programme introduction financial review banking operations strategic partnerships and channels ...
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PROGRAMMEPROGRAMME
Introduction
Financial Review
Banking Operations
Strategic Partnerships and Channels
Technology & Operations
Strategic Review
Richard Laubscher
Stuart Morris
Derek Muller
Mike Leeming
Barry Hore
Richard Laubscher
AN EVENTFUL YEARAN EVENTFUL YEAR
EconomyTough banking environment, improvingStrength and diversity delivers results
SubsidiariesAcquired ENF, FBC and Emirates bookMerged Peoples into FBCEmpowerment Group takes 20% of PeoplesSold 50% of NIBAM to Franklin Templeton
AlliancesOld Mutual, Capital One, JD Group, Pick ‘n Pay, Imperial, Virgin Active
AN EVENTFUL YEARAN EVENTFUL YEAR
Associates and InvestmentsOutlaid R2,5bn to acquire more DDIL, Internet Solution, IQ, Aplitec, Nihilent, Miraculum and KagisoExchanged DDIL for Didata plc, surplus R3,6bn, recouped R1,8bn cash
New Accounting StandardsImplemented effects of Goodwill, Pension Funds, Software Development, accelerated Hardware Depreciation, Deferred Tax Assets, Investments and Headline Earnings
INCOME STATEMENTINCOME STATEMENT% ch Dec-00 Dec-99
Net interest income 9 4 732 4 359Non-interest revenue 23 4 292 3 486Total income 15 9 024 7 845Provisions 5 910 869Net income 16 8 114 6 976Expenses 11 4 516 4 054Net operating income 23 3 598 2 922Taxation 16 722 625Net income after taxation 25 2 876 2 297Associate income 91 249 130Minorities 367 (98) (21)Headline earnings 26 3 027 2 406
Financial Review
Stuart Morris
ASSET GROWTHASSET GROWTH
12.6
16.521.9
0
5
10
15
20
25
Average advances Total advances Total assets
NET INTEREST INCOME TO NET INTEREST INCOME TO INTEREST-EARNING INTEREST-EARNING
ASSETSASSETS
3,07
7
3,55
5
3,92
5
4,35
9
4,73
2
4.17%4.00%
3.70% 3.64%3.46%
4.17%4.01%
3.79% 3.79% 3.73%
Dec 96 Dec 97 Dec 98 Dec 99 Dec 00
NII (Rm) NII to IEA (%) NII (Incl.'s Assoc. Inc. Gross-up) to IEA (%)
NON-INTEREST REVENUE NON-INTEREST REVENUE TO TOTAL INCOMETO TOTAL INCOME
2,08
7 2,61
1 3,21
1
3,48
6
4,29
2
40.4
1% 42.3
4%
44.9
9%
44.4
3%
47.5
6%
Dec 96 Dec 97 Dec 98 Dec 99 Dec 00
Non Interest Revenue N I R to Total Income (%)
SPECIFIC AND GENERAL SPECIFIC AND GENERAL PROVISIONS CHARGEPROVISIONS CHARGE
348
511
869
910
69811
.33% 14
.38% 17
.79%
19.9
3%
19.2
2%
Dec 96 Dec 97 Dec 98 Dec 99 Dec 00
Specific & General Provisions Charge (Rm) % of Net Interest Income
PROVISIONSPROVISIONS
Dec-00 Dec-99
INCOME STATEMENT Rm Avg adv Rm Avg adv
Provision charge- incl. Interest reserve
9101 155
0.79%1.00%
8691 099
0.85%1.07%
BALANCE SHEET Cls adv Cls adv
Specific provisions 3 079 2.5% 1 807 1.7%
General provisions 1 003 0.8% 1 028 1.0%
4 082 3.3% 2 835 2.7%
Credit insurance 283 0.2% 193 0.2%
TOTAL 4 365 3.5% 3 028 2.9%
NON-PERFORMING NON-PERFORMING LOANSLOANS
Dec-00 Dec-99
Rm Cls adv Rm Cls adv
Non-performing loans 5 832 4.7% 3 513 3.3%
Expected recoveries (2 753) -2.2% (1 706) -1.6%
Expected losses 3 079 2.5% 1 807 1.7%
Adequacy of provisions Dec-00 Dec-99
Gross coverage 75% 86%
Net coverage 142% 168%
EXPENSES EXPENSES 3,
164
4,51
6
3,60
1 4,00
8
4,05
4
61.2
7%
58.4
1%
51.6
8%
56.1
6%
50.0
4%
Dec 96 Dec 97 Dec 98 Dec 99 Dec 00
Expenses (Rm) Expense to Income Ratio (%)
HEADLINE EARNINGSHEADLINE EARNINGS
1,145
1,492
1,900
2,406
3,027
30.3
9%
26.0
5%
23.6
0%
24.5
7%
23.6
8%
528665
8221,024
1,266
Dec 96 Dec 97 Dec 98 Dec 99 Dec 00
Headline Earnings (Rm) Growth in E P S (%) E P S (cents)
SHAREHOLDERS’ SHAREHOLDERS’ FUNDSFUNDS
5 7
01
7 2
12
9 1
31
10
06
6
15
98
0
22
.40
%
23
.11
%
23
.25
%
25
.29
%
24
.00
%
Dec 96 Dec 97 Dec 98 Dec 99 Dec 00
Shareholders' Funds (Rm) ROE (%)
RETURN ON ASSETSRETURN ON ASSETS75
,635
91,2
72
109,
190
123,
686
144,
052
1.51
%
1.63
%
1.74
%
1.95
%
2.10
%
Dec 96 Dec 97 Dec 98 Dec 99 Dec 00
Average Total Assets (Rm) Return on Assets (%)
SEGMENTAL ANALYSISSEGMENTAL ANALYSISDec-00 % Dec-99 %
Nedcor Bank and Group ops 2 430 80 1,862 77Retail (incl. Peoples) 369 12 261 11Commercial 697 23 660 27Corporate 836 28 601 25International & Treasury 305 10 227 9Associate income 223 7 113 5
Nedcor Investment Bank 518 17 479 20Cape of Good Hope Bank 79 3 65 3
3 027 100 2 406 100
Business transfers in process & transfer pricing under review
GEOGRAPHIC ANALYSISGEOGRAPHIC ANALYSIS
Dec-00 % Dec-99 %
South Africa 2 214 73 2 084 87Rest of Africa 147 5 86 4Rest of the World 666 22 236 10
3 027 100 2 406 100
Banking Operations
Derek Muller
2000 REVIEW2000 REVIEW
Reconfigured the Business
Peoples Bank
Business Direct
Branch Rationalisation
Credit Technology
Asia
Reasonable Growth
Strong Corporate Performance
Commercial Market Share Up
Robust Homeloan growth
ABF Improvement
2001 PRIORITIES2001 PRIORITIES
Customer Service
Retail Initiatives
Channel Management
Muscle Building
Customer Acquisition / Retention
Old Mutual JV
Greater Homeloan Focus
Datamining / X-sales
Nedtreasury
Strategic Partnerships and Channels
Mike Leeming
EXPANDING THE EXPANDING THE UNIVERSEUNIVERSE
Peoples (expanded)Capital OneAplitec
400 outlets3500 POS5,5m customersTransactional banking
645 outlets2,5m customersMicrolending
589 outlets65000 new car sales20% financedInstalment credit
400 000 clients80 outletsSmartcards
800 000 clients130 branches1000 brokersBancassurance3,5m clients
IMPLICATIONSIMPLICATIONS
Nedcor Bank(existing)
Nedcor &partners
Clients 2,2m 9m+
Branches 395 1600+
Low acquisition cost i.t.o. NAV and goodwillHitting the road runningLow increase in expenditureNon-linear revenue growth vs. expense growth limitation with T&O momentum in place
Technology and Operations
Barry Hore
TECHNOLOGY & TECHNOLOGY & OPERATIONSOPERATIONS
Back office restructured into "service factory"
Ongoing productivity gains from e-process
Significant delivery on new technology projects
Leveraging technology investments
Commercialisation
Strategic Review
Richard Laubscher
FUNDAMENTALS OF FUNDAMENTALS OF GROWTH IN BANKINGGROWTH IN BANKING
Scope Product Old MutualImperial
Reach AccountsGeographiesFootprint
ClientsOutletsDevices
Scale Volume OrganicJVsInsourcing
GROWTH CONSTRAINTSGROWTH CONSTRAINTS
Large-scale acquisition problematic
Africa - selective - trade, aid and GDFI
International
No to Investment Banking
No to High-street Banking
No to Global Treasury
GROWTH OPTIONSGROWTH OPTIONS
Possibly yes to:
Private Banking
Insourced Processing
Investment in Banking Enabling Technologies
Convergence of Direct with e- and i- Commerce
CONCLUSIONCONCLUSION
Emphasis is on:
Local Retail Banking
Local Commercial Banking
Aided by Process-cost Reduction
Database Power
9 million potential customers
Capital One expertise
Affinity Partnership of Unparalleled Quality
Q & A