Nedbank Group · JSE:NED
Nedbank — FY2022 Earnings Presentation
100 slides from Nedbank's earnings presentation, Mar 7, 2023
Slide 1: 2022 Annual Financial Results
2022 Annual Financial Results For the year ended 31 December 2022 7 March 2023 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 1
Slide 2: Agenda / Overview
Agenda Operating environment Strategic progress Financial overview Cluster overview Outlook & guidance Overview Mike Brown Chief Executive NEDBANK GROUP LIMITED – 2022 Annual Financial Results 2
Slide 3: Overview
Overview Environment Strategic Operational Financial A challenging Strategic delivery Good operational Strong earnings operating on track performance growth & fortress environment balance sheet ▪ 2,3% SA GDP growth ▪ Strong digital growth ▪ PPOP: +15% ▪ HE: +20% ▪ Severe electricity ▪ Leading client
Slide 4: Operating environment – global economic pressures & domestic challenges
Operating environment – global economic pressures & domestic challenges impacted the local market, with the SA economy demonstrating high levels of resilience Global environment SA economy relatively resilient Annual SA GDP growth (%) Annual average SA inflation (%, ye) ▪ Ongoing impact of Russian w
Slide 5: Operating environment – SA's potential and challenges
SA’s SA’s Operating environment potential challenges failing state-owned monopolies, in particular: SA’s ▪ Energy/Eskom urgent & ▪ Logistics/Transnet decisive action economic ▪ Water requiring by government, potential but labour, civil remains … and high levels of crime society & compelling & corrup
Slide 6: Operating environment – failures of state-owned monopolies
Operating environment – but the reality of failures of many state-owned SA’s SA’s monopolies & poor service delivery in key network industries has led to very potential challenges disappointing outcomes, particularly in energy, logistics, water & crime Electricity Rail passengers SA on FATF Unemploy
Slide 7: Operating environment – SA placed on FATF greylist
Booklet slide Operating environment – SA placed on FATF’s greylist (‘jurisdiction under increased monitoring’) The Financial Action Task Force (FATF) Mutual Evaluation Report identified significant weaknesses in parts of SA’s AML, CFT & CPF systems. In February 2023, SA was placed on the FATF greyli
Slide 8: Operating environment – Eskom, electricity security & load-shedding
Operating environment – Eskom, electricity security & the impact of SA’s SA’s potential challenges load-shedding Eskom & electricity security Impact of load-shedding ▪ SA’s path to net zero is a path to energy security ▪ 2023 GDP forecast reduced to 0,7%, with downside risk (assuming at least stage
Slide 9: Operating environment – government/NECOM plan to end load-shedding
Booklet slide Operating environment – SA government/NECOM plan to end load-shedding ▪ South Africa’s Just Energy Transition requirements ‒ More renewable energy required every year to 2030 than the total constructed over the past 10 years R254bn debt o 7 GW per annum (difficult but achievable) Minis
Slide 10: Operating environment – government/NECOM plan to end load-shedding
Booklet slide Operating environment – SA government/NECOM plan to end load-shedding NEDBANK GROUP LIMITED – 2022 Annual Financial Results 10
Slide 11: Operating environment – impact of load-shedding on clients
Booklet slide Operating environment – negative impact of higher levels of load-shedding on our clients, but some opportunities do arise SA economy Our own operations Our clients Credit growth Credit quality Load- Nominal ▪ Higher costs – diesel generation shedding GVA lost costs up >100% to R59m, ge
Slide 12: Operating environment – SA's potential remains compelling
SA’s SA’s Operating environment – SA’s potential remains compelling, but … potential challenges Abundant Strong, profitable natural resources & well-regulated Resilient SA a top 10 global banking sector corporate sector producer of platinum, Capital & liquidity metrics palladium, chrome ore, Highly
Slide 13: Operating environment – households generally resilient
Booklet slide Operating environment – households generally resilient, but early signs of stress emerging as a result of higher interest rates & inflation Household debt ratios Household debt service (% of PDI) costs (% of PDI) 90 15 80 10 Rising pressure 7,5 70 Households on consumers, 62,8 60 5 hav
Slide 14: Operating environment – card & POS data show SA recovery
Booklet slide Operating environment – our high-frequency card & POS data show a continued SA recovery in 2022 Total monthly industry POS turnover1 (Rbn) Amex All underlying Corporate volumes industries spend2 up above 2019 now above 65% levels since 2019 levels April 2022 E-commerce Foreign spend up
Slide 15: Nedbank Group strategy
Nedbank Group 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 Focusing on areas market-leading
Slide 16: Growth – revenue growth trends improving
Strategic value drivers Growth – revenue growth trends improving Risk & capital Growth Productivity management Nedbank revenue1 & gross advances growth (%) Structural benefit from higher interest rates – R1,6bn 15% (pre-tax) for every 1% increase, partially offset by lower growth/higher impairments/
Slide 17: Productivity – optimisation benefits becoming more evident
Strategic value drivers Productivity – optimisation benefits becoming more evident but inflation Growth Productivity Risk & capital management Permanent employees pressures rising 3% Structural cost optimisation benefits ▪ Managed Evolution IT build 91% complete, enabling TOM 2.0 savings of R1,5bn t
Slide 18: Risk & capital management – fortress balance sheet
Strategic value drivers Risk & capital management – fortress balance sheet & record-high Growth Productivity Risk & capital management coverage, capital, liquidity metrics and dividend declaration Capital Dividends Dividends dividends CET1 ratio (%) 10,9% 12,8% 14,0% 11,5% 1 649 1 415 1 191 declared
Slide 19: Board & Group Exco changes
Board & Group Exco changes – experienced leadership & seamless succession Board chairperson Chief Risk Officer Chief Information Officer Daniel Mminele Dave Crewe-Brown Ray Naicker Pic Pic PIc Effective 1 May Effective 1 April Effective 1 July 2023, chairperson 2023 2023 from 2 June 2023 Mpho Makwan
Slide 20: Strategic overview
‘Strategic delivery on track, underpinned by our world-class technology platform’ Strategic overview Mfundo Nkuhlu Chief Operating Officer NEDBANK GROUP LIMITED – 2022 Annual Financial Results 20
Slide 21: Nedbank Group strategy
Nedbank Group 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 Focusing on areas market-leading
Slide 22: Managed Evolution technology programme – 91% complete
Strategic value unlocks Managed Evolution technology programme: building a world-class technology platform – 91% complete & delivering benefits as per plan Managed Evolution programme Key IT build components Investment vs benefit Invested R10,2bn to 31 Dec 2022, to completion realisation to date (%)
Slide 23: Managed Evolution – IT cash flow spend peaked in 2017
Strategic value unlocks Managed Evolution technology programme – IT cash flow spend peaked in 2017 & intangible software assets peaked in 2021 at R9bn Booklet slide Core systems (#) IT software development spend (Rbn) System downtime & IT changes (h, #) Rationalise, standardise & simplify Annual cas
Slide 24: Benefits from world-class technology platform
Strategic value unlocks 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
Slide 25: Digital journeys enabled by Eclipse & Nedbank Business Hub
Strategic value unlocks Our digital journeys are enabled by client onboarding and servicing via Eclipse & Nedbank Business Hub Booklet slide End-to-end digital client onboarding & digitising our products 2019 2020 2021 2022 2023 & beyond Clients Individual client Juristic client Ongoing juristic cli
Slide 26: Digital uptake & usage continues to accelerate
Strategic value unlocks Digital uptake & usage continues to accelerate Digitally active main-banked Digital transaction volumes App transaction volumes clients (%) (# m) (# m) +76% +253% 49% 57% 64% 68% 103 58 57 77 68 87 37 22 19 20 21 22 19 20 21 22 19 20 21 22 Digital sales Digital transaction va
Slide 27: External recognition received in 2022
Booklet slide External recognition received in 2022 – business excellence & digital innovation 2022 Asian Banker 2022 Intellidex/ 2022 International The Banker Excellence in Retail Investors Monthly Activeops Awards Investment Banking 2022 Global Banking 2023 Global Finance Financial Services Awards
Slide 28: Operating model changes enabling lower expense growth
Strategic value unlocks Operating model changes & efficient execution are enabling lower expense growth Cumulative target operating model Permanent employees SA outlets/branches Teller activity benefits (Rbn) (#) (#) (# m)2 (11%) (7%) (63%) 29 213 28 271 26 861 25 924 589 549 538 545 23 13 11 9 19 2
Slide 29: Market share gains – Strategic Portfolio Tilt 2.0
Strategic value unlocks Mixed outcome on market share gains as we remained prudent in a difficult economic environment (Strategic Portfolio Tilt 2.0) BA900 market share Dec Dec Dec Jun Dec (%) 19 20 21 22 22 Core corporate loans1 21,2 20,9 19,8 19,1 18,5 ▪ Growth opportunities – infrastructure & SDG
Slide 30: Creating positive impacts – R123bn sustainable-development financing
Creating positive impacts – R123bn of exposures at the end of 2022 that support Strategic value unlocks sustainable-development financing (SDF). We set an ambition for this to be around 20% of gross loans & advances by 2025, through >R150bn in support of new SDF Sustainable finance (multiple SDGs) S
Slide 31: Creating positive impacts – using financial expertise to do good
Strategic value unlocks Creating positive impacts – using our financial expertise to do good MSCI ESG Mandatory Audit Level 1 Employee ‘Best rating AAA Ranked #1 Firm Rotation – BBBEE status place to work’ (ranked in top in the JSE Satrix KPMG to for the past 5 NPS up to 22 5% of global Inclusion &
Slide 32: Creating positive impacts – ESG credentials & awards
Booklet slide Creating positive impacts – our ESG credentials & awards Nedbank’s ESG ratings Credentials & awards Top 5% Carbon- Net-zero Climate Zero 100% of AAA of global banks neutral operational Action exposure lending & operations water use Alliance to fossil-fuel- investing related supporting
Slide 33: Delivering value for all our stakeholders
Delivering value for all our stakeholders in a challenging operating environment Operating environment Strategic delivery Society & Employees Clients Shareholders Regulators environment Strong earnings growth & fortress balance sheet NEDBANK GROUP LIMITED – 2022 Annual Financial Results 33
Slide 34: Financial overview
‘Strong revenue growth supported HE of R14bn, up 20%; higher ROE at 14% & strong CET1 ratio at 14%’ Financial overview Mike Davis Chief Financial Officer NEDBANK GROUP LIMITED – 2022 Annual Financial Results 34
Slide 35: Key environmental & strategic drivers
Key environmental & strategic drivers – mixed impact on the group’s 2022 financial performance Operating environment Strategic delivery Financial outcomes SA GDP Global & local Technology/ Revenues growth markets Digital 11% SA Currency Efficient execution Headline inflation impacts earnings SA prim
Slide 36: Key drivers of shareholder value creation
Key drivers of shareholder value creation – solid NAV growth, ongoing ROE improvement & strong capital generation enabling a record-high 2022 dividend NAV per share (cents) ROE & cost of equity (%) Dividend per share (cents) 1 649 1 415 1 191 14% No dividends 21 533 18 391 20 493 8 10 12 14 16 18 20
Slide 37: Profitability metrics continue to improve
Profitability metrics continue to improve, underpinned by robust capital, liquidity & provisioning yoy 2022 2021 2020 2019 Headline earnings (Rm) 20% 14 049 11 689 5 440 12 506 DHEPS (cents) 19% 2 806 2 362 1 113 2 565 Profitability Basic EPS (cents) 27% 2 932 2 317 717 2 500 ROE (%) 14,0 12,5 6,2 1
Slide 38: Headline earnings up by 20%
Headline earnings up by 20% – driven by strong revenue growth Headline earnings (Rm) 12% 10% 10% 13% 8% +5% (excl incentives & other staff costs) 80 847 2 412 2 786 276 3 777 17 111 11 689 14 049 HE NII NIR Associate Impairments Expenses Direct tax HE 2021 income & other 1 2022 1 Other includes indi
Slide 39: Headline earnings up by 20%
Booklet slide Headline earnings up by 20% – driven by strong revenue growth Key earnings drivers (pre-tax, Rm) 12% 10% 10% 13% 8% 5% 7 381 6 534 4 307 4 104 32 500 36 277 24 889 27 301 33 639 36 425 879 799 NII NIR Associate income Impairments Expenses Direct tax 19 20 21 22 Note: 2021 NIR restated
Slide 40: Gross banking advances up 7%
Gross banking advances up 7% – driven by ongoing momentum in RBB & recovery in CIB CIB gross banking advances (Rbn) RBB gross banking advances (Rbn) ▪ CIB: activity picked up in H2 +7% ‒ Uptick in H2 credit demand & 450 execution of pipeline in mining +7% & resources, and diversified & +8% industria
Slide 41: Gross banking advances up 7%
Booklet slide Gross banking advances up 7% Muted CPF Strong H2 growth HL growth driven by Leverage MFC’s opportunities, but Pipeline lower attrition but market-leading growth driven by a conversions in slower payouts as a position, driven by steady recovery mining, resources result of a slight decli
Slide 42: Deposits up 7%
Deposits up 7% – exceeding R1 trillion for the first time; behavioural shift to longer tenure in a rising-interest-rate environment Deposits (Rbn, % change yoy) Funding mix (% contribution)1 (0%) (11%) 12% 20% 8% 29% 6,8 5,9 20 7 12 19,3 31,5 +0,8% (0,8%) 45 (0) (12) 2019 2021 2022 968 1 040 36,5 De
Slide 43: NII up by 12%
NII up by 12% ‒ NIM expansion driven by endowment income (higher interest rates) & liability mix/pricing benefits Net interest margin (bps) Q1 Q2 Q3 Q4 Run 386 385 392 410 rate 8 (5) (6) 23 352 336 373 393 2019 2020 2021 Endowment Liability Asset Foreign loan 2022 mix & rate mix & mix & reclassifica
Slide 44: NIR up by 10%
NIR up by 10% – solid commission & fees growth, good insurance income & equity performance & prior-year MVFHA loss did not recur NIR (Rm) ▪ Commission & fees – solid growth driven by ongoing recovery in client transactional activity +7% incl card interchange revenue, cross-sell & main- banked client
Slide 45: Impairment charge up 13%
Impairment charge up 13% – driven by higher impairments in interest-rate- sensitive products across our retail portfolios Impairment charge (Rbn) Key impairment growth drivers in 2022: ▪ 7% growth in gross banking loans & advances ▪ higher impairments in interest-rate- sensitive products in RBB (hom
Slide 46: Group credit loss ratio at 89 bps
Group credit loss ratio at 89 bps – CIB, RBB & NAR within their TTC target ranges & Wealth below Credit loss ratios (bps) GFC GLC 300 250 200 152 161 150 100 64 50 22 25 82 161 138 240 134 161 100 185 102 42 18 79 83 89 72 9 0 06 08 10 12 14 16 18 20 22 -20 Group CIB RBB Wealth NAR 2019 2020 2021 20
Slide 47: Total balance sheet ECL up 5% to R27,9bn
Total balance sheet ECL up 5% to R27,9bn – driven by the R7,4bn impairment charge, as well as higher levels of recoveries & write-offs Total balance sheet ECL Write-offs Post-write-off recoveries (Rbn) (Rbn) (Rbn) 3,37 ECL 1,6 27,9 8,6 26,6 coverage (%) 8,1 1,4 2,26 1,78 08 10 12 14 16 18 20 22 08 1
Slide 48: Higher total ECL coverage of 3,37%
Higher total ECL coverage of 3,37% (2021: 3,32%, 2019: 2,26%) – driven by a larger contribution from stage 3 loans Stage 1 loans Stage 2 loans Stage 3 loans 37,9 38,0 0,69 7,0 34,3 0,65 6,6 6,4 31,5 Coverage 0,60 ratio (%) 5,3 0,48 +7% yoy (21%) yoy +31% yoy Loans & advances (Rbn) 678 619 634 678 72
Slide 49: All clusters within or below target ranges
Booklet slide All clusters within or below their target ranges & coverage ratios well above 2019 levels p Credit loss ratio (bps) ECL coverage (%) 22 21 20 19 TTC 22 21 20 19 CIB 22 42 82 25 15–45 1,29 1,35 1,07 0,61 CIB excl CPF 17 53 103 45 1,41 1,56 1,23 0,75 CPF 28 30 54 (2) 1,19 1,14 0,91 0,44
Slide 50: Expenses up 8%
Expenses up 8% – or 5% excluding incentives & other staff costs, reflecting good expense management, with focus on efficiencies & benefits from digitisation Expenses (Rm) ▪ Staff-related costs ‒ Salaries & wages +4% 4% 23% >100% 3% 8% o Average ASR increases: +4,6% (BU +5,2%) o 3% decline in permane
Slide 51: Capital – CET1 ratio well above target range
Capital – CET1 ratio well above the top-end of our board-approved target range of 11% to 12%, supporting dividend declarations at 1,75x CET1 ratio (%) Dividend payout ratio (payout ratio %, times cover) 1,2 0,2 1,84x 2,02x 1,75x 2,2 1,99x 1,68x 2,50x 1,75x Board CET1 target: 11% to 12% SARB PA Board
Slide 52: RWA progression
Booklet slide RWA progression – lower overall RWA in 2022 as growth in credit RWA was offset by reductions in market & counterparty credit risk Risk-weighted assets (Rbn) 19 4 2 4 14 11 15 13 1 4 1 17 629 674 657 648 Dec Credit CCR Market Other Dec Credit CCR Market Other Dec Credit CCR Market Other
Slide 53: Capital allocation – R5bn share repurchase programme
Capital allocation – surplus capital held at the Centre enabled a R5bn share repurchase programme Capital allocation (Rbn) Share repurchase programme1 20,5 ▪ up to R5bn ▪ executed over the next 12 12,9 months 11,8 ▪ subject to all legal & 4,2 regulatory approvals & 2,5 3,3 4,3 4,5 1,4 1,1 requiremen
Slide 54: Cluster financial overview
Cluster financial overview – all our business clusters reported solid HE growth & higher ROEs Headline earnings Return on equity (Rbn, growth %) (%) NAR +64% Wealth +18% 1.0 1,1 R14,0bn 6,4 +14% Group ROE +13% 5,1 14,0% +20% CIB RBB 17,7% 16,0% 26,1% 13,8% CIB RBB Wealth NAR NEDBANK GROUP LIMITED –
Slide 55: CIB overview
‘Higher HE & ROE enabled by solid revenue growth & prudent risk management’ CIB overview Anél Bosman Group Managing Executive NEDBANK GROUP LIMITED – 2022 Annual Financial Results 55
Slide 56: CIB financial performance – higher HE & ROE
CIB financial performance – Higher HE & ROE enabled by solid revenue growth & prudent risk management Financial performance 17,7 17,7 15,3 ▪ NII up by 10% ROE 9,4 (%) ‒ NIM improved by 7 bps owing to increased deposit 14% margins ‒ Good advances growth of 8% ▪ NIR up by 5% ‒ Strong performance in th
Slide 57: CIB financial performance – reduced credit risk
CIB financial performance – reduced credit risk & higher second-half banking advances growth, while maintaining optimal capital levels Credit loss ratio (bps) Coverage ratios (%) ▪ Impairments declined by 43% 23,7% ‒ In line with management expectations 18,2% 3,30 ‒ Including for stressed counters 4
Slide 58: Credit risk – CIB high-risk exposures
Credit risk – CIB high-risk exposures % of CIB D7 & NPL% CIB high-risk sectors exposure of sector Rest of CIB exposure High-risk watchlist sectors reduced ▪ SOEs/Municipalities exposures Defaulted-exposures 5,0% (6,4%) 4,2% (4,5%) as lockdown 46% reducing & risk reducing, with 15% restrictions (48%)
Slide 59: Commercial property finance
Commercial property finance – a high-quality, well-diversified & collateralised portfolio Credit loss ratio (bps) & loan-to-value ratio (%) High-quality, Overlays at R0m CLR at 28 bps CLR 53 (2) 54 30 28 well-diversified (Dec 21: R590m) (Dec 21: 30 bps) & collateralised Overlays – driven by large 53
Slide 60: CIB creating positive impacts – sustainable finance & renewables
CIB creating positive impacts – expanding our leadership in sustainable finance & renewable-energy financing Renewable-energy financing Sustainable-finance facilities Sustainable funding raised (drawn exposures, Rbn) (exposures, Rbn) (cumulative, Rbn) 11,7 15,7 32 30 25 27 9,8 7,6 10 1,2 2,7 15 19 2
Slide 61: CIB creating positive impacts – tilting away from carbon-intensive assets
CIB creating positive impacts – tilting our portfolio away from carbon- intensive assets Our journey to zero exposure to fossil- fuel-related activities by 2045 Thermal-coal exposures (% of gross advances) Power generation Climate change resolutions passed with 2020 100% votes of approval at our 53r
Slide 62: Trading income & equity revaluations
Booklet slide Trading income & equity revaluations – low levels of market liquidity impacted trading, while the equity portfolio has seen higher yoy unrealised gains & dividends Group trading income (Rm) Group equity revaluations (Rm) 5 252 815 262 650 4 559 4 475 4 166 (1 038) 2019 2020 2021 2022 2
Slide 63: Our strategic growth levers
Our strategic growth levers Deliver Leverage a client value diverse, Invest in our Accelerated through our equitable & people growth sectorised inclusive approach culture Grow our Create Empower our positive transactional Continue to clients through impacts by business by focus on our enabling our d
Slide 64: Nedbank Corporate & Investment Banking – outlook
Nedbank Corporate & Investment Banking – outlook 2023 outlook ▪ NII – grow balance sheet while maintaining NIM levels ▪ NIR ‒ Expect a recovery in debt trading & increased client-hedging activity ‒ Fees & commissions to benefit from balance sheet activity ‒ Private equity to continue focus on new in
Slide 65: RBB overview
‘Strong revenue growth & expense discipline drove HE increase of 12%’ RBB overview Ciko Thomas Group Managing Executive NEDBANK GROUP LIMITED – 2022 Annual Financial Results 65
Slide 66: RBB financial performance
RBB financial performance – ROE improved to above COE with strong revenue growth & good cost optimisation, partially offset by a normalisation of impairments Financial performance ▪ NII up by 12% 17,3 16,0 13,7 ‒ Advances growth momentum continued & endowment benefit of ROE (%) higher interest rates
Slide 67: CB, RRB & Consumer – strong franchises
CB, RRB & Consumer – strong franchises Commercial Banking Retail Relationship Banking Consumer Banking 36,3 14,4 19,8 23,8 32,5 10,1 10,2 19,0 ROE 26,3 24,6 (%) 11,4 0,9 +42% +29% Headline earnings (8%) 2 789 2 109 1 950 1 383 1 408 1 812 1 292 161 803 969 815 907 (Rm) 19 20 21 22 19 20 21 22 19 20
Slide 68: Diversified portfolio & strong franchises
Booklet slide Diversified portfolio & strong franchises – CB, RRB, Consumer Return on equity (%) Home Unsecured Fx & loans VAF lending Transactional1 Card1 investments ROE 12,0% including insurance (2021: 12,4%) 10,2 10,1 8,8 7,4 4,8 24,6 50,6 36,6 19,8 22,5 17,3 22,7 28,6 23,8 36,3 14,5 15,5 -16,7
Slide 69: Client satisfaction – SA's #1 ranked bank on NPS
Client satisfaction metrics positively differentiates Nedbank – now SA’s #1 ranked bank on NPS 2015 to 2022 Net Promoter Score1 Social-media net sentiment2 Rank Rank #1 large Ranked #1 bank #1 #1 universal bank 80 80 on brand in the 2022 Ask sentiment: 71% N BC Africa Orange (2021: 55%) 60 D Index4
Slide 70: #1 NPS ranking driving main-banked clients & cross-sell
Nedbank’s #1 ranking in client satisfaction (NPS) & digital leadership is driving strong growth in main-banked clients & improving levels of cross- sell Retail client base breakdown (# m) Cross-sell ratio 19 20 21 22 +6% +13% +23% 1.94 3,14 3,02 3,05 3,24 1.86 1.71 1.78 2,59 2,29 2,05 2,01 1,78 1,63
Slide 71: Connecting individuals & businesses via marketplaces & APIs
Nedbank is connecting individuals & businesses via marketplaces & APIs, while creating new revenue streams Registered Avo clients API activity (# of active (# m) 3rd parties) Avo Auto hosts +24% Launched +1.9x >200 MFC- Avo B2B accredited Marketplace dealers & lists in 2022 >8 000 vehicles 17 56 45
Slide 72: Client-centred strategy intact
Booklet slide Client-centred strategy intact Main-banked1, # 000 Private Clients Kids & youth +9% +10% (12%) (8%) +4% +7% 95 104 114 516 456 421 436 89 Small Business (4%) (4%) +8% (1%) +2% +3% Entry level Services 1 425 1 365 1 309 1 412 179 177 180 185 0% +13% +6% (1%) (1%) +1% Commercial Banking2
Slide 73: Technology strategy driving NIR growth & cost optimisation
Booklet slide Our technology strategy, along with shifts in client transactional behaviours, is driving NIR growth & cost optimisation opportunities Branch teller transactions1 POS volumes +62% (63%) Jan Jan Jan Jan Jan Jan Jan Jan 19 20 21 22 19 20 21 22 ATM withdrawals Digital payment & transfers2
Slide 74: Project Phoenix & Project Imagine
Project Phoenix & Project Imagine – Shifting our RBB organisational structure to be more client-centred. Delivering great client experiences, strong product sales (revenue) uplift & productivity enhancements though improvements in- branch & from our digital channels. Branch staff sales Dedicated bra
Slide 75: Credit quality – rate-sensitive products
Credit quality – rate-sensitive products impacted by higher interest rates, while policy tightening has started to benefit unsecured lending Home loans Vehicle finance Personal loans Credit card Key risk driver Interest rates & inflation Interest rates & inflation Inflation & unemployment Discretion
Slide 76: RBB strategic progress – growth vectors
RBB strategic progress – good progress on growth vectors Avo Marketplace Value-added services Funeral insurance 192% 25% 28% Number of Avo Revenues Number of clients subscribers with funeral accounts 2021 2022 2021 2022 2021 2022 ▪ Introduced Auto Marketplace ▪ Digitally enabled DAILY LOTTO ▪ Simpli
Slide 77: Nedbank Retail & Business Banking – outlook
Nedbank Retail & Business Banking – outlook 2023 outlook ▪ NII ─ Advances growth – momentum continues ─ NIM continues to benefit from higher interest rates ▪ NIR – diversify revenue base & scale key growth vector strategies ▪ CLR ─ CLR within the top-half of our TTC target range (120 bps to 175 bps)
Slide 78: Wealth overview
‘Strong HE & ROE recovery, driven by increased revenue & net credit impairment releases’ Wealth overview Iolanda Ruggiero Group Managing Executive NEDBANK GROUP LIMITED – 2022 Annual Financial Results 78
Slide 79: Wealth financial performance
Wealth financial performance – strong HE & ROE recovery, driven by increased revenue & net credit impairment releases Financial performance ▪ NII up 43% 26,1 – NIM expansion due to higher local and international base 24,8 21,2 interest rates ROE (%) 15,3 ▪ NIR down 3% 18% – Sale of the international
Slide 80: Wealth financial performance by division
Booklet slide Wealth financial performance – strong HE growth positively impacted by favourable interest rate environment, offset by challenging local & international markets & higher non-life claims Headline earnings per division (Rm) Insurance (6%) ▪ Higher non-life claims due to KZN floods ▪ Prof
Slide 81: Insurance – resilient financial performance
Insurance – resilient financial performance despite lower investment returns and an increase in non-life claims Non-life claims ratio (%) Long-term average +3% Life claims volumes 10 product offerings at pre-Covid-19 available on 6 digital levels channels Dec 20 Dec 21 Dec 22 JSE All-share index & i
Slide 82: Nedbank Insurance – product & channel diversification
Booklet slide Nedbank Insurance – significant progress made on product & channel diversification Branch & bank insertion points MyCover Home- MyCover MyCover Credit Funeral owner’s personal Life Life VVAPs* Accident Cover lines and health Call centre Banker Home- MyCover MyCover MyCover MyCover Cred
Slide 83: Asset Management – 7% decline in AUM
Asset Management – 7% decline in AUM driven by negative market performance & net outflows, particularly in the cash portfolio Assets under management (Rbn) Asisa stats ranking • SA – 6th largest in (7%) Maintained steady total AUM (7% 424 growth in the market share) 375 393 Best of BreedTM • Interna
Slide 84: Wealth Management – HE improved to R281m
Wealth Management – HE improved by >100% to R281m, driven mainly by an increase in NII & net credit impairment releases Wealth Management average loans & advances, average deposits & NIM Optimised SA Enhanced Intellidex Awards NIM (%) 1,6 1,7 #1 in the operating onboarding 1,1 1,1 model Wealthy Fami
Slide 85: Nedbank Wealth – outlook
Nedbank Wealth – outlook 2023 outlook ▪ NII – Continued expansion of NIM due to local and international interest rate increases ▪ NIR ‒ Growth in the Nedbank Insurance MyCover portfolio ‒ Normalised life & non-life claims trends ‒ Increased cross-sell opportunities due to greater penetration within
Slide 86: NAR overview
‘Improved performance in SADC operations & continuing recovery from ETI driving HE growth’ NAR overview Dr Terence G Sibiya Group Managing Executive NEDBANK GROUP LIMITED – 2022 Annual Financial Results 86
Slide 87: NAR financial performance
NAR financial performance – strong uplift in ROE with improved performance from SADC operations & strong earnings from ETI Financial performance ▪ SADC operations 13,8 ‒ HE of R365m, up >100% & ROE of 5,9% (2021: 1,3%) ROE 7,7 9,3 (%) ‒ NII up 15%, driven by improved margins ‒ NIR up 23%, driven by
Slide 88: SADC operations – leveraging digital to achieve scale
SADC operations – leveraging digital to achieve scale across the regions Client & digital growth metrics Digital enablement, 7% Zipit smart clients in Migrate the NAR Positive growth in Zimbabwe for direct subsidiaries onto the digitally active payments from 334 338 360 group’s modernised Clients cl
Slide 89: Hyperinflation – financial impact on Nedbank Group
Booklet slide Hyperinflation – financial impact of hyperinflation on the Nedbank Group income statement & balance sheet Zimbabwe inflation & exchange rate Income statement Balance 3.44x impact sheet impact (Rm) gain/(loss) increase/decrease 13 673 13 349 13 114 Non- Ord 12 713 12 286 Total control s
Slide 90: ETI associate investment – ongoing strong performance
Booklet slide ETI associate investment – ongoing strong financial performance supporting our investment, while strategic progress is encouraging ETI share price (NGN) 25 Ghana’s sovereign debt restructure 20 Ecobank top 3 in may slow momentum ROTE up to 21,0% 15 14 African of ETI’s financial 10,6 fr
Slide 91: ETI associate investment – carrying-value drivers
ETI associate investment – sustained turnaround in financial performance, offset by Ghana bonds exposure & FCTR adjustments +14% income (Rm) 779 668 686 Associate (178) 19 20 21 22 Return on ETI investment1 (%) (0,1) Carrying-value drivers 0,8 12,4 (1,7) 10,7 11,0 5,6 (Rbn) 2,3 1,3 2,1 Carrying valu
Slide 92: Nedbank Africa Regions – outlook
Nedbank Africa Regions – outlook 2023 outlook SADC operations ▪ Transform the business & operating model ▪ Accelerate the pan-African digital growth strategy ▪ Unlock further value in Mozambique ▪ Amplify focus on quality of earnings ETI associate investment ▪ Collaborative shareholder focus to exec
Slide 93: Outlook
‘Good progress towards our 2023 targets, with new medium- & long-term targets to drive shareholder Macroeconomic value creation’ forecasts Strategy Targets Conclusion Outlook Mike Brown Chief Executive NEDBANK GROUP LIMITED – 2022 Annual Financial Results 93
Slide 94: Nedbank economic forecasts
Nedbank economic forecasts – medium-term GDP growth constrained by lack of reliable electricity supply Forecast: February 2022 Forecast: February 2023 19 20 21A 22 23 24 22A 23 24 25 SA GDP growth 0,1% (6,4%) 4,9% 1,7% 1,8% 1,0% 2,3% 0,7% 1,5% 1,6% Prime interest rate 10,0% 7,0% 7,25% 8,5% 9,0% 9,5%
Slide 95: Nedbank Group strategy
Booklet slide Nedbank Group 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 Focusing on areas m
Slide 96: Short-term (2023 full-year) financial guidance
Short-term (2023 full-year) financial guidance based on current economic forecasts 2022 2023 performance guidance1 Key drivers/risks in 2023 ▪ Advances growth broadly similar to 2022 NII Around ▪ Ongoing NIM expansion – run-rate impact of 325 bps interest rate +12% growth mid-teens increases from 20
Slide 97: New medium- & long-term targets
New medium- & long-term targets that support shareholder value creation 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 bank (CAGR
Slide 98: Conclusion
Conclusion – the group’s strong 2022 financial performance & good strategic delivery position Nedbank well for the achievement of our 2023 targets & demonstrate ongoing progress towards our medium- & long-term targets Tangible proof of Strong strategic delivery Good momentum Delivering on balance sh
Slide 99: Thank you
Thank you NEDBANK GROUP LIMITED – 2022 Annual Financial Results 99
Slide 100: Disclaimer
Disclaimer Nedbank Group has acted in good faith and has made every reasonable effort to ensure the accuracy and completeness of the information contained in this document, including all information that may be defined as 'forward-looking statements' within the meaning of United States securities le