Nedbank Group · JSE:NED

Nedbank — UBS 9th SA Financial Services Conference October 2009

30 slides from Nedbank's conference presentation, October 2009

1. Slide 1: The quest for positive "jaws"

   The quest for positive "jaws"

2. Slide 2: Agenda

   Agenda Key goal in long­term value creation History of Nedbank Group “jaws” ratio “Fix­it” phase “Consolidate” phase “Grow­it” phase In summary 2

3. Slide 3: Key long-term goal

   Key long­term goal Maximise ROE less cost of equity in a sustainable way • Under Basel I return on risk weighted Maximise risk­adjusted assets (RWA) a proxy for RAROC return on capital • Under Basel II measurement of (RAROC) minus cost of RAROC becomes more accurate equity • Economic capital measure

4. Slide 4: ROE drivers – du Pont type analysis

   ROE drivers – du Pont type analysis % ­ year / period ended 2001 2002 2003 2004 2005 H1 06 NII / IEA 3,07 2,95 2,95 3,18 3,55 3,88 3,88 Impairments / IEA 0,99 0,53 0,89 0,54 0,49 0,62 NIR / IEA 3,87 2,78 2,83 3,61 3,58 3,54 3,54 Expenses / IEA 3,36 3,75 4,48 4,87 4,64 4,25 4,25 Efficiency ratio 48,4

5. Slide 5: ROE over cost of equity

   ROE over cost of equity 30 25 ROE COE 20 15 10 5 0 1999 2000 2001 2002 2003 2004 2005 H1 06 Nedbank NED underperformed the market share until ROE started exceeding COE price Banks index based to NED at 31 Dec 03 5

6. Slide 6: Profitability trend – other big banks

   Profitability trend – other big 3 banks % 2001 2003 2005 Revenue / RWA 9,76 10,30 10,4 Expenses / RWA 5,73 6,01 5,92 “Jaws” 0,84 3,11 Impairments / RWA 1,04 0,79 0,52 Return on RWA 2,16 2,44 2,74 ROA 1,51 1,51 1,62 Gearing 14,58 15,69 16,61 ROE 21,9 23,5 26,7 6

7. Slide 7: Profitability trend – Nedbank Group

   Profitability trend – Nedbank Group % 2001 2003 2005 H1 06 Revenue / RWA 8,03 6,33 7,82 8,35 Expenses / RWA 3,89 4,91 5,09 (4,79) “Jaws” (52,25) 20,56 13,61 Impairments / RWA 1,14 0,98 0,54 (0,70) Return on RWA 2,55 0,03 1,44 ROA 1,48 0,02 0,93 1,15 Gearing 15,69 22,21 16,66 15,88 ROE 23,1 0,4 15,5

8. Slide 8: "Jaws" ratio

   “Jaws” ratio YoY income growth ahead / (behind) expense growth 20 10 0 2000 2001 2002 2003 2004 2005 -10 -20 -30 -40 Nedbank Other 3 NED before M&R costs 8

9. Slide 9: 2003 / 2004 problem definition

   2003 / 2004 problem definition 2003: ROE 0,38% Set targets for 2007 Efficiency ratio 77,51% CAR 10,00% n ROE of 20% ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ n Efficiency ratio of 55% Insufficient capital Clear accountability Complex structure “Jaws” ratio of 9% (with 2003 as a base) Interest rate & FX risk a

10. Slide 10: 2004 / 2005 – "FIX IT" phase

    2004 / 2005 – “FIX IT” phase n Appointed new EXCO team n Raised new capital – created capital management unit n Staff retrenchments – primarily back office n Completed the merger n Operational reorganisation – moved staff out of T&O n Reduced brands & JVs n Sold non­core assets n Defined scope of AL

11. Slide 11: "FIX-IT" phase outcomes

    “FIX­IT” phase outcomes 2003 – basic earnings per share loss 2004 – cost initiatives Staff morale worsened Internal focus leading to ­ Some client losses ­ Slow asset growth ­ Market share declines BUT Galvanised management & staff into action Brought group close together & reduced silo mentality Re

12. Slide 12: 2005 / 2006 – "CONSOLIDATE" phase

    2005 / 2006 – “CONSOLIDATE” phase Streamlined processes Focused IT resources on client systems – not merger Aligned MIS to business processes to enhance accountability Refocused remuneration models (ROE based) Added client facing staff Adjusted pricing to improve competitiveness Earnings, public pro

13. Slide 13: 2006 onwards - "GROW IT" phase

    2006 onwards ­ “GROW IT” phase Primary focus on revenue growth initiatives With particular focus on staff morale, client systems & customer service But, continued focus on cost management While allowing investment & expending into identified long­term growth areas Leading to a positive “jaws” ratio

14. Slide 14: "GROW-IT" phase - integrated investment bank

    “GROW­IT” phase ­ integrated investment bank An integrated investment banking business model ➭ providing comprehensive solutions to clients, leveraging market­leading service & research capabilities Execution Origination (Product Areas) Industry Relationships • Balance sheet Equity knowledge Economi

15. Slide 15: 2006 onwards – "GROW IT" phase strategies: Nedbank Capital

    2006 onwards – “GROW IT” phase strategies Nedbank Capital n Improve trading n Public sector focus n Increase deal pipeline from the African continent n London trading initiative n Equity underwriting & placing n Leverage BEE deal n Forex pick­up n Interest rate derivative sales 15

16. Slide 16: Nedbank Capital progress to date

    Nedbank Capital progress to date H1 05 2005 H1 06 Efficiency ratio (%) 44,8 44,5 43,0 Headline earnings (Rm) 427 971 576 ROA (%) 1,2 1,2 1,1 ROE (%) 26,9 27,9 30,6 16 … continued strong ROE

17. Slide 17: 2006 onwards – "GROW IT" phase strategies: Nedbank Corporate

    2006 onwards – “GROW IT” phase strategies Nedbank Corporate Business Banking n Performance focus improving service: n Brand awareness improving ­ Decentralised accountability n Increased sales capacity ­ Refined roles & n Corporate BEE scheme responsibilities n Effective expense control n Transactio

18. Slide 18: 2006 onwards – "GROW IT" phase strategies: Corporate Property Finance, Africa

    2006 onwards – “GROW IT” phase strategies Nedbank Corporate Property Finance n Maintain strong market n Brand awareness improving position n Corporate BEE scheme n Developing mid­market n Client retention & cross­sell n Rebuilding investment portfolio Africa n Building capacity n Growing existing bu

19. Slide 19: Nedbank Corporate progress to date

    Nedbank Corporate progress to date H1 05 2005 H1 06 Efficiency ratio (%) 53,9 54,7 48,7 Headline earnings (Rm) 885 1 894 1 214 ROA (%) 1,4 1,5 1,8 ROE (%) 18,2 18,9 22,0 19 … ROE now over 20%

20. Slide 20: 2006 onwards – "GROW IT" phase strategies: Nedbank Retail

    2006 onwards – “GROW IT” phase strategies Nedbank Retail n Home loan growth close to market levels n Card performing well ­ Acquiring market share stable ­ SAA co­brand tender won ­ Targeting 25% asset growth n Segmentation approach overhauled n Bancassurance ­ pleasing growth & group support n Buil

21. Slide 21: Nedbank Retail – investing for the future

    Nedbank Retail – investing for the future n Pricing ­ R100 m (annualised) invested in 2006 transactional price cuts ­ More competitive fixed deposit & savings account pricing ­ Risk based pricing refined – enabled average 20bps reduction in new home loan rates in May 2006 ­ But ­ pressure on fees li

22. Slide 22: Nedbank Retail progress to date

    Nedbank Retail progress to date H1 05 2005 H1 06 Efficiency ratio (%) 71,0 71,7 65,0 Headline earnings (Rm) 419 896 711 ROA (%) 1,0 1,0 1,4 ROE (%) 17,5 17,6 24,2 22 … significant improvement in ROE

23. Slide 23: R1 billion in distribution

    R1 billion in distribution n May refine as needs arise Includes: n Focus ­ Retail & Corporate ­ Certain system upgrades ­ ATM / SST / POS upgrades n Approx 40% new & replacements n EPS ­ no material impact ­ Branches ­ Personal loans branches n Self funding by 2009 ­ OMB in OMSTA ­ Nedbank in retail

24. Slide 24: "GROW-IT" phase - Barrett Survey results

    “GROW­IT” phase ­ Barrett Survey results Survey results – top 10 values as perceived by staff 2005 2006 1. cost­consciousness 1. cost­consciousness 2. profit 2. accountability 3. accountability 3. client­driven 4. community involvement 4. client satisfaction 5. client­driven 5. results orientation 6

25. Slide 25: "GROW-IT" phase - IT resource allocation

    “GROW­IT” phase ­ IT resource allocation September 2005 September 2006 Product Customer Product Customer innovation service innovation service 26% 13% 29% 22% 29% 13% 32% 36% Product Fix Product Fix enhancement enhancement 25

26. Slide 26: "GROW-IT" phase - Branding

    “GROW­IT” phase ­ Branding Nedbank's "share of voice" for 2006 has remained at a steady 20% 26

27. Slide 27: In summary

    In summary Financial performance remains on track Strong capital base with ongoing capital management Morale continues to improve Outwardly focused Investing for the future Continued improvement of ROE, RAROC & earnings growth 2007 targets Building for sustainable Efficiency ratio 55% growth ROE 20%

28. Slide 28: There is no miracle moment

    “There is no miracle moment. Small incremental wins in one common direction will restore Nedbank Group to a highly rated & respected financial institution.”

29. Slide 29: Questions?

    MAKE THI®)cs HAPPEN Questions?

30. Slide 30: Thank you

    MAKE THI®)cs HAPPEN Thank you

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