16.3% +16.3% 0.9 1,000 +4.7% +4.7% 900 +24.5% +24.5% 0.8 800 +36.6% +36.6% 700 0.7 600 +46.4% +46.4% 0.6 500 400 0.5 1997 1998 1999 2000 2001 Provisions (Rm) Prov.: Avg.advances (%)
Slide 21: Non-performing loans
Non-performing loans 2001 2000 2000 Rm % adv Rm Rm %% adv adv Non-performing loans 6,974 4.4 5,832 4.7 Expected recoveries 3,473 2.2 2,753 2.2 Expected losses 3,501 2.2 3,079 2.5 Provisions 5,154 3.3 4,366 3.5 Adequacy of provisions - Gross coverage 74% 75% - Net coverage 147% 142%
Slide 22: Provisions
Provisions 2001 % 2000 % Income statement Rm avg adv Rm avg adv Provision charge 1,058 0.75 910 0.79 Including interest reserve 1,231 0.88 1,155 1.00 Balance sheet Specific provisions 3,501 2.50 3,079 2.67 General provisions 1,253 0.89 1,287 * 1.12 4,754 3.39 4,366 3.79 Exceptional provision 400 0.2
Slide 23: Expenses
Expenses Rm % 6,000 62 +19.2% +19.2% 5,500 59 5,000 +11.9% +11.9% 56 4,500 +1.1% +1.1% +11.3% +11.3% 53 4,000 +13.8% +13.8% 3,500 50 3,000 47 1997 1998 1999 2000 2001 Expenses (Rm) Efficiency ratio (ex trans. gains %) Efficiency ratio (%)
Slide 24: Taxation
Taxation Rm % 1,100 30 +48.1% +48.1% 28 900 26 +14.6% +14.6% 24 700 +6.1% +6.1% +12.0% +12.0% +3.7% +3.7% 22 500 20 18 300 16 14 100 12 -100 1997 1998 1999 2000 2001 10 Taxation (Rm) Exceptional taxation Tax rate (%) Tax rate (ex trans. gains%)
Slide 25: Headline earnings
Headline earnings Rm C +25% +25% 4,000 1,600 +18% 1,400 +23% +23% 3,000 1,200 +25% +25% +12% +12% +20% 1,000 +20% +24% +24% 2,000 800 +26% +26% 600 1,000 400 1997 1998 1999 2000 2001 Headline earnings (Rm) EPS (c) EPS (ex trans. gains c)
Slide 26: Shareholders’ funds
Shareholders’ funds Rm % 30 19,000 17,000 +57.3% +57.3% -0.7% 27 -0.7% 15,000 24 13,000 11,000 +10.2% +10.2% 21 +26.6% +26.6% 9,000 +26.5% +26.5% 18 7,000 5,000 15 1997 1998 1999 2000 2001 Shareholders' funds (Rm) ROE (%)
Slide 27: Return on assets
Return on assets Rm % +23.5% +23.5% 180,000 2.3 2.2 160,000 2.1 +16.5% +16.5% +13.3% +13.3% 2.0 140,000 1.9 120,000 +19.6% +19.6% 1.8 +20.7% +20.7% 1.7 100,000 1.6 80,000 1.5 1997 1998 1999 2000 2001 Average total assets (Rm) Return on assets (%) ROA (ex trans.gains)
Slide 28: Operational Review
Operational Review Derek Muller Managing Director: Business Divisions
Slide 29: Segmental analysis
Segmental analysis Rm % change 2001 % 2000 % RETAIL 61 384 10 239 8 – Nedbank 24 189 5 153 5 – Peoples Bank 127 195 5 86 3 COMMERCIAL 15 778 21 677 22 – Nedbank 8 646 17 598 20 – Cape of Good Hope Bank 20 95 3 79 2 – Imperial Bank 37 1 CORPORATE 20 1,299 34 1,082 36 – Nedbank 25 963 25 768 26 – Nedc
Slide 30: Segmental analysis (continued)
Segmental analysis (continued) % change 2001 % 2000 % Rm T&O Strategic Investments 73 45 1 26 1 Group Ops & Funding -73 57 1 206 7 TOTAL DOMESTIC 15 2,563 67 2,230 74 TOTAL INTERNATIONAL 57 1,231 33 782 26 – Nedcor Bank 7 217 6 203 7 – Gerrard Private Bank 30 1 – Translation gains 86 696 18 375 12 –
Slide 31: Employee efficiency
Employee efficiency R’000 Rm 19.0 18.9 18.7 17.2 17.3 17.8 18.7 18.9 19.2 210 11 190 10 170 9 150 8 130 7 110 6 90 5 70 4 1997 1998 1999 2000 2001 Earnings/employee Assets/employee R’000 Rm
Slide 32: Retail
Retail Peter Backwell (42) • Net income after tax up 24% to R189m • Expense growth limited to 9% • Arrears trending down in all products • Significant investment in Customer Satisfaction Unit • Cost efficiencies to improve over next three years
Slide 33: Peoples Bank
Peoples Bank Lot Ndlovu (50) • Net income after tax more than doubled to R195m • Repositioning the brand • Expanding reach and footprint through JD • Empowerment partners now hold 30%
Slide 34: Banking alliances
Banking alliances •94,000 •94,000 microloans microloans •Top •Top management management •152 •152 Peoples Peoples Bank Bank •R754m •R754m advances advances appointed appointed branches branches book book (47% unsecured) (47% unsecured) •Systems •Systems fully fully tested tested •12,000 •12,000 clie
Slide 35: Old Mutual
Old Mutual • Personal Financial Planning – Premium flow up 72% to R546m • OMBS / Permanent Bank – All homeloans into Nedbank – Cost savings R150m+ • Group Schemes – 79,000 policies sold
Slide 36: Commercial
Commercial Jack de Blanche (56); Richard Buchholz (43) • Net income after tax up 8% to R646m • ROE sustained at 38% • Deposits growth of 17% to R19,3bn • Manager Direct fully operational
Slide 37: Corporate
Corporate Graham Dempster (46) • Net income after tax up 29% to R801m • Five-year compound growth rate in NIAT of 20%+ • ROE of 22% on capital ratio of 12% • Structured deals of R4,5bn
Slide 38: Treasury & International
Treasury & International Mark Parker (49) • Treasury efficiency ratio down to 11% from 13% • Conservative usage of trading limits • Hong Kong up 30% to R24m • London up 5% to R25m • Africa (Willem Frost) – Namibia, Swaziland and Lesotho up to R39m from R28m
Slide 39: Conclusion
Conclusion Richard Laubscher Chief Executive
Slide 40: Conclusion
Conclusion 7 Strong core performance 7 Management of risk central to our philosophy 7 Filled the gaps: Peoples Bank, Imperial Bank and OMBS 7 Export of key process and technology competence 7 Structure facilitates sales culture at front end and process culture at back end 7 Performance not at cost t
Slide 41: Questions?
Questions?