Nedbank Group · JSE:NED
Nedbank — ESG Presentation (May 2021)
50 slides from Nedbank's sustainability presentation, May 2021
Slide 1: 8th Annual Nedbank Board ESG roadshow
8th Annual Nedbank Board ESG roadshow Mpho Makwana (LID, Acting Chair), Errol Kruger (Independent Director), Stanley Subramoney (Independent Director), Hubert Brody (Independent Director) May 2021 NEDBANK GROUP LIMITED – ESG roadshow May 2021 1
Slide 2: Nedbank boardmembers on the roadshow
Nedbank boardmembers on the roadshow Mpho Makwana Errol Kruger Acting Chair Independent Director Lead Independent Director Chair: GRCMC, GCC & LEAC Chair: DAC, GRPTC & GTSEC Other committees: DAC & GAC Other committees: GCRC, GITCO, 4 years on the board Remco & GRCMC > 9 years on the board Stanley S
Slide 3: Agenda & objectives
Agenda & objectives 1. ESG during the Covid-19 pandemic ‒ Governance & risk management Objectives of the ESG roadshow ‒ Resilience: Supporting staff, clients & society + maintaining a strong balance sheet ‒ Technology & digital acceleration ▪ Maintain strong relationships 2. Governance between the N
Slide 4: ESG is embedded in the Nedbank purpose
ESG is embedded in the Nedbank purpose NEDBANK GROUP LIMITED – ESG roadshow May 2021 4
Slide 5: … and in our strategy
… and in our strategy NEDBANK GROUP LIMITED – ESG roadshow May 2021 5
Slide 6: ESG during the Covid-19 pandemic
ESG DURING THE COVID-19 PANDEMIC NEDBANK GROUP LIMITED – ESG roadshow May 2021 6
Slide 7: Governance during the initial lockdown phases of the Covid-19 pandemic
Governance during the initial lockdown phases of the Covid-19 pandemic Nedbank Board calls held every 2 weeks plus regular contact with the Chairman of the Board & Chairpersons of Board sub-committees to keep them suitably informed & consult them for input on key decisions Group Executive Steering C
Slide 8: Risk management – evolution of our top risks during the Covid-19 pandemic
Risk management – evolution of our top risks during the Covid-19 pandemic * NEDBANK GROUP LIMITED – ESG roadshow May 2021 8 * As per our 2019 Integrated Report, reflecting the immediate risk focus during Covid-19 in H1 2020.
Slide 9: Resilience – credit risk outcome at FY20 better than expected at H1
Resilience – credit risk outcome at FY 20 better than was expected at H1 20 Credit loss ratio1 (CLR, bps) 250 GFC GLC ▪ CLR ended only marginally higher than GFC H1 20 ▪ High-quality credit book & well secured (LTVs) 187 200 ─ Selective origination (lower risk) & enhanced credit risk 161 management
Slide 10: Resilience – R3,9bn adjustments/overlays due to Covid-19
Resilience – R3,9bn adjustments/overlays due to Covid-19 Impairment charge (Rm) Covid-19 related adjustments/overlays RBB ▪ Central Provision increase of R350m in H2 to R750m R750m CIB (emerging risk not yet in models/data/macroeconomic forecasts) Other Other ▪ NAR & Nedbank Wealth overlays of R70m
Slide 11: Resilience – balance sheet metrics remained strong & improved further in H2
Resilience – balance sheet metrics remained strong & improved further in H2 Nedbank Nedbank Regulatory responses June 2020 Dec 2020 ▪ Liquidity measures – transmission of liquidity through the system LCR LCR Liquidity ▪ D1/2020 – minimum LCR from 100% to 80% 115% 126% ▪ D3/2020 – provide temporary r
Slide 12: Resilience – supported staff, clients & society in difficult times
Resilience – supported staff, clients & society in difficult times Staff Clients Society ▪ Primary focus on the health & safety ▪ Enabled & educated our clients to ▪ Enabled staff & clients to contribute to of our staff – social distancing, increasingly bank through our mobile & Solidarity Fund thro
Slide 13: Resilience – Managed Evolution technology strategy on track
Resilience – Managed Evolution technology strategy on track with material implementation risks behind us Core systems (#) Managed Evolution programme IT software development spend (Rbn) Rationalise, standardise & simplify ~78% complete, R11,4bn spend to date Annual cashflow continues to decline Core
Slide 14: Resilience – accelerated digital sales & transactional activity
Booklet slide Resilience – accelerated digital sales & transactional activity & underpinned by high levels of system availability Managed Evolution – 78% complete (2019: 70%) ▪ 90 core systems (2019: 117) ▪ Individual onboarding in place & juristic rollout in progress ▪ 5 products/client journeys di
Slide 15: Governance
GOVERNANCE NEDBANK GROUP LIMITED – ESG roadshow May 2021 15
Slide 16: Nedbank board members & changes
Nedbank board members & changes Changes to the board New appointments ▪ Mike Davis (CFO) Retired/Resigned ▪ Joel Netshitenzhe ▪ Raisibe Morathi (CFO) ▪ Iain Williamson (OML nominee) – replacement process underway Nominees for 54th AGM ▪ Election: Mike Davis (CFO) ▪ Reelection: Neo Dongwana, Mfundo N
Slide 17: The Nedbank board is independent & diverse
The Nedbank board is independent & diverse from gender, age & tenure perspectives NEDBANK GROUP LIMITED – ESG roadshow May 2021 17 As at 31 Dec 2020
Slide 18: The Nedbank board has a broad set of skills
Booklet slide The Nedbank board has a broad set of skills (as required for the board of a bank) BOARD UPDATES & TRAINING IN 2020 ▪ Rethinking change management, ▪ Conduct risk & lessons learnt from the Commercial Bank of Australia case study, ▪ Disruptive technologies, ▪ Climate transition strategie
Slide 19: Governance – Group Exco members & changes
Governance – Group Exco members & changes 46% female 46% AIC > 200 years of combined service 24 16 24 23 27 19 24 19 18 9 3 New appointments in 2020 – the outcome of robust internal succession planning & bench-strength ▪ Anel Bosman ▪ Terence Sibiya ▪ Mike Davis (on Group Exco, but appointed as CFO
Slide 20: Reputational matters – Nedbank's relationship with Regiments
Reputational matters – Nedbank’s relationship with Regiments Nedbank has zero tolerance for corruption. We expect our staff, clients & service providers to conduct themselves with integrity. We have supported all anti-corruption & anti-state capture drives; & have & will continue to support & cooper
Slide 21: Mandatory Audit Firm Rotation
Mandatory Audit Firm Rotation Auditor tenure (years) ▪ IRBA’s MAFR rules effective from 1 April 2023 If a firm has served as an appointed auditor for 10 or more 47 consecutive financial years before the financial year commencing on or after 1 April 2023, then the audit firm may 2 not accept reappoin
Slide 22: Remuneration
REMUNERATION NEDBANK GROUP LIMITED – ESG roadshow May 2021 22
Slide 23: Remuneration – balancing performance & shareholder interests
Remuneration – balancing performance & shareholder interests with retention, attraction & organisational sustainability ▪ All staff retained at 100% guaranteed pay over the Covid-19 period. 5,500 staff took Special Leave (unable/not equipped to work) during lockdown (1 & 2) at full pay Guaranteed ▪
Slide 24: Remuneration – key 2020 outcomes (GP & STI)
Remuneration – key 2020 outcomes (GP & STI) NEDBANK GROUP LIMITED – ESG roadshow May 2021 24
Slide 25: Remuneration implementation changes – 2021 LTI CPTs
Remuneration implementation changes – 2021 LTI CPTs ROE – Vesting against the ROE CPT will be based on the performance of the third year alone. The target for 100% vesting aligns with the medium-term goal of a recovery of ROE to 2019 levels of 15% by end 2023. Remco retains right to amend the vestin
Slide 26: Remuneration implementation changes – 2021 LTI CPTs
Remuneration implementation changes – 2021 LTI CPTs Vesting ranges Achieving max stretch of both ROE & DHEPS targets will result in a vesting outcome of 200%, an increase from the previous 130% to better align with peers. Maximum vesting on business recovery metrics is 100% Linking to performance co
Slide 27: Remuneration – key 2020 outcomes (LTI)
Remuneration – key 2020 outcomes (LTI) NEDBANK GROUP LIMITED – ESG roadshow May 2021 27
Slide 28: Proposed non-executive director fees for 2021
Proposed non-executive director fees for 2021 DIRECTOR FEES (% increase) 3% 0% 2020 2021 NEDBANK GROUP LIMITED – ESG roadshow May 2021 28
Slide 29: Executive remuneration
Executive remuneration Mike Brown Chief Executive Mfundo Nkuhlu Chief Operating Officer Mike Davis Chief Financial Officer NEDBANK GROUP LIMITED – ESG roadshow May 2021 2021 Executive GP increases:+3% 29
Slide 30: Society & environment
SOCIETY & ENVIRONMENT NEDBANK GROUP LIMITED – ESG roadshow May 2021 30
Slide 31: Nedbank sustainable development framework
Nedbank sustainable development framework NEDBANK GROUP LIMITED – ESG roadshow May 2021 31
Slide 32: Sustainable development finance (key highlights)
Sustainable development finance (key highlights) ▪ Past 5 years provided 4 300 students with student ▪ Concluded a US$296m project finance deal for the loans to the cumulative value of R232m & R5,1bn Beitbridge Border Post Upgrade and Modernisation in funding for 41 780 student beds project in Zimba
Slide 33: Own operations (key highlights)
Own operations (key highlights) Carbon footprint Responsible finance Peace, Justice & strong institutions Managing social & environmental risk Our sustainability efforts are informed by: ‒ In CIB all new applications & risk reviews of ‒ The UN SDGs high-risk transactions are included in the ‒ King I
Slide 34: Corporate social investment (key highlights)
Corporate social investment (key highlights) ▪ Proud of my town initiative - in 2020 invested R8,5m, delivering R103m CSI spend – 46% education & skills 104 projects & touched 20 651 beneficiaries in 12 communities development, 18% community development, focusing on specific needs of a community eg
Slide 35: Employees – ongoing progress on diversity metrics
Employees – ongoing progress on diversity metrics FEMALE EMPLOYEES 61,2% (61,8%) BLACK EMPLOYEES1 78,9% (77,4%) 1 Africa, Indian, Coloured Brackets reflect 2018 position NEDBANK GROUP LIMITED – ESG roadshow May 2021 35
Slide 36: Employees – reduction in staff attrition
Employees – reduction in staff attrition (despite a reduction in headcount), while continuing to invest in the development of our employees HEADCOUNT (#) STAFF ATTRITION (%) STAFF TRAINING (Rm) STAFF NPS (%) 31 227 29 403 10,8 17 28 324 10,1 924 760 7,1 468 7 N/A 2018 2019 2020 2018 2019 2020 2018 2
Slide 37: Transformation – we retained our level 1 BBBEE contributor status
Booklet slide Transformation – we retained our level 1 BBBEE contributor status BBBEE CONTRIBUTOR LEVEL & SCORE NEDBANK GROUP LIMITED – ESG roadshow May 2021 37
Slide 38: Nedbank's climate change journey
Booklet slide Nedbank’s climate change journey 2005 First African bank to sign up to the Equator Principles 2018 Strengthened position on lending for coal-fired – disclosure of environmental & social impacts of project power plants by including existing commitments to SA’s finance transactions. Coal
Slide 39: Our inaugural TCFD report was released on Earth Day 2021
Our inaugural TCFD report was released on Earth Day 2021 Governance Strategy Risk management Metrics & targets ▪ Established, Group Climate ▪ Conducted detailed analysis ▪ Approved a Climate Risk ▪ Lending activities – Resilience Committee, a to inform the Nedbank Management Framework decrease therm
Slide 40: Good progress on renewable energy, while committing to reduce fossil fuel exposure
Good progress on renewable energy, while committing to reduce our exposure to fossil fuels in line with our energy policy NEDBANK ENERGY POLICY ▪ Thermal coal – a. Not to provide financing to thermal coal mines outside of SA, b. Not to provide project financing for new thermal coal mines, regardless
Slide 41: Committed to Zero exposure to fossil-fuel-related activities by 2045
Committed to Zero exposure to fossil-fuel-related activities by 2045 NEDBANK GROUP LIMITED – ESG roadshow May 2021 41
Slide 42: 54th AGM Resolutions (28 May 2021)
54TH AGM RESOLUTIONS (28 MAY 2021) NEDBANK GROUP LIMITED – ESG roadshow May 2021 42
Slide 43: Resolutions to be voted on at May 2021 AGM
Resolutions to be voted on at 28 May 2021 AGM Ordinary Resolutions 1.1 Mr IG Williamson Election of directors of the company appointed during the year: Mr MH Davis. withdrawn Ordinary resolution 2.1 Re-election of Mr PM Makwana. Following the conclusion of his term of nine years the Nedbank boards a
Slide 44: Resolutions to be voted on at May 2021 AGM
Resolutions to be voted on at 28 May 2021 AGM Ordinary resolution 5 Placing the authorised but unissued ordinary shares under the control of directors. The authority is limited Authority limited to: to 2.5% of the number of Nedbank Group ordinary shares in issue at 1 January 2020, and is further lim
Slide 45: Resolutions to be voted on at May 2021 AGM
Resolutions to be voted on at 28 May 2021 AGM Special resolution 3 General authority to repurchase ordinary shares limited to 5% of the company’s ordinary shares. The directors are of the opinion that it would be in the best interest of the company to provide this general authority and thereby allow
Slide 46: Appendix: Nedbank's ESG profile
Booklet slides APPENDIX: NEDBANK’S ESG PROFILE ▪ Independent ESG ratings ▪ Commitments ▪ External ESG reporting NEDBANK GROUP LIMITED – ESG roadshow May 2021 46
Slide 47: Nedbank is rated at the top end of the ESG ratings
Booklet slide Nedbank is rated at the top end of the ESG ratings NEDBANK GROUP LIMITED – ESG roadshow May 2021 47
Slide 48: Our commitments
Booklet slide Our commitments Africa’s first carbon-neutral Equator Principles Financial financial organisation – carbon Institution signatory neutral since 2010 (& offset our water consumption) Our sustainability reporting is prepared Report in accordance with the in accordance with the Global Inte
Slide 49: Our suite of integrated reporting cover all aspects of ESG
Booklet slide Our suite of integrated reporting cover all aspects of ESG Excel data table published with over 200 E, S & G KPIs over 3 years NEDBANK GROUP LIMITED – ESG roadshow May 2021 49
Slide 50: Contact us
Contact us Nedbank Group Nedbank Investor Relations nedbankgroup.co.za CFO Head: Investor Relations Nedbank Group Limited Mike Davis Alfred Visagie Tel: +27 (0) 11 294 4444 Email: MichaelDav@nedbank.co.za Direct tel: +27 (0) 10 234 5329 Physical address Cell: +27 (0) 82 855 4692 135 Rivonia Road Ema