Nedbank Group · JSE:NED
Nedbank — Investor Presentation (October 2004)
29 slides from Nedbank's investor presentation, Oct 29, 2004
Slide 1: Nedbank Corporate
Nedbank Corporate Graham Dempster 29th October 2004
Slide 2: Agenda
Agenda 2 Industry overview Business description Strategic focus & management actions Conclusion
Slide 3: Industry overview
NEpcor £f Industry overview
Slide 4: Operating environment
Operating environment 4 Overall credit will remain strong …but companies - cash flush Real credit growth 24 Company deposits as % gdp 35 20 30 16 12 25 8 20 4 15 0 10 -4 Downturns Total 5 -8 Total forecast Asset based -12 0 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 91 92 93 94 95 96 9
Slide 5: Corporate debt appetite muted
Corporate debt appetite muted 5 Corporate raising debt from bond market 300 Rbn Debt listed - December year end figures 250 R billion 700 Government & related Banks 200 650 Securitisation Other corporates Dual listings Commercial paper 600 R billion 150 550 500 100 450 2000 2001 2002 2003 2004E 400
Slide 6: Economic drivers
Economic drivers 6 Cyclical: Growth in balance sheet - helped by lower interest rates, but restricted as companies cash flush & entering the bond market directly, Interest rates relatively unchanged - little impact on the margin or bad debt scenario, Less Rand volatility lowers forex earnings.
Slide 7: Business description
Nepcor $f Business description
Slide 8: Business Description
Business Description 8 Nedbank Corporate Graham Dempster Corporate Banking Business Banking Property Finance Africa International Ingrid Johnson Richard Buchholz Frank Berkeley Mfundo Nkuhlu Corporate clients Bus. Banking clients Clients generally with Universal banking Branches or rep >R400nm T/O >
Slide 9: Client Base Definition
Client Base Definition 10 Corporate Banking Clients with revenue > R400mn Corporate > 650 client groups Banking R 29 bln advances Corp 288 employees Portfolio Business Banking Business Clients with revenue < R400mn Banking > 31 000 client groups Large Business R 31 bln advances 2114
Slide 10: Geographical Distribution
Geographical Distribution 11 JOHANNESBURG POLOKWANE NORTH RAND WEST RAND EAST RAND CENTRAL PORTFOLIO NELSPRUIT PRETORIA Middelburg Rustenburg Witbank Ermelo JOHANNESBURG Pongola Welkom Newcastle Upington Pietermaritzburg BLOEMFONTEIN DURBAN Vredendal Clanwilliam Piketberg Vredenburg Worcester Robert
Slide 11: Human Resources
Human Resources 12 Staff reduction of ± 400 planned for 2004 Total Staff (Aug 04) 4 283 - local 3 322 Building a high performance culture - outside RSA 961 - job profiling & assessment - learning & development plan - incentive schemes in place - staff communication Going beyond transformation
Slide 12: Key Differentiators
Key Differentiators 13 Regional & national strength Mid market focus - extensive regional presence & industry specialisation Customer focused structures - dedicated relationship managers Very strong corporate relationships Leaders in Property Finance Good risk management - very low provi
Slide 13: Major risks
Major risks 14 Credit risk - changes in the economic environment - conservative approach can reduce return capability - new requirements of Basel II will change market dynamics People risk - adequate skilled resources - staff retention Client risk - client defection due to changed & less user-
Slide 14: Profitability overview
Profitability overview 15 ROEs under pressure - Credit quality unlikely to deteriorate - positive outlook - Banks were not properly rewarded for the risk they took (credit-risk) - Competitive pressures following the arrival of foreign banks - Basel II set to introduce less onerous capital requirem
Slide 15: Strategic focus & management actions
Strategic focus & management actions
Slide 16: Strategic objectives
Strategic objectives 17 Build a high Increase Client-driven Strategic Beyond performance transactional Optimise mix business focus transformation culture banking model Strategy Back to basics Full service universal bank Southern Africa focus Cornerstone Nedbank Corporate objectives aligned to Group
Slide 17: Build a high performance culture
Build a high performance culture 18 Improve customer satisfaction - measurement against expectations - understand main causes of client defection Improve service standards - measure as part of balanced scorecard - training & development - accountability & responsibility for client service Redu
Slide 18: Lags in Transactional Banking
Lags in Transactional Banking 19 Ranking in Sample of 188 corporate with turnover above R400m Source: Startrack 2003 Focuses on corporate clients 2nd Offers full range business products/ services 2nd Good infrastructure/ footprint Joint 2nd Offers full range of electronic banking services 4t
Slide 19: Drive transactional banking
Drive transactional banking 20 Nedbank Corporate Market Share 40% 37% 80% of the current property 30% 25% finance customer & 70% of the 22% 20% 20% 15% previous BoE ABF base does not 12% 10% have a primary banking 0% relationship with Nedbank Transactional Foreign Trade Busines Business Corporate
Slide 20: Optimise Mix
Optimise Mix 21 Improved product DCM mix through High ECM M&A packaging of solutions based on Project finance Transactional client needs ROE banking Increase share of (Percent) Deposits Advisory services sold to increase share of customer Advances spend Customer value management Low Market 0 1
Slide 21: Beyond Transformation
Beyond Transformation 22 Next 10 years will see significant wealth transfer to black entrepreneurs Nedbank seeks sustainable relationships with 2nd generation BEE companies Striving to become the custodian of empowerment initiatives in terms of BEE & SME financing Grow empowerment business a
Slide 22: Client driven business model
Client driven business model 23 Pro-active offering of Solutions Extensive regional presence & industry specialisation Customer focused structures - dedicated relationship managers Strategies to improve include Better economic pricing and structuring of transactions Identification & penetr
Slide 23: Action plans
Action plans 24 Bed down new structure & business model (improve customer service) Increase primary banker status through bank wide focus on competence in payments, settlement & clearing Assist Retail to increase footprint; combine forces with Old Mutual in rural areas Address non-core busin
Slide 24: Action plans (continued)
Action plans (continued) 25 Corporate Banking Business Banking Increase primary banker status Active sales effort - transactional banking initiatives Leverage asset based finance strength Leverage geographical position Increase cross-sell Pro-active client driven solutions Increase ind
Slide 25: Conclusion
NEpcor £f Conclusion
Slide 26: Key drivers of future profitability
Key drivers of future profitability 27 Increased cross-sell & improved product mix - Leading competitor commands 50% larger share of their customer spending (on financial services) - Need to improve transactional banking systems & cash handling Sell more of the same product to the same client
Slide 27: Conclusion
Conclusion 28 Strong market positions Corporate, Business Banking & Property Finance Differentiated on client intimacy, pro-active engagement & strong client relationships Leverage strong regional presence Upskilling of staff in order to improve client service Focus on cross-sell & improvi
Slide 28: There is no miracle moment
“There is no miracle moment. Small incremental wins in one common direction will restore Nedcor to a highly rated & respected financial institution.”
Slide 29: Thank you
Nepcor $f Thank you