Nedbank Group · JSE:NED
Nedbank — ESG Presentation (May 2023)
48 slides from Nedbank's sustainability presentation, May 2023
Slide 1: 10th Annual Nedbank Group Board ESG roadshow
10th Annual Nedbank Group Board ESG roadshow May 2023 NEDBANK GROUP LIMITED – 10th Annual Board ESG roadshow 1
Slide 2: Boardmembers on Nedbank Group's 10th ESG roadshow
Boardmembers on Nedbank Group’s 10th ESG roadshow Mpho Makwana Hubert Brody Non-executive chairperson Lead Independent Director Chair: Board Chair: Remco & DAC Other committees: DAC & GCRC Other committees: GAC > 9 years on the board (retires at 2023 AGM) 5 years on the board Stanley Subramoney Dani
Slide 3: Agenda
Agenda ▪ Overview of ESG at Nedbank ESG roadshow objectives ▪ Governance ‒ Board & Group Exco matters ▪ Maintain strong relationships ‒ Ethics & Anti-money laundering between the Nedbank Group board & the investment community ‒ Technology oversight & Cyberrisk ‒ Capital, liquidity & dividends ▪ Comm
Slide 4: ESG is embedded in the Nedbank purpose & strategy
ESG is embedded in the Nedbank purpose & strategy Our purpose To use our financial expertise to do good for individuals, families, businesses & society Strategic value drivers Risk & Growth Productivity capital management Strategic value unlocks Delivering Ongoing disruptive Driving efficient Focusi
Slide 5: Creating positive impacts – our ESG ratings, credentials & milestones
Creating positive impacts – our ESG ratings, credentials & milestones Nedbank’s ESG ratings Credentials & milestones Top 5% Carbon- Net-zero Zero 100% of AAA of global neutral operational exposure lending banks operations water use to fossil-fuel- supports a net- related zero carbon Top 26% (since 2
Slide 6: We align to world-class ESG standards
Booklet slide We align to world-class ESG standards Report in accordance with Reporting is prepared in Signatory to the the International Finance Equator Principles accordance with the Corporation (IFC) Aligned to King IV Financial Institution Global Reporting Performance Standards CRISA principles
Slide 7: Our recent ESG-related recognition & awards
Booklet slide Our recent ESG-related recognition & awards Finance GLOBAL BANKING & review ENVIRONMENTAL FINANCE IMPACT AWARDS BONDS, LOANS & ESG CAPITAL MARKETS AFRICA Excellence in integrated reporting AWARDS Best Corporate Local currency ESG Top 3 rated for #1 rated Lender integrated report & Sust
Slide 8: Our suite of integrated reporting covers all aspects of ESG
Booklet slide Our suite of integrated reporting covers all aspects of ESG To update ESG data table with over 200 E, S & G KPIs over > 5 years & links to our ESG-related policies NEDBANK GROUP LIMITED – 10th Annual Board ESG roadshow 8 * Available on our website: nedbankgroup.co.za
Slide 9: Governance
Governance NEDBANK GROUP LIMITED – 10th Annual Board ESG roadshow 9
Slide 10: The Nedbank Group board – diverse & independent
The Nedbank Group board – diverse & independent 72% 29% 64% 98% independent black female black (AIC) Board meeting boardmembers attendance in 2022 NEDBANK GROUP LIMITED – 10th Annual Board ESG roadshow 10
Slide 11: Board changes & succession
Board changes & succession Board changes since 55th AGM (2022) Board succession plan ‒ Daniel Mminele joined (Board ▪ We aim to replace skills that will be lost with chairperson-designate, GCRC, DAC) retirements, including legal, retail banking, complex ‒ Mteto Nyati joined (GITCO, GRCMC, accounting
Slide 12: Board skills & training
Booklet slide Board skills & training Director updates & training in 2022 – various topics, including: ▪ Risk training (including on AML; combating the financing of terrorism; sanctions; market risk regulations; & cyberrisk); ▪ The future of banking; hyper automation; the metaverse; To update from I
Slide 13: Nedbank Group Board ESG oversight
Booklet slide Nedbank Group Board ESG oversight Nedbank Group board Overall ESG responsibility Group Information Director’s Affairs Group Audit Remuneration Technology (DAC) (GAC) (Remco) (GITCO) Governance & other Oversight of reputational Oversight of financial Oversight of Oversight of IT, digita
Slide 14: Our Nedbank Group Exco members
Our Nedbank Group Exco members Exco changes in 2022 Exco changes in 2023 ▪ Anna Isaac (Compliance officer) resigned from 30 April 2022 to take up a ▪ Trevor Adams (CRO) retired 31 March 2023 – replaced by Dave-Crewe compliance role in the UAE – replaced by Daleen du Toit (previously Head: Brown (RBB
Slide 15: Ethics & AML – Nedbank has zero tolerance for corruption
Ethics & AML – Nedbank has zero tolerance for corruption Key trends Zondo report on State Capture SARB AML administrative sanctions Suspicious transactions reported to FIC1 ▪ No findings were made against Nedbank ▪ SARB’s compliance inspection was ▪ Some transactions involving Nedbank, where conduct
Slide 16: Technology – GITCO oversight of the Managed Evolution IT build & digital developments
Technology – GITCO oversight of the Managed Evolution IT build & digital developments Managed Evolution programme Cybersecurity 91% complete Nedbank at advanced level of maturity ME benchmarked against world- class best practice ▪ Two global consulting firms Core banking benchmarked Nedbank’s ME mod
Slide 17: Benefits from our world-class technology platform & enhanced digital innovation
Booklet slide Benefits from our world-class technology platform & enhanced digital innovation Benefits for our clients Benefits for Nedbank Client onboarding Digital services Speed of innovation Systems uptime Eclipse1 NBH2 IT changes into Retail Juristic production per annum 99% >75% 99,3% (1Indivi
Slide 18: Capital, liquidity & dividends
Capital, liquidity & dividends – the group’s strong capital position supports growth, capital optimisation & future dividend payments, while liquidity ratios are very strong Capital ▪ Capital optimisation: R5bn share repurchase programme being executed (including odd-lot offer covered on page 45) CE
Slide 19: Mandatory audit firm rotation (MAFR)
Mandatory audit firm rotation (MAFR) – coordinated 5-year rotation cycle to ensure efficient audit firm handover & to protect shareholder interests KPMG … to YE 2018 Audit partner: Pierre Fourie Deloitte & Touche … to YE 2023 Audit partner (2017 to 2021): Lito Nunes Audit partner (2022 to 2023): Vuy
Slide 20: Remuneration – overview
Remuneration – overview Performance backdrop 2023 guaranteed Short-term 2023 LTI ▪ SPT 2.0 – mixed package increases incentives awards Headline earnings outcomes STI pool Key 2022 rem policy Group exco & non- ▲20% ▪ TOM 2.0 – R1,5bn bargaining unit ▲19% issues comprehensively (to R14bn) benefits rea
Slide 21: Remuneration – addressing shareholder concerns
Remuneration – addressing shareholder concerns Shareholder feedback Remco response Voting history on remuneration Shareholder votes in favour of proposed Group exco LTI awards ▪ 20% time-based in 2021 vesting was a once- remuneration off response to Covid-19 retention (%) requirements ▪ No time-base
Slide 22: Remuneration outcomes – guaranteed remuneration & STI outcomes
Remuneration outcomes – guaranteed remuneration & STI outcomes Guaranteed package increases 2022 STI increases versus Market cap, HE, DHEPS & EP 120% STI increases Bargaining unit aligned to DHEPS employee GP increases 208% & EP growth over well ahead of 90% time management & inflation 168% 60% 30%
Slide 23: Remuneration outcomes – focus on ethical & fair pay
Booklet slide Remuneration outcomes – focus on ethical & fair pay CE Guaranteed Package (GP) CE single-figure remuneration vs bank minimum GP vs bank minimum remuneration (multiple) (multiple) The Group Remco is mindful of the numerous methodologies The Group Remco reviews vertical pay gaps & horiz
Slide 24: Remuneration outcomes – long-term incentive scheme vesting
Booklet slide Remuneration outcomes – long-term incentive scheme vesting NEDBANK GROUP LIMITED – 10th Annual Board ESG roadshow 24
Slide 25: Remuneration policy – key changes to 2023 LTI scheme
Remuneration policy – key changes to 2023 LTI scheme: linked to corporate performance targets & no more time-based vesting * * NEDBANK GROUP LIMITED – 10th Annual Board ESG roadshow 25
Slide 26: Remuneration policy – retained financial CPTs aligned to 2025 targets
Remuneration policy – key changes to 2023 LTI scheme: retained financial CPTs & aligned them to the group’s 2025 (medium-term) targets Financial CPTs – retained ROE, DHEPS growth & efficiency ratio (aligned to 2025 targets) NEDBANK GROUP LIMITED – 10th Annual Board ESG roadshow 26
Slide 27: Remuneration policy – LTI CPTs linked to the group's 2025 targets
Booklet slide Remuneration policy – LTI CPTs linked to the group’s 2025 targets Short Targets to 2023 term DHEPS ROE Cost-to-income ratio Net Promoter Score > 2 565 cents > 15% < 54% #1 bank (2019 levels) (2019 levels) (from #3 in 2019) Medium Targets to 2025 term > CPI + GDP + 5% > 17% < 52% #1 ban
Slide 28: Remuneration policy – refined ESG & strategic CPTs
Remuneration policy – key changes to 2023 LTI scheme: refined ESG & strategic CPTs Strategic & EGS CPTs – environment & social, with governance covered by Malus & Clawback NEDBANK GROUP LIMITED – 10th Annual Board ESG roadshow 28
Slide 29: Remuneration – proposed non-executive director fees for 2023
Booklet slide Remuneration – proposed non-executive director fees for 2023 (target an approximate 90% vs peer group) NEDBANK GROUP LIMITED – 10th Annual Board ESG roadshow 29
Slide 30: Remuneration – executive remuneration
Booklet slide Remuneration – executive remuneration Mike Brown Mfundo Nkuhlu Mike Davis Chief Executive Chief Operating Officer Chief Financial Officer GP LTI face value GP LTI face value GP1 LTI face value (R 000) (R 000) (R 000) (R 000) (R 000) (R 000) +5% +1% +2% +4% +4% +8% +6% +2% +2% 1 325 16
Slide 31: Remuneration – Single figure calculation
Booklet slide Remuneration – Single figure calculation Mike Brown Mfundo Nkuhlu Mike Davis NEDBANK GROUP LIMITED – 10th Annual Board ESG roadshow 31
Slide 32: Environment & society
Environment & society NEDBANK GROUP LIMITED – 10th Annual Board ESG roadshow 32
Slide 33: Nedbank Sustainable Development Framework
Nedbank Sustainable Development Framework The Nedbank Sustainable Development Framework was conceived in 2017 to focus attention & resources on the most material goals & targets, which were selected using a rigorous proprietary methodology created by Earth Security Group. Given that the greatest con
Slide 34: SDG-related financing – sustainable development finance ambition
SDG-related financing – our ambition is to increase sustainable development finance (SDF) exposures to around 20% of gross loans & advances by 2025, through >R150bn in support of new SDF Sustainable finance (multiple SDGs) Sustainable-development financing (Rbn, exposures) R21bn lending R3,5bn for n
Slide 35: Nedbank's climate change journey – our commitment to net zero
Nedbank’s climate change journey – our commitment to net zero Commitments per our energy policy Progress on our energy policy (exposures, % of gross loans & advances) Climate change resolutions passed with 2020 100% votes of approval at our 53rd AGM Do more good Do less harm Adopted & disclosed our
Slide 36: Climate change – financed emissions: establishing glidepaths
Climate change – financed emissions: establishing glidepaths for fossil- fuel related financing activities Our approach Absolute GHG emissions ▪ Methodology: Partnership for Carbon (ktCO2e) Accounting (PCAF) Our fossil fuels glidepath, ▪ Initial focus: High emission intensity fossil- to be disclosed
Slide 37: Climate change – leading through our own operations
Climate change – leading through our own operations Total group GHG emissions Renewable energy (k tCO2e) (% of total electricity) ▪ Engaging our supply chain on (40%) Nedbank’s environmental & climate change carbon issues to reduce our GHG footprint has emissions & enhance disclosure been reducing f
Slide 38: Financial inclusion – strategy spans distribution, products & services
Financial inclusion – strategy spans distribution, products & services to entry- level clients & SMEs, community interventions & financial education Inclusive Financial inclusivity Financial inclusivity Community-based Financial distribution individuals businesses interventions wellness & education
Slide 39: Transformation – retained our BBBEE level 1
Transformation – retained our BBBEE level 1 (five years-in-a-row) Nedbank’s BBBEE level & points Nedbank scorecard Target Achieved 1 1 1 1 1 Ownership 23 26,1 2 2 Management control 20 14,5 122,4 121,5 119,4 117,6 117,6 2 2 Level 2 2 Skills development 20 17,6 110,0 Preferential procurement 15 18,0
Slide 40: Transformation/diversity, equity & inclusion – gender & diversity metrics
Transformation/diversity, equity & inclusion – ongoing improvement in gender & diversity metrics Gender diversity (%) Male Female 2019 61,8 2022 61,8 Racial diversity (%) White ACI1 2019 78,5 2022 80,8 1 Africa, Coloured, Indian employees NEDBANK GROUP LIMITED – 10th Annual Board ESG roadshow 40
Slide 41: Human Capital – higher levels of employee satisfaction
Human Capital – higher levels of employee satisfaction notwithstanding ongoing business optimisation Training spend Employee morale at multi- Optimising our business for a more digital world year high shifted to more efficient – retrenchments in 2022 limited to 63 digital learning channels – Great p
Slide 42: 56th AGM & GM resolutions
56th AGM & GM resolutions 2 June 2023 NEDBANK GROUP LIMITED – 10th Annual Board ESG roadshow 42
Slide 43: Resolutions to be voted on at 2 June 2023 AGM
Resolutions to be voted on at 2 June 2023 AGM Ordinary resolutions 1.1 and 1.2 Election of directors of the company appointed during the year: Mr M Nyati and Mr AD Mminele Ordinary resolutions 2.1 to 2.4 ▪ Re-election of Mr HR Brody ▪ Re-election of Mr MH Davis ▪ Re-election of Mr EM Kruger ▪ Re-ele
Slide 44: Resolutions to be voted on at 2 June 2023 AGM
Resolutions to be voted on at 2 June 2023 AGM Ordinary resolution 5 ▪ Placing the authorised but unissued ordinary shares under the control of directors. o ‘The below authority to place authorised but unissued shares under the control of the Shareholders are directors will be used only for the purpo
Slide 45: Special resolutions to be voted on at 2 June 2023 AGM
Special resolutions to be voted on at 2 June 2023 AGM Special resolutions 1.1 to 1.11 ▪ Remuneration of the Non-executive directors Special resolutions 2.1 to 2.3 ▪ Remuneration of non-executive directors appointed as Acting Group Chairperson, Acting Lead Independent Director or Acting Committee Cha
Slide 46: Odd Lot offer – resolutions to be voted on at 2 June 2023 GM
Odd Lot offer – resolutions to be voted on at 2 June 2023 GM Special resolutions 1 Proposed odd-lot offer by Nedbank Group to repurchase ▪ Specific approval for the acquisition by all of the Nedbank Group Shares of shareholders holding Nedbank Group from the odd-lot holders less than 100 Nedbank Gro
Slide 47: Thank you
Thank you NEDBANK GROUP LIMITED – 10th Annual Board ESG roadshow 47
Slide 48: Contact us
Contact us Nedbank Group CFO Nedbank Investor Relations nedbankgroup.co.za Mike Davis Head: Investor Relations Nedbank Group Limited Email: MichaelDav@nedbank.co.za Alfred Visagie Physical address Email: AlfredV@nedbank.co.za 135 Rivonia Road Group Company Secretary Sandown Jackie Katzin Larisa Baye