Nedbank Group · JSE:NED
Nedbank — Nedcor — Deutsche Bank London Conference 2004
27 slides from Nedbank's conference presentation, June 2004
Slide 1: Deutsche Bank London Conference
Deutsche Bank London Conference June 2004 Tom Boardman Chief executive
Slide 2: Road map
Road map Five point plan • Chairman’s 10 key issues • Reconstitute EXCO • CEO’s objectives • Strategic review • Improve transparency • Nedcor Board objectives • Deliver on merger • Customer service focus Priorities & Group strategy Strategic recovery programme Organic initiatives • Restore the bank
Slide 3: Peer group comparison
Peer group comparison Ratios Nedcor Competitor (Excluding Forex) Including M&R Excluding M&R A B expenses expenses NII / Lending assets 3.0% 3.0% 3.5% 3.9% NIR / NII 117% 117% 112% 110% Provisions / 0.9% 0.9% 0.6% 0.8% Lending assets Operating expenses / 4.5% 4.3% 4.2% 4.6% Lending assets Operating
Slide 4: Strategic recovery programme
Strategic recovery programme Restore the bank Build for the future • Management information • Long term strategic plan • Restore & manage capital • Customer satisfaction / retention • Merger completion • Peoples Bank integration • Improve bank image • Risk management & governance • Grow transactiona
Slide 5: Strategic recovery programme
Strategic recovery programme Clearly tracking all initiatives Division example - 2004 monthly • Organic budget (headline earnings) • M&R 350 • Recovery benefits 300 • Recovery costs 250 200 R'000 150 100 50 0 Aug Apr May July Jan Oct Mar June Nov Dec Feb Sep Months Budget excl Initiatives Initiative
Slide 6: Strategic recovery programme
Strategic recovery programme Divisional example - status of net benefits Under debate: 30 Apr Under debate: 14 May Soft: 30 Apr Soft: 14 May Medium: 30 Apr Medium: 14 May Hard: 30 Apr Hard: 14 May Total: 30 Apr Total: 14 May 0 50 100 150 200 250 300
Slide 7: Management information
Management information • Baseline set & clean-up completed • Stable & accurate financial data • “One version of the truth” ◦ Cost transfer pricing • Improved MIS ◦ Capital allocation • Focus By ◦ Funds transfer pricing Dec accountability • Asset and liability management 2004 • Clear • Financial proc
Slide 8: Restore & manage capital
Restore & manage capital • R5.2 billion rights issue • Sale of non-core assets & businesses • Management of foreign capital • Balance sheet efficiency By Dec 2004 Target Tier 1 capital 7.5%
Slide 9: Merger completion
Merger completion • BoE Business Bank ◦ All clients migrated ◦ Completion end June 2004 • Migration strategy for NBS ◦ 64k high net worth clients to be transferred to Nedbank ◦ Balance to be transferred to Peoples Bank ◦ Completion end November 2004 Overall committed synergy target remains R700m p.a
Slide 10: Peoples Bank integration
Peoples Bank integration • Minorities agreed to merger • Management integrated into Nedbank Retail • Risk centralised • Branch integration completion by mid 2005 Integrated retail offering in Nedbank
Slide 11: Risk management & governance
Risk management & governance • Re-examine governance structures • Basel II implementation • FICA compliance (money laundering) • FAIS compliance (financial intermediaries) • Revised ALM & ALCO process Enhanced risk management
Slide 12: Refocus incentive plans
Refocus incentive plans Guaranteed package Short term incentives Percentage of S-T • Principles supporting schemes agreed incentive tied to Group results: • Pool for 2004 agreed, linked to business results Exco: 80% • Median pay for median performance NG7: 60% NG6: 50% • Focus for 2004 - financial p
Slide 13: Staff morale, culture & values
Staff morale, culture & values • Required leadership • Accountability • Staff communication • Strategy, vision & values • Staff consultation • Continuous feedback
Slide 14: Executive team
Executive team Nedcor Group CEO Tom Boardman Retail & Wealth Nedbank Nedbank Capital Group Management Corporate Operations Pete Backwell Graham Brian Kennedy Len de Villiers Dempster Group Business Group Strategy Group Finance CEO’s Office / Group Risk Innovation & Corporate FSC / HR Affairs Barry H
Slide 15: Cost focus: retrenchment process
Cost focus: retrenchment process • Staff costs = 49% of total expenses • Voluntary retrenchment: March 2004 • 1 458 voluntary retrenchments • Target to finalise retrenchments by end July 2004 • Rebuild motivation & morale of staff Reduced costs for future (but one-off retrenchment costs in 2004) Ana
Slide 16: Voluntary retrenchments
Voluntary retrenchments 800 Expected last day 700 600 Total 500 1 458 400 300 200 100 0 Apr-04 May-04 Jun-04 Jul-04 Aug-04 Sep-04 Oct-04 Nov-04 Dec-04 Jan-05 African Coloured Indian White
Slide 17: Non-core asset disposal
Non-core asset disposal Disposal of non-core subsidiaries • Chiswell sold £20.9m • Stenham sold £19m • BoE Life Intl - £22m capital taken out & remaining business being sold Disposal of non-core assets From 31 Dec 03, approximately R2bn to be disposed of (over next 2-3 years) • Century City sold R98
Slide 18: Long-term strategic direction
Long-term strategic direction Back to basics Southern Africa focus • Disposal - non-core assets • Restructure foreign Strategic direction operations • Simplify brand strategy • Cautious African expansion • Optimise asset & liability Back to basics – management banking Client centricity • Exploit ban
Slide 19: Grow customer base
Grow customer base (Domestic market shares – Nedcor analysis) Number of Retail customers • Too few primary banker customers % primary customers - Both Retail and Corporate banking • Imperative to grow share of transactional banking Bank A Bank B Bank C Nedcor Total deposits market share Total loans
Slide 20: Customer satisfaction / retention
Customer satisfaction / retention • Customer research • Measurement of defection • Understand causes of dissatisfaction • Review processes & system functionality • Implement training • Align rewards with customer service • “Staying close to customers” initiatives
Slide 21: Financial Sector Charter
Financial Sector Charter Major milestones completed: • BEE policy committee to monitor compliance • Allocating responsibility to the respective BU’s Major milestones for remainder 2004 • BEE ownership strategy • Finalise procurement, EE & empowerment financing strategies & targets (group wide FSC &
Slide 22: Bancassurance
Bancassurance • Sharing platforms • Differentiated tactics ◦ Retail banking ◦ Corporate banking ◦ Commercial banking • Insurance & assurance products for bank customers ◦ Short-term insurance & long term assurance • Appropriate execution capability ◦ Skilled sales force ◦ Infrastructure
Slide 23: Organic growth initiatives
Organic growth initiatives • Grow transaction revenue – primary banker status • Focus on improving cross-sell ratio • Implement mass market retail strategy ◦ Target youth & middle income South Africa ◦ Differentiated product offering • Proactively offer creative solutions to corporate market • Preve
Slide 24: Some small wins
Some small wins • E&Y M&A survey ◦ Top domestic merchant bank & sponsor by deal flow ◦ 2nd domestic merchant bank by deal value • Financial Mail’s Ranking the Analysts survey ◦ Ranked 2nd for equity sectors ◦ Overall ranked 4th (top domestic house) • Financial Mail’s Top Empowerment Companies ◦ Rank
Slide 25: Current position
Current position • Full support of parent - Old Mutual • Grown to one of the largest SA banks • Dynamic young EXCO team • Successfully raised enough capital to grow • Reduced forex risk • Reduced interest rate risk ◦ Expensive fixed rate debt rolled off - April 2004 ◦ Improved hedging policies • Fac
Slide 26: “There is no miracle moment. Small incremental wins in one common direction will restore
“There is no miracle moment. Small incremental wins in one common direction will restore Nedcor to a highly rated & respected financial institution.”
Slide 27: Thank you
NEpcor £f Thank you