Nedbank Group · JSE:NED

Nedbank — Investor Day (November 2016)

24 slides from Nedbank's investor day presentation, Nov 14, 2016

  1. Slide 1: SBG Investor Day: Retail and Business Banking

    NEDBANK GROUP LIMITED SBG Investor Day Retail and Business Banking 14 November 2016 A Member of the Group 1

  2. Slide 2: Retail & Business Banking executive committee leadership & structure

    Retail & Business Banking executive committee leadership & structure Client facing businesses & Retail & channels Business Product lines Banking (Ciko Thomas) Functional Support Vacant Business Unsecured Integrated channels Human Banking Lending (Vacant) (Werner Terblanche) (Brian Duguid) Resources

  3. Slide 3: Retail & Business Banking contributions to Nedbank Group

    Retail & Business Banking contributions to Nedbank Group Retail & Business Banking H1 2016, % Rest of the Group Headline earnings Client Advances Client Deposits Capital consumption 32% 44% 44% 43% 56% 56% 57% 57 68% NII (after impairments) NIR Expenses # of staff 37% 35% 33% 50% 50% 63% 65% 67% 3

  4. Slide 4: The context in which we operate

    The context in which we operate  Digital is the preferred channel for ~55% of retail clients on transactions and ~25% on sales1; Digital  >90% of professional & small business clients are digitally enabled first  95% of business banking clients digitally enabled.  Value is key for SA households

  5. Slide 5: Resilient performance in a challenging macro environment

    Resilient performance in a challenging macro environment ROE (%) Key drivers 17.3% 18.3% 15.4% 15.9%  Margin improvements due to endowment benefits & 13.9% rigour in asset & deposit pricing  CLR down from peak of 2,2% in June 2012 & now flat at ~1,2% as improvements in personal loans book & Headli

  6. Slide 6: Market Share – consistent selective origination while growing household deposits

    Market Share – consistent selective origination while growing household deposits Home Loans (%) Instalment Credit (%) Personal Loans (%) 40% 40% 60% 34.3% 33.6% 35% 35% 39.0% 50% 30% 30% 26.4% 25.1% 40% 25% 25% 20.0% 18.8% 20% 20% 18.8% 30% 14.4% 21.2% 15% 15% 17.9% 20% 10% 10% 10.9% 10.9% 6.2% 5% 5

  7. Slide 7: Net interest margin – driven by asset mix change & endowment

    Net interest margin – driven by asset mix change & endowment over time with increasing impact from Basel III requirements Net interest margin (bps) Mix change impact (bps) Asset pricing impact (bps) 19 32 612 8 540 554 574 578 1 11 0 (12) (3) (6) (2) Endowment impact (bps) Funding cost impact (bps)

  8. Slide 8: Home loans – selective origination since 2009

    Home loans – selective origination since 2009, focussing on better through quality own channels Advances growth (CAGR %) Key potential industry stress points 30.0  Job losses – particularly middle market  Interest rate increases (0.0)  Devaluation of house prices 2006 - 2008 2013 - 2016 H1  Not

  9. Slide 9: Home loans – improved asset quality

    Home loans – improved asset quality enabled by increase in low risk customer & property contribution Credit loss ratio (%) Delphi Score - low risk 80% 3% Nedbank – greater percentage of low risk customers 70% 2% 60% 1% 50% 0% 40% 07 08 09 10 11 12 13 14 15 16 08 09 10 11 12 13 14 15 16 Coverage (%)

  10. Slide 10: Vehicle finance – Strong player in used/more affordable vehicle market

    Vehicle finance – Strong player in used/ more affordable vehicle market Advances growth (CAGR %) Key potential industry stress points 16.6  Employment environment pressure and job losses 11.9  Inflationary & exchange rate pressures – vehicle import prices & interest rate increases  New vehicles s

  11. Slide 11: Vehicle finance – Benchmarking through the cycle

    Vehicle finance – Benchmarking through the cycle MFC new & used Credit loss ratio (%) vehicle distribution (%) SA Prime (%) 2.5 100% 20% 2.0 80% 16% 1.5 60% 12% 1.0 40% 8% 0.5 20% 4% 0.0 0% 0% 10 11 12 13 14 15 16 02 04 06 08 10 12 14 16 New Used Prime Rate Coverage (%) Market share of big 4 SA bank

  12. Slide 12: Personal Loans – improved asset quality

    Personal Loans – improved asset quality enabled by increase in low risk customer Advances growth (CAGR %) Key potential industry stress points 15.9  Employment environment pressure and job losses  Inflationary & exchange rate pressures – impact of other lending on clients  Affordability declining

  13. Slide 13: Personal loans – improved product offering, on-boarding & client targeting

    Personal loans – improved product offering, on-boarding & client targeting has driven growth in desired lower risk segments; market share of new business in best risk segments has grown from ~13% in 2014 to ~18% in 2016 Credit loss ratio (%) Market Share of New Business by Risk Band (%) Low Risk Low

  14. Slide 14: Credit Card – Consistent credit quality with a focus on transactional growth

    Credit Card – Consistent credit quality with a focus on transactional growth Advances growth (CAGR %) Key potential industry stress points 34.1  Job losses (Middle-market client base) 14.4  Interest rate increases  Regulatory pressures on revenue 2006 - 2008 2013 - 2016 H1 Market 12.9% 7.5% share

  15. Slide 15: Business Banking – Decentralised empowered business model

    Business Banking – Decentralised empowered business model beneficial in tough times Advances growth (CAGR %) Key potential industry stress points 18.9  Downstream impact from stressed sectors  Higher risk from corporate fraud events 2,0  Smaller balance sheet & working capital base - more vulnera

  16. Slide 16: Deposit growth driving increases in NII & market share

    Deposit growth driving increases in NII & market share Current and Savings (Rbn) Fixed Deposits (Rbn) Average Capital Allocation (Rbn) 67.3 6,8% 8,7% 35.5 1,4% 27.0 63.6 26.7 59.0 26.0 30.1 25.8 56.0 51.8 27.0 27.6 24.6 25.4 Lending Funding Call and Term (Rbn) 141.9 Total Client Deposits (Rbn) Inter

  17. Slide 17: Retail transactional NIR & main banked growth ahead of total client growth

    Retail transactional NIR & main banked growth ahead of total client growth Total client base NIR #000 Rm +4.9% +6.9% 4 814 4 874 +7.0% +7.8% 7 080 7 329 4 558 4 507 6 888 7 038 4 448 6 655 4 262 6 423 4 203 6 164 3 934 5 894 +7,8% Total 3 606 +8,1% 5 593 Total +4.5% +6.6% 2 712 2 526 2 492 2 703 2 3

  18. Slide 18: Distribution Investment driving client growth, funded through efficiencies

    Distribution Investment driving client growth, funded through efficiencies Staffed Points of Presence (PoP) Cumulative Capital Spend (Rm) Number of clients per PoP Branch Sales Outlets In Retailer Staffed POP Staffed tech ATM/ID 758 708 1 495 703 1 222 1 037 738 10 000 10 425 7776 2012 2015 2016 H1

  19. Slide 19: Building more enduring client relationships through transactional product cross-sell

    Building more enduring client relationships through transactional product cross-sell # ‘000 Total Retail Clients % CAGR Growth Number of product line clients with % CAGR Growth Jun-11 Jun-11 – Jun-16 transactional products Jun-11 – Jun-16 Jun-16 715 Investments 14,5 14,7 1 406 74% 74% 709 Card1 5,4

  20. Slide 20: Client-centred strategy driving growth across all segments

    Client-centred strategy driving growth across all segments Main banked, # 000 Kids & Youth Professional +6% +5% 376 409 97 103 338 327 340 87 89 91 312 80 Small Business Entry Level +5% +1% 1 369 63 64 67 1 267 60 60 58 1 096 1 178 1 123 1 170 Business Banking1 +1% +6% Middle 714 757 19 18 19 20 19

  21. Slide 21: Nedbank Net Promoter Score is trending upwards

    Nedbank Net Promoter Score is trending upwards… fastest growth in the industry Net Promoter Score – Retail Consulta Industry Report 2013 57% 55% 2014 2015 41% Supported by strong growth in the 39% 38% Middle segment: 21% to 27% 21% 15% 12% 11% 10% 7% 8% 6% 3% Capitec (n=1418) FNB (n=6952) Nedbank (n

  22. Slide 22: Value creating innovation

    Value creating innovation Innovation  Efficient - quick  Convenient & secure  Rewards automatically  Valuable client analytics  Providing cashflow Value to clients turnaround time of 3 available, accessible via for sales strategies solutions to merchants off  Do not need bank hours on average

  23. Slide 23: Prospects

    Prospects  Advances: Leverage strong position in vehicle finance & business banking. Look to selectively Advances/ Liabilities increasing market share in other asset classes & segments, having derisked the book.  Liabilities: Focus on growth in household liabilities driven off main banked transact

  24. Slide 24: Contact us

    Contact us Nedbank Group Nedbank Investor Relations www.nedbankgroup.co.za Head of Investor Relations Nedbank Group Limited Alfred Visagie Tel: +27 (0) 11 294 4444 Direct tel: +27 (0) 11 295 6249 Physical address Cell: +27 (0) 82 855 4692 135 Rivonia Road Email: [email protected] Sandown 2196 In

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