creating value by using our financial expertise to do good · 2019-08-08 · play a leading role in...

Creating value by using our financial expertise

to do good

Unaudited interim results for the six months ended 30 June 2019

Implementation of IFRS 16 69

Segmental analysis 7374 Our organisational structure,

products and services76 Operational segmental reporting78 Nedbank Corporate and

Investment Banking82 Nedbank Retail and

Business Banking94 Nedbank Wealth97 Nedbank Rest of Africa100 Geographical segmental reporting

Supplementary information 144144 Earnings per share and weighted-

average shares145 Nedbank Group employee incentive

schemes146 Long-term debt instruments146 Additional tier 1 capital instruments147 Shareholders’ analysis148 Basel III balance sheet credit

exposure by business cluster and asset class

150 Nedbank Limited consolidated statement of comprehensive income

151 Nedbank Limited consolidated statement of financial position

151 Nedbank Limited consolidated financial highlights

152 Definitions154 Abbreviations and acronymsIBC Company details

Income statement analysis 102103 Net margin analysis107 Impairments 116 Non-interest revenue118 Expenses120 Non-trading and capital items120 Taxation charge120 Preference shares

Statement of financial position analysis 121122 Loans and advances127 Investment securities 128 Investments in associate

companies 129 Intangible assets130 Amounts owed to depositors133 Liquidity risk and funding136 Equity analysis138 Capital management

CONTENTS

Message from our Chief Executive 1

Results presentation 2

2019 interim results commentary 50

Financial results 6263 Financial highlights64 Consolidated statement

of comprehensive income65 Consolidated statement of

financial position66 Consolidated statement

of changes in equity68 Return on equity drivers

MES

SAG

E FR

OM

OU

R C

HIE

F EX

ECU

TIV

E

The SA economy performed worse than expected in the first six months of 2019 and our forecast for SA GDP growth for 2019 has been revised down from 1,3% to 0,5%. Significantly more urgency is required with the implementation of structural reforms to stem the economic and fiscal deterioration currently being experienced in the SA economy. If we are unable to do this, all the hard work done on maintaining our last investment grade rating from Moody’s will be in vain, at great cost to all South Africans as a result of higher inflation and higher interest rates, as well as lower growth and lower levels of employment than would otherwise have been the case.

The group’s financial performance was resilient as headline earnings increased 2,6% to R6,9bn and we produced an ROE (excluding goodwill) of 17,9%. Revenue growth was ahead of cost growth, resulting in preprovisioning operating-profit growth of 7,0% and the cost-to-income ratio improving to 55,4%. As expected, impairments increased off the low prior-year base and the CLR to within the bottom half of our through-the-cycle target range. We maintained a strong balance sheet with a CET1 ratio of 11,3% and a strong liquidity profile. The interim dividend per share increased by 3,6% to 720 cents per share.

A key milestone in our Managed Evolution digital journey, to position Nedbank as a market-leading digital bank, was reached in June 2019 as we operationalised a new and materially faster digital onboarding capability for individual clients in all our branches, alongside the ability to sell both a current account and personal loan digitally. Initial client feedback has been excellent, and we remain hard at work to deliver a similar capability for juristic client onboarding as well as the first release of an exciting new loyalty and rewards programme in the second half of 2019. We continued to grow main-banked clients across all our business clusters, underpinning solid NIR growth.

In support of our purpose of using our financial expertise to do good, we continue to play a leading role in contributing to society and the environment. We enabled more than 3 300 new job opportunities for previously unemployed youth as we activated our commitment to invest 1,5% of our SA net profit after tax in the Youth Employment Service (YES) initiative, we achieved level 1 BBBEE contributor status under the new Amended Financial Sector Code and we became SA’s first commercial bank to launch a green bond on the JSE.

In the context of slower-than-expected SA GDP growth we have slightly revised our guidance for growth in diluted headline earnings per share for 2019 to around nominal GDP growth (from previously greater than or equal to nominal GDP growth).

Mike BrownChief Executive

GOOD STRATEGIC AND OPERATIONAL PROGRESS AND A RESILIENT FINANCIAL PERFORMANCE IN A DIFFICULT ENVIRONMENT

HIGHLIGHTSHeadline earnings▲ 2,6%to R6 870m

Revenue growth ▲ 5,5%(incl associate income: +6,3%)

CLR▲ 70 bps(June 2018: 53 bps)

Expenses growth▲ 5,5%

DHEPS ▲ 3,7%to 1 411 cents

Interim dividend per share ▲ 3,6% to 720 cents

ROE (excl goodwill) ▼ 17,9%

CET1 ratio ▼ 11,3%(June 2018: 12,4%)

NAV per share ▲ 4,9%to 17 794 cents

Nedbank Group – Interim Results 2019 1

NOTES:

NOTES:

Nedbank Group – Interim Results 20192

2NEDBANK GROUP LIMITED – Interim Results 2019

Good strategic & operational progress & a resilient financial performance in a difficult environment

OVERVIEW

MIKE BROWN

Interim Results for the six months ended 30 June 2019

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-30

-20

-10

0

10

20

30

0

25

50

75

100

94 97 00 03 06 09 12 15 18Business confidence index (LHS)Consumer confidence index (RHS)

SA economic growth in 2019 slower than expected, while confidence levels remain low

SA GDP growth forecasts1 (%) Business & consumer confidence2

0.0

0.5

1.0

1.5

2.0

2.5

2019 2020 2021Feb 19 Apr 19 Jun 19

1 Nedbank Economic Unit forecasts at point in time. 2 Bureau of Economic Research, RMB, FNB.


Stronger economic growth dependent on structural reforms, policy certainty, improved levels of confidence, investment & job creation

Early stages of political &

institutional turnaround in SA

Structural reforms & policy certainty

Improved levels of

business & consumer confidence

Increased levels of inclusiveeconomic

growth

Job creation & reduced …− unemployment− poverty− inequality

Increased levels of local

& foreign investment

Government, business, labour & civil society working together to create a more prosperous SA for all its people …… underpinned by improved skills & educational outcomes

Progress on structural reforms & policy certainty – too slow

NOTES:

NOTES:



Good strategic & operational progress & a resilient financial performance in a difficult environment▪ Good strategic progress

− Ongoing progress on delivery of Managed Evolution IT Programme & Digital Fast Lane – building a leading digital bank

− Delivered capability to digitally onboard retail clients (Eclipse) + sell a transactional account & personal loan

− Retail main-banked clients up +4.9% yoy & 16 primary transactional client wins in CIB▪ Resilient financial performance

− HE growth of +2.6%, PPOP +7.0%− Solid revenue growth +6.3% (incl associate income)− Impairment normalisation off a low prior year base (CLR at 70 bps within the lower half of our

60―100 bps TTC range)− Cost-to-income ratio improved from 55.8% to 55.4% – ongoing benefits from optimisation − Interim dividend per share +3.6%

▪ Contributing to society− Largest corporate participant in YES initiative: created > 3 300 new job opportunities in 2019− First SA commercial bank to launch a green bond on the JSE− Level 1 BBBEE contributor


Fixed investment declined as key structural reforms delayed & policy uncertainty continues

Gross domestic capital formation1 (Rbn) Structural reforms & policies2

1 Nedbank Economic Unit. 2 Source: Adapted from Intellidex.

Potential growth impact

Implementation likelihood

Urg

ent i

ssue

s

Energy policy clarity

Eskom – operational stability & electricity pricing (upside/downside) /

Land reform & clarity on EWC (upside/downside) /

SARB nationalisation/policy changes

Prescribed assets

Shor

t-ter

m w

ins Visas – Tourism/Skills / /

Spectrum auctions

Mining charter

Improved infrastructure coordination

Long

er-te

rm Education reform

Labour market/Empowerment reforms /

National Health Insurance

H

VH

VH

H

M

M

M

H

VH

VH

H

L

L

M

H

VL

H

H

M

L

H

L

M

L

VL VHVery low Very highM

150

175

200

225

250

300

350

400

450

08 09 10 11 12 13 14 15 16 17 18 19Private sector (LHS)Government and public sector (RHS)

M

M

Delay risk

Delay risk

Delay risk

Delay & fallout risk

Fallout risk

Fallout risk

Fallout risk

M

VH

VH

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Our Managed Evolution strategy is enabling core banking system rationalisation, standardisation & simplification

250

176

166

145

129

114

112

60

10 14 15 16 17 18 H119

20target

Core systems (#)

Rationalise, standardise & simplify

Managed Evolution approach

▪ 24/7, real-time systems

▪ Agile, flexible multilayer architecture

▪ Digitally fit & analytically strong organisation

▪ Platforms that are innovative & responsive to change

▪ Omnichannel client onboarding & servicing

Business value

IT a

dvan

cem

ent

Opportunistic(‘Patching’)

‘Big bang’

ManagedEvolution

Robust, flexible IT landscape

2010 2020

2020 outcomes

Digitise Delight Disrupt


Nedbank strategic enablers – creating great client experiences & growing market share

Enabled by

+delivered through process /

operational excellence

leading to

Client growth & client satisfaction Operating efficiencies

resulting in

2020 financial targets

ROE (excluding goodwill) 18%Cost-to-income ratio1 53%

Create great client experiences & grow market share in key value-creating areas

Target operating model (TOM)(largely by New Ways of Work)

Revenue growth Cost savings

People &brand

Technology(Managed Evolution &

Digital Fast Lane)

1 In March 2019 we noted to the market that our 2020 cost-to-income target has become more challenging to achieve.

NOTES:

NOTES:



Eclipse – simplified end-to-end digital client onboarding for individuals rolled out in June 2019

From legacy▪ Legacy, product-centred operations spanning front-,

middle- & backoffice▪ Sequential paper-based processes▪ High ‘not taken up’ rate

▪ Uncompetitive turnaround times – hours/days▪ Low cross-sell rates (particularly transactional)▪ Legacy rules-based KYC/ FICA

To digital

▪ Client centred onboarding – once for life▪ Single onboarding process for most core products▪ Automated front-, middle- & backoffice processes

reducing turnaround times to minutes▪ Single digital application form, enabling frictionless

cross-sell▪ Digital FICA, biometrics & contract/signature

H1 2019 H2 2019 H1 2020 H2 2020

Individual client onboarding

Juristic client onboarding

▪ Personal loans▪ Transactional products

▪ Card issuing (1)▪ Investments (1)▪ Overdrafts (1)

▪ Card issuing (2)▪ Investments (2)▪ Overdrafts (2)▪ Home loans (1)

▪ Home loans (2)▪ Vehicle finance▪ Wealth products

Inbranch Web & app aligned to product releases

Client:

Channel:

Product1:

1 The number (1) refers to first minimal viable product launch on the new platform | (2) refers to additional enhancements.


New technology enhancements

Core banking modernisation

Client systems

Strategic payments

Enterprise data

Foundations

ERP

0% 20% 40% 60% 80% 100%

The Managed Evolution & IT rationalisation programmes are ~65% complete1 & forecast to be materially complete by end of 2020

IT investment profile

% completion

Star

ting

sequ

ence

& o

rder

of e

xecu

tion

ERP – implemented SAP

Foundations – Client 360, SOA, ECM, BPM, Agile, Security (60% to 83%)

Data – IFRS 9, POPI, EDW (Data lake), RDARR (60% to 74%)

Strategic payments – modernised payment engine, basic VAS (egelectricity), authenticated collections

Client systems – 86 services digitised (from 51), branch-of-future technology, Eclipse – digital onboarding, servicing + PL & transactional sales (inbranch), call centre modernisation, CRM, DXM (single front-end), AML, loyalty & rewards (pilot), insurance platform

New technologies – Karri app, Nedbank Money & Private Wealth app, MobiMoney, crossborder remittances, Unlocked.Me, chatbots, scan to pay, PL ghost account

Core banking modernisation – Flexcube (RoA subsidiaries), Loan IQ, Front Arena

ERP – completed

Foundations completed – ongoing investment in security

Data – RDARR compliance, Advance Machine Learning, RPA, artificial intelligence, single data store

Strategic payments – full service hub (incl VAS, FX)

Client systems – > 180 services digitised, digital onboarding & servicing – juristic + web & app, a further 8 products offered digitally, loyalty & rewards (H2 2019), FATCA/ FICAA

New technologies – platforms & ecosystems

Core banking modernisation –modernisation of lending & deposit systems, decommission legacy middleware

R0.6bn

R1.4bn

R0.8bn

R0.6bn

R3.0bn

R0.9bn

R1.3bn

2020/2021 outcomesCompleted to date (Rbn spend)

Bubble size indicates total estimated spend

R8.5bn

1 As reported, ME programme was ~60% complete at December 2018.

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13.014.4 13.9 13.8

14.2

17.3

15.715.1

18.4 17.9

15 16 17 18 19

COE ROE (excl GW)

Delivering value to shareholders

NAV per share1 (cents)

14 4

28

15 8

26

16 2

00

16 9

57

17 7

94

15 16 17 18 19

537

570

610

695

720

15 16 17 18 19

ROE & cost of equity (%) Interim dividend per share (cents)

+4.9% +3.6%

CAGR: +5.4% CAGR: +7.6%

1 NAV per share in H1 2018 excluding IFRS 9 & 15 day 1 impacts: 17 620c. 2 NAV per share H1 2019 excluding IFRS 9, 15 & 16 day 1 impacts, Zimbabwe currency devaluation & odd lot offer: 18 863c (+7.1%).

(1) Economic profit

(2)

H1 H1 H1


Eclipse delivering great client experiences & efficiencies, building on the progress made across other digital & servicing initiatives

32≤ 20

45-50

≤ 20

2018 Jun 2019

Time to open a PL & transactional product1 (min)

0%

14%

0%

37%

2018 Jun 2019

Sales through Eclipse (% of total)

02

10

2018 Jun 19 Dec 20

Digitised products (#)

PL PL

PL TPPL TP

90

35

2018 Jun 2019

Time to cross-sell a PL & transactional product (min)

2.1

2.3

2.8

3.1

4.1

4.3

4.5

4.7

OldNedbank

App

Bank A Bank B Bank C Bank D Bank E NedbankMoney

NedbankWealth

iOS App Store client ratings2 (stars / 5)

Nedbank Wealth app rated 2nd best globally

Nedbank consumer NPS score3 (%)

Largest yoy increase among SA banks

26.1

37.1

17 18

Initial benefits from Eclipse

1 For 57% of all TPs opened in June 2019. For 50% of all PLs accounts opened in June 2019. | 2 As at June 2019 | 3 Source: Consulta (SA-csi).

TPTop10

NOTES:

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A resilient financial performance

FINANCIAL OVERVIEW

RAISIBE MORATHI


Our role in society

STAFF

CLIENTS

SHAREHOLDERS

REGULATORS

SOCIETY

▪ Paid R8.4bn in salaries & benefits to support our 30 577 staffmembers & their families

▪ Staff engagement score strong at 75% – well above industry levels (+8% higher)

▪ Accelerated a leadership & culture change programme supporting strategy, incl New Ways of Work (> 1 550 staff)

▪ Transforming our workforce towards SA demographics (> 78% black employees)

▪ R94bn new-loan payouts, up 15%, to enable clients to finance their homes, vehicles & education & grow their businesses

▪ Safeguarded R866bn deposits at competitive interest rates

▪ Exciting innovations launched –end-to-end digital client onboarding & sale of transactional accounts & personal loans, HeyNed (digital concierge) & API Marketplace

▪ First large SA bank to introduce a zero-monthly-fee account▪ Largest increase in consumer NPS score among SA banks

▪ Celebrating 50 years on the JSE in 2019▪ Paid R3.5bn dividends to shareholders who represent

pension funds & investments of all South Africans▪ Supportive outcomes at 52nd AGM – with

remuneration: > 98% votes in favour▪ Committed to engage further on ESG & climate

change matters

▪ Maintained a strong balance sheet to support a safe & stable banking system

▪ Paid R6.3bn direct, indirect & other taxes▪ Invested more than R105bn in government

& public sector bonds to support the funding needs of governments

▪ Procured 78% of our goods & services locally▪ R54m SED spend – more than 50% on education▪ Ongoing delivery on the SDGs – including R24,6bn of renewable-

energy payouts to date & SA’s first & only commercial bank to list a green bond on the JSE

▪ Largest corporate participant to YES initiative to date – creating > 3 300 meaningful job opportunities for our youth in 2019 (investment of 1,5% of SA NPAT)

▪ Level 1 BBBEE contributor (under the Amended FSC)

Our purpose –to use our financial

expertise to do good

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Headline earnings – a resilient financial performance

6 696 6 870

814

638 (728)

(809) 215 44

H12018

NII NIR Impairments Expenses Associateincome

Direct tax& other

H12019

+5.8% +40.1%+5.2% +5.5% >100%

Headline earnings (Rm)


Key performance indicators – a resilient financial performance

H1 2019

H1 2018

Headline earnings (Rm) 2.6% 6 870 6 696

Economic profit (Rm) (16.3%) 1 411 1 685

ROE (excl goodwill)1 17.9% 18.4%

Diluted HEPS growth 3.7% 26.3%

Preprovisioning operating profit growth 7.0% 20.2%

Net interest margin 3.57% 3.67%

Credit loss ratio 0.70% 0.53%

Cost-to-income ratio 55.4% 55.8%

CET1 ratio2 11.3% 12.4%

Interim dividend per share (cents) 3.6% 720 695

1 H1 2018 ROE (excl GW) excluding IFRS 9 & 15: 17.8%. 2 H1 2019 CET1 excluding odd lot offer, Zimbabwe currency impact & IFRS 16: 11.8%.

NOTES:

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Net interest income +5.8% – strong AIEBA growth offset by a decrease in NIM

Net interest margin (bps)

Average interest-earning banking assets: +0.8%Average interest-earning banking assets: +8.7%

367 357

(2)(5)

(4)

(2) 3

H12018

Endowmentimpact

Assetmix & pricing

IFRS 16 HQLA Liabilitymix & pricing

H12019


IFRS 16 changes BOOKLET SLIDE

RmH1

2019H1

2018%

change IFRS 16Adjusted H1

2019%

change

NII 14 819 14 006 5.8 144 14 963 6.8Expenses 15 565 14 756 5.5 (119) 15 684 6.3Headline earnings 6 870 6 696 2.6 18 6 888 2.9Total assets (Rbn) 1 102 1 019 8.1 (2.7) 1 0991 7.9

NAV/share (cents) 17 794 16 956 4.9 141 17 9351 5.8

CET1 ratio (%) 11.3% 12.4% 11.5%1 0.2

ROE (excl GW) (%) 17.9% 18.4% 17.8%1

NIM (%) 3.57% 3.67% 3.61%

Cost-to-income ratio (%) 55.4% 55.8% 55.5%

IFRS 16 – replacing straight-line operating lease expense with a depreciation charge for the leased asset & an interest expense on the lease liability

1 Includes day-one adjustment on equity of R658m; Asset adjustment of R2.7bn.

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Net advances +6.5% yoy − ongoing momentum in RBB & increase in growth rate in CIB

200

250

300

350

H115

H215

H116

H216

H117

H217

H118

H218

H119

CIB (excl trading advances) RBB

CIB & RBB banking advances (Rbn)Banking vs trading advances (Rbn)

400

500

600

700

800

H115

H215

H116

H216

H117

H217

H118

H218

H119

Banking advances Trading advances


-

50

100

150

200

250

300

350

400

450

Mar14

Apr14

Jun14

Oct14

Nov14

Feb15

Apr15

May15

Jun15

Jul15

Nov15

Feb16

May16

Jul16

Sep16

Feb17

Mar17

May17

Jun17

Feb18

Mar18

Jul18

Nov18

Feb19

Mar19

Apr19

Jun19

3 year SUD 5 year SUD 7 year SUD 10 - 12 year SUD Tier 2

Sovereign downgradesNenegateABIL

South African

elections

Pricing (bps above JIBAR)

Net interest margin – evolution of Tier 2 & SUD pricing BOOKLET SLIDE

NOTES:

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BA900 market share1Deposits (Rbn)

Deposits +8.1% yoy – focus remains on Basel III-friendly deposits

ShareYoy

trendYtd

trend

Wholesale 21.8 (0.9) +0.3

Corporate (non-financial)

17.3 +0.7 +0.4

Household 17.6 (1.4) (0.4)

Retail current acc 19.0 (0.3) +0.8

Foreign currency 11.5 (0.8) +1.1

801.2

865.8

24.1 3.2

38.0

Jun2018

RBB Wealth CIB RoA &Centre

Jun2019

+8% +8% +11% (1%)

1 BA900 at May 2019.

Loan-to-deposit ratio: 88% (H1 18: 89%)LCR: 115% (min reg: 100%)

NSFR: 110% (min reg: 100%)

(0.7)


162

161

99 153

115 21 17

171

191

89 159

124 24 17

Commercialproperty

Termloans

Trading &otherloans

Homeloans

Vehiclefinance

Personalloans

Card

Jun 2018 Jun 2019

1 1

Selective origination & unique positioning

Gross advances (Rbn)

Wholesale

Gross advances +6.7% yoy – selective origination

+5%

+4%

+19% (10%)

+8%

+14% +5%

Leveraging relationships &

pipeline

Retail

1 Term loans include a reclassification of some investment banking loans from other loans. | 2 BA900 at May 2019 (compared with May 2018). 3 Core corporate loans exclude volatile short-term lending. | 4 Vehicle finance per BA900 comprises total lease & instalment sales.

BA900 market share2 (%)

ShareYoy

trendYtd

trendCommercial property 38.9 (0.7) (0.2)

Core corporate3 20.7 (0.6) +0.1

Home loans 14.6 +0.1 +0.1

Vehicle finance4 28.5 +0.4 0.0

Personal loans 10.2 (0.1) (0.2)

Card 13.5 (0.7) (0.2)

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Credit loss ratio up to 70 bps – normalisation of credit losses off a low base

46.5% 46.2% 4.3% 3.1%Bankingadvances

7767

47 53

70

15 16 17 18 19

H1

1

106

15

109

16

128

14

108

CIB RBB Wealth RoAH1 18 H1 19

Group CLR1 (bps) Cluster CLR (bps)

1 Nedbank through-the-cycle target range: 60–100 bps.2 CIB through-the-cycle target range: 15-45 bps. | 3 RBB through-the-cycle target range: 130–180 bps.4 Wealth through-the-cycle target range: 20–40 bps. | 5 RoA through-the-cycle target range: 75–100 bps.

2 3 4 5


9 07

6

2 17

4 897

293

434

Commission& fees

Tradingincome

Insuranceincome

Privateequity

Other¹

+5%

Non-interest revenue +5.2% – solid growth in commission & fees

Key driversNIR (Rm)

1 Represents sundry income, investment income & fair-value adjustments.

+4% +4%(0%)

▪ Commission & fees

– Ongoing growth in main-banked clients across all businesses

– Slow growth in client transactional activity

▪ Trading – impacted by weak markets

▪ Insurance – good sales volume increases offset by higher weather-related claims in H1 19

▪ Private equity – reflective of weak SA macro economy

▪ Other NIR includes a fair-value swing between an H1 18 loss & H1 19 gain

+36%

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Stage 3 advances (Rbn) Stage 3 coverage (%)

Stage 3 advances – increase in defaults as the macroenvironment deteriorated.

15.7 17.3 19.2

5.15.7

5.41.92.2

2.3

Jun 18 Dec 18 Jun 19

35.2 36.8 37.1


22.826.8

RBB

CIB

Other

25.2Total

+18% yoy

+11%(6%)

+10% +11%

+11%

+5% yoy

+22% yoy

+6%

Stage 3 advances/gross advances (%)

3.13 3.36 3.57


(1)

1 RBB increase in H2 2018 driven by R1.9bn as a result of change on point of writeoff.


0.94 0.91 0.89


Stage 1 & 2 coverage1 (%)

Impairments +40.1% – driven by increases across stage 1, 2 & 3 impairments

Impairment drivers (Rm)

1 815 2 543

123

362 243

H1 18 Stage 1 Stage 2 Stage 3 H1 19

1 The definition of portfolio coverage (stage 1 & 2) has been refined to only include LAA held at amortised cost.

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Expenses +5.5% – balance between investing & cost optimisation

Key driversExpenses by cluster (Rm, % growth)

3 247 10 071 1 593 1 148

CIB RBB Wealth RoA

+7.6%

+3.6%

+1.1%+6.6%

▪ Strategic investment in CIB & IT skills offset by reduction in overall headcount of 1 015 yoy (mostly in RBB)

▪ Annual salary increases: ave +5.4%

▪ STI reduced 10% – aligned to business performance

▪ Computer processing +14%, in line with IT & digital investments – cashflow spend to peak in 2019 at just above R2,0bn

▪ Optimisation & cost savings: R189m


14 756 15 565

884

281 56 (189)(104) (119)

H1 18 BAUgrowth

Computercosts

Youthemployment

service

Efficiencies Net PRMAcredit

IFRS16

H1 19

Expenses +5.5% – computer costs & IT investments offset by ongoing efficiencies & benefits from PRMA credit & IFRS 16

Expenses (Rm)

1 Computer costs include: Amortisation +28% up R119m. | Other computer costs include investments in cloud, +10% up R162m.2 R189m includes TOM (R146m) & other cost savings (R43m).

21

Amortisation

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14 15 16 17 18 19 20 21

4.6

7.4

3.13.5

6.0

Peak in 2020 at just over R9bn

IT spend expected to peak in 2019

Capitalised IT costs (Rbn)

Compliance-related

1.0 1.2

1.7

2.3 2.1

14 15 16 17 18 19 20 21

Peak in 2019 as regulatory projects are completed & development cost

on new technologies decrease

IT software development spend (Rbn)

655 718 799 793 958

14 15 16 17 18 19 20 21

Amortisation charge (Rm)

Illustrative only

BOOKLET SLIDE

Position at H1 19

1.0

7.8

541


Expenses – initiatives in place to support a reduction in our cost-to-income ratio

Central costs, property & procurement Technology Process

optimisationRBB & branch optimisation

▪ Shared services – finance, risk, HR, marketing etc optimisation

▪ RoA synergies

▪ Procurement savings –data, telephony & other

▪ Central property savings –27 campus sites, from 31 in H1 18 (MLT target: 22 sites, leading to significant savings in square meterage) | Desktop utilisation at 88%, (MLT target of > 95%)

▪ General costs – optimise travel, marketing etc

▪ Improved IT project delivery (using agile & hybrid methodologies)

▪ Cloud services – savings from migration to cloud over time (H1 19: Office 360 & staff email)

▪ Data-driven intelligenceefficiencies

▪ Reduction IT infrastructure eg servers

▪ 112 core IT systems –decommissioned 138 systems since 2010 to date (target of < 60 by 2020)

▪ Reduced client onboarding & sales costs through digital (MLT digital sales target: > 75%)

▪ Self-service & staff-assisted banking

– New digital services on mobile, app & web: 86, from 51 in H1 18 (target: > 180 by 2020)

– Self-service cash deposits: 71% of all cash (from 58% in H1 18)

▪ Paper & postage savings through increased digitisation

▪ Robotics & automation – 92 RPAs in use (from 51 in H1 18, excl the VBS > 160 onboarding bots)

▪ Number of outlets –ongoing optimisation (will be dependent on digital uptake). Closed 14 points of presence in H1 2019.

▪ Reduction in branch floor space – 37k m2 to date (from 29k m2 in H1 18 & target > 47k m2 by 2020)

▪ Sales & service integration – new operating model, businessreconfiguration & simplification (mostly complete by 2020)

▪ Backoffice & RBB support function optimisation

Headcount reduction – 1 015 since June 2018 (with ongoing reduction to 2020/1)

TOM initiativesCumulative

TOM savings: R826m (R146m

in H1 2019)

Oth

er in

itiat

ives

BOOKLET SLIDE

NOTES:

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ETI carrying value – Value-in-use remains above carrying value

6.3 3.2 2.9 2.3 4.5

(2.1)(0.3)1

(1.0)

Original cost ofinvestment

Carrying valueDec 2018

Carrying valueJun 2019

Market valueJun 2019

Share of ETINAV

Jun 2019

Impairment provision Associate income/(loss), FCTR & other

Carrying value drivers vs market value (Rbn)

1 FCTR loss offset by R381m of associate income.

Value-in-use

> R2.9bn


ETI associate income – reflecting ongoing ETI recovery

(1 061)

317 247 361 381

H1 H2 H1 H2 H1

Associate income from ETI1 (Rm)

(744)

1 ETI accounted for one quarter in arrear. 2 Source: ETI disclosures. ETI reported COE at ~ 17%.

17

ETI medium-to-long-term guidance2

▪ ROTE target: COE + 5%(H1 2019: 21.5%)

▪ Cost-to-income ratio target: 50–55% (H1 2019: 66.4%)

18

608

19

NOTES:

NOTES:



Earnings contribution (Rm)Headline earnings (Rm)

48%

38%

7%4%

3%

CIB RBBWealth Rest of AfricaCentre

3 29

6

2 58

1 519

245

55

3 29

8

2 59

0 455

293

234

CIB RBB Wealth Rest ofAfrica

Centre

H1 2018 H1 2019

>100%

Headline earnings – flat earnings growth in CIB & RBB, offset by stronger growth in RoA & centre

+0.1%

+0.3%

(12.3%) +19.6%


SARB minimum CET1: 7.5%11.7 11.3

(0.2) 1.0

(0.6)

(0.6)(0.1)

Dec2018

IFRS 16impact

Organicprofit

Dividends paid

RWAincrease

Intangibles Jun2019

CET1 target range: 10.5 – 12.5%

Capital – CET1 around the midpoint of our target range

CET1 capital ratio (%) – after full IFRS implementation Dividend cover (times)

2.101.99

1.80 2.00 1.99

Board-approved target range:1.75–2.25x

Payout ratio:

48%

50%

56%

50%

50%

Jun15

Jun16

Jun17

Jun18

Jun19

NOTES:

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Solid revenue growth offset by impairment headwinds

NEDBANK CORPORATE AND INVESTMENT BANKING

BRIAN KENNEDY


Centre – key drivers include once-offs


55 234

36

121

75 (53)

H12018

Centralimpairments

releases

Net gains onfair value

PRMA Other H12019

▪ Central overlay release in H1 19 (R50m pretax). None in H1 18

▪ Fair-value gain of R82m pretax in H1 19 vs loss of R86m pretax in H1 18

▪ PRMA credit of R354m pretax in H1 19 vs H1 18: R250m pretax

1 Net yoy movement of R104m pretax

1

NOTES:

NOTES:



48%52%

Headline earnings

48%52%

Advances

Nedbank CIB Other clusters

CIB – financial highlights BOOKLET SLIDE

1 Cost of equity H1 18: 13.8%. | H1 19: 14.2%.

Six months ended % change H1 2019 H1 2018Headline earnings (Rm) 0.1 3 298 3 296Operating income (Rm) 3.3 7 631 7 384PPOP (Rm) 7.0 4 598 4 299Net interest margin (%) 2.10 2.13NIR-to-expense ratio (%) 127.9 127.9Cost-to-income ratio (%) 40.9 40.9Credit loss ratio (%) 0.16 0.01Average banking advances (Rm) 4.2 335 703 322 247Average deposits (Rm) 6.0 356 300 336 199Headline economic profit (Rm)1 (17.3) 856 1 034Average allocated capital (Rm) 4.7 34 688 33 125ROE (%) 19.2 20.1


2 48

5

3 00

4

3 21

1

3 29

6

3 29

8

22.9 21.3 20.8 20.1 19.2

-2.0

3.0

8.0

13.0

18.0

23.0

28.0

-

1 000

2 000

3 000

4 000

5 000

6 000

H1 15 H1 16 H1 17 H1 18 H1 19Headline earnings (Rm) ROE (%)

Solid revenue growth offset by impairment headwinds

▪ GOI +6.7%: Client confidence impacted by uncertainty in H1 19

▪ Advances +6.1%: Faster growth despite the difficult environment

▪ NIR +7.7%: Good NIR growth, maintained solid growth in C&F income

▪ CLR at 16bps (+15bps): Continued strong risk management, collections & high quality portfolio – increases primarily from stage 1 & 2 impairments

▪ Cost-to-income ratio 40.9%: Continued investment in skills & technology

Key messagesHeadline earnings, ROE

0.1%

NOTES:

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Advances - conversion of pipeline resulted in strong growth in advances in key selected sectors in H1

Actual banking advances, incl corporate bonds (Rbn)

▪ Conversion of significant deals in H1 led to 8.8% growth; well positioned for H2 2019

▪ Market leader in CPF & renewable energy

− Continued drawdowns of round 4 renewable-energy deals boosted advances growth

− Property Finance grew 2.8% amidst competition for high-quality assets

▪ Awarded Sponsor of the Year in the Project Finance International (PFI) Awards (Enel Green Power) & Infrastructure & Project Finance Deal of the Year in The Banker Awards (Geita Gold Mine)

Key messages

339 338359

1

368

+9%

187 186 204 211

148 150 151 154

4 3 4 2

H2 17 H1 18 H2 18 H1 19Banking Property Finance Other

1 Banking defined as Investment Banking & Working Capital combined.


1.95% 2.25% 2.27%

NIR – solid growth in fee & commission income, trading income impacted by a weaker economy

Key drivers

▪ Deal activity & successful primary-client wins contributed to +7.8% fee & commission growth

▪ Trading income up 4.7% despite low volatility & decreased volumes from a high base in H1 2018

▪ Continue to invest in market-leading trading capabilities across the asset classes

▪ Leading position maintained across all major league tables

NIR/advances (%), NIR (Rm)

NIR/advances:

1 618 2 015 2 110

1 118

1 394 1 503335

447541

H1 15 H1 18 H1 19 Trading Income Fees & Comms Private Equity & Other

+7%

+8%

+13%

CAGR+8%

3 071

3 8564 154

+8%

+5%

+8%

+21%

1 Private equity +4%

1

NOTES:

NOTES:



Client solutions leading to significant wins BOOKLET SLIDE

Provided R3bn banking facilities to the Group

Mandated Lead Arranger, for US $1bn syndicated term loan for the

Government of Kenya

CIB concluded the inaugural issuance of green renewable energy bonds into the debt capital markets

for R1.7bn

CIB was mandated as Arranger and Funder to Barloworld’s Khula Sizwe

BBBEE Share Scheme

Concluded of a R1,5bn term debt facility for Fortress REIT Ltd

20192019

2019

2019

2019

Provided R1,5bn term funding in the capacity of sole funder

2019

2019

Mandated Lead Arranger and Facility Agent for a US$ 375m Term Loan Facility for Debmarine’s new

marine vessel

Co-ordinating Initial Mandated Lead Arranger and Bookrunners for the US $1.3bn Pre-Export Finance

deal

2019

CIB funded R1bn of the municipality’s capex requirements as part of the capex funding tender

2019

Provided R2bn term funding in the capacity of sole funder

2019

CIB funded R1.35bn of the municipality’s capex requirements as part of the capex funding tender

2019 2019

Implemented R500m revolving credit facility for AfroCentric

Investment Corporation


Increase in transactional revenue & ongoing new primary-client wins in CIB

Primary-client wins (#) Selected primary transactional account wins

BOOKLET SLIDE

Definition of tiers:Tier 1 > R5mTier 2 < R5m > R500kTier 3 < R500k > R100kTier 4 < R100k

J&J Capital

19 on Loop

TOIC Holdings

25

5

16 12

10

11

10

3

2

7

2

122

2

32

15 16 17 18 H1 19Tier 4 Tier 3 Tier 2Tier 1 Target

16

Target = 25 pa

3026

39

Definition of tiers:Tier 1 > R5mTier 2 < R5m > R500kTier 3 < R500k > R100kTier 4 < R100k

2019 FY target = 30

NOTES:

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40.8%

1.6%

3.7%

4.6%

2.3%

3.9%

42.3%

1.8%

4.8%

4.3%

2.7%

5.2%

PropertyFinance

Construction

Equity

Mining

Retailers

State OwnedEntities

H1 18 H1 19

78% 81%

22% 19%

Specificimpairment(stage 3)

NPLs

10 largest exposuresOther

CPF28%

Other72%

CIB – Proactive risk management & our quality portfolio has positioned us well for this tough credit environment BOOKLET SLIDE

CIB selected sector exposures1 (%)Downside

riskMigration

risk

M

H

M

H

M

Change2 –migration

risk

L

L

M

L

L

L

-

-

Change –downside

risk

-

-

Top 10 client contribution (%)

[ ] Risk decrease [ ] No change [ ] Risk increase▼ - ▲

M ▼

-

-

-

-

-

-

-

1 Restated to exclude trading bonds. 2 Change since December 2018.


0.25 0.30 0.37

14.111.6 12.8


5.15.7

5.4


65% 67% 65%

1.99%2.13% 2.10%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

0%

20%

40%

60%

80%

100%

H1 15 H1 18 H1 19

Investment Grade NIM

Proactive risk management & our quality portfolio has positioned us defensively for this difficult credit environmentQuality of book, CLR (bps) & NIM (%) Stage 3 advances (Rbn)

Stage 1 & 2 Stage 3

CLR 38 1 16

1

1 Restated to exclude trading book.

Coverage ratios (%)

+4.9%

NOTES:

NOTES:



1.95

%

1.97

%

1.83

% 2.25

%

2.27

%

H1 15 H1 16 H1 17 H1 18 H1 19

We have invested significantly in the CIB franchise over the past few years – leading to improved rankings & deeper levels of client coverage

Nedbank CIB NIR to gross advances (%)Improved industry rankings/share

Target: > 2.0%

20192013

CIB headline earningsR2.5bn R3.3bn 7.3%CAGR

BOOKLET SLIDE

CIB commercial property share Market leader > 30% market share

Renewable-energy lending Market leader

Primary-dealer rankings #7 #1

Dealmakers M&A advisersValue #3 #1Volume/Flow #1 #1

Best team government bonds #7 #1 (Spire awards)

DCM rankings #2 #1

Primary-client wins > 25 per annum


Quality commercial property book

Diversified book by property type (%)

22

23

1111

5

10

23

311

OfficesRetailersWarehouseMultiple portfoliosManufacturingResidentialVacant landHotel & BBOther mortgagesOther loans

▪ Strong client base supported by an experienced team

▪ Portfolio well diversified with underlying sectors impacted at different points

in the cycle – diversification inherently reduces sector concentration risk

▪ CLR below target range of 15 bps to 35 bps

▪ Vacant land < 3%

▪ LTVs > 90% declined to 1.4% of the portfolio

▪ Primary lending operation supplemented by private-equity arm

CLR (bps), LTVs (%)

BOOKLET SLIDE

47% 47%43% 43% 42%

H1 15 H1 16 H1 17 H1 18 H1 19

11 (8)13 7 (16)CLR

Key drivers

Residential▪ Actively reduced exposure over the past few years▪ Selective origination – focus on developers with established track records▪ Guideline of 120% presales applied▪ Adequate collateralisation significantly reduces potential losses▪ LTV @ 33.5%; default rates @ 0.1%Retail▪ Retail centre developments funded on >70% pre-lets▪ Low gearing/LTV ratios – LTV @ 40.4%; default rates @ 0.2%▪ Good quality & experienced retail developers with large portfolios – able to

manage some of the economic stresses within their portfolioOffices▪ Very selective approach to funding

NOTES:

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Underlying earnings growth impacted by higher impairments

NEDBANK RETAIL & BUSINESSBANKING

CIKO THOMAS


Prospects for CIB

A powerful wholesale business focused on its clients

▪ Serve our clients better through strengthening relationships & sector insights

▪ Strong pipeline that is expected to convert as business confidence improves

▪ Continued focus on our African expansion in key sectors, including property finance

▪ Driving NIR growth through transactional banking, trading, advisory & equity franchise

2020 targets:

− ROE ≥ 20% − maintain strong returns

− Cost-to-income ≤ 40% − leveraging technology to improve efficiencies

Awards

1st South Africa bonds including and excluding Self Led H1 2019

NOTES:

NOTES:



38%

62%

Headline earnings

45%55%

Advances

Nedbank RBB Other clustersSix months ended % change H1 19 H1 18Headline earnings (Rm) 0.3 2 590 2 581

Operating income (Rm) 3.5 13 995 13 516

PPOP (Rm) 9.9 5 793 5 272

Net interest margin (%) 5.69 5.71

NIR-to-expense ratio (%) 64.7 62.7

Cost-to-income ratio (%) 62.3 64.0

Credit loss ratio (%) 1.28 1.06

Average banking advances (Rm) 8.0 342 578 317 216

Average deposits (Rm) 8.3 321 874 297 290

Headline economic profit (Rm)1 (30.7) 467 674

Average allocated capital (Rm) 7.9 30 145 27 928

ROE (%) 17.3 18.6

Retail & Business Banking – financial highlights BOOKLET SLIDE

1 Cost of equity H1 18: 13.8% | H1 19: 14.2%.


Underlying earnings growth impacted by higher impairments

Key messages

▪ PPOP +9.9%

− NII +6.3%: solid growth from advances & deposits

− NIR +6.9%: growth as a result of average pricing & volume related increases

− Expenses +3.6%: reflects the impact of focused & active cost management

− CLR at 128 bps (+22 bps): impairments increased off a low base

Headline earnings, ROE2

132

2 37

1

2 54

4

2 58

1

2 59

0

15.918.3 18.7 18.6

17.3

-

5.0

10.0

15.0

20.0

25.0

-

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

5 000

H1 15 H1 16 H1 17 H1 18 H1 19

Headline earnings (Rm) ROE (%)

0.3%

NOTES:

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Retail transactional NIR growth ahead of client growth – deeper client penetration

Total retail client base (#000) Retail NIR (Rm)

1 +27% increase in dormant account closures in H1 19 to 586 000 resulting in lower total client numbers.

3 370 3 510 3 748

1 781 1 690 1 816

17 18 19

2 702 2 771 2 907

4 829 4 884 4 516

17 18 19

Total 7 4227 6557 531

+1.6%

+2.5%+4.9%

(3.0%)

Transactional & consumer card issuing

Other

Total 5 2005 151

+7.0%+1.0%

+6.8%+4.2%

5 564

H1 H1

1

Main-banked

Retail, exclmain-banked


Impairments – higher given the impact of the macroeconomic environment

Impats (R m)

79181 119

209

692(19)

26

H1 17 H1 19

21

H1 18

111 694 1 675

505

2 180

Impairments +30% to R2.2bn driven by:

– Stage 3 increases of R692m (+29%)

– Offset by increase in reallocation of interest on impaired advances of R119m

– Stage 1 & 2 impairment charge reduction of R79m

CLR to 128 bps – below the RBB 130 bps to 180 bps TTC target range

Defaulted loan coverage at 44.9% down slightly from Dec 18

Stage 3 loansInterest on impaired

RecoveriesStage 1 & 2

Key messagesImpairments (Rm)

NOTES:

NOTES:



Nedbank Retail & Business Banking – building more enduring client relationships through transactional product cross-sell BOOKLET SLIDE

+0.5

Card

Personal loans

MFC(vehicle finance)

Home loans

Total retail clients1

Investments

Transactional products

+2.5

(1.0)

+1.8

+2.0

(1.3)

(4.6)

% yoy growth

Transactional clients with product line

72%

1,154

68%

1,085

59%

597

60%

620

262250

56% 58%

14424% 24%140

40% 40%119119

28%

1 650

H1 18 H1 19

28%

1 643

Number of product line clients with transactional products, #000

1 609

1 026

1 594

443

1 008

452

579594

299295

6 1255 840

% yoy growth

+0.1

(3.6)

+1.2

+1.6

+0.7

H1 18 H1 19

# 000

1 +27% increase in dormant account closures in H1 19 to 586 000 resulting in lower total client numbers


Client-centred strategy intact, with strong growth across most segments

1 Client groups with gross operating income contributions in excess of R500 pm. | 2 2017 was rebased for migration of the Grey Portfolio from BB to SBS on 1 June 2018. Note: Non-resident, non-individual segment not shown.

Main-banked, # 000Ki

ds &

you

thEn

try le

vel

Mid

dle

Prof

essi

onal

Busi

ness

Ba

nkin

g1Sm

all B

usin

ess

Serv

ices

2

356383 367

(4%) (3%)

1 374 1 378 1 474

0% +7%

H1 17 H1 18

761

H1 19

832 866

+9% +4%

7269 79

+4% +10%

106 116 125

+9% +8%

20.6 20.9 21.5

H1 17 H1 18 H1 19

+2% +3%

NOTES:

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Highlights of client innovations in RBB

MobiMoney

Driving Financial Inclusivity

MFC private-to-private online solution

Safe, hassle-free financing

▪ USSD-based account with zero monthly fees that anyone with a valid SA identity number can open anywhere in seconds.

▪ Ability to buy airtime; electricity; pay bills & other value added services

▪ Attracted more than 170 000 users, up 174% yoy

▪ Facilitating safe, secure and hassle-free purchase of vehicles from private seller to private buyer

▪ Ensure technical inspection and roadworthy is done by seller

▪ Ensure the vehicle has an existing warranty or help you buy one

Pay-as-you-use Zero Fee

Zero monthly fee account

▪ Newly-launched no-frills transparent account with zero monthly fees

▪ Digital onboarding enabled by Nedbank eFica

▪ Staff assisted ‘Eclipse’ gives enhanced client experience in branch

HeyNed

Digital Lifestyle Concierge

▪ A digital concierge that gives clients 24/7 personal assistant in their pockets

▪ Clients can search for services and get quotes on just about anything, anywhere & at any time.

▪ Available on the Nedbank Money app for all clients who opt-in


Nedbank Retail & Business Banking – NIR growth supported by good volume growth, but muted by strategic choices & other factors

NIR growth (Rm)

BOOKLET SLIDE

76

259

7 107

26 20 8

109 28

421

Trans-actional

Card Securedlending

Priceincreases

Mix Activity Personalloans

Cardmargin

IFRS Other Yoy NIRgrowth

2 4

H1 2018 NIR growth (Rm)

5

Volume-related

1 Increase mainly due to the onboarding of a large acquiring client which happened in November 20182 Includes average price increase of 4.5% implemented on 1 January 2019.3 Includes average price increase of 5.3% implemented on 1 January 2018.4 Net MSC has declined (R111m rate impact) from prior year due to the onboarding of a large acquiring . with lower MSC rate offset by higher volumes. In the Issuing portfolio the Interchange rates have remained flat yoy.5 Includes 2018 swap profits in MFC and timing difference on review fees in BB.

3+122 +40 +27 +129 +1 +8 (11) (6) (271) +55 +93

1

NOTES:

NOTES:



Optimisation of processes & operations

Total RBB employees (#)

Branch floor space saved (m2)1

20 9

10

19 9

80

18 6

80

H1 18H1 17 H1 19

24 8

19

28 8

28

37 1

55

H1 17 H1 19H1 18

Efficiencies (Rm)

Number of retail outlets (#)

269 237 176

H1 17 H1 18 H1 19

627 608 592

H1 19H1 18H1 17

1 Represents the total branch floor space we saved since 2014 with a target of > 47 000m2 equating to approximately 20% of our branch floor space in 2014 when we started the journey. | 2 Refers to the volumes of interactions

Cumulative robotics process automation (#)

2783

H1 190

H1 17 H1 18

Teller activity (# 000)2

H1 18

18 9

14

18 914

H1 17

15 9

57

12 2

88

H1 19

15 95712 288


Digitally enabled clients (# 000)

Self-service cash deposit volumes (%)

Accelerated digitisation of technology & operations

5 68

0

5 83

8

H1 17 H1 186

059

H1 19

+4%+3%

43 58 71

H1 19H1 17 H1 18

+22%+28%

Money app active users (# 000)

H1 190

H1 18H1 17

305668

+119%

Digitally active clients (# 000)

Mobile app third-party payments & transfers (Rbn)

1 45

1

1 46

4

H1 17 H1 18

1 71

7

H1 19

+17%+9%

13 2137

H1 19H1 17 H1 18

+71%+68%

Digital vas1 NIR (Rm)

111

H1 18

67

H1 17

88

H1 19

26%+29%

1 Value added services (electricity, data, airtime, instant payments, etc).

NOTES:

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Business Banking well positioned for growth

Key drivers of yoy changeClientsAsset growth (Rbn)

64.3

75.6

Average Balances

68.2

+11%

9.6

11.4

13.6

Asset Payouts

+20%

H1 17 H1 18 H1 19

35.0 36.3 44.0

+7.7%Net promoter score

H1 19H1 17 H1 18

Headline earnings

PPOP

Ave deposit balance

NIR growth

Financial metrics

ROE

CLR

NIR-to-expenses

9.1%

2.1%

6.3%

2.3 2.1 4.81 2 3

GOI growth (%)

H1 19H1 17 H1 18

8.0%

18.8%

H1 19 H1 18

24.2%

38 bps 11 bps

49.0% 48.8%


68

33

74

36

81

40

206

Consumer Banking

Relationship Banking

306

327

353

RBB Total Business Banking

218 232

7.9%

+10.3%

+11.0%

+6.5%

Advances growth – driving market share gains

17 1519 1621 17

114 12

5

Home loans

89 98

CardPersonal loans

Vehicle finance

108

118

5.3%

+9.5%

+9.7% +4.5%

Graphs not drawn to scale

H1 17 H1 18 H1 19

Key messagesGross advances (Rbn)

Gross advances +7.9% driven by

– Strong growth in Business Banking, Relationship Banking, Personal Loans & Vehicle Finance.

– Home loans product growth at +5.3% is still ahead of market resulting in market share gain.

NOTES:

NOTES:



Mangaung Metro Municipality

Garden Route District Municipality

• District Municipality in George, Western Cape.

• Solution: Awarded the full Transactional Banking tender for a period of five years effective 1 May 2019.

• Metro Municipality in Bloemfontein, Free State.

• Solution: Awarded the full Transactional Banking tender for a period of five years effective 1 April 2019.

North West Community Education and Training College

• Educational College in North West.

• Solution: Awarded the full Transactional Banking tender and assisted with workplace banking solutions enabled by our quick turnaround.

• Government entity based in Gauteng.

• Solution: Awarded the full Transactional Banking tender and assisted with workplace banking solutions enabled by our quick turnaround.

South African Council for Social Service Professions

Lekwa Local Municipality

• Local Municipality in Standerton, Mpumalanga.

• Solution: Awarded the full Transactional Banking tender for a period of five years effective 1 June 2019.

Stellenbosch Municipality

• Local Municipality in Western Cape.

• Solution: Awarded the funding tender for infrastructure development for 10 years, with drawdown in June 2019.

Public Sector

BOOKLET SLIDERetail & Business Banking – client solutions leading to significant business with both new & existing clients


Big Concerts Group

• One of SA’s leading event management companies.

• Solution: Our holistic offering including cash & card, global and investments solutions, coupled with an understanding of their specific event driven needs and slick onboarding meant they were able to deliver a worldclass experience at the Guns and Roses, the Global Citizens and the Ed Sheeran concerts.

Retail & Business Banking – client solutions leading to significant business with both new & existing clients

BOOKLET SLIDE

One Up

• Positioned as a people’s store combining retail and wholesale trading in basic household commodities.

• Solution: Through our understanding of their value chain and the importance of their cash arrangements, we were able to deliver a customised solution that met their needs at competitive pricing, and to ensure a seamless client onboarding experience.

Street Fever group

• A leading retailer specialising in high-end fashion footwear and clothing brands with a national footprint of 54 stores.

• Solution: Leading with our innovative Unlocked.Me product offering, we were able to tailor innovative and competitive cash, card and credit solutions. We have also provided financial education for staff, aligning with their brand to nurture people from grassroots level, and do good for our communities.

The Max Group

• A large 100% BEE, Cape Town-based group that supplies a large range of industrial, domestic and electrical products.

• Solution: Using our partnership approach, we were able to offer sound advice to support their business growth and profitability by providing flexible, innovative transactional and lending solutions tailored for their business. We also collaborated with the group on a CSI initiative, thereby raising R150 000 for the Red Cross Children’s Hospital (ICU & Burn Unit).

Philafrica Foods

• Food across Africa, grown in Africa, for Africa.

• Solution: Our holistic and competitive offering in the agriculture sector, including specialised funding, invoice discounting facilities and transactional solutions, coupled with our relationship-based approach, won us their business after an intensely competitive process.

Obaro Handel

• Obaro is a fast-growing agricultural company spread across five provinces, with more than 85 years’ experience in the sector.

• Solution: Our holistic and competitive offering in the agriculture sector, including funding and transactional solutions, coupled with our relationship based approach and slick service delivery won us their business

Commercial

Agriculture and SpecFin Agriculture

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Earnings decline in a challenging environment

NEDBANK WEALTH

IOLANDA RUGGIERO


Building sustainable, profitable businesses through the cycle

▪ We remain committed to growing transactional clients faster than the market through focus on data-led acquisition, retention & cross-sell, enabled by:

− Digital First, First in Digital – accelerated digital transformation through digitising key client journeys & services to make it simple & easy for clients to transact with us, driving takeup of digital offerings (Eclipse)

− Disruptive CVPs – accelerated commercialisation of disruptive CVPs landed to date, while continuing to solution for financial inclusivity, leveraging ecosystem-based platform propositions

− Sales & Service excellence – investment in front-line service excellence to empower staff with tools to better serve clients taking into account the reformatting of branches for digital migration

− Loyalty & rewards – drive client retention by rewarding clients for desired behaviour through the new, differentiated loyalty & rewards programme landing in H2 2019

− Data Analytics & Business Intelligence – leverage enhanced data analytics capabilities (AI, machine learning, etc) to gain a deeper understanding of our clients to create value & commercialise successfully

▪ 2020 targets:

− ROE ≥ 20% − underpinned by lower cost-to-income ratio & relative CLR outperformance TTC

− Cost-to-income1 ≤ 58% − remains our focus, but has become more difficult to achieve in the short term

Prospects for Retail & Business Banking


NOTES:

NOTES:



Six months ended % change H1 2019 H1 2018Headline earnings (Rm) (12.3) 455 519

Operating income (Rm) (0.2) 2 203 2 208PPOP (Rm) (15.4) 576 681Net interest margin (%) 2.20 2.29NIR-to-expense ratio (%) 104.2 113.5

Cost-to-income ratio (%) 71.6 67.1

CLR (%) 0.14 0.15Assets under management (Rm) 2.7 322 766 314 173Life embedded value (Rm) 24.7 3 347 2 684Life value of new business (Rm) 33.5 231 173Headline economic profit (Rm)1 (29.7) 166 236Average allocated capital (Rm) 4 114 4 116ROE (%) 22.3 25.4

BOOKLET SLIDE

7%

93%

Headline earnings

Wealth Other clusters

▪ Net inflows R12bn

▪ Life APE (3.8%)

▪ Non-life GWP 1.5%

Wealth – financial highlights

1 Cost of equity H1 18: 13.8% | H1 19: 14.2%.


7

166

236

96

144

215

Wealth Management Asset Management Insurance18 19

519

614

519

519

455

38.935.9

27.825.4

22.3

-30.00

100

200

300

400

500

600

700

800

900

1000

15 16 17 18 19

Headline Earnings (Rm) ROE (%)

Headline earnings, ROE Headline earnings per division (Rm)Insurance

▪ High weather-related claims

▪ Higher sales & lower claims in credit life

▪ Strong investment performance

Asset Management

▪ Resilient AUM growth

▪ Positive net flows▪ Shift in product

mix

Wealth Management

▪ Strong international performance

▪ Subdued SA investor confidence

▪ Lower JSE volumes

(13.3%)(17.9%)

Earnings decline in a challenging environment

(8.9%)

H1

H1

(12.3%)

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234 256 295 314 323

15 16 17 18 19

Local International

10 11 12 13 14 15 16 17 18 19

SA unit trust FSCA approved offshore unit trust

Market share1 (%)

Asset Management – resilient AUM growth despite subdued investor confidence

Assets under management (Rbn)

+2.9%

1 Source: ASISA

11%

5%

2%

8%

Quarterly

Key drivers

▪ Change in AUM mix as investors shift to passive & cash products

▪ Growth in AUM with positive net flows predominantly in cash

▪ Strong positioning internationally

▪ Strong cash franchise & largest unit trust passive provider

H1


+11.

7%32%

15 16 17 18 19

SA client flows to int'nl SA clients to int'nl %

Wealth Management – muted markets impact domestic performance

Key drivers

International

▪ Solid earnings growth driven by strategic focus towards HNW clients & strong deposits growth

Local

▪ Subdued SA investor confidence impacting brokerage and portfolio management fees

▪ Change in investor behaviour with derisking of portfolios to lower-margin productsWealth Management International

H1

+8.4

%

0.8%

15 16 17 18 19

Liabilities Advances

H1

Liabilities & advances

NOTES:

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Client-centred innovation

Asset Management

Frictionless client interactions

Insurance

Smart technology

▪ Launched Extraordinary Life, an automated online investment portal.

▪ Introduced digital onboarding▪ Significant increase in automation of

transactions▪ Award-winning chatbot gaining traction▪ Progress on integration into Nedbank digital

platforms

▪ “Senseable”, a telematics device that connects to the geyser through an app, enabling the client to adjust temperature, track electricity usage & reduce latent damageo Innovation of the Year Award at the African

Insurance Awards▪ Celent’s Model Insurer of the Year award for

single administration policy system in the legacy & ecosystem transformation category

Wealth Management

Effortless trading

▪ Newly launched Stockbroking website offers clients enhanced security, research-based trading ideas, JSE-listed instruments & selected derivatives

▪ Significant reduction in client onboarding paperwork

▪ Enhanced NPW app with new features & functions


616

625

520

540

560

580

600

620

640

15 16 17 18 19

173

231

-

50

100

150

200

250

15 16 17 18 19

Non-life gross written premiums (Rm)

Insurance – performance impacted by higher weather-related claims

Key drivers

Life

▪ Higher sales & lower claims in credit life

▪ Growth in life VNB supported by higher sales & statutory change in commission

Non-life

▪ Higher weather-related claims

▪ Marginal growth in non-life GWP

Life value of new business (Rm)+33.5%

+1.5%

H1

H1

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Prospects for Nedbank Wealth

Creating value in a challenging environment

▪ Strong focus on cost containment as pressure on revenues persist

▪ Continue strategic focus and investing for growth in the international franchise

▪ Deliver innovative market-leading client experiences

▪ Create value through investment in systems, digital & data capabilities

▪ Continue to focus on improving Nedbank client penetration

2020 targets:

▪ ROE ≥ 30%

▪ Cost-to-income1 ≤ 60% − more challenging to achieve in the short term given pressure on NIR



Great traction on the award-winning app

Launched in July 2017

12 features added from Jul 2018 – Jun 2019

Ratings – Apple store 4.7 & Google Play store 4.4

19 348 app downloads

5 142 digitally active clients

51% active client base

NPW app rated the 2nd best app globally*

Unique features

45 915

186 193

4 915

186 193

*Source: Cutter International Research

▪ Siri payments

▪ In-app (instant | secure)

messaging

▪ Scan to pay

▪ Buy unit trusts & tax free

investments

▪ Multiple transfer lists

▪ Recurring & future dated

payments history

▪ Integration with NPW Intn’l

incl. single-signon

▪ Share trading

▪ Biometrics authentication

▪ Online purchases – switch

on/off

▪ ATM & branch locator using

augmented reality

▪ Market value of properties

bonded to Nedbank

▪ Privacy view switch

▪ Net-worth calculator &

dashboard

45 915

186 193

1

NPW app transaction volumes (000)

H1 18 H1 19

> 300%

45.9 186.2

BOOKLET SLIDE

NOTES:

NOTES:



Key drivers

Rest of Africa HE +19.6% & ROE of 9.8%

ETI (Ecobank Transnational Incorporated)

▪ HE growth of 97% to R264m reflecting:

− Strong performance from core West African operations (AWA & UEMOA).

− Recovery in CESA’s business performance.

− Nigeria business still facing headwinds.

SADC

▪ HE of R29m, down 74%, but excluding Zimbabwe & once-offs, earnings would have been up +21% to R87m:

− Adverse macroeconomic conditions, currency depreciation in Zimbabwe & once-offs.

− Operating income muted.

− Costs well managed, growing only 1%.

Rest of Africa – growth driven by the ongoing ETI recovery

Headline earnings, ROE

344 (550) (1 092)

245

293

15.3

(15.2)

(32.4)

7.6

9.8

H1 15 H1 16 H1 17 H1 18 H1 19

Headline earnings (Rm) ROE (%)

Note: ETI results are reflected a quarter in arrear in Nedbank results


Growth driven by ongoing ETI recovery

REST OF AFRICA

MFUNDO NKUHLU

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(74%)

+21%

SADC – performance affected by once-offs & difficult conditions in Zimbabwe


3%

97%

Advances

Rest of Africa Other clusters

Rest of Africa – financial highlights

Six months ended % change H1 2019 H1 2018SADCHeadline earnings (Rm) (73.9) 29 111Operating income (Rm) (3.7) 1 301 1 351PPOP (Rm) (23.5) 195 255Net interest margin (%) 7.3 7.6NIR-to-expense ratio (%) 41.9 48.1Cost-to-income ratio (%) 80.7 77.9Credit loss ratio (%) 1.08 1.09Average gross banking advances (Rm) 6.4 22 358 21 011

Average deposits (Rm) 11.5 29 976 26 889Headline economic profit (Rm) (23.2) (334) (271)Average allocated capital (Rm) (7.8) 5 145 5 581ROE (%) 1.1 4.0ETIHeadline earnings (Rm) 97.0 264 134Total headline earnings 19.6 293 245

4%

96%Headline earnings

BOOKLET SLIDE

Note: H1 2019 ROE on subsidiary in-country statutory capital: 10.6%

NOTES:

NOTES:



SADC – good deposit growth & balanced performance of key financial drivers

Average gross banking advances (Rbn) Average deposits (Rbn)

NIR (Rm)

+6%

Headline earnings (Rm), ROE (%)

▲68% ▲12%

▲6%

▲% CAGR 2015 - 2019

Cost-to-income ratio (%)

▼0.3%

1421 22

H1 15 H1 18 H1 19

1927 30

H1 15 H1 18 H1 19

374546 481

H1 15 H1 18 H1 19

82 78 81

H1 15 H1 18 H1 19

+11%

(12%)1 +4%

NIM (%)

6.57.6 7.3

15HY 18HY 19HY

▲80 bps 30 bps

40 53 70 111

29

5.0

2.7 3.0

4.0

1.1

-

1.0

2.0

3.0

4.0

5.0

6.0

-

20

40

60

80

100

120

H1 15 H1 16 H1 17 H1 18 H1 19

1 Excluding Zimbabwe: average advances +10%, average deposits +18%, NIR +6% & cost-to-income 80%.


Zimbabwe – summary of timelines & financial impact

1 Oct 18 22 Feb 19

Monetary policy statement, presented by

the Governor of the Reserve Bank of

Zimbabwe, introduces RTGS $ as a means of

exchange.

Zimbabwe gazetted two legal instruments1; resulting in recognition of RTGS $ as

legal tender & the initial exchange rate (set by

government) wasRTGS$ 2.5 to 1 US$.

24 Jun 19

Zimbabwe gazetted the Reserve Bank of Zimbabwe (Legal

Tender) Regulations, resulting in Zimbabwe recognising RTGS $ (Zimbabwe Dollar) as the sole

currency for legal tender.

31 Dec 18 30 Jun 19

Dec 17 Dec 18 ChangeHE2 R58m R142m 145%

Fx rate– average RTGS $ 1: US$ 1

RTGS $ 1: US$ 1

NAV2 R447m R170m (R277m)

Fx rate – closing RTGS $ 1: US$ 1

RTGS $ 3.88: US$ 1

Jun 18 Jun 19 ChangeHE2 R38m R3m (91%)

Fx – average RTGS $ 1: US$ 1

RTGS $ 4.34: US$ 1

NAV2 R529m R64m (R465m)

Fx rate – closing RTGS $ 1: US$ 1

RTGS $ 7.25: US$ 1

1 Exchange Control Regulations (Amendment) of 2019 (SI 32) & the Presidential Powers for (Amendment) of the RBZ Act & RTGS Electronic Dollars Regulations of 2019 (SI 33).2 Post minorities.

For the second half of 2019, the outlook for the

impact of monetary policy influences that

could impact exchange rates remains negative.

BOOKLET SLIDE

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SADC – delivering innovative market-leading client experiences

Digital solutions

Corporate internet banking solution with enhanced functionality

Improved service offerings

Client value

Launched youth offering, with zero fees

Improved value propositions

Digital solutions

Launched Nedbank Money app with additional 19 new features & benefits


Payments solutions

Clients can earn SAA Voyager Miles as they spend with card.


ZimbabweLesotho, Namibia, Malawi, Eswatini Eswatini, Namibia 1 Mozambique

1 Zimbabwe, Malawi & Lesotho rolled out in 2017 & 2018.


96 98

H1 18 H1 19

334359

H1 18 H1 19

397 386

H1 18 H1 19

5 439 7 000

H1 18 H1 19

2 5772 639

H1 18 H1 19

219 223

H1 18 H1 19

SADC – growth in non-financial metrics

Clients (# 000)

Branches (#)

Reve

nue

driv

ers

Cos

t driv

ers

Point-of-sale devices (#)

Headcount (#)

+7% +29%

ATMs (#)

+2%+2%+2%

App transactions vol (# 000)

(3%)1

1 The introduction of a 2% IMT tax by the Reserve Bank of Zimbabwe in September 2018 resulted in a reduction of mobile transactions as client behaviour changed.

1 Excluding Zimbabwe app transaction +66%

NOTES:

NOTES:



SADC – growing the wholesale client portfolio BOOKLET SLIDE

2019

2019

2019

2019

2019

2019

2019

2019

2019

2019

2019

2019

2019

2019

2019

2019

Puma Namibia Facility

Borrowing Base Facility/Facility agent

US$22m

Zuva Petroleum Zimbabwe

Letter of credit facilityUS$13.5m

Consolidated Tobacco Processors Zimbabwe

Tobaccotrade finance facility

US$15m

Debmarine Namibia

Debt and facility AgentUS$25M

National Foods Zimbabwe

Working Capital funding loan RTGS$12.5m

Mimosa Mining Zimbabwe

Medium Term Loan US$10m& Working Capital

RTGS$12m

Trafigura Zimbabwe

Letter of credit facilityUS$9m

Surface Wilmar Zimbabwe

Letter of credit facilityUS$5m

Seedco Zimbabwe

Working Capital funding loan RTGS$10m

Matekane MiningLesotho

Mining fleetAsset-based finance

M109.8m

Pure Oil Industries Zimbabwe

Letter of Credit facilityUS$2.5m

Total Zimbabwe

Letter of credit facilityUS$2.5m

Let’seng Diamonds Lesotho

Term LoanM37.5m

Royal Swaziland Sugar Corporation

Medium term-loanE200m

Masianokeng Lifestyle Centre Lesotho

Nedbond, O/D and CPFM7.0m

Eswatini SugarAssociation

Sugar stock funding loanE750m


▪ View cards linked on accounts

▪ Single app store publication with multicountry selection

▪ Touch ID login

▪ Freeze and unfreeze cards

▪ International card usage notification request

▪ Share account info with third parties via WhatsApp, message or email

▪ ‘Apply now’ requests

▪ Dashboard view of consolidated balances

▪ ATM & branch geolocation with navigation

▪ ‘Leave feedback’ & ‘Contact us’ within app

▪ Block and reorder cards

▪ Credit card ATM limit change

▪ Personal loan, Vehicle finance and Home loan instalment calculators

Digitally driven business for a digital ageNedbank Money (Africa) app published in app stores on 26 May 2019

Launched in May 2019, 13% of users converted in June 2019

19 additional features added over previous App suite

Great platform for future enhancements

UI & UX aligned to SA Money AppTM, achieving consistency

Selected / unique features

BOOKLET SLIDE

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AwardsRoA – continue to contribute to growth for the Nedbank Group

SADC – own & manage banks▪ Expect an improved performance in H2 relative to H1, with once-offs not recurring▪ Zimbabwe to continue to be a tough and challenging environment▪ A stronger control environment▪ Ongoing portfolio review

West & Central Africa: ETI – strategic investment▪ ETI outlook is flat yoy, but expect yoy growth for Nedbank due to quarterly

reporting in arrear▪ Leverage the Ecobank-Nedbank-API capability & crossborder remittance solution

for the convenience of clients

2020 targets – commitment to targets remain▪ ROE ≥ cost of equity1

▪ Cost-to-income ≤ 60% − creating scale from investments & cost optimisation

Prospects for Rest of Africa

1 Rest of Africa COE approximately 16%

Banco Único


Highlights (based on ETI’s Q1 2019)

▪ Ten consecutive quarters of profitability as recovery continues (including Q2 2019)

▪ Strong performance from West African businesses (AWA & UEMOA) – combined ROE > 30%, PAT +52%

▪ Continued turnaround in CESA business performance –ROE at 37%, PAT +92%

▪ Economic environment in Nigeria remains challenging –Ecobank Nigeria ROE at 2%, PAT -99%

▪ Transition to NAFEX rate (Nov 2018) for Nigeria & FX translation changes had adverse impact on results

▪ Return on original cost of ETI investment improved to 12.3% (H1 18: 7.9%)

ETI – ongoing recovery across all regions, except Nigeria


339

(603)

(1 162)

134 264

-1400-1200-1000-800-600-400-200

0200400600

H1 15 H1 16 H1 17 H1 18 H1 19

NOTES:

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Our environment – lower GDP growth & lower interest rates than previously forecast

Prospects into H2 2019

▪ Balance sheet

– Slightly stronger wholesale & retail advances growth

» Many clients still awaiting clarity on land expropriation, Eskom, etc

– Liquidity profile & capital levels to remain strong

▪ Income statement

– Revenue growth momentum to continue at similar levels with more meaningful increases dependent on SA economic recovery

– Growth in impairments expected to slow in H2

– Expense management remains a key focus

▪ Assets under management

– Weaker flows into higher-margin equity products

– Solid flows into lower-margin cash & passive

2018 2019 2020 2021

GDP SAFeb 19 forecast 0.8% 0.5%

1.3%1.6%1.8%

1.9%2.0%

GDP SSA (excl SA) 3.6% 4.2% 4.2% 4.1%

Inflation (CPI)Feb 19 forecast 4.7% 4.4%

4.6%5.1%5.2%

5.0%5.3%

Industry credit growthFeb 19 forecast 5.2% 5.4%

5.9%6.9%7.2%

7.7%8.2%

Ave prime interest rateFeb 19 forecast 10.1% 10.1%

10.3%10.0%10.7%

10.0%10.7%

Macroeconomic drivers1 (%)

1 All Nedbank Economic Unit forecasts at July 2019. | GDP SSA as per WEO (July 2019).


Our strategy positions Nedbank well for increased competition & higher levels of growth when SA macro improves

OUTLOOK & 2019 GUIDANCE

MIKE BROWN

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THANK YOU

Thank you


2019 financial guidance

Growth in DHEPS for full-year 2019 around nominal GDP growth [revised from ≥ nominal GDP growth]

▪ Average interest-earning banking asset growth of mid-to-upper single digits [no change].

▪ NIM below the 2018 level of 3.65% [no change].

NII

▪ Within the bottom half of our target range of 60–100 bps [no change].

▪ Around mid-single-digit growth [revised from mid-to-upper single digit growth].

▪ Around mid-single-digit growth [revised from above mid-single-digit growth].

CLR

NIR

Expenses

NOTES:

NOTES:



2020 targets – strategy in place to improve financial metrics in RBB & RoA, while maintaining good returns in CIB & Wealth

Cost-to-income ratio Return on equity1

Nedbank H1 2019

Peer average2

Nedbank 2020 target

Nedbank H1 2019

Peer average2

Nedbank 2020 target

Nedbank Group 55.4% 55% ≤ 53%4 17.9% 20% ≥ 18%

Corporate & Investment Banking 40.9% 51% ≤ 40% 19.2% 20% ≥ 20%

Retail & Business Banking 62.3% 55% ≤ 58%4 17.3% 28% ≥ 20%

Wealth 71.6% 64% ≤ 60%4 22.3% 20% ≥ 30%

Rest of Africa3 70.0% 55% ≤ 60% 9.8% 21% ≥ COE

1 Nedbank ROE target at group, excluding goodwill for comparability purposes. | 2 Peer averages exclude Nedbank and are based on Dec 2018 for ABG & SBK, Jun 2018 for FSR | CIB – ABG CIB, RMB & SBK CIB | RBB – ABG SA RBB, FNB & Wesbank, SBK SA PBB, Wealth – ABG WIMI, SBK Wealth and Liberty, excluding Liberty C:I peer average is 54%, RoA – ABG RoA, SBK RoA Legal. | 3 Rest of Africa includes ETI. COE estimated at > 16%. | 4 In March 2019 we noted to the market that our 2020 cost-to-income targets have become more challenging to achieve.

BOOKLET SLIDE


2020 & medium-to-long-term targets

MetricH1

2019Medium-to-long-term

target (MLT) 2019 outlook 1vs

2018

ROE (excl goodwill) 17.9% 5% above COE 3(≥ 18% by 2020) Around MLT

Diluted HEPS growth 3.7% ≥ CPI + GDP growth + 5% Around CPI + GDP growth

Credit loss ratio 70 bps 60–100 bps Increases to within the bottom half of our target range of 60–100 bps

NIR-to-expenses ratio 82.7% > 85% Increases, but remains below MLT

Cost-to-income ratio 2 55.4% 50–53%(≤ 53% by 2020) 2

Decreases, but remains above MLT

CET 1 CARTier 1 CARTotal CAR

11.3%12.3%14.6%

Basel III basis:10.5–12.5%

> 12%> 14%

Within target range

Dividend cover 1.99 x 1.75 to 2.25 times Within target range

1 2019 outlook compared to FY 2018 based on current economic forecasts. | 2 Cost-to-income ratio includes associate income. In March 2019 we noted to the market that our 2020 cost-to-income target has become more challenging to achieve. | 3 Target to be revised should Nedbank make future acquisitions that increase goodwill.

▲

▼

▲

▲

▲

▲▲

BOOKLET SLIDE

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Macroeconomic forecasts under Ramaphobia, Ramaphoria & Ramareality BOOKLET SLIDE

Limited structural reform▪ Fight against corruption continues▪ Ongoing debate around land, SARB

remain (no immediate resolution)▪ Ongoing policy ambiguity & limited

reforms▪ Moody’s downgrade, but discounted by

the market & search for higher yields▪ Eskom – deterioration in finance

continues with ongoing bailouts & limited progress on turn-around

Global environment less favourable than before, but still supportive▪ Sentiment swings between risk-on &

risk-off conditions

Significant improvements▪ Structural reform agenda implemented▪ Found solutions for land reform without

a negative impact on confidence ▪ More market & investment friendly

policies▪ Public finances improving▪ SA averts a Moody’s downgrade & some

ratings upgrades from 2020▪ Accelerated Eskom turnaround

Highly favourable environment▪ Synchronised growth, global trade wars

subside & commodity prices gain momentum

▪ Risk-on global conditions

Populist pressures lead to unfavourable outcomes▪ Land issue leads to rising tensions & social

discontent▪ Significant conflict with anti-Ramaphosa

faction & fight against corruption loses momentum

▪ Structural reforms fail▪ Universal sovereign downgrades – rand

under significant pressure▪ Eskom loadshedding continues & no

progress on turnaround

Adverse global conditions emerge▪ Commodity price pressures, increased

trade protection, adverse Brexit, heightened global tensions

▪ Risk-off global conditions

Domestic drivers:

Global drivers:

Ramareality(base case)

Ramaphoria(positive scenario)

Ramaphobia(high-stress scenario)

18 19 20 21 18 19 20 21 18 19 20 21


Macroeconomic forecasts under Ramaphobia, Ramaphoria & Ramareality

1 Nedbank forecasts & scenarios updated: July 2019 (Nedbank Group Economic Unit). | 2 Excludes mild-stress scenario of 20%.

BOOKLET SLIDE

Ramareality(base case)

Ramaphoria(positive scenario)

Ramaphobia(high-stress scenario)

18 19 20 21 18 19 20 21 18 19 20 21

SA GDP growth 0.8% 0.5% 1.6% 1.9% 0.7% 0.9% 2.3% 2.1% 0.8% (0.1%) (0.1%) 0.5%

Ave prime interest rate 10.1% 10.1% 10.0% 10.0% 10.1% 10.0% 9.8% 9.8% 10.1% 10.4% 10.9% 10.8%

Inflation (CPI) 4.7% 4.4% 5.1% 5.0% 4.7% 4.1% 4.0% 3.9% 4.7% 4.8% 6.4% 6.0%

Credit growth 5.2% 5.4% 6.9% 7.7% 5.2% 7.9% 10.0% 8.9% 5.2% 4.4% 3.5% 5.0%

Probability2 (%) 50% 20% 10%

NOTES:

NOTES:



32.0 33.9 37.1

08 09 H1 19

0.45 0.470.89

08 09 H1 19

1 Includes dormant account closures. | 2 Core equity tier 1.

Nedbank Group in a strong position

Number of clients (m) NIR income contribution (%) Defaulted advances (%)

CET1 ratio (%) Funding tenor (%) Coverage (%)

4.4 4.2

7.81

08 09 H1 19

39.842.2

46.5

08 09 H1 19

3.9

5.9

3.6

08 09 H1 19

8.229.92

11.3

08 09 H1 19

83%4.3%

(2.3)

1.4%

Spec

ific

Portf

olio

60.9 57.9 49.3

19.9 21.0 21.9

19.2 21.1 28.8

08 09 H1 19

ST

MT

LT Stage 1 & 2

Stage 3

BOOKLET SLIDE


5 92

1

5 76

5

4 27

7

11 7

87

13 4

9506 07 08 09 10 11 12 13 14 15 16 17 18

Nedbank Group in a strong position

16.3

4.1

20.1

5.6

06–08 14–H1 19

Wholesale Retail

0.50.6

1.4

08 09 H1 19

(28%)

Globalfinancial

crisis

Headline earnings (Rm) Loan growth (CAGR %)

NII sensitivity for 1% change in interest rates (Rbn)

CAGR13.5%

BOOKLET SLIDE

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Disclaimer

Nedbank Group has acted in good faith and has made every reasonable effort to ensure the accuracy andcompleteness 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 legislation.Forward-looking statements may be identified by words such as ‘believe’, 'anticipate', 'expect', 'plan','estimate', 'intend', 'project', 'target', 'predict' and 'hope'.Forward-looking statements are not statements of fact, but statements by the management of NedbankGroup based on its current estimates, projections, expectations, beliefs and assumptions regarding thegroup's future performance.No assurance can be given that forward-looking statements are correct and undue reliance should not beplaced on such statements.The risks and uncertainties inherent in the forward-looking statements contained in this document include,but are not limited to: changes to IFRS and the interpretations, applications and practices subject thereto asthey apply to past, present and future periods; domestic and international business and market conditionssuch as exchange rate and interest rate movements; changes in the domestic and international regulatoryand legislative environments; changes to domestic and international operational, social, economic andpolitical risks; and the effects of both current and future litigation.Nedbank Group does not undertake to update any forward-looking statements contained in this documentand does not assume responsibility for any loss or damage arising as a result of the reliance by any partythereon, including, but not limited to, loss of earnings or profits, or consequential loss or damage.


Price:book1,2 (x)

Nedbank Group – attractive relative valuation

Price:earnings1,2 (x)

8.7 8.7

13.9

10.6

23.5

8.5

NED ABG FSR SBK CPI EMbanks

1 IRESS Pro consensus at 30 June 2019. | 2 EM banks include Latam banks, Poland, Russia & Turkey (Data from JP Morgan). | All data based on 1-year forward forecasts.

1.3 1.4

2.9

1.8

5.8

1.4

NED ABG FSR SBK CPI EMbanks

5.96.7

4.2

5.3

1.6

5.8

NED ABG FSR SBK CPI EMbanks3-year forecast

EPS growth1

(CAGR %)8.8 8.2 8.9 9.3 20.9 7.4

BOOKLET SLIDE

Dividend yield1,2 (%)

2019 interim results commentary

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Households cut back on spending as increased unemployment levels, slowing income growth and rising fuel prices eroded household purchasing power. The gradual recovery in loans to households, which started in mid-2017, continued in the first half of the year. As a result, household debt burdens increased slightly, reaching 72,5% of personal disposable income in the first quarter after having receded to 71,3% in early 2018.

As a result of the ongoing uncertainty and lack of progress on structural reforms, the slump in fixed-investment activity intensified as capital outlays by public corporations, general government and the private sector contracted further. Despite these challenging conditions, loans to companies picked up slightly, off a low base, supported by the rollout of the fourth round of renewable-energy projects.

Inflation drifted moderately higher, mainly due to rising fuel prices although the impact was contained by weak demand, low food inflation and a relatively steady rand in the first six months of 2019. As a result, SARB’s Monetary Policy Committee left interest rates unchanged in the first half of 2019.

Overall conditions in the banking sector remained very challenging into 2019, with the weak economic environment resulting in subdued client activity across all categories of credit and transactional banking. Credit risks increased given pressures on household incomes and company profits.

REVIEW OF RESULTS

Nedbank Group produced a resilient financial performance in a difficult macroeconomic environment. HE increased 2,6% to R6 870m, underpinned by revenue growth including associate income (+6,3%) being ahead of cost growth (+5,5%), leading to PPOP growth of 7,0%. This was offset by the normalisation of impairments off a low base to within the bottom half of our TTC target range. These, together with the impact of buying back and cancelling seven million shares as a result of the odd-lot offer in December 2018, supported an increase in DHEPS of 3,7% to 1 411 cents and an increase in HEPS of 3,5% to 1 435 cents.

Key ratios were impacted by accounting changes and the odd-lot offer that was concluded in December 2018. IFRS 16, dealing with the accounting for leases, was implemented on 1 January 2019 and resulted in lower levels of equity and higher levels of assets and liabilities, as well as accounting changes between NII and expenses. Prior-year results were not restated. The odd-lot offer that was concluded in December 2018 had an impact on equity and shares in issue. The IFRS 9 and 15 changes implemented on 1 January 2018 are now in the base and therefore have not had an impact on comparatives.

ROE (excluding goodwill) and ROE were down on June 2018 at 17,9% and 16,8% respectively but were in line with December 2018 outcomes. ROA decreased 7 bps to 1,30% and the return on RWA decreased from 2,48% to 2,29%.

NAV per share of 17 794 cents increased 4,9%. The benefit from earnings growth was partially offset by the day 1 impact of IFRS 16 (R0,7bn), Zimbabwe currency deterioration (R0,6bn) and the odd-lot offer (R2,0bn). Excluding these, as well as the IFRS 9 and 15 impact, NAV per share increased by 7,1% yoy.

Our IFRS 9 fully phased-in CET1 and tier 1 capital ratios of 11,3% and 12,3% respectively, average LCR for the second quarter of 115,4% and an NSFR of 109,6% are all Basel III-compliant and reflect a strong balance sheet. On the back of our solid capital and liquidity position an interim dividend of 720 cents was declared, an increase of 3,6%.

2019 INTERIM RESULTS COMMENTARY

BANKING AND ECONOMIC ENVIRONMENT

Global economic conditions softened in the first half of 2019, affected by an escalation in the trade and technology war between the US and China as well as by the impact of higher US interest rates. US GDP growth remained robust, while other developed countries either posted relatively steady or slightly slower growth. Key emerging markets lost momentum, with GDP growth in China slowing noticeably, negatively affected by the impact of US trade measures. These developments adversely impacted global trade volumes, resulting in stagnant commodity prices and weaker conditions in most commodity-exporting developing countries, affecting many countries in sub-Saharan Africa. Internationally, financial market volatility increased as doubts about global growth prospects persisted and investors became more risk-averse. However, sentiment improved towards the end of the second quarter as the major central banks adopted a more dovish tone, fuelling expectations of a change in direction in US interest rates in the second half of 2019.

SA is in the early stages of a political, institutional and economic turnaround and we are operating in a very difficult and low-growth economic environment. While the turnaround has started, progress has been slow. There have been some positive developments after the national elections in May 2019 with the appointment of a new National Director of Public Prosecutions, a new SARS Commissioner and changes to some ministerial positions, including a slightly smaller cabinet, but progress on structural reforms and policy certainty has remained far too slow. Significantly more urgency is required with the implementation of structural reforms to stem the current unsustainable fiscal deterioration. If we are unable to do this, all the hard work done on maintaining our last investment grade rating from Moody’s will be in vain, at great cost to all South Africans as a result of higher inflation and higher interest rates, as well as lower growth and lower levels of employment than would otherwise have been the case. The SA economy encountered unexpected setbacks in early 2019, and real GDP contracted by a seasonally adjusted annualised 3,2% quarter-on-quarter in the first quarter. This decline in economic growth was largely a result of electricity shortages and loadshedding at a frequency and intensity not experienced since the 2008 electricity crisis, which impacted energy-intensive and export-oriented mining and manufacturing sectors. There was also pressure on the agricultural sector as a result of poor rainfall in selected parts of the country.

51 Nedbank Group – Interim Results 2019

DELIVERING SUSTAINABLY TO ALL OUR STAKEHOLDERS

Nedbank continues to play an important role in society and in the economy, and we remain committed to delivering on our purpose of using our financial expertise to do good. We contribute to the wellbeing and growth of the societies in which we operate by delivering value to our staff, clients, shareholders, regulators and society.

For staff

We currently employ 30 577 staffmembers and have paid salaries and benefits of R8,4bn over the period under review. Our bargaining unit staff received annual salary increases of 7,0% in 2019, ahead of inflation, and with management and executives receiving lower increases of between 4,0% and 4,5%, the blended average staff salaries increased by 5,4%. As part of our groupwide People 2020 programme aimed at transforming and aligning our culture and talent with our strategic objectives, our executive management programmes have been changed to be more digitally focused, with more than 95 senior leaders having participated in immersive learning experiences (the Executive Business Transformation Programme), with exposure to Silicon Cape, Silicon Savannah (Kenya) and Silicon Valley (USA). Our New Ways of Work (nWoW) practices to transform Nedbank into a more agile organisation, holistically rethinking the way we work, communicate and manage talent on our journey to creating a more high-performing culture are evident in the formation of more than 150 squads and 1 550 staffmembers working according to this new approach. We aim to increase these numbers incrementally to support an optimal agile scaling framework over the 2019 period. Our staff engagement score was strong at 75% and is 8% above industry levels. Transformation remains a key imperative to ensure Nedbank remains relevant in a transforming society and we have continued to focus on this across all levels at Nedbank, from our board of directors to all our staffmembers. Currently black representation at board level is 69%, at executive level it is 46% and for our total staff it is just more than 78%. Female representation at board level is 25%, at executive level is 46% and for total staff is 62%.

For clients

We supported our clients by advancing R94bn (2018: R82bn) of new loans to enable them to finance their homes, vehicles, education and to grow their businesses, while safeguarding R866bn of deposits at competitive rates. Our clients’ access to banking improved as we increased the total number of digitally focused branches to 366 or 62% of all outlets, while digitally active retail users increased by 17% to 1,7 million, representing 28% of all clients that have been digitally enabled. We launched new market-leading digital innovations, such as end-to-end digital client onboarding of individuals (no paper, quicker and fully FICA-enabled), together with the ability to sell a transactional account and personal loan, HeyNed (digital concierge) and API Marketplace (an open banking API platform that allows approved technical partners to create new digital solutions for clients). The Nedbank Money app has been downloaded 2,65 million times since its launch in November 2017 and, together with the Nedbank Wealth app, remained the highest-rated SA banking apps on the iOS Apple store. To address the high cost of banking services for certain clients, we launched SA's first no-frills transparent account zero-monthly-fee account, aimed at the entry-level and youth market. CIB continued to lead industry league tables in various categories, including first in M&A Investment advice (value and dealflow), and as M&A Investment sponsor (dealflow). Our asset management business, Nedgroup Investments was named Offshore Management Company of the Year for the fourth consecutive year at the Raging Bull Awards.

For shareholders

On 20 August 2019 Nedbank will celebrate its 50th year of being listed on the JSE. We were disappointed that, following a strong performance in 2018, the Nedbank share price was down 7,8% in the first half of 2019 compared with the FINI 15, which was up 3,7%. At our 52nd annual general meeting (AGM) all resolutions were passed and, following engagements with shareholders and enhancements to our remuneration practices, we were pleased that our remuneration policy and disclosure resolutions received more than 98% of votes in favour. We continued to ensure transparent, relevant and timeous reporting and disclosure to shareholders, and were honoured to be acknowledged by the Investment Analyst Society as the leader in corporate reporting in the banking sector and overall winner among JSE-listed companies. In the context of greater shareholder focus on ESG matters, we plan to engage with shareholders ahead of our 2020 AGM on both our coal-lending policy and measurement of carbon-related activities. Nedbank’s valuation metrics remain attractive with price/earnings and price-to-book ratios of 8,7 times and 1,4 times respectively and a dividend yield of 5,6% at 30 June 2019.

For regulators

We attained compliance with Basel III requirements ahead of the full compliance timelines, including a strong capital position, achieving a CET1 ratio of 11,3% after the fully phased-in day 1 impact of IFRS 9 (if we had elected to phase in like our peers in SA, our CET1 ratio would be 11,4%), an average LCR of 115,4% in the second quarter of 2019 and an NSFR of 109,6% at June 2019. We have invested over R105bn in government and public sector bonds as part of our HQLA requirements and, in doing so, remain committed to making a meaningful contribution to the countries in which we operate, thereby appropriately supporting the funding needs of governments. Cash taxation contributions across the group of R6,3bn were made relating to direct, indirect, pay-as-you-earn and other taxation. We continued to work closely with all our regulators to ensure delivery of the various regulatory programmes, including a focus on market conduct and the finalisation of the SA remediation and thematic sanctions review within anti-money-laundering (AML), combating the financing of terrorism (CFT) and sanctions legislation. Our compliance model ensures that appropriate controls are in place to enable compliance with applicable regulatory requirements. We implemented IFRS 16 on 1 January 2019, with an impact of 17 bps on our CET1 ratio.

For society

Our long-term sustainability and success are contingent on the degree to which we deliver value to society. Through the considered development and delivery of products and services that satisfy societal needs, we play our part to enable a thriving society, create long-term value, maintain trust and ensure the success of our brand. This is particularly important in the current context of SA as well as the broader African continent.


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We adopted the United Nations Sustainable Developments Goals (SDGs) as a framework for measuring delivery on our purpose. Key highlights include:

■ Quality Education (SDG 4) – Over the past three years Nedbank has provided approximately 1 484 first-year students with student loans to the value of R83,2m, with a further 1 173 students also having been granted loans to continue their studies to the value of R57,7m. During the first half of 2019 a total of R25m was disbursed to 401 first-year students, with an additional R13m granted to 232 students to continue their studies. In addition, we invested in education across a range of projects, including basic and tertiary education initiatives, graduate programmes and learnerships, as well as bursary support for our own staff and their families. We invested R54m in socioeconomic development, with more than 50% allocated to education. Our sponsorship of the Thuthuka Education Upliftment Fund supports 45 students a year and since inception we have contributed more than R23m and funded the qualification of 44 new black chartered accountants in SA.

■ Clean Water and Sanitation (SDG 6) – We provided a R550m general banking facility for Rand Water to assist in the provision of bulk potable water in SA, as well as additional finance to the Lesotho Highlands Water Project, which is of key importance in SA’s water mix. Through our support of the WWF-SA Water Balance Programme that removes alien invasive, water-hungry trees from our strategic water source areas (which will see the release of an additional one billion litres of water annually) we are effectively a net zero water user.

■ Affordable and Clean Energy (SDG 7) – At the start of the year we undertook not to provide new project financing or other forms of asset-specific financing where the proceeds would be used to develop a new coal-fired power plant, regardless of country or technology. In all renewable-energy project deals completed to date, Nedbank has arranged a total of 42 transactions, underwriting a total of R40,4bn, and has paid out R24,6bn. In the past six months R800m of our lending into property finance incorporated the installation of solar power. Nedbank also became the first SA commercial bank to launch a green bond on the JSE, raising R1,7bn to fund solar and renewable-energy projects. In our insurance business we completed the pilot phase of the geyser telemetry product: Senseable. Once launched to clients it will provide energy savings and consequently reduce carbon emissions.

■ Decent Work and Economic Growth (SDG 8) – The Nedbank Stokvel Account, which was launched in 2018 to provide safe, easy and effective ways for groups of individuals to pool their savings and grow their money, has attracted over 3 500 stokvel groups with more than 100 000 members. We continued to participate in the CEO Initiative, working with government, business and labour towards a more inclusive SA society. In April 2019 we activated our commitment to the Youth Employment Service (YES), in which corporate SA aims to provide internship opportunities for more than one million South Africans. This is estimated to translate into an annual investment of approximately 1,5% of net profit after tax (SA business). We have placed more than 3 300 previously unemployed youth internally and through sponsored placements to become the largest corporate contributor to date and we encourage other SA corporates to follow our example.

■ Industry, Innovation and Infrastructure (SDG 9) – In addition to funding water and energy infrastructure, we participated in the loan facility for Ethiopian Railways to assist with the construction of a 404 km strategic railway corridor linking passengers and freight in the northern, central and eastern regions of Ethiopia.

■ Reduced Inequalities (SDG 10) – We are driving financial inclusion and addressing the cost of banking services to certain clients through the launch of three zero-monthly-fee accounts: Pay As You Use (PAYU), Unlocked.Me and MobiMoney. From 1 April 2019 fees for the PAYU Account were reduced from R5,50 monthly to zero. Through MobiMoney, Nedbank is creating a first banking home for many South Africans, directly addressing the key concerns relating to financial inclusion by using unstructured supplementary service data (USSD) capability and saving clients time and money through a quick and frictionless mobile onboarding journey. Nedbank Private Wealth SA continues to assist clients to do good with their wealth, and in recognition won in the ESG/ Social Impact Investing category in the Euromoney Private Banking and Wealth Management Survey for the fourth consecutive year. In our own operations, we increased our BBBEE contributor status to level 1 as measured under the Amended Financial Sector Code (FSC), gazetted in terms of section 9(1) of the BBBEE Act, 53 of 2003, and have now maintained level 2 or higher for 10 consecutive years. Lastly, we raised R0,7m in support of the efforts of the International Federation of Red Cross and Red Crescent Societies (IFRC) in alleviating the challenges and suffering for millions of residents of Mozambique, Zimbabwe and Malawi after the devastating cyclone Idai in March. We donated R1 million to the SA Red Cross Society to assist with Durban flood relief efforts.

■ Sustainable Cities and Communities (SDG 11) – We disbursed R660m towards the development of new affordable housing in commercial-property finance. We also provided funding of R277m for the construction of buildings that conform to green-building standards. Nedbank is partnering with the Department of Human Settlements to assist first-time homebuyers qualifying for the government’s Finance Linked Individual Subsidy Programme (FLISP) with the application process. This is making it easier for our clients to access a subsidy that can be used to pay the deposit on a house or to decrease the size of their home loans.

■ Responsible Consumption and Production (SDG 12) – A total of 78% of our procurement spend was used to support local SA business, up from 75% in H1 2018.

■ Life on Land (SDG 15) – Nedbank has committed R25m over the next five years towards safeguarding critical water source areas, biodiversity hotspots and rural livelihoods. The money will be spent in partnership with WWF South Africa, which has a long-term working relationship with Nedbank. For the past eight years Nedbank and WWF have partnered to support sustainable farming across South Africa. The next five-year phase will be scaled up to secure water source areas, strengthen sustainable local economies and improve rural livelihoods to see more people living in harmony with nature.

CLUSTER FINANCIAL PERFORMANCE

Nedbank Group delivered HE growth of 2,6% to R6 870m and an ROE (excluding goodwill) of 17,9%, well above our estimated cost of equity of 14,2%. ROEs in most of our SA-focused clusters declined from June 2018 as HE growth was muted in a difficult environment, and capital levels increased in line with advances growth.


Change HEROE (excluding

goodwill)

(%) (Rm) (%)

Jun 2019

Jun 2018

Jun 2019

Jun 2018

CIB 0,1 3 298 3 296 19,2 20,1RBB 0,3 2 590 2 581 17,3 18,6Wealth (12,3) 455 519 22,3 25,4RoA 19,6 293 245 9,8 7,6Centre > 100 234 55 Group 2,6 6 870 6 696 17,9 18,4

CIB HE was flat at R3,3bn, while delivering an ROE of 19,2%. Growth was impacted by normalisation of the CLR to 16 bps off a low prior-year base of 1 bps, offsetting solid revenue growth underpinned by faster growth in banking advances and good growth in commission and fees. Notwithstanding the increase in CLR to within the bottom end of CIB’s TTC target range, credit quality remained sound, supported by proactive risk management and close monitoring and management of exposures to stressed sectors of the economy, such as cement, construction, retail, agriculture and selected state-owned enterprises (SOEs).

HE in RBB increased 0,3% to R2,6bn and ROE was 17,3%. The growth momentum in retail advances was maintained and transactional NIR growth was solid, supported by 4,9% growth in main-banked client numbers. This was offset by an increase in the CLR from the low prior-year base to just below the cluster’s TTC target range. Low expense growth reflects the ongoing benefit of optimising processes and operations, including headcount reductions of 1 300 yoy (including temporary staff), largely through natural attrition combined with some internal staff transfers.

Nedbank Wealth HE declined 12,3% to R455m and delivered an ROE of 22,3%. The results were impacted by a decline in earnings across all business units due to subdued investor confidence, which impacted investment-related revenues, and higher weather-related insurance claims.

RoA’s HE increased by 19,6% to R293m and ROE increased off a low base to 9,8% as our share of associate income from our investment in ETI continued to increase. The SADC business performance was affected by continued macroeconomic pressures across the region, monetary policy and currency changes in Zimbabwe and contagion effects of the difficult SA economy. SADC HE includes the negative impact of once-off accounting adjustments of R61m.

The performance in the Centre reflects the positive impact of the release of R50m (R36m after tax) central provisions as the underlying risks for which these central provisions had been raised, emerged in the cluster results (none released in the first half of 2018); fair-value gains of R59m (after tax) compared with a fair-value loss of R62m (after tax) in the first half of 2018; and a final postretirement medical aid (PRMA) credit amounting to R255m (after tax) compared with a R180m (after tax) credit in the first half of 2018, following finalisation of outstanding tax matters.

FINANCIAL PERFORMANCE

Net interest incomeNII increased 5,8% to R14 819m, supported by AIEBA growth of 8,7%. The AIEBA growth was driven by solid growth in advances and higher levels of HQLA held in the banking book.

NIM decreased by 10 bps to 3,57% from 3,67% in June 2018. This decrease was primarily driven by a 2 bps negative endowment impact due to lower net endowment balances, partially offset by the slightly higher average prime rate in the first half of 2019 of 10,3% compared with 10,1% in the first half of 2018. Negative asset pricing and mix contributed a net 5 bps decline, with pressure most evident in Personal Loans. This was due to the implementation of IFRS 9 and the impact of NCA pricing caps. Competitive pricing on wholesale advances was partially offset by higher-yielding retail advances having grown faster than wholesale advances. Higher levels of low-yielding HQLA resulted in a negative impact on margin of 2 bps and the implementation of IFRS 16 on 1 January 2019 decreased NIM by 4 bps. These decreases in margin were partially offset by improved pricing on deposits, which added 3 bps.

Impairments charge on loans and advances As expected, impairments increased off the low prior-year base. The impairment charge increased 40,1% to R2 543m. The CLR increased 17 bps to 0,70% and moved into the lower half of the group’s TTC target range of 60 bps to 100 bps.

CLR (%)

Banking advances

(%) Jun 2019

Jun 2018

Dec 2018

TTC target ranges

CIB 46,5 0,16 0,01 0,04 0,15–0,45RBB 46,2 1,28 1,06 1,06 1,30–1,80Wealth 4,2 0,14 0,15 0,13 0,20–0,40RoA 3,1 1,08 1,09 0,51 0,75–1,00Group 100,0 0,70 0,53 0,53 0,60–1,00

Impairments in CIB increased off a low base, with its CLR at 16 bps now within the lower end of its TTC target of 15 bps to 45 bps. Credit rating migrations resulted in increased stage 1 and 2 impairments. While we continue to see stress in some sectors, particularly in cement, construction, retail, agriculture and selected SOEs, the CIB CLR still reflects a high-quality book. The outcome of our proactive credit processes resulted in a reduction in stage 3 impairments due to the rerating of clients in the construction, cement and commercial-property sectors from stage 3 into stage 2. Stage 3 impairments are individually determined in CIB and are dependent on the value of the security we hold for each exposure. Approximately 78% of stage 3 impairments are concentrated in 10 counters.

RBB’s CLR at 128 bps increased to just below the bottom end of its TTC target range of 130 bps to 180 bps and reflects increased levels of default and therefore stage 3 impairments, given the impact of a macroeconomic environment that remains challenging for consumers.

The group’s central provision decreased by R50m to R100m as the underlying risks for which these central provisions had been raised, emerged in the clusters. The remainder of the provision is held for emerging risks not yet reflected in impairment models or relates to elevated risks for certain wholesale clients and concerns around exposures in selected countries in the rest of Africa.

Stage 3 (defaulted) advances increased 17,8% yoy to R26,8bn, inclusive of a R1,9bn increase attributable to an extension of our point of writeoff in RBB in the December 2018 results to comply with IFRS 9. While stage 3 advances in CIB increased 4,9% yoy, they have declined 5,9% since December 2018 on the back of client resolutions across construction, cement, commercial property and aviation segments, partially offset by new defaults in commercial property and retail. Stage 3 defaults in RBB have increased 10,9% since December 2018 as the weakened economic environment placed additional stress on


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the consumer. As a result, defaults increased in MFC (vehicle finance), Business Banking and Unsecured Lending.

The stage 1 and 2 coverage ratio declined marginally to 0,89% (December 2018: 0,91%) as portfolio provisioning levels increased largely in line with advances growth. The stage 3 coverage ratio increased from 35,2% (June 2018) and 36,8% (December 2018) to 37,1% given the mix impact from higher levels of RBB stage 3 advances. RBB stage 3 coverage was 44,8% as a result of increased levels of provisioning in line with higher defaults in Unsecured Lending. Stage 3 coverage for CIB increased to 12,8%.

Non-interest revenue NIR growth of 5,2% to R12 874m was supported by solid gains in main-banked clients across our retail and wholesale businesses in SA and the rest of Africa, although client transactional activity remained subdued, impacted by weak business and consumer confidence.

■ Commission and fee income grew 5,0% to R9 076m as RBB reported solid underlying retail transactional NIR growth of 6,8%, supported by main-banked client growth across entry-level, middle-market, professional and small-business client segments. CIB delivered strong growth, benefiting from transactional client wins and high levels of deal activity.

■ Insurance income was flat at R897m, due to higher weather-related claims offsetting good sales volume growth and lower claims in the credit life portfolio.

■ Trading income increased 3,7% to R2 174m, notwithstanding a decrease in overall market volumes and low levels of volatility.

■ Fair-value gains of R82m in the Centre were attributable to volatility in the hedged interest rate risk positions in the group’s banking book, where movements between the designated hedged exposures and the underlying hedges culminated in a net gain as opposed to losses of R86m in the previous period.

ExpensesExpenses grew 5,5% to R15 565m. Higher levels of amortisation from our IT and digital investments were offset by optimisation initiatives and once-off cost benefits. IFRS 16 replaced straight-line operating lease expenses with a depreciation charge for the leased asset and an interest expense on the lease liability (in NII). The underlying movements included:

■ Staff-related costs increasing at 3,3%, following: oo average annual salary increases of 5,4% and a reduction

in staff numbers of 1 015 since June 2018; oo a 9,9% decrease in STIs in line with the group’s financial

performance relative to the high base in the first half of 2018 and a 7,4% increase in LTIs as expected vesting ratios have progressively improved due to performance against corporate performance targets; and

oo finalisation of the settlement with our staff with regard to PRMA obligations and benefits, resulting in a final pretax credit of R354m, in respect of a reversal of actuarially estimated liabilities previously expensed. In the first half of 2018 an initial pretax credit of R250m was raised.

■ Computer processing costs increasing 13,9% to R2 311m, driven by the expected increases in software amortisation (+28,2%), incremental software licence costs and higher volumes, offset by reduced network-related costs as a result of efficiency savings.

■ Fees and insurance increasing 13,5% as a result of association fees driven by card-related volume increases and fees related to digital innovations.

■ Other cost lines are being well managed, with increases below inflation. In addition, we unlocked cumulative benefits of R826m from process enhancements and implementing our Target Operating Model. Other costs also include Nedbank’s participation in the YES initiative to the value of R56m.

The group’s growth in expenses of 5,5% was below total revenue and associate income growth of 6,3%, resulting in a positive JAWS ratio of 0,8% and an cost-to-income ratio of 55,4%, compared with 55,8% in June 2018. The JAWS ratio, excluding associate income, was a positive 0,05%.

Earnings from associatesAssociate income includes R381m (H1 2018: R247m) relating to ETI as a result of ETI reporting an attributable profit in the fourth quarter of 2018 and the first quarter of 2019, in line with our policy of accounting for our share of ETI’s attributable earnings a quarter in arrear. The total effect of ETI on the group’s HE was a profit of R264m (H1 2018: R134m), including the R117m impact of funding costs.

Accounting for associate income, together with Nedbank’s share of ETI’s other comprehensive income and movements in Nedbank’s FCTR, resulted in the carrying value of the group’s strategic investment in ETI decreasing from R3,2bn at 31 December 2018 to R2,9bn at 30 June 2019. ETI’s listed share price on the Nigerian Stock Exchange decreased 21,4% during the first half of 2019, which resulted in the market value of the group’s investment in ETI (at the NAFEX rate) decreasing to R2,3bn at 30 June 2019. In context, the Nigerian banking index declined by 8,0% during the period, reflecting general pressure on Nigerian bank share prices.

Due to the prolonged decline of ETI’s listed share price below its carrying value, Nedbank reviewed its impairment provision at 30 June 2019. Management’s value-in-use analysis supports the current carrying value of our investment. Our position will be reassessed again at year-end.

The payment mechanism for industrywide infrastructure costs of the cash-processing supplier to SA banks has now been resolved. As a result, associate losses were not repeated in the first half of 2019, however, operating expenses increased by R41m.

STATEMENT OF FINANCIAL POSITION

CapitalThe group remains well capitalised at levels significantly above the minimum regulatory requirements. The CET1 ratio of 11,3% was impacted by 17 bps as a result of the implementation of IFRS 16 on 1 January 2019 (R658m reduction in equity and R3,4bn increase in RWA), the ongoing investment in software development costs as part of the group’s Managed Evolution programme, the adverse impact of changes in foreign currency translation reserves and RWA migration in certain credit portfolios.

The total tier 1 CAR was positively impacted by the issuance of additional tier 1 instruments totalling R1,6bn. This was offset by the further grandfathering of old-style preference shares (R531m) in January 2019 in line with the Basel III transitional arrangements. The total CAR was further impacted by the redemption of R2,2bn tier 2 capital instruments (NED 15 and NED 16) and the issuance of new-style tier 2 capital of R2,5bn in line with the group’s capital plan.


Basel III (%)Jun

2019Dec

2018Jun

2018

Internal target range

Regulatory minimum1

CET1 ratio 11,3 11,7 12,4 10,5–12,5 7,5Tier 1 ratio 12,3 12,5 13,2 > 12,0 9,25Total capital ratio 14,6 14,8 15,6 > 14,0 11,5

(Ratios calculated with full IFRS 9 phase-in and include unappropriated profits.)1 The Basel III regulatory requirements exclude any idiosyncratic or

systemically important bank minimum requirements.

Funding and liquidity Optimising our funding profile and maintaining a strong liquidity position remain a priority for the group.

The group’s three-month average long-term funding ratio was 28,8% for the second quarter of 2019, supported by the successful capital market issuances of R1,6bn AT1, R2,5bn tier 2 capital and R4,5bn senior unsecured debt, which included the issuance of Nedbank’s inaugural green bond (R1,7bn) used to finance renewable-energy projects, with Nedbank being the first commercial bank in SA to issue such an instrument.

The group's June 2019 quarterly average LCR of 115,4% exceeded the minimum regulatory requirement of 100% effective from 1 January 2019, representing the end of the Basel III LCR phase-in from a minimum regulatory requirement of 60% in 2015. To ensure ongoing compliance Nedbank maintains appropriate operational buffers designed to absorb seasonal and cyclical volatility in the LCR.

Nedbank Group LCRJun

2019Jun

2018Dec

2018

HQLA (Rm) 171 909 148 675 162 678Net cash outflows (Rm) 148 985 139 043 148 694 Liquidity coverage ratio (%)² 115,4 106,9 109,4Regulatory minimum (%) 100,0 90,0 90,0

² Average for the quarter.

Further details on the LCR are available in the Additional information section of the condensed consolidated interim financial results.

Nedbank’s portfolio of LCR-compliant HQLA increased by 15,6% to a June 2019 quarterly average of R171,9bn. Looking forward, growth in the HQLA portfolio will be more aligned with balance sheet growth, without the incremental HQLA growth requirements that have emanated from the LCR phase-in of minimum regulatory requirements since 2015. The HQLA portfolio, together with Nedbank’s portfolio of other sources of quick liquidity, equates to total available sources of quick liquidity of R218,3bn, representing 19,8% of total assets.

Nedbank exceeded the minimum NSFR regulatory requirement of 100% effective from 1 January 2018 and reported a June 2019 ratio of 109,6% compared with the December 2018 ratio of 114,0%. The focus going forward will be on achieving continued NSFR compliance within the context of balance sheet optimisation.

Loans and advancesLoans and advances increased by 6,5% to R759,1bn, driven by continued solid growth in RBB and an increase in CIB banking advances growth.

Loans and advances by cluster are as follows:

Rm

Yoy change

(%) Jun 2019 Jun 2018 Dec 2018

CIB 5,5 364 711 345 783 358 639Banking activities 6,0 341 909 322 492 335 002Trading activities (2,1) 22 802 23 291 23 637RBB 7,6 339 416 315 516 326 763Wealth 0,8 31 331 31 089 31 111RoA 1,7 22 497 22 123 21 037Centre³ > 100 1 136 (1 843) (1 243)Group 6,5 759 090 712 668 736 305

³ Intercompany eliminations.

CIB loans and advances grew 5,5% to R364,7bn. The banking book increased 6,0%, driven by a strong pipeline conversion and momentum from the second half of 2018, partially offset by early repayments. Property Finance in CIB decreased 0,7% to R142,8bn, impacted by increased competition and muted industry growth in a difficult commercial-property market. The CPF portfolio contains good-quality collateralised assets with low loan-to-value ratios and is managed by a highly experienced property finance team.

RBB loans and advances grew 7,6% to R339,4bn, supported by growth across all asset classes in line with our risk appetite and selective origination strategies. Business Banking grew advances 10,4%, due to an increase in new-loan payouts coupled with an increase in client drawdowns of existing facilities as well as new-client acquisitions. MFC (vehicle finance) advances increased 7,1% as business volumes remained robust despite a muted new-vehicle sales market. Unsecured Lending grew 10,9% as a result of product and process enhancements, mostly through digital channels, driving increased takeup. Card advances increased 5,1% in line with our transactional banking strategy. Residential-mortgage loans grew 3,4%, slightly ahead of the industry.

DepositsDeposits grew 8,1% to R865,8bn, with total funding-related liabilities increasing 7,9% to R922,1bn, while the loan-to-deposit ratio declined to 87,7%.

RBB, Wealth and CIB grew deposits faster than nominal GDP with growth rates of 7,9%, 8,4% and 11,3% respectively, in line with Nedbank’s objective of growing the retail and commercial franchises. RoA deposits declined 3,3%, largely driven by the depreciation of the Zimbabwean currency versus the rand. Growth in RoA deposits, excluding Zimbabwe, was 4,8%.

Transactional deposits increased 10,3% in line with Nedbank’s strategy of growing the transactional banking franchise. Call and term deposits grew 5,7%, partly offset by marginal decreases in savings and fixed deposits. NCDs and other deposits, which include structured deposits, grew 10,7% and contributed positively to managing Nedbank’s contractual longer-term funding ratio. Foreign currency liabilities, which represent only 3,0% of Nedbank’s total deposits, increased 41,0% off an abnormally low base observed in June 2018 and are largely matched against foreign currency assets, resulting in an insignificant foreign currency liquidity mismatch.


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Group strategic focusDuring the first half of 2019 we continued to focus on delivering on our five strategic focus areas, which are designed to create market-leading client experiences delivered through technology and people and as a result drive sustainable earnings growth and improve ROE. We made good progress in delivering market-leading CVPs and digital innovations. This focus enabled us to grow revenues and unlock operating efficiencies. Our strategic enablers – which include technology investments (with our Managed Evolution IT strategy and Digital Fast Lane (DFL) as key components), our people and our brand – are delivered through process and operational excellence, our target operating model and by embracing nWoW. This is enabling us to create a more client-focused, agile, competitive and digital Nedbank.

■ Delivering innovative market-leading client experiences oo A key highlight in the first six months of the year was

the operationalisation of Eclipse, our new platform that enables simplified digital client onboarding for individual clients by allowing them to open a FICA-compliant account through our staff- and self-assisted channels. The staff-assisted channel was rolled out to all frontline users in RBB. Client and transactional product onboarding for individual clients are now following the full end-to-end process on this platform and resulted in the following benefits: client-centered onboarding (once for life), single onboarding foundation for most of our core products (transactional account and personal loans delivered in the first half of 2019), automated front-, middle- and backoffice processes (reduced account opening times and disbursals), digital FICA, biometrics and signing of contracts (no paper) and lower cost of client onboarding. The web and app self-service channels are expected to be rolled out to clients in the second half of 2019, along with juristic client onboarding.

oo The Nedbank Money app, which makes banking more convenient for our retail clients, has been downloaded 2,65 million times, with more than 668 000 clients having used it actively since November 2017, representing a 25% penetration of downloads. Building on our capability of rolling out new functionality on our apps, we introduced a market-first lifestyle capability, HeyNed, a digital concierge that gives clients a 24/7 personal assistant in their pockets. The Nedbank Private Wealth app, which ranked second-best globally by Cutter Associates International Research, increased app downloads by 28% yoy. Client ratings for iOS and Android Nedbank apps remained at the top end among its SA banking peers. MobiMoney, a mobile-based account with zero monthly fees that anyone with a valid SA identity number can open anywhere in seconds, attracted more than 170 000 users, up 174% yoy.

oo Unlocked.Me (an account with zero monthly maintenance fees) for the youth segment, which was launched at the start of 2018, has slowed down losses of main-banked clients in this segment as 48 000 accounts have been sold to date.

oo Our Stokvel Account, which offers members of stokvels up to 10% discount at our retail partners, burial benefits of R10 000 per member for only R15 a month, zero transaction fees and good interest rates, has attracted over 3 500 stokvel groups since its launch in March 2018, representing more than 100 000 members. We have enhanced our digital onboarding process to enable account opening on any USSD-enabled phone, catering for all cellphone users.

oo MyPocket, a free budgeting and savings pocket linked to any Nedbank transactional account, was launched during the period. It offers clients up to 10 savings pockets with each dedicated to a specific saving goal such as daily expenses and emergencies. Clients earn more interest than with a normal savings account and have instant access to their money – no notice period is required to access funds.

oo The Karri app has continued to achieve exponential growth throughout the first half of the year, with strong growth in both active users and transaction value and volume. The payment app is now used in more than 340 schools and has achieved mostly five-star reviews in app stores.

oo As far as our integrated channels are concerned, we have converted 62% of our outlets to new-image digital branches to date. The introduction of new channels such as chatbots and robo-advisors will continue to enhance client experience and increase the efficiencies of our contact centre and web-servicing capabilities.

oo Nedbank was the first bank in Africa to launch an application programming interface (API) platform that is aligned with the Open Banking Standard. The Nedbank API Marketplace is an easy-to-use, secure offering that allows approved partners to create innovative and disruptive solutions that put client experience first. By using Nedbank API Marketplace, approved partners can leverage the bank’s data and financial capabilities to integrate with our standard, secure and scalable APIs.

oo In 2018 Nedbank Insurance was the first insurer in SA to have chatbot functionality. The business was recognised by Celent as the Model Insurer of the Year in the category legacy and ecosystem transformation for our single-policy administration system that was completed in August 2018.

oo Asset Management introduced Extraordinary Life™, an automated online investment portal. The business launched digital onboarding and automated 50% of all transactions.

oo With the foundations put in place through Managed Evolution (our system and technology platform transformation), digital enhancements and nWoW we are delivering ongoing benefits and enhanced client service. The second half of 2019 will see the launch of the first phase of our new and exciting loyalty and rewards solution offering triple benefits (incentives for better money management, earning rewards and doing good for society); as well as further rollout of chatbots, robo-advisors and software robots (robotic process automation).

■ Growing our transactional banking franchise faster than the marketoo Our SA retail main-banked client numbers have

grown yoy by 4,9% to 2,9 million, driven largely by growth in the entry-level, middle-market, professional and small-business segments and supporting solid underlying retail transactional NIR growth of 6,8%. The 2018 Consulta survey estimated Nedbank’s share of main-banked clients at 13,1%, up from 12,7% in 2017, as we aim to reach a share of more than 15% by end 2020. Although this survey is done only once a year, our internal POS data shows continued growth in main-banked market share.


utilisation to greater than 95% (from the current 88%), by enabling flexible office constructs to support more dynamic ways of work, while creating further value and cost reduction opportunities.

oo Our Target Operating Model recorded cumulative savings of R826m to June 2019, with the aim of generating a cumulative R1,0bn pretax benefits for Nedbank by 2019 and a cumulative R1,2bn by 2020, as disclosed in the corporate performance targets in our long-term incentive scheme.

■ Managing scarce resources to optimise economic outcomes oo We maintained our focus on growing activities that

generate higher levels of EP, such as transactional deposits and transactional-banking revenues.

oo Our selective origination of personal loans, home loans and commercial-property finance has proactively limited downside credit risk in this challenging operating climate.

oo During the first half of 2019 we embedded our commitment to the United Nations SDGs, which will see lending flowing into targeted areas that contribute to a better society. A key example is our renewable-energy funding solutions, where R24,6bn has been drawn as part of a R40,4bn of commitment to the SA Department of Energy’s renewable-energy independent power producer procurement programme. We also became SA’s first commercial bank to launch a green bond on the JSE.

■ Providing our clients with access to the best financial services network in Africaoo In Central and West Africa, where we have adopted

a partnership approach, Ecobank Transnational Incorporated (ETI) remains an important strategic investment for us by providing us with access to dealflow in Central and West Africa and our clients with access to a pan-African transactional banking network across 36 countries. ETI has reported 10 consecutive quarters of profit to 30 June 2019 and is making good progress with its transactional-banking and digital strategy while optimising its cost base. Asset quality and risk management remain key priorities for the ETI board and executive. The credit loss experience has improved and the movement towards risk appetite in the key risk metrics continues, while management remains committed to resolving legacy risk matters. We continue to be supportive of ETI’s endeavours to deliver an ROE of more than its COE over time. For the first quarter of 2019 ETI achieved a strong performance from core West African operations and an improved performance in the Central, Eastern and Southern Africa (CESA) business, while the economic environment and ETI’s performance in Nigeria remained challenging. Through our collaboration more than 110 Nedbank wholesale clients are banking with ETI across the continent in countries where Nedbank is not present. Our gross return on the original cost of our ETI investment improved to 12,3%.

oo In SADC, where we own, manage and control six banks, we continue to build scale and optimise costs. To drive digital and transactional business we launched the Nedbank Money app in Namibia, Eswatini, Malawi and Lesotho, leveraging off the Nedbank Money app platform in SA. Excluding Zimbabwe, where local tax rules and the economic environment have reduced usage, there has been a continual increase in the use of digital channels. Client numbers grew by 7,4%, while the number of

oo Our SADC businesses grew their client base by 7,4% to 359 000, supporting NIR growth of 6,3% (excluding Zimbabwe) as the newly launched products and digital innovations started delivering benefits. NIR growth in the SADC subsidiaries was down 11,9%.

oo Our integrated model in CIB enabled deeper client penetration and increased cross-sell, resulting in 16 primary-bank client wins in the first six months. This supported fee and commission growth in CIB of 7,8%.

■ Being operationally excellent in all we do oo Cost discipline remains an imperative as we balance

investment with growth. We have ongoing initiatives to optimise our cost base. These include the reduction of our core systems from 250 to 112 since the inception of the Managed Evolution programme, and we are well on our way to reaching a target end state of less than 60 core systems by 2020. The rationalisation, standardisation and simplification of core banking operating systems enables reduced infrastructure, support and maintenance costs, as well as reduced complexity and increased agility in adopting new innovations. The time and cost of bringing new products and services to market have been reduced significantly as many of the foundational capabilities are built into our onboarding and servicing programmes. Overall, investments in various foundational IT programmes are either complete or nearing completion and we expect IT cashflow spend to peak in 2019 and capitalised IT costs to peak at just above R9bn in 2020.

oo During the first half of 2019 additional self-service options for functions that were available previously only in branches or through staffed channels were released on the Nedbank Money app and the new Nedbank Online Banking site, taking the total digital functions to 86 (compared with 42 in the first half of 2018). We also deployed 411 self-service kiosks across our branch network, enabling clients to undertake a range of self-service transactions, including ATM limit changes and overseas travel notifications. This digitisation of services in RBB has enabled us to reduce branch teller volumes by 23% and branch floor space by 37 155 m² to date, and we plan to achieve more than 47 000 m² of optimisation by 2020 (equating to approximately 20% of our branch floor space in 2014 when we started the journey). Over the past 12 months we reduced total group headcount by 1 015 (mainly through natural attrition) and optimised our staffed points of presence by closing 14 points of presence. Through our Intelligent Depositor devices we now process more than one million deposits and more than 335 000 requests for bank statements monthly, things that previously could be done only over the counter in a branch. Self-service cash deposit volumes increased to 71%, up from 58% in the first half of 2018.

oo We implemented 92 software robots to date (robotic process automation), up from 51 in H1 2018, to enhance efficiencies and reduce processing errors in administratively intense processes.

oo Through our strategy of consolidating and standardising corporate real estate, our number of campus sites (offices) decreased from 31 to 27 over the year, with a longer-term target of 23. Since 2016 we have saved 45 000 m² (over and above the 37 155 m² saved in our branches). In the next four years we will continue to optimise the portfolio by enhancing workstation


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After the 25 bps cut in July 2019 interest rates are forecast to remain flat until the end of 2022 (with short-term downside risk) on a benign inflation outlook, with cost push pressures kept in check by the absence of any demand pressure on prices.

SA’s banking system remains sound, liquid and well capitalised. The operating environment remains difficult, but the moderate upward trend in credit demand is forecast to continue in the second half of the year, supported by slightly easier monetary policy, some recovery in consumer spending and ongoing investment in the renewable-energy sector.

ProspectsOn the back of the group’s performance in the first half of 2019 and slower-than-expected SA GDP growth, we have updated our guidance on financial performance and currently expect the following for the full year 2019:

■ Average interest-earning banking assets to grow at upper single digits (no change).

■ NIM to be below the 2018 level of 3,65% (no change). ■ CLR to be within the bottom half of our target range of

60 bps to 100 bps (no change). ■ NIR to grow around mid-single digits (revised from

mid-to-upper single digits). ■ Expenses to increase around mid-single digits (revised from

slightly above mid-single digits.

Growth in DHEPS for the full 2019 year has accordingly been revised slightly to around nominal GDP growth (from at or above nominal GDP growth).

At the start of 2018 we set ourselves specific 2020 targets of an ROE (excluding goodwill) of greater than or equal to 18% and a cost-to-income ratio of lower than or equal to 53% as a pathway to ongoing and sustainable improvements in the key metrics that support shareholder value creation. Given resilient earnings, the impact of IFRS changes and the odd-lot offer, which reduced equity, we remain confident that we should meet our ROE (excluding goodwill) target on a sustainable basis. As previously disclosed, while we remain committed to our cost-to-income ratio target, it has become more challenging to achieve. This is the result of a combination of weaker-than-anticipated economic growth, primarily resulting in slower growth in wholesale advances and retail transactional activity; lower-than-expected interest rates (including the 25 bps cut in July 2019); IFRS changes impacting the shape of the income statement and negatively impacting the cost-to-income ratio; new costs relating to YES, deposit insurance and Twin Peaks; and a decision to increase our investments in platform-related activities in RBB as we continually evolve our business model to underpin future growth. Our medium-to-long-term targets have not changed from what we published in 2018. The current outlook for these targets in 2019 is as follows:

point-of-sale devices increased by 29% to 7 000. Up to 30 June 2019 Zimbabwe had an insignificant impact on the group’s results as it made a profit of R3m (at an average RTGS dollar exchange rate of 4,34) compared with a profit of R38m in the first half of 2018. The NAV of Nedbank’s share of the Zimbabwe business after FCTR losses was R64m at 30 June 2019 (at a RTGS dollar exchange rate of 7,25) and represents 0,1% of the total Nedbank Group NAV. For the second half of 2019, we remain cautious of the impacts of monetary policy influences which could further impact RTGS dollar rates.

Economic outlookThe outlook for the global economy remains uncertain. Hopes of some resolution in the trade war between the US and China have grown as talks between the countries having resumed, but recent additional tariff announcements by the US are concerning. Following a recent cut, investors are also counting on further easing in US interest rates to support global sentiment and activity. Recent indicators suggest that underlying conditions have either stabilised or improved slightly in most major economies. However, the IMF expects softer global growth of 3,3% in 2019, down from 3,6% in 2018. Growth in both advanced and developing countries is forecast to moderate slightly to 1,8% and 4,4% respectively. Encouragingly, sub-Saharan Africa is still expected to fare slightly better, with growth forecast at 3,5% in 2019, up from 3,0% in 2018.

When we started this year, our forecast for SA GDP growth in 2019 was to improve off the low 2018 base of 0,8% to around 1,3%. In April 2019 we revised this GDP growth forecast down to 0,9% given, in particular, our estimate of the impact of loadshedding in the first quarter of 2019. After the release of the worse-than-expected SA GDP numbers in the first quarter of 2019 we have again revised our forecast for GDP growth in 2019, now to only 0,5%. This is less than our population growth rate, which means that on average all South Africans are getting poorer. Economic conditions in SA are expected to remain subdued and challenging, but some improvement is expected off a low base in the quarters ahead and the SA economy should perform slightly better in the second half of 2019.

The public sector’s finances are too weak to increase either consumption or capital expenditure. Added to this, the possibility of a SA sovereign credit risk ratings downgrade to below investment grade by Moody’s has increased due to government’s weak fiscal position and the impact of taxpayer funded bailouts of many struggling SOEs (particularly Eskom). Fixed investment is forecast to stay low as underlying conditions remain unfavourable, given spare capacity in many industries, unreliable electricity supply and uncertainty over prices, high domestic cost structures and continued policy uncertainties. Consumer spending is expected to grow at a moderate pace, but any upside will be contained by limited job creation, effects of fading wealth and relatively high debt burdens.


MetricJun 2019

performance Full-year 2019 outlook Medium-to-long-term (MLT) target

ROE (excluding goodwill) 17,9% Around MLT target 5% above COE4 (> 18% by 2020)

Growth in DHEPS 3,7%Around consumer price index + GDP growth > consumer price index + GDP growth + 5%

CLR 0,70%Within the bottom half of our target range Between 0,6% and 1,0% of average banking advances

NIR-to-expense ratio 82,7%

Increase (on 2018) but remain below MLT target > 85%

Cost-to-income (including associate income) 55,4%

Decrease (on 2018) but remain above MLT target 50–53% (< 53% by 2020)

CET1 capital adequacy ratio (Basel III) 11,3% Within target range 10,5–12,5%

Dividend cover 1,99 times Within target range 1,75–2,25 times4 The COE is currently forecast at 14,0% in 2019.

Shareholders are advised that these forecasts are based on organic earnings and our latest macroeconomic outlook and have not been reviewed or reported on by the group’s auditors.

Board and leadership changes during the periodMalcolm Wyman retired as Lead Independent Director with effect from the close of Nedbank Group’s AGM on 10 May 2019. Mpho Makwana was appointed in the role of Lead Independent Director effective from the same date. Professor Tshilidzi Marwala was appointed as an independent non-executive director on 27 May 2019.

Basis of preparation*Nedbank Group Limited is a company domiciled in SA. The unaudited condensed consolidated interim financial results of the group at and for the six months ended 30 June 2019 comprise those of the company and its subsidiaries (the 'group') and the group's interests in associates and joint arrangements.

The condensed consolidated interim financial statements comprise the condensed consolidated statement of financial position at 30 June 2019, condensed consolidated statement of comprehensive income, condensed consolidated statement of changes in equity and condensed consolidated statement of cashflows for the six months ended 30 June 2019 and selected explanatory notes, which are indicated by the symbol*. The condensed consolidated interim financial statements have been prepared under the supervision of Raisibe Morathi CA(SA), the Chief Financial Officer.

The condensed consolidated interim financial statements are prepared in accordance with International Financial Reporting Standard IAS 34: Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, Financial Pronouncements as issued by the Financial Reporting Standards Council and the requirements of the Companies Act (71 of 2008) of SA. The accounting policies applied in the preparation of these condensed consolidated interim financial statements are in terms of IFRS and are consistent with those used for the previous annual financial statements, except for changes arising from the adoption of IFRS 16, as set out in the notes to the condensed consolidated interim financial statements.

The directors of the group take full responsibility for the preparation of this report. The condensed consolidated interim financial results have not been audited or independently reviewed by the group’s external auditors. The group’s 2018 annual financial information has been correctly extracted from the underlying audited consolidated annual financial statements.

Events after the reporting period*There are no material events after the reporting period to report on.

Forward-looking statementsThis announcement contains certain forward-looking statements with respect to the financial condition and results of operations of Nedbank Group and its group companies that, by their nature, involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future. Factors that could cause actual results to differ materially from those in the forward-looking statements include global, national and regional political and economic conditions; sovereign credit ratings; levels of securities markets; interest rates; credit or other risks of lending and investment activities; as well as competitive, regulatory and legal factors. By consequence, all forward-looking statements have not been reviewed or reported on by the group’s auditors.

Interim dividend declaration Notice is hereby given that an interim dividend of 720 cents per ordinary share has been declared, payable to shareholders for the six months ended 30 June 2019. The dividend has been declared out of income reserves.

The dividend will be subject to a dividend withholding tax rate of 20% (applicable in SA) or 144 cents per ordinary share, resulting in a net dividend of 576 cents per ordinary share, unless the shareholder is exempt from paying dividend tax or is entitled to a reduced rate in terms of an applicable double-tax agreement.

Nedbank Group’s tax reference number is 9375/082/71/7 and the number of ordinary shares in issue at the date of declaration is 497 053 536.


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In accordance with the provisions of Strate, the electronic settlement and custody system used by the JSE, the relevant dates for the dividend are as follows:

Event Date

Last day to trade (cum dividend) Tuesday, 10 September 2019Shares commence trading (ex dividend) Wednesday, 11 September 2019Record date (date shareholders recorded in books) Friday, 13 September 2019Payment date Monday, 16 September 2019

Share certificates may not be dematerialised or rematerialised between Wednesday, 11 September 2019 and Friday, 13 September 2019, both days inclusive.

On Monday, 16 September 2019 the dividend will be electronically transferred to the bank accounts of shareholders. Holders of dematerialised shares will have their accounts credited at their participant or broker on Monday, 16 September 2019.

The above dates are subject to change. Any changes will be published on SENS and in the press.

For and on behalf of the board

Vassi Naidoo Mike BrownChairman Chief Executive

6 August 2019

Registered officeNedbank Group Limited, Nedbank 135 Rivonia Campus, 135 Rivonia Road, Sandown, Sandton, 2196.

PO Box 1144, Johannesburg, 2000.

Transfer secretaries in SALink Market Services South Africa Proprietary Limited, 19 Ameshoff Street, Braamfontein, Johannesburg, 2001, SA.

PO Box 4844, Marshalltown, 2000, SA.

Transfer secretaries in NamibiaTransfer Secretaries (Proprietary) Limited, Robert Mugabe Avenue No 4, Windhoek, Namibia.

PO Box 2401, Windhoek, Namibia.

DirectorsV Naidoo (Chairman), MWT Brown** (Chief Executive), HR Brody, BA Dames, NP Dongwana, EM Kruger, RAG Leith, L Makalima, PM Makwana***, Prof T Marwala, Dr MA Matooane, RK Morathi** (Chief Financial Officer), MP Moyo, JK Netshitenzhe, MC Nkuhlu** (Chief Operating Officer), S Subramoney.

** Executive *** Lead Independent Director

Company Secretary: J KatzinReg number: 1966/010630/06JSE share code: NEDNSX share code: NBKISIN: ZAE000004875Sponsors in SA: Merrill Lynch SA Proprietary Limited Nedbank CIBSponsor in Namibia: Old Mutual Investment Services

(Namibia) (Proprietary) Limited

Nedbank Group Limited: JSE alpha code: NEDI

This announcement is available on the group’s website at nedbankgroup.co.za, together with the following additional information:

■ Detailed financial information. ■ Financial results presentation to analysts. ■ Link to a webcast of the presentation to analysts.

For further information please contact Nedbank Group Investor Relations at [email protected].


63 Financial highlights64 Consolidated statement of comprehensive income65 Consolidated statement of financial position66 Consolidated statement of changes in equity68 Return on equity drivers

Financial results

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FINANCIAL HIGHLIGHTSfor the period ended

Change Jun Jun Dec (%) 2019 2018 2018

Statistics Number of shares listed m 497,1 500,2 493,2Number of shares in issue, excluding shares held by group entities m 481,2 484,2 477,1Weighted-average number of shares m 478,7 482,7 483,2Diluted weighted-average number of shares m 487,0 492,0 493,2Headline earnings Rm 2,6 6 870 6 696 13 495Profit attributable to equity holders of the parent Rm 2,0 6 794 6 658 13 376Total comprehensive income Rm (12,9) 5 978 6 867 13 794Preprovisioning operating profit Rm 7,0 11 633 10 873 21 990Economic profit Rm (16,3) 1 412 1 685 2 868Headline earnings per share cents 3,5 1 435 1 387 2 793Diluted headline earnings per share cents 3,7 1 411 1 361 2 736Basic earnings per share cents 2,9 1 419 1 379 2 768Diluted basic earnings per share cents 3,1 1 395 1 353 2 712Ordinary dividends declared per share cents 3,6 720 695 1 415

Interim 3,6 720 695 695Final 720

Ordinary dividends paid per share cents 6,7 720 675 1 370Dividend cover times 1,99 2,00 1,97Total assets administered by the group Rm 6,8 1 424 361 1 333 188 1 341 250

Total assets Rm 8,1 1 101 595 1 019 015 1 043 912Assets under management Rm 2,7 322 766 314 173 297 338

Life insurance embedded value Rm 24,7 3 347 2 684 2 786Life insurance value of new business Rm 33,5 231 173 380Net asset value per share cents 4,9 17 794 16 956 17 560Tangible net asset value per share cents 4,3 15 068 14 440 14 917Closing share price cents 1,5 25 320 24 958 27 472Price/earnings ratio historical 8,7 8,9 9,8Price-to-book ratio historical 1,4 1,5 1,6Market capitalisation Rbn 0,9 125,9 124,8 135,5Number of employees (permanent staff) (3,0) 30 335 31 272 30 877Number of employees (permanent and temporary staff) (3,2) 30 577 31 592 31 277Key ratios (%) ROE 16,8 17,2 16,8ROE (excluding goodwill) 17,9 18,4 17,9Return on tangible equity 19,9 20,2 19,8ROA 1,30 1,37 1,33Return on RWA 2,29 2,48 2,40NII to average interest-earning banking assets 3,57 3,67 3,65NIR to total income 46,5 46,6 47,4NIR to total operating expenses 82,7 82,9 82,1CLR – banking advances 0,70 0,53 0,53Cost-to-income ratio 55,4 55,8 57,2Gross operating income growth less expense growth rate (JAWS ratio) 0,8 6,5 2,7Effective taxation rate 23,4 25,1 25,2Group capital adequacy ratios (including unappropriated profits): – CET1 11,3 12,4 11,7– Tier 1 12,3 13,2 12,5– Total 14,6 15,6 14,8


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEfor the period ended

% Jun Jun DecRm Note change 2019 2018 2018

Interest and similar income 9,1 41 136 37 716 75 941Interest expense and similar charges 11,0 26 317 23 710 47 122Net interest income 1 5,8 14 819 14 006 28 819Impairments charge on financial instruments 2 40,1 2 543 1 815 3 688Income from lending activities 0,7 12 276 12 191 25 131Non-interest revenue 3 5,2 12 874 12 236 25 976Operating income 3,0 25 150 24 427 51 107Total operating expenses 4 5,5 15 565 14 756 31 632Indirect taxation 9,0 519 476 942Profit from operations before non-trading and capital items (1,4) 9 066 9 195 18 533Non-trading and capital items 5 (96,3) (106) (54) (164)Profit from operations (2,0) 8 960 9 141 18 369Share of income of associate companies > 100 422 207 528Profit from operations before direct taxation 0,4 9 382 9 348 18 897Total direct taxation 6 (6,6) 2 192 2 346 4 762

Direct taxation 2 222 2 362 4 807Taxation on non-trading and capital items (30) (16) (45)

Profit for the period 2,7 7 190 7 002 14 135Other comprehensive (losses)/income (OCI) net of taxation > (100) (1 212) (135) (341)Items that may subsequently be reclassified to profit or loss

Exchange differences on translating foreign operations (326) 846 449Share of OCI of investments accounted for using the equity method (687) (194) (318)Debt investments at FVOCI – net change in fair value (300) (138) (20)

Items that may not subsequently be reclassified to profit or loss

Share of OCI of investments accounted for using the equity method (14) (16) (16)Remeasurements on long-term employee benefit assets 22 (631) (345)Gains/(Losses) on property revaluations 93 (2) (91)

Total comprehensive income for the period (12,9) 5 978 6 867 13 794Profit attributable to: – Equity holders of the parent 2,0 6 794 6 658 13 376– Non-controlling interest – ordinary shareholders (16,7) 50 60 169– Holders of preference shares 7 8,2 171 158 323– Holders of additional tier 1 capital instruments 38,9 175 126 267Profit for the period 2,7 7 190 7 002 14 135Total comprehensive income attributable to: – Equity holders of the parent (11,7) 5 674 6 423 13 175– Non-controlling interest – ordinary shareholders > (100) (42) 160 29– Holders of preference shares 7 8,2 171 158 323– Holders of additional tier 1 capital instruments 38,9 175 126 267Total comprehensive income for the period (12,9) 5 978 6 867 13 794Headline earnings reconciliation Profit attributable to equity holders of the parent 2,0 6 794 6 658 13 376Less: Non-headline earnings items > (100) (76) (38) (119)

Non-trading and capital items (106) (54) (164)Taxation on non-trading and capital items 30 16 45

Headline earnings 2,6 6 870 6 696 13 495


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CONSOLIDATED STATEMENT OF FINANCIAL POSITIONat

Jun Jun DecRm Note 2019 2018 2018

Assets Cash and cash equivalents 12 896 11 222 13 162Other short-term securities 70 369 94 226 79 362Derivative financial instruments 33 841 28 058 22 692Government and other securities 126 172 76 730 96 791Banking advances 8 736 288 689 377 712 668Trading advances 8 22 802 23 291 23 637Other assets 16 294 23 441 19 836Current taxation assets 185 922 186Investment securities 9 25 773 20 837 22 404Non-current assets held for sale 132 382 305Investments in associate companies 10 3 814 3 103 4 041Deferred taxation assets 378 341 254Property and equipment 11 977 8 630 9 371Long-term employee benefit assets 5 054 4 675 4 966Mandatory reserve deposits with central banks 22 500 21 596 21 629Intangible assets 11 13 120 12 184 12 608Total assets 1 101 595 1 019 015 1 043 912Equity and liabilities Ordinary share capital 482 484 477Ordinary share premium 18 116 19 332 17 315Reserves 67 029 62 285 65 986Total equity attributable to equity holders of the parent 85 627 82 101 83 778Non-controlling interest attributable to ordinary shareholders 825 1 005 874Holders of preference shares 3 222 3 222 3 222Holders of additional tier 1 capital instruments 4 963 2 634 3 397Total equity 94 637 88 962 91 271Derivative financial instruments 30 470 25 394 20 003Amounts owed to depositors 12 865 815 801 165 825 804Provisions and other liabilities 27 928 25 638 25 602Current taxation liabilities 330 239 363Deferred taxation liabilities 753 765 669Long-term employee benefit liabilities 2 384 2 812 2 749Investment contract liabilities 21 742 18 316 20 035Insurance contract liabilities 1 255 2 044 1 829Long-term debt instruments 56 281 53 680 55 587Total liabilities 1 006 958 930 053 952 641Total equity and liabilities 1 101 595 1 019 015 1 043 912


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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Rm

Number ofordinary

shares

Ordinaryshare

capital

Ordinaryshare

premium

Foreigncurrency

translationreserve

Propertyreserve

revaluation

Share-based

paymentreserve

Other non-distributable

reserves1Fair-value reserves2

Available-for-salereserve2

Otherdistri-

butablereserves3

Total equityattributable

to equity holders of

the parent

Non-controlling

interestattributableto ordinary

shareholders

Equityattributable

to preference

shareholders

Holders of additionaltier 1 capitalinstruments

Totalshare-

holders'equity

Balance at 31 December 2017 481 568 888 482 18 688 (1 580) 1 944 1 334 25 384 60 546 81 823 859 3 222 2 635 88 539Impact of adopting IFRS 9 and IFRS 15, net of taxation 1 004 (384) (3 838) (3 218) (14) (3 232)Balance at 1 January 2018 481 568 888 482 18 688 (1 580) 1 944 1 334 25 1 004 – 56 708 78 605 845 3 222 2 635 85 307Shares issued in terms of employee incentive schemes 2 130 389 2 626 628 628Shares (acquired)/no longer held by group entities and BEE schemes 467 727 18 (30) (12) (12)Preference share dividend paid – (158) (158)Dividends paid to shareholders (3 347) (3 347) (3 347)Total comprehensive income for the period 766 (2) (352) 6 011 6 423 160 158 126 6 867Transfer to/(from) reserves 13 (100) 87 – –Share-based payment reserve movements (191) (191) (191)Additional tier 1 capital instruments interest paid – (127) (127)Other movements (5) (5) (5)Balance at 30 June 2018 484 167 004 484 19 332 (814) 1 942 1 156 (75) 652 – 59 424 82 101 1 005 3 222 2 634 88 962Shares issued in terms of employee incentive schemes – –Odd-lot repurchase of shares (7 056 639) (7) (1 972) (1 979) (1 979)Additional tier 1 capital instruments issued – 750 750Shares (acquired)/no longer held by group entities and BEE schemes 18 370 (45) (29) (74) (74)Preference share dividend paid – (165) (165)Dividends paid to shareholders (3 397) (3 397) (3 397)Total comprehensive income for the period (575) (89) 412 7 004 6 752 (131) 165 141 6 927Transfer to/(from) reserves (128) (17) (5) 150 – –Share-based payment reserve movements 368 368 368Additional tier 1 capital instruments interest paid – (128) (128)Other movements 7 7 7Balance at 31 December 2018 477 128 735 477 17 315 (1 389) 1 725 1 507 (80) 1 064 – 63 159 83 778 874 3 222 3 397 91 271Impact of adopting IFRS 16, net of taxation (651) (651) (7) (658)Restated opening balance 477 128 735 477 17 315 (1 389) 1 725 1 507 (80) 1 064 – 62 508 83 127 867 3 222 3 397 90 613Shares issued in terms of employee incentive schemes 3 870 882 4 825 (632) (197) – –Additional tier 1 capital instruments issued – 1 613 1 613Shares (acquired)/no longer held by group entities and BEE schemes 195 697 1 (24) (1) (24) (24)Preference share dividend paid – (171) (171)Dividends paid to shareholders (3 541) (3 541) (3 541)Total comprehensive income for the period (564) 93 – – – (657) – 6 802 5 674 (42) 171 175 5 978

Profit attributable to equity holders of the parent and non-controlling interest 6 794 6 794 50 171 175 7 190Exchange differences on translating foreign operations4 (234) (234) (92) (326)Movement in fair-value reserve (300) (300) (300)Gains on property revaluations 93 93 93Remeasurements on long-term employee benefit assets 22 22 22Share of comprehensive income of investments accounted for using equity method (330) (357) (14) (701) (701)

Transfer to/(from) reserves (90) 58 12 20 – –Share-based payment reserve movements 375 375 375Additional tier 1 capital instruments interest paid – (222) (222)Other movements 16 16 16Balance at 30 June 2019 481 195 314 482 18 116 (1 953) 1 728 1 308 (68) 407 – 65 607 85 627 825 3 222 4 963 94 637

1 Represents other non-distributable revaluation surplus on capital items and non-distributable reserves transferred from other distributable reserves in order to comply with the Banks Act (94 of 1990).

2 The available-for-sale reserve has no longer been applicable from 1 January 2018 due to the implementation of IFRS 9.3 Represents the accumulated profits after distributions to shareholders and appropriations of retained earnings to other non-distributable reserves.4 Exchange differences on translating foreign operations disclosed in the statement of other comprehensive income of R326m include R60m relating to the conversion

of our investment in ETI from US dollar to SA rand. Included in the decrease of R234m in the foreign currency translation reserve is R174m relating to foreign subsidiaries and R60m relating to ETI.

Nedbank Group – Interim Results 2019 Nedbank Group – Interim Results 2019 6766

RETURN ON EQUITY DRIVERSfor the period ended

Jun Jun DecRm 2019 2018 2018

NII 14 819 14 006 28 819Impairment of financial instruments (2 543) (1 815) (3 688)NIR 12 874 12 236 25 976Income from normal operations 25 150 24 427 51 107Total operating expenses (15 565) (14 756) (31 632)Share of profits of associate companies 422 207 528Net profit before taxation 10 007 9 878 20 003Indirect taxation (519) (476) (942)Direct taxation (2 220) (2 362) (4 807)Net profit after taxation 7 268 7 040 14 254Non-controlling interest (398) (344) (759)Headline earnings 6 870 6 696 13 495Daily average interest-earning banking assets 836 193 769 499 790 376Daily average total assets 1 066 511 987 370 1 010 989Daily average shareholders' funds 82 702 78 522 80 420Daily average shareholders' funds, excluding goodwill 77 527 73 381 75 264Note: Averages calculated on a 365-day basis.

Jun

2019Jun

2018Dec

2018

NII/average interest-earning banking assets 3,57% 3,67% 3,65% less less lessImpairments/average interest-earning banking assets 0,70% 0,48% 0,47% add add addNIR/average interest-earning banking assets 2,87% 3,21% 3,29%

5,97% 6,40% 6,47% less less lessTotal expenses/average interest-earning banking assets 3,75% 3,87% 4,0% add add addAssociate income/average interest-earning banking assets 0,10% 0,05% 0,07%

2,32% 2,58% 2,54% multiply multiply multiply100% – effective direct and indirect taxation rate 0,73 0,71 0,71

multiply multiply multiply100% – income attributable to minorities 0,95 0,95 0,95

Headline earnings 1,61% 1,74% 1,71% multiply multiply multiplyInterest-earning banking assets/daily average total assets 78,4% 77,9% 78,2% = = =Return on total assets 1,30% 1,37% 1,33% multiply multiply multiplyLeverage 12,87 12,57 12,57 = = =ROE 16,8% 17,2% 16,8%

ROE, excluding goodwill 17,9% 18,4% 17,9%


Implementation of IFRS 16


TRANSITIONAL IMPACTThe group recognised lease liabilities of R3,8bn and accompanying right-of-use assets of R2,7bn. An IAS 17 straight-lining balance of R126m and an accompanying deferred tax entry of R35m was reversed against retained earnings. The equity impact (net of tax) is R658m.

The weighted-average lessee’s incremental borrowing rate applied to the lease liabilities on 1 January 2019 was 8,0% and the reclassifications and the adjustments arising from the new leasing rules were recognised in the opening statement of financial position on 1 January 2019.

Impact on the condensed consolidated statement of financial position at 1 January 2019

Balance at 31 December

2018Rm

IFRS 16 transitional

adjustments (posttax)

Rm

Adjusted balance at

1 January 2019Rm

Ordinary share capital and share premium 17 792 17 792Retained earnings 63 159 (651) 62 508Other reserves 2 827 2 827Total equity attributable to equity holders of the parent 83 778 (651) 83 127Holders of preference shares 3 222 3 222Holders of additional tier 1 capital instruments 3 397 3 397Non-controlling interest attributable to ordinary shareholders 874 (7) 867Total equity 91 271 (658) 90 613

Balance at 31 December

2018Rm

IFRS 16 transitional

adjustments Rm

Adjusted balance at 1 January

2019Rm

Property and equipment (including right-of-use assets) 9 371 2 711 12 082Total assets 9 371 2 711 12 082Provisions and other liabilities (including lease liabilities) 25 602 3 751 29 353Total liabilities 25 602 3 751 29 353

Impact on the consolidated statement of comprehensive income for the period ended 30 June 2019Right-of-use assets reconciliation1 Rm

Balance at 1 January 2 711Depreciation charge for the period (432)Additions 82Lease modifications2 66Impairment losses (33)Effect of movements in foreign exchange rates and other movements (5)Balance at 30 June 2 389

Lease liabilities reconciliation3 Rm

Balance at 1 January 3 751Interest expense 144Additions 82Lease modifications2 66Lease payments (634)Effect of movements in foreign exchange rates and other movements (5)Balance at 30 June 3 4041 The right-of-use assets are included as part of property and equipment on the statement of financial position.2 Relates to amendments to existing lease contracts after 1 January 2019.3 The lease liabilities is included as part of provisions and other liabilities on the statement of financial position.

Change in accounting policies – IFRS 16: Leases


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Overview of IFRS 16 and changes to the consolidated statement of comprehensive income

Rm H1 2019 H1 2018 % change IFRS 16Adjusted

H1 2019 % change

NII 14 819 14 006 5,8 144 14 963 6,8Expenses1 15 565 14 756 5,5 (119) 15 684 6,3Headline earnings 6 870 6 696 2,6 18 6 888 2,9Total assets (Rbn) 1 102 1 019 8,1 (2,7) 1 099 7,9NAV/share (cents) 17 794 16 956 4,9 141 17 935 5,8CET1 ratio (%) 11,3 12,4 11,5 0,2ROE (excluding GW) 17,9 18,4 17,8 0,1NIM (%) 3,57 3,67 3,61 0,04Cost-to-income ratio (%) 55,4 55,8 55,5 0,11 Depreciation expense on right of use asset R432m (June 2018: Operating lease expense R551m).


NOTES:

74 Our organisational structure, products and services76 Operational segmental reporting78 Nedbank Corporate and Investment Banking82 Nedbank Retail and Business Banking94 Nedbank Wealth97 Nedbank Rest of Africa100 Geographical segmental reporting

Segmental analysis

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Nedbank Corporate and Investment Banking

Nedbank Retail and Business Banking

Nedbank Wealth

Rest of Africa

Full suite of wholesale banking solutions, including investment banking and lending, global markets and treasury, commercial-property finance, deposit-taking, and transactional banking.

■ Leading industry expertise in infrastructure, mining and resources, oil and gas, telecoms and energy.

■ Market leadership in commercial-property finance and renewable-energy financing.

■ Strong corporate banking relationships. ■ Market leading business across fixed income, foreign exchange

and equity derivatives and building presence in cash equities.

Assets R533,2bn

HE R3 298m

ROE 19,2%

Full range of services on ‘banking and beyond’, including transactional banking, card solutions, lending solutions, deposit-taking, risk management, investment products, card-acquiring services for businesses, ecosystems and platforms-based solutions.

■ A leader in business banking, underpinned by an accountable, empowered, decentralised business service model.

■ Launch of several disruptive CVPs, including Unlocked.Me, MobiMoney and API Marketplace.

■ Enhanced digital offerings and first in the market to launch some of these client-centred innovations.

■ Receiving the International Banker award for Best Innovation in Retail Banking SA 2018 in recognition of the market-leading innovations and CVPs launched.

■ Highly competitive relationship banking offering for affluent clients (Professional Banking).

Assets R366,0bn

HE R2 590m

ROE 17,3%

Wide range of financial services, including high-net-worth banking and wealth management solutions, as well as asset management and insurance offerings.

■ Nedbank Insurance was recognised by Celent as the Model Insurer of the Year in the category legacy and ecosystem transformation for the single policy administration system.

■ Nedbank Private Wealth – Locally, first place for ESG/Social impact investing in SA. Internationally, Best UK Private Bank and included in The Sunday Times 100 Best Companies to Work For list. Nedbank Private Wealth app rated second in the world.

■ Unique Best of Breed™ asset management model. Nedgroup Investments maintained its top-three ranking in offshore asset management companies in SA over the past four years.

AUM R322,8bn

HE R455m

ROE 22,3%

Full range of banking services, including transactional, lending, deposit-taking and card products, as well as selected wealth management offerings.

■ SADC (own operations)Investment in technology and digital to enhance CVPs and create scale (Flexcube core banking and mobile implemented in five countries).

■ Central and West Africa (ETI alliance – 21,2% shareholding)The Ecobank–Nedbank Alliance: footprint across 36 countries, the largest in Africa.Increased dealflow by leveraging ETI’s local presence and knowledge and Nedbank’s structuring expertise and balance sheet.

■ Transactional banking > 110 Nedbank wholesale clients with > 230 new accounts opened at Ecobank businesses across the continent.

Assets R38,4bn

HE R293m

ROE 9,8%

Our products and services

Our areas of strength and differentiation Key metrics

OUR ORGANISATIONAL STRUCTURE, PRODUCTS AND SERVICESWe deliver our products and services through four main business clusters.

Nedbank Corporate and Investment Banking

Corporates, institutions and parastatals with a turnover of over R750m per annum.

> 600 large corporate clients.

Nedbank Retail and Business Banking

Individual clients and businesses:

> 7,4 million clients including approximately 275 000 small and medium enterprise clients (typically businesses with an annual turnover of less than R10m).

> 21 500 business-banking client groups with an annual turnover less than R750m per annum.

Of the total clients 2,9m are main-banked clients.

Nedbank Wealth

High-net-worth individuals as well as other retail, business and corporate clients.

> 18 300 high-net-worth clients locally and internationally.

Nedbank Rest of Africa

Retail, small and medium enterprises, and business and corporate clients across the countries we operate in.

> 359 000 clients.

Our clients

Advances (%) HE contribution (%)

48,0 48,0


44,7 37,7


4,1 6,6


3,0 4,3


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OPERATIONAL SEGMENTAL REPORTINGfor the period ended

Nedbank GroupCorporate and Investment

Banking Retail

and Business Banking Wealth Rest of Africa Centre

RmJun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018 Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018

Consolidated statement of financial position (Rm) Assets Cash and cash equivalents 35 396 32 818 34 791 1 278 3 281 4 719 5 623 2 843 3 105 2 219 1 352 1 562 5 033 6 324 5 615 21 243 19 018 19 790Other short-term securities 70 369 94 226 79 362 52 654 57 378 53 946 19 343 18 793 18 833 4 373 5 724 4 776 (6 001) 12 331 1 807Derivative financial instruments 33 841 28 058 22 692 33 802 28 010 22 653 4 6 18 22 10 17 26 23Government and other securities 126 172 76 730 96 791 63 889 41 337 51 131 869 400 668 61 414 34 993 44 992Loans and advances 759 090 712 668 736 305 364 711 345 783 358 639 339 416 315 516 326 763 31 330 31 089 31 111 22 497 22 123 21 037 1 136 (1 843) (1 245)Other assets 76 727 74 515 73 971 16 843 22 007 16 719 11 297 8 237 10 762 21 254 18 544 19 630 4 666 4 947 4 915 22 667 20 780 21 945Intergroup assets – – – 9 654 10 953 14 984 921 497 (10 575) (10 953) (15 481)Total assets 1 101 595 1 019 015 1 043 912 533 177 497 796 507 807 365 990 337 549 355 614 74 150 69 778 71 142 38 377 39 540 37 518 89 901 74 352 71 831Equity and liabilities Total equity 94 637 88 962 91 271 34 688 33 125 33 555 30 145 27 928 28 471 4 114 4 116 4 225 6 029 6 522 6 812 19 661 17 271 18 208

Average allocated capital 84 098 79 729 81 620 34 688 33 125 33 555 30 145 27 928 28 471 4 114 4 116 4 225 6 029 6 522 6 812 9 122 8 038 8 557Non-controlling interest 9 010 6 861 7 493 9 010 6 861 7 493Other equity1 1 529 2 372 2 158 1 529 2 372 2 158

Derivative financial instruments 30 470 25 394 20 003 30 439 25 354 19 986 13 5 19 40 12 (1) Amounts owed to depositors 865 815 801 165 825 804 372 590 334 627 348 310 327 976 303 832 322 520 41 174 37 983 39 495 30 560 31 616 29 472 93 515 93 107 86 007Provisions and other liabilities 54 392 49 814 51 247 11 655 12 646 15 878 6 870 4 605 3 534 26 307 23 327 24 764 1 453 1 103 894 8 107 8 133 6 177Long-term debt instruments 56 281 53 680 55 587 835 1 010 979 999 1 184 1 089 316 322 328 54 131 51 164 53 191Intergroup liabilities – 82 970 91 034 89 099 2 542 4 352 2 653 (63) (85 512) (95 323) (91 752)Total equity and liabilities 1 101 595 1 019 015 1 043 912 533 177 497 796 507 807 365 990 337 549 355 614 74 150 69 778 71 142 38 377 39 540 37 518 89 901 74 352 71 831Consolidated statement of comprehensive income (Rm) NII 14 819 14 006 28 819 3 747 3 551 7 246 9 657 9 084 18 692 564 532 1 113 779 755 1 627 72 84 141Impairments charge on financial instruments 2 543 1 815 3 688 270 23 103 2 180 1 665 3 433 21 21 39 122 106 113 (50) Income from lending activities 12 276 12 191 25 131 3 477 3 528 7 143 7 477 7 419 15 259 543 511 1 074 657 649 1 514 122 84 141NIR 12 874 12 236 25 976 4 154 3 856 8 521 6 518 6 097 12 591 1 660 1 697 3 484 481 546 1 206 61 40 174Operating income 25 150 24 427 51 107 7 631 7 384 15 664 13 995 13 516 27 850 2 203 2 208 4 558 1 138 1 195 2 720 183 124 315Total operating expenses 15 565 14 756 31 632 3 247 3 016 6 572 10 071 9 723 20 032 1 593 1 495 3 012 1 148 1 136 2 416 (494) (614) (400)Indirect taxation 519 476 942 95 48 86 275 177 275 55 53 108 32 18 37 62 180 436Profit/(Loss) from operations 9 066 9 195 18 533 4 289 4 320 9 006 3 649 3 616 7 543 555 660 1 438 (42) 41 267 615 558 279Share of income/(losses) of associate companies 422 207 528 41 (40) (83) 381 247 611 Profit before direct taxation 9 488 9 402 19 061 4 330 4 280 8 923 3 649 3 616 7 543 555 660 1 438 339 288 878 615 558 279Direct taxation 2 222 2 362 4 807 1 030 981 2 197 1 023 1 015 2 114 100 141 305 (2) (13) 23 71 238 168Profit after taxation 7 266 7 040 14 254 3 300 3 299 6 726 2 626 2 601 5 429 455 519 1 133 341 301 855 544 320 111Profit attributable to: – Non-controlling interest – ordinary shareholders 50 60 169 2 3 12 48 56 153 1 4– Holders of preference shares 171 158 323 36 20 50 135 138 273– Holders of additional tier 1 capital instruments 175 126 267 175 126 267Headline earnings 6 870 6 696 13 495 3 298 3 296 6 714 2 590 2 581 5 379 455 519 1 133 293 245 702 234 55 (433)Selected ratios Average interest-earning banking assets (Rm) 836 193 769 499 790 376 359 734 336 521 341 863 342 516 320 915 328 676 51 613 46 800 48 216 30 157 28 369 30 998 52 173 36 894 40 623Average risk-weighted assets (Rbn) 604 897 543 549 561 356 291 581 256 533 264 108 198 492 180 511 186 876 26 316 23 572 24 823 49 487 46 451 49 064 39 021 36 482 36 485ROA (%) 1,30 1,37 1,33 1,29 1,36 1,36 1,45 1,57 1,58 1,27 1,61 1,69 1,56 1,39 1,79 RORWA (%) 2,29 2,48 2,40 2,28 2,59 2,54 2,63 2,88 2,88 3,49 4,44 4,56 1,19 1,06 1,43 ROE (%) 16,8 17,2 16,8 19,2 20,1 20,0 17,3 18,6 18,9 22,3 25,4 26,8 9,8 7,6 10,3 Interest margin (%)2 3,57 3,67 3,65 2,10 2,13 2,12 5,69 5,71 5,69 2,20 2,29 2,31 5,21 5,37 5,25 NIR to total income (%) 46,5 46,6 47,4 52,6 52,1 54,0 40,3 40,2 40,2 74,6 76,1 75,8 38,2 42,0 42,6 NIR to total operating expenses (%) 82,7 82,9 82,1 127,9 127,9 129,7 64,7 62,7 62,9 104,2 113,5 115,7 41,9 48,1 49,9 CLR – banking advances (%) 0,70 0,53 0,53 0,16 0,01 0,04 1,28 1,06 1,06 0,14 0,15 0,13 1,08 1,09 0,51 Cost-to-income ratio, including associate income (%) 55,4 55,8 57,2 40,9 40,9 41,9 62,3 64,0 64,0 71,6 67,1 65,5 70,0 73,4 70,2 Effective taxation rate (%) 23,4 25,1 25,2 23,8 22,9 24,6 28,0 28,1 28,0 18,0 21,4 21,2 2,6 Contribution to group EP/(loss) (Rm) 1 543 1 685 2 868 856 1 034 1 976 467 674 1 359 166 238 536 (131) (200) (259) 54 (61) (744)Number of employees (permanent staff) 30 335 31 272 30 877 2 637 2 716 2 681 18 626 19 839 19 430 2 130 2 203 2 173 2 639 2 577 2 617 4 303 3 937 3 9761 Other equity includes the variance between average allocated capital, which is computed using the average-equity month-end balances and actual equity.2 Cluster margins include internal assets.


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Impairments increased to R270m (2018: R23m). The CLR at 0,16% is still well within our TTC target range of 0,15% to 0,45%. Defaults have increased from R5,1bn to R5,4bn since June 2018, due largely to the construction and cement industry, as well as a few specific over-geared corporates. Due to early engagements and restructures, a portion of the defaulted book has been restructured to reduce risk, which has resulted in lower defaults since December. The high level of collateralisation for these defaulted deals has resulted in a lower specific coverage ratio of 12,8%, although up from 11,6% in December 2018. The portfolio coverage ratio on the performing book also increased from 0,25% to 0,37% due to the migration of risk ratings for exposures within high risk industries, as well as some large corporates in the agriculture and telecommunications sectors. We continue to closely monitor stressed sectors of the economy, such as construction and cement, commercial property clients (including REITs with large office/government exposures), and parts of the retail sector. Focus will also continue on certain SOEs as a result of the rising government debt burden and ongoing uncertainty in terms of the SOEs’ liquidity. Governance and oversight at SOEs has improved post the Ministerial changes, but recent management changes in troubled enterprises may delay strategic turnaround plans that need to be implemented given the financial and liquidity challenges.

NIR has grown strongly in the first half of 2019, increasing 7,7% to R4 154m. Fee and commission revenue were up 7,7% due to deal activity and successful primary client wins. Trading income grew 4,7% despite low volatility and decreased volumes from a high base in Q1 2018. The NIR-to-expenses ratio remained flat at 128,0%.

The cost-to-income ratio of 40,9% remains at the lower end of the market and in this period reflects significantly investments in staff and technology. This contributed to the expenses growth of 7,6% to R3 247m as we embrace digital opportunities and upskill our staff to ensure an ever-improving client experience.

Property FinanceGOI increased 5,3%, driven mainly by NIR growth of 10,6%, NII growth of 2,6% as well as a reduction in impairments from R78m to a release of R55m. Actual banking advances, including corporate bonds, increased 2,8% to R154bn amid growing competition for high quality deals at the top end of the market. The CLR improved to -0,08% and remains below our target range due to the proactive restructuring and resolution of prior-year defaulted transactions. Rentals remain under pressure across all segments of the market with rental reversions a common occurrence. The portfolio however contains good quality assets with appropriate loan-to-value and cash flow cover ratios, underpinned by quality collateral and a strong client base. The business sustained its strong cost containment, improving its cost-to-income ratio to 32,7%. Property Finance has maintained a leading market share over many years in SA and is focused on maintaining that position and on growing business in key African jurisdictions to ensure revenue growth and diversification.

Investment BankingInvestment Banking grew GOI by 3,2% with NII and NIR growth offset by an increase in impairments. NII increased 3,2% with AIEBA increasing 15,9% to R188bn, but impacted by margin pressure in a very competitive environment for assets. Actual banking advances including corporate bonds, increased by 16,4% as we closed large transactions in the first half of the year, and experienced increased drawdowns as a result of deals written in the latter part of 2018. The advances pipeline is robust, presenting a growth opportunity when business confidence improves. NIR grew by 3,1% with strong growth in fees and commission of 9,9% being offset by revaluation adjustments. Defaulted advances decreased slightly since December 2018 as a result of certain counters performing better following restructures while new defaults increased as a result of over-geared corporates being exposed to a depressed retail/low growth environment. The CLR has increased to 0,25% and remains within our target range, with defaults well provisioned and proactive restructuring in place. The business has leading industry expertise in mining and resources, infrastructure, oil and gas, telecoms and energy, and ranked number one for debt capital market bond issuances for 2019. In H1 2019, Investment Banking ranked first by deal value and volume for M&A Advisors and first by deal volume for M&A Sponsors. Investment Banking was recognised in The Banker awards with the Infrastructure and Project Finance Deal of the Year 2019 as well as Sponsor of the Year in the Project Finance International (PFI) Awards.

MarketsGOI recorded growth of 4,6% despite low volatility and lower trading volumes against a persistently weak economic backdrop. Deliberate investment in the Markets sales and trading franchises is bearing fruit and underpins trading income growth of 4,7%. Strong trading performances in debt securities which increased 10,1% and foreign exchange which was up 3,2%. This was offset by a decline in equities of 22,3% off a high base in 2018. We continue to invest in capabilities across asset classes and have expanded our cash equities team to complement our market leading equity derivatives platform.

Transactional ServicesGOI increased 15,3% as a result of strong growth in deposits enabled by our competitive offerings such as the NDN investment product as well as transactional revenue uplift supported by 16 primary banked client wins and retention of top-tier clients. Notable wins include Airports Company of South Africa (ACSA) and ERWAT (Ekurhuleni Water Care Company). The transactional business has placed strategic focus on growing the short-term lending, trade finance and asset-based finance books through the formation of a specialised working capital sales team. The overall environment remains difficult with impairments increasing and a slowdown in domestic transactional revenue, however this has been offset by good growth in trade finance. Transactional Services continues to deliver on innovation in our functional rich product areas as well as renewed focus on efficiencies and robotics with Blockchain initiatives and API solutions being carried out in conjunction with selected clients.

FINANCIAL HIGHLIGHTS

Corporate and Investment

Banking Property Finance

Corporate and Investment Banking, excluding Property

Finance

Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018

NII (Rm) 3 747 3 551 7 246 1 029 1 003 2 044 2 718 2 548 5 202Impairments charge on financial instruments (Rm) 270 23 103 (55) 78 138 325 (55) (35)NIR (Rm) 4 154 3 856 8 521 562 508 1 202 3 592 3 348 7 319Gross operating income (Rm) 7 901 7 407 15 766 1 591 1 512 3 246 6 310 5 895 12 520Operating expenses (Rm) 3 247 3 016 6 572 520 461 1 029 2 727 2 555 5 543Headline earnings (Rm) 3 298 3 296 6 714 820 722 1 499 2 478 2 574 5 215ROE (%) 19,2 20,1 20,0 17,9 18,0 17,8 ROA (%) 1,29 1,36 1,36 0,88 0,80 0,81 CLR (%) 0,16 0,01 0,04 (0,08) 0,11 0,10 NIR to total operating expenses 127,9 127,9 129,7 108,0 110,2 116,8 Cost-to-income ratio (%) 40,9 40,9 41,9 32,7 30,5 31,7 Interest margin (%) 2,10 2,13 2,12 1,13 1,14 1,14 Total assets (Rm) 533 177 497 797 507 807 159 425 154 709 155 778 373 752 343 088 352 029Average total assets (Rm) 516 544 488 154 494 972 155 412 151 412 152 578 361 132 336 742 342 394Total advances (Rm) 364 711 345 783 358 639 142 765 143 705 140 169 221 946 202 078 218 470Average total advances (Rm) 367 484 351 676 352 318 139 337 141 528 140 848 228 147 210 148 211 470Total deposits (Rm) 372 590 334 627 348 310 917 1 141 875 371 673 333 486 347 435Average total deposits (Rm) 356 300 336 199 339 676 900 778 781 355 400 335 421 338 895Average allocated capital (Rm) 34 688 33 125 33 555 9 261 8 099 8 417 25 427 25 026 25 138


Property Finance Investment Banking MarketsWorking capital and transactional

services

Jun

2019Jun

2018Dec

2018 Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018

Gross operating income (Rm) 1 591 1 512 3 246 1 889 1 831 3 972 2 637 2 521 5 258 1 784 1 541 3 290Average total advances (Rm) 139 337 141 528 140 848 167 840 150 928 154 488 35 784 33 848 32 154 24 523 24 615 23 950

3 21

1

3 0

04

2 48

5

3 29

8

3 29

6

Headline earnings(Rm)

Jun2018

Jun2019

Jun2017

Jun2016

Jun2015

Jun2015

20,8

21,3

22,9

19,2

20,1

Return on equity(%)

Jun2018

Jun2019

Jun2017

Jun2016

NEDBANK CORPORATE AND INVESTMENT BANKING

by ongoing drawdowns from deals written in 2018, as well as several new transactions which were closed in the first half of 2019. Actual banking advances inclusive of corporate bonds, increased 8,8% to R368bn underpinned by good growth in the Investment Banking book following conversion of significant deals in the first half of the year. A strong pipeline is in place and it is expected that several transactions will be closed over the second half of 2019, in addition to continued drawdowns of Round 4 renewable energy deals. Average deposits increased by 6,0% to R356bn from growth in call and term deposits.

CIB’s headline earnings were flat at R3 298m. Despite the difficult environment, GOI increased 6,7% to R7 901m. This was offset by increased expenses as well as higher levels of impairments off a low prior year base. ROE decreased to 19,2% as allocated capital increased by 4,7% in line with advances growth and ratings migrations, but is still reflective of high-quality earnings.

NII increased 5,5% to R3 747m with good growth in AIEBA of 6,9% to R360bn. NIM decreased 3bps to 2,10% as asset margins came under pressure from competitive pricing. Average banking advances increased by 4,2% to R336bn, supported


Looking forwardThe focus for the rest of 2019 remains on serving our clients by delivering solutions and insights through our sector-led approach, as well as enhancing revenue synergies across the franchise. Business and consumer confidence is likely to improve but with a lag, which should yield better growth outcomes in 2020. However, we are well placed, with a strong advances pipeline, which we expect to convert in the second half of the year. We continue to focus on our NIR strategy through advisory, trading and transactional banking, as well as building private equity and scaling up the venture capital portfolio.

Essential to our strategy is utilising our strategic partners to benefit clients on the continent and globally, and expand our rest of Africa presence in selected sectors. Exponential technologies and creating efficiencies through optimising business processes, will be key to the strategy for the rest of the year.

We continue to emphasise proactive risk management and focus on resolutions in stressed sectors, while ensuring that we remain compliant with regulatory requirements.

Developing leadership capability and building key teams as well as attracting and retaining top talent, are significant levers in growing our businesses.

We remain committed to meeting our 2020 targets of an ROE of greater than or equal to 20% and a cost-to-income ratio of 40% or less.

Favourable Unfavourable

■ Good NIR growth, maintained solid growth in commission and fee income.

■ Faster growth in advances despite the tough environment. ■ Maintaining our leading position in commercial-

property finance. ■ Strong pipeline, which is expected to convert as business

confidence improves. ■ Strong risk management with quality portfolio. ■ Industry-leading cost-to-income ratio. ■ Continued investment in skills and technology.

■ Business confidence muted. ■ Increased competitive environment for high-quality assets, with

increased pricing pressure. ■ Impairments increased off low base.


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NOTES:


FINANCIAL HIGHLIGHTS for the period ended

SEGMENTAL VIEW

Total Retail and

Business Banking Business Banking Consumer Banking Relationship Banking

Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018

NII (Rm) 9 657 9 084 18 692 2 092 2 008 4 123 6 455 6 133 12 583 1 157 1 057 2 215Impairments charge (Rm) 2 180 1 665 3 433 143 35 117 1 916 1 600 3 239 63 47 74NIR (Rm) 6 518 6 097 12 591 954 897 1 866 3 888 3 644 7 496 680 620 1 274Operating expenses (Rm) 10 071 9 723 20 032 1 946 1 837 3 823 6 361 6 210 12 656 1 215 1 197 2 453Headline earnings (Rm) 2 590 2 581 5 379 677 736 1 462 1 379 1 333 2 884 397 311 691ROE (%) 17,3 18,6 18,9 18,8 24,2 22,2 14,5 14,6 15,6 29,1 25,4 27,4ROA (%) 1,45 1,57 1,58 0,92 1,09 1,05 1,23 1,27 1,34 1,06 0,91 0,98CLR (%) 1,28 1,06 1,06 0,38 0,11 0,15 1,71 1,52 1,51 0,33 0,27 0,21NIR to total operating expenses (%) 64,7 62,7 62,9 49,0 48,8 48,8 61,1 58,7 59,2 56,0 51,8 51,9Cost-to-income ratio (%) 62,3 64,0 64,0 63,9 63,3 63,8 61,5 63,5 63,0 66,2 71,4 70,3Interest margin (%) 5,69 5,71 5,69 2,87 2,99 2,99 3,72 3,68 3,89 3,10 3,11 3,14Total advances (Rm) 339 416 315 516 326 763 79 990 72 433 74 287 221 136 208 809 216 179 39 071 35 220 37 246Average total advances (Rm) 329 449 305 744 312 119 75 607 68 213 70 408 216 572 204 491 207 557 38 217 34 114 35 122Total deposits (Rm) 327 976 303 832 322 520 138 209 126 862 139 354 117 250 109 727 114 052 69 857 65 416 68 400Average total deposits (Rm) 321 874 297 291 305 151 140 774 129 050 131 800 112 469 104 672 108 738 67 109 62 459 64 285Average allocated capital (Rm) 30 145 27 928 28 471 7 269 6 141 6 600 19 247 18 436 18 495 2 754 2 468 2 520

1 Total includes unallocated costs relating to Channel, Card Acquiring and Shared Services, which are not reflected separately.

NEDBANK RETAIL AND BUSINESS BANKING

OverviewRBB's HE increased 0,3% to R2 590m, with quality revenue growth and good expense control impacted by a higher impairments charge off a low base. NII was underpinned by good growth in advances and strong growth in deposits, although the NIM decreased slightly. Solid NIR growth was due to inflation-related price increases and volume growth. Impairments are higher due to risk normalisation, constrained economic conditions and deteriorating consumer profiles. Expense growth of 3,6% reflects the impact of optimising processes and operations. Allocated capital increased in line with advances growth and this, coupled with flat earnings, has resulted in a lower ROE of 17,3%.

Looking at our business from our clients' point of viewAt the centre of our strategy is our intent to deliver delightful client experiences. RBB believes that standing out and being competitive go beyond just being innovative. To delight clients we need to ensure that we are solving real client problems and pain points by integrating banking seamlessly into clients' daily lives. We have launched a proprietary client-centred design approach combining human-centred design principles and digital innovations to deliver easy-to-use, market-leading solutions for our clients. We are on a quest to improve our products and services by leveraging the benefits of technology and increased digitisation. This quest is based on a deep trust and belief in our people to do the right thing for our clients in everything they do.

Client numbers – Total clients declined to 7,4 million as we accelerated the closure of dormant accounts. We include

approximately 275 000 small-and-medium-enterprise clients and 21 500 Business Banking client groups in this total. Progress in quality-client acquisition and improved client retention is reflected in the 4,9% increase in main-banked client numbers to 2,91 million. Middle-market, affluent and small-business clients continued to increase strongly. The entry-level segment also showed good main-banked client growth, albeit at a lower average GOI per client. We recorded an increase of 0,3% yoy in clients who were active in the past six months (+2,3% yoy in clients who were active in the past 35 days). We remain committed to reaching our target of more than 15% main-banked market share by 2020 from our 13,1% market share at December 2018. We traditionally survey this market share annually during the second half of the year using Consulta.

Digital innovation – We made significant progress in the past year, accelerating our digital transformation journey with core capabilities built to give us a competitive advantage and sustainability of our solutions. Examples include digital onboarding on the app, the web and through USSD, eFica, digital credit preapproval, API Marketplace and client360. We enjoyed recognition for this by winning two awards from the International Banker, namely for the best innovation in retail banking in SA and the best customer service provider in Africa. Our Nedbank Money app has been downloaded more than 2,65 million times and now offers over 70 client-servicing functions. We currently have 668 000 digitally active clients using the Money app. Functionality, developed through our


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Jun2018

Jun2019

Jun2017

Jun2016

Jun2015

2 54

4

2 37

1

2 13

2

2 59

0

2 58

1

Return on equity(%)

Jun2019

Jun2017

Jun2016

Jun2015

18,7

18,3

15,9

17,3

18,6

Jun2018

PRODUCT VIEWS, EXCLUDING BUSINESS BANKING

Home loans VAFUnsecured

lending TransactionalCard and payments

Forex and investments

Jun

2019Jun

2018Jun

2019Jun

2018Jun

2019Jun

2018Jun

2019Jun

2018Jun

2019Jun

2018Jun

2019Jun

2018

NII (Rm) 1 145 1 104 2 096 1 911 1 677 1 574 1 242 1 268 721 736 719 617Consumer Banking and other 848 834 2 047 1 872 1 660 1 556 610 695 721 736 540 440Relationship Banking 297 270 49 39 17 18 632 573 179 177

NIR (Rm) 139 127 341 322 346 337 2 536 2 380 2 080 1 940 116 92Consumer Banking and other 103 99 337 318 331 323 1 956 1 846 2 069 1 930 82 62Relationship Banking 36 28 4 4 15 14 580 534 11 10 34 30

Impairments charge (Rm) 38 20 853 746 582 443 21 16 507 464 – –Consumer Banking and other (6) (10) 846 738 570 435 21 16 507 464 Relationship Banking 44 30 7 8 12 8

Operating expenses (Rm) 769 740 718 673 834 756 3 520 3 601 1 712 1 542 741 647Consumer Banking and other 551 530 683 643 814 734 2 726 2 820 1 705 1 535 601 501Relationship Banking 218 210 35 30 20 22 794 781 7 7 140 146

Headline earnings (Rm) 336 333 545 535 434 501 160 21 404 449 66 44Consumer Banking and other 285 291 537 531 434 500 (141) (214) 401 447 13 Relationship Banking 51 42 8 4 1 301 235 3 2 53 44

ROE (%) 14,5 14,5 14,9 14,8 23,7 30,0 10,8 1,7 25,0 30,7 19,4 16,1CLR (%) 0,06 0,03 1,67 1,60 5,23 4,99 23,00 21,52 6,04 6,10 Cost-to-income ratio (%) 59,9 60,1 29,5 30,1 41,2 39,6 93,2 98,7 61,1 57,6 88,7 91,3Interest margin (%) 1,81 1,84 3,76 3,73 15,23 15,56 5,94 6,52 7,81 8,46 1,04 0,96Total average advances (Rm) 121 399 115 249 99 117 91 481 18 922 17 507 117 88 14 483 13 912 3 1

1 Does not include unallocated costs relating to Channel and Shared Services, therefore the table does not crosscast.


client-centred design process, include the ability to personalise the app with wallpaper and images of the client's choice or to chat directly to a banker using Live Chat. In line with our aim to delight our clients by providing them with worldclass digital experiences, we introduced HeyNed – a market-first digital concierge in clients' pockets to assist with any non-banking needs they may have, sourcing deals from over 350 000 suppliers and negotiating on clients' behalf.

The Nedbank Money app now allows new clients to open transactional accounts without having to submit documents or visit the branch – a market-leading experience. Existing Nedbank app users are currently able not only to open investment accounts and service their investment needs, but also to access customised offers for personal loans, overdrafts and credit cards based on individual assessments done by using advanced analytics and artificial intelligence (AI). Our Online Banking platform has 73 digitised client services that empower our clients to service themselves through their personal devices, including the capability to conveniently download stamped bank statements and tax certificates.

Small business has also been a key focus area and businesses are now able to register companies with the CIPC through nedbank.co.za as well as to open a business bank account online. They also have the ability to switch between their personal and business accounts while logged into the app or online banking for seamless and consistent experience.

Physical distribution – In response to shifts in client behaviour and preferences we continued to optimise our branch network. For the period under review we closed 14 points of presence and opened one new branch and one inretailer outlet, resulting in a net reduction of 12 physical points of presence. The reduction has not affected our coverage of the bankable population in SA. We also upgraded seven branches to our new format, bringing the total completed upgrades to 366 branches (62% of total branches). As regards branch space, we exceeded our 2020 targeted reduction of 30 000 m² by achieving an actual space reduction of 37 155 m² at 30 June 2019, with the total branch floor space now representing 16% less than that occupied in 2014. In response to the continued increase of transaction volumes through our self-service channels we revised our targeted reduction in branch space to more than 47 000 m² by the end of 2020.

We expanded our ATM footprint with a further 41 devices during 2019, which included 33 Intelligent Depositor devices. In this period cash dispensed increased by 7,5%, with 70% of all client cash at branches now being handled through Intelligent Depositor devices – an increase from 35% in 2016. We have a network of 411 self-service kiosks across our branch network, enabling clients to perform a range of self-service transactions, including ATM limit changes and overseas travel notifications. Client servicing through branch-located video banking and contact centre access provides further convenient alternatives for clients. We are pleased with our progress in making it easier and more convenient for clients to access our services – and at a lower cost.

Our physical footprint reflects both the increased drive towards client self-service and the diverse SA consumer base still requiring face-to-face assistance in many instances.

Our contact centre is available to clients 24 hours a day. Client experience and security have been improved through the deployment of voice biometrics as well as a new online live chat capability, enabling our clients to access services and advice through text-based interaction with our agents. Non-voice contact centre interaction now totals 20% of all interactions following the deployment of multimedia access through our contact centre channel.

Value propositions – We launched several disruptive CVPs. These include Unlocked.Me for the youth, launched in January 2019 and delivering banking value through a zero-monthly-fee account, with data, fast food and transport value-adds, lifestyle benefits through discounts on tech, fashion and experiences, and potential benefits such as job search and career support. We also continued to see sustained growth in our stokvel proposition – since its launch in March 2018 3 500 stokvels have been banked, with 101 000 members enjoying a market-leading funeral insurance benefit.

Another tool that has seen client numbers grow to 173 000 is our MobiMoney wallet, which allows for client onboarding within seconds.

In the home loan area there was an exciting launch of the Home-buying Toolkit, a digital-only tool that allows Nedbank clients to search for homes, access property research reports and apply for preapproved credit, all from the convenience of their cellphones. As part of the RRB Banking and Beyond™ value proposition, we continue to invest in SimplyBiz® small businesses. SimplyBiz® is a platform that offers a business community, business solutions, funding, directory and marketplace to support and promote business owners as they start, run and grow a business. The platform is powered by Nedbank and has 16 440 registered members. The Karri app has continued to achieve exponential growth throughout the first half of the year, with strong growth in both active users and transaction value and volume. The payment app is now used in more than 340 schools and has achieved mostly five-star reviews in app stores.

Treating customers fairly and market conduct – Building on improved client-centred design principles that are part of our new Ways of Work (nWoW) initiative, we have established a programme called Clientricity to drive significant improvements in our operations by increasing levels of client-centredness across the business. The objective is to operationalise our brand promise and to deliver consistently fair client outcomes that meet market conduct requirements.

Marketing – We have aligned our marketing efforts with our brand purpose, which is to use our financial expertise to do good. We base our approach on a universal insight that money, when well managed, can make a real difference in people's lives, as well as the lives of their family, their business, their communities and society as a whole. Through 'Sbu, the cab driver' campaign, we have created a better memory structure and recall for our brand. We continue to fast-track our data-led marketing, together with our digital marketing capabilities, to be more relevant and connect better with our clients.

Loyalty and rewards – We are excited about the launch of our new Greenbacks programme in H2 2019. This is not just another loyalty programme, but a money management toolkit that prompts, nudges, encourages and rewards good money behaviour.

Key drivers of the H1 2019 financial performance NII increased 6,3% to R9 657m, driven mainly by a 7,9% increase in gross loans and higher margin spreads on fixed deposits.

Average total banking advances increased 8,0% to R343bn, with new-loan payouts increasing to R50bn, on the back of payouts in Consumer Banking, which increased 5,0% to R31,4bn, Relationship Banking, which increased 12,5% to R4,5bn, and Business Banking, which increased 19,7% to R13,6bn.

Average deposits grew 8,3% to R322bn. Our market share of household deposits declined to 17,6% at May 2019 and was impacted by our strategic decision to widen margins at the expense of volume. Market share of household current-account deposits grew to 19,0% at May 2019.


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Looking forwardWe remain committed to our client-centred growth strategy and boldly executing our plans to deliver delightful client experiences through digital transformation using the five strategic levers of Digital First, First in Digital; Disruptive CVPs; Sales and Service Excellence; Loyalty and Rewards; and Data Analytics and Insights. We continue to strive towards achieving our targets for 2020, which include an ROE of greater than 20% and a substantially lower cost-to-income ratio with a stretching target set at less than or equal to 58%.

Our focus remains on accelerating financial inclusivity of our banking propositions to meet evolving client needs by developing new disruptive CVPs, delivering competitively priced products, and actively reducing transacting costs for our clients through digital banking services and tapping into ecosystem-based platform propositions to offer beyond-banking solutions. We successfully launched our refreshed loyalty and rewards programme to staff in June 2019 and are on track to launch this to clients in H2 2019. In H2 2018 we piloted our enterprise client-onboarding platform (Eclipse), which we believe will provide our clients with a seamless onboarding experience and an additional incentive to bank with us. The staff-assisted channel was rolled out to all frontline users in RBB during H1 2019. The web and app self-service channels are expected to be rolled out to clients in H2 2019, along with juristic onboarding capabilities. This will set us on a good path to digitising our top 10 client journeys and client services. There will also be continued focus on building data analytics, RPA, digital marketing, client-centred design and commercial partnership capabilities as strategic assets for our business.

Our policies on credit granting have remained consistent and should ensure relative risk outperformance in the market. HE growth will continue to be supported by various cost-efficiency strategies, including the reduction of the cost to acquire and serve clients through our convenient and functionally rich mobile and digital channels.

Future distribution investment is aimed at ensuring an optimal client channel footprint. This will provide more self-service device options for clients, a marginally reduced branch footprint, as well as a reformatted strategy aimed at unlocking more space efficiencies and equipping branches with self-service capabilities to provide convenient alternatives for our clients. There is also a focus on quality-client acquisition. We aim to achieve this through deepening the relationship with our clients by improving client experience and ensuring we have value-adding, cost-effective products that will drive improvement in our key Net Promoter Score (NPS). We have launched our new staffed interface for account opening and servicing, which will further enhance growth in our transactional banking franchise by reducing the amount of staff-assisted time required to onboard new-to-franchise clients and facilitate better cross-sell and client experiences.

Defaulted advances increased to R19,2bn, from R17,3bn in December 2018, increasing the defaulted book to 5,4% of the advances portfolio, up from 5,1% in December 2018.

Balance sheet impairments rose to 3,77% of total advances and the coverage on the performing book increased to 0,76%. Our strategy to grow advances selectively ahead of market within acceptable risk categories remains a focus.

The CLR of 1,28% increased from 1,06% in the previous year to just below our target range of 1,30% to 1,80%. The traditional seasonality improvements on impairments in the second half of the year are, however, expected to be offset by the tough economic environment.

NIR increased 6,9% to R6 518m, underpinned by growth in quality transactional income and revenue from consumer card issuing (combined growth of 7,1% yoy), as well as average product price increases of 4,5% from 1 January 2019. Stronger GOI growth of 5,6% with the closing of dormant accounts has resulted in higher growth in average GOI per client of 8,8% yoy.

Expense growth of 3,6% includes investment in distribution of R37m and growth in revenue-related costs of R60m, offset by the benefit from IFRS 16 of R51m. In addition, R176m of additional cost savings delivered through ongoing, active cost management have been realised, with headcount decreasing 865 to 18 680 since December 2018, of which 255 were internal transfers.

We have made significant progress in enhancing operational efficiencies, unlocking cost savings and improving client experience by leveraging technologies such as robotics, artificial intelligence, machine learning and data analytics. With our artificial intelligence and machine learning capabilities we have a deeper understanding of our clients, which helps us to personalise and customise offerings to meet their needs and service them better. Our enhanced Robotics Process Automation (RPA) enables us to automate manual processes, improving our speed and accuracy. During H1 2019 we have deployed a further 23 robotic solutions across RBB, increasing the total to 83.

Employee updateRBB is going through complex changes with regard to systems, processes and configuration. There has been a vigorous change management and communication process to cater for these changes, with change tools made available through our portals to all employees so that they can access them as and when required.

In preparation for the Fourth Industrial Revolution and updated skills requirements, various learning opportunities (technical/leadership/EQ) have been made available to our people. As a result, Nedbank won the LinkedIn award for best digital learning. Training has taken place in classrooms (face to face) as well as online. We have also partnered with various entities, including University of Johannesburg, Mail and Guardian and BANKSETA, to develop and grow pipeline talent, especially in scarce-skills areas such as data science, analytics, sciences, technology and the arts.

Our staff composition remains representative of our society across gender, age and race, which contributes to innovation and diverse thinking. We are focusing on 'Service Excellence' as a deliberate training intervention since we believe that this will be a lever of differentiation for us going forward.

NEDBANK RETAIL AND BUSINESS BANKING SEGMENTAL REVIEWBusiness Banking Business Banking (BB) provides relationship-based banking services to corporates, institutions and parastatals with an annual turnover of less than R750m but more than R30m. This limit was lifted from R10m with effect from 1 July 2019 and clients falling below this threshold have been migrated to the Retail Relationship Banking business. This change will be reflected only in the next reporting period.


Our core CVP is based on the premise of our being the trusted partner for our clients by having a better understanding of their aspirations than any of our competitors. We therefore partner with our clients to build a relationship through which we can provide them with expertise and excellent service so that they can achieve their financial and growth objectives. We package relevant, cutting-edge and unique solutions customised to their individual and business needs, while providing them with knowledge and insights about their business, to unlock future possibilities and options that can take their business to the next level. This is achieved through our decentralised model, based on accountability, leveraging localised knowledge of our clients, the industry and the geography of their businesses.

A full range of banking and financial services is provided to the identified target market, which includes specialist segments such as agriculture, public sector institutions and franchising. Our offering includes debtor factoring, fleet solutions, specialised finance and innovative deposit and transactional solutions of high-volume and high-value deposit and transactional requirements for medium and large businesses, even to the scale where line-of-business integration and host-to-host solutions are required.

The strategic choice of collaborating with various external partners, including the public sector, has been a success as we have been awarded 11 tenders in the public sector over the past six months.

Despite the sluggish economic growth that has seen deteriorating levels of business confidence, with business owners taking a more cautionary approach to key investment decisions, average advances growth is up 10,8%, largely due to a 19,7% increase in new-loan payouts to R13,6bn, coupled with an increase in client drawdowns of existing facilities as well as new-client acquisitions. We remain a strong generator of funding, with average total deposits increasing by 9,1% to R140,8bn, giving rise to the generation of R69,5bn in net surplus funds.

The CLR of 38 bps remained below the TTC target range of 50 bps to 70 bps. However, it is up significantly from the 11 bps in 2018 and is the main driver of the reduced headline earnings of 8%. Downside risk does, however, remain, as we continue to see the pressure in the operating environment of our clients, cashflow constraints in the public and private sectors, and general economic uncertainty driving cautious borrowing behaviour.

Lower earnings driven by the normalisation of impairments and a 60bp increase in cap rate have together reduced the ROE to 18.8%. Business Banking however remains robust and is well positioned to support the growth of our country and our people. We are focusing on key initiatives that add to the future sustainability of our country and our people. This includes our investment in enterprise development, supplier development finance, access to finance for black SMEs in all sectors as well as job creation opportunities. We will also continue to focus on delivering delightful client experiences through the consistent performance of our core banking propositions. To do so we will leverage digital advances and the successes we have in our current specialised CVPs to increase market penetration in those segments, while also refining and exploring adjacent markets and value chain opportunities. A further centre of attention will be developing propositions that unlock new markets and new revenue streams, including high-end disruption through the delivery of ecosystem-led CVPs that are enabled by digital innovation.

Retail Relationship Banking (RRB)RRB provides relationship-based banking services to affluent individuals and their households (salaried and self-employed); to non-resident clients and embassies; as well as to SMEs with a turnover of less than R10m and their business owners. This limit was lifted from R10m with effect from 1 July 2019 and clients in the R10m to R30m bracket previously housed in Business Banking have been migrated to RRB. The impacts of this change will be reflected only in the next reporting period.

The relationship banking CVP is designed for clients seeking a personalised, flexible and proactive approach and caters for the more complex financial needs typically associated with the abovementioned segments.

The business performed strongly and remains a key contributor to the overall performance of the cluster. A 12,5% increase in loan payouts led to 12,0% growth in average assets. Average liabilities growth at 7,0% was slower than in previous years, but the business still remains a R35bn net funding contributor to the cluster. The CLR has increased from 27 bps to 33 bps; however, this risk outcome is still well below the TTC target range and once again confirms RRB's entrenched risk management capabilities and the high quality of the portfolio.

From a strategic perspective the professional-banking proposition for the affluent segment continues to provide excellent value for money and access to exclusive benefits for clients (such as a dedicated banker for the entire family, unlimited domestic and 10 international airport lounge visits, preferential investment rates and tailored credit). We have had success in growing a pipeline for the business (19% CAGR in young professional clients over two years), which is compensating for the generally low switching rates in the established-professional segment. The Nedbank Money app™ has been well received in this market, with more than 40% of potential users having enrolled.

Nedbank remains well positioned in the small-business segment, with market share increasing to 22% based on positive perceptions of our ability to understand and serve the needs of this important sector. We continue to invest in both our banking offering and support services, including business registration with the Companies and Intellectual Property Commission, issuing of BEE certificates and rendering support through our Simplybiz.co.za platform. From June 2019 business users (previously enrolled for internet banking) can use the Nedbank Money app, online banking channels and associated self-service functionality for their business and, if applicable, toggle seamlessly between their personal and business profile.

A key focus across both segments is the automation and fine-tuning of our credit assessment and pricing approach to maximise takeup as well as transactional cross-sell on the back of these assets. The broader efforts of the bank to create more self-service functionality, digitise the onboarding processes, renew our loyalty programme and create a worldclass forex offering will greatly benefit this business in coming years.

Consumer BankingConsumer Banking serves approximately seven million clients in three primary subsegments, namely youth, entry-level banking and the middle market. These are mostly individuals earning less than R750 000 per annum, but includes some non-individual clients, primarily stokvels, clubs and societies.

Consumer Banking registered strong underlying growth in H1 2019. Strong growth in advances, deposits and transactional revenue was complemented by judicious expense focus. Growth in impairments off a low base has, however, muted headline earnings growth.


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We continue to invest in disruptive CVPs. For example, in January we launched Unlocked.Me aimed at young adults. We have been pleased with the 17% yoy growth of new main-banked Unlocked.Me clients. Apart from the growth in banking clients, we are seeing pleasing levels of engagement and client registrations in the Unlocked.Me pillars relating to lifestyle and to potential.

We have continued to invest heavily in client experience. The improvements in digital outcomes above are in part a reflection of innovations we have brought to market on our Nedbank Money app. For example, clients can now easily open an investment product on the app and, through the app, clients can enjoy preapproved offers for personal loans that are paid into their accounts in minutes. A further important client experience enhancement has been the rollout of our onboarding solution, Eclipse, to all our frontline bankers. We are seeing that 60% of our clients are able to join Nedbank in less than 20 minutes, compared with an average of 40 to 50 minutes before. This is a material improvement in the experience of our clients.

Transactional BankingTransactional Banking provides fully inclusive access to banking by offering affordable bank accounts to our clients across all income levels, enabling financial inclusion and effective money management through key innovations such as MobiMoney, Unlocked.Me and savings pockets.

Earnings were driven by increased active and main-banked clients and growth in value-added services. Expenses decreased yoy by 3,3% as a result of active cost management initiatives and increased digital takeup.

Nedbank Transactional Banking continues to make strong progress in client-facing experiences that enable clients to seamlessly take up an account and engage on an extensive list of services through physical or digital channels. Clients can transact with confidence and have control over their finances through digitally empowering solutions. We also focus on developing foundational capabilities and investing in all areas of future digital experiences to address unmet needs. Some of the exciting new value propositions landed include our innovative MobiMoney offering to the unbanked sector of our economy.

Card and Payments Card and Payments provides card-issuing, acceptance and payment products and solutions for all client segments. Our offering includes key innovations such as POSplus, scan to pay, Market Edge™ and Gap Access™.

Income increased on the back of ongoing client gains and growth in transactional volumes. Acceptance volumes showed strong growth of 27% with Issuing growing at 5,9%. Machine learning and other data-driven techniques are being implemented to enhance our process in making credit decisions.

Nedbank Card and Payments' innovation momentum continues in a landscape that is experiencing accelerated structural changes driven by regulation, innovation and expected disintermediation by new entrants in the end-to-end payments value chain. Client usage and payment patterns continue to evolve, with convenience, cost, security and speed being the key factors that influence choice of payment. Nedbank Card and Payments' innovation agenda is dominated by value-adding payment and transactional solutions that meet these needs. For this reason we continue to drive differentiated and competitive value propositions that enhance client experience. Recent innovations launched include scan to pay, a first-in-market mobile payment solution that allows clients the convenience of paying by scanning a Masterpass, Zapper and Snapscan QR code. In February 2019 we saw a world first with the launch of the SAA Voyager Cheque Card, giving clients the

same earn rate of Voyager miles and benefits that they would traditionally earn off the existing credit suite of products. This opens up extended SAA travel benefits to our entire base, allowing clients who do not want additional credit to earn miles faster.

Nedbank also launched its POSplus solution, enabling merchants to seamlessly accept e-commerce, mobile or physical payments as well as providing key business insights to help any business owner. Nedbank's purpose-based lending solution, which offers clients more choice at the point of sale, is gaining traction in the market. Digital servicing through the Nedbank Money app and the internet continues to resonate with clients, with over 20 card services now available. These services include blocking and replacing cards, overseas travel notification and managing contactless and online purchases.

Forex and Investment ProductsOur aim is to create investment and forex products that provide easy and quick client experiences. Our goals are to improve our clients' digital experience by shifting volumes from physical to digital and to lower our cost as a result.

Following the launch of our online investment capabilities on the Money app and Nedbank Online Banking in Q4 2018, we noted an improved trend towards digital. At least 22% of new accounts were opened digitally by June 2019, compared with last year's 5%, and 46% of notices of withdrawal were done digitally compared with our prior trend of 35%.

RBB's market share of household investments contracted from 19,8% to 18,4%, impacted by our proactive pricing decisions to ensure an appropriate balance between margin and volume.

We are on the journey to further enhance our online investment platforms to lower servicing cost. In May 2019 we implemented maturing investment (reinvestments and payouts). In the next few months this will be further enhanced with recurring payments and the inclusion of Nedgroup Investments products in the investments product catalogue.

Several investment value propositions have been enhanced, including stokvels, tax-free savings accounts, onboarding on USSD, new tax-free fixed deposit accounts, the Corporate Saver third-party funds administration platform and a deposit note programme at the top end of our commercial base. Our new Electronic 32Day Notice Account was launched late 2018 and continues to be priced competitively. Furthermore, system changes relating to the implementation of the Legal Practices Act were successfully implemented.

For Forex our aim is to create new and improved trade and crossborder payment value propositions across all RBB segments. This include travel cards, foreign bank notes, remittances and foreign currency accounts among the business-related services that enable clients to import and export with well-managed risks.

We continued to focus on digitising all services, including investing, saving for travel and transferring funds between the Foreign Currency Account and the Travel Card. We are expanding the travel card offering from the consumer to the business market.

Unsecured LendingUnsecured Lending provides all segments of Consumer Banking lending products, which include personal loans, overdrafts and student loans, but exclude credit cards.

The personal-loans portfolio of R21,4bn represents the majority (97%) of Unsecured Lending's total advances.

Unsecured Lending earnings were negatively impacted by R28m relating to the reduced maximum NCA rate, R70m relating


to increased impairments due to negative macroeconomic forecasts and risk normalisation to within target range, as well as digital-related expense growth, offset somewhat by portfolio growth driving increased revenues and effective non-digital-related cost management.

Personal Loans average advances increased 12,7%, while period-end advances were up 12,9% to R21,4bn, approximately 1% ahead of market growth. Total book market share increased marginally from 9,86% to 9,93% (BA900, adjusted for non-retail personal loans), while new-business market share in targeted lower-risk segments grew to about 13,5%, marginally lower than in the previous year as competition for increased share of wallet for primary-banked clients increases.

The shift to digital continues to gain momentum, as evidenced by the increased origination contribution from the direct channel (call centres and digital solution) to more than 20% of total volumes, with approximately 58% of those clients experiencing an end-to-end digital experience driven primarily by the introduction of a faceless FICA process, up from 26% in the previous year. The functionality to take up a personal loan on the Nedbank Money app™ was launched in Q4 2018, enabling existing clients to take up a loan in six clicks and in under three minutes. Nearly 5% of volumes for the month of June 2019 came through this channel, which is expected to double by year-end, providing material benefits from both a growth and expenses perspective. Our new client-centred onboarding system has been landed, enabling onboarding of clients for life through a single digital application to enable frictionless cross-sell opportunities and materially reducing turnaround time. Numerous other new digital products and processes for both Nedbank and non-Nedbank clients will be launched over the coming months and are expected to provide further impetus to digital growth and enhance the market share trajectory for both Personal Loans and Transactional Banking.

Furthermore, machine learning techniques have been enhanced in credit-scoring models, which will, along with embedded risk and collections excellence, enable sustainable growth within the current risk appetite while improving client experiences and assisting in growing our main-banked transactional franchise.

Home LoansHome Loans make homeownership dreams a reality by providing secured-lending products for the consumer segment, with RRB and BB providing these products to their segments directly, leveraging off the home loan infrastructure for several of the administrative processes.

HE declined due to book growth of 5,3% being partly offset by margin pressure as a result of higher funding costs. The CLR has remained low with both the prior and current half-year results including releases from adjustments in forward-looking IFRS 9 macroeconomic assumptions. The stage 2 portfolio decreased to 10,3%, while stage 3 decreased to 4,5%. Impairment coverage on the stage 3 portfolio increased to 20,9%.

The business continues to invest in initiatives to drive profitable growth:

■ The Home Loans Digital Channel continues to improve the online application experience, delivering 18% growth in sales and contributing 10% of total sales.

■ The Nedbank Home-buying Toolkit was launched on the Nedbank Money app and enables Nedbank clients to receive

instant preapprovals, search for properties for sale in the market, and request free property reports with valuable information on the properties they are interested in.

■ The Home Loans Digital Channel’s 1% cashback initiative continued to reward clients for applying online. Clients are given 1% cash back based on the value of the loan amount registered (capped at R15 000), which is payable into a Nedbank salary-funded transactional account.

■ In line with our digitisation strategy, clients registered on the Nedbank Money app are able to view their balances and debit order details, obtain documents such as title deeds and statements, as well as obtain settlement amounts. Clients accessing online banking through the web are also able to request the cancellation of their bond, as well as payment drawdowns in respect of building loans. This has driven a reduction in call centre volumes of 56% since the introduction of these features, with a year-on-year reduction of 11%.

■ In a first-for-banking initiative Nedbank offered clients three months' free access to a virtual lifestyle assistant, HeyNed, available on the Nedbank Money app. HeyNed assists clients through the homeownership journey by allowing them to search for services and obtain quotes on just about anything, anywhere and at any time.

Disciplined cost control and the ongoing benefit of optimising processes and operations resulted in headcount reduction of 6% yoy.

We remain committed to helping clients who face financial hardship and provide a website to educate them about their options should they fall behind on their home loan repayments. Since launching the programme, over 35 000 families have been able to retain their homes as a result of loan restructures, offering an effective rehabilitation process, with the redefault rate on these loans being only 17,7%. In addition, almost 5 000 financially distressed clients were given a fresh start through the Nedbank-assisted sales programme since the commencement of this offering in 2009. This programme gives clients the option to sell their houses on the private market through an estate agent allocated by Nedbank, thereby avoiding the repossession and distressed sale of the house through sheriff auction. Nedbank-assisted sales are fast becoming the preferred choice for distressed clients, with 78% of distressed clients opting for this solution in 2019.

MFCMFC's key business strategy is to provide vehicle asset financing to the consumer segment. In addition, the financing of dealer floor plans and key vehicle distributor joint ventures are housed in this business.

The slight increase in HE is underpinned by growth in average advances of 8,3% to R99bn in a contracting vehicle sales market. HE was impacted by a higher impairments charge presented by the challenging economic climate.

The continued momentum in staying ahead of the market is maintained through strong alliances with major motor franchises and delivering a digitised, dynamic client experience that takes a car finance application from daunting and onerous to easy and intuitive. This ensures our clients have a variety of channels to suit their individual needs as well as shop for additional car products, Nedbank banking products and Nedbank insurance products at excellent prices. Key to MFC's long-run, sustainable HE track record is being consistent in risk appetite throughout the economic cycle.


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RETAIL AND BUSINESS BANKING: KEY BUSINESS STATISTICS

Jun

2019Jun

2018Dec

2018

Business Banking New-client acquisitions – groups 710 879 1 465Cross-sell product holding 103 369 92 884 105 548Home Loans Number of applications received thousands 76 72 148Average loan-to-value of new business registered % 90 89 91Average balance-to-original-value of portfolio % 77 76 77Proportion of new business written through own channels % 58 65 59Proportion of book written since 2009 % 77 72 74Owned-properties book Rm 29 43 45MFC Number of applications received thousands 796 725 1 524Percentage of used vehicles financed % 71,7 70,8 71,1 Personal Loans Number of applications received thousands 659 635 1 295Average loan size R000s 52,6 51,7 52,7Average term months 40,8 39,3 40,2Retail deposits Total value of deposits taken in rand billions 40 44 84Total value of deposit withdrawals rand billions 39 40 80Number of clients at period-end Retail main-banked clients thousands 2 907 2 771 2 976Business Banking groups1 21 512 20 927 21 538Small Business Services segment2 thousands 275 265 268Home Loans thousands 295 299 296MFC thousands 594 579 589Personal Loans thousands 452 443 451Card issuing thousands 1 026 1 008 1 024Investment products thousands 1 594 1 609 1 570Transactional products thousands 5 840 6 125 5 974Distribution Number of Business Banking locations 69 68 68Number of retail outlets 592 608 604Number of new-image branches3 366 346 363Number of ATMs4 4 030 3 974 4 022Number of ATMs with cash-accepting capabilities5 1 109 1 034 1 076Digitally enabled retail clients thousands 6 059 5 838 5 911Digitally active retail clients thousands 1 717 1 464 1 544POS devices thousands 99 91 96

1 1 328 client groups migrated to RRB on 1 June 2018.2 3 085 CISs migrated from RRB on 1 June 2018.3 Included in the number of retail outlets – shown separately for additional disclosure.4 Includes four corporate cash devices.5 Cash-accepting devices and interactive teller machines included in total number of ATMs.


■ Operational rollout of Eclipse onboarding. ■ Quality origination across all asset classes at appropriate

risk-based pricing, driving asset mix benefit and market share gains.

■ Solid growth in main-banked clients. ■ Innovative first-to-market digital solutions delivered. ■ Leveraged technologies such as robotics, artificial

intelligence, machine learning and data analytics capability to enhance operational efficiencies and improve client experience.

■ Strong lending franchise to drive cross-sell investment into platform solutions.

■ Cost-to-income ratio still higher and ROE ratio still lower than market.

■ Aggressive competitor pricing driving lower household deposit market share.

■ Slowdown in client transacting activity. ■ Worsening macro environment driving increase

in impairments. ■ Economic uncertainty influencing business

borrowing activity.


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BALANCE SHEET AVERAGE ADVANCES AND IMPAIRMENTS

Daily gross average advances

RmStage 1

%Stage 2

% Stage 3

%% of

total advances Credit loss ratio1

Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018 Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018

Home loans 123 129 116 794 118 338 85,1 83,2 83,7 10,3 12,0 12,0 4,5 4,8 4,4 35,3 36,2 35,9 0,09 0,10 0,07VAF 103 227 94 160 96 152 80,7 83,3 80,7 14,5 12,8 15,0 4,8 3,9 4,3 30,5 30,0 30,7 1,68 1,61 1,48Personal loans 20 627 18 807 19 228 71,9 74,3 73,2 12,2 13,6 12,4 15,9 12,1 14,5 5,9 5,8 5,9 5,62 4,41 5,21Card 16 946 16 188 16 413 84,6 81,6 80,5 4,6 8,7 8,5 10,8 9,7 10,9 4,8 5,0 4,8 6,05 4,84 4,57Other loans 1 889 1 879 1 865 74,5 76,1 75,7 10,6 11,0 12,0 14,9 12,9 12,3 0,5 0,5 0,5 3,84 2,97 2,92Total Retail 265 818 247 828 251 996 82,3 82,4 81,4 11,8 12,2 13,0 6,0 5,3 5,6 77,0 77,5 77,8 1,55 1,33 1,32Business Banking 76 760 69 388 71 577 89,2 93,0 88,7 7,1 4,0 4,0 3,7 3,0 3,4 23,0 22,5 22,2 0,38 0,11 0,15Total RBB 342 578 317 216 323 573 83,9 84,8 83,1 10,7 10,4 11,8 5,4 4,8 5,1 100,0 100,0 100,0 1,28 1,06 1,06

BALANCE SHEET IMPAIRMENT AS A PERCENTAGE OF BOOK

%

of totalStage 1

%Stage 2

% Performing stage 3

%Non-performing stage 3

%Total stage 3

%

Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018 Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018

Home loans 1,50 1,63 1,56 0,16 0,22 0,17 3,99 3,79 4,05 15,14 9,93 14,36 22,46 26,92 23,65 20,85 20,84 21,23VAF 3,89 3,13 3,84 0,75 0,94 0,72 6,42 5,45 6,91 22,95 20,96 22,82 75,16 65,23 76,74 49,39 42,52 51,31Personal loans 16,23 14,85 15,44 3,46 3,86 3,78 15,38 23,67 15,30 52,46 48,80 50,58 79,09 79,02 80,56 74,52 72,36 74,54Card 14,07 13,65 14,37 4,49 3,37 3,20 45,49 39,12 35,33 14,17 10,24 10,13 80,22 81,86 85,34 75,65 77,16 80,25Other loans 16,62 15,18 16,19 2,15 2,04 1,80 26,79 25,59 24,60 50,00 54,41 53,19 83,56 85,28 97,82 81,86 83,81 95,88Total Retail 4,45 4,06 4,4 0,90 0,96 0,83 7,22 7,85 7,56 24,35 19,04 23,59 57,06 55,69 59,43 48,01 43,25 49,16Business Banking 1,51 1,61 1,48 0,30 0,40 0,33 2,80 6,41 2,99 27,97 32,64 27,7 27,97 32,64 27,70Total RBB 3,77 3,51 3,75 0,76 0,82 0,71 6,54 7,73 6,89 24,35 19,04 23,59 51,10 51,13 53,18 44,86 41,76 45,96

BALANCE SHEET ACTUAL ADVANCES

Total advances

RmStage 1

RmStage 2

Rm Performing stage 3

RmNon-performing stage 3

RmTotal stage 3

Rm

Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018 Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018

Home loans 124 549 118 284 121 745 105 996 98 407 101 862 12 890 14 245 14 553 1 242 2 014 1 383 4 421 3 618 3 947 5 663 5 632 5 330VAF 107 580 98 222 104 248 86 843 81 827 84 081 15 617 12 592 15 662 2 527 1 951 2 122 2 593 1 852 2 383 5 120 3 803 4 505Personal loans 20 792 18 946 20 004 14 949 14 077 14 641 2 530 2 576 2 471 568 505 583 2 745 1 788 2 309 3 313 2 293 2 892Card 17 001 16 264 16 341 14 378 13 268 13 160 787 1 416 1 395 127 104 121 1 709 1 476 1 665 1 836 1 580 1 786Other loans 1 588 1 653 1 755 1 183 1 258 1 329 168 182 210 12 10 9 225 203 207 237 213 216Total Retail 271 510 253 369 264 093 223 349 208 837 215 073 31 992 31 011 34 291 4 476 4 584 4 218 11 693 8 937 10 511 16 169 13 521 14 729Business Banking 81 214 73 616 75 400 72 412 68 469 66 886 5 788 2 946 5 939 3 014 2 201 2 575 3 014 2 201 2 575Total RBB 352 724 326 985 339 493 295 761 277 306 281 959 37 780 33 957 40 230 4 476 4 584 4 218 14 707 11 138 13 086 19 183 15 722 17 3041 Impairments charge and resultant CLR include charges housed centrally within RBB.


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BALANCE SHEET ACTUAL IMPAIRMENTS

Total impairments

RmStage 1

RmStage 2

Rm

Performing stage 3specific impairment

RmSpecific impairments

RmTotal specific impairments

Rm

Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018 Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018

Home loans 1 868 1 926 1 897 173 213 176 514 539 589 188 200 199 993 974 933 1 181 1 174 1 132VAF 4 184 3 075 4 001 652 772 607 1 003 686 1 082 580 409 484 1 949 1 208 1 828 2 529 1 617 2 312Personal loans 3 375 2 813 3 088 517 543 554 389 610 378 298 247 295 2 171 1 413 1 861 2 469 1 660 2 156Card 2 392 2 221 2 347 645 447 421 358 554 493 18 11 12 1 371 1 209 1 421 1 389 1 220 1 433Other loans 264 251 284 25 25 24 45 47 52 6 6 5 188 173 203 194 179 208Total Retail 12 083 10 286 11 617 2 012 2 000 1 782 2 309 2 436 2 594 1 090 873 995 6 672 4 977 6 246 7 762 5 850 7 241Business Banking 1 225 1 182 1 114 220 276 223 162 188 178 843 718 713 843 718 713Total RBB 13 308 11 468 12 731 2 232 2 276 2 005 2 471 2 624 2 772 1 090 873 995 7 515 5 695 6 959 8 605 6 568 7 954

Income statement impairments charge1,2,3

RmStage 1

RmStage 2

Rm Stage 3

RmInterest on impaired

RmPostwriteoff recoveries

Rm IFRS 9 IFRS 9 IFRS 9 IFRS 9 IFRS 9 IFRS 9

Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018 Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018

Home loans 57 59 86 5 8 (27) (54) (60) (5) 169 174 241 (37) (35) (68) (26) (28) (55)VAF 862 751 1 427 46 17 (8) (64) (6) 272 1 077 936 1 556 12 (5) (1) (209) (191) (392)Personal loans 575 411 1 001 (36) (3) 52 25 59 67 1 011 673 1 550 (259) (134) (291) (166) (184) (377)Card 508 388 750 243 31 5 (139) 52 (9) 548 452 1 063 (9) (10) (19) (135) (137) (290)Other loans 36 28 55 1 1 (2) (6) (1) 4 67 49 101 (11) (8) (18) (15) (13) (30)Total Retail 2 038 1 637 3 319 259 54 20 (238) 44 329 2 872 2 284 4 511 (304) (192) (397) (551) (553) (1 144)Business Banking 143 38 105 (2) (43) (96) (16) 27 16 170 66 202 4 11 23 (13) (23) (40)Total RBB 2 180 1 675 3 424 257 11 (76) (254) 71 345 3 042 2 350 4 713 (300) (181) (374) (565) (576) (1 184)

1 Impairments charge and resultant CLR include charges housed centrally within RBB.2 The income statement charge includes the charge associated with unutilised balances.3 June 2018 and December 2018 reflect only debit balances in loans and advances, together with the impairments associated with these debit balances.


NEDBANK WEALTH

FINANCIAL HIGHLIGHTSfor the period ended

Jun

2019Jun

2018Dec

2018

NII (Rm) 564 532 1 113Impairments charge on financial instruments (Rm) 21 21 39NIR (Rm) 1 660 1 697 3 484Operating expenses (Rm) 1 593 1 495 3 012Headline earnings (Rm) 455 519 1 133ROE (%) 22,3 25,4 26,8ROA (%) 1,27 1,61 1,69CLR (%) 0,14 0,15 0,13NIR to total operating expenses 104,2 113,5 115,7Cost-to-income ratio (%) 71,6 67,1 65,5Interest margin (%) 2,20 2,29 2,31Assets under management (Rm) 322 766 314 173 297 338Life assurance embedded value (Rm) 3 347 2 684 2 786Life assurance value of new business (Rm) 231 173 380Total assets (Rm) 74 150 69 778 71 142Average total assets (Rm) 72 182 65 062 66 982Total advances (Rm) 31 330 31 089 31 111Average total advances (Rm) 30 824 28 240 28 908Total deposits (Rm) 41 174 37 983 39 495Average total deposits (Rm) 40 567 35 934 37 217Average allocated capital (Rm) 4 114 4 116 4 225

In a difficult macro environment, Nedbank Wealth’s HE declined 12,3% to R455m, with ROE at 22,3%. The international Wealth Management business delivered a strong performance with pleasing year-on-year HE growth, while significant weather-related claims adversely affected the performance of the Insurance business. Subdued investor confidence impacted the domestic Wealth and Asset Management businesses, resulting in a decline in HE.

NII grew 6,0% to R564m, supported by strong deposit growth. Impairments were well managed in the weakening credit environment, which led to CLR improving to 0,14%, well below the TTC target range of 0,20% to 0,40%.

NIR declined 2,2% to R1 660m due to subdued investor confidence that resulted in lower overall JSE volumes traded, as well as the derisking of portfolios towards lower-margin products. NIR was further impacted by an increase in weather-related claims that adversely affected the short-term insurance business in the first half of the year, relative to the lower claims experienced in H1 2018.

Expenses grew 6,6% to R1 593m and as a result the cost-to-income ratio increased to 71,6%.

Overall, Wealth Management’s HE declined 17,9% to R96m on the back of a weaker performance in the local business, bolstered by a strong international performance. Advances remained relatively flat, while deposits increased by 8,4%.

Internationally, Wealth Management delivered a notable uplift in year-on-year earnings underpinned by an increase in the number of high-net-worth clients and strong deposits growth, despite Brexit uncertainty, which impacted lending activity. Nedbank Private Wealth was named Best UK Private Bank at the 2019 City of London Wealth Management Awards.

519

455

215

144

96236

166

117

Cluster Insurance Asset Management

WealthManagement


Jun 2019Jun 2018

Return on equity(%)

Jun2019

Jun2018

Jun2017

Jun2016

Jun2015

27,8

35,9

38,9

22,3

25,4


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Subdued investor confidence affected the local Wealth Management business, resulting in reduced market activity, which impacted brokerage fees. Portfolio management fees declined due to weaker investment returns and a shift in product mix, with investors derisking portfolios to lower-margin products. Nedbank Private Wealth was voted Top Private Bank and Wealth Manager in South Africa for Super Affluent Clients and ESG/Social Impact Investing in the 2019 Euromoney Private Banking and Wealth Management Survey.

Asset Management’s net flows increased to R12bn, driven by low-risk income and cash solutions, with overall AUM increasing 2,9% to R323bn. HE decreased 13,3% to R144m, mainly due to the change in AUM mix. At the 2019 Raging Bull Awards, Nedgroup Investments won the Top Offshore Manager award for the fourth year in a row and was also recognised as the Best Fund House: Larger Fund Range at the 2019 Morningstar Fund Awards. Nedgroup Investments remains a solid franchise, ranked fifth-largest unit trust manager and third-largest offshore unit trust manager.

Insurance HE decreased 8,9% to R215m, mainly due to higher weather-related claims. This was offset by an increase in sales and lower claims in the credit life portfolio. Non-life insurance gross written premiums grew marginally by 1,5% to R625m due to an increase in vehicle value-added product premiums, offset by lower volumes in homeowner’s cover.

Life value of new business grew 33,5% to R231m, driven by the combined effect of new business and a statutory change in commission in the credit life portfolio. Life embedded value increased 24,7% to R3 347m due to the increase in VNB, lower dividend payment and the statutory change in commission. Nedbank Insurance received recognition for the investment made in its single policy administration system by winning the Celent’s Model Insurer of the Year award in the legacy and ecosystem transformation category.

The local Wealth Management business will leverage cumulative opportunities within the group, focus on positioning the Nedbank Private Wealth brand and continue to invest in compelling CVPs.

The international Wealth Management business will focus on initiatives that further improve client experience by investing in worldclass digital innovation to complement high-touch and personal service.

Asset Management will focus efforts on delivering long-term performance and making it easy and secure to do business, and will continue to build a culture of stewardship. The business has invested heavily in its offshore capabilities and is well positioned to grow in this area.

Insurance remains committed to enhancing client experience through innovative solutions while further improving data and digital capabilities. The business will continue to focus on penetrating the Nedbank client base in line with our strategy as a bancassurer.

Despite our cost-to-income ratio of less than or equal to 60% proving to be more challenging to achieve in the short-to-medium term given the current and expected market environment, which impacts NIR, we remain committed to achieving our 2020 ROE target of more than or equal to 30%. To this end we will be focused on creating internal efficiencies, delivering delightful client experiences and/or generating additional revenue.


■ Strong international performance, driven by an increase in number of high-net-worth clients and strong deposit growth.

■ Solid AUM growth due to increased net flows. ■ Increased sales and lower claims in credit life.

■ Significant weather-related claims in the insurance business. ■ Subdued investor confidence and lower JSE volumes. ■ Shift in product mix towards lower-margin income and

cash solutions.

Assets under management(Rm)

56 2

55

49 5

88

49 9

94

61 5

74

55 9

74

InternationalLocal

256

058

223

739

207

301

261 1

92

241

364

Jun2019

Dec2018

Dec2017

Dec2016

Dec2015

Looking forwardWe anticipate continued economic headwinds, which will negatively impact clients and businesses alike. Market conditions are expected to remain less than robust, with subdued investor sentiment impacting appetite for trading and general business volumes. Brexit uncertainty continues to impact our international businesses through banking and investment activity. Strong competition from UK ring-fenced banks is set to further dampen loan demand appetite.

Despite this, Nedbank Wealth remains committed to providing innovative, market-leading client experiences; delivering value through investment in systems as well as data and digital capabilities; and managing growth in expenses through initiatives that create efficiencies across our businesses.


ASSETS UNDER MANAGEMENT

RmJun

2019Jun

2018Dec

2018

Fair value of funds under management – by type Unit trusts 263 488 253 803 241 421Third party 911 848 839Private clients 58 367 59 522 55 078 322 766 314 173 297 338Fair value of funds under management – by geography South Africa 261 192 251 814 241 364Rest of the world 61 574 62 359 55 974 322 766 314 173 297 338

Rm Unit trusts Third partyPrivate clients Total

Reconciliation of movement in funds under management – by type Opening balance at 31 December 2018 241 421 839 55 078 297 338Inflows 256 617 14 5 069 261 700Outflows (245 171) (7) (4 636) (249 814)Mark-to-market value adjustment 11 584 83 2 940 14 607Foreign currency translation differences (963) (18) (84) (1 065)Closing balance – 30 June 2019 263 488 911 58 367 322 766

Rm South AfricaRest of

the world Total

Reconciliation of movement in funds under management – by geography Opening balance at 31 December 2018 241 364 55 974 297 338Inflows 260 268 1 432 261 700Outflows (248 588) (1 226) (249 814)Mark-to-market value adjustment 8 148 6 459 14 607Foreign currency translation differences (1 065) (1 065)Closing balance – 30 June 2019 261 192 61 574 322 766


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NEDBANK REST OF AFRICA

Based on the latest World Bank forecast, sub-Saharan African growth has disappointed, with weakening external demand, supply disruptions and elevated policy uncertainty weighing on activity in the major economies. Growth in the region is projected to pick up from 2,5% in 2018 to 2,9% this year, and on average with 3,4% in 2020/21 as domestic demand gathers pace and oil production recovers in the large exporting economies. However, with GDP in many countries in the region still expected to grow faster than in SA, the region will continue to present opportunities.

Nedbank remains committed to long-term and profitable growth in our business in the rest of Africa. Our ambition remains to provide our clients with access to the best financial services network in Africa. We have a two-pronged strategy

in doing business on the continent: own and managed banking operations in SADC and East Africa and providing our clients with access to a banking network in West and Central Africa through our investment and alliance with the pan-African group Ecobank Transnational Incorporated (ETI), which operates in 36 African countries.

The ETI recovery is continuing, with 10 quarters of profitability having been reported. ETI's Q1 2019 financial performance reflects the progress of the turnaround as shown by:

■ Strong performance from West African businesses (Anglophone West Africa and Francophone West Africa) – achieving combined ROE > 30% and profit after tax +52%.

■ Recovery in Central, Eastern and Southern Africa performance – ROE at 37% and profit after tax +92%.


Total Rest of Africa SADC ETI

Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018

NII (Rm) 779 755 1 627 941 911 1 951 (162) (156) (324)Impairments charge on financial instruments (Rm) 122 106 113 122 106 113 NIR (Rm) 481 546 1 206 481 546 1 206 Operating expenses (Rm) 1 148 1 136 2 416 1 148 1 136 2 416 Associate income 381 247 611 3 381 247 608Headline earnings (Rm) 293 245 702 29 111 327 264 134 375ROE (%)1 9,8 7,6 10,3 1,1 4,0 5,6 ROA (%) 1,56 1,39 1,79 0,19 0,78 1,03 7,52 3,79 5,19Return on cost of ETI investment (%) 12,3 7,9 9,7 12,3 7,9 9,7CLR (%) 1,08 1,09 0,51 1,08 1,09 0,51 NIR to total operating expenses 41,9 48,1 49,9 41,9 48,1 49,9 Cost-to-income ratio (%) 70,0 73,4 70,2 80,7 77,9 76,5 Interest margin (%) 5,21 5,37 5,25 7,28 7,62 7,27 Total assets (Rm)2 38 377 39 540 37 021 35 512 36 675 33 776 2 865 2 865 3 245Average total assets (Rm) 37 210 35 494 39 123 34 187 32 618 36 042 3 023 2 876 3 081Total advances (Rm) 22 497 22 123 21 037 22 497 22 123 21 037 Average total advances (Rm) 21 591 20 321 21 866 21 591 20 321 21 866 Total deposits (Rm) 30 560 31 616 29 472 30 560 31 616 29 472 Average total deposits (Rm) 29 976 26 889 30 263 29 976 26 889 30 263 Average allocated capital (Rm)3 6 029 6 522 6 812 5 145 5 581 5 815 884 941 997

1 H1 2019 ROE on subsidiary incountry statutory capital is 10,6% (Namibia 11,4%; eSwatini 16,6%; Lesotho 11,7%; Malawi -106,6%; Zimbabwe 6,4%; Banco Único 14,6%).


176 (1

092

)

245

293

(550

)

344

Jun2019

Jun2017

Jun2016

Jun2018

Jun2015

Return on equity(%)

(32,

4)

(15,

2)

15,3

9,8

7,6

Jun2018

Jun2019

Jun2017

Jun2016

Jun2015


■ Ecobank Nigeria achieving an ROE of 2% and profit after tax of -88%, with the Nigerian business still facing headwinds. The performance in Nigeria was primarily affected by the suspension of interest income accruals on mainly subsidy-related oil and gas exposures, subdued client activity and a decrease in interest earning asset balances. Overall the results having been adversely affected by the transition to the NAFEX rate in November 2018 and foreign exchange translation changes.

In our ETI investment the focus remains on supporting the delivery of the board-driven strategic agenda and supporting management in key focus areas. It is also about leveraging the investment through collaboration to identify more growth opportunities. As Nedbank we are continuing to leverage our investment in ETI through collaboration. Over 110 Nedbank wholesale clients, with more than 230 new accounts opened at Ecobank businesses across the continent.

In our SADC business, where we manage and own six banks, performance was affected by adverse macroeconomic conditions, monetary policy and foreign exchange changes in Zimbabwe, and non-operational writeoffs. However, further operational progress has been made with investing for growth and enabling delivery of an improved client experience. These investments include:

■ The Nedbank Money (Africa) app, with 19 additional functionalities, to replace the Nedbank App Suite. The new app was launched in Lesotho, Namibia, Malawi and Eswatini in May 2019. (Zimbabwe and Mozambique already run separate and competitive apps.)

■ A competitive corporate internet banking solution, with enhanced functionality, launched in Eswatini and Namibia (Zimbabwe, Malawi and Lesotho rolled out the corporate

banking solution in 2017 and 2018, while Mozambique already has an award-winning internet banking solution).

■ The Nedbank Youth Account, which is one of the leading youth offerings in Zimbabwe that comes with zero fees.

In addition, improving the control environment remains a key focus area in our SADC business, with a programme specifically geared towards this. The client remains at the heart of all business delivery aspirations, and there are plans to provide an enhanced client experience through optimal client solutions that are data-insight-led.

Financial highlightsFor H1 2019 the growth performance of the RoA business was driven primarily by the ongoing ETI recovery. Overall business delivered HE of R293m, which is a 19,6% increase over H1 2018, and produced returns of 9,8% for H1 2019, compared with 7,6% in H1 2018. Of this, our SADC business contributed R29m in HE, which makes up 10%, while the ETI business achieved an HE of R264m, which accounts for the remaining 90%.

The HE for the SADC business was down year on year by 74% due to adverse macroeconomic conditions, currency depreciation in Zimbabwe and once-offs. These once-offs included a deferred tax writeoff of R33,9m from Malawi and non-operational writeoffs of R27,4m. Excluding Zimbabwe and once-offs, HE for SADC would have been 21% up to R87m yoy.

Even with the overall decline in HE in SADC, the business had good deposit growth against a balanced performance of key financial drivers:

■ Average advances and average deposits have grown 6% and 11% respectively.

ATMs

2416

0

2818

2

Banco Único

Rest of Africa

192

154

136

223

219

Jun2019

Jun2018

Jun20171

Jun2016

Jun2015

1 Banco Único consolidated with effect from 1 October 2016 .

17

Banco Único

Rest of Africa

Branches

78

1986

Jun2019

Jun2018

Jun20171

Jun2016

Jun2015

89

6761 9896

1 Banco Único consolidated with effect from 1 October 2016 .


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■ Zimbabwe to continue to be a challenging environment to do business in;

■ to achieve a stronger control environment; and ■ to have an ongoing review of our business portfolio

in place.

The focus will be on growing HE and achieving returns above COE over time through:

■ delivery on client experience and great client solutions informed by client insights;

■ delivery on digital strategy to transform our business model; and

■ an increase in share of wallet from existing clients and growing faster than market in client acquisition.

■ ETI is currently forecasting full-year 2019 numbers to be flat on full-year 2018 numbers. However, we expect to report year-on-year growth for the full year due to our reporting a quarter in arrear. We will continue to leverage the Ecobank-Nedbank-API capability and crossborder remittance solution for the convenience of clients.

Nedbank will continue to contribute to the recovery of the ETI business by supporting management in key focus areas and leveraging the investment through collaboration to identify business growth opportunities.


■ Ongoing ETI recovery – ETI reported 10 consecutive quarters of profit.

■ Opening more than 230 accounts since 2014 for over 110 of our wholesale clients who bank with Ecobank.

■ Good client growth across RoA. ■ Continued good cost management in the business (overall

costs up only 1%). ■ Launch of the Nedbank Money app, positioning us for growth

into the future because of continued investments in digital solutions and channels.

■ Development of new CVPs, enabling strong growth in transactional clients, assets and deposits.

■ Growth in advances and deposits. ■ Growth in app transactions (except Zimbabwe), point-of-sale

devices and revenue.

■ Difficult economic conditions in some SADC countries. ■ Continued macroeconomic pressure, changes to

forex/monetary policy in Zimbabwe and non-operational writeoffs adversely affecting RoA results.

■ Challenging environment for ETI in Nigeria. ■ Decline in NIM, NIR and cost-to-income ratio – primarily

because of Zimbabwe. ■ Increased regulatory requirements driving higher cost

of compliance.

■ NII grew 3%, while the NIM fell 34 bps, reflecting the difficult environment, especially in Zimbabwe where NII was down 57% yoy.

■ NIR decreased 11,5%, reflecting the negative environment across the businesses and regulatory pressure to reduce pricing. Excluding Zimbabwe, NIR would have increased by 6%.

■ Client numbers grew 7% yoy, with a focus on acquisition of quality clients. We also continued to reduce dormant accounts to acceptable levels.

■ Expenses increased 1,06%, well below inflation, highlighting continued efforts and drive towards good cost management. However, operating income in the same period decreased 4,77%, primarily driven by performance in the Zimbabwe business.

■ The cost-to-income ratio declined 28 bps, due to muted revenue growth and good cost management.

Looking forwardMacroeconomic pressures are expected to continue, but the business remains committed to long-term and profitable growth in the rest of Africa. We expect the RoA business to be a positive contributor to group earnings.

In our owned and managed operations in SADC, we expect: ■ performance to improve in H2 2019 relative to H1 2019 (no

once-offs expected);


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Nedbank Group South Africa1 Rest of Africa2 Rest of the world

RmJun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018 Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018

Consolidated statement of financial position Assets Cash and cash equivalents 35 396 32 818 34 791 28 676 25 142 27 763 5 033 6 324 5 615 1 687 1 352 1 413Other short-term securities 70 369 94 226 79 362 49 491 72 314 58 537 4 373 5 724 4 776 16 505 16 188 16 049Derivative financial instruments 33 841 28 058 22 692 33 663 27 893 22 525 18 22 10 160 143 157Government and other securities 126 172 76 730 96 791 123 790 74 236 94 329 869 400 668 1 513 2 094 1 794Loans and advances 759 090 712 668 736 305 691 478 657 453 669 363 22 497 22 123 21 037 45 115 33 092 45 905Other assets 76 727 74 515 73 971 66 976 64 809 64 398 4 666 4 947 4 915 5 085 4 759 4 658Intergroup assets – – – (921) (545) (497) 921 497 545 Total assets 1 101 595 1 019 015 1 043 912 993 153 921 302 936 418 38 377 39 540 37 518 70 065 58 173 69 976Equity and liabilities Total equity 94 637 88 962 91 271 78 552 73 281 74 727 6 029 6 522 6 812 10 056 9 159 9 732Derivative financial instruments 30 470 25 394 20 003 30 359 25 266 19 913 19 40 12 92 88 78Amounts owed to depositors 865 815 801 165 825 804 786 988 721 348 747 532 30 560 31 616 29 472 48 267 48 201 48 800Provisions and other liabilities 54 392 49 814 51 247 51 884 47 986 49 474 1 453 1 103 894 1 055 725 879Long-term debt instruments 56 281 53 680 55 587 55 965 53 358 55 259 316 322 328 Intergroup liabilities – – – (10 595) 63 (10 487) (63) 10 595 10 487Total liabilities 1 101 595 1 019 015 1 043 912 993 153 921 302 936 418 38 377 39 540 37 518 70 065 58 173 69 976Consolidated statement of comprehensive income NII 14 819 14 006 28 819 13 498 12 872 26 331 779 755 1 627 542 379 861Impairments charge on financial instruments 2 543 1 815 3 688 2 421 1 827 3 642 122 106 113 (118) (67)Income from lending activities 12 276 12 191 25 131 11 077 11 045 22 689 657 649 1 514 542 497 928NIR 12 874 12 236 25 976 11 878 11 256 23 829 481 546 1 206 515 434 941Operating income 25 150 24 427 51 107 22 955 22 301 46 518 1 138 1 195 2 720 1 057 931 1 869Operating expenses 15 565 14 756 31 632 14 014 13 287 28 505 1 148 1 136 2 416 403 333 711Indirect taxation 519 476 942 479 453 894 32 18 37 8 5 11Profit from operations 9 066 9 195 18 533 8 462 8 561 17 119 (42) 41 267 646 593 1 147Share of income/(losses) of associate companies 422 207 528 41 (40) (83) 381 247 611 Profit before direct taxation 9 488 9 402 19 061 8 503 8 521 17 036 339 288 878 646 593 1 147Direct taxation 2 222 2 362 4 807 2 177 2 314 4 649 (2) (13) 23 47 61 135Profit after taxation 7 266 7 040 14 254 6 326 6 207 12 387 341 301 855 599 532 1 012Profit attributable to non-controlling interest 396 344 759 348 288 606 48 56 153 Headline earnings 6 870 6 696 13 495 5 978 5 919 11 781 293 245 702 599 532 1 012

1 Includes all group eliminations.2 The Rest of Africa geographical segmental income statement and balance sheet consist of the SADC banking subsidiaries and the investment in ETI. These statements

do not include transactions concluded with clients resident in the rest of Africa by other group entities within CIB nor transactional banking revenues. For example, CIB has a credit exposure to clients resident in the rest of Africa of R18,6bn (June 2018: 21,6bn; December 2018: R27,7bn).

GEOGRAPHICAL SEGMENTAL REPORTINGfor the period ended


103 Net margin analysis107 Impairments 116 Non-interest revenue118 Expenses120 Non-trading and capital items120 Taxation charge120 Preference shares

Income statement analysis

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1 Net margin analysis Jun 20191 Jun 20181 Dec 2018Nedbank Group Bps Rm Bps Rm Bps Rm

Closing average interest-earning banking assets (year-to-date average)2 836 193 769 499 790 376Opening NIM/NII 367 28 244 358 27 320 362 27 624Growth in banking assets 2 448 230 987Endowment (2) (192) (2) (162) (2) (184)

Capital, net of working capital (3) (244) (1) (113) (2) (146)Deposits 1 52 (1) (49) (38)

Asset margin pricing and mix (5) (372) 9 688 4 340Impact due to pricing (8) (673) 4 272 3 224Impact due to mix change 3 301 5 416 1 116

Liability margin pricing and mix 3 229 1 42 1 99Deposits pricing and mix movements 3 235 (3) (273) (2) (169)

Impact due to pricing 4 333 (5) (389) (2) (159)Impact due to mix change (1) (98) 2 116 (10)

Enhancing funding profile (6) 4 315 3 268Prime – JIBAR basis 1 72 (2) (118) (1) (100)HQLA (2) (161) 2 137 (1) (49)IFRS 9: Financial Instruments 4 (21)IFRS 16: Leases (4) (290) Other (1) (94) 1 103 2 123Closing NIM/NII for the period 357 29 884 367 28 244 365 28 819

1 NII for the six months is annualised. 2 The year-to-date average is disclosed for June 2018 and June 2019.

Net interest margin (June 2018 to June 2019)(Bps)

IFRS 16 HQLA OtherLiability pricing and mix

Asset pricing and mix

Endowmentimpact

Jun2018

367

(1)(2) (4)(5) 13

Jun2019

Prime – JIBARbasis

(2)

357


NET INTEREST INCOME


■ Positive mix changes due to stronger growth in RBB higher-margin advances, compared with slower growth in CIB low-margin advances.

■ Liability rate benefit as a result of improved pricing on deposits.

■ Widening of the prime – JIBAR spread in 2019 versus 2018.

■ Negative endowment impact due to lower net endowment balances as a result of the odd-lot offer and non-financial assets growing faster than non-financial liabilities, partially offset by the average prime rate that increased from 10,09% in 2018 to 10,25% in 2019.

■ A decline in the Personal Loans margin due to the treatment of interest on the stage 3 portfolio and the extended writeoff period after the implementation of IFRS 9 and the impact of NCA pricing caps.

■ A decline in margin due to competitive pricing on wholesale advances.

■ Higher levels of low-yielding HQLA held in the banking book. ■ The implementation of IFRS 16 on 1 January 2019 results in

an interest expense on the lease liability for operating leases being included in NII. Previously, operating lease expenses were included in total operating expenses.

NII SENSITIVITY ANALYSIS ■ At June 2019 the NII sensitivity of the group’s banking book for a 1% parallel reduction in interest rates, measured over 12 months,

was 1,62% of total group ordinary shareholders’ equity, which is below the board’s approved risk limit of < 2,25%. ■ This exposes the group to a decrease in NII of approximately R1 387m before tax, should interest rates decrease by 1% across the

yield curve, measured over a 12-month period. Nedbank London and Wealth International NII sensitivities are, however, measured at a 0,5% instantaneous decrease in interest rates.

■ The group’s NII sensitivity exhibits very little convexity and will therefore also result in an increase in pretax NII of approximately similar amounts should interest rates increase by 1%.

■ The group’s NII sensitivity is actively managed through on- and off-balance-sheet interest rate risk management strategies for the group’s expected interest rate view and impairment sensitivity.

Net interest income1

(Rm)

26 4

26

23 8

85

27 6

24

28 2

44

28 8

19

29 8

84

Jun2019

Dec2015

Dec2016

Dec2017

Jun2018

Dec2018

1 June annualised.

Interest margin trends versus prime rate(%)

3,62

3,54

3,30

3,67

3,65

3,57

Nedbank Group NIM

Average prime rate 9,4

10,4 10,4

10,1 10,1

10,3

Jun2019

Jun2018

Dec2018

Dec2017

Dec 2016

Dec 2015


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Lending spread versus credit loss ratio (including the target range) of Nedbank Group(Bps)

Jun2019

Jun2018

Dec2018

Dec2017

Dec2016

Dec2015

Lending spread (banking financial assets)

CLR

Current CLR target range (60 –100 bps) Δ = 182Δ = 170Δ = 177

240231

Δ = 187 Δ = 187 Δ = 169

53

240 239

53

70

4968

77

238254

■ The group’s lending spread decreased by 1 bps in the current year to 239 bps. This was primarily due to a decline in the Personal Loans margin and competitive pricing on wholesale advances, partially offset by positive advances mix changes, with RBB advances growing faster than CIB advances.

■ The group’s CLR increased by 17 bps yoy to 70 bps at 30 June 2019, which is within the lower half of the group TTC target range of 60 bps to 100 bps.


Average banking statement of financial position and related interest

Jun

2019Jun

2018Dec 2018

Average balance

Margin statement interest1

Average balance

Margin statement interest

Average balance

Margin statement interest

Rm Assets Received % Assets Received % Assets Received %

Average prime rate 10,25 10,12 10,09Assets Loans and advances Home loans (including properties in possession) 157 884 7 479 9,55 150 332 7 017 9,41 152 545 14 314 9,38Commercial mortgages 165 390 8 026 9,79 159 872 7 710 9,73 161 473 15 581 9,65Finance lease and instalment debtors 119 086 7 008 11,87 110 472 6 375 11,64 112 521 13 099 11,64Credit card balances 17 272 1 280 14,95 16 307 1 214 15,01 16 621 2 461 14,81Overdrafts 22 300 1 162 10,51 19 224 1 011 10,61 20 052 2 081 10,38Term loans and other2 222 310 9 086 8,24 208 706 8 657 8,36 212 525 15 982 7,52Personal loans 23 342 2 503 21,62 20 628 2 313 22,61 21 219 4 764 22,45Impairment of loans and advances (15 963) (14 524) (14 383) Government and public sector securities 77 910 3 297 8,53 45 100 1 823 8,15 53 134 4 388 8,26Short-term funds and trading securities 46 662 1 295 5,60 53 382 1 596 6,03 54 669 3 271 5,98Interest-earning banking assets 836 193 41 136 9,92 769 499 37 716 9,88 790 376 75 941 9,61Revaluation of FVTPL-designated assets 1 858 1 768 1 202 Other non-interest-bearing assets3 101 688 87 561 95 335 Total assets 939 739 41 136 8,83 858 828 37 716 8,86 886 913 75 941 8,56

Liabi-lities Paid %

Liabi-lities Paid %

Liabi-lities Paid %

Equity and liabilities Deposit and loan accounts 450 243 15 155 6,79 419 583 14 027 6,74 427 747 28 469 6,66Current and savings accounts 108 663 529 0,98 104 095 481 0,93 107 761 1 016 0,94Negotiable certificates of deposit 109 220 4 333 8,00 100 464 3 943 7,91 104 236 8 236 7,90Other interest-bearing liabilities4 79 005 3 659 9,34 54 704 2 447 9,02 66 586 4 285 6,44Long-term debt instruments 56 512 2 641 9,42 53 602 2 812 10,58 53 810 5 116 9,51Interest-bearing banking liabilities 803 643 26 317 6,60 732 448 23 710 6,53 760 140 47 122 6,20Revaluation of FVTPL-designated liabilities 1 858 1 768 1 202 Other non-interest-bearing banking liabilities 45 922 41 254 40 560 Ordinary and minority shareholders' equity 88 316 83 358 85 011 Total shareholders' equity and liabilities 939 739 26 317 5,65 858 828 23 710 5,57 886 913 47 122 5,31Interest margin on average interest-earning banking assets 836 193 14 819 3,57 769 499 14 006 3,67 790 376 28 819 3,65

1 Yields are before incorporating the impact of hedging derivatives.2 Includes term loans, preference shares, factoring debtors, foreign lending, loans to banks and other lending-related instruments.3 Includes cash and banknotes, derivative financial instruments, insurance assets, associates and investments, property and equipment, mandatory reserve deposits

with central banks, intangible assets and other assets.4 Includes derivative financial instruments, investment contract liabilities, lease liabilities and other liabilities.


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2019Jun

2018Dec

2018

Total income statement impairments net of recoveries (Rm) 2 543 1 815 3 688Stage 1 197 74 200Stage 2 116 (246) (88)Stage 3 2 230 1 987 3 576

Total on-balance-sheet ECLs (Rm) 16 273 14 265 15 488Stage 1 2 940 2 739 2 762Stage 2 3 369 3 516 3 432Stage 3 9 964 8 010 9 294

Total ECL to gross banking loans and advances (%) 2,21 2,03 2,18Corporate and Investment Banking 0,57 0,48 0,50Retail and Business Banking 3,77 3,51 3,75

2 Impairments

Jun2019

Dec2018

Jun2018

Total on-balance-sheet impairments to banking book GLAA held at amortised cost(%)

2,212,182,03

Nedbank Group impairments charge(Rm)

Stage 1 ECL (portfolio impairments)

Stage 2 ECL (portfolio impairments)

Stage 3 ECL (specific impairments)

Jun2019

Jun2018

74

(246)

116197

1 815

1 9872 230

2 543

Nedbank Group credit loss ratio trends(%)

0,700,68

Stage 3 CLR

Stage 1 and 2 CLR

Total CLR

0,08

0,490,53 0,52

0,530,58

0,77

0,62

0,690,70

0,48

(0,01) 0,01(0,05)

0,010,07

Current CLR target range (0,6% – 1,0%)

Jun 2019Dec 2017 Jun 2018 Dec 2018Dec 2016Dec 2015


■ Nedbank Group on-balance-sheet impairments increased to R16 273m at 30 June 2019 (2018: R14 265m), resulting in an increase in total impairments as a percentage of banking book gross loans and advances (GLAA) to 2,21% (2018: 2,03%), with CIB increasing to 0,57% (2018: 0,48%) and RBB to 3,77% (2018: 3,51%).

■ The impairments charge increased 40,1% to R2 543m (2018: R1 815m), leading to a 17 bps higher CLR of 0,70% (2018: 0,53%), which is now in the lower half of the group’s 60 bps to 100 bps TTC target range.

CIB impairments charge increased to R270m (2018: R23m), off a low prior-year base, with stress in the agriculture, cement and retail industries leading to rating migrations and an increase in stage 1 and 2 impairments. RBB impairments charge increased to R2 180m, driven by increased levels of defaults and stage 3 impairments in a challenging macroeconomic environment. RoA impairments charge increased to R122m on the back of deteriorating asset quality across RoA in line with the increase in CLR of 1,09%, which is above the TTC target range.

■ Nedbank Group on-balance-sheet central provision decreased by R50m to R115m (2018: R165m) as risks provided for have emerged. The remainder of the provision is held for emerging risks not reflected in the impairment models and elevated risks for certain wholesale clients.

IMPAIRMENT OF LOANS AND ADVANCES

Rm

Corporate and

Investment Banking

Retail and Business

Banking WealthRest of

Africa Centre Jun 2019 Jun 2018 Dec 2018

Expected credit losses – opening balance 1 866 12 796 187 816 180 15 845 14 447 14 447Stage 1 ECLs 601 2 042 25 220 1 2 889 2 806 2 806Stage 2 ECLs 548 2 791 22 78 148 3 587 3 886 3 886Stage 3 ECLs 717 7 963 140 518 31 9 369 7 755 7 755

Statement of comprehensive income charge net of recoveries 270 2 180 21 122 (50) 2 543 1 815 3 688Adjusted for: 38 (1 587) (10) (151) – (1 710) (1 566) (2 290)Recoveries 16 563 21 600 629 1 271Interest in suspense 28 300 328 192 414Amounts written off/Other transfers (6) (2 450) (10) (172) (2 638) (2 387) (3 975)

Closing balance 2 174 13 389 198 787 130 16 678 14 696 15 845

Stage 1 ECLs 568 2 291 22 204 1 3 086 2 861 2 889Stage 2 ECLs 892 2 487 23 80 98 3 580 3 717 3 587Stage 3 ECLs 714 8 611 153 503 31 10 012 8 118 9 369

Split by measurement category 2 174 13 389 198 787 130 16 678 14 696 15 845

LAA 1 877 13 308 198 775 115 16 273 14 265 15 488LAA at FVOCI 168 168 147 122Non-LAA 6 5 16 27 5 25Off-balance-sheet allowance 123 81 7 (1) 210 279 210


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IMPAIRMENT OF LOANS AND ADVANCES

Rm

Corporate and

Investment Banking

Retail and Business

Banking WealthRest of

Africa Centre Jun 2019 Jun 2018 Dec 2018

Expected credit losses – opening balance 1 866 12 796 187 816 180 15 845 14 447 14 447Stage 1 ECLs 601 2 042 25 220 1 2 889 2 806 2 806Stage 2 ECLs 548 2 791 22 78 148 3 587 3 886 3 886Stage 3 ECLs 717 7 963 140 518 31 9 369 7 755 7 755

Statement of comprehensive income charge net of recoveries 270 2 180 21 122 (50) 2 543 1 815 3 688Adjusted for: 38 (1 587) (10) (151) – (1 710) (1 566) (2 290)Recoveries 16 563 21 600 629 1 271Interest in suspense 28 300 328 192 414Amounts written off/Other transfers (6) (2 450) (10) (172) (2 638) (2 387) (3 975)

Closing balance 2 174 13 389 198 787 130 16 678 14 696 15 845

Stage 1 ECLs 568 2 291 22 204 1 3 086 2 861 2 889Stage 2 ECLs 892 2 487 23 80 98 3 580 3 717 3 587Stage 3 ECLs 714 8 611 153 503 31 10 012 8 118 9 369

Split by measurement category 2 174 13 389 198 787 130 16 678 14 696 15 845

LAA 1 877 13 308 198 775 115 16 273 14 265 15 488LAA at FVOCI 168 168 147 122Non-LAA 6 5 16 27 5 25Off-balance-sheet allowance 123 81 7 (1) 210 279 210


Credit loss ratio CREDIT LOSS RATIO PER BUSINESS CLUSTER

%

Corporate and

Investment Banking

Corporate and

Investment Banking,

excluding Property

FinanceProperty

Finance

Retail and

Business Banking

Business Banking Retail Wealth

Rest of Africa

Nedbank Group

TTC target ranges 0,15–0,45 1,30–1,80 0,20–0,40 0,75–1,00 0,60–1,00 June 2019 Total CLR 0,16 0,33 (0,08) 1,28 0,38 1,55 0,14 1,08 0,70

Stage 1 and 2 CLR 0,18 0,25 0,03 0,00 (0,04) 0,02 (0,01) 0,48 0,08 Stage 3 CLR (0,02) 0,08 (0,11) 1,28 0,42 1,53 0,15 0,60 0,62

June 2018 Total CLR 0,01 (0,07) 0,11 1,06 0,11 1,33 0,15 1,09 0,53

Stage 1 and 2 CLR (0,19) (0,37) 0,03 0,05 (0,05) 0,08 (0,02) 0,65 (0,05) Stage 3 CLR 0,20 0,30 0,08 1,01 0,16 1,25 0,17 0,44 0,58

December 2018 Total CLR 0,04 (0,01) 0,09 1,06 0,15 1,32 0,13 0,51 0,53

Stage 1 and 2 CLR (0,08) (0,36) 0,04 0,08 (0,11) 0,14 0,07 0,45 0,01 Stage 3 CLR 0,12 0,35 0,05 0,98 0,26 1,18 0,06 0,06 0,52

SUMMARY OF THE CREDIT LOSS RATIO BY BUSINESS UNIT

Mix of average banking advances Impairments charge Credit loss ratio

Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018

% % % RmMix (%) Rm

Mix(%) Rm

Mix(%) % % %

Nedbank Group 100,0 100,0 100,0 2 543 100,0 1 815 100,0 3 688 100,0 0,70 0,53 0,53 Corporate and Investment Banking 45,9 46,9 46,5 270 10,5 23 1,3 103 2,8 0,16 0,01 0,04

CIB, excluding Property Finance 26,8 26,2 26,2 325 12,7 (55) (3,0) (35) (0,9) 0,33 (0,07) 0,01 Property Finance 19,1 20,7 20,3 (55) (2,2) 78 4,3 138 3,7 (0,08) 0,11 0,10

Retail and Business Banking 46,8 46,1 46,3 2 180 85,7 1 665 91,7 3 433 93,1 1,28 1,06 1,06

Business Banking 10,5 10,1 10,2 143 5,6 35 1,9 117 3,2 0,38 0,11 0,15 Retail 36,3 36,0 36,1 2 037 80,1 1 630 89,8 3 316 89,9 1,55 1,33 1,32

Home Loans 12,1 12,4 12,1 (6) (0,2) (10) (0,6) 44 1,2 0,06 (0,02) 0,05 MFC 13,6 13,3 13,4 846 33,3 738 40,7 1 429 38,7 1,67 1,62 1,53 Unsecured Lending 3,0 2,9 2,9 570 22,4 435 24,0 1 007 27,3 5,23 4,48 5,03 Relationship Banking 5,3 5,0 5,1 63 2,5 47 2,6 74 2,0 0,33 0,27 0,21 Card 2,0 2,4 2,3 508 20,0 464 25,6 765 20,7 6,04 5,93 4,88

Wealth 4,2 4,1 4,2 21 0,8 21 1,2 39 1,1 0,14 0,15 0,13 Rest of Africa 3,3 3,1 3,2 122 4,8 106 5,8 113 3,1 1,08 1,09 0,51

The splits above exclude the Centre and Other within RBB.


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Nedbank Group credit loss ratio per cluster(%)

Jun 2019Dec 2017 Jun 2018 Dec 2018Dec 2016Dec 2015

RBB

Rest of Africa

Wealth

CIB1,28

1,02

1,121,14 1,081,06

1,06

1,09

0,01

0,15

0,08

0,400,16

0,06

0,98

1,25

0,14

1,06

0,51

0,13

0,04

0,09

0,34

0,15

■ Nedbank Group CLR increased to 0,70% (2018: 0,53%) off a low base to within the lower half of the group’s TTC target range of 60 bps to 100 bps and reflects the high quality of the portfolios across all our businesses.

■ CIB CLR increased off a low base to 0,16% (2018: 0,01%) and is now within the TTC target range of 15 bps to 45 bps. The CIB CLR reflects a high-quality book and the outcome of the proactive restructuring processes, while we continue to see stress in the agriculture, retail and cement sectors.

■ RBB CLR increased to 1,28% (2018: 1,06%) to just below the bottom end of the TTC target range of 130 bps to 180 bps, which was largely due to higher CLRs in MFC, Unsecured Lending and Card, attributable to the higher seasonal delinquencies in H1 2019. While the delinquency levels are starting to normalise, the weak macroeconomic environment resulted in a higher-than-expected peak in impairments and it is taking longer to recover from the effects of the industrywide seasonality.

■ Wealth CLR decreased to 0,14% (2018: 0,15%), remaining below the TTC target range of 20 bps to 40 bps. ■ RoA CLR improved slightly to 1,08% (2018: 1,09%) and remained above the TTC range of 75 bps to 100 bps.


NEDBANK GROUP STAGE 3 (DEFAULTED) BY BUSINESS CLUSTER

Jun 2019

Jun 2018

Dec 2018

RmMix(%) Rm

Mix(%) Rm

Mix(%)

Corporate and Investment Banking 5 367 20,0 5 117 22,5 5 702 22,6

CIB, excluding Property Finance 3 259 12,2 2 798 12,3 3 555 14,1 Property Finance 2 108 7,9 2 319 10,2 2 147 8,5

Retail and Business Banking 19 182 71,5 15 722 69,0 17 304 68,6

Business Banking 3 014 11,2 2 201 9,7 2 575 10,2 Retail 16 168 60,3 13 521 59,3 14 729 58,4

Home Loans 4 736 17,7 4 877 21,4 4 541 18,0 MFC 5 051 18,8 3 746 16,4 4 440 17,6 Unsecured Lending 3 429 12,8 2 402 10,5 2 892 11,5 Card 1 836 6,8 1 580 6,9 1 942 7,7 Relationship Banking 1 060 4,0 875 3,8 914 3,6

Other 56 0,2 41 0,2

Wealth 833 3,1 768 3,4 812 3,2 Rest of Africa 1 447 5,4 1 178 5,2 1 413 5,6

Nedbank Group 26 829 100,0 22 785 100,0 25 231 100,0

Stage 3 advances as a percentage of gross banking loans and advances(%)

5,444,824,764,25

19 55317 559

3,57

1,56

Total Nedbank Group

CIB

RBB

2,531,14

2,72

1,122,71

0,82

4,813,241,58

5,10

3,471,69

19 576 26 82922 785 25 231

Stage 3 loans and advances

Jun2019

Jun2018

Dec2018

Dec2017

Dec2016

Dec2015

Nedbank Group’s stage 3 advances and coverage ratio (% and Rm)

19 57622 785

25 231 26 829

Stage 3 loans and advances

Stage 3 coverage39,6

35,2 37,136,8

Jun2019

Jan2018

Jun2018

Dec2018

Stage 3 (defaulted) loans and advances ■ Nedbank Group stage 3 LAA increased to R26 829m, representing 3,57% (2018: 3,13%) of banking book GLAA. This is inclusive of a

R1,9bn increase due to the extension of the point of writeoff in RBB in the December 2018 results to comply with IFRS 9.CIB stage 3 LAA increased to R5 367m (2018: R5 117m), largely due to increased defaults in the agriculture, cement and retail sectors.RBB stage 3 LAA increased to R19 182m (2018: R15 722m) due to the weakened economic environment placing additional stress on consumers as defaults increased in MFC and Unsecured Lending.RoA stage 3 LAA increased to R1 447m (2018: R1 178m), attributable to the ongoing adverse economic environment.


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Balance sheet coverage ratios ■ The Nedbank Group total coverage ratio increased to 2,21% (2018: 2,03%) due to a change in the stage mix as more RBB clients

moved from performing into stage 3. ■ The Nedbank Group stage 1 and 2 (portfolio) coverage ratio decreased to 0,89% (2018: 0,94%).

CIB stage 1 and 2 coverage ratios increased to 0,37% (2018: 0,25%) due to the successful restructure of a few Property Finance clients that moved out of stage 3 and into stage 2.RBB stage 1 and 2 coverage ratios decreased to 1,41% (2018: 1,57%) due to clients moving into stage 3 in Business Banking. The Business Banking stage 1 and 2 coverage decreased to 0,49% (2018: 0,65%) due to the release of overlays that were previously raised for model deficiencies that have been resolved.

■ The Nedbank Group stage 3 (specific) coverage ratio increased to 37,1% (2018: 35,2%) due to a change in the mix of the stage 3 LAA portfolio. CIB’s contribution to the group’s stage 3 LAA decreased to 20,0% (2018: 22,5%). The wholesale portfolio is highly collateralised and associated with lower coverage ratios and the group’s total coverage ratio increased as CIB’s proportionate contribution to stage 3 LAA decreased.

■ The CIB stage 3 coverage ratio decreased to 12,8% (2018: 14,1%) due to the high level of collateralisation of the stage 3 transaction. The number of stage 3 clients in CIB are limited and managed on an individual basis by a specialised team.

■ The RBB stage 3 coverage ratio increased to 44,8% (2018: 41,8%).

NEDBANK GROUP COVERAGE RATIOS BY BUSINESS CLUSTER

%Jun

2019Jun

2018Dec

2018

Stage 3 coverage ratio 37,1 35,2 36,8 Corporate and Investment Banking 12,8 14,1 11,6

CIB, excluding Property Finance 14,5 16,3 10,8 Property Finance 10,1 11,4 12,9

Retail and Business Banking 44,8 41,8 45,9 Business Banking 27,9 32,6 27,7 Retail 48,0 43,3 49,2

Wealth 18,3 17,7 17,2 Rest of Africa 34,9 48,5 36,8

Stage 1 and 2 coverage ratio1 0,89 0,94 0,91 Corporate and Investment Banking 0,37 0,25 0,30

CIB, excluding Property Finance 0,40 0,23 0,32 Property Finance 0,32 0,28 0,27

Retail and Business Banking 1,41 1,57 1,48 Business Banking 0,49 0,65 0,55 Retail 1,69 1,85 1,75

Wealth 0,15 0,15 0,15 Rest of Africa 1,24 1,42 1,38

1 The definition of portfolio coverage (stage 1 and 2) has been refined to include only LAA held at amortised cost.

NEDBANK GROUP COVERAGE RATIOS BY PRODUCT

Jun 2019 Dec 2018

Stage 3

GLAAStage 3

ECLStage 3

coverageStage 3

GLAAStage 3

ECLStage 3

coverageResidential mortgages 7 452 1 505 20,2 6 975 1 431 20,5Commercial mortgages 3 157 436 13,8 2 958 436 14,7Lease and instalment debtors 5 645 2 703 47,9 4 967 2 532 51,0Credit cards 1 862 1 400 75,2 1 805 1 441 79,8Overdrafts 1 324 610 46,1 1 260 607 48,2Personal, term and other loans 7 074 3 230 45,7 6 710 2 758 41,1Other 315 80 25,4 556 89 16,0 26 829 9 964 37,1 25 231 9 294 36,8


BALANCE SHEET COVERAGE RATIO BY PRODUCT, STAGE AND BUSINESS CLUSTER

Performing loans Stage 3 Total

Stage 1 LAA Stage 1 ECLStage 1

coverage Stage 2 LAA Stage 2 ECLStage 2


coverage Total LAA Total ECL Total coverage

June 20191 Corporate and Investment Banking 295 175 490 0,17 28 420 702 2,47 5 367 685 12,8 328 962 1 877 0,57

CIB, excluding Property Finance 177 316 311 0,18 9 097 443 4,87 3 259 473 14,5 189 672 1 228 0,65Property Finance 117 859 179 0,15 19 323 259 1,34 2 108 212 10,1 139 290 649 0,47

Retail and Business Banking 295 761 2 233 0,76 37 780 2 470 6,54 19 182 8 605 44,8 352 724 13 308 3,77Business Banking 72 412 221 0,31 5 788 161 2,78 3 014 843 27,9 81 215 1 225 1,51Retail 223 349 2 012 0,90 31 992 2 309 7,22 16 168 7 762 48,0 271 510 12 083 4,45

Home Loans 105 996 173 0,16 12 890 515 4,00 5 663 1 181 20,9 124 549 1 869 1,5VAF 86 843 652 0,75 15 617 1 003 6,42 5 120 2 529 49,4 107 580 4 184 3,89Personal loans 14 949 517 3,46 2 530 389 15,38 3 313 2 470 74,6 20 792 3 376 16,24Card 14 378 645 4,49 787 357 45,36 1 836 1 389 75,7 17 001 2 391 14,06Other loans 1 183 25 2,11 168 45 26,79 236 193 81,4 1 588 263 16,56

Wealth 30 568 22 0,07 128 23 17,97 833 153 18,3 31 529 198 0,63Rest of Africa 20 691 194 0,94 1 134 76 6,70 1 447 505 34,9 23 272 775 3,33Centre 1 251 1 98 16 1 251 115 Nedbank Group 643 446 2 940 0,46 67 462 3 369 4,99 26 829 9 964 37,1 737 737 16 273 2,21December 20181 Corporate and Investment Banking 285 122 526 0,18 27 237 414 1,52 5 702 663 11,6 318 061 1 603 0,50

CIB, excluding Property Finance 165 232 353 0,21 8 452 211 2,5 3 555 386 10,9 177 239 950 0,54Property Finance 119 890 173 0,14 18 785 203 1,08 2 147 277 12,9 140 822 653 0,46


Home Loans 101 862 176 0,17 14 553 589 4,05 5 330 1 132 21,2 121 745 1 897 1,56VAF 84 081 607 0,72 15 662 1 082 6,91 4 505 2 312 51,3 104 248 4 001 3,84Personal loans 14 641 554 3,78 2 471 378 15,3 2 892 2 156 74,6 20 004 3 088 15,44Card 13 160 421 3,2 1 395 493 35,34 1 786 1 433 80,2 16 341 2 347 14,36Other loans 1 329 24 1,81 210 52 24,76 216 208 96,3 1 755 284 16,18

Wealth 29 944 25 0,08 542 22 4,06 812 140 17,2 31 298 187 0,60Rest of Africa 19 314 205 1,06 1 112 76 6,83 1 413 521 36,9 21 839 802 3,67Centre (1 080) 1 148 16 (1 080) 165 Nedbank Group 615 260 2 762 0,45 69 121 3 432 4,97 25 231 9 294 36,8 709 612 15 488 2,18

1 LAA presented in this table include only LAA held at amortised cost.

Nedbank Retail stage 1 and 2 coverage ratio(%)

0,71

1,86 1,85 1,75 1,69

7,19

Unsecured Lending

Home Loans

MFC

Card

Nedbank Retail0,87

6,83

5,03

0,74

6,50

1,61

6,90

1,53

6,58

1,66

0,81

5,47

6,29

1,73

Jun2019

Jan2018

Jun2018

Dec2018


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BALANCE SHEET COVERAGE RATIO BY PRODUCT, STAGE AND BUSINESS CLUSTER

Performing loans Stage 3 Total

Stage 1 LAA Stage 1 ECLStage 1



coverage Total LAA Total ECL Total coverage

June 20191 Corporate and Investment Banking 295 175 490 0,17 28 420 702 2,47 5 367 685 12,8 328 962 1 877 0,57

CIB, excluding Property Finance 177 316 311 0,18 9 097 443 4,87 3 259 473 14,5 189 672 1 228 0,65Property Finance 117 859 179 0,15 19 323 259 1,34 2 108 212 10,1 139 290 649 0,47


Home Loans 105 996 173 0,16 12 890 515 4,00 5 663 1 181 20,9 124 549 1 869 1,5VAF 86 843 652 0,75 15 617 1 003 6,42 5 120 2 529 49,4 107 580 4 184 3,89Personal loans 14 949 517 3,46 2 530 389 15,38 3 313 2 470 74,6 20 792 3 376 16,24Card 14 378 645 4,49 787 357 45,36 1 836 1 389 75,7 17 001 2 391 14,06Other loans 1 183 25 2,11 168 45 26,79 236 193 81,4 1 588 263 16,56

Wealth 30 568 22 0,07 128 23 17,97 833 153 18,3 31 529 198 0,63Rest of Africa 20 691 194 0,94 1 134 76 6,70 1 447 505 34,9 23 272 775 3,33Centre 1 251 1 98 16 1 251 115 Nedbank Group 643 446 2 940 0,46 67 462 3 369 4,99 26 829 9 964 37,1 737 737 16 273 2,21December 20181 Corporate and Investment Banking 285 122 526 0,18 27 237 414 1,52 5 702 663 11,6 318 061 1 603 0,50

CIB, excluding Property Finance 165 232 353 0,21 8 452 211 2,5 3 555 386 10,9 177 239 950 0,54Property Finance 119 890 173 0,14 18 785 203 1,08 2 147 277 12,9 140 822 653 0,46


Home Loans 101 862 176 0,17 14 553 589 4,05 5 330 1 132 21,2 121 745 1 897 1,56VAF 84 081 607 0,72 15 662 1 082 6,91 4 505 2 312 51,3 104 248 4 001 3,84Personal loans 14 641 554 3,78 2 471 378 15,3 2 892 2 156 74,6 20 004 3 088 15,44Card 13 160 421 3,2 1 395 493 35,34 1 786 1 433 80,2 16 341 2 347 14,36Other loans 1 329 24 1,81 210 52 24,76 216 208 96,3 1 755 284 16,18

Wealth 29 944 25 0,08 542 22 4,06 812 140 17,2 31 298 187 0,60Rest of Africa 19 314 205 1,06 1 112 76 6,83 1 413 521 36,9 21 839 802 3,67Centre (1 080) 1 148 16 (1 080) 165 Nedbank Group 615 260 2 762 0,45 69 121 3 432 4,97 25 231 9 294 36,8 709 612 15 488 2,18

1 LAA presented in this table include only LAA held at amortised cost.

Nedbank Retail stage 3 coverage ratio(%)

19,8

43,9 43,349,2 48,0

75,7 Unsecured Lending

Home Loans

MFC

Card

Nedbank Retail

20,2

71,474,8

18,9

82,8

41,9

81,5

36,6

75,7

49,3

20,3

73,5

80,3

52,7

Jun2019

Jan2018

Jun2018

Dec2018



Banking Retail


RmJun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018 Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018

Commission and fees income 9 076 8 640 18 279 1 503 1 394 3 289 6 197 5 819 12 002 984 1 010 2 063 389 414 928 3 3 (3)Administration fees 600 583 1 201 23 8 26 255 254 509 281 273 567 34 39 82 7 9 17Card income 1 813 1 750 3 656 1 771 1 718 3 583 40 32 72 2 1Cash-handling fees 562 521 1 056 108 117 235 438 388 788 1 1 2 15 15 31 Exchange commission 296 253 554 94 71 175 123 122 249 41 34 71 36 27 57 2 (1) 2Guarantees income 142 115 275 102 83 197 22 19 41 1 18 13 36 Insurance commission 243 274 544 147 147 284 92 110 223 4 17 37 Other commission 2 073 1 829 3 986 676 525 1 198 1 323 1 179 2 515 (28) (13) (27) 92 128 282 10 10 18Other fees 1 086 1 185 2 664 472 564 1 403 47 43 89 576 586 1 188 9 7 25 (18) (15) (41)Service charges 2 261 2 130 4 343 28 26 55 2 071 1 949 3 944 21 19 38 141 136 306

Insurance income1 897 898 1 859 239 219 442 641 678 1 400 35 19 54 (18) (18) (37)Fair-value adjustments 134 (33) (2) 35 48 (8) 13 5 15 – – – 4 – (1) 82 (86) (8)

Fair-value adjustments 54 (3) (30) 30 45 (20) 4 (1) 20 (48) (9)Hedge-accounted portfolios 80 (30) 28 5 3 12 13 5 15 62 (38) 1

Trading income 2 174 2 096 4 429 2 110 2 015 4 278 33 41 84 – – – 31 40 67 – – –Commodities 25 9 42 25 9 42 Debt securities 1 284 1 166 2 482 1 284 1 166 2 482 Equities 202 261 445 202 261 445 Foreign exchange 663 660 1 460 599 579 1 309 33 41 84 31 40 67

Private-equity income 293 283 697 295 283 699 – – – (2) – (2) – – – – – –Realised gains, dividends, interest and other income 308 475 854 308 475 854 Unrealised losses2 (15) (192) (157) (13) (192) (155) (2) (2)

Investment income 36 41 29 30 29 21 1 7 (3) 2 1 3 1 1 2 2 3 6Sundry income3 264 311 685 181 87 242 35 6 51 35 8 20 21 72 156 (8) 138 216Total non-interest revenue 12 874 12 236 25 976 4 154 3 856 8 521 6 518 6 097 12 591 1 660 1 697 3 484 481 546 1 206 61 40 174

1 During 2018 management reclassified certain internal insurance commission allocations earned by Nedbank Retail and Business Banking, previously reported as part of commission and fee income to insurance income to ensure that the amount is appropriately eliminated against the cost recognised in Nedbank Wealth. Comparative figures have been restated accordingly (June 2018: R68m; December 2018: R184m).

2 Unrealised losses relate to equity investments in associates and joint ventures, which are estimated and converted to realised or dividends once earned.3 Sundry income mainly comprises security dealings, rental income and other income.

3 Non-interest revenue

Non-interest revenue to total operating expenses(%)

81,6

83,0

83,1

82,7

82,9

Jun2019

Jun2018

Jun2017

Jun2016

Jun2015

Non-interest revenue(Rm)

11 7

30

11 3

57

10 4

50

12 8

74

12 2

36

Jun2019

Jun2018

Jun2017

Jun2016

Jun2015


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Banking Retail


RmJun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018 Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018

Commission and fees income 9 076 8 640 18 279 1 503 1 394 3 289 6 197 5 819 12 002 984 1 010 2 063 389 414 928 3 3 (3)Administration fees 600 583 1 201 23 8 26 255 254 509 281 273 567 34 39 82 7 9 17Card income 1 813 1 750 3 656 1 771 1 718 3 583 40 32 72 2 1Cash-handling fees 562 521 1 056 108 117 235 438 388 788 1 1 2 15 15 31 Exchange commission 296 253 554 94 71 175 123 122 249 41 34 71 36 27 57 2 (1) 2Guarantees income 142 115 275 102 83 197 22 19 41 1 18 13 36 Insurance commission 243 274 544 147 147 284 92 110 223 4 17 37 Other commission 2 073 1 829 3 986 676 525 1 198 1 323 1 179 2 515 (28) (13) (27) 92 128 282 10 10 18Other fees 1 086 1 185 2 664 472 564 1 403 47 43 89 576 586 1 188 9 7 25 (18) (15) (41)Service charges 2 261 2 130 4 343 28 26 55 2 071 1 949 3 944 21 19 38 141 136 306

Insurance income1 897 898 1 859 239 219 442 641 678 1 400 35 19 54 (18) (18) (37)Fair-value adjustments 134 (33) (2) 35 48 (8) 13 5 15 – – – 4 – (1) 82 (86) (8)

Fair-value adjustments 54 (3) (30) 30 45 (20) 4 (1) 20 (48) (9)Hedge-accounted portfolios 80 (30) 28 5 3 12 13 5 15 62 (38) 1

Trading income 2 174 2 096 4 429 2 110 2 015 4 278 33 41 84 – – – 31 40 67 – – –Commodities 25 9 42 25 9 42 Debt securities 1 284 1 166 2 482 1 284 1 166 2 482 Equities 202 261 445 202 261 445 Foreign exchange 663 660 1 460 599 579 1 309 33 41 84 31 40 67

Private-equity income 293 283 697 295 283 699 – – – (2) – (2) – – – – – –Realised gains, dividends, interest and other income 308 475 854 308 475 854 Unrealised losses2 (15) (192) (157) (13) (192) (155) (2) (2)

Investment income 36 41 29 30 29 21 1 7 (3) 2 1 3 1 1 2 2 3 6Sundry income3 264 311 685 181 87 242 35 6 51 35 8 20 21 72 156 (8) 138 216Total non-interest revenue 12 874 12 236 25 976 4 154 3 856 8 521 6 518 6 097 12 591 1 660 1 697 3 484 481 546 1 206 61 40 174

1 During 2018 management reclassified certain internal insurance commission allocations earned by Nedbank Retail and Business Banking, previously reported as part of commission and fee income to insurance income to ensure that the amount is appropriately eliminated against the cost recognised in Nedbank Wealth. Comparative figures have been restated accordingly (June 2018: R68m; December 2018: R184m).

2 Unrealised losses relate to equity investments in associates and joint ventures, which are estimated and converted to realised or dividends once earned.3 Sundry income mainly comprises security dealings, rental income and other income.


■ Solid gains in main-banked clients across all clusters. ■ Good insurance-related sales volumes. ■ Fair-value gains.

■ Client transactional activity remained subdued. ■ Higher weather-related insurance claims. ■ Decrease in market volumes and low levels of activity in trading.



Banking Retail


RmJun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018 Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018

Staff costs 8 363 8 094 17 450 1 392 1 372 3 003 3 903 3 858 8 036 811 779 1 562 488 546 1 097 1 769 1 539 3 752Salaries and wages 7 550 6 982 14 240 Total incentives 1 287 1 364 3 358

Short-term incentives 926 1 028 2 625 Long-term incentives 361 336 733

Other staff costs (474) (252) (148) Computer processing1 2 311 2 029 4 341 239 190 398 791 405 870 170 114 220 69 22 48 1 042 1 298 2 805

Depreciation of computer equipment4 390 370 753 Amortisation of intangible assets 541 422 958 Operating lease charges for computer processing 98 165 336 Other computer processing expenses 1 282 1 072 2 294

Fees and insurances1,5 2 045 1 802 3 989 294 536 1 208 1 227 793 1 738 107 89 174 177 145 296 240 239 573Occupation and accommodation2,4 1 091 1 168 2 416 124 116 226 977 971 1 947 74 71 145 85 98 213 (169) (88) (115)Marketing and public relations 747 780 1 532 43 35 93 347 406 724 53 54 96 28 30 67 276 255 552Communication and travel 417 393 841 155 135 297 158 160 329 26 30 61 26 28 60 52 40 94Other operating expenses3 591 490 1 063 37 122 214 261 192 357 34 42 72 102 67 152 157 67 268Activity-justified transfer pricing5 963 510 1 133 2 407 2 938 6 031 318 316 682 173 200 483 (3 861) (3 964) (8 329)Total operating expenses 15 565 14 756 31 632 3 247 3 016 6 572 10 071 9 723 20 032 1 593 1 495 3 012 1 148 1 136 2 416 (494) (614) (400)

4 Expenses

Total operating expenses(Rm)

14 3

69

13 6

86

12 5

78

15 5

65

14 7

56

Jun2019

Jun2018

Jun2017

Jun2016

Jun2015

Cost-to-income ratio(%)

59,3

57,1

55,8

55,4

55,8

Jun2019

Jun2018

Jun2017

Jun2016

Jun2015

Analysis of total information technology-related function spend included in total expenses6

Jun 2019

Jun 2018

Dec 2018

IT staff-related costs within Group Technology 1 098 904 2 027Depreciation and amortisation of computer equipment, software and intangibles 963 851 1 818Other IT costs (including licensing, development, maintenance and processing charges)7 1 433 1 240 2 668Total IT-related functional spend 3 494 2 995 6 513

1 During 2018 management reclassified interbank fees from other computer-processing expenses to other fees and assurance costs to reflect the nature of these expenses appropriately. As a result, R189m previously included in other computer processing expenses for June 2018 has been reclassified to be included in other fees and assurance costs.

2 Includes a building depreciation charge of R223m (June 2018: R203m; December 2018: R423m).3 Includes a furniture depreciation charge of R174m (June 2018: R155m; December 2018: R328m), consumables and sundry expenses.4 Includes the depreciation of a right-of-use asset of R432m (computer R33m; land and buildings: R399m).5 During the period the group's Cash Operations Division was transferred from CIB to RBB and the concurrent review of the activity-justified transfer pricing

led to some costs shifting to CIB, reflected in the fees and insurance and activity-justified transfer pricing lines. This had no impact on the group’s expenses or expenses growth.

6 The information technology spend for June and December 2018 disclosure has been revised for better reporting taking into account staff and structure movements.

7 Includes professional, communication and travel, sundry and other IT-related spend.


INC

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Banking Retail


RmJun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018 Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018

Staff costs 8 363 8 094 17 450 1 392 1 372 3 003 3 903 3 858 8 036 811 779 1 562 488 546 1 097 1 769 1 539 3 752Salaries and wages 7 550 6 982 14 240 Total incentives 1 287 1 364 3 358

Short-term incentives 926 1 028 2 625 Long-term incentives 361 336 733

Other staff costs (474) (252) (148) Computer processing1 2 311 2 029 4 341 239 190 398 791 405 870 170 114 220 69 22 48 1 042 1 298 2 805

Depreciation of computer equipment4 390 370 753 Amortisation of intangible assets 541 422 958 Operating lease charges for computer processing 98 165 336 Other computer processing expenses 1 282 1 072 2 294

Fees and insurances1,5 2 045 1 802 3 989 294 536 1 208 1 227 793 1 738 107 89 174 177 145 296 240 239 573Occupation and accommodation2,4 1 091 1 168 2 416 124 116 226 977 971 1 947 74 71 145 85 98 213 (169) (88) (115)Marketing and public relations 747 780 1 532 43 35 93 347 406 724 53 54 96 28 30 67 276 255 552Communication and travel 417 393 841 155 135 297 158 160 329 26 30 61 26 28 60 52 40 94Other operating expenses3 591 490 1 063 37 122 214 261 192 357 34 42 72 102 67 152 157 67 268Activity-justified transfer pricing5 963 510 1 133 2 407 2 938 6 031 318 316 682 173 200 483 (3 861) (3 964) (8 329)Total operating expenses 15 565 14 756 31 632 3 247 3 016 6 572 10 071 9 723 20 032 1 593 1 495 3 012 1 148 1 136 2 416 (494) (614) (400)


■ Headcount reduction of 1 015. ■ Cumulative run-rate savings from our target operating model

of R826m. ■ Reduction of 138 core systems to date. ■ STI decreased by 9,9%, in line with the group's financial

performance relative to the high base in H1 2018. ■ Final PRMA credit of R354m. ■ IFRS 16 accounting changes.

■ Increase in computer processing costs relating to software amortisation as we invest in technology and digital channels.

■ Higher fees and insurance costs driven by card volume increases and fees related to digital innovations.

■ The costs of creating more than 3 300 job opportunities through YES.

Gross operating income growth rate less expense growth rate (JAWS ratio) (%)

Jun2017

Jun2018

Jun2019

Jun2016

Jun2015

1,3

(3,9)

6,5

0,8

(2,6)

Total employees (permanent and temporary staff)

32 4

65

32 5

22

31 4

05

30 5

77

31 5

92

Jun2019

Jun2018

Jun2017

Jun2016

Jun2015


5 Non-trading and capital items

Jun

2019Jun

2018Dec2018

Rm GrossNet of

taxation GrossNet of

taxation GrossNet of

taxation

Profit attributable to equity holders of the parent 6 794 6 658 13 376Non-trading and capital items 106 76 54 38 164 119

IAS 16 loss/(profit) on disposal of property and equipment 7 5 (2) (2) 29 22IAS 36 impairment of right-of-use assets 33 24 IAS 36 impairment of property, equipment and intangible assets 66 47 56 40 135 97

Headline earnings 6 870 6 696 13 495

6 Taxation charge

Jun

2019Jun

2018Dec

2018

Direct taxation 2 222 2 362 4 807Taxation rate reconciliation (excluding non-trading and capital items) (%) Standard rate of SA normal taxation 28,0 28,0 28,0Reduction of taxation rate: – Dividend income (1,1) (1,5) (0,9)– Capital items (0,1) (0,1)– Foreign income and section 9D attribution (1,2) (0,9) (0,6)– Associate income (1,2) (0,7) (0,9)– Additional tier 1 taxation on interest paid1 (0,6) – Other (0,5) 0,3 (0,3)Total taxation on income as percentage of profit before taxation 23,4 25,1 25,2 Effective tax rate, excluding ETI associate income/(loss) 24,5 25,8 26,1

1 The reporting relating to the taxable impact of interest paid on additional tier 1 capital instruments was changed from 1 January 2019 in accordance with amendments to IAS 12: Income Taxes. The tax effects of R49m for June 2019 have been reported in direct taxation, and the comparable tax effects (June 2018: R47m) were reported in equity.

7 Preference shares

Dividends declaredNumber of

sharesCents per

shareAmount

Rm

2019 Nedbank – Interim (dividend no 33) declared for 2019 – payable September 2019 358 277 491 42,35729 151,8 2018 Nedbank – Final (dividend no 30) declared for 2017 – paid March 2018 358 277 491 43,17350 154,7Nedbank – Interim (dividend no 31) declared for 2018 – paid August 2018 358 277 491 41,82076 149,8Total of dividends declared 304,5Nedbank (MFC) – Participating preference shares1 50,0Less: Dividends declared in respect of shares held by group entities (31,7) 322,82019 Nedbank – Final (dividend no 32) declared for 2018 – paid April 2019 358 277 491 42,23172 151,3Total of dividends declared 151,3Nedbank (MFC) – Participating preference shares1 35,9Less: Dividends declared in respect of shares held by group entities (15,8) 171,4

1 Share in economic profit calculated semi-annually.


122 Loans and advances127 Investment securities 128 Investments in associate companies 129 Intangible assets130 Amounts owed to depositors133 Liquidity risk and funding136 Equity analysis138 Capital management

Statement of financial position analysis

Gross loans and advances

Balance sheet impairments Net

Rm

Yoy change

(%) Rm Mix (%) Rm Mix (%)Yoy

change (%)

June 2019 Corporate and Investment Banking 366 588 1 877 11,5 364 711 5,5

Trading book 22 802 22 802 (2,1)Banking book 343 786 6,1 1 877 11,5 341 909 46,4 6,0

CIB, excluding Property Finance 200 372 (1,3) 1 228 7,5 199 144 27,0 (1,5)Property Finance 143 414 (0,7) 649 4,0 142 765 19,4 (0,7)

Retail and Business Banking 352 724 7,9 13 308 81,8 339 416 46,1 7,6Business Banking 81 214 10,3 1 225 7,5 79 989 10,9 10,4Retail 271 510 7,2 12 083 74,3 259 427 35,2 6,7

Home Loans 89 012 3,4 1 535 9,4 87 477 11,9 3,4MFC 103 547 8,3 4 125 25,3 99 422 13,5 7,1Unsecured Lending 22 037 12,3 3 499 21,5 18 538 2,5 10,9Relationship Banking 39 542 11,0 466 2,9 39 076 5,3 10,9Card 17 064 5,0 2 392 14,7 14 672 2,0 5,1Other 308 70,2 66 0,4 242 0,01 (151,7)

Wealth 31 528 0,8 198 1,2 31 330 4,3 0,8Rest of Africa 23 272 1,2 775 4,8 22 497 3,1 1,7Centre 1 251 >100,0 115 0,7 1 136 0,2 >100Nedbank Group 775 363 6,7 16 273 100,0 759 090 100,0 6,5

Trading book 22 802 – – 22 802 – (2,1)Banking book 752 561 7,10 16 273 100,0 736 288 100,0 6,8

December 2018 Corporate and Investment Banking 360 242 1 603 10,3 358 639 0,7

Trading book 23 637 23 637 (24,6 Banking book 336 605 3,0 1 603 10,3 335 002 47,0 3,2 CIB, excluding Property Finance 219 420 2,3 950 6,1 218 470 30,7 2,7 Property Finance 140 822 (2,1) 653 4,2 140 169 19,7 (2,2)

Retail and Business Banking 339 494 8,1 12 731 82,2 326 763 45,9 7,1

Business Banking 75 401 11,2 1 114 7,2 74 287 10,4 11,8 Retail 264 093 7,2 11 617 75,0 252 476 35,4 5,7

Home Loans 87 839 2,6 1 597 10,3 86 242 12,1 2,3 MFC 101 332 9,6 4 013 25,9 97 319 13,7 7,9 Unsecured Lending 20 652 9,9 3 172 20,5 17 480 2,5 6,6 Relationship Banking 37 668 11,8 422 2,7 37 246 5,2 11,3 Card 16 329 4,6 2 347 15,2 13 982 2,0 (1,8) Other 273 23,0 65 0,4 208 0,03

Wealth 31 298 6,0 187 1,2 31 111 4,4 5,8 Rest of Africa 21 839 3,4 802 5,2 21 037 3,0 2,4 Centre (1 080) 54,5 165 1,1 (1 245) (0,2) 46,1 Nedbank Group 751 793 4,1 15 488 100,0 736 305 100,0 3,7

Trading book 23 637 – – 23 637 – (24,6) Banking book 728 156 5,4 15 488 100,0 712 668 100,0 5,0

8 Loans and advances


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Gross loans and

advancesBalance sheet impairments Net

Rm

Yoy change

(%) Rm Mix (%) Rm Mix (%)Yoy

change (%)

June 2018 Corporate and Investment Banking 347 352 1 569 11,0 345 783 (5,0)

Trading book 23 291 23 291 (39,7) Banking book 324 061 (1,0) 1 569 11,0 322 492 46,8 (0,9) CIB, excluding Property Finance 202 991 (11,3) 913 6,4 202 078 29,3 (11,1) Property Finance 144 361 5,3 656 4,6 143 705 20,8 5,2

Retail and Business Banking 326 984 6,8 11 468 80,4 315 516 45,8 6,3

Business Banking 73 616 8,5 1 183 8,3 72 433 10,5 9,0 Retail 253 368 6,4 10 285 72,1 243 083 35,3 5,5

Home Loans 86 112 1,8 1 520 10,7 84 592 12,3 1,6 MFC 95 573 9,7 2 772 19,4 92 801 13,5 9,2 Unsecured Lending 19 625 7,8 2 904 20,4 16 721 2,4 6,2 Relationship Banking 35 627 9,5 407 2,9 35 220 5,1 9,1 Card 16 250 4,4 2 290 16,1 13 960 2,0 (1,3) Other 181 >100,0 392 2,7 (211) (0,03) >(100,0)

Wealth 31 272 5,7 183 1,3 31 089 4,5 5,5 Rest of Africa 23 003 10,4 880 6,2 22 123 3,2 8,5 Centre (1 678) >100,0 165 1,2 (1 843) (0,3) >100,0 Nedbank Group 726 933 0,7 14 265 100,0 712 668 100,0 0,4

Trading book 23 291 – – 23 291 – (39,7) Banking book 703 642 3,0 14 265 100,0 689 377 100,0 2,7

■ Nedbank Group banking book GLAA increased to R752 561m (2018: R703 642m), with continued growth across all business units and the strongest growth in Business Banking, Unsecured Lending and Retail Relationship Banking.

CIB banking book GLAA increased to R343 786m (2018: R324 061m) due to ongoing drawdowns in Project Finance and new transactions that closed in H1 2019. The CIB portfolio contains high-quality collateralised assets with low loan-to-value ratios and is managed by a highly experienced team. RBB banking book GLAA increased to R352 724m (2018: R326 984m) in an environment characterised by increased credit risk appetite and lower pricing in a competitive retail banking sector. Growth within the retail and SME asset classes was in line with our risk appetite and prudent origination strategies.

— Business Banking GLAA increased to R81 214m (2018: R73 616m) largely due to an increase in new-loan payouts, coupled with an increase in client drawdowns on existing facilities.

— MFC GLAA increased to R103 547m (2018: R95 573m) as business volumes remained robust despite a muted new-vehicle sales market.

— Unsecured Lending GLAA increased to R22 037m (2018: R19 625m) attributable to product and process enhancements driven through the digital channel and increased takeup rates.


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LOANS AND ADVANCES SEGMENTAL BREAKDOWN

Nedbank GroupCorporate and

Investment Banking Retail and

Business Banking Wealth Rest of Africa Centre3

RmJun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018 Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018

Home loans 159 164 152 700 156 414 11 5 11 136 039 130 001 133 163 16 800 16 762 17 068 6 816 6 419 6 672 (502) (487) (500)Commercial mortgages 170 743 161 982 166 221 138 030 132 155 134 984 22 387 19 472 20 765 8 719 8 605 8 915 1 588 1 670 1 523 19 80 34Properties in possession 168 155 152 (1) 2 54 70 68 11 22 22 104 63 60 Credit cards 17 350 16 522 16 608 17 231 16 430 16 501 119 92 107 Overdrafts 26 388 23 214 22 587 4 407 3 841 3 594 18 127 15 237 14 809 143 133 174 3 711 4 002 4 010 1 Personal loans 23 723 20 886 22 219 21 527 18 947 20 005 1 2 196 1 938 2 214 Term and other loans1 191 497 161 358 181 907 171 029 142 061 163 340 10 502 9 394 10 679 5 617 5 534 4 892 4 613 4 604 3 287 (264) (235) (291)Overnight loans 14 001 18 614 14 616 12 068 15 962 12 644 1 301 2 077 1 220 632 575 752 Foreign client lending 4 513 12 968 5 241 3 384 12 234 4 790 233 207 163 896 527 288 Leases and instalment debtors 124 065 114 765 121 003 2 392 2 198 2 170 119 420 109 675 116 229 67 69 68 2 593 3 102 2 914 (407) (279) (378)Preference shares and debentures 12 746 15 774 15 312 12 435 15 628 15 077 140 76 171 146 159 Factoring accounts 5 763 5 500 5 815 5 763 5 474 5 815 26 Macro fair-value hedge-accounted portfolios2 2 436 (808) 48 31 (23) (7) 2 405 (785) 55Trade, other bills and bankers’ acceptances 4 12 13 4 11 12 1 1Loans and advances before impairments 752 561 703 642 728 156 343 786 324 061 336 605 352 724 326 984 339 493 31 528 31 272 31 298 23 272 23 003 21 839 1 251 (1 678) (1 079)Impairment of advances (16 273) (14 265) (15 488) (1 877) (1 569) (1 603) (13 308) (11 468) (12 731) (198) (183) (187) (775) (880) (802) (115) (165) (165)Total banking loans and advances 736 288 689 377 712 668 341 909 322 492 335 002 339 416 315 516 326 762 31 330 31 089 31 111 22 497 22 123 21 037 1 136 (1 843) (1 244)Comprises: – Loans and advances to clients 725 065 675 529 697 846 334 829 311 697 323 734 339 392 315 525 326 770 28 065 28 451 27 909 21 644 21 710 20 689 1 135 (1 854) (1 256)– Trading loans and advances 22 802 23 291 23 637 22 802 23 291 23 637 – Loans and advances to banks 11 223 13 848 14 822 7 080 10 795 11 268 24 (9) (7) 3 265 2 638 3 202 853 413 348 1 11 11Total loans and advances after impairments 759 090 712 668 736 305 364 711 345 783 358 639 339 416 315 516 326 763 31 330 31 089 31 111 22 497 22 123 21 037 1 136 (1 843) (1 245)

1 The balances previously presented as other term loans, other loans to clients and remittances in transit have been aggregated in the line ‘Term and other loans’.2 Changes in the fair value (R55m increase in fair value) of fixed-rate exposure due to changes in interest rate risk have been recognised in LAA, with the associated

gain or loss recognised in NIR. The macro fair-value hedge accounting adjustment is reported as a separate line in the Centre within loans and advances and amounts due to depositors because of risk management of interest risk in the banking book is performed on a portfolio basis.

3 Centre includes the group’s centrally managed macro fair-value hedge-accounting adjustment, intercluster adjustments relating to deferred revenue recognised in LAA, a central impairment provision and an impairment on other assets.

125124 Nedbank Group – Interim Results 2019 Nedbank Group – Interim Results 2019

BA900 market share Home loans (June 2016 – May 2019)(%)

34,2

14,6

20,9

22,7

7,6

OtherStandard BankNedbank FirstRand Absa

Commercial-mortgage loans (June 2016 – May 2019)(%)


16,2

38,9

6,7

15,9

22,3

Credit cards (June 2016 – May 2019)(%)


24,7

13,5

26,8

26,9

8,1

Core corporate loans1 (June 2016 – May 2019)(%)

OtherStandard BankNedbank FirstRand Absa1 Core corporate loans comprise commercial mortgages, corporate overdrafts,

corporate credit cards, corporate instalment credit, foreign sector loans, public sector loans, preference shares, factoring accounts and other corporate loans.

20,0

20,7

21,9

21,2

16,2

Personal loans (June 2016 – May 2019)(%)


16,6

10,2

24,2

10,9

38,1

Instalment sales and leases (June 2016 – May 2019)(%)


19,3

28,5

28,6

19,8 3,

8


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9 Investment securitiesRm Jun 2019 Jun 2018 Dec 2018

Private-equity investments 7 759 5 001 5 543Private-equity associates – Property Partners1 1 633 2 547 1 361Private-equity associates – Investment Banking1 1 131 964 1 070Private-equity (unlisted) – Property Partners1 1 599 362 1 551Private-equity (unlisted) – Investment Banking1 3 396 1 128 1 561

Listed investments 218 58 25Unlisted investments 2 755 3 331 3 060

Taquanta Asset Managers portfolio 471 450 463Strate Limited 143 143 143Other 2 141 2 738 2 454

Total listed and unlisted investments 10 732 8 390 8 628Listed policyholder investments at market value 11 197 9 705 10 048Unlisted policyholder investments at directors' valuation 3 857 2 765 3 742Net policyholder liabilities (13) (23) (14)Total policyholder investments 15 041 12 447 13 776Total investment securities 25 773 20 837 22 404

1 These private-equity associates are classified as FVTPL financial instruments.

Equity risk in the banking book Jun 2019 Jun 2018 Dec 2018

Total equity portfolio (Rm) 14 546 11 493 12 669Disclosed at fair value (Rm) 10 732 8 390 8 628Equity-accounted, including investment in ETI (Rm) 3 814 3 103 4 041

Percentage of total assets (%) 1,3 1,1 1,2Percentage of group minimum economic-capital requirement (%) 4,6 3,9 4,7

■ Equity investments in the banking book are primarily undertaken by CIB as part of its private-equity business. Any additional investments are undertaken as a result of operational or strategic requirements.

■ The equity portfolio disclosed at fair value has increased by R2 104m since December 2018, predominantly due to new acquisitions and follow-on investments.

■ The ETI strategic investment value declined by R380m since December 2018, resulting in an overall decrease in the portfolio that is equity-accounted.

■ The Nedbank board sets the overall risk appetite and strategy of the group for equity risk, and business compiles portfolio objectives and investment strategies for its investment activities. These address the types of investment, expected business returns, desired holding periods, diversification parameters and other elements of sound investment management oversight.

■ The ETI strategic investment is accounted for under the equity method of accounting and is therefore not carried at fair value.


10 Investments in associate companies

Equity-accounted earnings

RmCarrying amount

RmNet exposure to associates1

Rm

Name of company and nature of business

Jun2019

Jun20183

Dec20183

Jun2019

Jun2018

Dec2018

Jun2019

Jun2018

Dec2018

Associates Listed ETI2 381 247 608 2 865 2 865 3 245 219 488 333Unlisted Private equity: Tracker Technology Holdings Proprietary Limited 29 529 506 962 1 017Private equity: Other investments 2 44 42 Other strategic investments 10 (40) (80) 376 238 248 63 78 68Total 422 207 528 3 814 3 103 4 041 1 244 566 1 418

1 Includes on-balance-sheet and off-balance-sheet exposure.2 Ecobank Transnational Incorporated is a pan-African bank and its shares are listed on the stock exchanges of Nigeria, Ghana and the Ivory Coast.3 Equity-accounted earnings included a R45m loss in June 2018 and a R96m loss in December 2018 related to SBV Services Proprietary Limited.

The percentage holding in ETI at June 2019 was 21,2% (December 2018: 21,2%). The net exposure movement is due to loan repayment and the reduction of off-balance-sheet exposure ytd.

ACCOUNTING RECOGNITION OF ETI

RmJun

2019Jun

2018Dec

2018

Opening carrying value (preimpairment) 4 245 4 320 4 320IFRS 9 transitional adjustment (780) (780)Opening carrying value 4 245 3 540 3 540Share of associate earnings/(loss)1,2 381 247 608Share of other comprehensive (losses)/income1,2 (701) (209) (332)Foreign currency translation3 (60) 287 429Closing carrying value (preimpairment provision) 3 865 3 865 4 245Impairment provision (1 000) (1 000) (1 000)Closing carrying value 2 865 2 865 3 245

1 Applicable period: 1 October 2018 – 31 March 2019.2 Applicable average exchange rate: 1 January 2019 – 30 June 2019.3 Applicable period: 1 January 2019 – 30 June 2019, ie the cumulative difference at each quarter of the earnings and other comprehensive income converted at

an average USD/ZAR rate compared with the related US dollar balances converted at the quarter-end spot rate.

Accounting for associate income, together with Nedbank’s share of ETI’s other comprehensive income and movements in Nedbank’s FCTR, resulted in the carrying value of the group’s strategic investment in ETI decreasing from R3,2bn at 31 December 2018 to R2,9bn at 30 June 2019. ETI’s listed share price decreased 21,4% during the first half of 2019, which resulted in the market value of the group’s investment in ETI decreasing to R2,3bn at 30 June 2019. Due to the prolonged decline of ETI’s listed share price below its carrying value, Nedbank reviewed its impairment provision at 30 June 2019. Management’s value-in-use analysis, based on the latest publicly available information, exceeds the current carrying value of our investment. Our position will be reassessed again at year-end.


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2019Jun

2018Dec

2018

Computer software and capitalised development costs 7 811 6 793 7 251Goodwill 5 164 5 168 5 173Client relationships, contractual rights and other 145 223 184 13 120 12 184 12 608

COMPUTER SOFTWARE AND CAPITALISED DEVELOPMENT COSTS – CARRYING AMOUNT

Rm

Amorti-sation

periodsJun

2019Jun

2018Dec

2018

Computer software1 2–10 years 5 685 4 688 5 310Core product and client systems 1 524 1 523 1 630Support systems 2 148 1 827 2 053Digital systems 1 359 595 935Payment systems 654 743 692

Development costs not yet commissioned none 2 126 2 105 1 941Core product and client systems 653 423 454Support systems 660 847 584Digital systems 757 808 847Payment systems 56 27 56

7 811 6 793 7 251Computer software Opening balance 5 310 3 592 3 592Additions 176 236 393Commissioned during period 750 1 285 2 313Disposals and retirements (6) (17)Foreign exchange and other moves (4) 3 3Amortisation charge for the period (541) (422) (958)Impairments (6) (16)Closing balance 5 685 4 688 5 310Development costs not yet commissioned Opening balance 1 941 2 411 2 411Additions 995 1 035 1 971Commissioned during period (750) (1 285) (2 313)Foreign exchange and other movements Impairments (60) (56) (128)Closing balance 2 126 2 105 1 941

1 The categories of computer software for December 2018 have been revised.

11 Intangible assets


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Deposits by product Contribution (Rbn) (%)

600,000

621,875

643,750

665,625

687,500

709,375

731,250

753,125

775,000

Foreign currency liabilities

NCDs and other

deposits

26,3

16,7

Savings accounts

Current and cash

management deposits

Jun2018

Jun 2019

801,2

7,5

(1,0)(0,1)15,2

865,8

Jun2019

Fixed deposits

Call and term

deposits

Current and cash management deposits

Call and term deposits

Fixed deposits

Savings accounts

Negotiable certificates of deposit

Other

18,9

35,57,4

3,8

23,2

11,2

8,1%

41,0%10,7%(0,2%)5,7%10,3% (1,6%)

12 Amounts owed to depositorsSEGMENTAL BREAKDOWN


Banking Retail


RmJun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018 Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018Jun

2019Jun

2018Dec

2018

Current accounts 82 465 82 879 85 267 5 690 9 579 8 385 67 425 62 500 67 200 1 921 1 733 1 777 7 310 9 091 7 846 119 (24) 59Savings accounts 32 746 32 806 32 442 1 4 10 628 9 977 10 141 21 183 21 684 21 354 934 1 141 947 Other deposits and loan accounts 596 429 544 327 573 103 316 952 285 940 300 549 244 389 226 103 240 128 18 061 14 566 16 354 17 188 17 310 16 275 (161) 408 (203)

Call and term deposits 307 084 290 434 305 251 104 323 103 817 109 848 178 482 165 326 172 663 12 935 10 905 11 662 11 341 10 383 11 075 3 3 3Fixed deposits 64 167 65 203 66 314 9 598 11 932 11 837 51 427 51 112 52 385 726 694 669 2 417 1 465 1 424 (1) (1)Cash management deposits 80 888 65 238 73 659 69 740 55 733 60 016 8 172 6 219 10 497 1 616 2 193 1 939 1 281 1 035 1 136 79 58 71Other deposits 144 290 123 452 127 879 133 291 114 458 118 848 6 308 3 446 4 583 2 784 774 2 084 2 149 4 427 2 640 (242) 347 (276)

Foreign currency liabilities 25 889 18 364 23 316 19 628 11 923 17 933 5 534 5 252 5 051 9 10 718 1 189 322 Negotiable certificates of deposit 97 186 95 880 89 919 4 021 2 885 3 648 93 165 92 995 86 271Macro fair-value hedge accounting adjustment 392 (272) (120) 392 (272) (120)Deposits received under repurchase agreements 30 708 27 181 21 877 30 319 27 181 21 443 389 434 Total amounts owed to depositors 865 815 801 165 825 804 372 590 334 627 348 310 327 976 303 832 322 520 41 174 37 983 39 495 30 560 31 616 29 472 93 515 93 107 86 007Comprises: – Amounts owed to clients 783 318 746 176 765 516 296 319 288 489 292 884 325 612 302 279 321 244 41 151 37 983 39 486 29 551 28 901 28 341 90 685 88 524 83 561– Amounts owed to banks 82 497 54 989 60 288 76 271 46 138 55 426 2 364 1 553 1 276 23 9 1 009 2 715 1 131 2 830 4 583 2 446Total amounts owed to depositors 865 815 801 165 825 804 372 590 334 627 348 310 327 976 303 832 322 520 41 174 37 983 39 495 30 560 31 616 29 472 93 515 93 107 86 007

Nedbank Group continues to focus on Basel III-friendly deposits with a strong funding profile Deposits by cluster (Rbn)

865,8

3,2

Jun2018

801,2

(0,7)38,0

24,1

Jun2019

8,1%

CIB

(0,5%)11,3%

RoA and Centre

8,4%

Wealth

7,9%

RBB

■ Deposits grew 8,1% to R865,8bn, with total funding-related liabilities increasing 7,9% to R922,1bn.With 93,9% of all funding-related liabilities emanating from client deposits, Nedbank’s continued focus on growing the retail and corporate banking franchise has contributed to an improved loan-to-deposit ratio of 87,7%.RBB, Wealth and CIB grew deposits faster than nominal GDP, with growth rates of 7,9%, 8,4% and 11,3% respectively, in line with Nedbank’s objective of growing the retail and commercial franchises. RoA and the Centre declined by 0,5%, largely driven by the depreciation of the Zimbabwean currency versus the rand (excluding Zimbabwe, yoy RoA growth of 4,8% versus 3,3% decline).

Transactional deposits grew 10,3%, in line with Nedbank’s strategy of growing the transactional banking franchise.Call and term deposits grew 5,7%, partly offset by marginal decreases in savings and fixed deposits. NCDs and other deposits, which include structured deposits, grew 10,7% and contributed positively to managing Nedbank’s contractual longer-term funding ratio.Foreign currency liabilities, which represent only 3,0% of Nedbank’s total deposits, increased by 41,0% off an abnormally low base observed in June 2018. It should be noted that foreign currency liabilities are matched against foreign currency assets, resulting in an insignificant foreign currency mismatch when expressed as a percentage of the total balance sheet. During the 12 months to June 2019 Nedbank has maintained a strong balance sheet position as observed through the funding profile, liquidity buffers and key liquidity risk metrics.


Non-financial corporate deposits2 (June 2016 – May 2019)(%)

Absa OtherStandard Bank

FirstRandNedbank

17,3

24,2

27,0

16,7

14,8

BA900 market share Household deposits1 (June 2016 – May 2019)(%)


FirstRandNedbank

17,6

21,7

19,0

21,6

20,1

Wholesale deposits3 (June 2016 – May 2019)(%)


FirstRandNedbank

21,8

18,6

20,5

24,0

15,1

Foreign currency liabilities4 (June 2016 – May 2019)(%)


FirstRandNedbank

11,5

17,2

33,6

11,6

26,1

1 Includes 'households' as per the SARB: PA BA900 return.2 Includes 'private non-financial corporate sector deposits', 'unincorporated businesses' and 'non-profit and charities' as per the SARB: PA BA900 return.3 Includes 'insurers', 'pension funds', 'private financial corporate sector deposits', 'collateralised borrowings' and 'repurchase deposits' as per the

SARB: PA BA900 return.4 Includes 'foreign currency deposits' and 'foreign currency funding' as per the SARB: PA BA900 return.

■ In the 12 months to June 2019 Nedbank’s funding mix tilted towards increased funding from commercial and wholesale deposits, supported by a stronger funding profile where Nedbank’s quarterly average long-term funding ratio of 28,8% compared favourably with the industry average of approximately 25,7%. The increase in commercial and wholesale funding contributions was offset by a reduction in funding contributions from households, capital markets and foreign funding sources.

■ In 2019 Nedbank will continue to focus on tilting its deposit mix towards Basel III-friendly deposits, with a focus on providing competitive and innovative transactional and investment products, as well as an ongoing emphasis on meeting client needs through product, pricing and innovation.

WholesaleCommercialHouseholdCapital marketsForeign funding

Nedbank Group’s deposit mix(%)

39,9

28,3

5,8

19,6

6,4

R865,8bn

Jun 2019

38,6

27,1

5,9

21,5

6,9

R801,2bn

Jun 2018


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Nedbank Group LCR exceeds minimum regulatory requirements

Jun 2018 Jun 2019 Dec 2018

162,7148,7

171,9

149,0

HQLA (Rbn)

Net cash outflows (Rbn)

LCR (%)

106,9

115,4109,4

148,7139,0

Liquidity risk and fundingSUMMARY OF NEDBANK GROUP LIQUIDITY RISK AND FUNDING PROFILE

Jun Jun Dec 2019 2018 2018

Total sources of quick liquidity Rm 218 331 203 800 213 255Total HQLA Rm 171 909 148 675 162 678Other sources of quick liquidity Rm 46 422 55 125 50 577

Total sources of quick liquidity (as a percentage of total assets) % 19,8 20,0 20,4Long-term funding ratio (three-month average) % 28,8 28,4 26,5Senior unsecured debt Rm 39 877 36 736 39 254

Green bonds Rm 1 685 Total capital market issuance (excluding additional tier 1 capital) Rm 56 281 53 680 55 587Reliance on negotiable certificates of deposit (as a percentage of total deposits) % 11,2 12,0 10,9Reliance on foreign currency deposits (as a percentage of total deposits) % 3,0 2,3 2,8Loan-to-deposit ratio % 87,7 89,0 89,2Basel III liquidity ratios LCR1 % 115,4 106,9 109,4Minimum regulatory LCR requirement % 100 90 90NSFR2 % 109,6 116,4 114,0

1 Only banking and/or deposit-taking entities are included in the group LCR and the group ratio represents an aggregation of the relevant individual net cash outflows (NCOF) and the individual HQLA portfolios across all banking and/or deposit-taking entities, where surplus HQLA holdings in excess of the minimum requirement of 100% have been excluded from the aggregated HQLA number in the case of all non-SA banking entities. The above figures reflect the simple average of daily observations over the quarter ending June 2019 for Nedbank Limited and the simple average of the month-end values at 30 April 2019, 31 May 2019 and 30 June 2019 for all non-SA banking entities.

2 Only banking and/or deposit-taking entities are included in the group NSFR and the group data represents a consolidation of the relevant individual assets, liabilities and off-balance-sheet items.

■ Nedbank Group remains well funded, with a strong liquidity position, underpinned by a significant quantum of long-term funding, an appropriately sized surplus liquid-asset buffer, a strong loan-to-deposit ratio consistently below 100% and a low reliance on interbank and foreign currency funding.

■ The group's quarterly average LCR exceeded the minimum regulatory requirement of 100% applicable in 2019, with the group maintaining appropriate operational buffers designed to absorb seasonal and cyclical volatility in the LCR.

The LCR, calculated using the simple average of daily observations over the quarter ending June 2019 for Nedbank Limited and the simple average of the month-end values at 30 April 2019, 31 May 2019 and 30 June 2019 for all non-SA banking entities, was 115,4%.

— Nedbank's portfolio of LCR-compliant HQLA increased to a quarterly average of R171,9bn, up from December 2018 when the portfolio amounted to R162,7bn.

— The increase in the LCR is attributable to marginally faster growth in the HQLA portfolio compared with the growth observed in NCOF, where an increase in the long-term funding profile contributed to slower growth in LCR net cash outflows.

— Nedbank will continue to procure additional HQLA to support balance sheet growth while maintaining appropriately sized surplus liquid-asset buffers.


Nedbank Group has significant sources of quick liquidity

Total sources of quick liquidity (Rbn)

Corporate bonds and listed equitiesUnencumbered trading securities

Price-sensitive overnight loans

Other bank’s paper and unutilised bank credit lines

Other assets

45

7

2

32

14

Other sources of quick liquidity contribution (%)

R46,4bn

Jun 2018 Dec 2018 Jun 2019

148,7162,7

55,150,6

203,8213,3

171,9

46,4

218,3

5,7%

(8,3%)

2,3%

Total HQLAOther sources of quick liquidity

Jun 2019

In addition to the HQLA portfolio maintained for LCR purposes, Nedbank also identifies other sources of quick liquidity, which can be accessed in times of stress. Nedbank’s combined portfolio of HQLA and other sources of quick liquidity collectively amounted to R218,3bn at June 2019 and represented 19,8% of total assets.

■ Nedbank exceeded the minimum NSFR regulatory requirement of 100% effective from 1 January 2018, with a June 2019 ratio of 109,6%. The decrease in the NSFR from December 2018 to June 2019 is largely attributable to a mix change in the asset book, contributing to increased required stable funding. The key focus in terms of the NSFR is to achieve ongoing compliance in the context of balance sheet optimisation.

Nedbank Group NSFR exceeds minimum regulatory requirements

556,9

648,3582,7

664,5 683,9624,1

Available stable funding (Rbn)

Required stable funding (Rbn)

NSFR (%)

116,4 114,0

Jun 2019 Dec 2018Jun 2018

109,6


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Nedbank Group funding and liquidity profile, is underpinned by strong liquidity risk metrics

Jun 2019Dec 2017 Jun 2018 Dec 2018

28,887,7

93,9

Dec 2015 Dec 2016

Annual growth in deposits (Rbn)

Annual growth in capital market issuance excluding additional tier 1 capital (Rbn)

Three-month average long-term funding ratio (%)

Loan-to-deposit ratio (%)

9,4

72,4

4,0

54,2

0,9

64,7

38,5

2,5

92,1 89,0 89,2

28,4 26,529,6

92,8

27,028,7

9,1

35,6

10,0

A strong funding profile has been maintained in the first half of 2019, with Nedbank recording a three-month average long-term funding ratio of 28,8% in the second quarter of 2019. The focus on growing retail and commercial deposits, while also proactively managing Nedbank’s long-term funding profile, collectively contributed to a strong balance sheet position and the marginally stronger liquidity risk metrics. Nedbank has continued to run a more prudent long-term funding profile when compared with the industry average of approximately 25,7%.

— Nedbank successfully issued R4,5bn in senior unsecured debt, while R3,9bn matured during the first half of the year. ○ Nedbank successfully issued R1,7bn at its inaugural Green Bond auction, which was 3,3 times oversubscribed, with total

bids within guidance of R5,2bn. — Nedbank issued tier 2 capital instruments of R2,5bn and redeemed R2,2bn during the first half of the year, in line with the

group’s capital plan.Increasing retail and commercial foreign currency deposits remains a key component of Nedbank’s strategy to diversify its funding sources and to match fund foreign advances growth at attractive interest rates.

■ The group’s ICAAP and ILAAP Reports were updated and approved by the board in accordance with annual business-as-usual processes and submitted to the SARB: PA.


Equity analysisANALYSIS OF CHANGES IN NET ASSET VALUE

Change

(%)Jun

2019Jun

2018Dec

2018

Balance at the beginning of the period 91 271 88 539 88 539Impact of adopting IFRS 9, IFRS 15 and IFRS 16, net of taxation (658) (3 232) (3 232)

IFRS 9: Impairments (2 135) (2 135)IFRS 9: Classification and Measurement (63) (63)IFRS 9: ETI (780) (780)IFRS 15: Revenue (254) (254)IFRS 16: Leases (658)

Additional shareholder value (11,7) 5 674 6 423 13 175Profit attributable to equity holders of the parent 6 794 6 658 13 376Currency translation movements (564) 766 191

Exchange differences on translating foreign operations – foreign subsidiaries1 (174) 459 160Exchange differences on translating foreign operations – ETI1 (60) 287 429Share of other comprehensive income of investments accounted for using the equity method – ETI2 (330) 20 (398)

Fair-value adjustments (657) (352) 60Fair-value adjustments on debt instruments (300) (127) (20)Fair-value adjustments on equity instruments (11) Share of other comprehensive income of investments accounted for using the equity method2 (357) (214) 80

Defined-benefit fund adjustment 22 (631) (345)Share of other comprehensive income of investments accounted for using the equity method (included in other distributable reserves) (14) (16) (16)Other direct reserve movements 93 (2) (91)

Transactions with ordinary shareholders 9,2 (3 190) (2 922) (8 004)Dividends paid (3 541) (3 347) (6 744)Odd-lot repurchase (1 979)Equity-settled share-based payments (257) (191) 177Net repurchase of share capital and premium and capitalisation of reserves 608 616 542

Transaction with non-controlling shareholders < (100) (89) 159 41Exchange differences on translating foreign operations1 (92) 100 (140)Other transaction with non-controlling shareholders 3 59 181

Additional tier 1 capital instruments 1 613 750Other movements 16 (5) 2Balance at the end of the period 6,4 94 637 88 962 91 271

1 Exchange differences on translating foreign operations as shown in the statement of comprehensive income of R326m (loss) [June 2018: R846m (profit); December 2018: R449m (profit)].

2 Share of other comprehensive income of investments accounted for using the equity method as shown in the statement of comprehensive income of R686m (loss) [(June 2018: R194m (loss); December 2018: R318m (loss)].

MOVEMENTS IN GROUP FOREIGN CURRENCY TRANSLATION RESERVE

Change

(%)Jun

2019Jun

2018Dec

2018

Balance at the beginning of the period (1 389) (1 580) (1 580)Foreign currency translation reserve (FCTR) < (100) (564) 766 191

ETI (390) 307 31Banco Único (35) 93 7Other subsidiaries (139) 366 153

Balance at the end of the period < (100) (1 953) (814) (1 389)


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Foreign currency translation risk in the banking book Foreign currency translation risk is the risk of the group’s capital losing value as a result of movements in exchange rates that adversely impact the rand value of foreign-denominated equity in subsidiaries and associates.

NEDBANK GROUP OFFSHORE CAPITAL SPLIT BY FUNCTIONAL CURRENCY

Jun 2019 Jun 2018 Dec 2018

$m (US dollar equivalent)

Forex-sensitive

Non-forex-sensitive Total

Forex-sensitive


Forex-sensitive


US dollar 366 366 386 386 384 384Pound sterling 240 240 197 197 215 215RTGS dollar (Zimbabwe) 7 7 18 18Malawi kwacha 4 4 7 7 7 7Mozambican metical 42 42 45 45 43 43Other 480 480 504 504 492 492Total 659 480 1 138 635 504 1 139 667 492 1 159Limit 1 100 1 100 1 100

Foreign-denominated equity in subsidiaries and associates has decreased by 1% to US $659m in June 2019, primarily due to: ■ The decrease in the value of the investment in ETI as a result of Nedbank’s share of ETI’s other comprehensive losses being partially

offset by Nedbank’s share of current-year earnings. ■ Foreign currency translation losses in Nedbank Zimbabwe resulting from the change of the Zimbabwean functional currency to the

RTGS dollar and its subsequent revaluation.

Through its investment in ETI, Nedbank is exposed indirectly to the US dollar due to the translation of its dollar-denominated investment to a rand value. In addition, Nedbank is directly exposed to a number of other African currencies, in particular the Ghanaian cedi and Nigerian naira, as ETI foreign currency translation movements are equity-accounted on the group’s balance sheet.

The total RWA for the group’s foreign-exchange-sensitive foreign entities is R49,5bn, which is 8% of total RWA.

EXCHANGE RATES

Average Closing

Change

(%)Jun

2019Jun

2018Dec

2018Change

(%)Jun

2019Jun

2018Dec

2018

UK pound to rand 4,7 18,46 17,67 17,64 (0,6) 17,95 18,11 18,32US dollar to rand 9,8 14,56 13,30 13,24 2,8 14,10 13,71 14,38US dollar to naira (1,7) 306,45 311,69 361,50 0,3 306,40 305,50 363,50Rand to naira (10,1) 21,05 23,46 27,31 (2,6) 21,72 22,28 25,08US dollar to RTGS dollar (Zimbabwe) > 100 4,34 1,00 1,00 > 100 7,25 1,00 3,88RTGS dollar (Zimbabwe) to rand (75,7) 3,23 13,30 13,24 (85,8) 1,94 13,71 3,71


CAPITAL MANAGEMENT

Nedbank manages its capital levels in line with a number of factors, including our internal assessment of the level of risk being taken, the expectations of the rating agencies, the requirements of the regulators and the returns expected by shareholders. Nedbank also seeks to ensure that its capital structure takes full advantage of the range of capital instruments and capital management activities available in optimising the financial efficiency and loss absorption capacity of its capital base.

Nedbank Group performed extensive and comprehensive stress testing during this period and concludes that the group remains well capitalised relative to its business activities, the board’s strategic plans, risk appetite, risk profile and the external environment in which the group operates.

Nedbank Group maintained its solid capital adequacy position, with the CET1 capital ratio at 11,3% after absorbing the adverse impact of IFRS 16 implemented in January 2019. The CET1 capital ratio has been supported by reasonable earnings generation in a tough economic environment and an appropriate dividend policy. The group’s sound capital structure is supported by:

■ A focus on fully loss-absorbent capital, with Basel III fully-compliant capital making up 98% of the group’s total capital structure, having issued R19,3bn of new-style tier 2 capital and R5,0bn of new-style additional tier 1 capital since the implementation of Basel III in 2013.

■ A conservative RWA density of 56% (RWA/total assets), which compares favourably with local and international peers.

SARB

minimum1Internal targets Jun 2019 Jun 2018 Dec 2018

Nedbank Group Including unappropriated profits Total CAR % > 14 14,6 15,6 14,8Total tier 1 % > 12 12,3 13,2 12,5CET1 % 10,5–12,5 11,3 12,4 11,7Surplus tier 1 capital Rm 18 919 23 837 21 460Leverage times < 25 < 20 14,9 14,9 14,7Dividend cover times 1,75–2,25 1,99 2,00 1,97Cost of equity % 14,2 13,8 14,1Excluding unappropriated profits Total CAR % 11,50 14,2 14,3 14,2Total tier 1 % 9,25 11,9 11,9 11,9CET1 % 7,50 10,9 11,1 11,1Nedbank Limited Including unappropriated profits Total CAR % > 14 15,3 16,3 15,7Total tier 1 % > 12 12,4 13,2 12,7CET1 % 10,5–12,5 11,1 12,1 11,6Surplus tier 1 capital Rm 15 430 19 378 18 185Excluding unappropriated profits Total % 11,50 15,1 15,5 15,2Total tier 1 % 9,25 12,3 12,3 12,3CET1 % 7,50 10,9 11,2 11,1

1 SARB minimum requirements for 2019 reflect the phase-in of the conservation buffer at 2,5% and is disclosed excluding bank-specific Pillar 2b and D-SIB capital requirements.

■ Nedbank Group remains well capitalised at levels significantly above the minimum regulatory requirements. The CET1 ratio of 11,3% was impacted by the implementation of IFRS 16 on 1 January 2019 (R658m reduction in equity and R3,4bn increase in RWA, resulting in a 17 bps impact), the ongoing investment in software development costs as part of the group’s Managed Evolution programme and the adverse impact of changes in foreign currency translation reserves and adverse rating migrations in certain credit portfolios, negatively impacting RWA.

This was impacted by: — Credit RWA increasing R18,9bn, primarily due to a combination of advances growth in the RBB and CIB portfolios as well as

rating migrations of certain CIB clients in a tough macroeconomic environment. — Counterparty credit and credit valuation adjustment RWA increases of R6,2bn following the fair-value increases in interest

rate currency swap derivatives. — Equity RWA growth of R10,9bn due to new investment acquisitions and fair-value revaluations of existing equity exposures. — Operational RWA growth of R2,5bn, mainly driven by the migration to our second-generation model, which resulted in an

increase in our Advanced Measurement Approach capital. There has also been an increase in GOI, which drives TSA capital. — Trading market RWA decrease of R6,9bn, driven primarily by lower exposures to foreign exchange, and interest rates, inflation

and credit spreads on the back of reduced trading activity during the period. ■ The group’s tier 1 ratio of 12,3% was positively impacted by the issuance of additional tier 1 instruments of R1,6bn during the

first half of 2019, offset by the further grandfathering of preference shares in January 2019, in line with the Basel III transitional arrangements.

Regulatory capital adequacy and leverage


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NEDBANK GROUP OVERVIEW OF RISK-WEIGHTED ASSETS

Jun 2019 Jun 2018 Dec 2018 RWA MRC1 RWA RWA

Credit risk 409 626 47 107 372 717 390 688Standardised Approach 36 319 4 177 40 530 38 598Supervisory Slotting Approach 9 223 1 061 8 323 8 612Advanced Internal Ratings-based Approach 364 084 41 869 323 864 343 478

Counterparty credit risk 7 798 897 6 257 5 072Current Exposure Method 7 798 897 6 257 5 072

Credit valuation adjustment 13 901 1 599 9 562 10 378Equity positions under Simple Risk Weight Approach 46 087 5 300 31 393 35 205Securitisation exposures in banking book 454 52 526 504

Internal Ratings-based Approach 182 21 206 204External Ratings-based Approach, including Internal Assessment Approach 272 31 320 300

Market risk 24 592 2 828 23 243 31 489Standardised Approach 5 658 651 5 836 4 204Internal Model Approach 18 934 2 177 17 407 27 285

Operational risk 73 569 8 460 68 460 71 083Standardised Approach 6 827 785 6 373 6 599Advanced Measurement Approach 63 051 7 251 53 783 60 838Floor adjustment 3 691 424 8 304 3 646

Amounts below the thresholds for deduction (subject to 250% risk weighting) 14 992 1 724 14 190 14 942Other assets (100% risk weighting) 27 589 3 173 26 275 27 265Total 618 608 71 140 552 623 586 626

NEDBANK LIMITED OVERVIEW OF RISK-WEIGHTED ASSETS2

Jun 2019 Jun 2018 Dec 2018 RWA MRC1 RWA RWA

Credit risk 339 839 39 082 309 245 318 549Standardised Approach 145 17 423 150Supervisory Slotting Approach 9 223 1 061 8 835 8 612Advanced Internal Ratings-based Approach 330 471 38 004 299 987 309 787

Counterparty credit risk 7 499 862 6 053 4 855Current Exposure Method 7 499 862 6 053 4 855

Credit valuation adjustment 13 132 1 510 8 980 9 683Equity positions under Simple Risk Weight Approach 25 411 2 922 22 651 22 677Securitisation exposures in banking book 454 52 526 504

Internal Ratings-based Approach 182 21 206 204External Ratings-based Approach, including Internal Assessment Approach 272 31 320 300

Market risk 19 273 2 216 20 092 28 141Standardised Approach 662 76 1 205 1 162Internal Model Approach 18 611 2 140 18 887 26 979

Operational risk 61 909 7 120 59 503 60 720Standardised Approach 3 < 1 12 5Advanced Measurement Approach 59 550 6 848 51 620 57 594Floor adjustment 2 356 271 7 871 3 121

Amounts below the thresholds for deduction (subject to 250% risk weighting) 1 761 203 2 280 2 167Other assets (100% risk weighting) 22 084 2 540 21 702 23 835Total 491 362 56 507 451 032 471 1311 Total MRC is measured at 11,5%, in line with the transitional requirements, and excludes bank-specific Pillar 2b and D-SIB capital requirements.2 Nedbank Limited refers to the SA reporting entity in terms of regulation 38 (BA700) of the regulations relating to banks issued in terms of the Banks Act

(Act No 94 of 1990).

■ The group’s total ratio of 14,6% was impacted by the redemption of new-style tier 2 capital instruments of R2,2bn and the issuance of new-style tier 2 capital instruments of R2,5bn during the first half of 2019, in line with the group’s capital plan.

■ Nedbank Group’s gearing (including unappropriated profits) remains below the Leverage Ratio Framework requirement of less than 25 times at 14,9 times.


SUMMARY OF REGULATORY QUALIFYING CAPITAL AND RESERVES1

Nedbank Group Nedbank LimitedRm Jun 2019 Jun 2018 Dec 2018 Jun 2019 Jun 2018 Dec 2018

Including unappropriated profits Total tier 1 capital 76 140 72 883 73 523 60 881 59 407 59 959

CET1 70 098 68 730 68 625 54 324 54 682 54 484Share capital and premium 18 598 19 816 17 792 19 221 19 221 19 221Reserves 66 540 61 698 65 493 47 641 45 737 47 375Minority interest: Ordinary shareholders 770 911 1 038 Deductions (15 810) (13 695) (15 698) (12 538) (10 276) (12 112)

Goodwill (5 164) (5 168) (5 173) (1 410) (1 410) (1 410)Excess of expected loss over eligible provisions2 (414) (438) (750) (404) (452) (759)Defined-benefit pension fund assets (1 915) (739) (1 588) (1 850) (739) (1 588)Capitalised software and development costs (7 724) (6 765) (7 250) (7 693) (6 716) (7 145) Other regulatory differences and non-qualifying reserves (593) (585) (937) (1 181) (959) (1 210)

Additional tier 1 capital 6 042 4 153 4 898 6 557 4 725 5 475Preference share capital and premium 1 594 2 125 2 125 1 594 2 125 2 125Perpetual subordinated debt instruments 4 963 2 600 3 350 4 963 2 600 3 350Regulatory adjustments (515) (572) (577)

Tier 2 capital 14 042 13 413 13 428 14 112 14 298 13 799Subordinated debt instruments 14 110 14 290 13 797 14 110 14 290 13 797General allowance for credit impairment 276 318 289 2 8 2Regulatory adjustments (344) (1 195) (658)

Total capital 90 182 86 296 86 951 74 993 73 705 73 758 Excluding unappropriated profits Tier 1 capital 73 707 65 670 70 068 60 202 55 413 57 730CET1 capital 67 665 61 517 65 170 53 646 50 688 52 255Total capital 87 749 79 083 83 496 74 314 69 711 71 5291 For comprehensive 'composition of capital' and 'capital instruments main features' disclosure please refer to nedbank.co.za/content/nedbank/desktop/gt/en/

aboutus/information-hub/capital-and-risk-management-reports.html.2 While there is now greater alignment in the calculation of the expected loss under the impairment and regulatory frameworks, there are still some differences that

lead to a positive excess expected loss over provisions in the regulatory framework. The main difference relates to the fact that Basel requires the use of downturn expected loss, while IFRS 9 impairments are explicitly linked to a forward-looking macroeconomic outlook. Excess of expected loss over eligible provisions decreased from R750m to R414m from December 2018 to June 2019, following the recognition of portfolio provisions in respect of the Retail portfolio prior to the application of the modification loss adjustment for IFRS 9 purposes (R369m).

REGULATED BANKING SUBSIDIARIES

Nedbank Group banking subsidiaries are well capitalised for the environments in which they operate, with CARs well in excess of respective host regulators’ minimum requirements.

Jun 2019 Jun 2018 Dec 2018

Total capital requirement

(host country) RWA

Total capital

ratio RWA

Total capital

ratio RWA

Total capital

ratio% Rm % Rm % Rm %

Rest of Africa Banco Único 8,0 4 235 13,9 3 663 14,9 3 901 15,8Nedbank Namibia Limited 10,0 13 270 14,8 12 162 16,9 12 647 18,0Nedbank (Swaziland) Limited 8,0 4 913 17,0 2 985 25,4 4 654 17,3Nedbank (Lesotho) Limited 8,0 2 019 27,4 2 199 21,5 2 282 20,8Nedbank (Malawi) Limited 15,0 357 21,5 326 24,1 364 28,7Nedbank (Zimbabwe) Limited 12,0 1 231 14,4 3 037 27,6 3 5211 29,91

Isle of Man Nedbank Private Wealth (IOM) Limited 10,0 7 729 15,5 7 302 15,8 7 607 14,9

1 As reported in the December 2018 BA Regulatory Return, before any functional currency changes.


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Economic capital adequacyNEDBANK GROUP ECONOMIC CAPITAL REQUIREMENT

Jun 2019 Jun 2018 Dec 2018 Rm Mix % Rm Mix % Rm Mix %

Credit risk 40 173 63 38 717 65 38 476 63Market risk 7 742 12 7 637 13 8 094 13 Business risk 7 966 13 7 192 12 7 223 12 Operational risk 4 448 7 3 236 5 3 972 6 Insurance risk 435 1 536 1 474 1 Other assets risk 2 705 4 2 384 4 2 958 5 Minimum economic capital requirement 63 469 100 59 702 100 61 197 100Add: Stress-tested capital buffer (10%) 6 347 5 970 6 120 Total economic capital requirement 69 816 65 672 67 317 AFR 93 191 100 89 396 100 90 350 100Tier A capital 72 571 78 70 428 79 71 125 79Tier B capital 20 620 22 18 968 21 19 225 21Total surplus AFR 23 375 23 724 23 033 AFR: total economic capital requirement (%) 133 136 134

■ Nedbank Group’s minimum economic capital requirement increased by R2,3bn during the first half of the year, primarily due to: A R1,7bn increase in credit risk economic capital driven primarily by a combination of advances growth in the RBB and CIB portfolios as well as rating migrations of certain CIB clients in a tough macroeconomic environment.Respective increases of R743m and R476m in business risk economic capital and operational risk economic capital, which were driven mainly by annual model parameter updates, reflective of a higher risk environment.

■ Nedbank Group’s AFR increased R2,8bn in the first half of 2019, mainly as a result of:A R1,0bn increase in reserves, primarily due to organic growth in earnings and an increase in share capital and share premium of R806m as a result of employee long-term incentives vesting.A R1,4bn increase in tier B AFR following the issuance of R2,5bn of new-style tier 2 capital instruments and the issuance of R1,6bn additional tier 1 capital. The increase in AFR was partially offset by the grandfathering of old-style preference shares of R531m and the redemption of new-style tier 2 capital instruments of R2,2bn.

External credit ratings Standard & Poor’s Moody’s Investors Service

Nedbank

LimitedSovereign rating SA

Nedbank Limited

Sovereign rating SA

Oct 2018 Oct 2018 Oct 2018 Oct 2018

Outlook Stable Stable Stable StableForeign currency deposit ratings

Long-term BB BB Baa3 Baa3Short-term B B P-3 P-3

Local currency deposit ratings Long-term BB BB+ Baa3 Baa3Short-term B B P-3 P-3

National scale rating Long-term deposits zaAA+ zaAA+ Aa1.za Short-term deposits zaA-1+ zaA-1+ P-1.za


NOTES:


144 Earnings per share and weighted-average shares145 Nedbank Group employee incentive schemes146 Long-term debt instruments146 Additional tier 1 capital instruments147 Shareholders’ analysis148 Basel III balance sheet credit exposure by business cluster and asset class150 Nedbank Limited consolidated statement of comprehensive income151 Nedbank Limited consolidated statement of financial position151 Nedbank Limited consolidated financial highlights152 Definitions154 Abbreviations and acronymsIBC Company details

Supplementary information

Earnings per share BasicDiluted

basic HeadlineDiluted

headline

June 2019 Earnings for the period 6 793 6 793 6 870 6 870Weighted-average number of ordinary shares 478 714 592 486 992 378 478 714 592 486 992 378Earnings per share (cents) 1 419 1 395 1 435 1 411June 2018 Earnings for the period 6 658 6 658 6 696 6 696Weighted-average number of ordinary shares 482 714 054 491 951 726 482 714 054 491 951 726Earnings per share (cents) 1 379 1 353 1 387 1 361December 2018 Earnings for the year 13 376 13 376 13 495 13 495Weighted-average number of ordinary shares 483 240 926 493 159 191 483 240 926 493 159 191Earnings per share (cents) 2 768 2 712 2 793 2 736

Basic earnings and headline earnings per share are calculated by dividing the relevant earnings amount by the weighted-average number of shares in issue.

Fully diluted basic earnings and fully diluted headline earnings per share are calculated by dividing the relevant earnings amount by the weighted-average number of shares in issue after taking the dilutive impact of potential ordinary shares to be issued into account.

Number of weighted-average dilutive potential ordinary shares (000)Potential shares are the total number of shares arising from historic grants, schemes or awards, available for distribution.

Taken into account to determine the weighted-average dilutive shares are the number of potential shares, the strike price at issuance date, potential funding charges and imputed costs, the future share-based payments charge, allocated versus unallocated shares, and the date of issuance.

Jun2019

Jun2018

Dec2018

Potential

shares

Weighted-average dilutive shares



Traditional schemes 14 808 6 549 7 413 8 119 Nedbank Group Restricted-share Scheme (2005) 11 654 5 047 5 745 6 426 Nedbank Group Matched-share Scheme 3 154 1 502 1 668 1 693

Total BEE schemes 1 845 1 729 1 825 1 799 BEE schemes – South Africa 1 812 1 717 1 813 1 785

Community 1 690 1 690 1 690 1 690 Black executives 116 26 112 83 Black management 6 1 11 12

BEE schemes – Namibia 33 12 12 14

Total 16 653 8 278 9 238 9 918

EARNINGS PER SHARE AND WEIGHTED-AVERAGE SHARES


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NEDBANK GROUP EMPLOYEE INCENTIVE SCHEMESfor the period ended

Nedbank Group employee incentive schemesJun

2019Jun

2018Dec

2018

Summary by scheme Nedbank Group Restricted-share Scheme (2005) 9 161 730 9 466 040 9 369 675Nedbank Group Matched-share Scheme (2005) 2 327 056 2 291 745 2 178 999Instruments outstanding at the end of the period 11 488 786 11 757 785 11 548 674Analysis Performance-based – restricted shares 5 146 525 5 220 019 5 168 775Non-performance-based – restricted shares 4 015 205 4 246 021 4 200 900Performance-based – matched shares (CBSS1) 1 623 703 1 590 261 1 493 277Non-performance-based – matched shares (VBSS2) 703 353 701 484 685 722Instruments outstanding at the end of the period 11 488 786 11 757 785 11 548 674Movements Instruments outstanding at the beginning of the period 11 548 674 11 646 502 11 646 502Granted 4 287 920 3 494 025 3 699 952Exercised (4 193 184) (3 129 759) (3 234 541)Surrendered (154 624) (252 983) (563 239)Instruments outstanding at the end of the period 11 488 786 11 757 785 11 548 6741 Compulsory Bonus Share Scheme.2 Voluntary Bonus Share Scheme.

Nedbank Group (2005) Restricted- and Matched-share Schemes Restricted shares3

Details of instruments granted and not exercised at 30 June 2018 and the resulting dilutive effect:

Instrument expiry dateNumber of

shares

12 August 2019 38 357 P13 August 2019 33 635 16 March 2020 1 588 731 P17 March 2020 1 289 995 11 August 2020 44 551 P12 August 2020 39 819 15 March 2021 1 462 809 P16 March 2021 1 187 247 17 August 2021 103 172 P18 August 2021 86 526 15 March 2022 1 908 905 P16 March 2022 1 377 983 Restricted shares not exercised at 30 June 2019 9 161 730 Unallocated shares 121 127 Treasury shares 9 282 857 Average shares exercised or forfeited during the period 2 371 586 Total potential shares 11 654 443 Weighted-average dilutive shares applicable for the period 5 046 774 3 Restricted shares are issued at a market price for no consideration to participants, and are held by the schemes until the expiry date (subject to achievement of

performance conditions). Participants have full rights and receive dividends.P Performance-based instruments.


LONG-TERM DEBT INSTRUMENTSInstrument code

Jun2019

Jun2018

Dec2018

Subordinated debt 14 537 14 723 14 233Callable notes (rand-denominated) 14 221 14 400 13 905Long-term debenture (Namibian dollar-denominated) 316 311 316Callable notes (MZN-denominated) 12 12

Securitised liabilities – callable notes (rand-denominated) 1 834 2 193 2 069Senior unsecured debt – senior unsecured notes (rand-denominated)1 39 877 36 736 39 254Unsecured debentures (rand-denominated) 33 28 31Total long-term debt instruments in issue 56 281 53 680 55 587

1 June 2019 includes Green bonds (rand-denominated) of R1 685m.

Further information can be accessed on our group website:nedbank.co.za/content/nedbank/desktop/gt/en/aboutus/information-hub/capital-and-risk-management-reports.htmlnedbank.co.za/content/nedbank/desktop/gt/en/aboutus/debt-investor/debt-investors-programme.html

ADDITIONAL TIER 1 CAPITAL INSTRUMENTSThe group issued new-style (Basel III-compliant) additional tier 1 capital instrument as follows:

Instrument code Instrument termsJun

2019Jun

2018Dec

2018

Subordinated Callable notes (rand-denominated) NEDT1A 3-month JIBAR + 7,00% per annum 1 500 1 517 1 517NEDT1B 3-month JIBAR + 6,25% per annum 500 504 505NGLT1A 3-month JIBAR + 5,65% per annum 600 613 613NGLT1B 3-month JIBAR + 4,64% per annum 750 762NGT103 3-month JIBAR + 4,40% per annum 671 NGT104 3-month JIBAR + 4,50% per annum 942 Total attributable to holders of additional tier 1 capital instruments 4 963 2 634 3 397

The additional tier 1 notes represent perpetual, subordinated instruments, with no redemption date. The instruments are redeemable subject to regulatory approval at the sole discretion of the issuer from the applicable call date and following a regulatory event or following a tax event. The payment of interest is at the discretion of the issuer and interest payments are non-cumulative. In addition, if certain conditions are reached, the regulator may prohibit Nedbank from making interest payments. Accordingly, the instruments are classified as equity instruments and disclosed as part of the non-controlling interest.

Matched shares

Instrument expiry dateNumber of

shares

1 April 2020 697 5261 April 2021 659 7511 April 2022 969 779Matched shares outstanding not exercised at 30 June 2019 2 327 056Movements due to unallocated shares during the period 826 628Total potential shares 3 153 684Weighted-average dilutive shares applicable for the period 1 501 704

The obligation to deliver the matched shares issued under the Voluntary and Compulsory Bonus Share Schemes is subject to time and other performance criteria.

This obligation exists over 30 June 2018 and therefore has a dilutive effect.

Matched shares are not issued and are therefore not recognised as treasury shares. However, until they are issued, there remains a potential dilutive effect.


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Register date: 28 June 2019Authorised share capital: 600 000 000 sharesIssued share capital: 497 053 536 shares

Number of

shares

Jun2019

% holding

Jun2018

% holding

Dec2018

% holding

Major shareholders/managers Old Mutual Life Assurance Company (SA) Limited and associates (includes funds managed on behalf of other beneficial owners) 121 700 558 24,48 54,06 24,54 Nedbank Group treasury shares 15 858 222 3,19 3,21 3,26

BEE trusts 6 527 853 1,31 1,28 1,32

Eyethu scheme – Nedbank SA 6 375 551 1,28 1,25 1,29 Omufima scheme – Nedbank Namibia 152 302 0,03 0,03 0,03

Nedbank Group (2005) Restricted- and Matched-share Schemes 9 282 857 1,87 1,92 1,93 Nedbank Namibia Limited 47 512 0,01 0,01 0,01

Public Investment Corporation (SA) 51 790 903 10,42 6,10 9,38 Coronation Fund Managers (SA) 32 585 498 6,56 5,96 7,31 BlackRock Inc (International) 19 010 290 3,82 1,97 3,71 Allan Gray Investment Council 17 966 430 3,61 1,50 5,14 The Vanguard Group Incorporated 15 366 987 3,09 1,60 2,91 GIC Asset Management Proprietary Limited 12 796 726 2,57 1,84 2,65 Lazard Asset Management (International) 12 721 791 2,56 3,17 2,96 Dimensional Fund Advisors (US, UK and AU) 9 734 260 1,96 1,39 1,62 Sanlam Investment Management 9 708 045 1,95 0,60 1,88Major beneficial shareholders Old Mutual Life Assurance Company Limited1 111 328 923 22,40 16,23 22,06 Government Employees Pension Fund (SA) 53 627 021 10,79 6,20 9,66 GIC Asset Management Proprietary Limited (SG) 12 877 020 2,59 1,84 2,67 Geographical distribution of shareholders Domestic 355 443 618 71,51 79,45 70,74

South Africa 340 849 188 68,57 78,69 67,38 Namibia 6 745 669 1,36 0,75 1,47 Eswatini 194 513 0,04 0,01 0,05 Unclassified 7 654 248 1,54 1,84

Foreign 141 609 918 28,49 20,55 29,30

United States of America 72 627 352 14,61 11,72 14,89 Asia 25 169 075 5,06 3,25 5,06 Europe 22 766 114 4,58 2,93 4,78 United Kingdom and Ireland 12 533 533 2,52 1,72 2,96 Other countries 8 513 844 1,71 0,93 1,61

Total shares listed 497 053 536 100,00 100,00 100,00 Less: Treasury shares held 15 858 222

Net shares reported 481 195 314

1 Old Mutual Limited retains a strategic minority shareholding of 19,9% in Nedbank Group, held through its shareholder funds, under the terms of the relationship agreement. The above shareholding is inclusive of funds held on behalf of other beneficial owners and increased after the Old Mutual Managed Separation had been completed as a result of the subsequent odd-lot offer. The relationship agreement with Old Mutual Limited is available at https://www.nedbank.co.za/content/dam/nedbank/site-assets/AboutUs/About%20Nedbank%20Group/Old%20Mutual/Nedbank%20Old%20Mutual%20Limited%20Relationship%20Agreement%202018.pdf

SHAREHOLDERS’ ANALYSIS


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BASEL III BALANCE SHEET CREDIT EXPOSURE BY BUSINESS CLUSTER AND ASSET CLASS

Corporate and

Investment Banking

Property Finance

Retail and

Business Banking

Nedbank Wealth

Rest of Africa Centre

Nedbank Group June 2019 Nedbank Group June 20188

RiskDownturn expected

Downturn expected

Mix Change weighting loss (dEL)2 BEEL3 loss (dEL)2 BEEL3

(Rm) (%) (%) (%) (%) (Rm) (Rm) (Rm) (Rm)

Advanced Internal Ratings-based Approach 390 238 153 748 348 769 19 843 361 71 127 830 338 91,1 7,5 40,3 7 020 9 444 772 513 6 057 8 010Corporate 176 403 45 883 18 321 3 194 727 21,3 11,5 44,8 1 113 579 174 593 970 509Specialised lending – HVCRE4 6 840 6 840 57 6 897 0,8 (4,7) 115,0 112 122 7 234 74 96Specialised lending – IPRE5 96 364 96 364 1 586 5 285 103 235 11,3 3,9 33,5 227 93 99 339 220 170Specialised lending – project finance 42 924 42 924 4,7 11,0 66,9 164 38 687 139 SME – corporate 5 956 4 452 28 256 2 152 36 364 4,0 17,7 49,0 229 259 30 883 190 156Public sector entities 18 160 171 18 331 2,0 (22,8) 55,8 102 23 736 52 Local governments and municipalities 11 322 869 12 191 1,3 35,6 23,8 5 8 989 3 10Sovereign 10 678 4 71 127 81 809 9,0 16,5 10,8 26 70 206 25 Banks 21 388 39 5 361 21 754 2,4 (18,9) 60,6 71 26 833 100 Securities firms Retail mortgage 125 416 10 131 135 547 14,9 5,7 22,7 625 1 324 128 294 645 1 322Retail revolving credit 16 486 79 16 565 1,8 3,7 67,3 847 1 454 15 977 228 1 844Retail – other 122 893 169 123 062 13,5 10,0 51,9 2 997 4 847 111 845 2 944 3 253SME – retail 33 34 462 1 967 36 462 4,0 2,9 39,4 502 766 35 432 467 650Securitisation exposure 170 170 300 470 0,1 1,1 96,6 465 The Standardised Approach6 172 18 349 40 514 59 035 6,5 7,9 63,1 54 690 Corporate 10 009 10 009 1,1 51,6 99,4 6 603 SME – corporate 172 1 409 1 581 0,2 7,8 96,3 1 467 Public sector entities 706 706 0,1 76,9 68,4 399 Local government and municipalities 29 29 (29,3) 89,7 41 Sovereign 6 410 5 590 12 000 1,3 (8,3) 53,0 13 083 Banks 3 610 6 630 10 240 1,1 (14,2) 48,3 11 929 Retail mortgage 5 784 6 992 12 776 1,4 4,0 40,8 12 288 Retail revolving credit 644 644 0,1 (62,5) 47,6 1 716 Retail – other 1 136 4 764 5 900 0,6 62,8 76,3 3 623 SME – retail 5 150 5 150 0,6 45,4 85,6 3 541 Properties in possession (1) (1) 54 11 104 168 8,4 155 Non-regulated entities 21 734 21 734 2,4 (2,6) 22 319 Total Basel III balance sheet exposure7 411 979 153 747 348 995 38 203 40 979 71 127 911 275 100,0 7,2 7 020 9 444 849 677 6 057 8 010Downturn expected loss (AIRB Approach) 16 464 14 067Expected loss performing book 7 019 6 057BEEL on defaulted advances 9 444 8 010IFRS impairment on AIRB loans and advances (16 050) (13 629)Excess of downturn expected loss over eligible provisions 414 438

1 Risk weighting is shown as a percentage of exposure at default (EAD) for the AIRB Approach and as a percentage of total credit extended for TSA.2 dEL is in relation to performing loans and advances.3 Best estimate of expected loss (BEEL) is in relation to defaulted loans and advances.4 HVCRE = high-volatility commercial real estate.5 IPRE = income-producing real estate.6 A portion of the legacy Imperial Bank book in Nedbank RBB, Nedbank Private Wealth (UK) and the non-SA banking entities in Africa are covered by TSA.7 Balance sheet credit exposure includes on-balance-sheet, repurchase and resale agreements and derivative exposure.8 The June 2018 figures have been restated to account for removal of trading book exposure not subject to counterparty credit risk (R67bn). These exposures were

removed from Basel III balance sheet credit exposure in Q4 2018 in line with the regulations which requires these to be quantified as market risk. This impacted the Sovereign and Banks advanced Internal Ratings-based Approach asset classes.


NEDBANK LIMITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEfor the period ended

RmChange

%Jun

2019Jun

2018Dec

2018

Interest and similar income 9,9 39 057 35 554 72 739Interest expense and similar charges 12,2 25 661 22 876 46 774Net interest income 5,7 13 396 12 678 25 965Impairments charge on loans and advances 42,4 2 479 1 741 3 547Income from lending activities (0,2) 10 917 10 937 22 418Non-interest revenue 5,9 10 452 9 866 20 884Operating income 2,7 21 369 20 803 43 302Total operating expenses 5,6 13 483 12 774 27 616Indirect taxation 11,2 455 409 804Profit from operations before non-trading and capital items (2,5) 7 431 7 620 14 882Non-trading and capital items 77,0 (108) (61) (164)Profit from operations (3,1) 7 323 7 559 14 718Share of income/(losses) of associate companies > 100 41 (40) (83)Profit before direct taxation (2,1) 7 364 7 519 14 635Total direct taxation (11,6) 1 745 1 975 3 854

Direct taxation 1 775 1 993 3 899Taxation on non-trading and capital items (30) (18) (45)

Profit for the period 1,4 5 619 5 544 10 781Other comprehensive losses net of taxation 67,3 (202) (617) (368)

Items that may subsequently be reclassified in profit or loss Exchange differences on translating foreign operations 30 139 70Debt investments at FVOCI – net change in fair value (320) (130) 7

Items that may not subsequently be reclassified in profit or loss Remeasurements on long-term employee benefit assets (5) (626) (345)Gains/(Losses) on property revaluations 93 (100)

Total comprehensive income for the period 9,9 5 417 4 927 10 413Profit attributable to: – Ordinary and preference shareholders 1,4 5 616 5 540 10 765– Non-controlling interest – ordinary shareholders (25,0) 3 4 16Profit for the period 1,4 5 619 5 544 10 781Total comprehensive income attributable to: – Ordinary and preference shareholders 10,0 5 415 4 924 10 397– Non-controlling interest – ordinary shareholders (33,3) 2 3 16Total comprehensive income for the period 9,9 5 417 4 927 10 413Headline earnings reconciliation Profit attributable to ordinary and preference equity holders 1,4 5 616 5 540 10 765Less: Non-headline earnings items net of taxation (78) (43) (119)

Non-trading and capital items (108) (61) (164)Taxation on non-trading and capital items 30 18 45

Headline earnings attributable to ordinary and preference shareholders 2,0 5 694 5 583 10 884


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NEDBANK LIMITED CONSOLIDATED STATEMENT OF FINANCIAL POSITIONat

NEDBANK LIMITED CONSOLIDATED FINANCIAL HIGHLIGHTSfor the period ended

RmJun

2019Jun

2018Dec

2018

ROE (%) 16,9 17,5 16,6ROA (%) 1,20 1,22 1,16NII to average interest-earning banking assets (%) 3,50 3,61 3,57CLR – banking advances (%) 0,73 0,54 0,54Cost-to-income ratio 56,4 56,8 58,9

RmJun

2019Jun

2018Dec

2018

Assets Cash and cash equivalents 7 490 6 145 7 931Other short-term securities 48 967 71 677 57 844Derivative financial instruments 33 622 26 864 22 412Government and other securities 125 279 76 330 96 123Banking advances 724 374 679 628 702 156Trading advances 22 802 23 291 23 637Other assets 12 168 11 403 12 039Current taxation assets 70 788 105Investment securities 8 822 6 541 6 787Non-current assets held for sale 132 382 305Investments in associate companies 939 229 786Deferred taxation assets 28 43 40Property and equipment 10 331 7 642 8 367Long-term employee benefit assets 4 852 4 510 4 764Mandatory reserve deposits with central banks 20 759 19 013 19 789Intangible assets 9 087 8 109 8 538Total assets 1 029 722 942 595 971 623Total equity and liabilities Ordinary share capital 28 28 28Ordinary share premium 19 182 19 182 19 182Reserves 50 663 46 949 49 636Total equity attributable to equity holders of the parent 69 873 66 159 68 846Preference share capital and premium 3 561 3 561 3 561Additional tier 1 capital instruments 4 963 2 647 3 416Non-controlling interest attributable to ordinary shareholders 25 10 23Non-controlling interest attributable to preference shareholders 561 561 561Total equity 78 983 72 938 76 407Derivative financial instruments 30 302 24 286 19 761Amounts owed to depositors 848 196 774 011 806 487Provisions and other liabilities 13 277 14 767 10 414Current taxation liabilities 173 40 272Deferred taxation liabilities 380 363 224Long-term employee benefit liabilities 2 285 2 704 2 648Long-term debt instruments 56 126 53 486 55 410Total liabilities 950 739 869 657 895 216Total equity and liabilities 1 029 722 942 595 971 623


DEFINITIONS12-month ECL This ECL represents an ECL that results from a default event on financial instruments occurring within the 12 months

after the reporting date (or a shorter period if the expected life of the financial instrument is less than 12-months), weighted by the probability of that default occurring.

Assets under administration (AUA) (Rm) Market value of assets held in custody on behalf of clients.

Assets under management (AUM) (Rm) Market value of assets managed on behalf of clients.

Common-equity tier 1 (CET1) capital adequacy ratio (%) CET1 regulatory capital, including unappropriated profit, as a percentage of total risk-weighted assets.

Cost-to-income ratio (%) Total operating expenses as a percentage of total income, being net interest income, non-interest revenue and share of profits or losses from associates and joint arrangements.

Coverage (%) On-balance-sheet ECLs divided by gross banking loans and advances. Coverage excludes ECLs on off-balance-sheet amounts, ECL and gross banking loans and advances on the fair value through other comprehensive income (FVOCI) portfolio and loans and advances measured at fair value through profit or loss (FVTPL).

Credit loss ratio (CLR) – (% or bps) ECL charge on banking loans and advances as a percentage of daily average gross banking loans and advances. Includes the ECL recognised in respect of the off-balance-sheet portion of loans and advances.

Default Default occurs in respect of a particular client in the following instances:

■ When the bank considers that the client is unlikely to pay its credit obligations to the bank in full without the bank having recourse to actions such as realising security (if held).

■ When the client is past due for more than 90 days on any material credit obligation to the bank. Overdrafts will be considered as being past due if the client has breached an advised limit or has been advised of a limit smaller than the current outstanding amount.

■ In terms of Nedbank‘s Group Credit Policy, when the client is placed under business rescue in accordance with the Companies Act, 71 of 2008, and when the client requests a restructure of his facilities as a result of financial distress.

At a minimum a default is deemed to have occurred where a material obligation is past due for more than 90 days or a client has exceeded an advised limit for more than 90 days. A specific impairment is raised against such a credit exposure due to a significant perceived decline in the credit quality.

Diluted headline earnings per share (DHEPS) (cents) Headline earnings divided by the weighted-average number of ordinary shares, adjusted for potential dilutive ordinary shares.

Dividend cover (times) Headline earnings per share divided by dividend per share.

Economic profit (EP) (Rm) Headline earnings less the cost of equity (total equity attributable to equity holders of the parent, less goodwill, multiplied by the group's cost-of-equity percentage).

Effective taxation rate (%) Direct taxation as a percentage of profit before direct taxation, excluding non-trading and capital items.

Earnings per share (EPS) (cents) Earnings attributable to ordinary shareholders, divided by the weighted-average number of ordinary shares in issue.

Forward-looking economic expectations The impact of forecast macroeconomic expectations in determining significant increase in credit risk (SICR) and the measurement of ECL.

Gross operating income growth rate less expenses growth rate (JAWS ratio) (%) Measure of the extent to which the total income growth rate exceeds the total operating expenses growth rate.

Headline earnings (Rm) The profit attributable to equity holders of the parent, excluding specific separately identifiable remeasurements, net of related tax and non-controlling interests.

Headline earnings per share (HEPS) (cents) Headline earnings divided by the weighted-average number of ordinary shares in issue.

Lifetime ECL An ECL on any default event between the reporting date and the end of the lifetime of the financial asset.

Life insurance embedded value (Rm) The embedded value (EV) of the covered business is the discounted value of the projected future after-tax shareholder earnings arising from covered business in force at the valuation date, plus the adjusted net worth.

Life insurance value of new business (Rm) A measure of the value added to a company as a result of writing new business. Value of new business (VNB) is calculated as the discounted value, at the valuation date, of projected after-tax shareholder profit from covered new business that commenced during the reporting period, net of frictional costs and the cost of non-hedgeable risk associated with writing new business, using economic assumptions at the start of the reporting period.

Net asset value (NAV) (Rm) Total equity attributable to equity holders of the parent.

Net asset value (NAV) per share (cents) NAV divided by the number of shares in issue, excluding shares held by group entities at the end of the period.

Net interest income (NII) to average interest-earning banking assets (AIEBA) (%) NII as a percentage of daily average total assets, excluding trading assets. Also called net interest margin (NIM).


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Non-interest revenue (NIR) to total income (%) NIR as a percentage of operating income, excluding the impairments charge on loans and advances.

Number of shares listed (number) Number of ordinary shares in issue, as listed on the JSE.

Off-balance-sheet exposure Undrawn loan commitments, guarantees and similar arrangements that expose the group to credit risk.

Ordinary dividends declared per share (cents) Total dividends to ordinary shareholders declared in respect of the current period.

Performing stage 3 loans and advances (Rm) Loans that would otherwise not be in default, but are classified as defaulted due to regulatory requirements, ie directive 7 and the new curing definition.

Preprovisioning operating profit (PPOP) (Rm) Headline earnings plus direct taxation plus an impairments charge on loans and advances.

Profit attributable to equity holders of the parent (Rm) Profit for the period less non-controlling interests pertaining to ordinary shareholders, preference shareholders and additional tier 1 capital instrument noteholders.

Profit for the period (Rm) Income statement profit attributable to ordinary shareholders of the parent, before non-controlling interests.

Return on equity (ROE) (%) Headline earnings as a percentage of daily average ordinary shareholders' equity.

Return on equity (ROE) (excluding goodwill) (%) Headline earnings as a percentage of daily average ordinary shareholders' equity less goodwill.

Return on tangible equity (%) Headline earnings as a percentage of daily average ordinary shareholders' equity less intangible assets.

Risk-weighted assets (RWA) (Rm) On-balance-sheet and off-balance-sheet exposures after applying prescribed risk weightings according to the relative risk of the counterparty.

Stage 1 Financial assets for which the credit risk (risk of default) at the reporting date has not significantly increased since initial recognition.

Stage 2 Financial assets for which the credit risk (risk of default) at the reporting date has significantly increased since initial recognition.

Stage 3 (Defaulted loans and advances, non-performing defaulted advances) Any advance or group of loans and advances that has triggered the Basel III definition of default criteria and is in line with the revised SA banking regulations. For retail portfolios this is product-centred and a default would therefore be specific to a client or borrower account (a specific advance). For all other portfolios, except specialised lending, it is client- or borrower-centred, meaning that should any transaction within a borrowing group default, all transactions within the borrowing group would be treated as having defaulted. At a minimum a default is deemed to have occurred where a material obligation is past due for more than 90 days or a client has exceeded an advised limit for more than 90 days. A specific impairment is raised against such a credit exposure due to a significant perceived decline in the credit quality.

Stage 3 ECL (Rm) ECL for banking loans and advances that have been classified as stage 3 advances and specifically impaired, net of the present value of estimated recoveries.

Tangible net asset value (Rm) Equity attributable to equity holders of the parent, excluding intangible assets.

Tangible net asset value per share (cents) Tangible net asset value (NAV) divided by the number of shares in issue, excluding shares held by group entities at the end of the period.

Tier 1 capital adequacy ratio (CAR) (%) Tier 1 regulatory capital, including unappropriated profit, as a percentage of total risk-weighted assets.

Total capital adequacy ratio (CAR) (%) Total regulatory capital, including unappropriated profit, as a percentage of total risk-weighted assets.

Value in use (VIU) (Rm) The present value of the future cashflows expected to be derived from an asset or cash-generating unit.

Weighted-average number of shares (number) The weighted-average number of ordinary shares in issue during the period listed on the JSE.


ABBREVIATIONS AND ACRONYMS

AFR available financial resources

AIEBA average interest-earning banking assets

AIRB Advanced Internal Ratings-based

AUA assets under administration

AUM assets under management

BBBEE broad-based black economic empowerment

BEE black economic empowerment

bn billion

bps basis point(s)

CAGR compound annual growth rate

CAR capital adequacy ratio

CET1 common equity tier 1

CIB Corporate and Investment Banking

CLR credit loss ratio

COE cost of equity

CPI consumer price index

CPF commercial-property finance

CVP client value proposition

DHEPS diluted headline earnings per share

D-SIB domestic systemically important bank

ECL expected credit loss

EP economic profit

EPS earnings per share

ESG environmental, societal and government

EV embedded value

ETI Ecobank Transnational Incorporated

FVOCI Fair value through other comprehensive income

FVTPL Fair value through profit or loss

GDP gross domestic product

GLAA gross loans and advances

GOI gross operating income

group Nedbank Group Limited

HE headline earnings

HEPS headline earnings per share

HQLA high-quality liquid asset(s)

IAS International Accounting Standard(s)

ICAAP Internal Capital Adequacy Assessment Process

IFRS International Financial Reporting Standard(s)

ILAAP Internal Liquidity Adequacy Assessment Process

JIBAR Johannesburg Interbank Agreed Rate

JSE JSE Limited

LAA loans and advances

LAP liquid-asset portfolio

LCR liquidity coverage ratio

LIBOR London Interbank Offered Rate

m million

MFC Motor Finance Corporation (vehicle finance lending division of Nedbank)

MRC minimum required capital

NAFEX The Nigerian Autonomous Foreign Exchange Rate Fixing Methodology

NCA National Credit Act, 34 of 2005

NCD negotiable certificate of deposit

NCOF net cash outflows

NGN Nigerian naira

NII net interest income

NIM net interest margin

NIR non-interest revenue

NPL non-performing loan(s)

NSFR net stable funding ratio

OM Old Mutual

plc public listed company

PPOP preprovisioning operating profit

qoq quarter on quarter

R rand

RBB Retail and Business Banking

Rbn South African rands expressed in billions

Rm South African rands expressed in millions

RoA Rest of Africa (cluster name)

ROA return on total assets

ROE return on equity

RORWA return on risk-weighted assets

RRB Retail Relationship Banking

RWA risk-weighted assets

SA South Africa

SADC Southern African Development Community

SAICA South African Institute of Chartered Accountants

SARB South African Reserve Bank

SDGs Sustainability Development Goals

SICR Significant increase in credit risk

STI short-term incentive

TTC through the cycle

UK United Kingdom

US United States

VAF vehicle and asset finance

VaR value at risk

VIU value in use

VNB value of new business

yoy year on year

ytd year to date

ZAR South African rand (currency code)


DISCLAIMERNedbank 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 legislation.

Forward-looking statements may be identified by words such as ‘believe’, ‘anticipate’, ‘expect’, ‘plan’, ‘estimate’, ‘intend’, ‘project’, ‘target’, ‘predict’ and ‘hope’.

Forward-looking statements are not statements of fact, but statements by the management of Nedbank Group based on its current estimates, projections, expectations, beliefs and assumptions regarding the group’s future performance.

No assurance can be given that forward-looking statements will be correct and undue reliance should not be placed on such statements.

The risks and uncertainties inherent in the forward-looking statements contained in this document include, but are not limited to: changes to IFRS and the interpretations, applications and practices subject thereto as they apply to past, present and future periods; domestic and international business and market conditions such as exchange rate and interest rate movements; changes in the domestic and international regulatory and legislative environments; changes to domestic and international operational, social, economic and political risks; and the effects of both current and future litigation.

Nedbank Group does not undertake to update any forward-looking statements contained in this document and does not assume responsibility for any loss or damage arising as a result of the reliance by any party thereon, including, but not limited to, loss of earnings, profits, or consequential loss or damage.

NEDBANK GROUP LIMITEDIncorporated in the Republic of SA Registration number 1966/010630/06

Registered officeNedbank Group Limited, Nedbank 135 Rivonia Campus, 135 Rivonia Road, Sandown, Sandton, 2196PO Box 1144, Johannesburg, 2000

Transfer secretaries in SAShareholders are reminded that, with effect from 1 June 2018, Nedbank Group’s transfer secretaries in SA has changed from Computershare to Link Market Services.

Link Market Services South Africa Proprietary Limited, 19 Ameshoff Street, Braamfontein, Johannesburg, 2001, SA.

PO Box 4844, Marshalltown, 2000, SA.

NamibiaTransfer Secretaries (Proprietary) Limited Robert Mugabe Avenue No 4, Windhoek, Namibia PO Box 2401, Windhoek, Namibia

INSTRUMENT CODESNedbank Group ordinary sharesJSE share code: NED NSX share code: NBK ISIN: ZAE000004875 ADR code: NDBKY ADR CUSIP: 63975K104

Nedbank Limited non-redeemable non-cumulative preference sharesJSE share code: NBKP ISIN: ZAE000043667

FOR MORE INFORMATION CONTACTINVESTOR RELATIONSEmail: [email protected]

RAISIBE MORATHIChief Financial Officer Tel: +27 (0)11 295 9693

ALFRED VISAGIEExecutive Head, Investor Relations Tel: +27 (0)11 295 6249 Email: [email protected]

This announcement is available on the group’s website at nedbankgroup.co.za, together with the following additional information:

■ Financial results presentation to analysts. ■ Link to a webcast of the presentation to analysts.

For further information please contact Nedbank Group Investor Relations at [email protected].

COMPANY DETAILS

NEDBANK SAYS ‘YES’ TO YES

The Youth Employment Service (YES) was launched by President Cyril Ramaphosa in 2018 as an initiative between government, business, labour and civil society to tackle a national plan to build economic pathways for the youth with the aim of reducing the youth unemployment rate in SA through the creation of one million work opportunities over three years. At Nedbank we are committed to our role in the broader SA society and to delivering on our purpose of using our financial expertise to do good. On 26 April Nedbank signed the YES CEO Pledge, committing to go beyond business as usual by creating meaningful job opportunities for our youth, thereby becoming the biggest corporate contributor to the YES initiative to date. Of the more than 3 300 YES recruits for 2019 Nedbank is onboarding 250 into the organisation and the balance will be placed with our sponsored implementation partners.

creating value by using our financial expertise to do good · 2019-08-08 · play a leading role in...

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