Nedbank Group · JSE:NED
Nedbank — Nedcor — Non-Deal Roadshow (October 2003)
16 slides from Nedbank's roadshow presentation, October 2003
Slide 1: UK Roadshow October 2003
UK Roadshow October 2003 Stuart Morris Group Financial Director
Slide 2: CEO appointment process
CEO appointment process • Appointed an internationally renowned head- hunter • Possible candidates identified (external and internal) • Psychometric assessments performed • Intensive panel interviews conducted by entire Nomination Committee: CF Liebenberg (Chair), WAM Clewlow, ME Mkwanazi, JH Sutcli
Slide 3: Alignment of market and analysts expectations for 2003
Alignment of market and analysts expectations for 2003 • Wide diversity in analysts’ forecasts • Inherent uncertainty, volatility and unpredictability caused by introduction of IAS39 (AC133) • 1H03 EPS (pre AC133) was 445c • Full-year consensus was 1204cps (2002 – 1330cps) • Implied 2H03 EPS would b
Slide 4: Adverse impacts on Nedcor profits
Adverse impacts on Nedcor profits Merger synergy extraction proceeding well, but acquisition geared to recognise costs upfront, synergies later • Acquisition funded 82% debt, 18% equity • Price:book 1,8 (goodwill R3,4bn) • Merger costs:synergies cash negative until 2004 • And, net of funding costs,
Slide 5: Gearing impact of BoE acquisition (2003 Rand)
Gearing impact of BoE acquisition (2003 Rand) 1000 800 600 400 Merger costs/ synergies 200 Net of funding 0 costs 2002 2003 2004 2005 2006 After BoE -200 earnings -400 -600 -800
Slide 6: Overview of Merger Status
Overview of Merger Status • Merger on track and proceeding well Steady Communicated to 2002 2003 2004 2005 state analysts * Plan Forecast Plan Forecast Plan Forecast Plan Forecast Forecast Operational synergies ** - - 90 293 400 563 660 638 660 Once-off costs p.a. (100) (91) (225) (436) (175) (341)
Slide 7: Overview of Merger Status (cont.)
Overview of Merger Status (cont.)
Slide 8: Main profit drivers
Main profit drivers • Advances growth – single digit (corporate lowest, retail highest) • Margin – funding profile shortening, but will see further compression – Disposing of NPAs and repatriating offshore capital • NIR – negative impact of investment banking (deal flow improving), wealth management
Slide 9: Main profit drivers (cont.)
Main profit drivers (cont.) • Bad debts – lower than 1H03, should benefit from lower interest rates (seeing benefit slowly in arrears improving) • Expenses – in line with inflation and supplemented by synergies • Tax – mid-20%, normalised in 1H03 post effect of tax losses and change to residency-bas
Slide 10: Market Share trends – July 2003 (YoY)
Market Share trends – 31 July 2003 (YoY) Nedcor - Market Share - July (yoy) 30.0% 26.7% 26.8% 27.1% 25.6% 24.4% 25.0% 23.1% 20.3%21.0% 20.0% 17.8%18.5% 15.0% 31-Jul-02 10.0% 31-Jul-03 5.0% 0.0% Deposits Installment Mortgage Home Loans Loans & Credit Lending Advances Losses within acceptable and expe
Slide 11: Market Share trends – months ending July 2003
Market Share trends – 4 months ending 31 July 2003 Nedcor - Market Share - Last 4 Mths 30.0% 27.0%26.8% 25.2% 25.6% 23.9%23.1% 25.0% 21.1% 21.0% 18.5% 18.5% 20.0% 15.0% 31-Mar-03 10.0% 31-Jul-03 5.0% 0.0% Deposits Installment Mortgage Home Loans Loans & Credit Lending Advances Recent market shares s
Slide 12: Joint Venture performances
Joint Venture performances Alliance Partner Cumulative to Current action/focus June 2003 – Rm Pick ‘n Pay Go (107) Reduce costs by revised instore Banking acquisition model, promote card usage, seek new revenue sources Amex (30) Reduce costs, implement 2nd phase risk scorecards, develop corporate ma
Slide 13: Joint Venture performances (cont.)
Joint Venture performances (cont.) Alliance Partner Cumulative to Comment June 2003 – Rm Losses b/f (219) Imperial Bank 173 Business model increasing market share Gerrard Private Bank 107 Exceeding expectations. Product awards won Old Mutual Bank (7) Very good deposit growth. Focus on mortgage growt
Slide 14: Capital
Capital • Objective: to carry a buffer above statutory requirements (10% overall, 7,5% primary during 2004) to allow for volatility and future asset growth • Current Capital Adequacy – Group >10% (carries BoE goodwill impairment), primary < 7,5% – Bank >12% (comfortably above statutory minimum), pri
Slide 15: Accounting standards
Accounting standards • IAS 39 (AC 133) – Financial instruments – Implemented in 2003 (not retrospective), still subject to audit – IAS 39 improvements standard (excluding macro hedging) expected before year end – IAS 39 macro hedging standard expected 2004 (Could involve retrospective changes) • IAS
Slide 16: Key improvement actions
Key improvement actions • Focus on merger – synergy extraction • Margin and endowment yield improvement • Investment banking & advisory mandates, transactional banking & trading income • Improved credit management • Expense reduction drive • Review of JVs and profitability • Image & reputation enhan