1
0
1
6
2
A Tribute to Nelson Rolihlahla Mandela
The Children’s Champion
To a man who made our land his life
And forgiveness his focus
Who turned hatred into humility
And made peace with the past
Who made his captors his comrades
And his prison cell his podium
Who turned imprisonment into freedom
And a divided people into a nation
Who made children his cause
And love his legacy.
N
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D
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I
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T
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D
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Nedbank is a proud partner of:
nedbank.co.za
Nedbank Limited Reg No 1951/000009/06. Authorised financial services and registered credit provider (NCRCP16).
NEDBANK GROUP LIMITED
INTEGRATED
REPORT
for the year ended 31 December 2013
NedbaNk Group | IntegrateD report 2013
nedbank group prides itself on
supplying stakeholders with updated
information on a regular basis.
this information can be found at
nedbankgroup.co.za or through
the Nedbank app SuiteTM.
reference gUiDe
Crossreferencing
reporting standard
2013 nedbank group pillar 3 Basel III
public Disclosure report
2013 nedbank group transformation report
Content available at nedbankgroup.co.za
Supplementary information is available at
nedbankgroup.co.za
Scan with your smart
device’s QR code reader to
access additional
information online.
Accessing informAtion
in this report
this report has been produced with a view to simplifying the
process of accessing the relevant information required by
specific stakeholders. as was the case with the 2012 report,
the 2013 report is extensively crossreferenced to ensure that
related information is easy to find and that the global
reporting Initiative and Financial Services Sector Supplement
requirements are easily identifiable.
Detailed supplementary information can be accessed at
nedbankgroup.co.za
mAKing
things hAppen
DeLiVering
to oUr
stAKehoLDers
ensUring A
sUstAinABLe
BUsiness
informAtion
to oUr
shArehoLDers
OUR cONTAcT DETAILs
NEDBANK GROUP LTD
Incorporated in the republic of Sa
reg no 1966/010630/06
BUsINEss ADDREss AND REGIsTERED OFFIcE
nedbank 135 rivonia Campus
135 rivonia road
Sandown, Sandton, 2196, Sa
POsTAL ADDREss
po Box 1144
Johannesburg, 2000, Sa
tel: +27 (0)11 294 4444
Website: nedbankgroup.co.za
TRANsFER sEcRETARIEs:
Sa: CoMpuTerSHare INVeSTor
SerVICeS (pTy) LTd
BUsINEss ADDREss
70 Marshall Street
Johannesburg, 2001, Sa
POsTAL ADDREss
po Box 61051
Marshalltown, 2107, Sa
tel: +27 (0)11 370 5000
Fax: +27 (0)11 688 5238
NaMIbIa: TraNSFer SeCreTarIeS (pty) Ltd
BUsINEss ADDREss
robert Mugabe avenue no 4
Windhoek, namibia
POsTAL ADDREss
po Box 2401
Windhoek
namibia
tel: +264 (0)61 227 647
Fax: +264 (0)61 248 531
AUDITORs:
DELOITTE & TOUcHE
poSTaL addreSS
private Bag X6
gallo Manor, 2052, Sa
tel: +27 (0)11 806 5000
Fax: +27 (0)11 806 5003
KPMG INc
poSTaL addreSS
private Bag X9
parkview, 2122, Sa
tel: +27 (0)11 647 7111
Fax: +27 (0)11 647 8000
NEDBANK GROUP INTEGRATED
REPORT 2013
Should you wish to engage on the content of this report or if you
require an additional copy of the nedbank group Ltd Integrated
report 2013, please email your address details to nedbank group
Investor relations at nedbankgroupir@nedbank.co.za or send a fax
to +27 (0)11 294 6549.
INVEsTOR RELATIONs
alfred Visagie: Head of Investor relations
tel: +27 (0)11 295 6249
email: nedbankgroupir@nedbank.co.za
cOMPANY sEcRETARY
tSB Jali: group Company Secretary
tel: +27 (0)11 295 9696 Fax: +27 (0)11 294 9696
email: thabanij@nedbank.co.za
DIscLAIMER
nedbank 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
‘forward-looking
that may be defined as
information
statements’ within the meaning of US 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 prove to 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 International Financial reporting
Standards 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 whatsoever and
howsoever 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.
ABOUT THIs REPORT
this report is printed on Sappi triple green – a paper grade
manufactured according to three environmental pillars: a
minimum of 60% of the pulp used in the production of this
paper is sugar cane fibre, which is the material remaining after
raw sugar has been extracted from sugar cane; the bleaching
process is elemental chlorine-free; and the remaining pulp
used in the production process comprises wood fibre, which is
internationally certified
obtained
afforestation, using independently audited chains of custody.
from sustainable and
the carbon emissions generated through the production of this
report have been included in the calculation of nedbank group’s
total 2013 carbon footprint that will be offset during 2014.
Committed to
transparent reporting
A profile of our business
Increasing our footprint
A strong performance
in uncertain times
Building enduring
relationships
Investing in our people
Innovating for our clients
Chairman’s Review:
A sustainable future for all
Committed to good governance:
Report from Group
Transformation, Social and
Ethics Committee Chairman
Chief Executive’s Review:
Delivering sustainably to
all our stakeholders
Growing our franchises
Nedbank Capital
Nedbank Corporate
Nedbank Retail and
Nedbank Business Banking
Nedbank Wealth
Established leadership teams:
Board of directors
Group Executive Committee
Cluster management
Building a sustainable bank
Validating our
sustainability journey
Invitation from our Chairman
Our financial calendar for 2014
Question form for our
annual general meeting
Notice of our
annual general meeting
Form of proxy
Notes to form of proxy
2
4
5
6
30
32
34
48
52
58
62
68
72
76
80
82
98
174
175
176
177
Inserted
Inserted
An attractive growth strategy
Understanding material matters
A sound investment
Value-creating business model
A summarised company structure
Delivering value to
our shareholders
Partnering with our regulators
Leading in the communities
we serve
Chief Financial Officer’s Review:
Our financial performance
in 2013
Our summarised
five-year track record
Responsibility of
our directors
Certification from our
Company Secretary
Report from our
Audit Committee
Report from our directors
Report from
independent auditors
Summarised annual
financial statements
Worldclass at
managing risk
Reporting back on
remuneration
Incentive schemes
for our people
10
14
24
28
38
42
44
100
108
109
109
110
114
118
119
130
138
173
Analysis of shareholders
187
Terms used in our report
Abbreviations, acronyms and
initialisms used in our report
Codes for our financial
instruments
Our contact details
Inside back
cover
2
30
48
174
1
ENSURING A SUSTAINABLE BUSINESSINfoRmATIoN To oUR ShAREhoLdERSdELIVERING To oUR STAKEhoLdERSmAKING ThINGS hAPPEN
MAKING
THINGS
HAPPEN
Committed to transparent reporting
A profile of our business
Increasing our footprint
A strong performance in uncertain times
An attractive growth strategy
Understanding material matters
A sound investment
Value-creating business model
A summarised company structure
2
4
5
6
10
14
24
28
COMMITTED TO
TRANSPARENT REPORTING
This integrated report builds on progress, insights
and stakeholder feedback received during the year and
seeks to provide a detailed overview of the group’s
financial and non-financial performance and how we
created value for the period 1 January 2013 to
31 December 2013.
The compilation of this report has been aligned with the
requirements of the King Code of Governance Principles for
SA (King III Code), the International Integrated Reporting
Framework and complies with Global Reporting Initiative (GRI)
Guidelines (3.1) A+ application level, which inform not only
Nedbank Group’s annual reporting, but also our ongoing reporting
initiatives throughout the year.
For ease of reading and information accessibility, this report is
written in the first person. The terms ‘Nedbank Group’, ‘Nedbank’,
‘the group’, ‘our’, ‘we’ and ‘us’ all refer to Nedbank Group Ltd and its
associated operations, unless otherwise indicated.
SCOPE OF REPORTING
The Nedbank Group Ltd Integrated Report is published annually. This particular issue
of the report provides information on our operations, financial and non-financial
performance and integrated sustainability developments during the year ended
31 December 2013. The report covers all group clusters, operational areas and
businesses of Nedbank Group in SA and internationally.
Organisations in which we hold a minority stake are not included in the scope of this
report. This report is addressed primarily to the long-term investor but also takes into
account our primary stakeholders, namely our staff, clients, shareholders, regulators
and communities.
This report should be read in conjunction with other supporting reports and
documents, all of which are available at nedbankgroup.co.za:
■ 2013 Nedbank Group Consolidated Annual Financial Statements
■ 2013 Results Booklet
■ 2013 Risk and Capital Management Pillar 3 Public Disclosure Report
■ 2013 Nedbank Group King III Principles
■ 2013 Nedbank Group Transformation Report
■ 2013 Supplementary Information: Governance and Ethics Review
■ 2013 Supplementary Information: Sustainable Development Review
■ 2013 Supplementary Information: Risk and Balance Sheet Management Review
■ 2013 Supplementary Information: Operational Overview
■ 2013 Global Reporting Initiative Financial Services Sector Supplement
■ 2013 Global Reporting Initiative G3.1 Index
2
The integrated report
reflects our
commitment to
integrating
sustainability across
the organisation for
the benefit of all
stakeholders.
This report builds on
the 31 December 2012
Nedbank Group Ltd
Integrated Report
and was approved by
the board on
11 March 2014.
The six capitals
(financial,
manufactured,
human, natural,
social and
intellectual) and
how we build or
deplete them are
addressed in this
integrated report,
while not
specifically referred
to in this manner.
NedbaNk Group | Integrated report 2013 Assurance
statement
98
GRI
3.1: 1.2,
3.1,
3.2,
3.3,
3.5,
3.6,
3.8,
3.9,
3.13
ASSURANCE
AND INDEPENDENT
ASSESSMENT
Assurance of the 2013
Nedbank Group Ltd financial
statements and Integrated
Report is the responsibility
of a combined financial and
non-financial assurance
team from Deloitte &
Touche and KPMG Inc.
The assurance statement by Deloitte & Touche and KPMG Inc on page 98 confirms:
■ The preparation of this report in accordance with the self-declared Global Reporting
Initiative G3.1 Guidelines A+ application level using the principles of materiality,
completeness and sustainability.
■ The use of the principles of inclusivity, materiality and responsiveness in accordance
with AccountAbility’s AA1000APS (2008).
■ Limited assurance expressed over the following specified key performance indicators,
which are marked with a P in the report:
■ Net promoter scores
■ Net primary-client gains
■ Banking Ombudsman cases
■ IT systems availability
■ Ethics acknowledgement
■ Anti-corruption interventions
■ Equator Principle deals
■ Carbon footprint
■ Water
■ Paper
■ Waste sent to landfill
■ Waste recycled
■ Entropy level
■ Employee surveys
■ Employee turnover
■ Value-added statement
■ All elements of the FSC
scorecard
The annual financial statements have being audited, and the report from
independent auditors is on page 118.
This integrated report also conforms to the requirements of the South African
Companies Act, 71 of 2008, and JSE Ltd Listings Requirements.
All FSC and black economic empowerment (BEE) information contained in this
report has been verified and signed off by the audit firm, SizweNtsalubaGobodo Inc.
An analysis of our compliance with the full Global Reporting Initiative (GRI)
and the GRI Financial Services Sector Supplement indices (FSSS) is available at
nedbankgroup.co.za in the supplementary sustainability review.
MATERIAL MATTERS
integrated
Key to Nedbank Group’s goal of entrenching
sustainability across every area of our business is our focus
primarily on those matters and issues that are most material to our
stakeholders.
Determining material matters is an ongoing process, involving the
study of all reports submitted for board or executive discussion,
key business risk factors and identified opportunities, all formal
and informal stakeholder feedback, our strategic objectives, and
integrated sustainability imperatives.
The resulting material matters inform content priority for this
report and are discussed on pages 14 – 20 of this integrated report.
They are also linked to and inform our strategy and actions. The
Nedbank Group Executive Committee assumes responsibility for
approval of the material matters prior to their endorsement
by the Group Transformation, Social and Ethics Committee,
a subcommittee of the board.
Building
enduring
relationships
30–47
Understanding
material
matters
14–20
Report from
independent
auditors
118
STATEMENT OF THE BOARD OF
DIRECTORS OF NEDBANK GROUP
The board acknowledges its responsibility to ensure the integrity of
this integrated report, which in the board’s opinion addresses all
material
integrated
issues and presents fairly the group’s
performance. This integrated report has been prepared in line with
best practice as detailed on page 2 of this report.
Dr Reuel Khoza
Chairman
11 March 2014
Mike Brown
Chief Executive
3
MAKING THINGS HAPPENENSURING A SUSTAINABLE BUSINESSINfoRmATIoN To oUR ShAREhoLdERSdELIVERING To oUR STAKEhoLdERS NEDBANK GROUP | INTEGRATED REPORT 2013
A PROFILE OF OUR BUSINESS
Nedbank Group is one of SA’s four largest banking
groups by assets and deposits, with Nedbank Ltd our
principal banking subsidiary. We are a JSE Top 40
company with our ordinary shares listed on the JSE
since 1969 and on the Namibian Stock Exchange
since 2007. Our market capitalisation was R107bn at
31 December 2013. Old Mutual plc is our majority
shareholder, owning 52% of Nedbank Group.
THE SERVICES AND PRODUCTS WE PROVIDE
NEDBANK
CAPITAL
Investment banking and
markets solutions for
institutional and corporate
clients.
NEDBANK
CORPORATE
Lending, deposit-
taking, transactional
banking and
commercial-property finance
to large corporates, financial
institutions, the public sector
and government clients.
NEDBANK RETAIL
Holistic financial solutions
for individuals, startups and
small businesses; as well
as corporate card and
merchant solutions.
NEDBANK
WEALTH
Wealth
management,
asset
management
and insurance
solutions
for clients of
Nedbank Group.
NEDBANK BUSINESS BANKING
Holistic financial solutions for businesses
and their owners.
R750bn
TOTAL ASSETS
R8,7bn
HEADLINE
EARNINGS
6,7m
CLIENTS
1 050
STAFFED OUTLETS
3 382
ATMs
29 513
EMPLOYEES
A sound
investment
24–27
Growing
our
franchises
68–71
GRI
FSSS:FS6
GRI 3.1: 2.2,
2.4,
2.6
OUR FOCUS AND POSITIONING
■ A bank for all, based in Southern Africa, with selected
WHERE WE ARE BASED
■ Headoffice in Sandown, Sandton, Johannesburg, SA.
expansion into the rest of Africa.
■ Top two wholesale bank and strong market position in
commercial-property finance, business banking,
investment banking, vehicle finance, card-acquiring,
deposit-taking and asset and wealth management.
■ Pan-African banking alliance with Ecobank Transnational
Incorporated, giving our clients access to 37 countries
across Africa.
■ Leadership in sustainability, transformation and
community development.
4
■ Regional branch network of more than 1 050 staffed
outlets across SA.
■ Subsidiary banks in Lesotho, Malawi, Namibia, Swaziland,
Zimbabwe, Isle of Man, Guernsey and Jersey. Representative
offices in other Southern Africa countries, including Angola,
Kenya, strategic acquisition of an initial stake of 36,4% in
Banco Unico in Mozambique (regulatory approval received,
with completion of the transaction targeted for end March 2014)
and key global financial centres to provide international banking
services for our SA-based multinational and high-net-worth
clients, including in London, Toronto and Dubai (UAE).
MAkING
THINGS HAPPEN
DELIVERING TO
OUR STAKEHOLDERS
ENSURING A
SUSTAINABLE BUSINESS
INFORMATION TO
OUR SHAREHOLDERS
INCREASING OUR FOOTPRINT
Isle of Man
UNITED
KINGDOM
London
Guernsey
Jersey
CANADA
USA
Ecobank footprint
Nedbank footprint
Nedbank and
Ecobank footprint
Nedbank
representative
offices
Ecobank
representative
offices
Deals concluded
in Africa
Cape Verde
Senegal
Gambia
Guinea Bissau
Guinea
Sierra Leone
Liberia
Morocco
Mali
Niger
Burkina
Faso
Benin
Ghana
Nigeria
Côte
d’Ivoire
São Tomé
and Principe
Togo
Cameroon
Equatorial
Guineas
Gabon
Congo
(Brazzaville)
Luanda
Dubai
UAE
Kenya
Chad
Central African
Republic
Uganda
Ethiopia
DRC
Rwanda
Burundi
Angola
Zambia
Tanzania
Seychelles
Mauritius
Malawi
SOUTH AFRICA
Limpopo
Namibia
Zimbabwe
Mozambique
Botswana
Madagascar
North West
Gauteng
Mpumalanga
Lesotho
Swaziland
South
Africa
Northern Cape
Western Cape
Free State
Eastern Cape
KwaZulu-
Natal
New Nedbank branches 2013
Established Nedbank branches
GRI
FSSS: FS10
FS6
GRI
G3.1: 2.2,
2.3,
2.4,
2.5,
2.6,
2.7,
2.8
5
A STRONG PERFORMANCE
IN UNCERTAIN TIMES
GRI 3.1: EC1
FINANCIAL HIGHLIGHTS
hEADLINE EARNINGS
HEADLINE EARNINGS
DILUTED hEADLINE EARNINGS
DILUTED HEADLINE EARNINGS
PER ShARE
PER SHARE
RETURN ON EqUITy
RETURN ON EQUITY
(ExCLUDING GOODWILL)
(EXCLUDING GOODWILL)
Rm
RM
cents
CENTS
%
%
0
7
6
8
3
8
4
7
4
8
1
6
0
0
9
4
7
7
2
4
0
4
3
1
9
6
0
1
3
8
9
9
2
8
1
0
9
5
1
,
2
7
1
,
4
6
1
,
3
5
1
,
4
3
1
,
4
3
1
2009 2010
2011
2012
2013
2009 2010
2011
2012
2013
2009 2010
2011
2012
2013
NON-INTEREST REvENUE
RETURN ON ASSETS
Rm
%
NON-INTEREST REVENUE
RETURN ON ASSETS
ORDINARy DIvIDEND
PER ShARE
cents
ORDINARY DIVIDEND
PER SHARE
1
6
3
9
1
4
2
3
7
1
2
1
4
5
1
5
1
2
3
1
6
0
9
1
1
%
%
3
2
,
1
3
1
,
1
9
9
0
,
2
8
0
,
6
7
0
,
5
9
8
2
5
7
5
0
6
0
8
4
0
4
4
2009 2010
2011
2012
2013
2009 2010
2011
2012
2013
2009 2010
2011
2012
2013
6
NedbaNk Group | Integrated report 2013
NON-FINANCIAL HIGHLIGHTS
INvESTING
IN OUR
PEOPLE
■ Providing
employment for
an additional
588 permanent
staff in SA.
■ Investing R396m
in training our
people.
■ Participation in
our Leading for
Deep Green
programme by
1 521 of our
staffmembers.
■ Consistently good
staff and culture
survey results.
■ High staff morale.
■ Good progress
on staff
transformation
initiatives.
INNOvATING
FOR OUR
CLIENTS
■ Increase of total
group client
numbers by 9,8%
to 6,7m in 2013
(2012: 6,1m).
■ Significantly
investing in our
distribution footprint
to be a bank for
all, with five net
new outlets and
334 ATMs in 2013.
■ Systems uptime at
multiyear highs.
■ Accelerating
delivery in
innovation, including
the reformatting of
28 Branch of the
Future outlets, with
more to follow.
■ Launching market-
leading products
such as PocketPOS™,
MyFinancialLife™,
My eBills™ invoice
issuing and payment
system. Added
further functionality
to the award-
winning Nedbank
App Suite™.
■ Offering clients a
lower-priced credit
life product with
increased benefits.
■ Increasing loan
payouts to R159bn
(2012: R144bn)
and assets under
management by
26,5% to R190bn.
DELIvERING
vALUE TO OUR
SHAREHOLDERS
■ Delivering
economic profit of
R2 114m and
increasing the
return on equity
(excluding
goodwill) to 17,2%.
■ Increasing the
full-year dividend
by 19,0%, ahead of
14,9% growth in
headline earnings
per share.
■ Delivering total
shareholder return
for 2013 of 16,0%.
■ Positioning the
group for future
shareholder value
creation through
our long-term,
risk-mitigated and
capital-efficient
Pan-African
banking strategy.
■ Voted the
Financial Times
and The Banker
magazine’s
2013 SA Bank
of the Year.
■ Our 2012
integrated report
the overall winner
of the 2013
Chartered
Secretaries
Southern Africa
and JSE Annual
Report awards.
PARTNERING
WITH OUR
REGULATORS
LEADING IN
THE COMMUNITIES
WE SERvE
■ Implementing
Basel III
successfully on
1 January 2013.
■ Strengthening the
group’s common-
equity tier 1
further to 12,5%.
■ One of SA’s
largest tax
contributors: with
R8,0bn relating to
direct, indirect,
PAYE and other
taxation.
■ Strong, open
and transparent
relationships with
all regulators.
■ Commitment to
responsible
banking and
insurance
practices.
■ Strengthening
balance sheet
impairments
and coverage
ratios to the
highest levels.
■ Aspiring to be
worldclass at
managing risk
and having
appropriate
remediation
where required.
■ Expanding our
distribution
footprint by 29%
in urban areas
and 71% in
non-urban areas
since 2009.
■ Contributing
R413m to
socioeconomic
development
since 2009
(2013: R111m).
■ Supporting
163 external
bursars across
17 universities.
■ Maintaining our
level 2 BBBEE FSC
contributor status
for the fifth
consecutive year.
■ Sourcing 78,1% of
our procurement
locally, improving
on an already high
benchmark.
■ Being recognised
as a leader in
socially
responsible
banking at the
2013 African
Banker awards
and winning the
Sunday Times
Top 100
Companies CSI
awards.
Staff
32–33
Clients
34–37
Shareholders
38–41
Regulators
42–43
Communities
44–47
Cultural entropy
(%)
Number of clients
(millions)
Total shareholder
return (%)
Common-equity tier 1
ratio (Basel III) (%)
Socioeconomic
spend (Rm)
3
1
3
1
1
1
1
0 1
1
5
5
,
1
,
5
4
4
,
7
1 6
6
,
,
,
3
5
3
,
3
4
3
,
3
5
1
,
6
8
,
0
6
1
0
,
1
1
6
,
1
1
,
5
2
1
9
9
,
1
,
0
1
9
0 8
3 8
7
6
1
1
1
1
1
2009 2010
2011
2012
2013
2009 2010
2011
2012
2013
2009 2010
2011
2012
2013
2009 2010
2011
2012
2013
2009 2010
2011
2012
2013
GREAT PLACE
TO
WORK
GREAT PLACE
TO
BANK
GREAT PLACE
TO
INvEST
WORLDCLASS
AT MANAGING
RISK
hIGhLy INvOLvED IN
ThE COMMUNITy
AND ENvIRONMENT
7
MAKING THINGS HAPPENENSURING A SUSTAINABLE BUSINESSINfoRmATIoN To oUR ShAREhoLdERSdELIVERING To oUR STAKEhoLdERS A STRONG PERFORMANCE IN UNCERTAIN TIMES (CONTINUED)
PERFORMANCE HIGHLIGHTS
ECONOMIC
Headline earnings
Income attributable to equity holders of the parent
Diluted earnings per share:
■ Headline
■ Basic
Dividend declared per share
Dividend cover
Net asset value
Tangible net asset value per share
Net interest income to average interest-earning banking assets
Credit loss ratio – banking advances
Non-interest revenue (NIR) to total income
NIR to total operating expenses
Efficiency ratio
Group capital adequacy ratios:
■ Common-equity tier 1
■ Tier 1
■ Total
Total assets under administration
Total assets
Assets under management
Return on total assets
Return on ordinary shareholders’ equity (ROE), excluding goodwill
ROE
1 Basel II.
2 Basel II.5.
3 Basel III.
ENVIRONMENTAL
Green Star-rated buildings
Carbon footprint per fulltime employee
Offset through carbon emission reduction projects
Carbon status
SOCIAL
Socioeconomic development spend2
CULTURAL
Broad-based black economic empowerment credentials
Barrett entropy
1 tCO2e = tonnes of CO2 equivalent.
2 Includes Community Trust and Nedbank Private Wealth Foundation, spend impacted by FSC Code changes in 2013.
8
% change
2012–2013
2013
2012
2011
2010
2009
15,9
15,9
15,0
15,1
19,0
12,1
13,6
8 670
8 637
1 829
1 822
895
2,11
64 336
11 346
3,57
1,06
47,7
86,4
55,2
12,53
13,63
15,73
1,23
17,2
15,6
7 483
7 449
1 590
1 583
752
2,18
57 375
9 989
3,53
1,05
46,8
84,4
55,6
11,42
12,92
14,92
1,13
16,4
14,8
6 184
6 190
1 340
1 341
605
2,26
52 685
9 044
3,48
1,13
46,1
81,5
56,6
11,01
12,61
15,31
0,99
15,3
13,6
4 900
4 811
1 069
1 050
480
2,30
47 814
8 160
3,35
1,36
44,3
79,6
56,7
10,11
11,71
15,01
0,82
13,4
11,8
4 277
4 826
983
1 109
440
2,30
44 984
7 398
3,39
1,52
42,2
78,8
53,5
9,91
11,51
14,91
0,76
13,4
11,8
12,8
9,8
26,5
939 935
749 594
833 453
682 958
760 358
648 127
190 341
150 495
112 231
711 288
657 907
608 718
102 570
570 703
87 204
(3,5)
(4,2)
3
7,61
230 000
Neutral
3
7,89
240 000
Neutral
2
7,74
240 000
Neutral
1
8,25
220 000
Neutral
–
8,77
220 000
Neutral
Rm
Rm
cents
cents
cents
times
Rm
cents
%
%
%
%
%
%
%
%
Rm
Rm
Rm
%
%
%
tCO2e4
tCO2e4
tCO2e4
Rm
(4,3)
111
116
89
80
73
%
Level 2
11
Level 2
10
Level 2
11
Level 2
13
Level 2
13
NEDBANK GROUP | INTEGRATED REPORT 2013
% change
2012–2013
2013
2012
2011
2010
2009
Our
summarised
five-year track
record
108
Summarised
annual financial
statements
119–129
15,9
15,9
15,0
15,1
19,0
12,1
13,6
8 670
8 637
1 829
1 822
895
2,11
64 336
11 346
3,57
1,06
47,7
86,4
55,2
12,53
13,63
15,73
7 483
7 449
1 590
1 583
752
2,18
57 375
9 989
3,53
1,05
46,8
84,4
55,6
11,42
12,92
14,92
6 184
6 190
1 340
1 341
605
2,26
52 685
9 044
3,48
1,13
46,1
81,5
56,6
11,01
12,61
15,31
4 900
4 811
1 069
1 050
480
2,30
47 814
8 160
3,35
1,36
44,3
79,6
56,7
10,11
11,71
15,01
4 277
4 826
983
1 109
440
2,30
44 984
7 398
3,39
1,52
42,2
78,8
53,5
9,91
11,51
14,91
12,8
9,8
26,5
939 935
749 594
833 453
682 958
760 358
648 127
190 341
150 495
112 231
711 288
657 907
608 718
102 570
570 703
87 204
1,23
17,2
15,6
1,13
16,4
14,8
0,99
15,3
13,6
0,82
13,4
11,8
0,76
13,4
11,8
(3,5)
(4,2)
3
7,61
230 000
Neutral
3
7,89
240 000
Neutral
2
7,74
240 000
Neutral
1
8,25
220 000
Neutral
–
8,77
220 000
Neutral
Rm
Rm
cents
cents
cents
times
Rm
cents
%
%
%
%
%
%
%
%
Rm
Rm
Rm
%
%
%
tCO2e4
tCO2e4
tCO2e4
Socioeconomic development spend2
Rm
(4,3)
111
116
89
80
73
Broad-based black economic empowerment credentials
1 tCO2e = tonnes of CO2 equivalent.
2 Includes Community Trust and Nedbank Private Wealth Foundation, spend impacted by FSC Code changes in 2013.
%
Level 2
11
Transformation
Report
Level 2
10
Level 2
11
Level 2
13
Level 2
13
9
ECONOMIC
Headline earnings
Income attributable to equity holders of the parent
Diluted earnings per share:
■ Headline
■ Basic
Dividend cover
Net asset value
Dividend declared per share
Tangible net asset value per share
Net interest income to average interest-earning banking assets
Credit loss ratio – banking advances
Non-interest revenue (NIR) to total income
NIR to total operating expenses
Efficiency ratio
Group capital adequacy ratios:
■ Common-equity tier 1
■ Tier 1
■ Total
Total assets
ROE
Total assets under administration
Assets under management
Return on total assets
Return on ordinary shareholders’ equity (ROE), excluding goodwill
ENvIRONMENTAL
Green Star-rated buildings
Carbon footprint per fulltime employee
Offset through carbon emission reduction projects
Carbon status
SOCIAL
CULTURAL
Barrett entropy
MAKING THINGS HAPPENENSURING A SUSTAINABLE BUSINESSINfoRmATIoN To oUR ShAREhoLdERSdELIVERING To oUR STAKEhoLdERS AN
ATTRACTIvE
GROWTh
STRATEGy
Our vision is to be Africa’s most
admired bank by our staff, clients,
shareholders, regulators and
communities supported by our
values of accountability, integrity,
respect, pushing beyond
boundaries and being people-
centred.
Our growth-oriented strategy is
underpinned by strong franchises
each with long-term growth
opportunities, growing our share of
transactional banking revenues,
tilting our portfolio in favour of
strategically attractive opportunities
while protecting against the
downside in higher risk portfolios
and expanding into the rest of
Africa. This is enabled by our
people and our unique culture,
which we regard as our primary
strategic differentiator.
10
BUILDING STRONG
FRANCHISES
The historic strength of Nedbank Group has been in our
wholesale franchises, which are built on strong client
relationships, competitive deposit and lending market
shares, quality portfolios with low levels of impairments
over an extended period of time in corporate and business
banking, expertise in key areas such as commercial
property
energy,
resources,
infrastructure and, more recently, oil and gas as well as
markets businesses. We are well positioned to leverage
off growth in the rest of Africa, support growth in small
and medium enterprises and benefit
the
participation in the rollout of government’s infrastructure
programmes.
renewable
finance,
from
Repositioning Nedbank Retail has been a large focus of
the group for the past few years as we addressed
weaknesses in the transactional banking franchise, owing
to historic underinvestment and poor strategic choices in
relation to clients, distribution and marketing, and a
predominantly product-focused approach. This, coupled
with inadequate risk management disciplines, led to
Retail reporting a loss in 2009. Our actions over the past
few years in building a sustainable and profitable retail
bank, while recognising the importance of being a bank
for all in SA, were to focus on the growth markets of
youth and entry-level banking as well as restoring our
historic strengths in the middle-market, seniors and
small-business segments. As a result, we have made
significant investments in footprint, new client value
propositions and innovative products. At the same time
we embedded worldclass risk practices, significantly
strengthened balance sheet provisions and adopted more
prudent provisioning methodologies. As a result, financial
performance improved substantially and since the start
of 2009 we have gained more than 2m clients. Future
growth will be driven by SA’s banking population, which
is forecast to grow by 10m people, and by our capturing
an increasing share of these primary clients through
innovative, client-centred value propositions.
Nedbank Wealth, the youngest of the group’s client
facing clusters, was established in 2009 following the
buyout of the remaining shares in the former joint
ventures with Old Mutual. The cluster has low capital
is a significant economic profit
requirements and
in our wealth
contributor. Growth opportunities
insurance
management, asset management and
businesses remain very attractive.
NedbaNk Group | Integrated report 2013 MAkING
THINGS HAPPEN
DELIVERING TO
OUR STAKEHOLDERS
ENSURING A
SUSTAINABLE BUSINESS
INFORMATION TO
OUR SHAREHOLDERS
GROWING OUR
TRANSACTIONAL
BANKING FRANCHISE
Historically, Nedbank has had a smaller
transactional banking franchise than our peers
and as a result our earnings have been strongly
influenced by macroeconomic changes given the
absence of a substantial, stable commission and
fee income stream.
Since 2009 we have focused on growing our
transactional banking franchise through client
gains, improved cross-sell and innovations, with
the aim of increasing our non-interest-revenue-
to-expense ratio and meeting our medium-to-
long-term target of greater than 85%. In 2013 we
achieved this target for the first time.
GEOGRAPHIC EXPANSION
Our largest opportunity is to capture a greater
share of the banking profit pool in SA. In the
longer term, economic growth in the rest of
Africa is expected to be much higher and we will
follow our clients who are also expanding beyond
the borders of SA. We are building the Nedbank
franchise in SADC and East Africa. In Central and
West Africa we are following a partnership
approach with Ecobank.
MANAGING A
BANK IN A TIME OF
UNCERTAINTY AND
REGULATORY CHANGE
The introduction of new capital and liquidity requirements
by Basel regulations in recent years has forced banks to
rethink their business portfolios as capital and liquidity
have become increasingly scarce and expensive resources
impacting on overall profitability. In order to optimise
returns for shareholders and position the bank in a
tougher, uncertain and more volatile environment we
have adopted a portfolio approach to managing our
different businesses and products. Through our strategic
portfolio tilt we choose to grow faster in certain businesses
or products such as transactional banking, deposits,
investment banking, insurance and asset management,
while taking a selective origination approach with others.
Home loans and personal loans are products where we
have chosen to limit our downside risk and we recognise
that we may lose market share during certain times in the
economic cycle.
OUR PEOPLE AND CULTURE ARE OUR
PRIMARY DIFFERENTIATORS
We believe that our people and our unique culture differentiate us. We are committed to
developing and training our staff, and investing significantly in programmes such as Leading
for Deep Green to improve our personal and team effectiveness across the group.
In addition, we track and monitor our staff satisfaction levels and changes in our corporate
culture by identifying areas of dissonance (entropy) and value matches in relation to our
ideal corporate culture.
Chairman’s
Review
48–51
Chief
Executive’s
Review
62–67
GRI 3.1: 1.2
11
An AttrActive growth strAtegy (CONTINUED)
A vISION-LED,
vALUES-DRIvEN
ORGANISATION
vISION:
TO BE AFRICA’S
MOST ADMIRED BANk
vALUES:
INTEGRITy
be honest, trustworthy, truthful, and
consistent and open in all of our conduct
and decisions.
RESPECT
recognise the inherent worth of
every human being and treat all
people accordingly.
ACCOUNTABILITy
prepared to make commitments and be
judged against our commitments, to
deliver on those commitments and to be
responsible for our actions.
PUShING BEyOND
BOUNDARIES
recognise our obligation to the entire
organisation – to push beyond the limits
of what is best for us individually, or as a
group or unit and strive to break new
ground – fuelled by our passion
and commitment.
PEOPLE-CENTRED
we invest in our people and create
empowering environments through
development, support, mentoring,
coaching, valuing diversity, recognition
and reward.
12
DELIvERING ON OUR
2013 STRATEGIC
FOCUS AREAS
In 2013 we made progress
towards achieving our vision
through delivery on our
strategic growth drivers of
repositioning Nedbank Retail,
growing NIR, portfolio tilt and
rest of Africa. During our
strategic planning processes
for 2014-16 we refined our
strategic focus areas in the
context of our material matters
– these are discussed in more
detail on page 21.
Over the past four years Nedbank’s franchise has
experienced strong growth as reflected in the
increase of our brand value by 38,0% to R10,9bn
(2009: R7,9bn), measured by Brand Finance’s
Brands Survey. We have also made significant
progress in delivering on the four key strategic
focus areas of repositioning Nedbank Retail,
growing NIR,
implementing the portfolio tilt
strategy and expanding into the rest of Africa.
Our 2014
strategic
focus areas
21
NedbaNk Group | Integrated report 2013 REPOSITION NEDBANK RETAIL
GROW NIR
Chairman’s
Review
48–51
Chief
Executive’s
Review
62–67
We have made excellent progress in growing our
NIR-to-expense ratio from 78,8% in 2009 to 86,4%
in 2013, exceeding our medium-to-long-term target of
more than 85%. Over this period, our client base has
grown across all clusters and transactional banking
From 2009 to 2013 our retail business’ headline earnings have
increased from a loss of R27m to R2,5bn and ROE from (0,2%) to
11,6% in 2013. We invested R1,7bn in distribution footprint and a
further R400m in people, integrated channels and innovations,
while extracting R1,1bn in efficiencies and growing clients by 2,2m
to 6,4m. With the repositioning
complete, the focus now turns
to leveraging our strong
foundations to accelerate
primary banked client gains and
capturing a greater share of the
market while continuing to be
diligent in managing risk.
REPOSITION
NEDBANK
RETAIL
GROW
NIR
TO BE
AFRICA’S
MOST
ADMIRED
BANk
PORTFOLIO
TILT
REST OF
AFRICA
CLIENT-CENTRED APPROACH
SUSTAINABILITy EMBEDDED IN
GROUP STRATEGy
volumes have
increased.
As a result,
commission and
fee income grew
at a compound
annual growth
rate of 13,1%
to R14 023m
(2009: R8 583m).
REST OF
AFRICA
Our rest of Africa
strategy
incorporates our
strategic alliance
with Ecobank
Transnational
Incorporated (ETI)
in West and
Central Africa and
strengthening our
existing network
and expanding our
presence in the
Southern African
Development
PORTFOLIO TILT
Under the portfolio tilt
strategy, economic
profit (EP) increased
significantly from R57m in
2009 to R2,1bn in 2013,
supported by selective
advances growth to
mitigate against downside
risk in personal loans and
home loans while we
focused strongly on
EP-generative activities
such as deposit growth,
insurance, asset
management and investment banking.
Risk and
balance
sheet
management
review
134–136
Community (SADC) and East Africa. Nedbank has the
right to take up a shareholding of up to 20% in ETI and
a formal decision will be made during the rights
exercise period in 2014. Regulatory approval has been
received for us to acquire an initial stake of 36,4% of
Banco Unico in Mozambique, with completion of the
transaction targeted for end March 2014. The group
has the right to acquire a majority shareholding over
time and this will contribute to strengthening
Nedbank’s franchise and client proposition in the
SADC and East Africa, increasing our presence to
six countries.
13
MAKING THINGS HAPPENENSURING A SUSTAINABLE BUSINESSINfoRmATIoN To oUR ShAREhoLdERSdELIVERING To oUR STAKEhoLdERS An AttrActive growth strAtegy (CONTINUED)
UNDERSTANDING
MATERIAL MATTERS
Material matters impact on the sustainability and long-term performance of
the group and our stakeholders. Determining material matters is an ongoing
process that involves the study of all reports submitted for board or
executive discussion, key business risk factors and identified opportunities,
all formal and informal stakeholder feedback, our strategic objectives,
and integrated sustainability imperatives.
We identified six material matters in 2013 and broadly discuss why these
are important to Nedbank Group, and what our strategic responses are.
1
MATERIAL MATTERS
2
TOUGH
ECONOMIC
CONDITIONS
GRI 3.1: 1.2
3
BANKING RELEVANCE
AMID CONSUMERISM
AND INCREASED
COMPETITION
INCREASED
DEMANDS ON
GOVERNANCE AND
RISK MANAGEMENT
4
GROWTH
OPPORTUNITIES
IN THE REST
OF AFRICA
5
TRANSFORMATION
OF SOCIETY WITHIN
PLANETARY
BOUNDARIES
6
SCARCE
SKILLS
Innovating
for our
clients
34–37
Leading in
the
communities
we serve
44–47
Investing in
our people
32–33
14
NedbaNk Group | Integrated report 2013
1 TOUGH ECONOMIC CONDITIONS
Economic growth in advanced economies remains anaemic as these economies continue to
deleverage, while China’s cooling economic growth and the normalisation of the monetary
policies of advanced economies have muted prospects for many emerging economies.
SA’s economic growth forecasts were systematically adjusted lower in 2013 and although
growth for 2014 is currently anticipated at 2,6%, downside forecast risk remains.
SA, with a current account deficit at 6,5% and a fiscal deficit of 4% of GDP in 2013, is
seen as part of the ‘fragile five’ emerging economies, together with Brazil, India, Indonesia
and Turkey.
Infrastructural constraints continue to limit new investments and business confidence
remains weak owing to policy uncertainty and labour disputes. In addition, rand weakness
is likely to increase inflation putting pressure on interest rates.
High levels of indebtedness and increasing pressure from rising administrative and
transportation costs continue to weigh on consumers in SA.
We proactively
educate our clients
about their pricing
options and assist
them in moving to
lower-priced
bundles based on
their current
banking needs
and behaviour.
WHY DO WE
REGARD THIS AS A
MATERIAL MATTER?
The weak economic environment
directly impacts a bank and its
balance sheet through:
■ Reduced demand for credit
(lower growth in loans and
advances) coupled with high
levels of consumer indebtedness
and a muted corporate
investment appetite.
■ Increased risk of defaults and
bad debts.
■ An increase in expense growth
from high levels of inflation.
■ 40-year-low interest rates
that negatively affect
endowment income.
■ The potential for a further
downgrade of the SA sovereign
credit rating coupled with a
slowdown in capital inflows to fund
the current account deficit, which
could lead to greater currency
volatility and depreciation,
placing additional pressure on
economic growth.
■ Delays in response to
infrastructural constraints and
service delivery issues, which could
lead to increased social instability
and postponement of much-
needed capital investment.
OUR STRATEGIC RESPONSE
■ Our capital levels remain strong, and we have sound liquidity, a well-
diversified business portfolio and a risk framework that has been stress-
tested for downside economic scenarios.
■ Over the past four years we have made significant progress in growing our
transactional banking client base and NIR, and this focus will continue.
As a result, we will be more resilient in the event of a slowdown in the
growth of loans and advances and higher levels of impairments.
■ Early action was taken in higher-risk portfolios such as Home Loans
and Personal Loans through selective origination and more stringent
credit scorecards, while we further strengthened portfolio impairments
and increased coverage ratios.
■ We have positioned our book for rising interest rates with net interest
income benefiting by R936m for each 1% parallel upward shift in interest
rates over 12 months.
■ We have a countercyclical strategy to invest for growth while containing
costs and driving efficiencies through the implementation of ‘Optimise to
invest’, a key strategic initiative to fund investment for the future through
internal cost optimisation. Core to this is our strategy to rationalise,
standardise and simplify IT systems through projects such as the SAP ERP
implementation launched in 2013 to streamline Finance, HR and
Procurement.
■ We proactively educate our clients about their pricing options and assist
them in moving to lower-priced bundles based on their current banking
needs and behaviour. In the process clients are saving on fees every year.
We also assist our clients to avoid costly penalty fees and educate them
to be ‘more savvy’ with their money.
■ We remain committed to the financial health of our clients and have
introduced client-centred innovations such as MyFinancialLifeTM, My Money
Map and education programmes for the youth and entrepreneurs to improve
financial literacy, and a unique no-funds-alert function that notifies clients
when there are insufficient funds in their account ahead of a pending debit
order and delays the processing of the debit order. This gives clients time to top
up their balance to prevent payments from being returned and avoid
unnecessary penalty charges. This commitment was also demonstrated by the
slowdown in the growth of our personal-loans book, ahead of the industry.
15
MAKING THINGS HAPPENENSURING A SUSTAINABLE BUSINESSINfoRmATIoN To oUR ShAREhoLdERSdELIVERING To oUR STAKEhoLdERS An AttrActive growth strAtegy (CONTINUED)
2 BANKING RELEVANCE AMID CONSUMERISM
AND INCREASED COMPETITION
Technology has enabled new competitors to emerge in the financial sector, and they are unencumbered
by legacy systems. The most prominent examples are online banks, microloan providers and virtual
payment systems. This has led to a proliferation of internet and mobile telephony providers placing an
increasing array of products and services at consumer’s fingertips available 24/7.
Consumer expectations of banks have increased resulting in a choice of integrated channels. Retail
banking in SA has also seen a shift in banking behaviour, as clients become more aware of their options
and understand the pricing consequences of their choices.
OUR STRATEGIC RESPONSE
■ Nedbank has identified and adopted ‘client-
centred innovation’ as a strategic growth
driver. For example, we fully embraced digital
and mobile banking, while embedding an
integrated-channel strategy. This allows our
clients to transact seamlessly across their
channel of choice. Nedbank has differentiated
its transactional services by being a leader in
cybersecurity through its award-winning
Nedbank App Suite™ technology.
■ In the past three years we have expanded our
outlets by 41% and ATMs by 83% to provide
clients with increased convenience and
access. As part of our Branch of the Future
rollout we are refurbishing all outlets to
provide multichannel access, optimising floor
size, improving efficiency and making the
instore experience more client-friendly.
■ We are increasingly focusing on cross-selling,
enabled by greater crosscluster collaboration
and the integration of processes and systems.
■ To demonstrate our commitment to making
banking more affordable and transparent, we
have not only saved clients a great deal by
moving them to more suitably bundled
products but also Retail, Corporate and
Business Banking transactional banking fees
for 2014 will remain as they were in 2013.
The cost is expected to be offset in the future
by continued client gains, cross-sell and more
transactional volumes.
■ In 2013 we launched a new credit life product,
one of the lowest priced in the industry, with
increased benefits.
Competition for primary
clients has increased, with
pressure on banks to innovate
more rapidly, price more
competitively and market their
offerings more aggressively.
WHY DO WE REGARD THIS AS
A MATERIAL MATTER?
Transacting is a core service provided by banks.
Clients that transact through a bank tend to also
use other services such as deposits, thereby
providing funding. Owing to reduced economic
activity and non-traditional players into the
market, competition for transacting clients has
increased, with pressure on banks to innovate more
rapidly, price more competitively and market their
offering more aggressively.
Innovating
for our
clients
34–37
16
NedbaNk Group | Integrated report 2013 MAkING
THINGS HAPPEN
DELIVERING TO
OUR STAKEHOLDERS
ENSURING A
SUSTAINABLE BUSINESS
INFORMATION TO
OUR SHAREHOLDERS
Worldclass
at
managing
risk
130–137
Partnering
with
our
regulators
42–43
3 INCREASED DEMANDS ON GOVERNANCE
AND RISK MANAGEMENT
The global financial crisis and events such as the London Interbank Offered Rate (LIBOR) and misselling scandals in the UK have
eroded trust in banks and the finance sector in many parts of the world. Regulators have responded with a multitude of measures
to ensure the soundness of banks and protect consumers, the most prominent of which are the Basel III regulations on capital
adequacy and liquidity. In the US the Volcker rule, restricting proprietary trading for banks, came into force during 2013.
SA is moving towards a new Twin Peaks regulatory framework that seeks to coordinate prudential (South African Reserve Bank)
and market conduct (FSB) regulations. Consumer protection is increasing, with a focus on improving transparency and
protecting clients in terms of the Consumer Protection Act.
WHY DO WE REGARD THIS AS
A MATERIAL MATTER?
Banks have to deal with greater complexity resulting from
increased regulation and higher compliance costs, and this
has impacted business activities.
■ Basel III reduces bank leverage, which reduced return on
equity (ROE). This could increase the cost of credit at the
higher end of the risk spectrum.
■ There is a trend towards greater emphasis on the
core business of banking and reducing proprietary
trading activities.
■ Consumer regulation is focused on protecting clients
and ensuring sustainable banking practices.
■ Internationally, regulators have imposed significant fines
on banks that have not complied with regulations.
We fully support sustainable banking
practices and continuously aim to stay
at the forefront of anticipated
regulatory interventions.
OUR STRATEGIC RESPONSE
■ Managing risk is the cornerstone of a bank’s
success. Our aspiration is to be worldclass at
managing risk while being a great place to bank.
Our regulators are one of our five key stakeholders
and play a major role in our vision to build Africa’s
most admired bank.
■ We have healthy relations with our regulators
and continue to support governance and
regulatory frameworks that have made it possible
for SA’s banking sector to be rated third in the
world for ‘soundness of banks’ by the World
Economic Forum in 2013.
■ In January 2013 we implemented the Basel III
capital and liquidity requirements.
■ We fully support sustainable banking practices
and continuously aim to stay at the forefront of
anticipated regulatory interventions. An example
of this would be our new credit life product, priced
at the lower end of the market while offering
increased benefits.
■ We aspire to be worldclass at managing risk and
having appropriate remediation where required.
■ We have an experienced board of directors,
with currently six independent and five
non-executive directors out of a total of 14.
■ Our strategic portfolio tilt strategy brings to the
forefront effective risk management, focusing not
only on returns but also on the risk and capital
requirements for those returns.
17
An AttrActive growth strAtegy (CONTINUED)
4 GROWTH OPPORTUNITIES
IN THE REST OF AFRICA
Economic growth rates in the rest of Africa are attractive compared with those in many regions in the world, owing to
improvements in the political environment, structural adjustments, the continent’s rich resource base and a young, growing,
urbanising population.
SA’s trade with the rest of Africa continues to grow rapidly. In 2012 the total value of trade was US$26bn, a compound annual
growth rate of 12% since 1996. SA firms are also increasingly expanding into and investing in the rest of Africa. Trade liberation
and the extension of trade corridors in several regions of Africa support further trade and economic integration.
Notwithstanding these factors, many investors are still cautious about investing in Africa and perceived risks are still high.
There is also less regulatory certainty in many African markets. The financial markets are typically much shallower and less
sophisticated than in SA and large segments of the population are excluded from the financial sector. Incountry banking in
most African countries is dominated by a few established banks. These banks are typically tightly controlled, particularly
in the major economies – Nigeria, Angola, Ghana and Kenya – owing to strong historic domestic shareholder ties or subsidiary
relationships to larger banking groups.
OUR STRATEGIC RESPONSE
■ Our strategy is to develop a ‘Pan-African
banking network’ by extending our Southern
and East African country presence from five to
approximately 10 countries over the medium
term. Our clients are present in all of these
countries. This network was most recently
strengthened through the acquisition by
Nedbank of a 36,4% stake in Banco Unico
in Mozambique.
■ In addition, our clients have access to West and
Central Africa through our strategic alliance
with ETI, which is represented in 35 countries.
We have the right to acquire 20% of ETI until
November 2014. These linkages position us to
provide our clients with a ‘one bank’ experience
across the largest Pan-African network in
sub-Saharan Africa in a risk-mitigated manner.
■ Our Africa approach fits into our growth
strategy of a ‘step change in sustainably
building the franchise’.
The economic growth potential of
the rest of Africa remains attractive
for banks as well as their clients.
WHY DO WE REGARD THIS AS
A MATERIAL MATTER?
The economic growth potential of the rest of Africa remains
attractive for banks as well as their clients:
■ With faster economic growth in rest of Africa there is a
pressing need for infrastructure and capital-intensive
projects – banks play a key role in their funding and
structuring.
■ SA clients entering the rest of Africa through their local
banks seek to benefit from one-stop solutions.
■ International banks are increasingly focusing on expansion
into Africa as investors seek exposure to the region
through investment in well-managed SA banks.
■ New entrants to countries in the region could be
forced to make comparatively subscale and expensive
banking acquisitions.
■ Despite high revenue growth rates, many investments in
the rest of Africa still have lower risk-adjusted returns.
18
NedbaNk Group | Integrated report 2013 5 TRANSFORMATION OF SOCIETY WITHIN
PLANETARY BOUNDARIES
Improvements in life expectancy have led to rapid population growth over the past two centuries. Economic growth has been faster,
leading to higher living standards and an increase in average per capita incomes by a factor of more than 10. This growth has been
underpinned by the conversion of natural resources into useful products and services, as well as improved social structures and
technological innovation.
However, high levels of poverty and inequality remain in many regions, including sub-Saharan Africa. Millions of citizens lack access
to formal employment opportunities, sufficient food, clean water and sanitation, safe and affordable transportation, suitable
housing, modern healthcare, education and financial services. Furthermore, progress has come at a price, as there is mounting
evidence that human consumption is exceeding the supply limits of the planet.
In addition, specific attention to the black economic empowerment (BEE) transformational environment is still required in SA.
We will contribute through our core
businesses to fulfil our social purpose
of facilitating capital flows throughout
the economy. We commit to doing
our fair share.
WHY DO WE REGARD THIS AS
A MATERIAL MATTER?
■ The primary means through which modern societies have
enjoyed developmental gains for the past two centuries –
for instance the burning of fossil fuels and the extraction
of finite mineral resources – appear unable to deliver the
same benefits sustainably to a growing population.
■ It is predicted that the impact of climate change would
manifest itself in the increasing frequency and intensity of
natural disasters, freshwater, food and other supply
constraints. The acceleration of species extinction and the
degradation of ecosystems would erode nature’s capacity
to supply essential life support services.
■ In this scenario, knockon economic effects of high and
volatile commodity prices would be felt as resources are
increasingly directed away from productive towards
‘repair’ activities.
■ Stricter regulatory responses may be expected – with the
potential for social backlash against those perceived to
have contributed to the emerging reality – as governments
and businesses struggle to articulate and execute
effective strategies.
OUR STRATEGIC RESPONSE
■ Nedbank has developed a strategic response
to address societal needs within critical
environmental thresholds or ‘planetary
boundaries’ called Fair Share 2030. This sets
out how we will contribute through our core
business, fulfilling our social purpose of
facilitating capital flows throughout the economy.
Fair Share 2030 is described in more detail on
pages 22–23.
■ In addition we will contribute through our own
operations and corporate social investment (CSI)
through our foundation and trusts, and we will
continue to play a role in shaping the future we
want through thought leadership and advocacy.
■ Nedbank remains committed to building on its
solid empowerment credentials in the interests of
transformation and will continue to contribute to
the nation’s socioeconomic growth through the
support of the Financial Sector Code.
Fair Share
2030
22–23
19
MAKING THINGS HAPPENENSURING A SUSTAINABLE BUSINESSINfoRmATIoN To oUR ShAREhoLdERSdELIVERING To oUR STAKEhoLdERS An AttrActive growth strAtegy (CONTINUED)
6 SCARCE SKILLS
SA has high levels of unemployment. Recent statistics reflect that only 41% of the working-age population are
employed, compared with a global average of 61%. While this appears to indicate labour surplus, there is a skills
shortage attributable to the failings in the SA education system, where SA was rated 146th out of 148 countries
according to the 2013–2014 World Economic Forum Competitiveness Report.
WHY DO WE REGARD THIS AS
A MATERIAL MATTER?
Banking is a service industry managing significant levels of risk, and highly
skilled employees are needed to service clients. Therefore, attracting and
retaining skills are very important to us:
■ Competition for the pool of qualified people entering the labour market is
increasing. Quantitative analysis skills are at a premium.
■ Companies are required to invest an increasing amount in training
and development to address the skills gap.
■ The retention of skilled staff is critical to remain competitive and requires
significant investment through incentives and career development.
■ Transformation is an imperative that we fully embrace to build a better
country and to remain relevant.
Competition for the pool of
qualified people entering the
labour market is increasing.
Quantitative skills are at
a premium.
Investing in
our people
32–33
Managing
and
optimising
our own
impact
92–97
20
OUR STRATEGIC
RESPONSE
■ We place great value on being a
great place to work.
■ In 2013 we spent R396m
(2012: R352m) on training
and development.
■ Our staff and corporate culture
continue to be our key
competitive advantage – in 2013
our values survey highlighted
measures health levels, while we
continue to optimise personal and
team effectiveness through our
Leading for Deep Green
programme.
■ We continue to transform our
business to reflect the profile
of society as can be seen in
our improving employment
equity ratios.
■ Of the Nedbank Foundation’s
expenditure, 50% is geared
towards improving educational
outcomes in the country.
■ Our bursary programme has
assisted 16 learners across
the entire SA, having spent
R11m in 2013.
■ Recognising quantitative analysts
as a scare resource we have
launched a risk academy to
develop quants. To date
15 staffmembers have graduated
with a further 33 enrolled in
the programme.
NedbaNk Group | Integrated report 2013 OUR 2014 STRATEGIC FOCUS AREAS
Following the progress made with regard to our four previous strategic
focus areas, the emphasis will now be on client-centred innovation, grow
our transactional banking franchise, optimise to invest, our strategic
portfolio tilt, and Pan-African banking network.
Chief
Executive’s
Review
62–67
CLIENT-CENTRED
INNOVATION
is vital in accelerating
and building on the
innovations launched in
the past two years to
enhance Nedbank’s
value propositions and
drive client growth and
product cross-sell.
GROW OUR
TRANSACTIONAL
BANKING
FRANCHISE
focuses on capturing a
greater share of the
overall groupwide
transactional banking
opportunity, with
growing NIR and client
deposits a
key outcome.
OPTIMISE TO INVEST
is aimed at driving internal efficiencies in an environment of
slower revenue growth and enhancing our ability to invest in
the franchise for the longer term. Significant information
technology (IT) innovations are planned to enhance our
systems and deliver business benefits through managed
evolution. Our ‘rationalise, standardise and simplify’ IT
TO BE AFRICA’S MOST ADMIRED BANK
GROW
TRANSACTIONAL
BANKING
FRANCHISE
OPTIMISE
TO
INVEST
CLIENT-
CENTRED
INNOVATION
STRATEGIC
PORTFOLIO
TILT
PAN-AFRICAN
BANKING
NETWORK
STEP CHANGE IN SUSTAINABLY BUILDING
THE FRANCHISE
STRATEGIC PORTFOLIO TILT continues to
emphasise the strategic nature of portfolio tilt and
EP-generative activities while incorporating Nedbank’s
Fair Share 2030 initiative, which encompasses a carefully
calculated flow of money allocated each year to invest in
future-proofing the environment, society and our
business. We have also increased collaboration with our
parent company, Old Mutual plc, and our sister
companies in SA. New-business flows from our financial
planners to Old Mutual SA increased 58% in 2013 and we
entered the direct-insurance market in partnership with
Mutual & Federal.
strategy forms part of
this intent as we move
from 220 to 60 core
systems over time and
embark on initiatives
such as a SAP ERP
system replacement in
Finance, Human
Resources and
Procurement. In 2013
alone, 30 IT systems
were decommissioned.
PAN-AFRICAN
BANKING
NETWORK
reflects the
importance of
providing banking
services for our
clients as they
expand across the
continent, and
creating
shareholder value
through appropriate
investment
opportunities that
are aligned with the
Nedbank strategy
and culture and
that can clear our
financial hurdles.
21
MAKING THINGS HAPPENENSURING A SUSTAINABLE BUSINESSINFORMATION TO OUR SHAREHOLDERSDELIVERING TO OUR STAKEHOLDERS
AN ATTRACTIVE GROWTH STRATEGY (CONTINUED)
MONEY WORKING FOR THE FUTURE WE WANT
Nedbank’s vision is to be Africa’s most admired bank
by all our stakeholders. We understand that our
success in achieving this vision is greatly dependent
on the success of the environment in which we
operate – the people and our planet. Therefore, we are
deeply committed to ensuring greater and lasting
wellbeing for all.
However, we are aware that the prevailing model for socioeconomic development is running into
serious challenges as the economy bumps against environmental limits (eg climate change and fresh
water), exacerbating inequality, increasing the potential for conflict and creating a real risk of stalled
progress. While the private sector definitely plays a positive developmental role by supplying products
and services, creating jobs, paying taxes and supporting social investment, the collective business
response has not been sufficient to address these challenges.
We cannot afford to be neutral with respect to outcomes for society; neither can we expect different
outcomes if we do the same things as before.
Our commitment is therefore to think and act differently, to go beyond usual business to help create
the future we all want. We believe this ambition will increase our own chances of success, as well as
those of our stakeholders, and help us to grow our franchise sustainably.
SHAPING THE CONTEXT
We need to get money working for the future we want by
doing what we do best: being a successful bank. We are
worldclass at managing risk, we facilitate trade, and we
enable the deployment of capital
into the economy.
Through the proper application of these skills we can
shape the context in which we operate.
Taking a more deliberate and imaginative approach to
creating a better future requires us to extend our aspiration
to be the ‘green and caring’ bank into the range of products
and services we offer. To this end we have applied a future-
back, outside-in process to gain a better understanding of
the conditions for long-term success and the needs and
aspirations of society.
Chief
Executive’s
Review
62–67
DRIVING
TOWARDS
THE FUTURE
WE WANT
THROUGH
FAIR SHARE
2030
22
NEDBANK GROUP | INTEGRATED REPORT 2013 MONEY WORKING FOR THE FUTURE WE WANT
LONG-TERM GOALS AND RESPONSE
Not everything that needs to be done can or should be done by
a bank. We have therefore identified a number of long-term
societal goals that are relevant for a thriving bank in a thriving
society and that we believe we can contribute towards.
These goals are:
Atmospheric greenhouse gases are stabilised at a
level that gives a more-than-50% probability of
avoiding a 2°C temperature rise above the
long-term preindustrial average.
Water resources are not being extracted
beyond sustainable levels.
The labour force is employed at percentages
comparable with those of other prosperous
nations.
All citizens have affordable access to energy
services essential for development and
prosperity.
All citizens have affordable access to clean
water and sanitation services.
Levels of saving and investment are sufficient
to support national economic development
objectives.
Good health outcomes are consistently being
achieved for citizens at a cost that is
comparable with that of other nations.
Good educational outcomes are consistently
being achieved for citizens at a cost that is
comparable with that of other nations.
These goals speak to environmental and social issues as
well as the important interplay between these two domains.
Achieving them collectively will also ensure other desirable
outcomes such as improved food security, a more resource-
efficient economy and less divided communities.
We have calculated that, to achieve these goals between
now and 2030, capital equal to 2% of the SA gross domestic
product will have to be invested and lent differently into the
economy annually. We have calculated that our fair share
of this equates approximately to our market share of debt
provision in the economy. This fair share is additional to all
the things we already do in areas such as renewable energy,
BEE financing and enterprise development – in most of
which Nedbank is already an established leader. To get
money working for the future we want needs imaginative
solutions from our clients and our staff, coupled with
rigorous risk assessment.
Fair Share 2030 is our strategic response to these long-
term goals. It is a calculated flow of money, allocated each
year to be invested in future-proofing the environment,
society and our business. Starting in 2015, Fair Share 2030
represents a constant flow of funding, estimated at R6bn,
working for the future we want. Our response to the long-
term goals also includes a risk screen to improve the
management of our lending exposure to carbon and water
risk, both for ourselves and our clients.
Fair Share 2030 forms part of our strategic portfolio tilt, a
mechanism through which to shift away from areas that
contribute to societal risks, and towards areas that build
resilience and wellbeing.
An initial Fair Share 2030 target of R6bn has been set for 2015; 2014 is a pilot year. This represents a lending or investment target,
subject to credit granting criteria, not an expense or donation, and we expect to make a decent return on this funding to be deployed
into the economy.
We will allocate our fair share every year to make sure money is flowing to activities that contribute to meeting the long-term goals.
We will rigorously measure the performance of Fair Share 2030 funds and, in future years, report on indicators and progress towards
reaching our targets.
Fair Share 2030 is not designed to replace any aspect of our existing commitment to sustainability. Properly understood, it represents
a step change in the way we approach our sustainability efforts through core business and a strategic response to our recognition of
the need for all South Africans to work towards creating a better future for our country.
By setting out how we will adapt to a changing environment, develop new competencies, sustainably grow our franchise, and invest
our resources with a view to achieving a prosperous future, Fair Share 2030 forms another vital component in Nedbank’s realisation
of its vision to be Africa’s most admired bank.
23
MAKING THINGS HAPPENENSURING A SUSTAINABLE BUSINESSINFORMATION TO OUR SHAREHOLDERSDELIVERING TO OUR STAKEHOLDERS A
SOUND
INvESTMENT
The Nedbank Group
investment proposition
remains compelling. Our
competitive franchises
are differentiated in the
SA market and continue
to create value. Also, we
offer an attractive growth
strategy and have a
strong balance sheet.
SOUND BANKING
SYSTEM IN SA
Through economic cycles SA banks have delivered
sustainable returns on equity (ROEs), well above the
much larger international banks in the US and the EU,
with growth driven by continued increases in banking
penetration in the retail market, business investment in
SA infrastructure programmes and expansion into the
rest of Africa. SA banks are well capitalised, operate in a
predominantly closed funding system, and are very well
regulated as evidenced by their being rated third globally
in terms of soundness by the World Economic Forum
and are currently delivering dividend yields above the
JSE all-share index benchmarks.
GRI 3.1: 1.2,
EC2
Value-
creating
business
model
28–29
24
NedbaNk Group | Integrated report 2013 MAkING
THINGS HAPPEN
DELIVERING TO
OUR STAKEHOLDERS
ENSURING A
SUSTAINABLE BUSINESS
INFORMATION TO
OUR SHAREHOLDERS
Our objective of building an
organisation that optimises returns
for all stakeholders and creates a
sustainable future is enabled by an
integrated approach to the
economics of the business,
environmental preservation,
involvement in society and
organisational culture.
Incorporating this approach,
the investment case for Nedbank
Group is built around:
OPTIMISING
RETURNS FOR ALL
STAKEHOLDERS
1
2
3
4
5
COMPETITIvE FRANCHISES CREATING
vALUE AND ENHANCING BRAND vALUE
CONTINUED DELIvERY ON
GROWTH-ORIENTED STRATEGY
WELL POSITIONED FOR CURRENT
ECONOMIC ENvIRONMENT
A STRONG BALANCE SHEET AND
DEFENSIvE INvESTMENT GIvEN THE
STABLE BANKING SECTOR IN SA
A STABLE AND EXPERIENCED MANAGEMENT
TEAM AND DIFFERENTIATED vALUES-BASED
CULTURE
Refer to
26–27
25
A SOUND INVESTMENT (CONTINUED)
1 COMPETITIVE FRANCHISES CREATING VALUE
AND ENHANCING BRAND VALUE
Our historical strength in wholesale banking is evident in the fact that the underlying businesses consistently deliver
ROEs – higher than our cost of capital, which is a key driver of value creation, while the high-ROE Nedbank Wealth
cluster is growing faster than industry trends and Nedbank Retail is building a sustainable retail banking business.
Leading position in corporate banking and commercial-property finance
■ Excellent client relationships and ratings.
■ Strong market shares, particularly in commercial-property finance and public sector loans.
■ Excellent risk practices over time.
■ Opportunity to increase transactional banking market share.
Integrated, full-spectrum investment banking
■ Leadership and expertise in mining and resources, infrastructure, energy, telecommunications and oil and
gas sectors, providing good growth opportunities in SA and the rest of Africa.
■ Full-service investment banking model, combined with an ability to leverage client relationships
in collaboration with other wholesale clusters.
■ Focus on flow and deal facilitation in markets business.
Strongly differentiated and decentralised business banking
■ Globally best-in-class client management practices.
■ Holistic relationship-banked offering through localised client service teams.
■ Excellent, client-centred risk management capabilities.
■ Strong deposit-generating franchise.
■ Client and people measurement at multiyear highs.
■ Excellent momentum in net new client gains and new business growth.
Innovative and client-centred retail banking
■ Sustainable investment in the franchise, including integrated channels, people effectiveness and
brand positioning.
■ Compelling, innovative client value propositions and positive shifts in brand perception, fuelling strong
client growth momentum and cross-sell.
■ A growing client franchise to take advantage of the lower primary banked market share relative to our
strong positioning in advances and deposits.
■ Judicious advances growth and strengthened balance sheet impairments to protect against downside risk.
■ Skilled people committed to collaboration and diligence in execution.
Fast-growing wealth, insurance and asset management businesses
■ Significant opportunity in penetrating the Nedbank client base and benefiting from various
new-product launches and recently introduced direct insurance offerings.
■ Unique Best of BreedTM asset manager with excellent track record, generating strong growth in assets
under management.
■ Leveraging of the Nedbank Private Wealth brand as one of SA’s leading high-net-worth franchises.
Longer-term, client-centred, risk-mitigated, capital-efficient strategy in rest of Africa,
with unmatched Pan-African geographic footprint
■ Providing clients with access to 37 countries across Africa.
■ Rights to acquire up to 20% in Ecobank Transnational Incorporated.
■ Expansion into the Southern African Development Community and East Africa, where gross domestic product
is expected to grow much faster than in SA, even though economic returns in financial services are still
below cost of capital in the medium term. Approval to acquire an initial 36,4% in Banco Unico in Mozambique
has been obtained and completion of transaction targeted for end March 2014.
26
Growing
our
franchises
68–71
Our 2014
strategic
focus areas
21
Worldclass
at
managing
risk
130–137
Established
leadership
teams
72–81
Building a
sustainable
bank
82–97
NEDBANK GROUP | INTEGRATED REPORT 2013 2 CONTINUED
DELIVERY ON
GROWTH-ORIENTED
STRATEGY
Our 2014–2016 strategic focus areas of
client-centred innovation, optimising to invest,
strategic portfolio tilt, building a Pan-African
banking network, growing our transactional
banking franchise, and a step change in
sustainably building the franchise will continue
to drive growth.
4 A STRONG BALANCE
SHEET AND DEFENSIVE
INVESTMENT GIVEN
THE STABLE BANKING
SECTOR IN SA
■ We have a strong, cost management culture,
with the existing strategy favouring an
investment-for-growth focus in our
transactional businesses.
■ Risk and capital management is embedded in
our culture and aimed at creating a stable
and sustainable organisation. Our credit
impairment coverage ratios are among the
highest in the industry. The prudent and
proactive actions taken in unsecured lending
and home loans position the group
defensively in the event of a further
deterioration in the macroeconomic
environment.
■ We have a common-equity tier 1 capital
adequacy ratio at 12,5%, with sound funding
and liquidity ratios that are in line with those
of domestic peers.
■ Earnings streams are well diversified,
with no cluster contributing more than
29% of headline earnings to the group.
■ A dividend cover range of 1,75 to 2,25 times,
aiming to deliver dividend per share growth
ahead of headline earnings per share growth.
3 WELL POSITIONED FOR
CURRENT ECONOMIC
ENVIRONMENT
■ Operational and financial gearing benefits should
enable us to deliver improved profitability ratios
over time.
■ Endowment income upside will be unlocked when
interest rates increase (a 1% yield curve parallel
shift in interest rates impacts pretax earnings by
approximately R936m).
■ Through our strong wholesale banking franchise,
we are well positioned to benefit from the rollout
of government’s infrastructure programme,
highlighted in the 2013 SA Budget and the National
Development Plan.
5 A STABLE AND
ExPERIENCED
MANAGEMENT TEAM
AND DIFFERENTIATED
VALUES-BASED CULTURE
■ Our stable and skilled management team is among
the most experienced and transformed in the SA
banking sector. Group Executive Committee
members have an average of 14 years with Nedbank
Group and on average more than 23 years of industry
and functional experience. The average tenure for
cluster managing executives is over 12 years.
Importantly, we have experienced limited change in
the management team since 2010, and this has
enabled strong and well-coordinated execution of the
group’s strategy.
■ Our people and culture give us a sustainable
long-term competitive advantage. Internal culture
and staff surveys show that we are close to
worldclass levels with high levels of consensus
on common value.
■ Motivated and energised staff enable greater client
satisfaction, which leads to higher revenue growth
and improved shareholder value creation over the
long term.
27
MAKING THINGS HAPPENENSURING A SUSTAINABLE BUSINESSINfoRmATIoN To oUR ShAREhoLdERSdELIVERING To oUR STAKEhoLdERS VALUE-CREATING BUSINESS MODEL
The business model of Nedbank Group is centred on the following:
LENDING, DEPOSIT-TAKING AND FUNDING ACTIVITIES
We manage shareholder funding, source
deposits from clients, and raise funding from
the markets to enable us to engage in lending
and investment activities. This funding results
in an obligation to pay interest to funders and
generate a return for shareholders.
We extend credit to clients, taking
into account relevant factors such
as a client’s risk grading and credit
standing, and industry dynamics.
The extension of credit results in an
obligation on clients to pay interest
to the bank.
Where there is deterioration in
clients’ risk grading or their ability
to repay the funds to the bank, we
make a provision of impairment
on the extended credit. This is
reported as a credit impairment.
DEPOSITS (Rm)
SHAREHOLDERS’
EQUITY (Rm)
+9,5%
+12,1%
LOANS AND
ADVANCES (Rm)
+9,9%
STATEMENT OF FINANCIAL
POSITION IMPAIRMENT (Rm)
+5,4%
8
7
8
0
5
5
2
5
9
2
0
6
5
7
3
7
5
6
3
3
4
6
6
6
1
7
2
5
2
7
3
9
7
5
2012
2013
2012
2013
2012
2013
NET INTEREST INCOME
Net income generated from lending activities is net interest income (NII) less impairments
charges, while NII is the net result of income received and interest paid on our lending and
funding activities.
■ Interest is charged for loans granted to clients, with the interest rate based on clients’ risk
profile and related funding and capital costs. These loan categories include home loans, motor
finance, personal loans, credit cards, term loans and corporate property finance.
■ Interest is paid to funders for deposits placed with and debt granted to the bank, with the
rate based on the bank’s credit rating, the term, size of deposit/facility and prevailing interest
rates, among other things.
■ Included in NII is the endowment which is the
income received on the bank’s own capital
and low-yielding deposits, utilised in
lending activities.
■ Loans and advances are impaired by the
actual or expected change in bad debts from
levels of loan repayments, property values
and impact of interest rates, to name a few.
NII (Rm)
+7,8%
0
8
6
9
1
0
2
2
1
2
NET INCOME FROM
LENDING ACTIVITIES (Rm)
+8,1%
1
8
4
4
1
5
5
6
5
1
2012
2013
2012
2013
0
7
8
0
1
6
5
4
1
1
2012
2013
NON-
INTEREST
REVENUE
Non-interest revenue
includes income
received from value-
adding activities such
as advisory and
transactional banking
services, insurance,
asset management,
trading and
investment
income and
private-equity
valuations.
Value added is the wealth created from the rendering of quality
services to clients:
NET INTEREST INCOME
R21 220m
61%
IMPAIRMENT LOSSES
ON LOANS AND
ADVANCES
(R5 565m)
(16%)
INCOME FROM
LENDING ACTIVITIES
R15 655m
45%
R34 993mP
55%
O
D
E
W
T
A
H
W
Y
E
N
O
M
F
O
W
O
L
F
D
E
D
D
A
E
U
L
A
V
28
1 Includes non-interest revenue, non-trading and capital items, and share of profits
of private-equity associates, associate companies and joint arrangements.
2 Includes direct and
indirect taxation.
NEDBANK GROUP | INTEGRATED REPORT 2013
VALUE-CREATING BUSINESS MODEL
LENDING, DEPOSIT-TAKING AND FUNDING ACTIVITIES
TRANSACTIONAL,
ADVISORY,
TRADING, INVESTMENT,
INSURANCE AND
OTHER SERVICES
We provide:
■ Transactional banking services.
■ Insurance solutions.
■ Asset management services.
■ Advisory services.
■ Trading services.
■ Investment services and related solutions,
which generate non-interest revenue.
CLIENTS (m)
+10%
1
,
6
,
7
6
2012
2013
■ Fees and commissions include transactional
banking fees and commissions earned on
investment products and advisory services.
■ Insurance income includes insurance premiums
and underwriting profit less claims as well as
profit-sharing arrangements.
■ Trading income is generated from fees for client
flows, foreign-exchange, commodity, credit,
interest rate and equity-trading investments.
■ Private-equity income is generated from the
realisation or revaluation
of property and private-
equity investments, as well
as dividends received.
■ Other income includes the
fair-value adjustment of
hedges held to mitigate
fixed-interest-rates and
basis risk of the bank’s
balance sheet.
NIR (Rm)
+11,8%
4
2
3
7
1
1
6
3
9
1
2012
2013
OTHER BANKING INCOME1
R19 338m
The following section of the report covers in more detail
how we managed, created value and Made Things Happen
for our stakeholders in 2013.
OPERATIONS
In return:
We deliver these service activities by investing
and maintaining our own operations, including
our staff, distribution platforms, IT systems,
marketing and communications, which
generate our expense base.
NUMBER
OF STAFF
NUMBER OF
STAFFED OUTLETS
8
4
7
8
2
3
1
5
9
2
1
7
0
1
0
5
0
1
2012
2013
2012
2013
Chief Financial
Officer’s Review
100–107
GRI 3.1: EC1
TAX AND OTHER
Taxation is the regulatory
requirement to pay direct
and indirect taxes in the
various jurisdictions in which
we operate.
EXPENSES
TAX
Expenses include staff and other operational
costs incurred to maintain and invest in the
group’s operations to service our clients.
TAX PAID
(DIRECT AND INDIRECT)
Staff-related – 56%:
Remuneration,
short-term and
long-term incentives,
investing in training and
developing our people.
Other operational – 44%:
Technology, systems and
operational infrastructure,
communication and
marketing expenses, etc.
EXPENSES (Rm)
TAX (Rm)
+9%
+5,6%
3
6
5
0
2
9
1
4
2
2
6
2
4
3
7
1
6
3
2012
2013
2012
2013
RETENTIONS FOR GROWTH
R6 334m
R34 993mP
18%
36%
D
E
T
A
C
O
L
L
A
E
U
L
A
V
OTHER EXPENDITURE4
R8 171m
24%
SHAREHOLDERS3
R4 141m
EMPLOYEES
R12 629m
SOCIOECONOMIC
DEVELOPMENT SPEND
R101m
12%
10%
GOVERNMENT (TAXES)2
R3 617m
3 Value is allocated to shareholders in respect of cash dividends (but does not include the underlying
value of capitalisation shares awarded) and income attributable to non-controlling shareholders.
4 Includes expenses relating to computer processing, communication and travel, occupation
and accommodation, marketing and public relations and fees and insurances.
29
MAKING THINGS HAPPENENSURING A SUSTAINABLE BUSINESSINFORMATION TO OUR SHAREHOLDERSDELIVERING TO OUR STAKEHOLDERS
DELIVERING
TO OUR
STAKEHOLDERS
Building enduring relationships
Investing in our people
Innovating for our clients
Delivering value to our shareholders
Partnering with our regulators
Leading in the communities we serve
30
32
34
38
42
44
STAKEHOLDER OVERVIEW
building enduring
relationships
Our stakeholders are those individuals, groups of individuals or organisations
that affect and/or could be affected by our organisation’s activities, products or
services and performance. Our primary stakeholders, as outlined in our vision,
are our staff, clients, shareholders, regulators and communities and include
‘silent’ stakeholders such as future generations and the environment.
The Nedbank Group Executive Committee has overall responsibility for the
group’s stakeholder engagement. The process of engagement is largely
decentralised, with the various clusters and business areas empowered to
engage directly and transparently with their immediate stakeholders.
We recognise that this presents the organisation with a measure of risk,
particularly in terms of managing and maintaining a consistent message across
all areas of stakeholder engagements. To mitigate such risk we have a
comprehensive stakeholder engagement policy and framework in place, which
aligns with the recommendations of King III and identifies material stakeholders
for each business area and any potential areas of overlap that need to be
monitored and managed.
It is our belief that the benefits of immediate engagement between business
areas and their stakeholders far outweigh the risks of such engagement. Direct
engagement at a business level not only ensures that every area of Nedbank
remains in touch with the needs, wants and expectations of all its stakeholders,
but also empowers us to be more responsive and accurate in addressing and
managing risks and leveraging potential opportunities because we have access
to immediate feedback on these matters. We therefore encourage such
decentralised Nedbank representation, but always within the parameters of
our stakeholder engagement policy.
The information that follows offers a high-level overview of our main
stakeholder engagements and what was accomplished in 2013. Details of our
engagement with other stakeholders are available in the online Sustainable
Development Review.
GRI
FSSS: FS5
GRI 3.1: 1.2
4.14,
4.15,
4.16,
4.17
30
InvestIng
In our
people
‘Nedbank has come a
long way in terms of
transformation and I
believe there are still
great things to come.
It’s a wonderful
environment to work
in and there are lots
of opportunities
and programmes
through which to
improve yourself
and your career.’
– Nedbank staffmember
‘I believe in Nedbank;
they take care of their
staff. They encourage
staff to get involved in
community projects
and care about the
environment, and they
make you feel that you
are part of something
truly exceptional.’
– Nedbank staffmember
Refer to
32–33
Great place
to work
D
E
V
I
E
C
E
R
K
C
A
B
D
E
E
F
NedbaNk Group | Integrated report 2013
nedbank group views its stakeholders as partners in its
business. our approach to stakeholder communication
therefore extends beyond conversation to comprehensive
engagement, through which ideas can be shared, input can
be provided, and mutual benefit can be unlocked.
InnovatIng
for our
clIents
delIverIng
value to our
shareholders
partnerIng
wIth our
regulators
leadIng In the
communItIes
we serve
‘Knowledgeable staff
and high levels of
expertise make
business a pleasure.’
– Nedbank Corporate
client in an electronic
Business Banking
survey
‘Nedbank Private
Wealth is the best bank
that I have dealt with.
You are very
professional, fair and
clear. I rate Nedbank
Private Wealth as a
model bank.’
– Nedbank Wealth client
‘Nedbank’s
MyFinancialLifeTM is
the best financial tool
with which to keep
track of your spending
behaviour.’
– Nedbank Retail client
‘I would criticise the
Nedbank Private Wealth
logo. The marketing
colours are dull.’
– Nedbank Wealth client
‘In an environment where
pressure on the consumer
is building, we prefer banks
to focus on clients and
deliver conservatively
stated results … We think
Nedbank ticked all the
boxes in 1H13.’
– Rated financial analyst
‘Nedbank has a strong
management team,
I think one of the best in
emerging market banks.’
– International investor
‘We particularly value our
strategic partnership on
Imbizo and believe that
through this and other
contributions we continue to
add real value to Nedbank’.
– CEO of Wipcapital Ltd
Founder and Executive
Director of WIPHOLD Ltd
‘Key issues are to
understand how the credit
loss ratio progresses
from here and the health
of the consumer.’
– Local investor
Our relationships with
regulators remain
ongoing, proactive and
transparent. Over the last
year the demands from
regulators to comply fully
with all legislative and
regulatory requirements
have increased.
Nedbank has approval
from SARB to apply the
Advanced Management
Approach to calculate
exposure to credit,
operational and market risk.
We view the professional
relationship between
Nedbank and our
regulators as mutually
beneficial.
‘SA is rated as a
well-regulated
financial market.’
– WEF Competitiveness
Report 2013/14
‘In the 30 years that
I’ve been involved in
invasive alien clearing,
I never thought that I
would get on top of this
problem, but since
receiving this Water
Balance assistance,
I now do.’
– Participating farmer,
WWF Water Balance
Programme
‘I have been part of
Enactus since 2010,
that has helped me to
grow professionally and
personally. It’s the
generous sponsorships
from corporates such
as Nedbank that have
helped Enactus SA to
get to where it is today.’
– Zuko Xelelo, Nedbank
Business Banking
Academy Agriculture
trainee
Refer to
34–37
Refer to
38–41
Refer to
42–43
Refer to
44–47
Great place
to bank
Great place
to invest
worldclass at
manaGinG risk
HiGHly involved in
tHe community
and environment
31
ENSURING A SUSTAINABLE BUSINESSINfoRmATIoN To oUR ShAREhoLdERSmAKING ThINGS hAPPENDELIVERING TO OUR STAKEHOLDERS nedbank Group | INTEGRATED REPORT 2013
STAFF
investing in
our people
In 2013 we improved our cultural sustainability performance
as measured by non-financial key performance indicators.
29 513
NUMBER OF
EMPLOYEES
63%
FEMALE
EMPLOYEES
37%
MALE
EMPLOYEES
related
materIal
matters
■ Tough economic conditions
■ Scarce skills
PERFORMANCE DURING 2013
Progress with its academies and the external acknowledgement of this innovative
work, as we strive for continuous learning. Through the Nedbank academies
approach, 1 311 leaders and professionals have been trained (868 in 2013).
The alignment of management processes through the implementation of the
integrated talent framework, which included training of the HR community and
line managers on the framework.
Good progress made on our journey to achieve a culture of collaboration, innovation
and client-centredness through research and planned initiatives.
Nedbank’s efforts in creating an inclusive environment where all employees are
valued for their diversity.
The People with Disabilities target was exceeded. At 31 December 3,73% of
employees had declared disabilities.
High level of staff satisfaction in Nedbank Staff Survey with a 76,7% rating.
A total of 1 521 employees benefitted from the Leading for Deep Green Programme
and over 100 employees were included in the Nedbank Leader/Manager Academy.
Approximately 400 employees attended Planning for Retirement workshops.
Good progress has been made with the implementation of the transformation
strategy.
Altogether 588 additional jobs were created in SA.
On average 85% black representation on Nedbank learning programmes, with
30% of them black female.
Retention of 95,9% of individuals identified in the talent pool for cluster executive
roles during the 2012/13 talent review period.
We continue to work on building our black talent pipeline and 78,9% of the long-
term pipeline for cluster executive roles are black candidates.
Positive review of overall competitiveness of our total remuneration and benefit
offering relative to the markets in which we compete, while we remained
appropriately commercial and agile in response to changes in market conditions.
Ongoing monitoring of and adaptation to the evolving HR governance requirements
applicable to organisations in financial services.
Understanding
material
matters
14–20
32
Managing and
optimising our
own impact
92–97
Transformation
Report
Supplementary
information:
Sustainable
Development
Review
GRI 3.1: 4.4,
4.17
deliverinG to
our stakeHolders
MAKING
THINGS HAPPEN
ENSURING A
SUSTAINABLE BUSINESS
INFORMATION TO
OUR SHAREHOLDERS
hot topIcs In 2013
Hot topics
our response/resulting developments
development and growth
opportunities
management capability
■ We offer our employees and managers
numerous development opportunities
(see page 94). In 2013, the Integrated
Talent Framework was implemented.
It includes talent conversations between
managers and employees about
performance, personal aspirations and
holistic development.
■ Our Leading for Deep Green Programme
and Leader/Manager Academy aim to
better equip our managers and leaders.
A total of 1 521 managers participated in
the Leading for Deep Green Programme
in 2013 and more than 100 managers
went through the Nedbank Leader/
Manager Academy.
work/Home life balance
■ Wellness Days were implemented to
performance management
process
raise awareness of the importance of a
healthy lifestyle. In 2014 a stress
management programme will be piloted.
■ Ongoing engagement with employees led
to an understanding of how they
experience the performance management
process. Feedback has been consolidated
with a focus on continuous improvement.
employment equity progress
■ We achieved five out of our nine
employment equity targets. We are
determined to understand the barriers
and challenges involved so that we can
address these proactively.
■ Countrywide transformation dialogues
provided insights that were used to
refine our employment equity plan and
promoted a common understanding of
diversity issues.
Refer to
94
accolades
In 2013
■ Skills @ Work award in the
Large Company category:
BANKSETA
■ Highest Contributor award in
the Financial Services Sector
by the Thuthuka Bursary Fund
■ Nedbank Group monthly staff
TV broadcast awarded a gold
award for video excellence at
the 2013 International
Academy of the Visual Arts
■ Knowledge Resources
Chief Learning Officer
of the Year award
challenges
durIng 2013
■ Achieving senior
management employment
equity targets has been
particularly challenging
since 2009. The statistics
show that although we have
achieved senior management
black and black female
targets, achievement
regarding senior management
Africans and Coloureds were
below our plans and require
further organisational effort.
■ Technology challenges have
delayed the creation of a
virtual online learning
platform. More focus will
be given in 2014.
FOCUS AREAS FOR 2014
TARGETS FOR 2014
■ Driving transformation in order to create a
diverse workforce in an inclusive
environment.
■ Enabling a unique, collaborative, innovative
and client-centred culture.
■ Acquiring and optimising talent.
■ Repositioning rewards to create
differentiation.
■ Creating a learning organisation that
supports employee development and
achievement of business objectives.
■ Senior management 37,6% black,
with 15% being black females.
■ Middle management 57,2% black,
with 30% of those being black females.
■ Junior management 83,1% black,
with 55,1% being black females.
■ Maintaining a score of 9,2 for FSC skills.
■ Over 170 Leading for Deep Green
workshops with the aim of reaching
about 2 500 employees.
Transformation
Report
Supplementary
information:
Sustainable
Development
Review
33
nedbank Group | INTEGRATED REPORT 2013
CLIENTS
innovating For
our Clients
‘Being great at listening, understanding our clients’ needs and delivering’
remains at the heart of nedbank’s strategy and we therefore remain committed
to providing a choice of distinctive client-centred banking experiences as a bank
for all through excellent service, innovative offerings and competitive pricing.
6,7m
TOTAL
CLIENTS
210 000
SMALL-AND-MEDIUM-
ENTERPRISE (SME)
CLIENTS
25 000
BUSINESS
BANKING CLIENTS
related
materIal
matters
■ Tough economic conditions
■ Banking relevance amid
consumerism and increased
competition
■ Increased demands on
governance and risk
management
■ Growth opportunities in the
rest of Africa
■ Transformation of society
within planetary boundaries
Understanding
material
matters
14–20
34
GRI
FSSS: FS13
FS14
PERFORMANCE DURING 2013
Grow clients
and
transactional
income streams
differentiated
and relevant
value offering
delivering strong
performance for
clients
wholesale
banking
proposition
demonstrating
relevance
Nedbank Retail grew its client total by 529 000, with
primary-client gain remaining stable and improved the
quality of revenue per client. Nedbank Business Banking
delivered strong net primary-banked- client gains of
965 clients. In addition Nedbank Corporate and Nedbank
Wealth grew primary clients, continuing the momentum gained.
A focus on product and process innovation yielded a number
of market firsts and enhanced the client experience through
simplified onboarding, more
relevant offerings and
automated fulfilment. Nedbank’s progress on conceptualising
and operationalising the integrated-channels strategy and
leveraging digital, was acknowledged when Nedbank
received the Bank of the Year 2013 award from the Financial
Times and The Banker magazine.
Accelerated innovation resulted in the launch of a number of
new solutions over the period, including enhancing the
Approve-itTM internet security feature, the PocketPOSTM
mobile chip and PIN card acceptance device and the
MyFinancialLifeTM personal financial management tool,
many of which are unique in the market and contribute to the
distinctiveness of Nedbank’s overall value proposition.
Nedbank Private Wealth clients experienced top quartile
investment performance as measured over periods of 1, 3, 5,
7 and 9 year(s), and since fund inception.
For the fifth consecutive year Nedgroup Investments was
voted one of the Top 3 domestic asset management
companies at the 2013 Raging Bull Awards.
We enhanced our position in the global trade market through
client enablement and new-product development. Transactional
Banking continued to innovate while still focusing on compliance
projects related to product enhancements.
We continued to focus on maintaining a high-performance
culture across the businesses with ongoing investment in
people development and skills enhancement.
Holding or reducing transactional prices in 2014 to ensure all
elements of the value proposition remain compelling for our
clients, and encourage product cross-sell while also
supporting the accelerating drive in new-client acquisition.
Two of Nedbank’s Savvy adverts ranked among the top five
best-liked adverts in Q3 2013, only the third time this has
happened in 29 years. Nedbank was also acknowledged as
the bank of choice for small business and rated second
Business Bank overall in the first business banking survey by
Intellidex for Business Day Investors Monthly.
deliverinG to
our stakeHolders
MAKING
THINGS HAPPEN
ENSURING A
SUSTAINABLE BUSINESS
INFORMATION TO
OUR SHAREHOLDERS
PERFORMANCE DURING 2013 (CONTINUED)
accessibility to
our financial
services
worldclass
client service
Making Nedbank more accessible through the R1,7bn investment in
distribution since 2009. Branches have increased by 41% to 763, with
76% growth in the non-urban areas, and ATMs have increased by 83% to
3 382. An accelerated rollout plan has been chosen for the purpose of
investing R2,1bn over the next five years, to enable 75% of our clients to
experience the new Branch of the Future design within three years.
In addition we are driving innovation across multiple distribution channels,
including mobile and digital, allowing our clients to choose how they want
to interact with us.
The main service metric common to the majority of the bank is the Net
Promoter Score (NPS) , which is used both as a lead measure of the
overall health of client relationships and as a behavioural driver seeking to
enhance client loyalty and organic growth. Business Banking, Property
Finance and Retail experienced improvements in their NPS for 2013
(Business Banking reached a new historic high). Corporate Banking saw a
slight year-on-year decline in NPS, but off a high base in 2012. Nedbank
Private Wealth conducted their first NPS survey since 2009, with good
scores following the rebranding of the old BoE Private Client business.
Nedbank Retail’s recent CMATTM results have shown a substantial
improvement in the overall score, with Retail’s client management
intentions benchmarked as worldclass in 2012. On the recent very rigorous
SCHEMATM measure, Retail was ranked in the top five of 92 companies
surveyed globally.
Business Banking’s client management capabilities are worldclass as
confirmed by an independent assessment conducted globally, which
ranked the business first in 92 global SCHEMATM assessments and second
in some 900 global CMATTM assessments.
The Treating Customers Fairly programme remained a prominent focus for
Nedbank during 2013. The programme aims to improve client confidence
through the supply of appropriate products and services and to enhance
transparency and discipline in the industry. The programme also aligns
with our current client-centred ethos and code of conduct. We anticipate
that the additional focus this programme brings to client imperatives will
further enhance client trust and service levels.
In the spirit of ensuring accurate and relevant client advice, Nedbank
rescreened more than 6 380 FAIS key individuals and representatives
to ensure that they all comply with the prescribed ‘fit and proper’
requirements.
Overall, 2013 was a pleasing year from a systems availability perspective.
We measure the overall uptime of our major infrastructural platforms as
well as our most critical application systems, and the blended uptime
infrastructure and applications was 99,89%
score
(2012: 99,88%) against a target of 99,70%. It is important to note that
this was achieved against a record number of complex changes deployed
in the information technology (IT) environment.
for both
While we are fully committed to meeting our clients’ needs, they are able
to approach the Ombudsman for Banking Services in cases where we are
unable to resolve an issue to their satisfaction. The number of cases
opened against us has remained relatively stable since 2012, with 688
(2012: 648) Nedbank Group-related cases being opened and 753 closed
(2012: 659). Of the cases closed, 65% were resolved in favour of the bank.
This result demonstrates that our internal processes are robust and
address clients’ needs.
accolades
In 2013
■ Nedbank voted SA 2013
Bank of the Year by the
Financial Times and
The Banker magazine.
■ Nedbank App Suite™
awarded the Best Android
App in the consumer
category at the MTN App
of the Year awards 2013.
■ The bank recognised as
Best Subcustodian in SA
at the Global Finance
World’s Best
Subcustodian Banks
awards 2013.
■ Nedbank voted Best
Property Finance Bank in
SA by the 2013 SA PwC
banking survey.
■ Nedbank Private Wealth
voted Best International
Private Wealth Manager
and received the
prestigious Euromoney
Best Private Bank for
High-net-worth Clients
award in the UK
offshore category.
■ Nedbank awarded Power
Deal of the Year by
Euromoney Project
Finance Africa.
■ Nedbank achieved first
position by volume and
third by value in 2013
Dealmakers M&A
league tables.
Growing our
franchises
68–71
Supplementary
information:
Operational
Overview
35
NEDBANK GROUP | INTEGRATED REPORT 2013
INNOVATING FOR OUR CLIENTS (CONTINUED)
PERFORMANCE DURING 2013 (CONTINUED)
Selectively expanding into
Africa and leveraging the
Ecobank–Nedbank Alliance
The group continued to build on the foundations of the Ecobank–Nedbank Alliance. Various banking
initiatives were implemented to align with the vision of providing clients with a one-bank experience
across the African continent. Revenue is being generated as a result of an effective client engagement
approach supported by streamlined operational processing. Client activity in sub-Saharan Africa
increased significantly during 2013 and this is reflected in the increased pipeline, transactional revenue
and account openings that have been recorded across the business clusters.
Nedbank Capital and Corporate made strides into Africa by leveraging the Ecobank alliance to provide
Africa-destined clients with banking on the ground and participated in various lending opportunities.
Improving the group’s
positioning in the public sector
Nedbank Group participated in the majority of public sector business tenders during 2013. The business
retained its share of public sector liabilities. Feedback from various levels of government has indicated that we
are well recognised as a reliable partner to the public sector.
DATA PROTECTION
AND PRIVACY
Nedbank Group subscribes to the Code of
Banking Practice of The Banking Association
the Consumer
SA and complies with
Protection Act and
the Protection of
Information Act, all of which require that all
personal client information be treated as
private and confidential. The group is further
committed to complying with the Electronic
Communications and Transactions Act
regarding client privacy as well as the
Financial Intelligence Centre Act (FICA) and
Financial Advisory and Intermediary Services
(FAIS) Act.
in
Formal policies and processes are
place
to manage client privacy and
confidentiality. For more details on cybercrime
issues, such as online fraud, fraud prevention
and anti-money-laundering measures, please
see the Operational risk section online.
RESPONSIBLE PRODUCT/
INFORMATION LABELLING
Detailed product brochures that comply with
all relevant legislation, such as the National
Credit Act, are available to the group’s clients.
Relationship managers are also responsible
for explaining the characteristics, benefits
and implications of products to clients in
accordance with the FAIS Act. Product policies
review
and
procedures
and
committees are in place.
product
36
RESPONSIBLE LENDING
TO PROTECT CLIENTS,
INVESTORS AND THE BANK
FROM THE PRESSURES OF
THE NEXT CREDIT CYCLE
A number of concerning industry dynamics over the past three years
have made it easier for consumers to access personal loans:
■ Many new entrants driving supply.
■ Inconsistency in the criteria and calculations applied, especially using
40-year-low interest rates and above-inflation wage increases
(especially in the public sector) to determine affordability.
■ Ability to increase debt by extending tenor for similar or lower
monthly instalments.
This fuelled strong personal-loans industry growth before 2013 in an
economy with weak fundamentals, while consumer indebtedness has
materially increased over the past two years. At the same time distressed
consumers have been able to keep current for longer, as they can access
more credit to delay going into default. There is also a knockon effect to
other asset classes as consumers are able to take out additional personal
loans to sustain their lifestyles, including the ability to meet their home
loans or vehicle finance obligations.
As a result, actual loan origination vintages look more benign than the
underlying factors suggest, and as macro factors change (higher inflation
especially due to administered prices, below-inflation salary increases,
higher risk of job losses and prime interest rate increases), the true
quality of the assets and level of consumer stress emerge.
Nedbank highlighted these concerns in 2011 and took early action to
redesign the personal loans business fundamentally and reduce risk
appetite, while increasing conservatism in impairment methodologies
(away from the recency-based industry approach). This resulted in a
slowing of advances growth well ahead of the market. In the 2013
financial year we reduced our book by 9,4% (R2,1bn) while the rest of
the industry continued to grow strongly at 8,3% (R12,3bn).
By applying more stringent affordability criteria and selective advances
origination policies across all asset classes, Nedbank sought to improve
the underlying asset quality and, importantly, protect our clients against
overindebtedness ahead of the next rising interest rate cycle. This is in
line with Nedbank’s principles of acting as a responsible lender, ensuring
sustainable growth and enabling our clients’ financial fitness.
deliverinG to
our stakeHolders
MAKING
THINGS HAPPEN
ENSURING A
SUSTAINABLE BUSINESS
INFORMATION TO
OUR SHAREHOLDERS
hot topIcs In 2013
Hot topics
our response/resulting developments
pricing
■ We have moved towards more transparent and simplified
pricing structures.
■ Credit life protection and pricing have become much
debated topics in SA and are under increasing regulatory
scrutiny. In 2013 we took a leadership position in
proactively launching a differentiated credit life proposition
that offers a sustainable insurance solution to the entry
level market and provides top quartile and differentiated
benefits at highly competitive rates.
■ We made a decision not to increase transactional prices in
2014 for the majority of our clients.
■ We invested R1,7bn in our distribution footprint, which
resulted in 41% more branches and alternate outlets
(a total of 763 excluding personal-loan kiosks) and 83%
more ATMs.
■ The rollout of our Branch of the Future formats has been
well received.
■ Video banking facilities in branches allow easy access to
specialist advice.
■ Additional functionality was deployed for the Nedbank
App Suite™. This included banking functionality for
business and corporate clients.
■ Online channels were launched for business clients wishing
to apply for products or provide feedback.
■ Our digital home loans Apply Online channel is the first on
the market to offer approval within hours. The channel has
already processed over 10 000 applications, granted loans
worth R1,5bn and registered 1 548 properties.
■ Our listening centre is now fully established and facilitates
engagements with clients and staff through social media
and digital channels.
■ We funded a Green Star SA performance rating tool
produced by the Green Building Council of South Africa.
The tool helps existing building owners and/or portfolio
managers to gain a better understanding of the
environmental impact and related costs of their buildings,
improving efficiencies and reducing costs.
■ We implemented and improved our cash management
system, which maximises interest income and minimises
the cost of borrowed funds for clients.
■ We have increased the functionality of our free, holistic
personal financial management tool, MyFinancialLife™,
through the addition of a simplified, fun budgeting tool
called MyMoneyMap™.
■ We proactively educate our clients about their pricing
options and help them to switch to the lowest-cost options
for their needs.
■ A unique no-funds-alert function notifies clients when
there are insufficient funds in their account ahead of a
pending debit order and delays the processing of the
debit order.
■ Our business clients now have a single point of entry
through our wholesale banking client solution. This has
resulted in a better understanding of our clients and
improved communication and client service levels.
■ We proactively match the skills of our bankers to identified
client needs.
■ We ensure that our clients have access to specialists
when these are needed.
Greater accessibility
to banking services
and increased
channel choice
responsiveness –
social media
the impact of spiralling
energy costs on
corporate building stock
integrated cashflow
management
Financial literacy and
overindebtedness
Holistic understanding of
clients’ businesses
focus
areas for
2014
With many of the client
measurements steadily
improving and accelerating,
Nedbank remains well
positioned to grow its
client franchise and market
share in all segments.
Emphasis will be placed on:
■ Accelerated rollout of
the Branch of the Future
design and network of
formats, reaching 75% of
our clients by 2016.
■ Implementation of the
integrated-channels
roadmap towards a truly
seamless client
experience across the
full range of channels
emphasising mobile
functionality and
self-service.
■ Leveraging the strong
foundations and
compelling offering built
for small businesses,
professionals and
seniors to regain
market share in these
important segments.
■ Continuing the journey
of simplified, transparent
pricing, with no price
increases and with
structural changes
in 2014.
■ Emphasis on quality
client growth, balanced
with judicious granting
of new loans to protect
clients and the bank
from the consequences
of increasing consumer
overindebtedness.
GRI
FSSS: FS15
GRI 3.1: 1.2,
4.17,
PR3,
PR5,
PR6
37
nedbank Group | INTEGRATED REPORT 2013
SHAREHOLDERS
delivering value to
our shareholders
a great place to invest.
types of
engagement
■ Jse sens
announcements
■ Financial results
and integrated
report
■ roadshows and
conferences
■ management
meetings and
calls
■ investor days
■ annual general
meeting
■ media releases
■ Group website
engagements held
During the year,
344 individual meetings
were held, including the
following events:
■ Annual and interim
results
announcements,
presentations and
roadshows.
■ First- and third-quarter
trading results.
■ Broker-hosted
conferences, lunches
and non-deal
roadshows.
■ Nedbank Wealth
and Nedbank Retail
investor days.
■ Ad hoc meetings with
shareholders, potential
investors, analysts,
credit rating agencies
and financial media
during non-closed
periods.
■ Engagement with our
holding company,
Old Mutual Group,
to ensure alignment
of financial reporting
and communication,
to provide a holistic
group view of which,
the Old Mutual plc
Africa Showcase held
in the fourth quarter of
2013, is a good
example.
Feedback from
the investment community
‘In an environment where
pressure on the consumer
is building, we prefer banks
to focus on clients and
deliver conservatively
stated results … We think
Nedbank ticked all the
boxes in 1H13.’
– Rated financial analyst
‘Consistent strategy;
gradual gains. There is an
indication yet again of
a clear, all-encompassing
and consistent strategy for
the retail business, focused
on building a solid, loyal
client base. We heard more
of what we have heard
before, which is comforting
to us.’
– Rated analyst
‘Your rest of Africa strategy
is sensible – I like the
approach.’
– International investor
‘Strong management team,
I think one of the best in
emerging-market banks.’
– International investor
‘Easily one of the best
discussions of banking
culture I’ve had.
Professional and
realistic management.
One we watch closely.’
– International investor
‘Key issues are to
understand how the credit
loss ratio progresses from
here and the health of the
consumer.’
– Local investor
why do
we engage
wIth our
shareholders
and the
Investment
communIty?
To provide relevant and timeous
information on our strategy,
prospects and financial
performance so that shareholders
and the investment community
can fairly value Nedbank Group,
and rating agencies can assign
appropriate bank credit ratings
to Nedbank, and so that
we can manage the
group’s reputational risk.
related
materIal
matters
■ Tough economic conditions
■ Banking relevance amid
consumerism and increased
competition
■ Increased demands on
governance and risk
management
■ Growth opportunities in the
rest of Africa
■ Transformation of society
within planetary boundaries
■ Scarce skills
Understanding
material
matters
14–20
38
deliverinG to
our stakeHolders
MAKING
THINGS HAPPEN
ENSURING A
SUSTAINABLE BUSINESS
INFORMATION TO
OUR SHAREHOLDERS
delIverIng value to our shareholders
Who are our shareholders?
Our stakeholders include the local and international investment community and comprise:
■ 19 832 shareholders
■ Investment funds and potential
retail investors
■ 19 sellside analysts
■ Three credit rating agencies
■ Financial media
nedBank
shareholdIng
top 40
InternatIonal
35%
100%
65%
south afrIca
nedBank
treasury
shares
10%
other
5%
100%
top 40
33%
52%
old mutual
delivering to shareholders in 2013
■ Economic profit R2,1bn, up 39% driven by solid NIR growth, despite challenging
economic environment and prudent provisioning.
■ Total shareholder return of 16%.
■ Total dividend of 895 cents, up 19,0%.
■ Price to net asset value 1,6 times.
■ Rights to 20% in Ecobank Transnational Incorporated.
■ Maintained leadership in transparent reporting.
consistent
strategy; gradual
gains. there is an
indication yet
again of a clear,
all-encompassing
and consistent
strategy for the
retail business,
focused on
building a solid,
loyal client base.
we heard more of
what we have
heard before,
which is
comforting to us.
– Rated financial analyst
39
nedbank Group | INTEGRATED REPORT 2013
dELIvERIng vaLUE to oUR ShaREhoLdERS (continued)
16,0%
TOTAL
SHAREHOLDER
RETURN
19,0%
FULL YEAR
DIVIDEND
INCREASE
17,2%
ROE
(ExCLUDING
GOODWILL)
PERFORMANCE DURING 2013
metric
Return on equity (ROE)
(excluding goodwill)
Growth in diluted headline
earnings per share (HEPS)
Credit loss ratio (CLR)
Non-interest-revenue
(NIR)-to-expense ratio
Efficiency ratio
Common-equity tier 1 capital
adequacy ratio (Basel III)
Economic capital
2013
performance
17,2%
15,0%
1,06%
86,4%
55,2%
12,5%
medium-to-long-term targets
5% above cost of ordinary
shareholders’ equity
2014
outlook
Below target
≥ consumer price index + growth domestic
product (GDP) growth + 5%
≥ consumer price index
+ GDP growth
Between 0,8% and 1,2% of
average banking advances
Meet target, improving
slightly on 2013
> 85%
At target
50,0% to 53,0%
Above target
10,5% to 12,5%
At or above the top
end of target
Internal Capital Adequacy Assessment Process (ICAAP):
A debt rating (including 10% capital buffer)
Dividend cover
2,11 times
1,75 to 2,25 times
1,75 to 2,25 times
Shareholders are advised that this guidance is based on organic earnings and our latest macroeconomic outlook, and has not been
reviewed or reported on by the group’s independent auditors.
challenges
durIng 2013
■ Weak global and local economic environment leading to muted advances growth and higher
defaults in certain product categories, most notably unsecured lending and small businesses.
■ Once-off impairment in business banking and unsecured lending environment impacting
impairments in the first half of 2013.
■ Dealing with the complexity and challenges of increased regulation.
■ Strong competition from existing and non-traditional players.
Chief
Financial
Officer’s
Review
100–107
Committed
to good
governance
52–57
GRI 3.1: 4.4,
4.17
40
accolades
In 2013
■ Voted the Financial Times
and The Banker
magazine’s 2013 SA
Bank of the Year
■ Our 2012 integrated
report was awarded
as follows:
¨ Overall winner: 2013
Chartered Secretaries
Southern Africa and
JSE Integrated
Reporting awards
¨ Eighth place: 2013 EY
Africa Excellence in
Integrated Reporting
¨ Second in the Finance
Sector and joint third
overall: 2013 Nkonki
Integrated Reporting
Awards
deliverinG to
our stakeHolders
MAKING
THINGS HAPPEN
ENSURING A
SUSTAINABLE BUSINESS
INFORMATION TO
OUR SHAREHOLDERS
hot topIcs In 2013
Hot topics
our response/resulting developments
impact of a tougher-than-
anticipated economic environment
■ We strengthened our balance sheet
(capital ratios, liquidity and provisioning).
■ Our focused collection processes generated
solid post-writeoff recoveries.
■ We concentrated on selected advances growth
to protect downside risk in line with our
portfolio tilt strategy.
■ We are gaining new clients and improving
cross-sell to grow NIR.
■ We are ensuring disciplined expense growth
at 9% (2012: 8%), while continuing to invest for
the future.
■ We proactively slowed our advances book growth
in certain higher risk areas from H2 2012 and
throughout 2013 through initiatives such as the
tightening of affordability criteria.
■ We have kept our maximum loan size and
tenor the same since 2009.
■ We released a new credit life product, priced
competitively in the market, with increased
benefits.
■ We have the rights to acquire a shareholding of up
to 20% in Ecobank Transnational Incorporated.
This alliance provides network coverage for
Nedbank in Central and West Africa.
■ In addition to our existing presence in five
Southern African Development Community
(SADC) countries, the agreement to acquire an
initial stake of 36,4% of Banco Unico in
Mozambique – with the right to a majority
shareholding over time – will strengthen our
position in SADC and East Africa.
■ We gained 529 000 new clients, achieved higher
cross-sell ratios, increased the number of our ATMs
by 323 and our outlets by five, launched various
innovative client value propositions and products,
and continued proactive risk management while
strengthening balance sheet provisioning (see the
Supplementary Operational Overview information
online for more details on Nedbank Retail).
Health of the consumer and
developments in the personal-
loans industry
reaching into the rest of africa
in a value-creating, risk-
mitigating manner
progress in nedbank retail’s
positioning
focus areas
for 2014
■ Deliver on our strategic focus areas (see page 21) and
make progress towards medium-to-long-term financial
targets.
Our 2014
strategic
focus areas
21
■ Ongoing improvement in quality of investor
engagements and financial reporting disclosure.
■ Introduction of a corporate governance roadshow to
deepen stakeholder engagement.
41
nedbank Group | INTEGRATED REPORT 2013
REguLATORS
partnering With
our regulators
regular and open communication with regulators ensures that nedbank
group is seen to be transparent in its dealings with them, thereby instilling
trust in the nedbank brand and in risk management in the group.
Basel III
IMPLEMENTED
1 JANUARY 2013
12,5%
COMMON-EQUITY
TIER 1 ACHIEVED
31 DECEMBER 2013
related
materIal
matters
■ Tough economic conditions
■ Banking relevance amid
consumerism and increased
competition
■ Increased demands on
governance and risk
management
■ Growth opportunities in the
rest of Africa
■ Transformation of society
within planetary boundaries
■ Scarce skills
PERFORMANCE DURING 2013
The Enterprisewide Risk Management Framework (ERMF), which is fully aligned
with regulatory developments, was maintained.
Following industry concerns of regulators about SA banks’ exposure to unsecured
lending, our credit loss ratio of 1,06% was in line with that of 2012 and represented
an improvement on the 1,31% reported in June 2013. Defaulted advances decreased
by 9,4%.
Regulatory compliance ensured strong capital adequacy levels supported by internal
stress-testing results.
Sound implementation and ongoing enhancement of the Advance Measurement
Approach (AMA) for operational risk management were maintained and similarly the
Internal Model Approach (IMA) for market risk continued to meet the regulators’
requirements.
In line with international and local trends, Nedbank observed an increase in
regulatory scrutiny and inspections, which highlighted areas where administrative
regulatory controls can be strengthened.
All regulatory reviews were attended to with significant attention to detail,
professionalism and prompt reaction to matters raised.
Compliance and regulatory risk has become increasingly significant given the more
stringent regulatory environment in which Nedbank operates. The group sought to
achieve compliance with applicable local and international laws, regulations and
supervisory requirements, guided by an established comprehensive set of board-
approved policies, procedures and governance structures.
We engaged proactively with the South African Police Service and other crime
prevention initiatives. The redesigning of our physical security systems at our branches
and offices allowed us to save an amount of R36,5m in operational costs.
Although we have experienced a decrease in the number of fraud cases (6 026 in 2013,
down from 8 139 in 2012), the overall value of these cases has increased. The number
of internal fraud cases has also decreased, evidence that preventing fraud rather than
dealing with the consequences is a more effective strategy. As part of Nedbank’s
recruitment process, integrity checks are conducted on all potential staffmembers.
With regard to industry requirements by the regulators, we have commenced
benchmarking our risk management performance against that of other banks and
against feedback from the South African Reserve Bank (SARB). No issues were raised
on our Internal Capital Adequacy Assessment Process (ICAAP) by SARB.
Given the high levels of corruption currently experienced in SA we added our anti-
corruption interventions as a key performance indicator that is externally assured.
This was done to give an extra level of assurance to our stakeholders that our actions in
this regard are robust and that we do not contribute to this negative cycle. In 2013 all
(100% ) of our operations underwent corruption screening without any material
concerns/issues being raised.
Understanding
material
matters
14–20
42
GRI 3.1: 4.17
Worldclass
at
managing
risk
130–137
deliverinG to
our stakeHolders
MAKING
THINGS HAPPEN
ENSURING A
SUSTAINABLE BUSINESS
INFORMATION TO
OUR SHAREHOLDERS
CHALLENGES DURING 2013
Industry concerns that resulted in our reducing our exposure to unsecured lending.
Continued changes to regulations, which involve updating of our systems and processes to meet these requirements.
The growing need for effective controls and procedures to enhance all aspects of regulatory compliance, especially
as far as combating money laundering and the financing of terrorist activities is concerned.
Increased oversight of all aspects of regulatory compliance.
hot topIcs In 2013
Hot topics
our response/resulting developments
implementation and impact of
basel iii regulations relating to
banks
increased focus on consumer
protection, such as twin peaks
regulation, the consumer
protection act and the protection
of personal information act
solvency assessment and
management (sam) regime for
the sa insurance sector
■ We achieved compliance with Basel III on 1 January 2013.
■ We are well placed to comply with increased capital and liquidity
requirements when these are required in future years. Net stable
funding ratio compliance remains a challenge in SA.
■ We are well on track with our preparation for the new regulatory
regime of Twin Peaks, the Consumer Protection Act and the Protection
of Personal Information Act.
■ Nedgroup Insurance remains well capitalised and is on track to
implement SAM.
unsecured lending
■ We continued to implement our policy of responsible lending and
rest of africa strategy
money-laundering, terrorist-
financing and sanctions
risk management
resolution and recovery
planning
focus areas
for 2014
reduced our market share proactively.
■ We have adopted a risk-mitigated, client-centred, capital-efficient,
longer-term strategic approach that has started to demonstrate
benefits (see the information on our Africa operations on page 69).
■ We have invested significantly in IT and people resourcing to comply
with the more stringent anti-money-laundering regulation and to
combat terrorist-financing activities, with more to be done.
■ We maintain resilient business continuity management processes.
International and local regulatory reform (in particular Basel III and Twin
Peaks) has materially increased capital levels and liquidity costs, and is
changing business models internationally. Regulatory risk remains high, but
there is now less uncertainty because Basel III is substantially finalised by
Bank for International Settlements and SARB, while Twin Peaks is expected
to be finalised in 2014 with an ongoing emphasis on consumer protection. To
meet the stringent requirements of all regulators in full, Nedbank Group will:
■ maintain good, regular and transparent relationships with all regulators; and
■ ensure compliance with all legal and regulatory requirements.
A comprehensive risk strategy is in place and forms an integrated component
of the group’s business plan. The salient features include continuing to
evolve the strong risk culture, the ERMF, risk and balance sheet management
and the building of worldclass risk management.
Rest of
Africa
69
43
nedbank Group | INTEGRATED REPORT 2013
COMMuNITIES
leading in the
Communities We serve
level 2P
BBBEE
RATING
38%
RENEWABLE-ENERGY
FUNDING FOR REIPPPP
100%
DISCLOSURE:
SA CARBON
PROJECT
related
materIal
matters
■ Tough economic conditions
■ Transformation of society
within planetary boundaries
■ Scarce skills
Understanding
material
matters
14–20
Building a
sustainable
bank
82–97
GRI 3.1: 4.17
44
PERFORMANCE DURING 2013
2013 objective
making things happen in 2013
leading as a ‘Caring bank’
be a truly sa bank:
■ socioeconomic
development
■ Our 2013 socioeconomic development spend was
R89m, in excess of the 0,7% of the SA NPAT FSC
requirement (2012: R95m). This supported
585 development projects and initiatives, with
more than 135 000 beneficiaries.
■ Altogether 82% of the total cost of external
bursaries we awarded went to 132 black students
(2012: 203), of which 68 (51%) were women.
■ access to finance
■ More than 54 000 clients and other stakeholders
■ lending to enable
healthcare, housing
and education,
enterprise
development (ed) and
community upliftment
■ economic
empowerment
■ preferential
procurement
delivering on
transformation
commitment
were directly impacted by our consumer
education programmes.
■ In 2013 Nedbank Business Banking granted R1,3bn
in black small-and-medium-enterprise (SME)
loans to 2 972 beneficiaries.
■ Nedbank extended more than R7,3bn in funding
for transformational infrastructure, black SME
financing, black agriculture financing and
affordable housing in 2013.
■ 78% of our 2013 procurement spend was
on locally sourced products and services
(2012: 73%).
■ Black-owned supplier spend increased by 4%
year on year.
■ Nedbank was recognised as the most transformed
of the JSE Top 100 listed companies in the 2013
Mail & Guardian Most Empowered Companies
survey done in partnership with Empowerdex.
■ Our progressive transformation initiatives have
ensured that we maintained our level 2 broad-
based black economic empowerment (BBBEE)
rating for the fifth consecutive year. Our BBBEE
rating for the past four years was calculated under
the Codes of Good Practice (dti Codes) and for
the first time this year was calculated in
accordance with the Financial Sector Code (FSC).
deliverinG to
our stakeHolders
MAKING
THINGS HAPPEN
ENSURING A
SUSTAINABLE BUSINESS
INFORMATION TO
OUR SHAREHOLDERS
PERFORMANCE DURING 2013
2013 objective
making things happen in 2013
leading as a ‘green bank’
manage social and
environmental impacts
of our lending
■ We continued to refine and implement our Social and Environmental
Management System (SEMS). Credit policies within our Business Banking,
Wealth, Corporate and Capital clusters were enhanced to include a focused
approach to high-impact industries to ensure that the related social and
environment risks are mitigated.
accelerate relevant
product and service
offering
manage our carbon
emissions
contribute to resource
conservation
■ Altogether 15 (2012:15) Nedbank Capital transactions that comply with the
Equator Principles (per risk category) had additional drawdowns in 2013.
■ We developed Fair Share 2030, a business strategy that provides a longer-term
perspective and a wider lens to identify client needs and develop appropriate
business solutions. We developed a number of pilot products and projects that
will form the foundation of this work and these will be further refined and
evolved in 2014 for rollout in 2015.
■ We were involved in all three rounds of the Renewable Energy Independent
Power Producer Procurement Programme (REIPPPP), effectively funding and
supporting projects that will deliver 1,486 MW or 38% of the total renewable-
energy capacity allocated by REIPPPP since inception.
■ Since the inception of the Nedbank Green Savings Bond R3,6bn has been
invested in it. Altogether R2,7bn of this flowed in during 2013
(see page 84 of the Sustainability Development Performance Review).
■ Nedbank Affinity donations grew from R20,9m in 2012 to R27,8m in 2013, with
support given to nearly 1 000 social and environmental projects across SA
(excluding the projects supported by the Nelson Mandela Children’s Fund).
Since the inception of the four Nedbank affinities, donations of more than
R225m have been made to the respective trusts supported by them.
■ We maintained our carbon-neutral status for the fifth consecutive year.
■ We decreased our total greenhouse gas (GHG) emissions by 2,18% in 2013.
■ We again participated in the SA Carbon Disclosure Project Index and were one
of only two participants to achieve a disclosure score of 100%.
■ Nedbank occupies three Green Star SA-rated buildings with another two
planned for 2014. To date, Nedbank Corporate Property Finance has financed
eight Green Star SA-rated buildings, making Nedbank the leader in green
building finance.
■ Electricity usage declined by 2,63% per fulltime employee (FTE) and by 1,44%
based on total floor space.
■ Overall water consumption on our campus sites increased marginally as a result
of the consolidation of employees and organic growth. However, we continued
our investment in water security through the WWF Water Balance programme.
The year 2013 was the third in our five-year R9m pledge to support this vital
water conservation programme (see page 90 of this report).
■ Our support of the WWF-SA Sustainable Agriculture programme encourages
reduction of energy, water and other resource-intensive inputs in the SA
agriculture sector.
■ We launched our Green Living Guide, which is aimed at encouraging all South
Africans to adopt more sustainable lifestyles and enjoy the associated
economic, social and environmental benefits.
Fair Share
2030
22–23
Refer to
84
Transfor-
mation
Report
Sustainable
Develop-
ment
Review
Refer to
90
45
nedbank Group | INTEGRATED REPORT 2013
LEadIng In thE CommUnItIES wE SERvE (continued)
alIgnIng wIth fInancIal sector
code-Based reportIng
Our progressive transformation initiatives have ensured that we maintained our level 2 broad-based black economic
empowerment (BBBEE) rating for the fifth consecutive year.
For the past four years our broad-based black economic empowerment (BBBEE) rating was calculated under the
Codes of Good Practice (dti Codes) and for the first time it was calculated in accordance with the Financial Sector
Code (FSC). Because of the unique position that financial institutions hold in the development of SA, two new elements
have been introduced into the FSC, which had been promulgated in November 2012. These include empowerment
financing and access to financial services.
The year 2013 brought with it the latest phase of the BBBEE framework in the form of the revised Codes of Good
Practice, which prescribe goals of a transformational environment that is progressively more demanding.
These changes symbolise a new beginning in the reorientation of the Transformation Policy to address the issue of
fronting and focus more on productive BBBEE and the growth of black entrepreneurs through enterprise and supplier
development elements.
We seek to ensure that existing and new initiatives build on our current successes to advance our transformation
journey.
Financial sector code
possible points december 2013
14 + 3 bonus
8 + 1 bonus
15 + 3 bonus
10
16
15
5
3
14
100 + 7 bonus
16,92
6,91
11,29
9,21
14,56
13,86
5,00
3,00
10,47
91,21
P
2
Transformation
Report
Supplementary
information:
Sustainable
Development
Review
element
ownership
management control
employment equity
skills development
procurement
empowerment financing
enterprise development
socioeconomic development
access to financial services
total
bbbee level
46
deliverinG to
our stakeHolders
MAKING
THINGS HAPPEN
ENSURING A
SUSTAINABLE BUSINESS
INFORMATION TO
OUR SHAREHOLDERS
hot topIcs In 2013
Hot topics
scarce skills
Funding of energy-
related projects
our response/resulting developments
■ We have implemented diverse training and development
programmes to give our employees the skills necessary for
them to meet client needs.
■ We further invested in graduate and bursary programmes as
well as learnerships – all for the purpose of developing a
talent pipeline for our own business as well as contributing to
the overall SA skills pool.
■ Nedbank proactively responding to the regulatory and policy
developments with regard to the SA energy mix. These
developments will include the Integrated Energy Plan and the
Integrated Resource Plan. We are committed to providing
funding to ensure a secure energy future for SA, with
cognisance given to the need for reducing carbon-intensive
energy generation.
trust in the
financial sector
During 2013 we paid special attention to:
■ Driving ethical behaviour through enhanced ethical
awareness training for staff.
■ Ensuring correct financial advice for clients through well-
qualified staff who comply with the Financial Advisory and
Intermediary Services Act.
■ Protecting client information through stringent application of
the Protection of Personal Information Act and worldclass
online security.
■ We acknowledge that the number of applications we receive
far outweigh the available funds. The Nedbank Foundation
follows a stringent funding process to ensure the prudent
allocation of our CSI investment.
■ Guided by our long-term goals and Fair Share 2030 response,
we are committed to collaborating with businesses that
innovate in the environmental and social spheres.
The economic sustainability of these businesses is
equally important and remains key to our investment and
partnering decisions.
access to corporate
social investment
(csi) funding
Funding of green
innovations/
companies
accolades
In 2013
In 2013 we received a
number of awards that
recognised our efforts in
leading at sustainability in
the communities we serve
and impact. While we do
not approach sustainability
for the purpose of receiving
accolades, recognition
serves as external
affirmation of the validity
and effectiveness of the
work we are doing. We are
therefore proud of having
been awarded the following:
■ Corporate Social
Investment Leadership
Award: Sunday Times
Top 100 Companies
■ Socially Responsible
Bank Award:
African Banker Awards
■ 2013 Transformation
Champion of the Year:
Black Business Quarterly
(BBQ) Awards
■ 100% disclosure score:
SA Carbon Disclosure
Project Index 2013
■ Natural Capital
Decoupling Leader on the
Natural Capital Leaders
Index 2013
focus areas for 2014
objective
target
integrate sustainability
initiatives and considerations
into all business activities.
Continue the integration of sustainability into a long-term strategy and implementation
of Fair Share 2030 (see page 22–23).
Accelerate development of sustainable products and services.
Enhance and expand responsible lending and investment practices.
pursue carbon awareness,
measurement and reduction
and maintain our carbon-
neutral status.
Reduce carbon footprint through the pursuit of clearly defined electricity, paper, waste and
business travel reduction targets and ongoing recycling initiatives in support of our journey to
combat climate change.
Maintain carbon neutrality despite tough economic conditions, with a simultaneous increase
in the scope of our carbon measurements.
continue to deliver on
transformation as a vital
component of realising one
of our aspirations, which is to
be a bank for all south
africans.
Maintain level 2 BBBEE rating as measured under the FSC, including the two additional
sector-specific elements, which are empowerment financing and access to financial services.
Participate in an industry realignment process through Banking Association of South Africa
(BASA) and the FSC Council.
Continue to focus on enhancing and extending access to financial services for all.
Maintain growth in the representation of black women at Nedbank, especially at senior
management level.
Achieve a greater impact from our socioeconomic development spend and build stronger
partnerships in this area.
47
ENSURING A
SUSTAINABLE
BUSINESS
Chairman’s Review:
A sustainable future for all 48
Committed to good
governance:
Report from Group
Transformation, Social
and Ethics Committee
Chairman
Chief Executive’s Review:
Delivering sustainably to
all our stakeholders
Growing our franchises
52
58
62
68
Nedbank Capital
Nedbank Corporate
Nedbank Retail and
Nedbank Business Banking
Nedbank Wealth
Established leadership teams:
Board of directors
Group Executive
Committee
Cluster management
72
76
80
Building a sustainable bank
82
Chief Financial Officer’s Review:
Our financial performance
in 2013
100
Our summarised
five-year track record
Responsibility of
our directors
Certification from our
Company Secretary
Report from our
Audit Committee
Report from our directors
Report from
independent auditors
Summarised annual
financial statements
Worldclass at
managing risk
Reporting back on
remuneration
108
109
109
110
114
118
119
130
138
173
Validating our
sustainability journey
Incentive schemes
for our people
98
A SUSTAINABLE FUTURE FOR ALL
CHAIRMAN’S REVIEW
A strong and sustainable
economy with higher levels of
employment occurs when private
enterprise is strong and works in
harmony with government,
creating the enabling conditions
under which business can flourish.
We are committed to playing an
active role in facilitating the
building of a thriving nation.
Dr Reuel Khoza
Non-executive
Chairman
48
Committed
to good
governance
52–57
GRI 3.1: 1.1
Twenty years of democracy
Reflecting on the first 20 years of democracy in SA provides an
opportunity to review the country’s achievements and contemplate
the next two decades. Change is often incremental, and on a year-
by-year basis the cumulative effects are often overlooked. Looking
back to 1994 we can see just how deeply our society and our
economy have changed. In many areas our country is admired and
respected. Even in its remotest areas the great majority of the
population now has access to electricity, water and sanitation.
Living standards have improved materially and the black middle
class has become a significant component of our economy.
Expansion of access to the monthly social grant has provided a
degree of upliftment for the poor, with more than 16m people
benefiting. Our public service and private sector have transformed
and great progress has been made relative to the enormity of the
challenges inherited in 1994. We score at or near the top of
the rankings, including those of the World Economic Forum, for the
quality of our corporate governance, the strength of our institutions,
such as the stock exchange, and the soundness of our banks.
Because SA has been embraced into the global economy and is
able to participate in it fully, the private sector has been given many
opportunities to grow and strengthen its abilities. This was enabled
by government’s market-based approach, disciplined fiscal policies,
protection of property rights, the gradual reduction of exchange
controls and the lowering of trade barriers that helped attract an
investment grade sovereign rating from Moody’s as early as 1994.
These achievements have been remarkable given the massive
challenges that needed to be addressed at the dawn of our
democracy in 1994. Yet much remains to be done in areas where
progress has been frustratingly slow. One key area is education,
where many children never reach matric, and the majority of those
who do, pass at a level that does not position them for growth and
readiness for the world of work. Our youth are badly equipped for
today’s labour market and this has contributed to our recording
among the world’s highest levels of unemployment over a sustained
period. In addition, a heavily regulated labour market keeps many
unemployed. In recent years the business and
investment
environment has also become more uncertain and less supportive
of expansion. Infrastructure shortfalls and policy uncertainty have
contributed to these challenges. It is imperative that we imbue
ourselves with moral leadership and wisdom for the public and
private sectors. I strongly believe that leadership in these sectors
should work together constructively to make a positive contribution
to the creation of a better life for all.
When we reflect on Nedbank Group’s journey since 1994,
it is clear that we have had our own successes and challenges. We
have grown organically as well as through various mergers and
NEDBANK GROUP | INTEGRATED REPORT 2013 R107,2bn
MARKET
CAPITALISATION
(2012: R95,4bn)
16%
TOTAL
SHAREHOLdER
RETURN
LEVEL 2
BEE RATING
FIFTH YEAR
IN A ROW
acquisitions. We had a difficult period, just after the start of the
new millennium, that culminated in a rights issue in 2003 to
strengthen the capital base of the group. Since then we have
developed into one of the strongest financial services participants
in the SA economy. We are making significant contributions to all
our stakeholders, thereby helping to make SA a better place to live
in. As an employer we created an additional 13 500 jobs, and we
now have over 30 000 employees in total. At the same time,
we embrace transformation and we have been one of the top three
most transformed large companies on the JSE for the past three
years. Since 2004 we have spent R1,5bn (approximately 70% of
the group spend) on skills development for our black employees.
Through our banking activities we granted over R570bn in loans to
clients. We expanded our presence to service an additional 10 000
new areas and suburbs, particularly in peri-urban areas, and added
more than 2 000 new ATMs to make banking more accessible and
convenient. Nedbank is a bank for all, with more than 3m new retail
and small-and-medium-enterprise (SME) clients having chosen to
bank with us since 2004. Many of these clients are new to the
formal banking system and we now service over 6,7m clients
in total.
In 2005 we embraced broad-based black economic empowerment
(BBBEE) and developed a leadership position. Our innovative BEE
transaction benefited more than 500 000 black South Africans
directly and/or indirectly. The net value of our Eyethu scheme, with
more than 47 000 participants, has grown by more than R6,7bn,
with R2,3bn having already accrued free of any debt to these
shareholders. In addition, over R747m has been paid out in
dividends to date.
As an active corporate citizen we have spent in excess of R644m
on socioeconomic development projects since 2004. We assisted
the communities in which we operate with sustainable and viable
projects that focus on education, community development,
health, economic development and volunteerism. Since 1994 the
Nedbank Affinity Programme has contributed more than R200m
to almost 1 000 projects in the areas of arts and culture, sports
development, helping underprivileged children and environmental
conservation. A total of 1,2m clients support these affinities and our
primary beneficiaries have been the Nelson Mandela Children’s
Fund and the World Wide Fund for Nature (WWF).
We also marked, with great sadness, the passing of the founding
father of our democracy, Mr Nelson Rolihlahla Mandela, in 2013.
Tata Madiba represented universal virtues that unite us all as
human beings the world over: moral authority and probity,
resilience, conviction, moderation, compassion, grace, courage,
humility and wisdom. At Nedbank we seek to support Madiba’s
honourable legacy through a shared vision to champion the rights
of children. We will continue our relationship with the Nelson
Mandela Children’s Fund, spanning more than 15 years thus far,
through the Nedbank Children’s Affinity. Since the launch of
the Children’s Affinity, Nedbank has donated more than R50m to
the Nelson Mandela Children’s Fund.
Creating a desirable future
The global economic environment over the past 20 years has been
very beneficial for SA. It included rising commodity prices, a strong
demand for exports and large capital inflows reducing the cost of
capital, thereby assisting investment. This was the case especially
in the period before the global financial crisis in 2008 and for a
short period thereafter as the world began to recover from
recession. Globally, financial institutions in particular have focused
on addressing their financial strength and a return to traditional
banking activities. The global financial system is in a better place
today, but with much still to be done.
SA banks are strong and the industry is rated the third most sound
in the 2013–2014 World Economic Forum Global Competitiveness
Report. Regulatory oversight is worldclass. Nedbank’s strategic
focus areas of repositioning Nedbank Retail, non-interest revenue
growth and portfolio tilt have ensured that we have substantially
strengthened our franchise. We also lowered our exposure to the
macroeconomic cycle through selected growth in higher-risk
products such as unsecured lending, more prudent provisioning,
levels of sustainable
a stronger balance sheet and higher
transactional income.
It is very concerning that the global environment has been under
stress for the past five years, which has culminated in significantly
intensified pressure on emerging-market currencies as investors
struggle to come to terms with changes in US monetary policy.
The growth environment that attracted
interest
towards developing economies is still present and will reassert
itself as the middle class grows. Africa in particular faces a bright
future where better economic policies, greater regional integration,
more open economies, reduced debt burdens, increased investor
interest and massive resources will keep many economies on a
strong growth trajectory. SA companies are already taking
advantage of the many opportunities to the north, and our
government
is encouraging greater regional cooperation to
unblock borders and boost infrastructure.
investment
Expansion into the rest of Africa is a great longer-term opportunity.
Our vision, to be Africa’s most admired bank, reflects our intention
to unlock this opportunity while managing the higher risk that
typifies earlier-stage economies. Nedbank’s vision aligns with the
ambition of our parent company, Old Mutual plc, to become
Africa’s financial services champion.
49
ENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderSdelIVerInG to oUr StaKeholderSmaKInG thInGS haPPen CHAIRMAN’S REVIEW (CONTINUED)
We are positioning ourselves to provide a Pan-African
banking network supporting our clients’ activities on the
continent. It is in this context that we established our alliance
with Ecobank Transnational Incorporated (ETI) in 2008 for
expansion into West and Central Africa, recognising the
benefits that flow from deep local knowledge. The year 2014
is an important one for Nedbank as we are in the 12-month
period during which we have the opportunity to exercise
our rights to acquire 20% in ETI. Regulatory approval for our
acquisition of a strategic stake in Banco Unico has been
received and completion of the transaction is targeted for
end March 2014. This acquisition enhances our plans for
expansion into SADC and East Africa.
A strong and sustainable economy with higher levels of
employment occurs when private enterprise is strong and
works in harmony with government, creating the enabling
conditions under which business can flourish. We are
committed to playing an active role in facilitating the building
of a thriving nation.
We appreciate the fact that our business success is linked to
the upliftment of society at large, as well as the fact that we
can do much to enable this upliftment through our core
business activities. We are committed to playing an active
role in building a thriving nation. In 2012 Nedbank developed
its long-term vision for SA, describing a country that would
be flourishing by 2030 and that would be a vibrant place to
live and work, having overcome a series of pressing economic,
social and environmental challenges. We worked with many
experts, including those linked to the development of the
National Planning Commission’s Diagnostic Report, to
provide a clear understanding of our country’s potential.
The 2030 goals are aligned with the National Development
Plan (NDP): they were developed independently but in
parallel and remain firmly aligned with it in spirit and
objective, and they are more than just a statement of
ambition. They provide a telescope that enhances our ability
to identify future business opportunities and risks. We are
responding through a strategic initiative called Fair Share
2030, challenging ourselves to capture new business
opportunities by taking a non-conventional approach to
lending on a scale that is appropriate to our market share.
Leading by example
This year I share with stakeholders more of the Nedbank
board’s deliberations and challenges, both in the year gone
by and looking forward. In addition I will lead our first board
governance roadshow in 2014 to engage proactively with
our shareholders and other stakeholders, to share our
philosophies and thinking and to receive valuable input
from them.
Awareness around governance matters has increased since
the global financial crisis, with unsound practices exposed
and with regulatory intervention more strict. As a board we
take governance, compliance and ethics very seriously – they
underpin our deliberations and decisionmaking and align us
with the spirit and guidelines of King III. We are continuously
learning and challenging ourselves to strengthen our
governance capabilities and recognise that, while much has
been achieved, we must drive the organisation to raise its
standards further in our aspiration to be worldclass at
managing risk. Nedbank believes that the development of a
unique corporate culture
is an enduring competitive
advantage. For more than a decade Nedbank has invested in
personal-mastery and team-effectiveness programmes.
50
This is underpinned by the recognition that a values-based
approach in leading the organisation is imperative if we are
to safeguard the integrity of the organisation and position it
appropriately in a rapidly transforming environment.
Our board is well diversified and balanced, and we seek to
continue building diversity in skills and thinking. We were
pleased to welcome David Adomakoh in February 2014 as an
independent non-executive director of Nedbank Group and
Nedbank Ltd. We announced the departure of two of our
directors, Don Hope and Thenjiwe Chikane, during 2013 and
express our sincere appreciation to them for the many years
of diligent service and insight they provided.
A number of directors will be retiring in 2015 in line with our
board continuity programme. In anticipation, the board
has instituted a formal succession planning process and
identified a broad spectrum of specific skills and experience
it must have within its ranks. The process is robust and
constructive in identifying the capabilities that potential new
boardmembers should possess to complement those of the
current members. In line with our strategy we will continue
to bolster the skills of the board in areas such as banking,
mining and
technology (IT),
innovation as well as the rest of Africa.
information
resources,
in
the
integrated report contains detailed reporting on
The
governance
transformation and
risk, audit,
remuneration sections. In addition to this, I summarise in
the following paragraphs some deliberations of each of the
board subcommittees.
In 2013 the Group Transformation, Social and Ethics
Committee focused on monitoring regulatory developments
relating to the BBBEE Act and the Financial Sector Charter
Codes. It also reviewed management’s effort to improve
BBBEE performance and maintain our carbon neutrality
despite increases in the scope of our carbon measurement.
Lastly, the committee guided the strategic development
of Fair Share 2030 in response to a set of long-term goals
for a thriving SA.
implementing the group’s
The Group Information Technology Committee focused on
reviewing and
IT strategy,
interrogating key technology trends that have a significant
impact on banking. These trends will become increasingly
prevalent over the next few years and include social media,
mobile banking and cybersecurity. Production stability was
monitored and it is pleasing that the group recorded the best
system uptime levels in recent history. The committee
approved Project 4321, which will consolidate the group’s
finance, human resources and procurement systems and
continue to be a focus over the next few years.
The Group Audit Committee was satisfied with the adequacy
and efficiency of the internal control systems, accounting
practices, information systems and assurance processes
applied within the group. We are particularly pleased with
the ongoing recognition received for our financial and
integrated reporting from independent observers such as the
JSE, Chartered Secretaries Southern Africa, Nkonki and EY.
We will continue to ensure that the committee is exercising
its assurance oversight role effectively in relation to financial
reporting, internal controls, internal audit, and our relationship
with the external auditors, as well as to oversee the finance
transformation project. More detailed reporting can be found
on pages 110 to 113 of this integrated report.
Report
from Group
Transfor-
mation,
Social and
Ethics
Committee
Chairman
58–59
Report
from our
Audit
Committee
110–113
NEDBANK GROUP | INTEGRATED REPORT 2013 increased regulatory
Given
intervention, our focus on
governance and the emergence of risks in a tougher
macroeconomic environment, the Group Risk and Capital
Management Committee provided oversight on various
risks. These included capital and liquidity management,
compliance with various frameworks and requirements,
regulatory compliance with an increased focus on the
prevention of money laundering and financing of terrorist
activities, and actions to manage and reduce the onslaught of
fraud. details are discussed on page 134 to 135 of this
integrated report. These focus areas along with the group’s
expansion into the rest of Africa will be closely monitored in
the coming year.
The primary focus for the Group Credit Committee was on
reducing the group’s appetite for unsecured lending in the
rapidly deteriorating consumer credit profile. In addition, it
monitored stress in the middle-market business banking
environment and engaged management on its level of
comfort in our mining, automotive and agricultural credit
exposures due to protracted strikes in these sectors during
the year. Our construction industry exposures were also
reviewed. The uncertainty in the global economy and
difficult credit environment will be of considerable
importance in 2014.
remuneration. Given
Remuneration, and specifically the remuneration of
executives, continues to receive considerable attention from
stakeholders. This had led globally to a significant increase
in the amount of regulation. In some cases there has
legislation regarding the delivery and disclosure
been
increasingly complex
this
of
environment, the Group Remuneration Committee carries
a key responsibility to ensure that remuneration policies
and practices
in the group enable the
attraction and retention of key talent. It also aims to mitigate
against imprudence and inappropriate risk-taking, and to
enable sustainability. These remuneration policies and
practices must be applied within the context of efforts
ensuring that our core reward-for-performance principles are
adhered to.
implemented
suite while
These factors featured prominently
in the scope of
the Remuneration Committee’s work during 2013. The
committee reviewed the competitiveness of the Nedbank
remaining attuned and
remuneration
appropriately responsive to the changing governance
environment. Where necessary, changes were made to our
practices (these changes are set out in detail in the
Remuneration Report on pages 138 to 140 of this integrated
report). Our remuneration policies and practices foster an
appropriately long-term focus, and growth in remuneration
should be reflective of the overall performance of the
business, resulting in an appropriate sharing of value between
the various stakeholders in the group. This work will continue
through 2014, with a broader focus on the critical issues
of performance management, the competitiveness of our
employee benefit suite, and further enhancements in
our stakeholder engagement.
Delivering value to shareholders
In 2013 Nedbank Group again delivered value to our
shareholders, with a total shareholder return of 16%.
Our share price increased 11,7%, making us the second-best
performer among the big four banks. We declared a total
dividend of 895 cents, up 19% ahead of headline earnings-
per-share growth of 14,9%. despite a volatile and uncertain
environment, we continue to possess qualities that we
believe are attractive to investors. These include:
■ competitive franchises that create value and enhance
brand value because of:
¨ our leadership in corporate banking, and the fact that
we hold the largest market share in commercial
property finance and generate good returns
underpinned by an excellent risk profile;
¨ integrated, lower-risk investment banking with strong
growth prospects resulting from government’s
infrastructure plans and growth on the continent;
¨ strong, differentiated and decentralised business
banking;
¨ innovative, client-centred retail banking, with more
clients choosing to bank with Nedbank; and
¨ fast-growing wealth, insurance and asset management
business with high return on equity;
■ a client-centred, risk-mitigated, capital-efficient strategy
in the rest of Africa over the long term, with the largest
Pan-African geographical footprint;
■ continued delivery on a growth-oriented strategy;
■ a strong balance sheet and defensive investment given
the stable banking sector in SA; and
■ a stable and experienced management team, a
differentiated, values-based culture and high levels of
staff morale.
Looking forward
The outlook for the environment remains volatile and
uncertain. We, the board, believe that Nedbank is well
positioned given its strong balance sheet and higher coverage
in 2013. As proved over the past few years, we have a stable
management team and a sustainable growth strategy, and
this will continue to stand us in good stead as more clients
choose to bank with Nedbank.
We have refined our 2014 strategic focus areas (covered in
more detail on page 21) to ensure that we build a sustainable
franchise. This will help Nedbank remain on a growth path,
focus on our clients through innovative solutions and grow in
strategically attractive areas, particularly transactional
banking, while optimising our spend to invest for the future.
The year 2014 is also a key period in which to decide whether
or not we will exercise our right to take up a 20% shareholding
in ETI.
Lastly, we will be finalising key board appointments in the
near future and I look forward to engaging with our major
shareholders during our first governance roadshow.
Appreciation
Thank you to my fellow directors for their contributions,
insights and commitment to the affairs of the group. I am
pleased that we again delivered strongly to all stakeholders
in 2013. We are well prepared for both uncertain times
and the unlocking of growth prospects, and I congratulate
Mike Brown and the Group Executive Committee.
We thank our staff for their contribution as they continually
strive to exceed the expectations of our stakeholders.
To our clients who have chosen Nedbank as their bank of
choice, we thank you for your support on our journey towards
making Nedbank a great place to bank.
Dr reuel J Khoza
Non-executive Chairman
Refer to
134–135
Refer to
21
Refer to
138–140
51
ENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderSdelIVerInG to oUr StaKeholderSmaKInG thInGS haPPen GovernanCe in neDbanK Group
Global banking scandals and high costs associated with them
continue to emphasise the importance of sound governance
in all organisations. They have also highlighted the fact that
many organisations still do not understand that ethical
leadership is crucial to ensure that sound governance prevails
in organisations. despite the Sarbanes-Oxley Act, the
Organisation for Economic Cooperation and development
(OECd) principles, the UK Code of Corporation Governance
and other good governance guidelines, corporates and their
leaders do not all adhere to governance principles. SA has
been fortunate to avoid the repercussions of the global crisis
to some extent. Continuing meticulous management ensures
that Nedbank’s governance is of the highest standard and
these risks are managed.
Fundamental to the Nedbank way of doing things is the
aspiration to apply the King III principles. As required by our
JSE Ltd (the JSE) Listings Requirements, we provide full
disclosure in terms of Nedbank’s King III application. This is
in the supplementary Governance and Ethics Review.
Our aim is to implement the high governance standards
in our SA operations and in all our affiliated entities
across Africa.
Currently, Nedbank Group has 283 affiliated entities.
Included in these entities are the five African subsidiaries:
Nedbank Lesotho, Nedbank Malawi, Nedbank Swaziland,
Nedbank Zimbabwe (MBCA) and Nedbank Namibia.
There has been increased focus in these areas to align
governance processes to the best governance processes
of Nedbank. In some instances, where the rule of law is
stricter in the subsidiary, then that rule would be applicable
in the subsidiary country. Some of these processes are:
■ Aligning the African subsidiaries to the King III
requirements. Nedbank and the rest of Africa are using
the Governance Assessment Instrument of the Institute
of directors to track and implement King III best
practices. Namibia and Zimbabwe adhere to King II as
required by their regulator. However, in principle, they
apply King III.
■ Reviewing and aligning the boards’ and the board
committees’ composition in terms of composition, skill,
diversity, independence and gender representation.
■ Conducting board and board committee evaluations.
■ Reviewing board charters, minutes and committee
functions.
■ Compiling board continuity programmes and
succession plans.
Training is done at board level and 91% of the African
boardmembers have done the GIBS Banking Board
Leadership Programme.
All African subsidiaries have done board evaluations in
2013. Following these evaluations, reports were compiled
for all subsidiaries except Zimbabwe for regulatory reasons.
The subsidiaries based their evaluation questionnaires on
those used at group level, but adapted the questions to suit
their entity’s environment. The questionnaires covered the
following areas:
■ Role and responsibilities of directors.
■ Board committees and structures.
CommitteD
to GooD
GovernanCe
We are committed to good
governance and compliance
with recognised best-practice
codes and legislation. We believe
that our conduct should be
underscored by sound governance
practices that include
transparency and accountability
to all stakeholders, including staff,
clients, regulators, shareholders
and communities.
52
NedbaNk Group | Integrated report 2013 ■ Company Secretariat.
■ Compliance and risk management.
■ Financial and operational reporting.
■ Human Resources.
■ General observations.
The results showed that all the boards were operating
effectively and in accordance with their charters. All
suggestions for improvement included in the evaluation
in each of the
results were based on the ratings
abovementioned areas as well as directors’ comments.
The results were submitted to the company secretary, who
discussed them with the chairman for appropriate action
by the board.
following areas were
The
improvement in the rest of Africa:
identified as
requiring
■ Succession planning.
■ The boards’ interaction with management.
■ The IT expertise of the board.
■ Technical training for directors in risk management,
especially IT risk.
All African subsidiaries have submitted their regulation
39(18) reports and all have stated that sound governance
processes are followed
in support of their boards’
objectives. As part of the onsite visits conducted in the
African countries, we review statements made in their
respective reports for accuracy, validity in governance and
ethics processes that need improvement.
during 2013 Enterprise Governance and Compliance
(EGC) reviewed the top 20 operational subsidiaries of the
Nedbank Group. This included:
■ The major operating board subsidiaries (Rest of Africa,
short-term insurance and stockbroker subsidiaries).
■ The composition of the subsidiary boards for
skills, gender representation and tenure length.
■ The documented processes followed by these boards
in approving changes to the subsidiary boards.
■ The attendance registers of the board meetings for
the subsidiaries.
■ The state of the subsidiary Audit Committees
was checked.
There is a robust governance process to oversee all
283 affiliated companies in the group, and an annual
report is submitted to the board of directors.
King III is applied to all companies in the group.
CompLianCe with KinG iii
We endeavour at all times to apply the principles of King III
to all aspects of our business. during the period under
review the board again indicated that it was satisfied with
the way in which the group applied the recommendations
of King III or put alternative measures in place.
In terms of the JSE Listings Requirements we are required
to provide an explanation of how the King III principles
were applied during the 2013 financial year and, should
these not have been applied, to provide reasons for this and
an indication of alternative measures taken. There are
75 such principles that apply to us and a comprehensive
statement outlining our approach to each is included in
the supplementary governance information available at
nedbankgroup.co.za.
Independence of Chairman
The current Nedbank Group Chairman is not independent
as defined by the governance codes, as he also serves on
the board of the group’s parent company, Old Mutual plc.
For this reason, the position of Lead
Independent
director was created in 2007, and it is currently held by
Malcolm Wyman.
and
deliberated whether
Non-executive directors’ remuneration
The board of directors has considered the King III
the
recommendations
remuneration of non-executive directors should comprise
a base fee and an attendance fee per meeting. The board is
of the view that this requirement is less pertinent to non-
executive directors of Nedbank Group, because of the
greater responsibilities associated with being a director of
a bank and the requirement for boardmembers to provide
input on an ongoing basis, over and above attendance of
board meetings.
The manner in which directors are selected, the internal
discipline and regular independent evaluation continue to
ensure high levels of commitment among boardmembers.
Accordingly, the directors are paid an annual fee for
their services.
Independence of boardmembers
The majority of the Nedbank Group boardmembers are
non-executive directors, and at 31 december 2013 there
were four independent and six non-independent non-
executive directors on our board. The composition of the
board is monitored and discussed by the directors on an
ongoing basis to ensure that boardmembers have the
correct skills and experience, and that the mix of non-
independent non-executive
executive directors and
directors is enhanced.
While the recruitment of additional independent non-
executive directors is progressing, the board believes that
the current composition is sufficiently robust to ensure
that shareholder interests (including minority interests)
are protected.
At 1 January 2014 Tom Boardman was classified as an
independent non-executive director as three financial
years passed since he had been
last employed by
Nedbank Group in an executive capacity. At 21 February
2014 david Adomakoh joined the board as an independent
the
non-executive director. At 28 February 2014
board comprised of:
■ three executive directors;
■ six independent non-executive directors; and
■ five non-executive directors.
King III recommends that board committees should
comprise a majority of non-executive directors, the
majority of whom should be independent. Committees
should also be chaired by independent non-executive
directors. At 31 december 2013 Nedbank Group
board committees did not comply with King III in the
following respects:
Chairman’s
Review
48–51
GRI 3.1:
4.1,
4.2,
4.3,
4.4,
4.6,
4.7,
4.8,
4.9,
4.10
Supplemen-
tary
information:
Governance
and Ethics
Review
53
ENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderSdelIVerInG to oUr StaKeholderSmaKInG thInGS haPPen Committed to good governanCe (CONTINUED)
■ The Group Information Technology Committee (GITCO) was
chaired by a non-executive director who was not independent.
On 1 January 2014 the chairman of the committee,
Tom Boardman, was classified as an independent director.
■ Only non-executive directors are members of the Group
Transformation, Social and Ethics Committee (GTSEC), but
the majority of them were not independent. In addition, the
GTSEC is chaired by a non-executive director who is not
independent. With effect from 1 January 2014, GTSEC
comprised a majority of independent non-executive directors.
■ The Group Credit Committee (GCC) was chaired by a
non-executive director who was not independent. On
1 January 2014 the Chairman of the committee,
Tom Boardman, was classified as an independent director.
While the GCC has a majority of non-executive directors, the
majority of these are not independent non-executive directors.
■ The Group Risk and Capital Management Committee
(GRCMC) is chaired by a non-executive director who is
not independent.
■ The Group directors’ Affairs Committee (dAC) is chaired
by the Chairman of the group who is not independent.
Independent directors are in the minority in terms
of composition.
While compliance with King III is not always achieved, the board
is satisfied that the committees are appropriately constituted
given the expertise and experience of the committee chairmen
and members. This is evidenced in the results of the board and
board committee evaluations that were conducted by an
independent party in 2013.
neDbanK Group boarD oF DireCtors
In line with the recommendations of King III we have a unitary
board structure.
There is no overlap between the roles of the Chairman and the Chief
Executive. The Chairman, Reuel Khoza, leads the board, while the
executive management of the group is the responsibility of the Chief
Executive, Mike Brown. This ensures that no individual has
unrestricted decisionmaking powers. At the same time the board
and executive management work closely together in determining
the strategic objectives of the group.
The board provides for independent and objective input into the
decisionmaking process, thereby ensuring that no single director
holds unfettered decisionmaking powers. during 2013 the board
internally assessed the status of the Nedbank Group independent
non-executive directors and was satisfied
these
boardmembers met the criteria of independent directors in
terms of King III. Independence is debated by the dAC following
detailed analysis of the circumstances of all the independent
non-executive directors.
that
boarD appointments
Board appointments take place according to a formal and
transparent process in line with the board appointment policy.
The entire board is involved in this process, with assistance
provided by the dAC. Appointments to the board are made with
due consideration of the need to ensure that the board comprises
a diverse range of skills, knowledge and expertise and has
the
demographic
representation, a relevant balance of skills and expertise and the
professional and industry knowledge necessary to meet our
strategic objectives. Non-executive directors are given no fixed
term of appointment, although all directors are subject to
retirement by rotation in terms of the company’s memorandum
independence,
appropriate
requisite
54
of incorporation. Reappointment of non-executive directors is
not automatic. Executive directors are subject to six-month
notice periods, but the Chief Executive is subject to a 12-month
notice period. An executive director is required to retire from the
board at age 60, while a non-executive director is required to
retire at age 70.
In terms of our policy, non-executive directors and independent
non-executive directors who have served on the board for longer
than nine years are required to retire from the board at the
following annual general meeting.
Executive directors are discouraged from holding directorships
outside the group.
boarD evaLuations
In the last quarter of 2013, PwC conducted external evaluations
of the full Nedbank Group Ltd Board, including all members, the
Chairman and all board committees. A wide array of matters was
assessed and the following comments were received:
Overall, the questionnaire results and
interviews conducted revealed that the
boardmembers were satisfied that good
governance was generally practised and
that the board functions well in its oversight
and support role.
Based on our work performed, which included
analysis of completed questionnaires and
discussions with the selected boardmembers
– covering the effectiveness of the board at a
particular point in time rather than over a
period of time – the Nedbank board appears
to be supported by the relevant governance
structures and processes, as required by
governance best practice – allowing for the
board to function effectively in discharging
its responsibilities.
The CE’s performance is evaluated according to his performance
scorecard, which is approved annually by the Group Remuneration
Committee (GRC). The feedback from this board evaluation process
contributes to the production of the regulation 39(18) report
addressing the state of our corporate governance.
boarD Committees
The board committee structure is designed to assist the board in the
discharge of its duties and responsibilities. Each board committee
has formal written terms of reference that are reviewed annually.
Certain of the board’s responsibilities are delegated in accordance
with the terms of reference. The board monitors these
responsibilities to ensure effective coverage of, and control over,
the operations of the group. during 2013 the following board
committees operated within Nedbank Group:
NedbaNk Group | Integrated report 2013 ■ The Group Audit Committee
The Group Audit Committee (GAC) assists the board in
its evaluation and review of the adequacy and efficiency
of the internal control systems, accounting practices,
information systems and auditing processes applied
within Nedbank Group, and highlights measures to
enhance the credibility and objectivity of financial
statements and reports prepared.
■ The Group Risk and Capital Management Committee
The Group Risk and Capital Management Committee
(GRCMC) assists the board of directors in evaluating
the adequacy and efficiency of risk policies, procedures,
practices and controls.
■ The Group Remuneration Committee
The Group Remuneration Committee (GRC) is
authorised to approve aggregate adjustments to the
remuneration of employees below Group Exco levels.
The committee also recommends adjustments to the
total remuneration of members of the Nedbank Group
Executive Committee (Group Exco). The board,
following recommendations made by the GRC,
approves each Group Exco member’s total
remuneration. This committee is also charged with
the supervision of the Nedbank Group Employee
Incentive Scheme.
■ The Group Credit Committee
The Group Credit Committee (GCC) approves our
credit philosophy and policies, sets credit limits and
guidelines, confirms procedures to manage, control
and price credit risk, approves the adequacy of interim
and year-end impairments and monitors credit risk
information, processes and disclosure. Apart from
the GCC, the Large-exposure Approval Committee
also approves large credit exposures as required by
banking legislation.
■ The Group Directors’ Affairs Committee
The Group directors’ Affairs Committee (dAC)
considers, monitors and reports to the board on
reputational and compliance risk, compliance with
King III and the corporate governance provisions of
the Banks Act. It also acts as the nominations
committee for board appointments.
■ The Group Information Technology Committee
The Group Information Technology Committee (GITCO)
has broad responsibility for monitoring all issues
pertaining to information technology (IT), both
operational and strategic, and aims to ensure that IT
development spend and investment are aligned with
overall group strategy and direction and that the IT
systems are efficient and effective.
■ The Group Finance and Oversight Committee
The Group Finance and Oversight Committee (GFOC)
has the primary functions of providing a board
discussion forum for the consideration of risks within
the bank, and ensuring that the board and the various
board committees address those risks effectively.
■ The Group Transformation, Social and Ethics Committee
The Group Transformation, Social and Ethics
Committee (GTSEC) focuses on monitoring the
imperative of integrated sustainability within the group,
with specific focus on social and economic
development, good corporate citizenship,
environmental concerns, health and public safety,
stakeholder engagement, labour and employment.
our approaCh to ethiCs
anD human riGhts
A lack of ethical leadership in organisations globally has
caused a number of governance and ethical lapses in
recent years, which have resulted in corporate scandals
and reinforced the need for ethical behaviour to be at the
core of any business. Ethics failures can also impact
financially on the sustainability of a business, as
demonstrated by the recent London Interbank Offered
Rate (LIBOR) scandal which resulted in sanctions and
responsible business should,
significant fines. Any
therefore, have at its core a clear value system, a focus on
sustainability, ethical leadership, and a strong governance
framework
that guides decisionmaking and action.
At Nedbank Group we work tirelessly to ensure that we
have all of these.
Governance of ethics
The board assumes ultimate responsibility
for the
is
company’s ethics performance. This responsibility
delegated to executive management who utilise various
management
this mandate.
These include:
frameworks
fulfil
to
ethics and Corporate accountability Framework
In line with Nedbank Group’s deep Green aspiration to be
a great place to work, a key focus area is to develop a
unique and innovative culture. We believe that ethical
behaviour lies at the heart of such a culture and therefore
have an Ethics and Corporate Accountability Framework in
place. The updated framework was approved by the Group
Exco and the dAC in 2013.
the ethics panel
This panel deals with all tipoffs regarding unethical conduct
and now reports to the GTSEC on its continued efforts
to ensure that independent, objective and fair courses
of action are taken in all instances of unethical behaviour
or actions.
board ethics statement
In line with the King Code of Governance Principle 1.1,
which states that the board should provide effective
leadership on an ethical foundation, Nedbank Group
boardmembers and all subsidiary boardmembers are
required to acknowledge and sign the Board Ethics
Statement (BES) every year to demonstrate their continued
commitment to the Nedbank values and to ethical conduct.
This was done in July 2013.
Code of ethics
doing the right thing is at the heart of our approach to
business. This commitment is encapsulated in the Nedbank
Code of Ethics, to which all employees (including
contractors and temporary employees) are required to
adhere. In May 2013 the Code of Ethics, which is available
on the Nedbank Group website to all stakeholders, was
reviewed against the latest Old Mutual plc Code of
Business Ethics. No material changes were made. We
continue to maintain the highest ethical standards in
carrying out our business activities, and our core values
inform our Code of Ethics to guide and direct all decisions
and actions.
Established
leadership
teams
72–75
GRI
FSSS: FSI,
FS2,
FS4,
FS15
GRI 3.1:
4.11,
HR1,
HR2,
HR3,
HR10,
HR11
Supplemen-
tary
information:
Governance
and Ethics
Review
55
ENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderSdelIVerInG to oUr StaKeholderSmaKInG thInGS haPPen Committed to good governanCe (CONTINUED)
Code of Conduct
The Nedbank Group Code of Conduct expands on the Code of
Ethics. This operational document offers examples of ethical
behaviour to help employees make ethical decisions. The Code
of Conduct was reviewed and updated in 2012 and posted on
the compliance tool in 2013 for all staff to acknowledge.
A total of 93,3% of our employees had completed the Code of
Conduct policy acknowledgement by 31 december 2013. It is
important to note that the acknowledgement includes a set of
questions to demonstrate an understanding of the policy
principles after the staffmember has read and acknowledged
the policy.
Our group’s Supplier Code of Conduct is aligned with the Group
Code of Conduct and supports the protection of human rights
across our supply chain. The principles of the Supplier Code of
Conduct apply to all our suppliers, consultants and contractors.
african subsidiary implementation
Because our strategy focuses on expansion into the rest of Africa,
our Ethics Office implemented the full Nedbank Group ethics
programme within our African subsidiaries from the latter part of
2012 through 2013. Representatives of the Ethics Office have
visited all subsidiaries to review ethics practices and implement
a common set of ethics policies and procedures.
Measurement of ethics
In line with our recognition of the fact that a business cannot
manage what it doesn’t measure, we use a variety of indicators,
surveys and tools to ensure that ethical conduct within Nedbank
remains at the highest possible standard.
nedbank ethics indicator
The Nedbank Ethics Indicator (NEI) results help us to gauge the
effectiveness of our ethics management interventions as well as
the prevailing ethical culture in the organisation. This instrument
also measures ethics risk. The top 20 risks identified in the NEI
are included in business plans and monitored annually.
sa business ethics survey
To benchmark our progress in implementing ethical practices, we
participated in the South African Business Ethics Survey (SABES),
previously the South African Corporate Ethics Indicator or SACEI.
This Ethics Institute of South Africa (Ethics SA) initiative included
15 large and mostly listed organisations in SA, and was based on
the Organisational Ethics Indicator used in 2011.
Our ranking of 11th in the survey indicates that we definitely can
improve, particularly in identified areas of weakness such as
‘tendency to report misconduct’ and ‘experienced satisfaction
with reporting’. To address this the Ethics Office has identified
and taken steps to implement initiatives aimed at raising our
performance in each area of the survey where we performed
below par in 2013. Each business cluster has implemented
improvement plans, and the Ethics Office is monitoring progress.
Additionally, these points have been added to the Nedbank Staff
Survey (NSS), and this will allow us to track the success of our
initiatives annually.
We performed above average in a number of survey measures,
including ‘levels of awareness of ethics policies and processes’,
‘organisational culture’ and ‘observed misconduct’.
‘Overall Nedbank’s efforts to create an ethical culture among
employees have paid off. From the findings it is evident that,
although some gaps were identified, Nedbank has had success
with embedding its ethical values in employees’ behaviour.
We believe that Nedbank will successfully continue on this road.’
SABES commentary
ethics risk assessment
Starting in the fourth quarter of 2013, Ethics SA started
conducting an ethics risk assessment with the aim of providing a
benchmark against which organisations can compare their ethics
risk profile and ensure compliance with King III. The risk
assessment includes the identification of opportunities that we
will build on, and risks that we will manage.
nedbank staff survey
during 2012 we made a significant change to the ethics questions
in the NSS by incorporating our highest-rated risks as identified
by the NEI. Whereas the ethics dimension was the strongest
dimension in previous years, it dropped to third place in 2012 as
a result of the robust change in questions in this dimension.
These risks were also our focus areas for 2013 and the NSS
results showed a promising increase during 2013 as a result of
our continued efforts to improve ethical culture in the group.
DrivinG ethiCaL awareness
Through experience gained in the Ethics Office over the past
eight years, we have realised that we need a variety of tools for
effective awareness creation as our staffmembers respond
differently to methods of learning based on their personalities.
We therefore make use of a formal computer-based policy
acknowledgement tool, face-to-face interaction with staff in
awareness sessions, articles in our group publications, poster
campaigns and film case studies and information pieces on
topical issues that are screened in our branch networks.
Promoting staff awareness
awareness training
In an ongoing effort to raise awareness of the importance of and
the need for ethical behaviour, the Ethics Office performed more
than 90 (2012: 38) training initiatives across our group. There
has been a noticeable increase in queries and reports to the
Ethics Office as a result of this awareness training.
acknowledgement of policies
Our electronic EGC Management System is integral to our ethics
and conduct awareness and education efforts among
staffmembers. The system is used to send out policies for staff to
read and acknowledge and includes a survey to measure the
extent of employees’ understanding of the policy principles.
declarations of outside interests and gifts are also captured on
the system, and these declarations and acknowledgements are
monitored by governance and compliance officers.
56
NedbaNk Group | Integrated report 2013 during 2013 the following data on policy acknowledgements and declarations was collected by the system:
Policy acknowledgements and declarations
Anti-corruption Pledge
Code of Conduct
Code of Ethics
Employee Conduct Pledge
declaration of Secrecy (launched in 2013)
declaration of Outside Interests
Nil Returns (referring to outside interests)
2013
95,3%
93,3%
94,7%
94,6%
95,2%
13,4%
83,4%
2012
91,4%
93,3%
80,1%
85,3%
13,6%
82,6%
Promoting ethics among our suppliers
The Ethics Office has developed an Ethics Responsibility Index (ERI) that has thus far been used in seven tender processes
to assess ethics, governance and human rights aspects of the vendors/suppliers who want to partner with us. These aspects
make up 15% of the tender application assessment, so where businesses do not show effective governance, ethics, human
rights and environmental frameworks, their tender results may be significantly impacted. The Ethics Office also conducts
independent assessments of a number of tender processes, and this has resulted in a saving of more than R850 000 in the
year under review. The Ethics Office is in partnership with the Ethics Institute and deloitte for further development of this
index into a fully fledged industry tool.
Human rights
Nedbank Group upholds the protection of human rights as enshrined in the SA Constitution and specifically the Bill of
Rights. Using the United Nations Global Compact’s (UNGC) 10 principles and the findings of the John Ruggie Report, which
was commissioned by the UNGC, we have developed our own Human Rights Statement. The statement was approved
by the board in 2012 and we developed an implementation plan for our Human Rights in Business Project in 2013.
Full implementation of the project will start in 2014.
In terms of our Human Rights Statement, our corporate responsibility to protect human rights includes:
■ Adherence to global social norms and codes of good practice.
■ An understanding of how human rights impact our business, people management practices, environmental and social
considerations, procurement, the value chain, product development and financial considerations.
■ The implementation of a human rights risk management system.
■ due diligence, which includes an analysis of practices in our own activities as well as those of our stakeholders.
■ The tracking of our performance against global social norms.
■ The provision of grievance mechanisms for both internal and external stakeholders to address issues of concern.
We conduct a human rights compliance assessment every two years to ensure continued adherence to international
standards. during 2013 we also completed a risk assessment according to the John Ruggie Guiding Principles to ensure that
we focus on all improvement areas with the implementation of the project. The Ethics Office recruited an additional ethics
officer, whose main focus will be the implementation of this project.
Seven human-rights-related incidents of misconduct were raised by management in 2013 (2012: 15 incidents), but all were
successfully resolved. In addition, 151 human-rights-related grievances were logged by staff (2012: 84). All of these were
also resolved. The increased number of reports can be attributed to increased awareness on the issue of harassment as well
as the available reporting mechanisms.
Type of incident
Assault
discrimination
Intimidation
Sexual harassment
Victimisation
Total
Disciplinary action
Grievances
2012
n/a
n/a
5
5
5
15
2013
n/a
n/a
5
1
1
7
2012
2013
3
15
n/a
7
59
84
7
21
n/a
6
117
151
Managing
and
optimising
our own
impact
92–97
Supplemen-
tary
information:
Governance
and Ethics
Review
57
ENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderSdelIVerInG to oUr StaKeholderSmaKInG thInGS haPPen COMMITTED TO GOOD GOVERNANCE (CONTINUED)
REPORT FROM GROUP
TRANSFORMATION,
SOCIAL AND ETHICS
COMMITTEE CHAIRMAN
The Group Transformation, Human Resources and
Sustainability Committee, which was established
as a subcommittee of the board during 2005,
was reconstituted in 2012 to form the Group
Transformation, Social and Ethics Committee in
line with the requirements of the Companies
Act 2008, as amended.
Gloria Serobe
Group Transformation,
Social and Ethics
Committee Chairman
The Group Transformation,
Social and Ethics Committee
is an expression of our
commitment to effective and
good governance. In 2014 it
will remain a key enabler in the
achievement of our Deep Green
aspirations as we continue on
our journey to be Africa’s most
admired bank.
58
NEDBANK GROUP | INTEGRATED REPORT 2013 Since then we have complied with the requirements of the
Companies Act 2008 and applied the recommendations of
King III, as we endeavoured to fulfil our transformation,
social and ethics mandates.
The committee comprises three non-executive directors and other
attendees, including experts on each of the disciplines or areas
falling within the mandate of the committee specified in regulation
43(5) of the Companies Act. Meetings are held on a quarterly
basis and a report is submitted to the board after each meeting.
Our focus in 2013
‘scarce skills’ and
In support of the material matters of
‘transformation of society within planetary boundaries’, we have
been mandated to advise, oversee and monitor Nedbank Group’s
activities with regard to social and economic development,
ethics, transformation, sustainability, corporate citizenship,
environmental, health and public safety, consumer relationships,
labour and employment.
In doing so, we have focused on the following:
Governance
■ We have reviewed our board charter and annual work plan to
ensure the strategic and systematic fulfilment of our
identified objectives. The changes incorporated gave more
direction to the functions reporting into the committee,
streamlined reporting into the committee and enhanced the
oversight capabilities of the committee.
■ We have considered the composition, operations and
functions of the committee in an annual committee
evaluation process as part of our ongoing governance review.
The committee was found to be functioning effectively with
appropriate standards of corporate governance being applied.
■ We have ensured that meetings are attended by relevant
members of management who are experts in the areas within
the scope of the committee’s mandate. The regular
attendance by these experts facilitated an effective flow
of information between the committee and management.
■ We have incorporated relevant training on our agenda to
ensure that members remain abreast of developments within
the scope of the committee’s mandate. Noteworthy topics
included proposed amendments to the Broad-based Black
Economic Empowerment (BBBEE) Act, and carbon and the
implications of a carbon tax/carbon pricing.
monitoring
■ We have reviewed the transformation strategy and monitored
achievement against identified targets in a bid to deliver on
our transformation commitments. The committee is satisfied
with the level of transformation within the group, its target-
setting methodology and transformational achievements
to date.
■ We have monitored regulatory developments relating to
the BBBEE Act and the Financial Sector Codes (FSC).
At 31 december 2013 the group achieved a level 2 score.
Committed
to good
governance
52–57
Fair Share
2030
22–23
Transformation
Report
■ We have monitored management’s effort to improve
BBBEE scores and are satisfied with the interventions
by management.
■ We have reviewed developments in the area of ethics
management within the group, which includes a dedicated
ethics officer and an anonymous hotline for tipoffs.
■ We have monitored progress against the sustainability strategy
and the group’s efforts to maintain our carbon neutrality despite
increases in the scope of our carbon measurement.
■ We have guided the strategic development of Fair Share 2030
in response to Nedbank’s long-term vision for a thriving SA
(see pages 22 to 23 for more detail on Nedbank’s approach).
■ We have monitored activities relating to socioeconomic
development (including external skills development),
access to finance, lending to enable healthcare,
housing and education, enterprise development and
community upliftment, economic empowerment
and preferential procurement.
■ We have monitored the impact of our corporate
social investment spend and considered ways of
strengthening partnerships.
Gt serobe
Group Transformation, Social and Ethics Committee Chairman
21 February 2014
WHAT WE WILL
fOCuS ON IN 2014
In 2014 the committee will:
■ focus on the group’s transformation agenda with
emphasis on the impact of regulatory requirements
and targets;
■ focus on the impact of the industry realignment
process of the Financial Sector Code with the Revised
Codes of Good Practice (the codes) through
The Banking Association South Africa (BASA);
■ monitor developments in the implementation of
Fair Share 2030, Nedbank’s strategic response to
its long-term goals for a thriving SA; and
■ continuously evolve its monitoring activities,
where necessary, to enable effective fulfilment
of its mandate.
59
ENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderSdelIVerInG to oUr StaKeholderSmaKInG thInGS haPPen Committed to good governanCe (CONTINUED)
reGister oF DireCtors‘ attenDanCe
Nedbank
Group
Ltd
Board
Nedbank
Ltd
Board
Nedbank
Group
Directors’
Affairs
Committee
8
8/8
8/8
4/5
7/8
8/8
8/8
4/4
8/8
8/8
8/8
8/8
8/8
8/8
8/8
8/8
8
8/8
8/8
4/5
7/8
8/8
8/8
4/4
8/8
8/8
8/8
8/8
8/8
8/8
8/8
8/8
5
5/5
3/3
4/43
4/54
5/5
2/43
5/5
Number of meetings
directors
Tom Boardman
Mike Brown
Thenjiwe Chikane1
Graham dempster
Mustaq Enus-Brey
Ian Gladman
don Hope2
Reuel Khoza
Mpho Makwana
Nomavuso Mnxasana
Raisibe Morathi
Joel Netshitenzhe
Julian Roberts
Gloria Serobe
Malcolm Wyman
Nedbank
Group
Remuneration
Committee
Nedbank
Group
Audit
Committee
6
5
Nedbank
Group IT
Committee
Nedbank
Group
Credit
Large-
exposure
Approval
Committee
Committee
Nedbank
Group
Risk and
Capital
Management
Committee
5
Nedbank
Group
Transformation,
Social and Ethics
Committee
Nedbank
Group
Finance
and
Oversight
Committee
5/5
1/1
4/4
5/6
6/6
2/4
4/6
3/4
1/1
5/5
5/5
4
4/4
3/3
4/4
3/4
9
8/9
9/9
5/5
8/9
9/9
9/9
11
10/11
10/11
6/7
9/11
9/11
7/9
10/11
6/9
6/11
5/5
4/5
2/2
5/5
4/5
5/5
4
1/4
3/3
3/4
4/4
4
4/4
4/4
0/1
2/2
4/4
1 Resigned as director with effect from 13 August 2013.
2 Resigned as director with effect from 30 June 2013.
3 Recused from one short-notice meeting due to a conflict of interest.
4 Unable to attend one meeting that was called at short notice.
details of appointments to and resignations from the board committees are provided on page 171 of the Remuneration Report.
60
NedbaNk Group | Integrated report 2013 Nedbank
Group
Ltd
Board
8
Nedbank
Group
Directors’
Nedbank
Group
Nedbank
Group
Audit
Affairs
Remuneration
Committee
Committee
Committee
Nedbank
Ltd
Board
6
5
8
8/8
8/8
4/5
7/8
8/8
8/8
4/4
8/8
8/8
8/8
8/8
8/8
8/8
8/8
8/8
5
5/5
3/3
4/43
4/54
5/5
2/43
5/5
8/8
8/8
4/5
7/8
8/8
8/8
4/4
8/8
8/8
8/8
8/8
8/8
8/8
8/8
8/8
5/5
1/1
4/4
5/6
6/6
2/4
4/6
3/4
1/1
5/5
5/5
Number of meetings
directors
Tom Boardman
Mike Brown
Thenjiwe Chikane1
Graham dempster
Mustaq Enus-Brey
Ian Gladman
don Hope2
Reuel Khoza
Mpho Makwana
Nomavuso Mnxasana
Raisibe Morathi
Joel Netshitenzhe
Julian Roberts
Gloria Serobe
Malcolm Wyman
1 Resigned as director with effect from 13 August 2013.
2 Resigned as director with effect from 30 June 2013.
3 Recused from one short-notice meeting due to a conflict of interest.
4 Unable to attend one meeting that was called at short notice.
details of appointments to and resignations from the board committees are provided on page 171 of the Remuneration Report.
Nedbank
Group IT
Committee
Nedbank
Group
Credit
Committee
Large-
exposure
Approval
Committee
4
4/4
3/3
4/4
3/4
9
8/9
9/9
5/5
8/9
9/9
9/9
11
10/11
10/11
6/7
9/11
9/11
7/9
10/11
6/9
6/11
Nedbank
Group
Risk and
Capital
Management
Committee
5
5/5
4/5
2/2
5/5
4/5
5/5
Nedbank
Group
Transformation,
Social and Ethics
Committee
Nedbank
Group
Finance
and
Oversight
Committee
4
1/4
3/3
3/4
4/4
4
4/4
4/4
0/1
2/2
4/4
61
ENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderSdelIVerInG to oUr StaKeholderSmaKInG thInGS haPPen DeliVerinG sustAinAbly to All our stAKeHolDers
ChieF exeCutive’s review
2013 has been a successful year for Nedbank Group –
we repositioned Nedbank Retail, exceeded our NIR-to-expenses
ratio of greater than 85%, tilted our portfolio away from high-risk,
low-EP activities and built on our rest of Africa strategy.
These actions position us well for the challenging economic
environment we expect in the year ahead.
I am pleased to report to all our stakeholders that 2013 was
a successful year for Nedbank Group. It has been four years
since I was appointed CEO, and we set out to deliver on four
key strategic focus areas that I announced at that time.
These were:
1
Repositioning Nedbank Retail
Headline earnings have increased from a loss-making
position to R2,5bn in 2013 and the return on capital has
improved to 11,6%. In the second half of 2013 Nedbank
Retail’s return on capital exceeded its cost of capital.
Mike Brown
Chief Executive
62
NedbaNk Group | Integrated report 2013 1 829 cents
dILUTEd HEAdLINE
EARNINGS PER SHARE
15%
895 cents
dIVIdENd
PER SHARE
19%
12,5%
COMMON-EQUITY
TIER 1 RATIO (BASEL III)
(2012: 11,6%)
An
attractive
growth
strategy
10–23
2
Growing non-interest revenue (NIR)
Our NIR growth has been ahead of the industry
average and our NIR-to-expense ratio increased from
78,8% in 2009 to 86,4%, above our > 85% target for
the first time.
3
Portfolio tilt
We have followed a policy of selective origination in some
advances categories and proactively reduced our exposure
to higher-risk products in preparation for rising interest
rates. Common-equity tier 1 capital increased from 9,9%
(Basel II) to 12,5% (Basel III) and non-performing loan
coverage levels from 29% to 42,8%. Economic profit (EP)
increased from R57m to R2,1bn.
4
Rest of Africa
We have secured the rights to subscribe for up to 20% in
Ecobank Transnational Incorporated (ETI) and made our
first foray into Mozambique with approval obtained for an
initial stake of 36,4% of Banco Unico, targeting the end of
the first quarter of 2014 for completion of the transaction.
Chief
Financial
Officer’s
Review
100–107
GRI 3.1: 1.1
63
during this time, we also acquired the minority
interests that we did not own in various Old
Mutual joint venture (JV) businesses to expand
our economic interests in bancassurance and
wealth management and we acquired full
ownership of Imperial Bank, increasing our
vehicle financing exposure to a market share of
25,2%. We have also increased our cooperation
with our parent company, Old Mutual plc, and
our sister companies in SA. New-business
flows from our financial planners to Old Mutual
SA increased 58% in 2013 and we entered the
direct-insurance market in partnership with
Mutual & Federal.
Today, we are a far stronger bank than we were
in 2009; we have added 2,2m retail clients and
franchise while
built
strengthening our balance sheet for the rising
interest rate cycle that lies ahead.
the value of our
Investors will be pleased to know that since
2009 our net asset value per share has
increased by a compound growth rate of 9,6%,
our return on equity (ROE) (excluding goodwill)
has increased from 13,4% to 17,2%, and we
have delivered compound dividend growth of
19,4% per annum. Headline earnings have
grown from R4,3bn to R8,7bn.
While our financial performance has been
among the best in our peer group, I am
particularly pleased that, with our focus on
sustainability that is so closely linked to our
brand, we delivered value to all our stakeholders.
ENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderSdelIVerInG to oUr StaKeholderSmaKInG thInGS haPPen CHIEF EXECUTIVE’S REVIEW (CONTINUED)
Our journey to being Africa’s most admired bank, by all our stakeholders
Our vision, to be Africa’s most admired bank, is underpinned by delivery to all our stakeholders – our staff, clients, shareholders, regulators and
communities. In 2013 we continued to make good progress with our vision, as demonstrated by the following achievements:
INVESTING
IN OUR
PEOPLE
INNOVATING
FOR OUR
CLIENTS
For our staff. At a time when
jobs are being lost across the
economy, we provided
employment for more than
550 additional permanent
employees in SA, invested
significantly in training,
progressed well with staff
transformation initiatives as
reflected in our employment
equity statistics and
continued the participation
of our leaders in our Leading
for Deep Green. This
programme has not only
made a significant difference
to team effectiveness across
the group, but also provided
deep personal insights, for
which our staffmembers are
extremely grateful. As a
result, our culture
measurements are healthy
– internally we have never
been in a better position and
our culture continues to
attract high-calibre staff.
■ Tough economic
conditions
■ Scarce skills
I
S
R
E
T
T
A
M
L
A
R
E
T
A
M
D
E
T
A
L
E
R
For our clients. We continued
investing in our distribution
footprint with 334 additional
ATMs and the rollout of 28 of our
Branches of the Future. System
uptime was at multiyear highs and
we accelerated delivery in
innovation with the launch of
various market-leading products.
Taking cognisance of the impact of
a tough economic environment on
our clients’ disposable income, we
launched one of the lowest-priced
credit life products with increased
benefits and saved clients banking
fees by proactively moving them to
lower-priced bundled products and
by keeping general fee increases at
0% for 2014. In 2013 we increased
loan payouts by 10% and excelled
at managing our clients’ money,
once again being rated one of SA’s
top three asset managers in the
Raging Bull Awards, with assets
under management increasing
26,5% to a record R190bn. As a
result of all of this, more people
chose to bank with Nedbank and
our client numbers increased
by 10% to 6,7m.
■ Tough economic
conditions
■ Banking relevance
amid consumerism
and increased
competition
■ Increased demands on
governance and risk
management
■ Growth opportunities
in the rest of Africa
■ Transformation of
society within planetary
boundaries
DELIVERING
VALUE TO OUR
SHAREHOLDERS
For our shareholders. We
delivered a strong set of
results, achieving earnings
growth in excess of our
medium-to-long-term
target, while investing in
the franchise and
strengthening our balance
sheet provisioning levels.
We delivered a total
shareholder return of 16%
and increased the full-year
dividend by 19%. We also
positioned the group for
long-term shareholder
value creation through our
Pan-African banking
strategy and we were once
again voted the Financial
Times and The Banker
magazine 2013 SA Bank of
the Year.
■ Tough economic
conditions
■ Banking relevance
amid consumerism
and increased
competition
■ Increased demands on
governance and risk
management
■ Growth opportunities
in the rest of Africa
■ Transformation of
society within planetary
boundaries
■ Scarce skills
PARTNERING
WITH OUR
REGULATORS
For our regulators. To the
satisfaction of these
important institutions that
oversee the health of our
industry, we implemented
Basel III successfully on
1 January 2013, with the
group’s common-equity
tier 1 capital strengthening
further to 12,5%, being
the top end of our internal
target ranges. For our
government, we made
cash taxation
contributions of R8bn
relating to direct, indirect,
PAYE and other taxation.
We maintained our
strong, open and
transparent relationships
with all regulators and
continued our
commitment to
responsible banking
practices. We are
committed to being
worldclass at managing
risk and doing
appropriate remediation
where required.
■ Tough economic
conditions
■ Banking relevance
amid consumerism
and increased
competition
■ Increased demands on
governance and risk
management
■ Growth opportunities
in the rest of Africa
■ Transformation of
society within planetary
boundaries
■ Scarce skills
GREAT PLACE
TO WORK
GREAT PLACE
TO BANK
GREAT PLACE
TO INVEST
WORLDCLASS AT
MANAGING RISK
64
NEDBANK GROUP | INTEGRATED REPORT 2013
LEADING IN THE
COMMUNITIES
WE SERVE
For our communities. Since
2009 we have expanded our
footprint to service 10 000
more areas and suburbs and
contributed significantly to
socioeconomic development.
We maintained our level 2
broad-based black economic
empowerment (BBBEE)
contributor status for the fifth
consecutive year and were
ranked first among the top
100 companies in the Mail &
Guardian dti Code survey,
acknowledgement of the lead
we are taking in building a
more transformed SA. We
were recognised as a leader in
socially responsible banking at
the 2013 African Banker
awards and won the Sunday
Times Top 100 Companies
Corporate Social Investment
(CSI) awards, illustrative of
our green and caring
approach, whether it’s for the
benefit of our communities or
our environment.
■ Tough economic
conditions
■ Transformation of
society within planetary
boundaries
■ Scarce skills
HIGHLY INVOLVED IN
THE COMMUNITY AND
ENVIRONMENT
A sustainable business model
The world has been a tough place for banks and bankers since the financial crisis began
in 2008, with very few macroeconomic tailwinds. In SA our economy has grown slower
than expected for the past few years, but given our sound banking system, growth in
consumer spending and the commodity demand from China, it has been less affected
than many developed economies. However, in 2013 the economy weakened more than
expected. Initially forecast to grow at 2,6%, gross domestic product (GDP) growth
ended the year at 1,9%, reflecting the continuing tough global environment and
slowdowns in the economies of key trading partners together with our country’s own
challenges, such as widespread labour strikes across export-led industries, high
unemployment, infrastructure constraints and high levels of consumer indebtedness
despite low levels of interest rates and real wage increases.
Nevertheless, as discussed in greater detail in the Chief Financial Officer (CFO) section
of this integrated report, our 2013 financial performance reflects the benefits of
continuing to invest for growth and building our franchise, while our cost discipline and
risk management capabilities ensured that we remained resilient despite the uncertain
and volatile economic environment.
I am convinced that the foundation we have built enables Nedbank to enter what is
likely to be a challenging and volatile environment in 2014 in the best shape we have
ever been.
Our history also shapes the way we think about the future. It explains the value we
place on our people and our unique culture, why we emphasise risk management and
manage costs well, and why we invest with a long-term perspective and build diverse
earnings streams. As we continue to grow, it will become more difficult to deliver the
same rates of growth year after year, but this is the challenge every successful
organisation faces and Nedbank is no different. This is where I believe our resilient
business model, our people and our organisational culture will stand us in good stead.
Embedding our values and culture
Nedbank is a vision-led, values-driven organisation. We identified and introduced our
values of accountability, integrity, pushing beyond boundaries, respect and being
people-centred a decade ago. We have embedded them in our culture and continuously
acknowledge our people – not just for what they achieve, but for how they achieve it.
We fundamentally believe our culture, which encompasses our values, is our key source
of competitive differentiation. Our culture survey, which measures the number of
matches between an individual’s values and those of the organisation, shows that we
have five matches – a worldclass level. It is particularly pleasing for me to see that our
top three values – accountability, client satisfaction and being client-driven – are
embedded in the organisation. Other values on our top 10, such as teamwork,
environmental awareness and employee recognition, also align with our strategic focus
areas, which gives me confidence in our future success as our plans and our hearts
are aligned.
We have found that there is no magic wand to reinforce culture, and no organisation
can ensure that everyone does everything perfectly all the time. But we need to keep
working at embedding our culture, because it is our key differentiator.
Collaboration across our business is another area of distinctiveness. We have had good
success from our Nedbank @ Work offering, which provides the employees of our
wholesale clients with banking services, and which has given us more than 200 000
new clients since 2012. We also gained good traction in winning deals because we
combined and co-located our Nedbank Capital and Nedbank Corporate structured-
debt finance teams. Our shared services areas continue to be a good example of how to
share resources and work together efficiently with a business partnering mindset.
Building
enduring
relation-
ships
30–47
Chief
Financial
Officer’s
Review
100–107
65
ENSURING A SUSTAINABLE BUSINESSINFORMATION TO OUR SHAREHOLDERSDELIVERING TO OUR STAKEHOLDERSMAKING THINGS HAPPEN Chief exeCutive’s review (CONTINUED)
Refining our strategy
during our strategy development and planning processes
in 2013 we identified six material matters that will continue
to impact the bank in years to come as we seek to become
Africa’s most admired bank. These are:
■ tough economic conditions. These seem to be the
‘new normal’ as developments in the external
environment impact both our clients and the bank.
■ banking relevance amid consumerism and increased
competition. We put our clients at the centre of
everything we do in a more competitive environment.
■ increased demands on governance and risk
management. Regulators seek to ensure a strong stable
financial system and parity for all stakeholders.
■ Growth opportunities in the rest of africa. As our
clients expand beyond the borders of SA we seek to
unlock growth opportunities in regions of higher
GdP growth.
■ the transformation of society within planetary
boundaries. We strive to build a thriving bank in
a thriving society.
■ scarce skills. We continually seek to keep and attract
the best skills in a highly competitive environment.
during 2013 we took stock of our four key strategic focus
areas in relation to these six material matters and refined
our statement of strategic intent, sharpened the language
and changed the emphasis. The core principles of our
successful strategy remain the same, but the context and
challenges have evolved, and therefore we felt that our
emphasis needed to shift as well.
The first change is that our initiative to reposition Nedbank
Retail is no longer highlighted as a separate focus area because
the retail bank has been fundamentally repositioned, and it is
resilient and ready to grow and improve its returns. Going
forward we have five key strategic focus areas that are
applicable right across Nedbank Group. All five, together with
our stakeholder commitments, represent our strategic
response to the material matters.
3
1 Client-centred innovation
Firstly, we are accelerating innovation to make the group more accessible and
easier to bank with through digital, integrated banking channels. Our client-
centred business model, which was introduced in 2009, has enabled a far deeper
understanding of what is important to our clients, and the clients I engage with
across all our segments echo this. In the past two years we have brought more
digital-banking offerings to our clients than ever before, with offerings such
as Approve-it™, MyFinancialLife™, PocketPOS™ and an online home loan
application site, to name a few. Since the Nedbank App Suite™ was launched
over 340 000 downloads have been done and over R6bn (in over 10,5m
transactions) has been transacted over the platform. Winning the MTN Android
Consumer App of the Year award in 2013 demonstrates that we are indeed
making progress, but we have to get even better and be more relevant and
responsive to our clients in an increasingly competitive banking environment.
An
attractive
growth
strategy
10–23
investing
Optimise to invest
We want to leverage our strong cost
culture and be more adept at extracting
efficiencies while
in our
franchise for the longer term. Since 2009
we have achieved a cumulative R1,1bn in
in Nedbank Retail while
efficiencies
investing R1,7bn
in new distribution
channels, client-value propositions such
as Savvy and Ke Yona and system
functionalities across the bank. In 2013 we
initiated a SAP enterprise
resource
planning (ERP) system replacement in
finance,
and
procurement functions. Since 2009 we
have removed over R500m from the core
cost base in technology, and as part of our
‘rationalise, standardise and simplify’
information technology (IT) strategy we
have decommissioned 56 IT systems in
our effort to reduce core systems from
220 to 60, while decommissioning a
further 21 non-core IT systems.
resources
human
2 Strategic portfolio tilt
Strategic portfolio tilt retains the same focus as portfolio tilt, which has helped us drive an increase in EP from R57m in 2009 to
R2,1bn in 2013 as we focus on the optimal allocation of scarce resources such as capital and longer-dated funding. This has been
supported by selective advances growth to mitigate against downside risk in products such as personal loans and home loans, while
we focused strongly on EP-generative activities such as deposit growth, insurance, asset management, cards, vehicle finance and
investment banking.
Strategic portfolio tilt also incorporates Nedbank’s Fair Share 2030, which is born of the important role that Nedbank, as one of the
40 largest companies in SA, has to play in the economy and broader society. It involves a carefully calculated flow of money allocated
each year for investment in future-proofing the environment, society and our business. In 2013 our Fair Share 2030 initiative made
steady progress and early results have been encouraging, with innovative financing solutions emerging in agriculture, energy, housing
and transportation. Lessons learned during our proof-of-concept phase will inform the way we scale up to the full Fair Share 2030
commitment – roughly equivalent to R6bn, or 4% to 6% of new lending each year. While it is too early to state precisely the earnings
impact of Fair Share 2030, we are convinced it will create significant long-term value as we increase our participation in the green
economy and underpin our vision of being Africa’s most admired bank.
66
NedbaNk Group | Integrated report 2013 4 Growing our transactional
banking franchise
Our strategic initiative to grow NIR has
seen us increase our NIR-to-expenses
ratio above 85% for the first time.
Growing NIR is, however, an outcome of
growing our
transactional banking
franchise and that is why we focus on
high-quality, annuity NIR generated
through transactional banking volume
growth. To achieve this we will further
strengthen our franchise by attracting
even more transactional banking clients
to build our current and savings account
market share to levels closer to our
asset market share, a challenge not
dissimilar to the 85% NIR-to-expenses
target we set in 2010. Achieving this
will require innovative, client-centred
products and value propositions,
transparent and competitive pricing,
efficient and sales-oriented channels,
both physical (through our Branch of
the Future) and electronic, as well as
collaboration across all our businesses
to deepen our share of wallet.
5 Pan-African banking
network
‘rest of Africa’ strategic focus
The
has been renamed the ‘Pan-African
banking network’ and will continue to
incorporate our strategic alliance with
Ecobank in West and Central Africa
and our own network and expansion
activities
the Southern African
Development Community (SADC) and
East Africa. Nedbank has the right to
take up a shareholding of up to 20%
in ETI and a formal decision will be
made during the rights exercise period
in 2014.
in
Regulatory approval has been received
to acquire an initial stake of 36,4% of
Banco Unico
in Mozambique and
completion of the transaction targeted
for end March 2014. The presence in
Mozambique will contribute to the
strengthening of Nedbank’s franchise
and client proposition in the SADC
and East Africa,
increasing our
presence to six countries.
In 2013 we signed an alliance
agreement with the Bank of China
and this has already resulted in the
conclusion of several transactions
for clients.
Outlook
The economic outlook for 2014 remains volatile and uncertain, both globally and here in SA.
There is a growing divergence between anticipated prospects for developed economies and
emerging markets. Developed economies are expected to see accelerated momentum while
emerging markets wrestle with the effects of the tapering off of quantitative easing as funds are
disinvested, currencies depreciate and interest rates increase. This is particularly the case in
countries such as SA, which have both current account and fiscal deficits to finance. A further
concern is China’s economic slowdown, given its importance as a trade partner of SA.
SA’s GDP is forecast to grow by 2,6% in 2014 – higher growth than in 2013, but still below
potential – with the key drivers likely to be better export performance and an increase in gross
fixed-capital formation. However, downside risk to growth has increased as interest rates have
started on an upward trajectory with a 50 basis point increase in January 2014 and further
potential increases later in the year. At the time of writing, forward rate markets were pricing in
further interest rate increases of 150 basis points in 2014. This does not bode well for consumers
who are already struggling with high levels of indebtedness.
The economy is also dealing with infrastructural constraints and policy uncertainty, and
corporate credit demand will likely remain subdued as corporates delay their commitment to
new projects.
In this context we believe Nedbank is well positioned and our strategies are appropriate for the
environment. Our business is well diversified, with no cluster contributing more than 29% to
headline earnings. NIR today contributes 48% of income, well ahead of the 42% in 2009. Our
asset base is approximately 62% in wholesale and 38% in retail. We have positioned our book
for a rising interest rate cycle, benefiting net interest income (NII) (including endowment
income) by R936m before tax for every 1% increase in interest rates over a 12-month period.
Defaulted advances continued to decrease to R17,5bn or 3% of our book (5,9% in 2009). While
we cannot avoid the potential negative impact of higher rates on our clients’ ability to repay and
hence our impairments, especially if rates increase too fast or too much, we have taken proactive
steps by increasing our coverage on specific impairments to 42,8% (from 29% in 2009) and
retail portfolio impairments to 1,4% of the performing book (from 0,5%). In addition, we have
taken early action to reduce our exposure to higher-risk products such as personal loans and
home loans, well ahead of the industry – home loans in particular have proved historically to be
problematic for the industry if interest rates rise steeply.
In summary, Nedbank enters 2014 with good momentum and a strong balance sheet. We are
well positioned to make the most of growth opportunities as they present themselves, and we
remain committed to consistent delivery for all our stakeholders.
Given the uncertain economic environment, forecast risk has increased and, in this context in
the year ahead, we are currently expecting organic growth in diluted headline earnings per
share to be in excess of the growth in nominal GDP.
Appreciation
Nedbank’s journey over the past four years has been one of resilience, growth and consistent
delivery. The next four years will undoubtedly be equally exciting. We have a solid foundation
on which to continue building our growth, driven by our five key focus areas, and we are
investing in our businesses and growing our franchise value. By delivering on our strategy, by
staying true to our culture, and by being innovative and client-centred, I am confident that we
can continue to go from strength to strength.
I would like to thank our investors for their support throughout this journey. I would also like to
express my gratitude to the exceptional and highly experienced group executive team that I am
honoured to work with. Thank you for your invaluable contribution to the group, your knowledge,
your leadership strength and your willingness to take on tough situations with a smile.
To our board of directors and to our parent company, Old Mutual, thank you. To our Chairman,
Reuel Khoza, thank you for your wisdom, guidance and support. Finally and most important of
all, I would like to thank our people for their hard work, loyalty and commitment and our clients
for trusting us with their banking needs. Together we make Nedbank a great place to work at,
a great place to bank with and a great bank to invest in.
Mike Brown
Chief Executive
67
ENSURING A SUSTAINABLE BUSINESSINFORMATION TO OUR SHAREHOLDERSDELIVERING TO OUR STAKEHOLDERSMAKING THINGS HAPPEN GrowinG our FranChises
The following pages
offer a broad
overview of the
various clusters
making up Nedbank
Group’s core
business. for
detailed information
on business activities
and strategies, as
well as a review of
2013, please see
the supplementary
information on
nedbankgroup.co.za
or through the
nedbank
app suitetm.
F
F
A
T
S
GROuP
Wholesale and retail
banking services
Insurance
Asset management
Wealth management
NEDBANk
CAPITAL
Investment banking and
markets solutions to
institutional and
corporate clients.
Offices: SA and London.
Representative offices:
Angola and Toronto.
NEDBANk
CORPORATE
Lending, deposit-taking,
transactional banking to
SA corporates with
turnover > R700m pa
and commercial-
property finance.
Headline earnings
29 513
683
2 186
ASSETS
ASSETS
ASSETS
100%
24%
25%
I
S
C
R
T
E
M
Assets
L
A
C
N
A
N
I
F
I
ROE1
15,6%
ECap2
R64,3bn
(100%3)
ROE1
29,4%
ECap2
R5,9bn
(9,1%3)
ROE1
26,4%
ECap2
R8,5bn
(13,2%3)
HEADLINE EARNINGS
HEADLINE EARNINGS
HEADLINE EARNINGS
100%
20%
26%
R8,67bn (+15,9%)
R1,73bn (+20,6%)
R2,25bn (+23,6%)
GRI
FSSS: FS6
GRI
G3.1: 2.2,
2.7,
EC2
Supplementary
information:
Operational
Overview
68
1 Return on equity.
2 Economic capital.
3 % of group total.
NedbaNk Group | Integrated report 2013
NEDBANk
BuSINESS
BANkING
Commercial banking
solutions for small-to-
medium-sized
businesses with a
turnover of R10m to
R700m pa.
Holistic offering for
businesses, business
owners, households
and employees.
NEDBANk
RETAIL
A bank for all financial
needs of individuals and
small businesses with a
turnover less than
R10m pa.
Transactional, card,
lending, deposit-taking,
risk management and
investment products/
services, as well as
card-acquiring services
for business.
NEDBANk
WEALTH
Insurance, asset
management and wealth
management solutions.
Offices: SA, London,
Isle of Man, Jersey,
Guernsey and
Middle East.
CENTRE
INCLuDING
REST Of
AfRICA
In addition to nine shared-
services clusters, Centre
includes the Rest of Africa
(RoA) division with operations
in Lesotho, Malawi, Namibia,
Swaziland and Zimbabwe as
well as a recent investment in
Mozambique (regulatory
approval obtained, targeting
completion by end March
2014). RoA is the custodian of
the Ecobank Alliance.
2 346
17 153
2 056
5 089
ASSETS
ASSETS
ASSETS
ASSETS
13%
27%
7%
4%
ROE1
19,4%
ECap2
R4,8bn
(7,4%4)
ROE1
11,6%
ECap2
R21,9bn
(34,0%4)
ROE1
36,2%
ECap2
R2,5bn
(3,9%4)
ECap2
R20,7bn3
(32,3%4)
HEADLINE EARNINGS
HEADLINE EARNINGS
HEADLINE EARNINGS
HEADLINE EARNINGS
11%
29%
10%
4%
R0,93bn (-1,6%)
R2,54bn (-0,5%)
R0,90bn (+25,3%)
R0,33bn (+>100%)
1 Return on equity.
2 Economic capital.
3 Rest of Africa, goodwill and excess capital.
4 % of group total.
69
ENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderSdelIVerInG to oUr StaKeholderSmaKInG thInGS haPPen growing our franChises (CONTINUED)
GROuP
Nedbank Group Ltd is a
bank holding company
and one of the four
largest banking groups in
SA measured by assets,
with a strong deposit
franchise. Its principal
banking subsidiary is
Nedbank Ltd. Nedbank
operates under a federal
operating model with
five separate yet aligned
client-facing clusters,
supported and enabled
by central services.
NEDBANk
CAPITAL
Clients among top 200
SA corporates
and parastatals.
Top three mergers and
acquisitions player.
Industry expertise in:
■ Infrastructure.
■ Mining and resources.
■ Oil and gas.
■ Telecoms.
■ Energy.
NEDBANk
CORPORATE
Top two SA corporate
bank.
> 600 large corporate
clients.
Strong market share in
public sector loans.
Continued market
leadership in commercial
property finance.
W
E
I
V
R
E
V
O
L
A
N
O
T
A
R
E
P
O
I
■ Grow transactional
banking franchise.
■ Client–centred
innovation.
■ Optimise to invest.
■ Strategic portfolio tilt.
■ Pan-African
banking network.
■ Strong client
relationships.
■ Continued product
and NIR growth
through enhanced
capabilities and
primary-client growth.
■ Increased Pan-African
focus.
■ Strong risk
management.
■ Strong Investment
Banking (IB) pipeline
with more cross-sell
across businesses.
■ Strategic growth in
Africa and leverage
Ecobank and Bank
of China.
■ Leverage industry
expertise.
■ Leverage trading
systems.
■ Participating strongly
in SA’s infrastructure
build programme,
including renewable
energy.
I
I
S
R
E
V
R
d
C
G
E
T
A
R
T
S
Y
E
K
GRI
FSSS: FS6
GRI
G3.1: 2.2,
2.7,
EC2
Supplementary
information:
Operational
Overview
70
NedbaNk Group | Integrated report 2013
NEDBANk
RETAIL
6,4m clients.
763 branches and
alternate outlets,
287 Personal Loan
kiosks and 3 382 ATMs.
Strong positioning in
household motor
finance (28% share),
and household
deposits (20%).
Compelling, innovative
CVPs for all segments.
NEDBANk
BuSINESS
BANkING
About 25 000 client
groups and strong
primary-client gains.
A leader in Corporate
Saver deposits and
debtor management.
Excellent client-centred
risk management and
worldclass client
management
capabilities.
distinctive client value
propositions (CVP) and
accountable empowered
decentralised business
service model.
■ A choice of distinctive client-centred banking experiences.
■ A rigorous approach to capturing virtuous circle and
interdependencies between client segments.
■ Integrated-channels strategy leveraging mobile innovation,
digital channels and social media; selected micro markets
for growth/optimisation; area collaboration.
■ Robust risk management supporting strong product niches.
■ Liabilities innovation sustaining historical strength.
■ Collaborative, people-centred culture.
NEDBANk
WEALTH
Life embedded value: R2,1bn
Assets under management:
R190,3bn
> 10 000 high-net-worth
(HNW) clients
Nedgroup Investments:
Raging Bull awards: Top 3
management company in SA
for the fifth consecutive year;
Morningstar awards: overall
third place.
Nedbank Private wealth:
SA: ranked second in the
‘Up-and-coming
professionals’ category in
the 2013 SA’s Top Private
Bank survey.
International: ‘Best Private
Bank for the Channel
Islands’ and ‘Euromoney‘
Best Private Bank for
HNW clients in the
offshore category.
■ Explore broader
complementary
financial services
growth opportunities.
■ Leverage momentum
in Wealth and Asset
Management.
■ Further CVP
enhancements and
focus on service
excellence.
■ Product expansion and
delivering client-
centred solutions.
■ Continued investment
in brand profiling.
■ Leverage advantage
through group
collaboration.
CENTRE
INCLuDING
REST Of AfRICA
Each cluster is charged
using an activity-justified
transfer pricing model
based on a fully
recoverable basis.
■ Creating a Pan-African
banking network by
utilising our tiered
approach for RoA
expansion, which includes
leveraging our Ecobank
alliance.
■ Optimise economic
profit through strategic
portfolio tilt.
■ Optimise-to-invest
initiative.
■ IT systems rationalisation
and replacement.
■ Risk-based economics
(economic capital
allocation, funds transfer
pricing, liquidity
premiums and risk-
adjusted performance
management) embedded
groupwide in the business.
71
ENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderSdelIVerInG to oUr StaKeholderSmaKInG thInGS haPPen boArD of Directors
estabLisheD
LeaDership teams
1 Dr reuel Jethro Khoza 64
non-executive Chairman
Appointed August 2005 as a non-executive
director and May 2006 as Chairman
Qualifications: BA(Hons) Psychology
(University of Limpopo),
MA Marketing Management
(Lancaster, UK), Engd (Warwick, UK),
IPBM-IMd (Lausanne, Switzerland),
PMd (Harvard Business School, USA),
LLd(hc) Rhodes, Cd (SA)
Chairman’s Review
48–51
1
2
2 michael william thomas brown 47
Chief executive
Appointed June 2004 as Chief Financial Officer
and March 2010 as Chief Executive
Qualifications: BCom, dip Acc, CA (SA),
AMP (Harvard Business School, USA)
Chief Executive’s Review
62–67
3 David Kwame tandoh
adomakoh1 48
Appointed 21 February 2014
Qualifications: BSc(Hons) Economics
(London School of Economics),
diplome de Langue et de Civilisation
(La Sorbonne, Université de Paris)
4 thomas andrew boardman1 64
Appointed November 2002 as an
executive director, March 2010
as a non-executive director and
January 2014 as an independent
non-executive director
Qualifications: BCom, CA (SA)
72
3
4
5
6
5 Graham wayne Dempster 58
Chief operating officer
Appointed August 2009
Qualifications: BCom, CTA, CA (SA),
AMP (Harvard Business School, USA)
6 mustaq ahmed
enus-brey2 59
Appointed August 2005
Qualifications: BCompt(Hons),
CA (SA)
NedbaNk Group | Integrated report 2013
7 Ian David Gladman2 49
Appointed June 2012
Qualifications: BA(Hons)
History (Christ’s College, Cambridge)
8 Paul Mpho Makwana1 43
Appointed 17 November 2011
Qualifications:
BAdmin(Hons)
Reporting back on remuneration
138–140
GRI 3.1: 4.3
9 Nomavuso Patience
Mnxasana1 57
Appointed October 2008
Qualifications: BCompt(Hons),
CA (SA)
7
8
9
10 Raisibe Kgomaraga Morathi 44
Chief Financial Officer
Appointed September 2009
Qualifications: BCompt(Hons),
CA (SA), HDip Tax, AMP (INSEAD)
Chief Financial Officer’s Review
100–107
12 Julian Victor Frow Roberts2 56
Appointed December 2009
Qualifications: Fellow of Institute of
Chartered Accountants, member of
Association of Corporate Treasurers,
Accountancy and Business Law
(University of Stirling, Scotland)
13 Gloria Tomatoe Serobe2 54
Appointed August 2005
Qualifications: BCom (Unitra),
MBA (Rutgers, USA)
Report from Group
Transformation, Social and
Ethics Committee Chairman
58–59
14 Malcolm Ian Wyman3 67
Appointed August 2009
Qualifications: CA (SA),
AMP (Harvard Business
School, USA)
Report from our
Audit Committee
110–113
10
13
11
12
14
11 Joel Khathutshelo Netshitenzhe1 57
Appointed August 2010
Qualifications: MSc
(University of London, UK)
1
2
3
Independent non-executive director
Non-executive director
Senior independent non-executive director
73
ENSURING A SUSTAINABLE BUSINESSINFORMATION TO OUR SHAREHOLDERSDELIVERING TO OUR STAKEHOLDERSMAKING THINGS HAPPEN established leadership teams (CONTINUED)
Dr Reuel Jethro Khoza 64
Non-executive Chairman (Appointed: August 2005 as a
non-executive director and May 2006 as Chairman)
Qualifications: BA(Hons) Psychology (University of Limpopo),
MA Marketing Management (Lancaster, UK), EngD (Warwick,
UK), IPBM-IMD (Lausanne, Switzerland), PMD (Harvard
Business School, USA), LLD(hc) Rhodes, CD (SA)
Nationality: SA
Reuel was appointed the Non-executive Chairman of the group
in May 2006. He is also Chairman of Aka Capital (Pty) Ltd, and a
non-executive director of Nampak Ltd, Protea Group Ltd and
Old Mutual plc. He is president of the Institute of Directors and,
in this capacity, served on the King II and King III Committees on
corporate governance. He is a founding director of the Black
Management Forum and the former Chairman of Eskom Holdings
Ltd. Reuel is also the Chancellor of the University of Limpopo.
Committees: Group Directors’ Affairs Committee (Chairman)
Shares: Nedbank Group Ltd ordinary shares:
7 800 beneficial direct and
6 974 beneficial indirect
Nedbank Ltd preference shares: 0
Michael William Thomas Brown 47
Chief Executive (Appointed: June 2004 as Chief Financial
Officer and March 2010 as Chief Executive)
Qualifications: BCom, Dip Acc, CA (SA), AMP (Harvard
Business School, USA)
Nationality: SA
Mike was an executive director of BoE Ltd and, after the merger
between Nedbank Ltd, BoE Ltd, Nedbank Investment Bank Ltd
and Cape of Good Hope Bank Ltd, was appointed Head of
Property Finance at Nedbank Ltd. He was appointed as
Chief Financial Officer of Nedbank Group in June 2004 and then
as Chief Executive in 2010.
Committees: Large-exposure Approval Committee,
Group Credit Committee
Shares: Nedbank Group Ltd ordinary shares:
55 049 beneficial direct and
288 108 beneficial indirect
Nedbank Ltd preference shares: 0
David Kwame Tandoh Adomakoh 48
Independent Non-executive Director (Appointed
21 February 2014)
Qualifications: BSc (Econs) Hons (London School of
Economics), Diplome de Langue et de Civilisation (La Sorbonne,
Université de Paris)
Nationality: Ghanaian
David is Chairman of Tiso Investment Holdings (Pty) Ltd and a
co-founder of Tiso Group and served as its Group Managing
Director. He is a former director of Chase Manhattan Ltd, London;
Head of the Chase Manhattan Bank, Southern Africa; Executive
Director of Robert Fleming SA; and Head of Africa Corporate
Finance at JP Morgan. He currently serves as a non-executive
director of Kagiso Tiso Holdings (Pty) Ltd, and Chairman of its
Investment Committee. He also serves as a non-executive
director of Idwala Industrial Holdings, African Explosives Ltd,
Aveng (Africa) Ltd and Trident Steel.
His experience spans 25 years in executive management and
investment banking, and includes principal investing, corporate
and project finance advisory work, debt capital raising, and
financial derivatives in a number of countries predominantly in
Africa and Europe. He has also served on the boards of a number
of SA, Nigerian and Ghanaian companies. He is a founding
trustee of the Tiso Foundation, and a World Fellow of the Duke of
Edinburgh’s International Award.
Shares: Nedbank Group Ltd ordinary shares: 0
Nedbank Ltd preference shares: 0
74
Thomas Andrew Boardman 64
Independent Non-executive Director (Appointed: November
2002 as an executive director, March 2010 as a non-executive
director, and January 2014 as an independent non-executive
director)
Qualifications: BCom, CA (SA)
Nationality: SA
Tom was Chief Executive of Nedbank Group Ltd from December
2003 to February 2010. He was previously Chief Executive and
an executive director of BoE Ltd, one of SA’s leading private and
investment banking companies that was acquired by Nedbank in
2002. He was the founding shareholder and Managing Director
of retail housewares chain Boardmans, which he sold to Pick ‘n
Pay Stores Ltd in 1986. Prior to this he was Managing Director of
Sam Newman Ltd and worked for Anglo American Corporation
Ltd for three years. He served his articles at Deloitte.
He is a non-executive director of Nedbank Group Ltd, Woolworths
Holdings Ltd, Royal Bafokeng Holdings (Pty) Ltd and African
Rainbow Minerals Ltd. Tom has also been appointed as a
non-executive director of Kinnevik, a listed Swedish investment
company.
He is a director of The Peace Parks Foundation and the Chairman
of The David Rattray Foundation, and serves as a trustee on a
number of other charitable foundations.
Committees: Group Information Technology Committee
(Chairman), Group Transformation, Social and Ethics
Committee, Group Credit Committee (Chairman),
Large-exposure Approval Committee, Group Finance and
Oversight Committee, Group Directors’ Affairs Committee
Shares: Nedbank Group Ltd ordinary shares:
4 012 beneficial direct and
28 593 beneficial indirect
Nedbank Ltd preference shares:
243 000 beneficial indirect
Graham Wayne Dempster 58
Chief Operating Officer (Appointed: August 2009)
Qualifications: BCom, CTA, CA (SA), AMP (Harvard Business
School, USA)
Nationality: SA
Graham joined the group in 1980 in the Corporate Finance
Division of UAL Merchant Bank Ltd. He was appointed General
Manager in 1987 and Joint Head of the (UAL) Special Finance
Division in 1989. In 1992 he was transferred to Nedbank Ltd, and
in 1998 he was appointed Head of the International Division.
He assumed responsibility for the Corporate Banking Division in
1999 and was appointed Managing Director of Nedbank
Corporate in 2003. Graham was appointed Chief Operating
Officer of Nedbank Group in August 2009.
Committees: Group Credit Committee
Shares: Nedbank Group Ltd ordinary shares:
17 822 beneficial direct and
134 273 beneficial indirect
Nedbank Ltd preference shares: 0
Mustaq Ahmed Enus-Brey 59
Non-executive Director (Appointed: August 2005)
Qualifications: BCompt(Hons), CA (SA)
Nationality: SA
Mustaq was appointed as a Nedbank Group director in August
2005. He is also a director of Brimstone Investment Corporation
Ltd and Oceana Group Ltd, and Chairman of Life Healthcare Ltd.
Committees: Group Risk and Capital Management Committee
(Chairman), Group Directors’ Affairs Committee, Group Credit
Committee, Group Finance and Oversight Committee,
Large-exposure Approval Committee
Shares: Nedbank Group Ltd ordinary shares:
2 113 beneficial indirect
Nedbank Ltd preference shares: 0
NedbaNk Group | Integrated report 2013 Ian David Gladman 49
non-executive Director (Appointed: June 2012)
Qualifications: BA(Hons) History (Christ’s College, Cambridge)
nationality: British
Ian is currently the Group Strategy director of Old Mutual plc.
Previous positions held by him include Head of Corporate Finance
(SA) and Joint Head: Financial Institutions Group, EMEA, at UBS
Investment Bank.
Committees: Group Credit Committee, Group Risk and Capital
Management Committee, Group Finance and Oversight
Committee, Large-exposure Approval Committee
shares: nedbank Group Ltd ordinary shares: 0
nedbank Ltd preference shares: 0
Paul Mpho Makwana 43
independent non-executive Director (Appointed: 17 November
2011)
Qualifications: BAdmin(Hons)
nationality: SA
Mpho is the immediate past Chairman of Eskom Holdings Ltd,
Independent director of Adcock Ingram Ltd, and Chairman of
ArcelorMittal SA Ltd.
Committees: Group Remuneration Committee (Chairman), Group
Transformation, Social and Ethics Committee, Group IT Committee,
Group Audit Committee, Group directors’ Affairs Committee
shares: nedbank Group Ltd ordinary shares: 0
nedbank Ltd preference shares: 0
Nomavuso Patience Mnxasana 57
independent non-executive Director (Appointed: October 2008)
Qualifications: BCompt(Hons), CA (SA)
nationality: SA
Nomavuso is a director at Winhold Ltd, JSE Ltd, Transnet SOC and
Land and Agricultural development Bank of SA Ltd (Land Bank).
She was a senior partner and member of the executive committee
of SizweNtsaluba before serving as Group Audit and Risk Executive
at Imperial Holdings Ltd.
Committees: Group Audit Committee, Group Remuneration
Committee, Group Risk and Capital Management Committee.
shares: nedbank Group Ltd ordinary shares:
11 620 beneficial indirect
nedbank Ltd preference shares: 0
Raisibe Kgomaraga Morathi 44
Chief Financial officer (Appointed: September 2009)
Qualifications: BCompt(Hons), CA (SA), Hdip Tax, AMP (INSEAd)
nationality: SA
Raisibe has held senior positions in banking and insurance over the
past 19 years. Prior to joining Nedbank Group she was an executive
director of one of the listed insurance companies. She previously
held several executive positions at the Industrial development
Corporation of SA Ltd, the last position being Chief Operating Officer.
Committees: Large-exposure Approval Committee,
Group Credit Committee
shares: nedbank Group Ltd ordinary shares:
12 615 beneficial direct and
160 887 beneficial indirect
nedbank Ltd preference shares: 0
Joel Khathutshelo Netshitenzhe 57
independent non-executive Director (Appointed: August 2010)
Qualifications: MSc (University of London, UK)
nationality: SA
is an executive director of the Mapungubwe Institute
Joel
for Strategic Reflection (MISTRA) and a member of the National
Planning Commission. He has been a member of the National
Executive Committee of the African National Congress since 1991,
and serves on the African National Congress’s Economic
Transformation and Political Education subcommittees.
He served as Head of Policy Coordination and Advisory Services
in The Presidency from 2001 until december 2009.
He was previously Chief Executive of the Government
Communication and Information System and also served as
Head of Communication in the President’s Office. He is a
non-executive director on the board of Life Healthcare Group
Holdings Ltd.
Committees: Group Risk and Capital Management Committee,
Group Information Technology Committee.
shares: nedbank Group Ltd ordinary shares: 0
nedbank Ltd preference shares: 0
Julian victor Frow Roberts 56
non-executive Director (Appointed: december 2009)
Qualifications: Fellow of Institute of Chartered Accountants,
member of Association of Corporate Treasurers, Accountancy
and Business Law (University of Stirling, Scotland)
nationality: British
Julian was appointed Group Chief Executive of Old Mutual plc in
September 2008. Prior to this he was Chief Executive of the
Old Mutual Group’s Skandia business. Julian originally joined
Old Mutual plc as Group Finance director in August 2000.
Before joining Old Mutual plc, he was Group Finance director of
Sun Life & Provincial Holdings plc (now part of AXA) and,
prior to that, Chief Financial Officer of Aon UK Holdings Ltd.
Committees: Group directors’ Affairs Committee, Group
Remuneration Committee
shares: nedbank Group Ltd ordinary shares: 0
nedbank Ltd preference shares: 0
Gloria Tomatoe Serobe 54
non-executive Director (Appointed: August 2005)
Qualifications: BCom (Unitra), MBA (Rutgers, USA)
nationality: SA
Gloria is the Chief Executive of Wipcapital Ltd and also founder
and Executive director of WIPHOLd Ltd. She was previously the
Executive director of Finance at Transnet SOC Ltd.
Gloria serves on several boards, including that of Sasol Mining
and Ixia Coal. She is the Chairman of the Board of the Independent
Ports Regulator. She
is also a non-executive director of
Old Mutual Emerging Markets Ltd.
Committees: Group Transformation, Social and Ethics
Committee (Chairman), Group Credit Committee, Large-
exposure Approval Committee, Group directors’ Affairs
Committee
shares: nedbank Group Ltd ordinary shares:
1 296 non-beneficial indirect
nedbank Ltd preference shares: 0
Malcolm Ian wyman 67
senior independent non-executive Director (Appointed:
August 2009)
Qualifications: CA (SA), AMP (Harvard Business School, USA)
nationality: British
Malcolm is a non-executive director of Imperial Tobacco plc,
senior independent non-executive director of Serco Group plc,
and a non-executive director of Tsogo Sun Holdings Ltd. He was
previously an executive director and Chief Financial Officer of
SABMiller plc until August 2011.
Committees: Group Audit Committee (Chairman), Group Risk
and Capital Management Committee, Group directors’ Affairs
Committee, Group Remuneration Committee, Group Finance
and Oversight Committee (Chairman)
shares: nedbank Group Ltd ordinary shares:
350 non-beneficial indirect
nedbank Ltd preference shares: 0
75
ENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderSdelIVerInG to oUr StaKeholderSmaKInG thInGS haPPen GROUP EXECUTIVE COMMITTEE
ESTABLISHED
LEADERSHIP TEAMS
Ciko Thomas 44
Managing Executive:
Consumer Banking,
Nedbank Retail
(4 years‘ service)
Qualifications: BSc, MBA
Our leadership team
remains among the most
skilled and transformed in
the SA banking sector.
Sandile Shabalala 47
Managing Executive:
Business Banking
(18 years‘ service)
Qualifications: BAdmin,
National Higher Diploma:
Management Practice,
CAIB (SA), MBL, Strategic
Management in Banking
(INSEAD Business School,
France), AMP (Harvard
Business School, USA)
CLIENT-FACING CLUSTERS
Brian Kennedy 53
Managing Executive:
Nedbank Capital
(18 years‘ service)
Dave Macready 55
Managing Executive:
Nedbank Wealth
(16 years‘ service)
Qualifications: MSc (Eng)(Elec), MBA,
AMP (Harvard Business School, USA)
Qualifications: BCom (Hons), CA (SA),
SEP (Harvard Business School, USA)
Ingrid Johnson 47
Managing Executive:
Retail and Business Banking
(20 years‘ service)
Qualifications: BCom,
BAcc, CA (SA), AMP (Harvard
Business School, USA)
Mfundo Nkuhlu 47
Managing Executive:
Nedbank Corporate
(10 years‘ service)
Qualifications: BA(Hons),
Strategic Management in
Banking (INSEAD), AMP
(Harvard Business School, USA)
76
Mike Brown
Chief Executive
Board of directors
74
NEDBANK GROUP | INTEGRATED REPORT 2013 Trevor Adams 51
Group Managing
Executive: Balance
Sheet Management
(17 years‘ service)
Qualifications:
BCom(Hons),
CA (SA),
Risk Management in
Banking (INSEAD)
Abe Thebyane 53
Group Executive:
Group Human
Resources
(3 years‘ service)
Qualifications:
BAdmin, Postgraduate
Diploma in
Management
(Human Resources),
MBA
Thulani Sibeko 42
Group Executive:
Group Marketing,
Communication
and Corporate
Affairs
(2 years’ service)
Qualifications:
BSc (Acc), Graduate
Certificate
Fred Swanepoel 50
Chief Information Officer
(17 years‘ service)
Qualifications: BCom(Hons),
MBA, SEPSA, AMP (Harvard
Business School, USA)
John Bestbier 58
Group Executive: Strategic
Planning and Economics
(18 years‘ service)
Qualifications: BBusSci
Actuarial, CA (SA)
CENTRAL CLUSTERS
Raisibe Morathi
Chief Financial Officer
Board of directors
75
Thabani Jali 55
Group Executive: Enterprise
Governance and Compliance;
Group Company Secretary
(2 years‘ service)
Qualifications: BA (Fort Hare),
LLB (Natal University),
LLM (Tulane University, USA)
Graham Dempster
Chief Operating Officer
Board of directors
74
Philip Wessels 55
Chief Risk Officer
(18 years‘ service)
Qualifications: BCom, CTA, CA (SA),
Diploma in Advanced Banking Law,
Institute of Stockbrokers
77
ENSURING A SUSTAINABLE BUSINESSINFORMATION TO OUR SHAREHOLDERSDELIVERING TO OUR STAKEHOLDERSMAKING THINGS HAPPEN established leadership teams (CONTINUED)
Trevor Adams 51
Group managing executive: balance sheet management
Ingrid Johnson 47
managing executive: retail and business banking
service:
Qualifications:
20 years
BCom, BAcc, CA (SA), AMP (Harvard Business
School, USA)
Ingrid joined Nedbank Group in 1993 to set up the foreign
currency financing operations in several offshore jurisdictions.
She also carried operational responsibility for the group’s banking
businesses in London and Asia. Ingrid introduced balance sheet
management in the Corporate Banking division, and thereafter
moved into line management in Corporate Banking. In 2004 she
was appointed Managing director of Corporate Banking and in
2005 she became Managing director of Nedbank Business
Banking. She was appointed to the Nedbank Group Executive
Committee in 2008. In August 2009 Ingrid assumed the
additional responsibility for the turnaround of the Retail Banking
Cluster and the integration of Imperial Bank in her new role as
the Group Managing Executive of Retail and Business Banking.
Brian Kennedy 53
managing executive: nedbank Capital
18 years
service:
Qualifications: MSc (Eng)(Elec), MBA, AMP (Harvard
Business School, USA)
Brian has over 24 years of investment banking experience, 18 of
which have been at Nedbank. He led Capital Markets within
Nedbank following the merger with BoE, and in November 2003
was appointed to the Group Executive Committee of Nedbank
Group and mandated to develop the investment banking
franchise, Nedbank Capital. Brian has extensive experience in
the debt and equity capital markets and has been actively
involved in the design and execution of innovative solutions for
top SA corporates and parastatals. He has been instrumental in
developing and driving the strategy, culture and new business
initiatives within Nedbank Capital. Brian started his career in
engineering before joining FirstCorp Merchant Bank Ltd in 1988.
Prior to his appointment as Managing Executive of Nedbank
Capital, Brian was an Executive director and Md of BoE Merchant
Bank and Chairman of BoE Securities.
Dave Macready 55
managing executive: nedbank wealth
service:
Qualifications: BCom(Hons), CA (SA), SEP (Harvard Business
16 years
School, USA)
dave joined Nedcor Investment Bank as a member of the Exco in
1997 after being a partner at deloitte & Touche for more than 10
years in both London and SA. He was responsible for Syfrets
Private Bank and NIB International and was appointed Managing
director of Asset Management three years later. In 2004 dave
took on the role of Managing Executive for Bancassurance and
Wealth. In 2009 the name was changed to Nedbank Wealth and
dave was appointed to the Exco.
service:
17 years
Qualifications:
BCom(Hons), CA (SA), Risk Management in
Banking (INSEAd)
Trevor was appointed to the Group Executive Committee in
2009 and leads the group’s Balance Sheet Management Cluster,
which comprises the
integrated central functions of risk
management (eg credit portfolio management, asset and liability
management, concentration risk, risk strategy, risk appetite and
stress testing), funding and liquidity management, capital
management, margin management), and strategic portfolio
management (eg strategic portfolio tilt, funds transfer pricing,
economic profit optimisation and risk-adjusted performance
management) as well as the group’s regulatory reporting under
the Banks Act. Trevor also led the group’s successful Basel II
implementation, and recently Basel III as well, and the significant
enhancement of risk, capital and balance sheet management
across the group. Prior to joining the group in 1996 he was a
partner at deloitte, where he also specialised in banking and risk
management, and so collectively has over 21 years’ banking-
related experience.
John Bestbier 58
Group executive: strategic planning
service:
18 years
Qualifications:
BBusSci Actuarial, CA (SA)
John was appointed to the Group Executive on 1 January 2010 as
Group Executive: Strategic Planning, having previously been with
the group for 14 years. John is an investment banker with
extensive experience in the financial services industry, having led
a number of large corporate finance transactions for clients and
for the group. In 1995 he served as a main board committee
member of the JSE Securities Exchange and was closely involved
in the reforms adopted by the exchange.
He joined the group in 1995 as a director of its investment
banking subsidiary UAL. during his tenure with the group he
served on subsidiary boards and in various areas including short-
and long-term insurance, asset management and stockbroking.
Thabani Jali 55
Group executive: enterprise Governance and Compliance;
Group Company secretary
service:
2 years
Qualifications: BA (Fort Hare), LLB (Natal University), LLM
(Tulane University, USA)
Thabani joined Nedbank Group in October 2011 as the Group
Executive responsible for governance and compliance. He is also
responsible for ethics, sustainability and Nedbank Group
Editorial and Language Services. In addition to this role, he was
also appointed Group Company Secretary on 1 July 2012. He is a
member of the Specialist Committee on Company Law. Prior to
joining the group, Thabani gained over 20 years’ experience in
the legal profession as an attorney, a mediator, an arbitrator and
later a judge. Thabani was formerly executive chairman of
PricewaterhouseCoopers (Southern Africa), a deputy Judge
President of the High Court of SA (Natal Provincial division) and
a Judge of the Competition Appeal Court. He was also a partner
in a commercial law firm and served as Chairman of the
Competition Commission Enquiry
into Bank Charges and
the National Payment System from 2006 to 2008.
78
NedbaNk Group | Integrated report 2013 Mfundo Nkuhlu 47
Managing Executive: Nedbank Corporate
10 years
Service:
BA(Hons), Strategic Management in Banking
Qualifications:
(INSEAD), AMP (Harvard Business School, USA)
Mfundo joined Nedbank Group in 2004. He has led and managed
Nedbank Africa and Corporate Banking, and since 2009 has been
the Managing Executive of Nedbank Corporate. He joined the
Group Exco in 2008. Previously he was the executive responsible
for strategy, revenue and economic analysis at the SA Revenue
Service. Prior to that he was with the Department of Trade and
Industry as Chief Director for Africa and the New Partnership for
Africa’s Development (NEPAD) programme.
Sandile Shabalala 47
Managing Executive: Business Banking
Service:
Qualifications:
18 years
BAdmin, National Higher Diploma: Management
Practice, CAIB (SA), MBL, Strategic
Management in Banking (INSEAD), AMP
(Harvard Business School, USA)
Sandile has over 25 years’ banking experience, including 18 years at
Nedbank Group. Prior to joining Nedbank Group he worked for
Barclays Bank, NBS Bank Ltd and Telkom SA. He has experience in
retail, small business, corporate and business banking in both sales
and credit banking functions. Prior to his appointment in October
2009 to the Group Exco as Managing Executive: Business Banking,
Sandile had been leading and managing the Northern Business Unit
in Business Banking as Divisional Executive.
Thulani Sibeko 42
Group Executive: Group Marketing, Communication and
Corporate Affairs
2 years
Service:
BSc (Acc), Graduate Certificate
Qualifications:
Thulani joined Nedbank Group in May 2011 and leads the group’s
Marketing, Communication, Transformation, CSI and Public Affairs
areas. Thulani started his marketing career at Gillette SA in 1993
and has held different marketing roles at Polaroid, Procter &
Gamble, Vodacom Group Ltd and The Hollard Insurance Company
Ltd. During his marketing career, he managed brands such as
Gillette, Oral B, Braun, Polaroid, Olay, Pantene, Head & Shoulders,
Vicks, Vodacom and Hollard. In addition to working in SA, Thulani
has held regional assignments in the USA, the UK and Switzerland.
Fred Swanepoel 50
Chief Information Officer
17 years
Service:
BCom(Hons), MBA, SEPSA, AMP (Harvard
Qualifications:
Business School, USA)
Fred has more than 24 years’ experience in finance, banking and
information technology. In 1996 Fred joined Nedbank to run
regional operations, Western Cape. In 2000 he brought his
operational experience into the group’s technology arena and was
appointed Nedbank Group’s Chief Information Officer in November
2008. Prior to this he held several high-level positions in the
technology environment, including Divisional Director for Finance,
Risk and Compliance, Projects and Programme Management, and
Head of Group Software Services. He has significantly repositioned
Group Technology to deliver a simplified and agile technology
landscape. Fred’s goal is to ‘leverage technology to make Nedbank
Africa’s most admired bank’.
Abe Thebyane 53
Group Executive: Group Human Resources
Service:
3 years
Qualifications: BAdmin, Postgraduate Diploma in
Management (Human Resources), MBA
Abe joined Nedbank Group and was appointed to the Group
Exco in February 2011 as Head of Group Human Resources.
Abe has 30 years’ experience in human resources, which he
acquired through the various senior and executive positions he
held in large corporations in SA. Prior to joining Nedbank Group,
Abe was Executive Head: Human Resources at Anglo American
Platinum Ltd for six years and before that he was Executive
Director: Human Resources at Iscor Ltd.
Ciko Thomas 44
Managing Executive: Consumer Banking, Nedbank Retail
Service:
4 years
Qualifications:
BSc, MBA
Ciko joined the group in January 2010 as Group Executive: Group
Marketing, Communications and Corporate Affairs. Ciko has
wide-ranging marketing and business experience in financial
services and in the consumer goods and motor industries.
He joined Nedbank from Barloworld where he was the Group
Marketing Director of the Automotive Division. Ciko was
previously General Manager of Retail Banking Marketing at Absa
Group. He has also held various management positions at SA
Breweries, Unilever and M-Net. In November 2010 Ciko was
appointed as Managing Executive for Consumer Banking in the
Retail Cluster.
Philip Wessels 55
Chief Risk Officer
Service:
18 years
Qualifications: BCom, CTA , CA (SA), Diploma in Advanced
Banking Law, Institute of Stockbrokers
Philip has held the position of Chief Risk Officer on the Group
Exco for Nedbank Group for the past 10 years. Under his
leadership, and with
the commitment and support of
management and staff within the group, Nedbank Group’s risk
management processes and governance principles have become
highly regarded in the financial services industry. In 2011 Philip
received the Risk Manager of the Year Award from the Institute
of Risk Managers of SA. Prior to his appointment as Chief Risk
Officer in 2004, Philip was a divisional director in Nedbank
Business Banking and Nedbank Corporate. In addition, he was an
executive director of BoE Ltd, Managing Director of BoE
Securities, Chief Executive of BoE International (London) and
Managing Director of BoE Bank, Business Banking and Boland
Bank between 1995 and 2003. Philip was also a partner at
Deloitte & Touche between 1989 and 1995.
79
ENSURING A SUSTAINABLE BUSINESSINFORMATION TO OUR SHAREHOLDERSDELIVERING TO OUR STAKEHOLDERSMAKING THINGS HAPPEN cluster mAnAGement
estabLisheD
LeaDership teams
CLIENT-fACING CLuSTERS
NEDBANK
CORPORATE
Graeme Auret 44
Managing Executive:
Corporate Banking
10 years’ service
Frank Berkeley 57
Managing Executive:
Property Finance
19 years’ service
Francis Brand 50
Executive Head:
Transactional Banking
27 years’ service
Grant Kelly 41
Executive Head: Risk
9 years’ service
Shamelle Maharaj 41
Executive Head:
Human Resources
16 years’ service
Priyabashni Naidoo 40
Executive Head:
Finance and Strategy
13 years’ service
Murray Stocks 47
Executive Head:
Corporate Shared
Services
22 years’ service
NEDBANK BUSINESS
BANKING
Goolam Kader 47
divisional Executive:
Cape
15 years’ service
Douglas Lines 42
divisional Executive:
Gauteng
13 years’ service
Kandis Swanepoel 48
divisional Executive:
Business Banking and
Retail Relationship
Banking Strategic
Business Unit
17 years’ service
Nomaxabiso Teyise 34
Executive Head:
Human Resources
10 years’ service
Jan Bosch 41
Executive Head:
Business Banking and
Retail Relationship
Banking Specialist
Services
16 years’ service
Herman de Kock 40
divisional Executive:
Northern
11 years’ service
Bedresh Dhanjee 44
Executive Head: Risk
24 years’ service
Brinsley du Plessis 43
Executive Head:
Innovation, Process &
Project Integration
23 years’ service
Craig Evans 48
divisional Executive:
Coastal and Inland
20 years’ service
Annette Francke 39
Executive Head:
Retail and Business
Banking Strategy,
Communication,
Group Innovation;
Business Banking
Marketing
8 years’ service
NEDBANK
CAPITAL
Anél Bosman 48
Chief Operating Officer
13 years’ service
John Chemaly 49
Executive Head:
Global Markets
14 years’ service
Karel Janse van
Rensburg 40
Executive Head: Finance
6 years’ service
Peter Lane 57
Group Treasurer
24 years’ service
Bradley Maxwell 39
Executive Head:
Investment Banking
12 years’ service
Neil McCarthy 42
Executive Head: Risk
18 years’ service
Claire Meagher 45
Executive Head:
Compliance &
Governance
8 years’ service
Terence G Sibiya 44
Executive Head:
Coverage & Origination
2 years’ service
Elsa Tshatedi 52
Executive Head:
Human Resources
1 year’s service
Johann van Zyl 46
UK Country Head
12 years’ service
NEDBANK wEALTH
Nicholas Andrew 42
Managing Executive:
Asset Management
15 years’ service
Gareth Baines 53
Managing Executive:
Insurance
2 years’ service
Lance Blumeris 42
Executive Head: Life
Insurance
16 years’ service
vince Boulle 49
Managing Executive:
Wealth Management
(Local)
9 years’ service
Lloyd Buthelezi 35
Executive Head:
Financial Planning
6 years’ service
John Gibson 51
Executive Head: Trust
and Fiduciary (Local)
2 years’ service
Nancy Gwama 42
Executive Head:
Marketing
1 year’s service
Greg Horton 57
Managing Executive:
Wealth Management
(International)
19 years’ service
Bertus Janse van
Rensburg 39
Chief Risk Officer
8 years’ service
Patiswa Jumba 41
Executive Head:
Human Resources
5 years’ service
Thulani Kunene 40
Executive Head:
Compliance
1 year’s service
walter Marte 37
Chief Financial Officer
8 years’ service
Dion Nair 38
Executive Head:
Insurance distribution
8 years’ service
Don Rogan 44
Executive Head:
Stockbroking
6 years’ service
Iolanda Ruggiero 43
Chief Operating
Officer
11 years’ service
Anees vazeer 44
Executive Head:
Short-term
Insurance
7 years’ service
80
NEDBANK
RETAIL
David Crewe-Brown 45
Executive Head: Finance,
Projects and Strategy
18 years’ service
Anton de wet 47
Managing Executive:
Client Engagement
16 years’ service
Brian Duguid 52
Managing Executive:
Nedbank Integrated
Channels
32 years’ service
Sydney Gericke 55
Managing Executive:
Retail Card and Payments
25 years’ service
Keith Hutchinson 55
Managing Executive:
Retail Secured Lending
27 years’ service
Millicent Lechaba 45
Executive Head:
Human Resources
8 years’ service
Sibongiseni Ngundze 44
Managing Executive:
Retail Relationship Banking
9 years’ service
Gavin Payne 51
Executive Head: Risk Retail
and Business Banking
30 years’ service
Sarel Rudd 58
Executive Head: Rest of
Africa
11 years’ service
Ashley Sutton-Pryce 60
Executive Head: Retail and
Business Banking Human
Resources, Communications
and Projects
40 years’ services
REST OF AFRICA
Smit Crouse 37
Managing Executive:
Investments, Alliances
and Strategy
5 years’ service
Adriaan du Plessis 54
Managing Executive:
Banking Subsidiaries
22 years’ service
wayne McAdam 53
CIO and COO
21 years’ service
Chico Naidu 58
Executive Head: Innovation,
Process & Project Integration
Business Unit
36 years’ service
NedbaNk Group | Integrated report 2013 CENTRAL CLuSTERS
GROUP TECHNOLOGy
Thabang Legae 43
divisional Executive:
Solutions delivery
6 years’ service
Thando Lukhele 40
divisional Executive:
Governance,
Compliance, Legal,
Procurement and Vendor
Management
9 years’ service
Patricia Maqetuka 55
divisional Executive:
Wholesale Banking
Technology
21 years’ service
Ray Naicker 37
divisional Executive:
Programme
Management, design
and Architecture
14 years’ service
Andrew Sematimba 47
divisional Executive:
Africa Technology and
E-Commerce
12 years’ service
Glenn Smith 56
divisional Executive:
Mobile and digital
17 years’ service
Hendrik Swanepoel 51
divisional Executive:
Risk, Security and
Shared Services
20 years’ service
Barry van Huyssteen 49
divisional Executive:
Information Technology
Infrastructure and
Operations
30 years’ service
Hendus venter 42
divisional Executive:
Retail Banking and
Wealth
13 years’ service
Andre young 45
divisional Executive:
Human Resources,
Marketing and
Communications
3 years’ service
BALANCE SHEET
MANAGEMENT
Michael Davis 42
Executive Head: Group
Asset, Liability and
Capital Management
17 years’ service
Alan Faber 49
Executive Head: Strategic
Projects, Reporting and
Execution
16 years’ service
Dhiren Haripersad 35
Executive Head:
Group Value Based
Management
3 years’ service
Anthony Johnson 36
Executive Head:
Group Credit Portfolio
Management
9 years’ service
GROUP RISK
Glynis Hunziker 42
(direct reporting into
Chair of Group
Audit Committee)
Chief Internal Auditor
18 years’ service
Gerda Ferreira 50
Head Group
Forensic Services
10 years’ service
Nick Jacobs 48
General Manager:
Group Legal and
Risk Services
20 years’ service
Sheralee Morland 49
General Manager:
Enterprisewide
Risk Management
8 years’ service
Khosi Mpungose 35
Executive Head:
Group Risk
Human Resources
8 years’ service
Anny Pachyannis-
Alman 58
General Manager:
Group Market Risk
Monitoring
16 years’ service
Johan Theron 44
Chief Credit Officer
15 years’ service
Jan van Zyl 44
General Manager:
Group Operational
Risk Management
2 years’ service
STRATEGIC
PLANNING AND
ECONOMICS
Dennis Dykes 53
Group Chief Economist
30 years’ service
Norman Edwards 48
divisional Executive:
Group Strategy
17 years’ service
Giles Needham-Clark 48
divisional Executive:
Innovation Projects
14 years’ service
ENTERPRISE
GOvERNANCE
AND
COMPLIANCE
Brigitte Burnett 46
Head: Sustainability
14 years’ service
Brenda Chetty 39
Head: Client Facing
Clusters, FAIS and
Special Projects
16 years’ service
Sicelwesihle Dlamini 45
Head: Governance and
Compliance Shared
Services
11 years’ service
Maryna Mouton 43
Head: Governance
and Ethics
18 years’ service
Bittie Smook 57
Head: Nedbank Editorial
and Language Services
32 years’ service
GROUP
HUMAN
RESOURCES
Ayn Brown 48
HR Executive:
Organisational
development
23 years’ service
Gina Davidson 39
HR Executive: Talent
Management
12 years’ service
Sarel du Plessis 52
HR Executive:
Operations
19 years’ service
Florah Ehirim 36
divisional HR Manager:
HR Business Partner
2 years’ service
Thulane Ngele 41
HR Executive: IR,
Transformation and
Compliance
1 year’s service
Dean Retief 39
HR Executive:
People development
13 years’ service
Clinton Rodgers 42
HR Executive: Rewards
Management
1 year’s service
GROUP
FINANCE
Luigi Bianco 45
General Manager:
Planning, Measurement
and Control
21 years’ service
Steven Bird 35
General Manager: Group
Financial Control
Less than 1 year’s service
Rian Cloete 40
General Manager:
Group Tax
11 years’ service
Anthony Costa 42
Business Performance
Executive
12 years’ service
GROUP
MARKETING,
COMMUNICA-
TIONS AND
CORPORATE
AFFAIRS
Thabang Chiloane 39
divisional Executive:
Public Affairs
2 years’ service
Gregory Garden 57
divisional Executive:
Marketing Capability
15 years’ service
Kershini Govender 40
divisional Executive:
Transformation, Strategy
and Alignment
11 years’ service
Konehali Gugushe 38
divisional Executive:
Corporate Social
Responsibility
6 years’ service
Sydney Mbhele 40
divisional Executive:
Group Marketing
2 years’ service
Mark Rock-Perring 46
divisional Executive:
Market and Client
Insights
15 years’ service
Ian Fuller 58
General Manager:
Business
16 years’ service
Darryl McMullen 53
General Manager:
Group
Shared Services
Centre
26 years’ service
George
Procommenos 41
General Manager:
Group IT Projects,
Business Planning
and AJTP
15 years’ service
Meshack Qacha 50
Human Resources
Executive
20 years’ service
vern Solomon 40
General Manager:
Shared Accounting
and Finance Services
8 years’ service
Alfred visagie 41
Head of Investor
Relations
13 years’ service
veona watson 47
General Manager:
Finance Strategy and
Projects
13 years’ service
81
ENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderSdelIVerInG to oUr StaKeholderSmaKInG thInGS haPPen NedbaNk Group | Integrated report 2013
BUILDING A
SUSTAINABLE
BANK
For nedbank group, sustainability
has always been about far more than
legislative compliance or public
perception. it is the single word that
represents our multifaceted
approach to the responsibilities we
have to our stakeholders.
today these stakeholders are faced with numerous
sustainability challenges relating to
limited natural
resources, the growing impact of climate change, ongoing
global financial crises and high
levels of personal
indebtedness. For this reason we consider it one of our
primary responsibilities to demonstrate our commitment
to and effectiveness in responding appropriately to the
sustainability challenges of the world in which we operate
– particularly since these challenges are material to our
sustainable success, both as a business and as a green and
caring bank. to this end, we endeavour to integrate
sustainability into every aspect of how we work and who
we are. this ranges from doing our share to create and
nurture the world we desire for current and future
generations, to ensuring deep and trusting relationships
with, and acceptable results for, our staff, clients,
shareholders, regulators and the communities within
which we operate.
82
In previous years we reported separately on the group’s activities
as they relate to environmental, social and cultural matters.
Increasingly, however, a far more
integrated approach to
sustainability is being adopted across the business through a
three-pronged approach of:
1
2
enabling
sustainability
through our
products and
services
leading
through
collaboration
and
partnership
3
managing and optimising
our own impact
For this reason we have chosen to structure our sustainability
reporting to reflect this reality, which is simply that environmental,
cultural, social and economic sustainability are inextricably linked.
SUSTAINABILITY GOVERNANCE
to ensure that sustainability issues enjoy the prioritisation and
focus they require, we have entrusted the responsibility for
integrating sustainability into every aspect of our business to our
group’s senior governance bodies.
the group transformation, Social and ethics Committee (gtSeC)
is the subcommittee of the nedbank group Ltd Board that takes
primary responsibility for monitoring and refining all sustainability
policies and ensuring that these are fully integrated across all
nedbank group businesses and activities.
this topdown sustainability governance framework allows the
business to respond quickly to sustainability risks and opportunities,
while ensuring that management oversight of all such risks and
opportunities is consistent and thorough.
the group Sustainability Committee (gSC) reports to gtSeC and
has executive and senior management representation across the
organisation. a key focus of the gSC is to facilitate a greater
understanding among our group’s bankers of the long-term
sustainability implications – for both our bank and Sa – of their
interactions. the gSC also
decisions, actions and client
communicates extensively with all nedbank staff. In recent years
the sustainability evolution and maturity of our organisation have
seen
to
implementation. In line with this, individual and team sustainability
key performance indicators (KpIs) have evolved from being purely
reduction-focused to assessing performance in terms of the
employee’s ability to leverage sustainability for organisational
growth and improved risk management.
this communication
from awareness
transform
maKIng
thIngS happen
deLIVerIng to
oUr StaKehoLderS
InFormatIon to
oUr SharehoLderS
eNsuriNG a
sustaiNable busiNess
SOCIAL AND ENVIRONMENTAL RISK
MANAGEMENT
at nedbank group we prioritise social and environmental
risk management as a central component of how we manage
our own business and how we work with our clients. to this
end responsible business management is a non-negotiable
part of our sustainable development.
Like our overall sustainability philosophy, our approach to
social and environmental risk management is highly integrated
and recognises the interconnectedness of all significant social
and environmental risks, whether directly or
indirectly,
presented through our own activities or those of our clients.
our risk management approach complies with relevant
legislation, including the Code for responsible Investment for
South africa (CrISa). We are signatories to the equator
principles and the United nations global Compact, and
through our parent company, old mutual, we adhere to the
principles for responsible Investment (prI).
risk management through cooperation
In 2013 we made the content of our social and environmental
risk policies and management processes accessible to all our
stakeholders. We provided our lending clients, in particular,
with environmental policy frameworks and the assistance of
our environmental law specialists, with the aim of helping
them to develop their own sustainability policies.
In doing so we not only manage our own risk better, but also
actively enhance our clients’ compliance and
risk
management processes, thereby protecting business value
(theirs and ours) and maximising our client value proposition.
social and environmental management system
nedbank group’s social and environmental policies are
linked to, and supported by, our Social and environmental
management System (SemS) and have also been integrated
into the group Credit policy. SemS is based on ISo 14001 and
aligned with International Finance Corporation (IFC) best
practice and equator principles’ guidelines. SemS details the
policies, procedures, resources and workflow required to
identify and assess the environmental or social impacts of
lending activities that we undertake.
Credit policies within our Business Banking, Wealth,
Corporate and Capital clusters were enhanced to include a
focused approach on high-impact industries to ensure that
the related social and environment risks are mitigated.
our social and environmental assessment tool also provides
a screening mechanism to aid finance decisionmaking within
high-risk sectors. this focused approach ensures that we
responsibly manage our social and environmental risk
exposure across our organisation. all of the assessment
criteria are linked to the relevant equator principles and IFC
performance Standards. this is to ensure that transactions
are socially and environmentally sound when tested against
international benchmarks.
In 2013 SemS underwent a number of improvements aimed
at closing identified assessment loopholes and delivering
more comprehensive and thorough results to aid in lending
decisionmaking. these enhancements enabled us to add
value to our clients by recommending adjustments or
improvements to proposed projects that served to raise their
levels of sustainability compliance.
RESpONSIBLE INVESTMENT
In 2012 nedbank group adopted the old mutual group
responsible investment standards to align with old mutual’s
commitment to the prI and CrISa. the adoption of these
standards aligns well with nedbank’s strategic positioning of
being a green and caring bank and, more importantly, enables
the bank to look at investment decisions through a new
lens, thereby facilitating better risk management and the
identification of new opportunities.
nedbank contributes 4% of old mutual group’s total funds
under management. during 2013 we addressed many of the
compliance requirements of being a signatory to the prI
such as committing to the publication of our responsible
Investment policy and Voting guidelines on the nedgroup
Investments website. the focus was on upskilling staff to
ensure a better understanding of the prI and CrISa as well
as on what needed to be adapted to integrate the prI into
the various assurance and investment businesses. this will
continue in 2014. old mutual group will submit its first
report to the prI governing body in February 2014 using
2013 data.
RESpONSIBLE LENDING
as one of the leading providers of project finance in Sa,
nedbank Capital reviews all potential project finance
transactions for environmental and social compliance
with the equator principles, IFC performance standards and
legislation. the business has adopted an
integrated
and proactive approach to compliance. Key to this approach
is compliance with the equator principles, an international,
voluntary framework aimed at ensuring a consistent
approach to managing environmental and social risks in
project financing.
the application of the equator principles since 2005 has
ensured greater consistency
in our application of
environmental and social risk management within our project
finance business. other benefits have arguably been
improved client engagement on these issues as well as
enhanced protection for project-impacted ecosystems and
communities. With the adoption of equator principles III in
the Corporate and property Finance business areas, we
anticipate reaping similar benefits.
In 2012 a large number of deals were in compliance with the
equator principles. this momentum was maintained as 15P
transactions that comply with the equator principles had
their first drawdowns in 2013, thanks to the completion of a
number of oil and gas and project finance transactions,
particularly within the renewable-energy sector.
equator principles deal activity
total number of deals – first drawdown
Category a
Category B
Category C
total value of deals (US$m)
2013
15P
14
1
965
2012
2011
2010
2009
15
6
9
2
1
1
1
1
5
1
3
1
938
172
25
174
Understand-
ing material
matters
14–20
report
from group
transfor-
mation,
Social and
ethics
Committee
Chairman
58–59
grI
FSSS: FS1,
FS2,
FS3,
FS5
grI 3.1: 1.2,
4.1,
4.7,
4.8,
4.9,
4.10,
4.11,
4.12
grI 3.1: en26,
hr1,
eC1
Supplemen-
tary
information:
Sustainable
develop-
ment
review
83
NedbaNk Group | Integrated report 2013
BUILDING A SUSTAINABLE BANK (CoNtiNued)
1
enabling sustainability through
our products and services
in addition to offering our clients the means and opportunities to achieve
their personal or business financial goals, nedbank group’s banking,
lending and investment solutions and services are built on the foundation
of responsible financial services.
From the incorporation of sustainability
considerations into credit assessments to
supporting clients through a balanced and
carefully considered approach to their
financial needs, we place a priority on
ensuring that what we offer helps create
a better future for all.
ENABLING SA’S GREEN
fUTURE
Key to the sustainable future of Sa
is our country’s ability to develop
and nurture a green economy.
We embrace the responsibility and
opportunity to help nurture such
a green future through innovative
product development and
sustainability-focused investment.
investing in sa’s green economy through reipppp
the renewable energy Independent power producer procurement programme (reIpppp) forms
an integral part of the Sa government’s Integrated resource plan 2010 and seeks to achieve a
significant increase in the proportion of the country’s energy needs being met through
independent, renewable-energy sources. this vital transition to a broader energy supply is
crucial to securing the energy supply needed to encourage economic growth.
Since the inception of reIpppp our investment bank has been highly involved in this forward-
thinking programme and it has delivered numerous innovative finance solutions to organisations
bidding to become independent power suppliers to Sa.
the details of nedbank’s involvement in and support of reIpppp can be found in the case study
in the nedbank Capital operational overview online. as a result of its extensive involvement
nedbank effectively funded and supported projects that will deliver 1,478mW or 38% of the
total renewable-energy capacity allocated by reIpppp since its inception – making us a key
enabler of the country’s green future.
the Nedbank Green savings bond
this fixed-term investment offers flexible investment terms ranging from
18 months to five years, a competitive rate and guaranteed returns. more
importantly, it allows regular investors to make a tangible contribution to
environmental sustainability because invested funds are earmarked for the
support of renewable-energy projects in Sa. Since its inception r3,6bn has
been
in the nedbank green Savings Bond, of which
r2,7bn flowed in during 2013.
invested
84
maKIng
thIngS happen
deLIVerIng to
oUr StaKehoLderS
InFormatIon to
oUr SharehoLderS
eNsuriNG a
sustaiNable busiNess
the Nedbank Green index
the nedbank green Index (ngI) is an innovative equity benchmark for investors who place a
priority on incorporating environmental sustainability criteria into their investment decisions. In
2013 the ngI was significantly outperformed by the JSe/FtSe all-share Index (aLSI) – 7,8%
(2012: 26,1%) compared with 21,4% for the broad market index. this is in stark contrast to
previous work on the relative performance of the ngI, which suggested that the stock selection
process, which is primarily based on climate change credentials, had played a significant role in
the ngI’s outperformance of the aLSI. For the most part, the companies within the ngI with
the strongest environmental credentials have continued to provide positive contributions to the
relative total return. however, a number of companies that had a particularly strong share price
performance in 2013 were excluded from the ngI entirely, although in most cases this was not
because of poor environmental credentials, but rather because of non-public disclosure. For
further details on the ngI please refer to nedbankcapital.co.za.
Building
enduring
relationships
30–47
grI
FSSS: FS8,
FS14
grI 3.1: 2.2
grI
FSSS: FS5
Supplementary
information:
Sustainable
development
review
exchange-traded Fund (bGreen etF)
We launched our nedbank Bgreen etF in december 2011. at the end of
2013 the Bgreen etF had a market capitalisation of r131m (2012: r119m).
the Guaranteed exchange-traded Fund plan
nedgroup Life offers this investment alternative as part of its Secure
Investments portfolio. Based on the Bgreen etF, and provided through
nedbank Financial planners, it offers our clients another way of participating
in, and benefiting from, the work we are doing to deliver competitive,
environmentally driven investments to all investors. In 2013 a total of r14,4m
was invested through this platform.
Carbon financing
Carbon markets have been through a particularly turbulent time in recent
years because of continued uncertainty surrounding long-term international
carbon commitments. It
is anticipated that greater clarity regarding
international markets will emerge by the end of 2015. domestically, the
proposed carbon tax could bolster the local carbon market for selected
offsets. given our commitment to driving the green economy, our Carbon
Finance Unit continues to monitor developments in this area.
Nedbank Green affinity
We make it possible for our clients to support environmental causes by
choosing to use nedbank green affinity banking, investment or insurance
products. as they do so, we donate money to the WWF nedbank green
trust on their behalf at no cost to them. In 2013 nedbank green affinity
donations to the WWF nedbank green trust increased by 14% to nearly
r14,8m (2012: r12,9m). as a direct result of concerted efforts to raise
awareness of the nedbank green affinity, we also added approximately
50 000 nedbank clients to the programme.
Since its inception the nedbank green affinity programme has raised
more than r150m in support of nearly 200 environmental projects
across Sa.
Greenbacks
the nedbank greenbacks
loyalty programme
includes a ‘green stream’
that allows members to
redeem loyalty points for
goods that are
environmentally friendly.
In 2013 more than 750
of these ‘green’ products
were redeemed by our
environmentally aware
clients, with a total value
of r500 000.
The WWf Nedbank Green Trust
1990 nedbank group created a
In
partnership with WWF-Sa through the
WWF nedbank green trust as an
innovative and sustainable way to raise
funds in support of environmental causes.
the WWF nedbank green trust’s mission
is to bring together environmental and
social sustainability. put another way, it
seeks to enable people to live and work in
harmony with nature, for the sustainable
benefit of both. the trust funds projects
in climate change, freshwater conservation,
marine conservation, the preservation of
outstanding places, the conservation of
species of special concern and conservation
leadership. For more information on the
WWF nedbank green trust go
to
nedbankgreen.co.za.
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BUILDING A SUSTAINABLE BANK (CoNtiNued)
ENABLING SOCIAL SUSTAINABILITY AND DEVELOpMENT ThROUGh
INVESTMENT
We recognise that leadership in social sustainability requires more than just a commitment to supporting
communities; it also demands a willingness to put our money where our mouth is and invest in people,
projects and businesses.
our continued good performance in this regard illustrates the success of our efforts to meet the requirements
of the Financial Sector Code (FSC).
empowerment financing
Comprising the two elements of targeted investments and BBBee transaction finance,
empowerment financing is an integral part of our overall transformation commitment. It involves
investment in the economic development of empowered corporates, emerging black farmers,
municipalities and emerging black small and medium enterprises. at the end of 2013 we had
invested a total of r36bn in empowerment financing since 2009. We are pleased with the progress
we have made in lending in this area, but also recognise that there is still much to be done.
BBBEE transaction financing
BBBee transaction financing is the extent to which we help promote
the productive and sustainable participation of black companies and
black people in each sector of the economy through various forms of
credit extension. this includes all transactions for acquisition by
black people, including women, of direct ownership in new or
existing companies other than black Smes. these transactions also
include joint ventures with debt financing of or other forms of credit
in BBBee companies.
extension to and equity
a transaction of r1,8bn was our most notable deal in 2013.
investments
enterprise development
our approach to enterprise development (ed) is multifaceted and
includes a mix of funding, transactional and support products and
services that provide flexibility and adaptability across all industries.
this allows us to design and tailor unique solutions, in line with the
diverse needs of entrepreneurs and businesses, ultimately creating
job opportunities and supporting socioeconomic development.
regional teams with specialist and expert support, such as the
national agriculture team, continue to drive the business imperative
of transforming our client base and supporting emerging businesses,
with a particular focus on supporting the vital small, medium and
micro enterprises (Smme) sector.
over the past two years more than 2 000 entrepreneurs have
benefited from our enterprise development
investments. In
accordance with the FSC requirements we invested an additional
r59,5m in non-recoverable initiatives in 2013.
Targeted investments
targeted investment is an opportunity to
extend the effectiveness of nedbank’s
social sustainability efforts through debt
financing of, credit extension to, or equity
investment in Sa projects that have the
potential to help close any gaps that still
exist in the country’s economic development
and facilitate job creation for future growth.
our targeted investment activities include:
■ transformational infrastructure financing
■ Black agriculture finance
■ Black small-and-medium-enterprise
(Sme) financing
■ affordable housing
at the end of 2013 we had invested a
total of r18bn in targeted investments
since 2009.
during 2013
the affordable housing
development finance unit concluded a
number of new
funding opportunities,
including a facility for International housing
Solutions, to bolster the affordable rental
market and create quality accommodation
for people in the lower-income range who
cannot prove affordability to buy homes.
also during 2013 the unit disbursed more
than r1bn towards new affordable housing
developments across Sa, with more than
12 000 new home opportunities created for
2013 and cumulatively over 25 000 homes
during the past five years.
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ENABLING ACCESS TO fINANCIAL
SERVICES fOR ALL
nedbank group remains committed to enabling social
transformation and economic upliftment through access to
finance for all. We are convinced that true access to finance
involves a combination of physical accessibility to transaction
points and financial education for maximum empowerment.
over the past four years we have opened 220 retail banking
outlets (branches and alternative outlets, excluding
personal Loans kiosks) and increased our atm footprint by
1 529 (or 83%) across the full spectrum of Sa communities.
this means that nedbank’s retail banking footprint has
grown by 41% to 763 outlets across the country since
2009. the Branch of the Future design choice and network
of formats have further enhanced the relevance and appeal
of nedbank to all in Sa by improving the instore experience
through increased self-service capabilities, client-friendly
queuing systems and emphasis on client education.
altogether 28 outlets have been converted to the new
formats, with the full rollout plan seeking to cover 77% of
branches by 2016. Innovations in digital (notably mobile
and telephone) banking, including the launch of the
nedbank app Suitetm in 2012, have further increased
access to nedbank’s banking services for all in Sa
regardless of physical location.
recently, this access strategy has seen us intensify our
focus on rural areas, with initiatives undertaken in such
far-flung communities as Kuruman in the rural northern
Cape, Bela-Bela in Limpopo, elliotdale in the eastern Cape
and nquthu in KwaZulu-natal, to mention just a few.
Where there’s a lack of proper infrastructure, we partner
with leading supermarket chain outlets such as pick ’n pay
and Boxer Stores to offer inretailer facilities. a partnership
with the passenger rail agency of South africa (praSa)
will also see nedbank retail branches established in selected
praSa stations across Sa.
Making business more mobile with pocketpos™. In
February 2013 nedbank cemented its position as a
leading innovator in the business-banking space
with the launch of pocketpoS™. this live emV-
certified mobile point-of-sale (poS) solution, a first
in Sa, enables our clients to process debit and credit
card transactions anywhere and any time using a
smartphone connected to a secure card reader.
For our clients the pocketpoS™ eliminates the risk
of carrying cash, avoids cash deposit fees and, most
importantly,
increases payment success and
thereby improves cashflow for small businesses
and contractors.
By the end of 2013 more than 1 200 nedbank
pocketpoS™ units had been purchased by business
clients across Sa.
Growing access to entry-level banking
as a direct result of our comprehensive mass market
strategy, which was introduced in 2011, we have generated
significant year-on-year growth in entry-level banking and
now serve more than 3m clients. a key solution that has
contributed to our success in this market is nedbank
Ke Yona. Launched in 2011, this eLB offering is designed to
attract new entrants into the formal banking market.
Ke Yona allows these previously unbanked individuals to
transact, save, borrow and acquire
insurance easily
and affordably.
imbizo: Helping to build economically viable and
sustainable communities
In 2005 the Imbizo programme was launched as a
partnership between nedbank, mutual & Federal,
old mutual and our black business partner,
WIphoLd. Imbizo seeks to
ignite economic
activity
in primarily rural markets, with an
emphasis on building sustainable communities
through commercial and corporate
social
investment activity to improve people’s livelihoods.
the model focuses on identifying interventions
that can contribute to building economically
viable communities. these interventions include
facilitating the creation of micro enterprises,
migrating these up the value creation chain
(from micro enterprise to small business), and
encouraging job creation through medium-to-
large-scale commercial investments.
an additional component of the Imbizo programme
is the Zakheleni collective lending product. If a self-
help group or club of five to 12 members saves
collectively for six months, it may apply for a loan of
up to three times the amount it has saved, capped
at r10 000 for the first loan, and repayable over
22 months. When the first loan has been repaid in
full, the club can apply for a second loan. to date the
Zakheleni product has registered more than
880 clubs and issued over 1 500 loans. more than
100 formal micro enterprises, and many more
informal enterprises, have been formed as a result of
this unique offering.
In 2013 we introduced the Imbizo Business acumen
pilot programme to provide small-business owners
with valuable training in money management skills,
establishing a market, separating personal and
business accounts and understanding input costs to
ensure the growth of their enterprises.
its
inception
135 participants have
Since
registered for the programme and 112 owners
of microbusinesses have graduated. a total of
r556 000 in funding has also been extended to
graduates of the programme to help them grow
their businesses.
Building
enduring
relation-
ships
30–47
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FS2,
FS13,
FS14
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mation
report
Supplemen-
tary
information:
Sustainable
develop-
ment
review
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BUILDING A SUSTAINABLE BANK (CoNtiNued)
2
leading through collaboration
and partnership
at nedbank group we acknowledge that the best way to maximise our positive
sustainability impact is through partnerships with like-minded individuals,
groups and organisations. we therefore proactively seek out such partnerships
across all our stakeholder groups to contribute towards increased awareness
and understanding of the sustainable development imperative.
COMMITTED TO SOCIAL SUSTAINABILITY ThROUGh CARING
We believe wholeheartedly in caring for the communities in which we operate, and in expressing that care through action.
a thriving bank needs a thriving community, and so we direct our socioeconomic development (Sed) towards seven
interlinked areas that also help to build our future client base. these areas are education (the knowledge economy),
community and skills development (job creation), health (building healthy communities), the environment, sport and arts
and culture development, and child welfare and protection.
In terms of the Financial Sector Code, relevant Sa companies are required to spend at least 0,7% of their net profit after tax
(npat) on Sed initiatives. In 2013 we far exceeded this compliance requirement, placing r89m1 (r111m including community
trust and the nedbank private Wealth Foundation) (2012: r95m) in socioeconomic development projects across our
various focus areas. most of this investment was facilitated through:
■ the Nedbank Foundation. In 2013 a total of r36m was
disbursed by our primary corporate social investment
(CSI) arm, the nedbank Foundation, which focuses on
long-term contributions to education, skills
development and job creation, health and community
development. the foundation supported 374 projects,
reaching more than 8 000 beneficiaries.
■ the Nedbank external bursary Fund. We allocate a
number of external bursaries, which amounted to a
value of r11m in 2013. the bursaries are administered
by the national Student Financial aid Scheme (nSFaS)
through a public-private partnership.
■ staff volunteerism. this is intrinsic to nedbank, and
many staffmembers take the time to apply their skills
and talents to improving the lives of others. It also helps
staff understand the communities we are trying to serve.
%
19,96
1,42
9,92
4,02
5,21
NEDBANK SOCIOECONOMIC DEVELOPMENT
SPEND 2013
42,83
■ Education
■ Environment
■ Health
■ Sport
■ Welfare
■ Arts and culture
■ Community and
skills development
■ Nedbank affinity programme. our clients have become
16,64
part of our CSI continuum through our successful
nedbank affinity programme, through which we
donate to causes and organisations on behalf of clients
(and at no cost to them). In 2013 a total of r27,8m
(2012: r20,9m) was distributed across the four
affinities (green, Children’s, Sport and arts), with
most of the growth coming from the recently
launched investment-linked affinity accounts and
electronic statements.
In the past five years nedbank has spent over r400m on
Sed projects. through our Sed we are striving to accelerate
transformation in an effort not just to raise the bar in terms
of compliance with the FSC, but also to entrench
transformation within our organisational culture, enhance
our commitment as a corporate citizen, and continue our
drive to become a bank for all.
1 Reporting against FSC measurement principles.
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ThE NEDBANK CONSUMER EDUCATION
pROGRAMME
Launched in 2004, this programme continues to deliver
excellent results, providing clients and potential clients
with information and insights to ensure they make informed
decisions for financial wellbeing. In 2013 we invested r8,1m
in our consumer education programme, which benefited
almost 54 000 consumers across all nine provinces. Some
of the education initiatives included under the Consumer
education programme are:
■ Teach Children to Save South Africa™ (TCTS SA™).
■ Nedbank/Bona partnership. provides Bona magazine
readers with accessible and relevant financial education.
■ Nedbank how-to guide. Low-income earners are
introduced to essential banking basics.
■ Consumer learning programme material. Learning
modules available are Banking products and Services,
Buying on Credit, personal Budgeting and Insurance
and assurance.
pARTNERING TO CREATE A fUTURE
fOR SA’S YOUTh
■ The Nedbank Graduate programme. a total of
3 334 graduate applications were received for the
2013 graduate intake, and 134 were accepted.
the intention behind the programme is to ensure that
nedbank can recruit, develop and retain the best
graduate talent in the market – people who can add
value to our business and the industry as a whole.
■ SAGDA Graduate programmes. the programmes of the
South african graduate development agency (Sagda)
align with nedbank’s focus of enabling young people to
enter and compete in the job market. We contributed
r1m to Sagda’s prestigious internship programme in
2013, which saw young graduates enter the job market
through placement with the department of public Works.
■ Enactus SA. Since 2009 nedbank has invested in
enactus Sa (previously SIFe Sa), which helps university
students gain a practical understanding of economics
while developing a culture of ethical business conduct.
through our partnership with enactus Sa, nedbank
group human resources has also been able to recruit
high-quality students into the graduate programme.
■ Nedbank External Bursary programme. We continue to
help fund students who do not have the financial means
to study fulltime towards a first degree through Sa
public universities. In 2013 altogether 161 (2012: 249)
bursaries were awarded. the total value of the support
remains constant, even though increasing education
costs and a more complete bursary offering per student
have resulted in a reduced number of students being
supported each year. the programme is a vital part of
our talent pipeline development as it serves to equip
and attract talent within our three-year skills plan.
■ Nedbank Learnership programmes. Learnerships are a
vital means of contributing towards addressing the
crisis of scarce skills in the Sa financial services
industry. all our learnership programmes are accredited
by the South african Qualifications authority
(SaQa), which requires attendance of classes as part
of the learning process. In 2013 seven new
learnerships were added to the nedbank portfolio,
bringing the total number offered to 16. these were
attended by a total of 1 307 learners, including
unemployed graduates, matriculants and current
nedbank employees. the nedbank-funded
learnerships range from national Qualifications
Framework (nQF) level 3 to nQF level 7.
■ Nedbank 4me – My future My Bank. targeted at Sa
youth, this banking solution encourages and enables
young people to save and to build their financial fitness
from an early age. nedbank 4me is supported by four
pillars – ‘4spending’, ‘4saving’, ‘4growing’ and ‘4good’
– and comprises a full transactional banking account with
no monthly fees and a number of free initial transactions.
thereafter pay-as-you-use pricing applies. Free enotes
and self-service banking complete the offering.
this banking product is supported by an entrepreneurial
and business skills programme reaching approximately
135 000 learners at 300 schools in 2013.
pARTNERShIpS fOR EffECTIVE
SUSTAINABILITY EDUCATION
the Nedbank Green Living Guide
Launched at the green Building Council Conference in
october 2013, this detailed sustainability guide is produced
in collaboration with the Sustainability
Institute and
endorsed by the green Building Council South africa. the
aim of the publication is to encourage all South africans to
adopt a more sustainable lifestyle so that they can enjoy the
economic, social and environmental benefits that such an
approach can deliver. It is available free to nedbank staff and
clients, as well as to the general public. Since it was launched
more than 2 000 copies have been distributed. It can be
downloaded from nedbankgroup.co.za.
Greening Your business
established in 2010 in collaboration with Business Day, the
greening Your Business programme continues to grow in
popularity among Sa businesses of all types and sizes.
In 2013 this innovative digital sustainability course was
again updated and expanded with the addition of five
new modules covering green company policies, facilities
and supply chain management, sustainable event
management and green living. a 10-part series called
Green Living at Home was also added. during the year
under review more than 1 350 businesses registered for
the course.
Nedbank Sustainability Outlook
Nedbank Sustainability Outlook is researched on behalf of
nedbank group by the University of Cambridge programme
for Sustainability Leadership and distributed to more than
100 000 readers with the aim of encouraging debate
around various sustainability issues. In 2013 topics ranged
from impact investment, climate change, electromobility
and the issues and challenges around nuclear energy and
shale gas.
grI
FSSS: FS5,
FS16
transfor-
mation
report
Supplemen-
tary
information:
Sustainable
develop-
ment
review
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BUILDING A SUSTAINABLE BANK (CoNtiNued)
future generations grow up with a
entrenching sustainable thinking in schools
and communities
We understand the importance of ensuring that our
country’s
full
understanding of the value of sustainability as well as a
knowledge of how to entrench it into the way they think
and act. We are involved in a number of programmes
aimed at instilling this sustainability mindset, thereby
ensuring that we have a healthy world in which to operate
in the future, including the following:
Caring for Communities
this programme has grown steadily and now sees hundreds
of nedbank staffmembers actively involved in educating
learners, teachers and communities on all aspects of
sustainable living.
Since inception the programme has involved 3 000 nedbank
staff volunteers and touched the lives of over 6 000 learners
and 1 600 adults at over 180 schools. In 2013 altogether
650 nedbank staffmembers volunteered to implement
56 projects (vegetable tunnels and rainwater harvesting
tanks) at schools around the country. Forty sustainability
workshops were held, and 2 100 learners were reached.
twelve branch openings were also accompanied by
community upliftment projects with a
focus on
environmental sustainability.
Lean in Education
Complementing the extensive work we undertake in
education across Sa, nedbank Lean practitioners
volunteered their time to facilitate personal mastery and
Lean in education workshops with teaching bodies in
12 schools in 2013.
WORLD WIDE fUND fOR NATURE SA
nedbank group first partnered with the World Wide Fund for nature Sa
(WWF-Sa) in 1990, and this led to the establishment of the WWF nedbank
green trust.
the partnership has been further strengthened through our involvement in and
support of various WWF-Sa programmes:
The WWf Water Balance programme. access to clean drinking water is
not only a basic human right, but it is also essential for economic growth.
For this reason we have invested r9m in the WWF Water Balance
programme, which is aimed at clearing alien vegetation at key water
catchment areas around the country. our investment is over a five-year
period and, since inception in 2011, has seen 193 ha (2013: 63 ha) of alien
vegetation cleared. this has not only ensured the release of over
400 000 kℓ (2013: 131 000 kℓ) of water into the country’s ecosystem but,
given the labour-intensive nature of the clearing work, has also created
nearly 8 000 (2013: 3 368) workdays for members of communities in and
around the targeted areas.
as part of the programme in 2013 nedbank provided a local Wakkerstroom
community in mpumalanga with financial education and banking services.
the team also handed over 50 hippo water rollers (a 90 ℓ device that
assists with the transportation of water to households where it is not
available on tap), a vegetable tunnel and solar chargers. this type of
participation is key to achieving the deliverables of the Water Balance
programme as it enhances our relationship with the community and
demonstrates the mutual benefits of the programme.
WWf Nedbank Green Trust Graduate programme. the programme
aims to support the development of a new cadre of young professionals
who serve both the environment and the development agenda of Sa.
to achieve this the programme funds part of the WWF postgraduate
placement programme, which places young graduates with an honours or
master’s degree in environmental sciences on 18-month internships that
allow them to develop core conservation and professional skills under the
guidance of an appointed mentor.
90
WWf-SA Sustainable Agriculture
innovative
this
programme.
programme seeks to promote and
enable sustainable agriculture as a
means of minimising the adverse
impacts of farming on the environment.
It also raises awareness of the need
for good agricultural stewardship as
a key part of addressing food security
challenges
In 2012 we
committed r8,3m in support of this
vital programme.
in Sa.
In 2013
it achieved a number of
significant successes across all the
areas of agriculture it targets, including:
■ good advances in awareness
and support among all stakeholders
within the fruit and wine
industries;
■ the provision of meaningful inputs
into the establishment of a national
framework to support sustainable
agriculture;
■ the acquisition of funding in support
of sustainable sugar farming
initiatives; and
■ the completion of a draft code
for better production of beef and
dairy in partnership with
Conservation South africa.
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ENSURING A SUSTAINABLE SUppLY ChAIN
procurement offers a unique opportunity to express and
extend our commitment to enterprise development and
put into practice a values-driven business philosophy,
particularly in terms of our transformation imperative.
therefore go beyond
our procurement practices
compliance with preferential procurement legislation and
guidelines, and our various procurement functions work
closely with our suppliers to promote and enable greater
sustainability across our supply chain.
transformation
as a direct result of this philosophy we are able to
transform our procurement spend into an effective form
of
total
investment.
procurement spend amounted to just over r8,5bn. our
preferential procurement investment amounted to just
over r9,4bn as we managed to achieve 109% on the all
supplier spend category (2012: r8,9bn).
In 2013 our
We also intensified our focus on the environmental and
ethical performance and governance of new and existing
suppliers
introduction of enhanced
declarations on our procurement systems. this
information gives nedbank a better understanding of our
suppliers and insight into the level of values alignment.
through
the
local procurement
We continue to monitor our progress in terms of the
Local procurement accord with our first-tier suppliers.
our Vendor management System has also been
enhanced to provide detailed information on the origin
of products and services supplied. We are pleased to
have achieved a local content procurement level of
almost 78%, which translates into approximately r7,5bn
of local procurement.
prompt payment Code
nedbank group was the first signatory to the prompt
payment Code, which was implemented in 2013. the
initiative, driven by the national Small Business Chamber
(nSBC), seeks to address the cashflow challenges of
small business in their dealings with large public and
private sector organisations. We have committed to
paying micro enterprises within seven days and all other
small businesses within 30 days of the receipt of valid,
compliant and accurate invoices from approved suppliers
that have met our supplier onboarding requirements
fully. Just over 3 200 Sme suppliers were used during
2013, with total payments of r2,3bn made to them.
Greening our supply chain through proactive
partnerships
during the year under review we built more robust
sustainability considerations into our overall procurement
decisionmaking processes. We now
that
approved vendors not only demonstrate environmental
awareness, but also be actively committed to entrenching
environmental considerations and practices into all areas
of their businesses.
require
In 2013 sustainability assessments of the top 300
nedbank group suppliers (representing approximately
85% of total group spend) showed that 23% (2012: 15%)
now have formal environmental policies in place, while
41% (2012: 31%) are actively recycling.
In 2014 we will be working with these suppliers to further
their commitment to environmental sustainability.
RECOGNISING SUSTAINABILITY LEADERShIp
awarding leading sustainability efforts in various industries presents our group with an excellent opportunity to
partner with other organisations in furthering the principles of sustainability.
In addition to recognising best practices, awards serve to encourage others to adopt sustainable principles and
practices, while highlighting the importance of sustainability as a business imperative, irrespective of the industry
in which such businesses operate.
In line with our integrated approach to sustainability, we support or sponsor a range of awards across various
industries and economic sectors. these include the nedbank Capital Sustainable Business awards, the green
Wine awards and, most recently, the eston Show Sustainable Farming awards, which promote and recognise
sustainable farming practices among Sa’s sugarcane growers and producers.
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3
managing and optimising
our own impact
at nedbank group we believe that the only way to lead is from
the front, which is why we are committed to getting and
keeping our own house in order. therefore, by effectively
limiting our negative impacts, while maximising the positive,
we not only do our share to create a sustainable future, but
also position ourselves to influence others to do the same.
in Sa and the
We pride ourselves on having a stable employment
environment at nedbank, but are conscious of the unstable
impact unhappy
labour environment
employees can have on the productivity and sustainability
levels of any organisation. For this reason we prioritise
ongoing efforts to build and nurture strong and positive
relationships with all our employees. By understanding
their daily working experiences and challenges, engaging
with them, and ensuring a positive and empowering
nedbank culture, we strive continuously to build our
organisation into an employer of choice in Sa, and a truly
great place to work.
the consistent and steadily improving results of our annual
staff surveys reveal that our efforts in this regard are
delivering good results and that we are moving our bank
forward towards the realisation of this aspiration.
TRANSfORMING OURSELVES,
TRANSfORMING OUR INDUSTRY
diversity has long been an essential part of our group’s
people strategy. We want to remain at the forefront of
transformation and sustainability, not just to meet targets
and achieve FSC BBBee compliance but, even more
importantly, to entrench diversity and transformation
within our organisational culture. In so doing, we know that
we will enhance our commitment to being a good corporate
citizen, to meeting our clients’ needs even better, and to
maintaining our momentum on our way to becoming a
bank for all.
our organisational transformation vision is to be a pan-
african bank with an inclusive culture, relevant in the
societies in which we operate and admired as a business
that significantly advances the development of historically
disadvantaged people across all our stakeholder groups.
to achieve this we have developed a transformation
strategy that focuses on activities that will drive our
transformation efforts to ensure that our workforce profile
is representative of the societies in which we operate and
underpinned by all the essential factors that contribute to
an inclusive environment. this also includes ensuring that
differentiation in respect of pay and access to benefits is
defensible and not based on arbitrary or unfair
considerations.
as can be seen from our diverse employee profile, we
continue to move ever closer to being a business that is
fully representative of Sa society. International staff
represent 6% of our total staff complement. It should be
noted, however, that data provided with regard to
employment equity and the FSC relates only to Sa
employees.
as nedbank furthers its growth into the rest of africa, we
are continually striving to align all people processes with
the nedbank group policies, while ensuring adherence to
the specific countries’ local legislation and market best
practice. the subsidiaries are also impacted by the active
trade unions and industry bodies, which require local
practices to prevail. the focus in 2014 will be on auditing
the alignment of all people-related policies and processes.
Supplementary
information:
Sustainable
development
review
transformation
report
grI 3.1: La14
Fair Share
2030
22–23
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EMpLOYEE pROfILE
In 2013 nedbank group had 29 513 permanent employees, including 1 759 employees in its international operations.
employee gender proFile
62,7%
EMPLOYEE AGE PROFILE
employee age proFile (%)
%
attrition:
gender
proFile1
37,3%
4,3
9,2
14,9
ATTRITION – AGE PROFILE*
attrition: age proFile (%)
%
27,8
43,8
■ < 26 years
■ 26–35 years
■ 36–45 years
■ 46–55 years
■ 55+ years
43,6%
40
56,4%
19
18
■ < 26 years
■ 26–35 years
■ 36–45 years
■ 46–55 years
■ 55+ years
9
14
1 Total attrition rates: 2013: 8,7%P (2012: 8,2%)
EMPLOYEE TENURE
%
employee
tenure (%)
26,9
26,1
25
22
■ < 3 years
■ 3–5 years
■ 6–10 years
■ 10+ years
grI 3.1: 2.8,
La1,
La2,
La13
transfor-
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report
Female management (%)
61,5% female
managers
23% of boardmembers
are female
12,5% female executives
a progressive and empowering employment
equity plan
during 2013 we adopted a slightly different and more
inclusive approach
to developing our groupwide
employment equity (ee) plan. this rigorous process
included the use of available internal data as well as
consultation with employees in a number of the major
centres. It was aimed at better understanding the barriers
and challenges that have hindered the success of previous
plans and targets. this allowed us to gather vital input in
terms of what staffmembers believe will contribute to or
limit the development of a more inclusive corporate culture
and environment.
the nedbank employment equity Forum (neeF) includes
representation from all chairpersons of the group’s various
cluster employment equity forums. the forum meets
monthly and has been constituted in terms of the ee act to
provide a platform for consultation on ee matters.
achieving management transformation targets
Senior management targets have been particularly
challenging since 2009 and remained so in 2013. the
statistics show that achievement against targets for
african and Coloured groups is still below our ee plans, and
we will continue to focus on addressing and overcoming
these challenges.
Gender advancement
nedbank group is committed to the advancement of
women in our bank and industry. With over 60% of our
employees being female, we pay particular attention to
this focus area. In the year under review 60% of all
promotions were female, with 84,7% of those being black
female appointments.
advancement of people with disabilities
We continue to focus on advancing people with disabilities
(pWd) within our bank. to ensure that this is achieved
in the most appropriate and accommodative manner
employees are asked to declare any disabilities.
the number of pWd declarations increased from 3,43% of
all staff in 2012 to 3,73% in 2013. this was the result of
ongoing pWd awareness campaigns and workshops, and
the enhancement of the declaration portal. nedbank’s
percentage of people with disabilities is above the average
Sa corporate rate of 2%.
embracing diversity
nedbank continued its commitment to embracing diversity
in 2013 through the further rollout of the Botho pele
diversity programme. In 2013 altogether 5 027 employees
attended the workshops, which brings the total number of
employees impacted since 2008 to 20 226.
93
GRI 3.1: 4.5,
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NEDBANK GROUP | INTEGRATED REPORT 2013
BUILDING A SUSTAINABLE BANK (CONTINUED)
At the forefront of leadership transformation
The Leading for Deep Green programme provides managers
with an opportunity to understand how they lead and how
their leadership behaviours impact their teams.
The programme gained further momentum in 2013 and by
the end of the year had achieved its target, set in 2010, of
positively impacting 3 489 leaders and employees in the
organisation. Of these, 1 521 were reached in 2013.
In 2013 we also piloted our Nedbank Leader/Manager
Academy, in which training was offered to more than
100 employees.
ENABLING A COLLABORATIVE, INNOVATIVE
AND CLIENT-CENTRED CULTURE
At Nedbank Group we prioritise the creation of a unique
organisational culture and work environment as we believe
this serves as a key competitive differentiator. Maintaining
a culture that resonates with employees and inspires them
is essential for our organisation’s sustainability.
To this end a particular focus in 2013 was on building a
collaborative and innovative culture that would, in turn,
make us even more client-centred. Through the cultural
measurements, we strive to understand how our employees
experience the culture of the organisation and how closely
this aligns with what they desire. As we consider our
employees to be central to our success, we also take into
consideration the suggestions for improvement that they
provide through these survey platforms. The following
measurements are viewed in a holistic manner so that we
can plan effectively:
■ Values assessment – Barrett Survey. In 2013 we saw a
slight shift in the entropy results (from 10% to 11% ).
When seen in conjunction with the five current desired
culture matches, it still indicates a healthy culture with
good alignment between the current and desired
employee values.
■ Organisational climate – Nedbank Staff Survey (NSS).
The survey score improved from 75,5% in 2012 to
76,7% in 2013. This improvement is underpinned by
the improvement of 12 of the 14 dimension scores year
on year. Dimensions that showed statistically significant
positive shifts included Change and Transformation,
Ethics, Organisational Culture and Values, Rewards,
Recognition and Performance Management, and
Training and Development.
■ Staff Net Promoter Score. As part of our commitment
to ensuring that we are Africa’s most admired bank
– first and foremost by our staff – a Net Promoter Score
was introduced into the NSS in 2012. The 2013 results
show significant improvement, indicating that we have
15,5% more promoters than detractors in terms of
Nedbank’s being a great place to bank. There were also
19,5% more promoters of Nedbank’s being a great place
to work.
■ Hewitt Engagement Survey. The annual Hewitt
Engagement Score measures how intellectually and
emotionally involved Nedbank employees are in their
94
work. The year 2013 saw the Nedbank Engagement
Score positively increasing by 1% to 72%. This score
again puts us in the high-performance range and well
above the average global financial services score of
59%. To build on this we have developed an
engagement strategy, which will actively contribute to
all employees’ experiences and further increase their
engagement levels. This will be implemented in 2014.
DEVELOPING, EMPOWERING AND
EQUIPPING OUR PEOPLE
We endeavour to create a culture of collaboration and
innovation, where employees are given the opportunity to
grow and thrive, so that they can work towards attaining
their goals, prepare themselves for future roles and
opportunities, and be instrumental in the organisation’s
achievement of its objectives.
Enabling employees to plan for the futures
they want
For us, continuous learning is the responsibility of both the
employee and the organisation. We encourage all
employees to plan their development thoroughly to ensure
that they achieve the growth they need to realise their
aspirations and benefit the organisation. Development
discussions are held twice a year as part of the formal
annual review process. Employees are able to plan and
track their development on an online system. In 2013 a
total of 21 238 (2012: 23 361) employees had development
plans captured on the system.
Outcomes-driven training and development
Training and development are integral to this philosophy. In
2013 we recorded an average of 55 hours (2012: 44 hours)
of training per employee, with an average of 56 hours for
females. This aligns with our gender advancement focus.
In 2013 we invested R396m (2012: R352m) in training.
EFFECTIVE TALENT MANAGEMENT
In 2013 we implemented our Integrated Talent Framework,
which provides line managers with a view of how to
enable effective talent management by demonstrating
how the different HR practices interlink.
A key component of the framework is the conversation that
forms part of the annual talent review process. These
include discussions between managers and
their
employees on career aspirations, retention drivers and the
development objectives of individuals.
Acquiring and optimising talent
We believe that having the right people in the right jobs is
of the utmost importance to the realisation of our vision to
be Africa’s most admired bank. Occupational assessments
form an integral part of selecting the right talent by
ensuring that we employ those with the right skills and
attitudes to match and complement our corporate culture.
Occupational assessments are used to predict the likely
future performance and potential that the individual may
display in the workplace. These assessments improve the
efficiency of the recruitment process by allowing us to
make more informed recruitment decisions based on
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objective information. not only does this benefit the
it also enables us to evaluate an
organisation, but
individual’s potential to grow rather than just the skills he
or she demonstrates. these assessments also provide
significant benefits for employee development.
REWARDING fOR pERfORMANCE
performance planning at nedbank group ensures the
alignment of our strategic business intent and the
development and achievement of personal performance
objectives. this is achieved through a scorecard approach
from overall group and cluster
cascaded down
performance
that each
indicators, which ensures
employee is able to contribute to the organisation’s
success.
In 2013 a total of 97% (2012: 96%) of employees
participated in the final performance review process,
confirming their ratings on our self-service hr portal. In
addition to providing formalised input for development
purposes, the outcome of the final performance review is a
primary input into the annual remuneration review process.
this is in support of our reward-for-performance objectives.
our approach to reward is based on a total reward
philosophy. In addition to our core reward programmes,
which are set out in detail in the 2013 remuneration report,
we offer a number of banking and lifestyle products that
provide access to a range of very competitively priced
goods and services.
SUSTAINABILITY ThROUGh
EMpLOYEE WELLBEING
given the rigours of working in the fast-paced financial
services environment, employee wellbeing is important.
our wellness strategy therefore aims to help employees
foster a long-term commitment to a healthy lifestyle and
the proactive limitation of health risks. this strategy is
complemented by a range of employee benefits, including
medical aid and retirement funds.
the Nedbank employee Wellbeing programme
our employee Wellbeing programme ensures that we are
able to help employees respond adequately to the
challenges they may encounter in their lives, which helps
us build a more effective, more productive workforce.
the employee Wellbeing programme provides assistance
and support with issues such as emotional and personal
difficulties, family and relationship concerns, alcohol or
drug abuse, stress and change management, financial
legal concerns, hIV/aids, violence and
matters,
bereavement.
the overall employee Wellbeing programme engagement
rate in 2013 was 42%, while individualised usage of the
core counselling and advisory services was 20,3% (2012:
19,6%). this is higher than the average uptake of such
services for the financial services sector in Sa, and we
believe it is a result of our ongoing efforts to raise awareness
of the service and encourage our employees to make full
use of it. the most common themes for 2013 were
relationship, stress and organisational issues.
Managing lifestyle diseases in the workplace
nedbank is committed to addressing lifestyle diseases
proactively and
in a positive, supportive and non-
discriminatory manner. to this end we have developed a
holistic and inclusive wellness strategy that includes
ongoing education and health screening.
We regularly offer our employees the opportunity to be
tested for lifestyle diseases such as cardiovascular disease,
diabetes and hIV/aids, while our ongoing education and
health screening programme helps them to gain a better
understanding of their personal health risk. It also gives
nedbank’s management a good understanding of the
health risks faced by employees, allowing for appropriate
intervention planning. In 2013 a total of 3 703 employees
underwent voluntary testing for various lifestyle diseases
as part of nedbank Wellness days (2012: 1 211).
planning for retirement
In 2012 we
launched our planning for retirement
workshops. aimed at employees who are 55 and older,
the workshops tackle the psychosocial as well as financial
aspects of preparing for and taking retirement. the
feedback from the approximately 400 employees who
attended was overwhelmingly positive, so the programme
will be opened to employees of all ages in 2014, as we
believe planning for retirement should start as early
as possible.
enabling staff volunteerism
nedbank’s volunteerism programmes form an integral part
of our CSI agenda and offer a tangible way for employees
and clients to become personally involved in tackling the
social, economic and environmental issues that pervade
for nedbank group
Sa. Volunteerism opportunities
staffmembers
International
include team Challenge,
mandela day, the Caring for Communities programme,
nedbank payroll giving and the Local hero programme.
ENSURING hARMONIOUS EMpLOYEE
RELATIONShIpS
as part of our commitment to promoting and fostering
good employee relations, we recognise the right of our
employees to representation, freedom of association and
collective bargaining. Combined representation by the
recognised unions, IBSa and SaSBo, accounts for 44,4%
of employees in the bargaining unit. the bargaining unit
comprises 18 091 employees and the non-bargaining
unit makes up the balance.
We engage
in annual salary negotiations with all
recognised trade unions representing our employees. In
2013 these salary negotiations took place over three days
and an overall salary increase of 8% (distributed in
accordance with an agreed matrix) was agreed for
unionised employees.
monthly consultation meetings with the unions ensure
that sound employee relations practices are consistently
applied. as a result of constructive consultations between
grI 3.1: La4,
La5,
La8,
La12
transfor-
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information:
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95
NEDBANK GROUP | INTEGRATED REPORT 2013
BUILDING A SUSTAINABLE BANK (CONTINUED)
all stakeholders, retrenchments were kept to a minimum
in 2013, with only 11 forced retrenchments because of
operational requirements. The minimum notice period for
bargaining and non-bargaining units, as specified
in
agreements, is three months for any significant operational
changes. Where necessary, we also consult regarding
occupational health and safety matters.
Documentation pertaining to injuries on duty is kept at a
central portal within the Health and Safety Department.
Our accident reporting and recording procedure further
includes the recording of minor first-aid incidents, medical-
related incidents and injuries sustained by contractors
and visitors if our first aiders and medics attend to
these incidents.
The Nedbank Grievance Policy and Procedure gives our
employees an accessible channel through which to raise
any issues or dissatisfaction without fear of victimisation or
discrimination. A total of 249 grievances were effectively
managed in 2013. These ranged from disputes concerning
victimisation and discrimination to specific complaints
against managers.
Consistent adherence to fair employee relations processes
has ensured that referrals to the Commission for
Conciliation, Mediation and Arbitration (CCMA) were
kept to a minimum, with 106 matters referred to the CCMA
for the year, compared with 133 in 2012. A total of 58 cases
were settled (compared with 42 in 2012). Only one of the
referred cases resulted in a decision against Nedbank
(2012: 4).
OCCUPATIONAL HEALTH AND SAFETY
We place a priority on ensuring the occupational health
and safety of our employees, clients and contractors, and
make every effort to embed health and safety into our
corporate culture. All our SA entities comply fully with the
Occupational Health and Safety Act, 85 of 1993, including
its regulations, as well as the Compensation
for
Occupational Injuries and Diseases Act, 130 of 1993.
Our group subsidiaries are required to comply with relevant
local occupational health and safety laws in their countries,
as well as with the Occupational Health and Safety Policy
of the group.
Occupational health and safety committees
All our group sites have occupational health and safety
committees in place.
Incident recording and reporting
In compliance with the Compensation for Occupational
Injuries and Diseases Act, 130 of 1993, our Health and
Safety Department records, reports to the Compensation
investigates (via the appointed
Commissioner, and
Accident Investigators) all workplace injuries.
The table below reflects incidents and injuries recorded
in 2013:
Category
First aid (minor incidents)
Medical
Workmen’s Compensation
claims – Nedbank
employees
Workmen’s Compensation
claims – Contractors
Fatalities
Near-miss incidents
Days lost
2013
325
1361
40
1
22
7
2012
450
111
44
7
1
–
404
346
1 Medical incidents were related to medical conditions and were not caused by
work-related injuries.
2 The fatalities were related to medical conditions and were not caused by work-
related injuries.
In 2013 a total of 2,2% (2012: 1,9%) man-days were lost
because of sick leave.
Occupational health and safety education
and training
Comprehensive occupational health and safety training is
available on the Nedbank Group intranet site. It is
compulsory for all our employees to read and acknowledge
the Occupational Health and Safety Policy of the
group annually.
Risk control: compliance and emergency
procedures
Emergency procedures are in place for all our headoffices
and retail outlets. All headoffice sites are also equipped
with evacuation chairs, essential medical equipment, first-
aid rooms and portable public address systems for
emergency use. All occupational health and safety
appointees are fully trained in the relevant emergency
procedures. We hold two annual evacuation drills per year
at all headoffice buildings and one drill in every retail outlet.
It is compulsory for all staff, contractors and visitors to
participate in these drills and disciplinary measures are
taken for non-compliance with this requirement.
GRI 3.1: LA7
Transfor-
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tary
information:
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ment
Review
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COMMITTED TO LEVERAGING OUR
CARBON NEUTRALITY
Carbon neutrality
nedbank group achieved carbon-neutral status in 2010
and was the first financial services organisation in africa to
do so. the carbon-neutral status propelled us into the next
important phase of our environmental sustainability
journey. the achievement also added momentum to
the realisation of our becoming a leader and driver of
sustainability in Sa.
In the years since we achieved carbon neutrality we have
been able to leverage this position to enhance our client
value proposition, contribute to the development of Sa’s
green economy, and unlock numerous synergies and
partnerships through close collaborations with like-minded
organisations.
our approach to carbon neutrality is to reduce our own
impact as much as possible first and then to offset the
remainder of the footprint. Footprint reductions are
achieved through a variety of initiatives from internal
behavioural change to working towards clear reduction
targets in terms of paper, water, electricity, waste, travel
and carbon emissions.
We obtained the carbon credits required to offset our
2013 footprint from projects throughout africa that are
delivering benefits for the continent’s natural resources as
well as its people and communities. these include the
rukinga project, the Kibale national park natural high
Forest rehabilitation project, reliance Compost, the
ethekwini Landfill methane project, the Beatrix methane
destruction and Utilisation project and Lifestraw Water
Filtration project.
From 2012 to the end of 2013 there were some positive
signs in the growth of the amount of domestic Sa carbon
offsetting projects that had verifiable carbon credits with
the appropriate social upliftment benefits. this said, there
is still a limit on the available and eligible carbon offsetting
projects we can invest in Sa.
CARBON REDUCTION
In 2013 our total carbon footprint was 221 379P tCo2e
(2012: 226 310 tCo2e). therefore the total ghg emissions
across the entire nedbank group decreased by 2,18% from
2012 to 2013. accordingly, the emission rate per fulltime
employee (Fte) also decreased by 3,46% year on year and
was calculated as 7,61 tCo2e per Fte (2012: 7,89 tCo2e per
Fte). Based on floor space the ghg intensity rate decreased
by 2,28% to 0,33 tCo2e/m2 (2012: 0,34 tCo2e/m2).
A TARGETED AppROACh TO REDUCING
OUR OWN ENVIRONMENTAL IMpACT
reduction targets remain a key component of nedbank
group’s overall commitment to limiting and constantly
reducing its impact on the environment and its usage of
diminishing natural resources. these reduction targets not
only set the bar in terms of our groupwide carbon emissions
and resource use, but are also cascaded through our
organisation to provide individuals and teams with clearly
defined annual objectives.
In many cases, the achievement of these reduction targets
forms an integral part of performance reviews, thereby
ensuring that nedbank staffmembers clearly understand
the role and responsibility they have in meeting our group
reduction targets.
resources consumption not reflected in the carbon footprint
pie chart below includes 299 694 kℓP (2012: 292 325 kℓ) of
water, 355P (2012: 372) tonnes of waste sent to landfill and
565P (2012: 557) tonnes of waste recycled.
target achievements in 2013
In 2013 we achieved the following in terms of our intensity
reduction targets:
resource
Carbon emissions 7,61 tCo2e per Fte and
achievement
electricity
Water
paper
Waste and
recycling
business travel
0,33 tCo2e/m2.
electricity use was decreased by
2,63% per Fte and by 1,44% based
on floor space, mostly because of
campus site electricity reductions.
Water consumption on campus
sites increased by 0,73% per Fte
from 2012 to 2013.
total usage decreased by 13,4%
from 2012 and the end-of-2016
target was reached. there was also
a 13,2% reduction in emissions
associated with paper usage.
the waste sent to landfill
decreased from the 2012 value of
21,01 kg per Fte to 19,70 kg per
Fte. this means that the target for
the end of 2016, based on 2011
values, was met by the end of 2013.
recycling also increased by 1,44%
to 565 tonnes.
Business travel decreased from
15 899 tCo2e in 2012 to 14 514 tCo2e
in 2013. this was mainly due to
active cost containment.
NEDBANK GROUp 2013 CARBON
fOOTpRINT
NEDBANK GROUP 2013 CARBON FOOTPRINT
%
0,36
6,56
18,25
1,38
73,45
– 0,36%
■ Scope 1: Emissions
■ Scope 2: Electricity
■ Scope 3: Product
– 73,45%
distribution – 0%
– 1,38%
■ Scope 3: Office paper
■ Scope 3: Commuting
■ Scope 3: Business
– 18,25%
travel – 6,56%
grI
FSSS: FS4,
FS5
grI 3.1: en1,
en3,
en4,
en8,
en16,
en22,
en26
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information:
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NedbaNk Group | Integrated report 2013
VALIDATING OUR
SUSTAINABILITY
jOURNEY
ASSURANCE STATEMENT
independent assurance report on selected sustainability information to the directors of
Nedbank Group ltd
We have undertaken a limited assurance engagement on selected sustainability information, as presented in the 2013 nedbank
group Ltd Integrated report (‘this integrated report’) of nedbank group Ltd (‘nedbank’) for the year ended 31 december 2013.
subject matter and related assurance
the subject matter of our engagement, and related assurance we are required to provide, is as follows:
1
2
3
Limited assurance on nedbank’s assertions relating to their alignment with the aa1000apS (2008) principles
(inclusivity, materiality and responsiveness) as described on page 3 of this integrated report.
refer to
3
Limited assurance on the key performance indicators, identified by P on the relevant pages of this integrated report, as
described in the table below.
Limited assurance on nedbank’s self-declaration of the global reporting Initiative (grI) g3.1 a+ application level
(available online).
key performance indicators
Net promoter score (Nps)
Net primary-client gain
systems availability
description
net promoter score trend based on externally conducted surveys (%).
number of primary and/or net primary-client gain/loss for retail, corporate and business
banking.
Blended uptime score for infrastructure and applications, It capability quartile
positioning (%).
ombudsman for banking services cases number of external cases opened and closed.
equator deals
anti-corruption interventions
Carbon footprint
number of projects financed.
percentage and total number of business units analysed for risks related to corruption (%).
total tonnes of Co2 equivalents.
total kℓ consumed on campus sites.
total tonnes consumed for nedbank group.
Water
paper
Waste sent to landfill
Waste recycled
entropy
employee surveys
ethics acknowledgement
employee turnover
bbbee scorecard
Value-added statement
total tonnes sent to landfill from campus sites.
total tonnes recycled from campus sites.
entropy score as calculated by the Barrett Survey (%).
overall employee satisfaction as determined by the nedbank Staff Survey (%).
total number of employees acknowledging the nedbank Code of ethics and sundry
ethics codes.
Staff attrition rate (%).
externally verified BBBee scorecard in terms of Financial Sector Code.
Value allocated from income earned.
directors’ responsibilities
the directors of nedbank are responsible for the selection, preparation and presentation of the sustainability information in accordance with
the criteria described in the subject matter above, the identification of stakeholders and stakeholder reporting requirements, material issues,
commitments with respect to sustainability performance, establishing and maintaining appropriate performance management and internal
control systems from which the reported information is derived, and for such internal control as the directors determine necessary for the
preparation of this integrated report that is free from material misstatement, whether due to fraud or error.
independence and expertise
We have complied with the International Federation of accountants (IFaC) Code of ethics for professional accountants, which includes
comprehensive independence and other requirements founded on fundamental principles of integrity, objectivity, professional competence
and due care, confidentiality and professional behaviour. our engagement was carried out by a multidisciplinary team with extensive
experience in sustainability reporting.
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our responsibility
limited assurance
is to express
our responsibility
conclusions on the selected sustainability information
based on our work performed. We have conducted our
engagement in accordance with the International Standard
on assurance engagements (ISae 3000), assurance
engagements other than the audits or reviews of historical
Financial Information, which standard requires that we
plan and perform our engagement to obtain limited
assurance that the selected sustainability information is
free from material misstatement.
our procedures selected and the extent of our procedures
depend on our judgement, including the risks of material
misstatement of the selected sustainability information
in this integrated report, whether due to fraud or error. In
making our risk assessments, we considered internal
control relevant to nedbank’s preparation of this integrated
report. In a limited assurance engagement, the evidence-
gathering procedures are less than where reasonable
assurance is expressed. We believe the evidence we have
obtained is sufficient and appropriate to provide a basis for
our limited-assurance-conclusion.
summary of work performed
our work included the following evidence-gathering
procedures:
■ Interviewing management and senior executives at
corporate level to evaluate the application of the grI
g3.1 guidelines and aa1000apS (2008) principles and
to obtain an understanding of the control environment
related to integrated reporting.
■ testing the processes and systems at group level for
generating, collating, aggregating, monitoring and
reporting selected sustainability information and
inspecting related documentation, more specifically:
¨ Interviews and discussions with relevant
management, key personnel and/or stakeholders of
nedbank to confirm definitions and boundaries for
selected performance information, and to gather
information on the data collection and report
preparation processes.
¨ evaluation of internal data management controls
based on system walkthroughs.
¨ Inspection of selected internally and externally
generated documents and records and comprehensive
data analyses.
¨ recalculation of the key performance indicators.
■ evaluating whether the information presented in this
integrated report is consistent with our overall knowledge
and experience of sustainability management and
performance at nedbank and not materially inconsistent
with information contained in this integrated report.
Conclusions
1
On the AA1000ApS (2008) principles of
inclusiveness, materiality and responsiveness on
which we are required to express limited assurance
Based on our work performed, nothing has come to our
attention that causes us to believe that nedbank’s
the
assertions relating
aa1000apS (2008) principles of inclusivity, materiality
and responsiveness, described on page 3, are not
properly prepared.
their alignment with
to
2
3
On the selected key performance indicators on
which we are required to express limited assurance
Based on our work performed, nothing has come to
our attention that causes us to believe that the
selected key performance indicators set out in the
table for the year ended 31 december 2013 are not
fairly stated, in all material respects, in accordance
with the grI g3.1 guidelines.
On Nedbank’s self-declaration on the GRI G3.1 A+
application level on which we are required to
express limited assurance
Based on our work performed, nothing has come to our
attention that causes us to believe that nedbank’s self-
declaration of an a+ application level is not fairly stated
in all material respects, in accordance with the grI g3.1
guidelines.
limitation of liability
our work has been undertaken to enable us to express the
conclusions contained in this report solely to the addressee in
accordance with the terms of our engagement, and for no
other purpose. We do not accept or assume liability to any
party other than the directors of nedbank, for our work, for
this report, or for the conclusions we have reached.
KpMG Services (pty) Ltd
per neil morris
Chartered accountant (Sa)
registered auditor
director
KpMG Crescent
85 empire road
parktown
Johannesburg
2193
KpMG policy board:
Chief executive: rm Kgosana
executive directors: t Fubu, a hari, d van heerden, e magondo,
JS mcIntosh, Cat Smit
other directors: dC duffield, am mokgabudi, Lp Fourie, n Fubu,
th hoole, a Jaffer, m Letsitsi, a masemola, Y Suleman (Chairman
of the board), a thunström, t rossouw
the company’s principal place of business is at Kpmg Crescent,
85 empire road, parktown, where a list of the directors’ names is
available for inspection.
Deloitte & Touche
per nina le riche
Chartered accountant (Sa)
registered auditor
partner
Building 8, Deloitte place
the Woodlands
Woodlands drive
Woodmead, Sandton
2128
national executive: LL Bam (Chief executive), ae Swiegers (Chief
operating officer), gm pinnock (audit), dL Kennedy (risk
advisory), nB Kader (tax), tp pillay (Consulting), K Black (Clients
and Industries), JK mazzocco (talent and transformation),
Cr Beukman (Finance), m Jordan (Strategy), S gwala (Special
projects), tJ Brown (Chairman of the board), mJ Comber
(deputy Chairman of the board)
a full list of partners and directors is available on request.
11 march 2014
refer to
3
99
Our FiNaNciaL perFOrmaNce iN 2013
ChIEf fINANCIAL OffICER’S
REVIEW
good performance
underpinned by strong
nir growth and risk
management.
raisibe Morathi
Chief Financial officer
fINANCIAL OVERVIEW Of 2013
In a tougher-than-anticipated economic environment the group continued to
build and grow the nedbank franchise, delivering headline earnings growth of
15,9% to r8 670m, a return on average ordinary shareholders’ equity (roe)
excluding goodwill of 17,2% and economic profit (ep) of r2 114m, up 39,0%.
our progress over the past year is equally reflected in the return on assets
(roa) increasing to 1,23% from 1,13% in 2012, driven by good revenue growth,
impairments increasing at a slower rate than net interest income and
disciplined expense management.
We have continued to create value for our shareholders by increasing net
asset value (naV) per share by 12,1% to 13 143 cents and dividends per share
19,0% to 895 cents per share, ahead of the 15,9% growth in headline earnings
per share (hepS), while our diluted hepS increased 15% to 1 829 cents
per share.
nedbank group is well capitalised, with the Basel III common-equity tier 1
ratio at 12,5% – at the top end of our internal target range (2012: Basel III
pro forma ratio 11,6%). Funding and liquidity levels remained sound with the
surplus liquidity buffer at r28,0bn (2012: r24,4bn), and the final-quarter
average long-term funding ratio was maintained at 26,2%.
strong financial position to build our franchise
Year ended
% change
headline earnings (rm)
economic profit (rm)
hepS (cents)
diluted hepS (cents)
preprovisioning operating profit
(rm)
roa (%)
roa (excluding goodwill) (%)
roe (%)
tangible naV per share (cents)
assets under management
(rbn)
Common-equity tier 1 capital
ratio (%)
15,9
39,0
14,9
15,0
2013
8 670
2 114
1 884
1 829
2012
7 4831
1 521
1 640
1 590
11,1
17 268
15 5431
1,23
17,2
15,6
1,13
16,4
14,8
13,6
26,5
11 346
9 989
190,3
150,5
12,5
895
11,62
752
100
1 December 2012 restated by R27m to reflect the adoption of IAS 19 Employee Benefits.
2 Pro forma Basel III.
dividend per share (cents)
19,0
NedbaNk Group | Integrated report 2013 maKIng
thIngS happen
deLIVerIng to
oUr StaKehoLderS
InFormatIon to
oUr SharehoLderS
eNsuriNG a
sustaiNable busiNess
r8,7bn
headLIne
earnIngS
Up 15,9%
86,4%
nIr/expenSeS
ratIo
(2012: 84,2%)
17,2%
retUrn on eQUItY
(exCLUdIng goodWILL)
(2012: 16,4%)
REVIEW Of 2013 RESULTS
the group’s financial performance was fundamentally driven by our diligence in executing on the key strategic focus areas,
namely repositioning retail, portfolio tilt, rest of africa and growing nIr. the following review should thus be read in
conjunction with the strategic focus areas and material matters covered on pages 21 and 14 respectively of this
integrated report.
Cluster review: defensive wholesale banking bias in tough consumer environment
the group benefited from diversified earnings streams from our clusters with the wholesale and wealth clusters producing
strong earnings growth rates and high roes, while retail and business banking were impacted by higher impairments.
Concerns around the worsening consumer environment led to further strengthening of our retail provisions and nedbank
Business Banking was affected by the large single-client impairment. Further details on cluster performance are covered in
the Segmental overview on page 122 of this integrated report.
Year ended
nedbank Capital
nedbank Corporate
nedbank Business Banking
nedbank retail
nedbank Wealth
Line clusters
Centre and rest of africa
group
group (excluding goodwill)
headline earnings
Rm
ROE
%
% change
20,6
23,6
(1,6)
(0,5)
25,3
11,8
>100,0
15,9
2013
1 726
2 245
929
2 539
900
8 339
331
8 670
20121
1 431
1 817
944
2 552
718
7 462
21
7 4831
2013
29,4
26,4
19,4
11,6
36,2
19,1
15,6
17,2
2012
25,4
22,5
21,5
12,1
29,7
17,9
14,8
16,4
1 December 2012 restated by R27m for the updated IFRS 19 accounting policy relating to employee benefits.
headline earnings at the centre represent mainly an increase in earnings in the rest of africa division, a reversal of r88m
of insurance provisions following court rulings in our favour in the first half of the year and net interest income (nII) earned
on higher levels of surplus equity held at the centre. the approximately 2% delta in roe between operating units and the
group is as a result of capital held at the centre allocated to rest of africa, unallocated capital in excess of a threshold of 11%
and capital held for goodwill and other corporate assets.
our 2014
strategic
focus areas
21
Understand-
ing material
matters
14–20
refer to
122
grI 3.1: 2.8,
eC1
Consolidated
annual
financial
statements
101
NedbaNk Group | Integrated report 2013
ChIEf fINANCIAL OffICEr’S rEvIEw (CoNtiNued)
hEADLINE EARNINGS DRIVEN BY GOOD MOMENTUM fROM GOOD NON-INTEREST-
REVENUE GROWTh AND ExpENSES DISCIpLINE
HEADLINE EARNINGS
Rm
0
4
5
1
3
8
4
7
6
6
3
7
3
0
2
6
5
8
1
8
6
1
0
7
6
8
7,8%
7,0%
11,8%
9,0%
2012
NII
Impairments
NIR
Expenses
Direct tax and other
2013
Net interest income (Nii)
nII grew 7,8% to r21 220m, underpinned by average interest-earning banking assets growth of 6,8%.
the net interest margin (nIm) increased to 3,57% from 3,53%, led by liability margin gains from a lower cost of marginal
wholesale funding, deposit mix and volume benefits, and slightly lower levels of average long-term debt. notwithstanding
improved risk-adjusted pricing of new advances, the asset margin was impacted by mix changes from the planned slowdown
in growth of personal loans. overall margin benefited from 3 basis points on the back of our interest rate strategies.
NET INTEREST INCOME
Bps
)
2
(
1
2
3
Asset margin pricing
and mix change
Endowment on
capital and deposit
Liability margin
pricing and mix
Other
2013
7
5
3
3
5
3
2012
102
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sustaiNable busiNess
impairments charge on loans and advances
Impairments increased 7,0% to r5 565m and the credit loss ratio (CLr) was similar to that of 2012 at 1,06%, largely due to
higher impairments charges from methodology changes and increased defaulted advances in personal Loans, and a large
single-client impairment in Business Banking at r167m. the CLr is comprised of 0,95% in specific and 0,11% in portfolio
provisioning, resulting in overall increased coverage ratios.
Sound asset quality and proactive risk management resulted in lower levels of inflows into defaulted advances, which
declined 9,4% to r17 455m, 2,95% of gross advances.
CREDIT LOSS RATIO
%
1,59
1,52
1,36
1,32
1,13
1,05
Target range1
60 – 100bps
1,01
2009
2010
2011
0,91
2012
DEFAULTED ADVANCES (Rm)
DEFAULTED ADVANCES AS % OF BOOK
10,6
5,9
2,6
1,06
0,95
5
4
0
7
2
5
6
7
6
2
0
1
2
3
2
6,3
3,6
2,0
3
7
2
9
1
5,4
3,0
1,6
(9,4)
5
5
4
7
1
2013
2009
2010
2011
2012
2013
Total impairments Specific impairments
Retail Wholesale
Nedbank Group
1 Revised through-the-cycle range: Nedbank Group 80–120 basis points (2014)
the coverage ratio for total and specific impairments increased to 65,6% and 42,8% respectively. portfolio coverage on the
performing book continued to strengthen to 0,70%.
our collections processes are robust and generated post-writeoff recoveries of r888m (2012: r866m), reflecting the
prudency of cash accounting recoveries on the written-off book. this includes recoveries in personal Loans of r276m
(2012: r243m).
Non-interest revenue
nIr increased by 11,8% to r19 361m, with commission and fee income increasing by a strong 11,8% to r14 023m from
good transactional volume increases across the group and improved cross-sell.
NON-INTEREST REVENUE
Rm
2
3
2
0
0
1
)
5
8
(
5
0
3
11,8%
CONTRIBUTION (%)
4
13
10
5
8
4
1
4
2
3
7
1
73
45
4
16
1
6
3
9
1
11,8% 13,7%
4,1% (9,5%) >100%
16
2012
Comm
and fees
Insurance
income
Trading
Private
equity and
other
FY adj
2013
10
9
and fees
■ Comm
■ Insurance
■ Trading
■ Other
Banking
■ Retail
■ Business
■ Corporate
■ Capital
■ Wealth
■ Other
103
NedbaNk Group | Integrated report 2013
ChIEf fINANCIAL OffICEr’S rEvIEw (CoNtiNued)
Insurance income remained robust with growth of 13,7% to r1 927m on the back of good sales in motor vehicle insurance
and an improvement in the claims environment, which was partly offset by the volume-related slowdown in credit life income.
trading income increased 4,1% to r2 564m off the high 2012 base and private-equity income of r225m was recorded
following higher unrealised losses in nedbank Capital and nedbank Corporate, exacerbated by higher realisations in 2012.
Fair-value gains of r40m against a r265m loss in 2012 resulted from basis risk on centrally hedged banking book positions
and accounting mismatches in the hedged fixed-rate advances portfolios.
our strategy to grow nIr has resulted in an nIr increase of 13,0% (excluding fair-value adjustments) on a compounded
basis since 2009, with an increase in the nIr-to-expenses ratio from 78,8% in 2009 to 86,4% (2012: 84,4%) to meet our
medium-to-long-term target of > 85% for the first time since the introduction of this measurement in 2010.
Banking fees are particularly relevant to consumers in this difficult economic climate and as part of our commitment to making
banking more affordable we have kept our transactional fees in nedbank retail, nedbank Business Banking and nedbank
Corporate for 2014 at 2013 levels. the cost is expected to be partly offset by continued client gains, cross-sell and more
transactional volumes.
expenses
disciplined cost management, combined with ongoing investment in the franchise, resulted in operating expenses growing
9,0% to r22 362m.
growth in expenses was primarily driven by a staff-related cost increase of 10,5%, comprising salary and union–negotiated
wage cost growth of a combined average of 6,5% and 1,4% growth in average headcount, and a variable-compensation
increase in line with the group’s financial performance, with the short-term incentive up 15,9% and long-term incentive
up 23,4%.
marketing and computer processing costs grew at 13% and 10,5% respectively, consistent with increases in business
volume growth.
our efficiency ratio of 55,2% is steadily improving, in spite of the group investing more than r1,7bn in capex over the past
five years in our franchise, distribution network, systems and new products.
EFFICIENCY RATIO AND EXPENSE GROWTH
%
9,9
9,9
,
5
3
5
,
7
5
5
2009
2010
Efficiency ratio Total expense growth (%)
14,0
,
6
6
5
2011
8,7
9,0
,
6
5
5
2012
,
2
5
5
2013
taxation
the base effect of capital gains tax and secondary tax on companies in 2012, together with lower levels of dividend income,
resulted in a lower effective tax rate of 25,2% in comparison with 26,8% for the prior period. this was computed from a
total tax charge of r3 033m, 6% higher than that of 2012, and income tax payments were r3 239m for the year.
a consolidated total cash payment of r8bn was made collectively by several group companies representing, inter alia,
income tax, Vat, paYe and other indirect taxes. nedbank remains committed to responsible and ethical practices, and
works closely with the tax authorities in various jurisdictions in which the group operates.
104
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sustaiNable busiNess
WELL-CApITALISED AND fUNDED BALANCE ShEET
loans and advances
Loans and advances increased 9,9% to r579,4bn from r527,2bn, with good wholesale banking advances growth of 16,1%.
gross advances payouts stood at r158,9bn, up 10,1% from r144,3bn.
Loans and advances by cluster are as follows:
rm
nedbank Capital
Banking activities
trading activities
nedbank Corporate
nedbank Business Banking
nedbank retail
nedbank Wealth
Centre, including rest of africa
% change
32,8
36,7
25,9
7,7
4,4
2,5
11,2
25,9
9,9
2013
109 549
72 066
37 483
175 274
62 785
195 435
22 082
14 247
579 372
2012
82 494
52 732
29 762
162 730
60 115
190 647
19 864
11 316
527 166
Banking advances growth in nedbank Capital remained robust, following steady drawdown of the deal pipeline, including
the renewable energy Independent power producer procurement programme (reIpppp). growth in the trading advances
book came largely from foreign currency placements, and deposits placed under reverse repurchase agreements related to
surplus liquidity and the hedging of the group’s liquid-asset portfolio.
the increase in nedbank Corporate’s advances is comprised of 5,3% growth in corporate banking and 11,0% growth in
property finance.
nedbank Business Banking recorded advances growth of 4,4% as the small-to-medium-sized enterprises sector continued to
experience economic pressure throughout 2013.
retail banking advances grew modestly at 2,5%. advances growth was led by an increase of 14,2% and 13,8% for card and
vehicle finance respectively, while personal loan and home loan advances declined 9,4% and 2,1% respectively in line with
the selective origination strategy.
growth in advances at the centre was led by increased business activity in the rest of africa, consistent with the group’s focus
on deepening its pan-african banking client relationships and expanding its presence in the rest of africa.
deposits
deposits grew 9,5% to r603,0bn – up from r550,9bn – and a sound loan-to-deposit ratio of 96,1% was maintained.
STRONG DEPOSIT GROWTH AND A WELL-DIVERSIFIED DEPOSIT MIX
DEPOSITS (Rbn)
,
3
5
524,1
8
5
,
0
9
,
8
6
,
,
6
5
1
6
9
,
9,6%
CONTRIBUTION (%)
16,9
13,5
,
0
3
0
6
14,5
9,4
6,3
39,4
,
9
0
5
5
5,3%
9,7%
7,8%
9,1% 36,5% 11,0%
2012 Nedbank
Capital
Nedbank
Corporate
Nedbank
Business
Banking
Nedbank
Retail
Nedbank
Wealth
Central
Management,
including Rest
of Africa
2013
savings accounts
■ Current accounts and
■ Call and term deposits
■ Fixed deposits
■ Cash management deposits
■ Negotiable certificates of deposit
■ Other
105
NedbaNk Group | Integrated report 2013
ChIEf fINANCIAL OffICEr’S rEvIEw (CoNtiNued)
our group’s portfolio tilt strategy to drive deposit growth is reflected in good contributions seen from all the clusters. Current
accounts increased 5,1% and savings accounts grew by a strong 30,3%, as savings deposits held in nedbank Wealth were also
boosted by rand depreciation. Call and term deposit balances were 9,7% higher due to increased funding from the commercial
and asset management sectors. the strategy also focused on increasing fixed deposits, which resulted in 16,3% growth in fixed
deposits, while negotiable certificates of deposit were up 13,7%.
accounting policies
nedbank group’s principal accounting policies have been consistently applied in current and prior financial years in terms of
International Financial reporting Standards (IFrS) as issued by the International accounting Standards Board (IaSB), with the
exception of those items noted in the key changes to accounting policies section.
engagement with audit Committee
We remain accountable to the audit Committee concerning the adequacy of processes and controls, the quality of financial
results and significant judgement and accounting issues. We are pleased to report that the audit Committee: ‘Considers the
accounting practices and internal financial controls that have led to the compilation of the annual financial statements to
be appropriate’.
BASEL III IMpLEMENTATION
Sa was one of the first countries to implement Basel III as scheduled on 1 January 2013. the successful implementation of
Basel III capital requirements at nedbank group was partly enabled by our portfolio tilt strategy, which brings to the forefront
effective risk management, focusing not only on returns but also on the risk and capital requirements for those returns.
In January 2014 the Basel Committee on Banking Supervision announced changes to the Basel III leverage ratio easing the
international requirements, as well as the much anticipated proposed revisions to the net stable funding ratio, which is effective
from 2018. While the Sa banking industry’s gap to compliance with the net stable funding ratio (nSFr) has substantially
improved, full compliance remains a challenge due to structural constraints within Sa financial markets.
Capital
nedbank group remains well capitalised and reported a Basel III common-equity tier 1 ratio of 12,5% (2012: 11,6% pro forma
Basel III). during 2013 our strong balance sheet, together with organic earnings growth, resulted in the group’s capital adequacy
ratios all remaining well above the Basel III regulatory capital minima and at or above the top of the group’s Basel III internal
target ranges.
Nedbank Group
Common-equity tier 1 ratio
tier 1 ratio
total capital ratio
2013
(Basel III) %
2012
(pro forma
basel iii) %
12,5
13,6
15,7
11,6
13,1
15,1
internal
target
range
(basel iii) %
10,5 – 12,5
11,5 – 13,0
14,0 – 15,0
regulatory
minimum1
(basel iii) %
4,5
6,0
9,5
(ratios include unappropriated profits.)
1 The Basel III regulatory minima are being phased in between 2013 and 2019 and excluded Pillar 2B add-ons.
during the year a total of r3,0bn of new-style, fully loss-absorbent, Basel III-compliant, tier 2 subordinated debt was successfully
issued to replace the r2,1bn of Basel II tier 2 capital that matured in September 2013.
Funding and liquidity
nedbank group’s surplus-liquid-asset buffer increased to r28,0bn from r24,4bn, reflecting a strong liquidity position. the
group has low levels of reliance on interbank and foreign currency funding, and continues successfully to diversify and lengthen
its funding profile.
the last-quarter average long-term funding ratio was maintained at 26,2%, supported by the successful conclusion of a r2,0bn
five-year commercial-mortgage securitisation in march 2013 as well as r5,8bn in senior unsecured debt issued during the year,
replacing r3,4bn that matured in march and april 2013. the group has been compliant with the Basel III Liquidity Coverage
ratio on a pro forma basis since 31 december 2012.
106
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BUILDING EffICIENCY AND pRODUCTIVITY
our Sap erp project referred to in the Chief executive’s review commenced in 2013 and is well under way with the planned
replacement of the finance, human resources and procurement systems during the course of 2015 and 2016. the new systems
are anticipated to generate savings in technology costs as 43 systems that are nearing the end of their current useful lives are
expected to be replaced with this single integrated erp system, in line with the group’s strategy of ‘rationalise, simplify and
standardise’. this will be part of the initiative to reduce 220 systems to 60 over time and will support ‘optimise to invest’, one of
the five key focus areas introduced in 2014. From a business perspective, the new system will be implemented with a new target
operating model that ensures a high level of standardisation of processes, and the benefits are expected from operational
efficiencies. the project has a strong governance process with oversight from the group executive Committee and the group
Information technology Committee, a subcommittee of the board.
pROSpECTS fOR 2014
In the light of the volatile economic conditions the group is currently expecting organic diluted hepS growth in 2014 to be greater
than the growth in nominal gross domestic product. as usual, this will be updated at the presentation of our interim results.
our CLr target range of 0,60% to 1,00% was amended to 0,80% to 1,20% to reflect nedbank retail’s more prudent provisioning
methodologies and asset mix changes. the efficiency ratio target was amended from < 50,0% to a range of 50,0% to 53,0% to
reflect the lower-interest-rate pattern and our strategy of investing for growth in the franchise.
the group currently anticipates financial performance for 2014 as follows:
■ advances to grow at mid-to-upper single digits.
■ nIm to remain at levels similar to those of 2013.
■ the CLr to be within the new CLr range of 80 to 120 basis points, improving slightly on 2013.
■ nIr (excluding fair-value adjustments) to grow at mid to upper single digits, incorporating the 0% transactional fee
increase in 2014.
■ expenses to increase at upper single digits.
AppRECIATION
my gratitude goes to many people within and outside nedbank who contributed to our scoreboard as tabled from different
perspectives in this integrated report. the finance teams within nedbank who consistently produced reports and analytics that
track and measure our performance against our strategic focus areas, ensuring effective engagement and communication to all
our stakeholders, including participating in no less than 300 investor meetings, have been a pillar of strength to me as CFo. I also
acknowledge and fully appreciate the recognition received from the accounting and investment industry for the quality and
standard of our financial reporting and communication. I will continue to rely on your collective guidance and support during 2014.
thank you.
Raisibe Morathi
Chief Financial officer
107
our summarised
five-year tracK record
consolidated statement of comprehensive income
Rm
Net interest income
Impairments charge on loans and advances
Income from lending activities
Non-interest revenue
Total operating expenses
Indirect taxation
Share of profits of associate companies and
joint arrangements
Headline profit before direct taxation
Direct taxation
Non-controlling interest
Headline earnings
4-year
CAGR1
%
6,8
(4,3)
12,8
12,9
10,4
8,2
(16,3)
18,5
25,3
(14,0)
19,3
2013
21 220
(5 565)
15 655
19 361
(22 419)
(601)
27
12 023
(3 033)
(320)
8 670
2012
19 680
(5 199)
14 481
17 324
(20 563)
(561)
1
10 682
(2 861)
(338)
7 483
2011
18 034
(5 331)
12 703
15 412
(18 919)
(505)
8 691
(2 194)
(313)
6 184
2010
16 608
(6 188)
10 420
13 215
(16 598)
(447)
1
6 591
(1 366)
(325)
4 900
2009
16 306
(6 634)
9 672
11 906
(15 100)
(438)
55
6 095
(1 232)
(586)
4 277
EP
share statistics
Earnings per share:
– Headline
– Diluted headline
Dividends/Distributions:
– Declared per share
– Dividend cover
1 Compound annual growth rate.
>100
Rm
2 114
1 521
924
(289)
57
16,9
16,8
19,3
cents
cents
cents
times
1 884
1 829
1 640
1 590
1 365
1 340
1 104
1 069
895
2,11
752
2,18
605
2,26
480
2,30
1 010
983
440
2,30
consolidated statement of financial position
4-year
CAGR1
%
9,7
6,4
9,2
7,1
11,2
(8,6)
6,3
9,4
13,4
7,1
21,5
9,3
9,6
11,3
Rm
Cash and securities
Loans and advances
Other assets
Total assets
Total equity attributable to equity holders
of the parent
Non-controlling interest
Amounts owed to depositors
Provisions and other liabilities
Long-term debt instruments
Total equity and liabilities
Assets:
– Assets under management
– Total assets administered by the group
Net asset value per share
Tangible net asset value per share
Key ratios
ROE
ROE (excluding goodwill)
Return on total assets
Net interest income to interest-earning
banking assets
Credit loss ratio – banking advances
Non-interest revenue to total operating expenses
Efficiency ratio (including BEE transaction
expense)
Effective taxation rate
1 Compound annual growth rate.
108
2013
108 774
579 372
61 448
749 594
60 617
3 719
602 952
49 038
33 268
749 594
2012
98 467
527 166
57 325
682 958
53 601
3 774
550 878
44 407
30 298
682 958
Rm 190 341
Rm 939 935
13 143
11 346
cents
cents
150 495
833 453
11 721
9 989
2011
92 459
499 023
56 645
648 127
48 946
3 739
524 130
41 870
29 442
648 127
112 231
760 358
10 753
9 044
2010
81 400
477 226
50 092
608 718
44 101
3 713
492 393
42 407
26 104
608 718
2009
75 110
452 332
43 261
570 703
39 649
5 335
471 386
34 249
20 084
570 703
102 570
711 288
9 831
8 160
87 204
657 907
9 100
7 398
%
%
%
%
%
%
%
%
15,6
17,2
1,23
3,57
1,06
86,4
55,2
25,2
14,8
16,4
1,13
3,53
1,05
84,2
55,6
26,8
13,6
15,3
0,99
3,48
1,13
81,5
56,6
25,2
11,8
13,4
0,82
3,36
1,36
79,6
55,7
20,7
11,8
13,4
0,76
3,39
1,52
78,8
53,5
20,2
NedbaNk Group | Integrated report 2013 responsibility of our
directors
The summarised annual financial statements on pages 119 to 129 are derived from the Nedbank Group Ltd consolidated annual financial
statements for the year ended 31 December 2013.
The directors are responsible for the preparation and fair presentation of the consolidated and separate financial statements of Nedbank
Group Ltd, comprising the statements of financial position at 31 December 2013; the statements of comprehensive income; the
statements of changes in equity and statements of cashflows for the year then ended; the notes to the financial statements, which
include a summary of significant accounting policies and other explanatory notes; and the directors’ report in accordance with
International Financial Reporting Standards as issued by the International Accounting Standards Board, the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee, the requirements of the Companies Act, 71 of 2008 (as amended) and the
JSE Listings Requirements.
The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error, and for maintaining adequate accounting
records and an effective system of risk management as well as the preparation of the supplementary schedules included in these
financial statements.
The directors have made an assessment of the group’s and company’s ability to continue as going concerns and there is no reason to
believe that the group and company will not be going concerns in the year ahead.
The auditors are responsible for reporting on whether the consolidated and separate financial statements are fairly presented in
accordance with the applicable financial reporting framework.
approval of consolidated and separate financial statements
The consolidated and separate financial statements of Nedbank Group Ltd, as identified in the first paragraph, were approved by the
Nedbank Group Ltd Board of Directors on 21 February 2014 and are signed on its behalf by:
dr rJ Khoza
Chairman
Sandown
21 February 2014
mWt brown
Chief Executive
certification from our
company secretary
In terms of section 88(2)(e) of the Companies Act, 71 of 2008 (as amended), I certify that, to the best of my knowledge and belief,
Nedbank Group Ltd has filed with the Commissioner all such returns and notices as are required by the Companies Act, 71 of 2008
(as amended), and that all such returns and notices are true, correct and up to date.
tsb Jali
Company Secretary
Sandown
21 February 2014
109
ENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderSdelIVerInG to oUr StaKeholderSmaKInG thInGS haPPen NedbaNk Group | Integrated report 2013
report from
our audit
committee
In a tough economic
environment we continued
to focus on the integrity of the
group’s financial statements,
and ensured that controls
remained effective, assets were
safeguarded and appropriate
oversight was exercised
over the external and internal
audit processes.
KeY areaS of focuS for 2013
■ ensured that the group’s financial systems,
processes and controls were operating effectively
and were consistent with the group’s complexity
and responding to the changes in requirements.
■ Continued to oversee the internal audit process to
ensure satisfaction with the quality and coverage
of the work performed by group Internal audit.
■ oversaw the relationship with our group statutory
auditors and evaluated the effectiveness of the
audit, ensuring that they have allocated sufficient
and experienced resources to address
heightened risks.
■ ensured adequate focus on control and
compliance issues.
■ assessed the effective linkages between the
nedbank group audit Committee, the board
and other board committees.
■ enhanced oversight over subsidiaries’ board
audit committees and internal audit functions.
prioritY areaS for 2014
■ ensuring that the committee is exercising its
assurance oversight role effectively.
■ overseeing the delivery of the group’s finance
transformation project.
■ Considering significant accounting issues and
International Financial reporting Standards
changes and ensuring appropriate disclosure.
■ Continuing to scrutinise key accounting
judgements used for credit, goodwill-tax
and valuation of financial instruments.
MI Wyman
Group audit Committee
Chairman
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■ monitoring changes in the external regulatory
environment and ensuring that we continue to have
appropriate financial, compliance and internal controls
in place.
■ Continuing to ensure that the group statutory auditors
have allocated sufficient and experienced resources to
match the changes in and the complexity of the group.
■ Continuing oversight over subsidiaries’ board audit
committees and consideration of the activities of their
internal audit functions.
LegaL reSponSibiLitieS
the legal responsibilities of the nedbank group audit
Committee (’the committee‘) are governed by the
Companies act, 71 of 2008, and the Banks act, 94 of 1990
(as amended). these responsibilities, and compliance with
appropriate governance and international best practice,
are incorporated in the committee’s charter, which is
reviewed annually and approved by the board.
compoSition of the committee
the
independent non-executive directors, with
all
exception of the chairman of the board, are eligible to serve
on the committee. the group directors’ affairs Committee
recommends to the board any appointments to or removals
from the board, which in turn is responsible for the
composition of the committee. the committee has three or
more members, all of whom are financially literate, with
three members forming a quorum. access to training is
provided on an ongoing basis to help members discharge
their duties.
committee memberS
mI Wyman (Chairman)
tCp Chikane
(resigned 13 august 2013)
np mnxasana
pm makwana
(appointed 2 September 2013)
Scheduled
meetings: 5
5/5
3/4
5/5
1/1
including details of
Biographical details of the current members of the
committee,
academic
qualifications, are set out on pages 72 to 75. members’
fees are included in the table of directors’ remuneration on
page 171.
their
the Chief executive, Chief Financial officer, Chief operating
officer, Chief risk officer, Chief Internal auditor, Chief
governance and Compliance officer and representatives
of the external auditors are invited to attend committee
meetings. the external auditors attend all committee
meetings and separate meetings are held to afford them
the opportunity to meet with the committee without the
presence of management or internal auditors. the internal
auditors attend all committee meetings and are similarly
afforded the opportunity to have separate meetings with
the committee.
committee effectiveneSS
the performance of the committee is reviewed annually
through a self-assessment questionnaire. this year an
independent review was performed, which concluded that
the committee continued to operate effectively and
indicated improvements in various areas.
internaL audit
Internal audit is an independent assurance function,
forming part of the third line of defence as set out in the
enterprisewide risk management Framework (ermF). the
Chief Internal auditor has a functional reporting line to the
Chairperson of the committee and an operational reporting
line to the Chief executive officer.
externaL audit
the group’s external auditors are deloitte & touche and
Kpmg Inc. Fees paid to the auditors are disclosed in
note 16 to the annual financial statements online.
objectivity and independence of the external
auditors
the committee considers the external auditors to be
independent of the group. our responsibility to monitor
and review the objectivity and independence of the external
auditors is supported by a policy that sets out the
circumstances under which the external auditor may be
permitted to render non-audit services. allowable services
are preapproved, as set out in the non-audit Services
policy, up to but not exceeding r15m. any non-audit
service that exceeds this threshold requires approval from
the committee and must be robustly justified and, if
appropriate, tendered before it is approved. the committee
closely reviews all requests for approval and receives
quarterly reports on non-audit services undertaken by the
external auditors so that the committee can monitor
the types of service being provided and the fees incurred.
details of the fees paid to the external auditors for non-
audit work may be found in note 16 to the annual financial
statements online. Significant categories of engagement
undertaken in 2013 include the Banks act returns audit and
the half-year results review. In each case approval was
given only after a full and thorough assessment of the value
case for using the auditors and of the skills and experience
the auditors would bring to each assignment. We also
satisfied ourselves that there were safeguards in place to
protect the objectivity and independence of the auditors.
KeY functionS and reSponSibiLitieS of
the committee
the
the key
to execute
responsibilities outlined in its charter the committee,
during the period under review:
functions and discharge
■ assisted the board of directors in its evaluation of the
adequacy and efficiency of the internal control systems,
accounting practices, information systems and auditing
processes applied within the group in the day-to-day
management of its business;
■ facilitated and promoted communication between the
board, management, the external auditors and the Chief
Internal auditor on matters that are the responsibility of
the committee;
established
leadership
teams
72–75
refer to
171–172
111
NEDBANK GROUP | INTEGRATED REPORT 2013
REPORT FROM OUR AUDIT COMMITTEE (CONTINUED)
■ introduced measures that, in the opinion of the
committee, may enhance the credibility and objectivity
of financial statements and reports prepared with
reference to the affairs of the group;
■ nominated, for appointment as external auditors, the
company registered auditors who, in the opinion of
the committee, are independent of the group;
■ determined the fees to be paid to the external auditors
and the auditors’ terms of engagement;
■ ensured that the appointment of the external auditors
complied with the Companies Act and any other
legislation relating to the appointment of auditors;
■ determined the nature and extent of any non-audit
services to the group;
■ was available to receive and deal appropriately with any
complaints (whether from inside or outside the group)
relating either to the accounting practices and internal
audit of the group or to the contents or auditing of its
financial statements, or to any other matters related
thereto; and
■ performed such further functions as were prescribed.
The committee reports that it has adopted appropriate
formal terms of reference to discharge its responsibilities,
regulated its affairs in compliance with its charter and
discharged all of its responsibilities as contained therein.
EFFECTIVENESS OF INTERNAL CONTROL
The committee monitors the group’s internal controls for
effectiveness and adherence to the ERMF for pragmatic
and consistent application, as these form the foundation of
successful risk management.
The emphasis on risk governance is based on a three-lines-
of-defense concept, which is the backbone of the group’s
ERMF. The ERMF places weight on accountability,
responsibility, independence, reporting, communication
and transparency, both internally and with all our key
external stakeholders.
The functions of the three lines of defense, as well as the
principal responsibilities that extend across the group, are
set out in the worldclass at managing risk section on
pages 130 to 137.
Specific responsibilities of the committee for the period
under review included the following:
Internal control
The committee:
■ monitored management’s effectiveness in creating and
maintaining an effective internal control environment
throughout the group and in demonstrating and
stimulating the necessary respect for this control
environment; and
■ monitored the identification and correction of
weaknesses and breakdowns of systems and
internal controls.
112
Financial control, accounting and reporting
The committee:
■ monitored the adequacy and reliability of management
information and the efficiency of management
information systems;
■ delegated to the Group Information Technology
Committee the monitoring of the adequacy and
efficiency of the group’s information systems and
received reports thereon;
■ satisfied itself as to the expertise, resources and
experience of the finance function;
■ reviewed quarterly, interim and final financial results
and statements and reporting for proper and complete
disclosure of timely, reliable and consistent information;
■ evaluated on an ongoing basis the appropriateness,
adequacy and efficiency of accounting policies and
procedures, compliance with generally accepted
accounting practice and overall accounting standards as
well as any changes thereto;
■ discussed and resolved any significant or unusual
accounting issues;
■ reviewed and monitored capital expenditure throughout
the group for adequate control, monitoring and
reporting;
■ reviewed reports from the Group Credit Committee
regarding the effectiveness and efficiency of the
credit-monitoring process, exposures and related
impairments and adequacy of impairment provisions to
discharge its board and Banks Act obligations
satisfactorily;
■ reviewed and monitored the effectiveness, efficiency
and reporting of the management of tax-related
matters;
■ evaluated the appropriateness of the accounting for
taxation risks (as set out in the group’s ERMF);
■ reviewed and monitored all key performance indicators
to ensure that they are appropriate and that
decisionmaking capabilities are maintained at high
levels; and
■ reported to the board on the effectiveness of the
group’s internal financial reporting controls.
Internal audit
The committee:
■ ensured direct reporting by the Chief Internal Auditor to
the Chairman of the committee;
■ reviewed and approved the annual Internal Audit Plan;
■ reviewed and recommended the Internal Audit Charter
for approval by the board of directors;
■ monitored the effectiveness of the internal audit
function in terms of its scope, execution of its plan,
coverage, independence, skills, staffing, overall
performance and position within the organisation;
■ monitored and challenged, where appropriate, action
taken by management with regard to adverse internal
audit findings;
Worldclass
at
managing
risk
130–137
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■ formed a view on the adequacy and effectiveness of the
control environment; and
not having their own audit committees. In this regard
the committee:
■ monitored the bank’s compliance with Basel III as
detailed in the regulations to the Banks act, in line with
existing phase in timelines and ongoing developments.
external audit
the committee:
■ recommended to the board the selection of the external
auditors and the approval of their audit fees;
■ approved the external auditor’s annual plan and related
scope of work;
■ monitored the effectiveness of the external auditors in
terms of their skills, independence, execution of the
audit plan, reporting and overall performance;
■ approved non-audit services to be rendered by the
external auditors and monitored potential conflicts of
interest;
■ considered whether the extent of reliance placed on
internal audit by the external auditors was appropriate
and whether there were any significant gaps between
the internal and external audits; and
■ obtained assurance from the external auditors that their
independence has not been impaired.
regulatory reporting
the committee:
■ reviewed the adequacy of the regulatory reporting
processes, including the quality of the Banks act
reporting and the adequacy of systems and people to
perform these functions;
■ considered the findings of any audited regulatory
reports as they related to the key responsibility of the
committee and the monitoring of management actions
with a view to resolving any issues identified; and
■ performed such other functions as are prescribed in the
regulations relating to the Banks act.
concLuSion
having considered, analysed, reviewed and debated
information provided by management, internal audit and
external audit, the committee confirmed that:
■ the internal controls of the group had been effective in
all material aspects throughout the year under review;
■ these controls had ensured that the group’s assets had
been safeguarded;
■ proper accounting records had been maintained;
■ resources had been utilised efficiently; and
■ the skills, independence, audit plan, reporting and
overall performance of the external auditors were
acceptable, and the committee recommended their
reappointment in 2014.
■ ratified the list of subsidiaries for which responsibility is
assumed; and
■ reviewed the formalised process used for the group
audit Committee to perform the necessary governance
duties on behalf of subsidiaries.
appropriateneSS of the expertiSe and
experience of the chief financiaL
officer
In terms of the JSe listings requirements the audit
Committee satisfied
its meeting held on
itself, at
16 January 2014, as to the appropriateness of the
expertise and experience of the Chief Financial officer.
integrated report
the committee has overseen the integrated reporting
process, reviewed the report and recommended the approval
thereof to the board. the board subsequently approved the
integrated report.
annuaL financiaL StatementS
during the period under review the committee:
■ reviewed and discussed the audited annual financial
statements included in this integrated report with
the external auditors, the Chief executive and the
Chief Financial officer;
■ reviewed the external auditors’ report and
management’s response thereto;
■ reviewed significant adjustments resulting from
external audit queries and accepted unadjusted audit
differences; and
■ received and considered reports from the internal
auditors.
approvaL
the committee considers the accounting practices and
internal financial controls that have led to the compilation
of the annual financial statements to be appropriate. We
further concurred with and accepted the external auditors’
report on the annual financial statements and have
recommended the approval thereof to the board. the board
subsequently approved the financial statements, which
will be open for discussion at the forthcoming annual
general meeting.
companieS act requirementS
In terms of the Companies act, 71 of 2008, the committee
is responsible, as set out above, for all subsidiary companies
mi Wyman
group audit Committee Chairman
21 February 2014
113
NEDBANK GROUP | INTEGRATED REPORT 2013
REPORT FROM
OUR DIRECTORS
NATURE OF BUSINESS
Nedbank Group Ltd (‘Nedbank Group’ or ‘the company’) is
a registered bank-controlling company that, through its
subsidiaries, provides a wide range of banking and financial
services. Nedbank Group maintains a primary listing under
‘Banks’ on JSE Ltd (the JSE), with a secondary listing on the
Namibian Stock Exchange.
ANNUAL FINANCIAL STATEMENTS
Details of the financial results are set out on pages 119
to 129 of the summarised annual financial statements,
which have been prepared under the supervision of the
Nedbank Group Chief Financial Officer, Mrs RK Morathi,
and audited in compliance with the South African Institute
of Charted Accountants (SAICA) Financial Reporting
Guides as issued by the Accounting Practices Committee,
and the requirements of the Companies Act, 71 of 2008
(as amended) and the JSE Listings Requirements.
INTEGRATED REPORT
The board of directors acknowledges its responsibility to
ensure the integrity of this integrated report. The board has
accordingly applied its mind to this integrated report and in
the opinion of the board the integrated report addresses all
material
integrated
performance of the organisation and its impacts. The
integrated report has been prepared in line with best
practice pursuant to the recommendations of the King III
Code (principle 9.1).
issues, and presents
fairly the
YEAR UNDER REVIEW
The year under review is fully covered in the Chairman’s
Review on pages 48 to 51, Chief Executive’s Review on
pages 62 to 67, growing our franchises section on pages 68
to 71, and the Chief Financial Officer’s Review on pages 100
to 107.
SHARE CAPITAL
Details of the authorised and issued share capital, together
with details of shares issued during the year, appear in
note 38 to the annual financial statements available at
nedbankgroup.co.za.
AMERICAN DEPOSITARY SHARES
At 31 December 2013, Nedbank Group had 3 159 022
(31 December 2012: 2 715 248) American depositary
shares in issue through the Bank of New York Mellon as
depositary, and trading on the OTC markets in the US. Each
American depositary share is equal to one ordinary share.
DIVIDENDS
The following dividends were declared in respect of the
year ended 31 December 2013:
■ Interim ordinary dividend of 390 cents per share
(2012: 340 cents per share); and
■ Final ordinary dividend of 505 cents per share
(2012: 412 cents per share).
BORROWINGS
Nedbank Group’s borrowing powers are unlimited pursuant
to the company’s memorandum of incorporation. The
details of borrowings appear in note 43 to the annual
financial statements available at nedbankgroup.co.za.
Summa-
rised
annual
financial
statements
119–129
DIRECTORS
Biographical details of the current directors appear on
pages 72 to 75. Details of directors’ and prescribed officers’
remuneration and Nedbank Group shares
issued to
directors and prescribed officers appear on pages 152
to 172.
During the period under review, and also subsequent to
year-end, the following changes occurred to the Nedbank
Group Ltd Board:
■ Don Hope resigned as Non-executive Director on
30 June 2013;
■ Thenjiwe Chikane resigned as Independent
Non-executive Director on 13 August 2013; and
■ David Adomakoh was appointed as Independent
Non-executive Director on 21 February 2014.
terms of Nedbank Group’s memorandum of
In
incorporation, one third of the directors are required to
retire at each Nedbank Group annual general meeting and
may offer themselves for election or reelection. David
Adomakoh was appointed by the board of directors during
2014 and in terms of the memorandum of incorporation his
appointment terminates at the close of the annual general
meeting. He is available for election. Tom Boardman,
Mustaq Enus-Brey, Mike Brown and Joel Netshitenzhe are
also required to seek reelection at the annual general
meeting. The aforementioned directors make themselves
available for reelection and separate resolutions will be
submitted for approval at the annual general meeting to
beheld on 13 May 2014.
Chairman’s
Review
48–51
Chief
Executive’s
Review
62–67
Growing
our
franchises
68–71
Chief
Financial
Officer’s
Review
100–107
OWNERSHIP
The holding company of Nedbank Group is Old Mutual Life
Assurance Company (SA) Ltd and associates, which holds
52,03% of the issued ordinary shares of the company. The
ultimate holding company is Old Mutual plc, incorporated in
England and Wales. Further details of shareholders appear on
pages 187 and 188.
In terms of Nedbank Group policy, non-executive directors
and independent non-executive directors of Nedbank
Group who have served on the board for a period longer
than nine years are required to retire from the board. None
of the current non-executive directors and independent
non-executive directors of Nedbank Group have served on
the board in that capacity for more than nine years.
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details of the members of the board who served during the year and at the reporting date are given below:
Name
dKt adomakoh (ghanaian)
ta Boardman
position as director
Independent non-executive
director
Independent non-executive
director
date resigned/retired
as director
(where applicable)
date appointed
as director
21 February 2014
1 november 2002
(1 march 2010 as
non-executive, 1 January
2014 as independent
non-executive)
mWt Brown
tCp Chikane
gW dempster
ma enus-Brey
Id gladman
Chief executive
17 June 2004
Independent non-executive
director
1 november 2006
13 august 2013
Chief operating officer
5 august 2009
non-executive director
16 august 2005
non-executive director
7 June 2012
dI hope (new Zealand)
non-executive director
1 december 2009
30 June 2013
rJ Khoza
pm makwana
np mnxasana
rK morathi
JK netshitenzhe
non-executive Chairman
16 august 2005
Independent non-executive
director
Independent non-executive
director
17 november 2011
1 october 2008
Chief Financial officer
1 September 2009
Independent non-executive
director
5 august 2010
JVF roberts (British)
non-executive director
1 december 2009
gt Serobe
mI Wyman (British)
non-executive director
16 august 2005
Senior Independent non-
executive director
1 august 2009
directorS’ intereStS
the directors’ interests in ordinary shares in nedbank group
and non-redeemable non-cumulative preference shares in
nedbank ltd at 31 december 2013 are set out in the
remuneration report on page 172. the directors had no
interest in any third party or company responsible for
managing any of the business activities of the group. Banking
transactions with directors are entered into in the normal
course of business under terms that are no more favourable
than those arranged with third parties.
audit committee and group
tranSformation, SociaL and
ethicS committee reportS
the audit Committee report appears on pages 110 to 113
the group transformation, Social and ethics
and
Committee report appears on pages 58 and 59.
report
from our
audit
Committee
110–113
refer to
172
report
from group
transfor-
mation,
Social and
ethics
Committee
Chairman
58–59
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NedbaNk Group | Integrated report 2013
report from our directors (CoNTINued)
companY SecretarY and regiStered
office
the board of directors has conducted an assessment of the
Company Secretary and is satisfied that mr Jali is suitably
competent, qualified and experienced and has adequately
and effectively performed the role and duties of a company
secretary. mr Jali has direct access to, and ongoing
communication with, the Chairman of the board. mr Jali is
not a director of the company and the board is satisfied
that, as far as is reasonably possible, an arm’s length
relationship between the Company Secretary and the
board is intact.
details of mr Jali’s qualifications and experience appear on
page 78.
the Company Secretary’s addresses and the registered
office are as follows:
business
address
nedbank group ltd,
nedbank 135 rivonia
Campus, 135 rivonia
road, Sandown,
Sandton, 2196, Sa
registered
address
135 rivonia
road,
Sandown,
Sandton,
2196, Sa
postal
address
nedbank
group ltd,
po Box 1144,
Johannesburg,
2000, Sa
propertY and equipment
there was no material change in the nature of the fixed
assets of nedbank group or its subsidiaries or in the policy
regarding their use during the year.
poLiticaL donationS
nedbank group has an established policy of not making
donations to any political party.
contractS and matterS in Which
directorS and officerS of the
companY have an intereSt
no contracts in which directors and officers of the company
had an interest and that significantly affected the affairs or
business of the company or any of its subsidiaries were
entered into during the year.
internal
In 2005 the WIphold Consortium and the Brimstone
Consortium were chosen as active black business partners
to assist in growing and repositioning the nedbank group
business and driving
transformation.
its
Consequently, performance agreements were entered into
between nedbank group and the aforementioned parties,
which govern, inter alia, the setting of the performance
criteria, their evaluation and the resultant performance
fees
the black business partners.
mrs gt Serobe is founder, executive director and 10%
shareholder of Women Investment portfolio holdings
limited (WIphold) and Chief executive of Wipcapital
(pty) ltd, a wholly owned subsidiary of WIphold.
mr ma enus-Brey
is Chief executive and 8,76%
shareholder of Brimstone Investment Corporation ltd and
a director of various Brimstone subsidiary companies.
respect of
in
116
also in 2005, aka Capital (pty) ltd (aka Capital), in which
dr rJ Khoza is a director and 27% shareholder, was
appointed as business development partner of nedbank
group and a performance agreement was similarly entered
into between nedbank group and aka Capital. the
aka-nedbank eyethu trust subsequently matured on
1 January 2011.
mr JK netshitenzhe is an executive director of the
mapungubwe Institute for Strategic reflection (mIStra).
In 2013 mIStra received a grant of r2m from the nedbank
eyethu Community trust (formed in 2005 as part of
nedbank group’s Bee transaction). the nedbank eyethu
Community trust provides funding to charitable or
non–profit organisations that qualify. the grant to mIStra
was evaluated against the normal criteria for funding by
the trust.
directorS’ and preScribed officerS’
Service contractS
there are no service contracts with the directors of the
company, other than for the Chairman and executive
directors as set out below. the directors who entered into
these service contracts remain subject to retirement
by rotation in terms of nedbank group’s memorandum
of incorporation.
the key responsibilities relating to dr rJ Khoza’s position
as Chairman of nedbank group are encapsulated in
a contract.
Service contracts have been entered into for messrs
mWt Brown and gW dempster and ms rK morathi.
these service contracts are effective until the executive
directors reach the normal retirement age and stipulate a
maximum notice period of six months (12 months for
mr Brown) under most circumstances.
details relating to the service contracts of prescribed
officers are incorporated in the remuneration report on
page 153.
inSurance
the group has placed cover in the london insurance market
for up to r2,55bn for losses in excess of r50m. group
captive insurers provide cover for total losses below the
r50m level engagement point, retaining r100m, in any
one year. Selected insurance cover is placed with the
old mutual group.
SubSidiarY companieS
details of principal subsidiary companies are reflected in
note 54 to the annual financial statements available at
nedbankgroup.co.za.
SpeciaL reSoLutionS bY SubSidiarieS
■ 14 February 2013 by Boe developments (pty) ltd for
the adoption of a new memorandum of incorporation.
■ 22 February 2013 by Boness development phase 3
(pty) ltd for the adoption of a new memorandum of
incorporation and change of objective.
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■ 22 February 2013 by Capegate Crescent development
(pty) ltd for the adoption of a new memorandum of
incorporation and change of objective.
■ 22 February 2013 by lighthouse developments
(pty) ltd for the adoption of a new memorandum of
incorporation.
■ 22 February 2013 by onrus manor (pty) ltd for the
adoption of a new memorandum of incorporation and
change of objective.
■ 22 February 2013 by Visigro Investments (pty) ltd for
the adoption of a new memorandum of incorporation
and change of objective.
■ 8 march 2013 by linton projects (pty) ltd for the
adoption of a new memorandum of incorporation and
change of objective.
■ 8 march 2013 by nedport developments (pty) ltd for
the adoption of a new memorandum of incorporation
and change of objective.
■ 15 march 2013 by nedgroup Secretariat Services
(pty) ltd for the adoption of a new memorandum
of incorporation.
■ 15 march 2013 by nhS properties (pty) ltd for the
adoption of a new memorandum of incorporation.
■ 16 april 2013 by toontjiesrivier landgoed ltd for the
adoption of a new memorandum of incorporation and
change of objective.
■ 16 april 2013 by Villager Investments no 1 (pty) ltd for
the adoption of a new memorandum of incorporation
and extending the objective of the company.
■ 19 april 2013 by mercury Securities (pty) ltd for the
adoption of a new memorandum of incorporation.
■ 19 april 2013 by ned Settle Services (pty) ltd for the
adoption of a new memorandum of incorporation.
■ 19 april 2013 by proclare (pty) ltd for the adoption of a
the creation of 287 Class F cumulative redeemable
non-par-value preference shares and the amendment of
Schedule 1 attached to the memorandum of
incorporation detailing the preferences, rights,
limitations and other terms of the preference shares.
■ 21 october 2013 by nBg Capital management (pty) ltd
for the adoption of a new memorandum of
incorporation and conversion from a public company
to a private company.
■ 24 october 2013 by Syfrets mortgage nominees (rF)
(pty) ltd for the adoption of a new memorandum of
incorporation, change of main business, change of
name, and conversion from a public company to a
private company.
■ 28 october 2013 by eighty one main Street nominees
(rF) (pty) ltd for the adoption of a new memorandum
of incorporation, change of main business, change of
name and conversion from a public company to a
private company.
■ 28 october 2013 by nedbank nominees (rF) (pty) ltd
for the adoption of a new memorandum of
incorporation, change of name and conversion from
a public company to a private company.
■ 28 october 2013 by nedcor Bank nominees (rF)
(pty) ltd for the adoption of a new memorandum of
incorporation, cancelling the classes of preference
shares, change of name, and conversion from a public
company to a private company.
■ 5 november 2013 by nedgroup Wealth management
(pty) ltd for the adoption of a new memorandum of
incorporation and conversion from a public company
to a private company.
■ 5 november 2013 by nedinvest (pty) ltd for the
adoption of a new memorandum of incorporation
and conversion from a public company to a
private company.
new memorandum of incorporation.
■ 15 november 2013 by Fidelity nominees (rF) (pty) ltd
■ 15 may 2013 by Kingsmead properties (pty) ltd for the
adoption of a new memorandum of incorporation.
■ 17 may 2013 by depfin Investments (pty) ltd for the
adoption of a new memorandum of incorporation.
■ 25 July 2013 by Syfrets participation Bond managers
(pty) ltd for the adoption of a new memorandum of
incorporation, change of main business, and conversion
from a public company to a private company.
■ 1 august 2013 by depfin Investments (pty) ltd for the
amendment of the memorandum of incorporation by
the creation of 90 Class e cumulative redeemable
non-par-value preference shares and the amendment of
Schedule 1 attached to the memorandum of
incorporation detailing the preferences, rights,
limitations and other terms of the preference shares.
■ 14 august 2013 by depfin Investments (pty) ltd for the
amendment of the memorandum of incorporation by
for the adoption of a new memorandum of
incorporation, change of main business, change of
name, and conversion from a public company to a
private company.
acquiSition of ShareS
no shares in nedbank group were acquired by nedbank
group or by a nedbank group subsidiary during the
financial year under review in terms of the general authority
previously granted by shareholders. members will be
requested to renew the general authority enabling
the company or a subsidiary of the company to
repurchase shares.
eventS after the reporting period
the directors are not aware of any other material events
that have occurred between the reporting date and
21 February 2014.
117
auditorS’ report on conSoLidated
financiaL StatementS
deloitte & touche and Kpmg Inc, nedbank group limited’s
independent auditors, have audited the consolidated financial
statements and specified sections of the remuneration report of
nedbank group limited from which management prepared the
summarised consolidated financial results. the auditors have
expressed an unqualified audit opinion on the consolidated
financial statements in accordance with International Financial
reporting Statements and the requirements of the Companies
act of Sa. the consolidated financial statements and
the auditors’ report thereon are available for inspection at the
registered office of nedbank group limited.
report from
independent
auditorS
118
NedbaNk Group | Integrated report 2013 SummariSed
annuaL
financiaL
StatementS
the summarised annual financial statements on pages 119 to 129
are derived from the nedbank group ltd annual financial
statements for the year ended 31 december 2013. the group has
applied the provisions of the new Companies act, 71 of 2008
(as amended), of Sa, which allows for summarised financial
statements
report.
in
these summarised financial statements have been prepared
under the supervision of raisibe morathi, the group Chief
Financial officer.
integrated
disclosed
this
as
In the preparation of the consolidated annual financial statements
the group has applied key assumptions concerning future and other
inherent uncertainties in recording various assets and liabilities.
the assumptions applied in the financial statements for the year
ended 31 december 2013 were consistent with those applied
during the 2012 financial year. these assumptions are subject to
ongoing review and possible amendments.
nedbank group’s principal accounting policies have been
prepared in terms of International Financial reporting Standards
(IFrS) of the International accounting Standards Board and have
been applied consistently over the current and prior financial
year, with the exception of the following new standards and
amendments, which have been mandatorily adopted on
1 January 2013:
■ the Consolidation Suite of Standards comprising IFrS 10
Consolidated Financial Statements, IFrS 11 Joint
arrangements, IFrS 12 disclosures of Interests in other
entities and the consequential amendments to IaS 27
Separate Financial Statements and IaS 28 Investments in
associates and Joint Ventures;
■ IFrS 13 Fair Value measurement;
■ amendments to IFrS 7 Financial Instruments: disclosures –
offsetting Financial assets and Financial liabilities; and
■ amendments to IaS 19 (IaS 19 revised). employee Benefits.
the adoption of IaS 19 (revised 2011) required certain restatements
to prior-year information, while the adoption of the remaining new
standards and amendments did not have a material impact on the
measurement of the group’s assets and liabilities.
information contained
the summarised annual financial statements are only a summary
of the
in the consolidated financial
statements of nedbank group ltd and does not contain full or
complete information. any investment decision should be based
on the consolidated financial statements of nedbank group ltd.
these
a
comprehensive list of the group’s accounting policies and further
financial information included in the results Booklet, are available
at nedbankgroup.co.za.
consolidated
statements,
including
financial
119
ENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderSdelIVerInG to oUr StaKeholderSmaKInG thInGS haPPen CONsOlIdaTed sTaTemeNT Of COmPReheNsIve INCOme
for the year ended 31 December
Interest and similar income
Interest expense and similar charges
Net interest income
Impairments charge on loans and advances
Income from lending activities
Non-interest revenue
Operating income
Total operating expenses
Operating expenses2
Black economic empowerment (BEE) transaction expenses
Indirect taxation
Notes
1
2
3
4
5
2013
Rm
46 087
24 867
21 220
5 565
15 655
19 361
35 016
22 419
22 362
57
601
2012
Rm
Restated
44 730
25 050
19 680
5 199
14 481
17 324
31 805
20 563
20 485
78
561
Profit from operations before non-trading and capital items
11 996
10 681
Non-trading and capital items
Net profit on sale of subsidiaries, investments, and property and equipment
Net impairment of investments, property and equipment, and capitalised development costs
Fair-value adjustments of investment properties
Profit from operations
Share of profits of associate companies and joint arrangements
Profit before direct taxation
Total direct taxation
Direct taxation2
Taxation on non-trading and capital items
Taxation on revaluation of investment properties
Profit for the year
Other comprehensive income net of taxation
Exchange differences on translating foreign operations3
Fair-value adjustments on available-for-sale assets3
Remeasurements on long-term employee benefit assets2
Gains on property revaluations3
Total comprehensive income for the year
Profit attributable to:
– equity holders of the parent2
– non-controlling interest – ordinary shareholders2
– non-controlling interest – preference shareholders
Profit for the year
Total comprehensive income attributable to:
– equity holders of the parent2
– non-controlling interest – ordinary shareholders2
– non-controlling interest – preference shareholders
Total comprehensive income for the year
Basic earnings per share2
Diluted earnings per share2
1 Represents amounts less than R1m.
2 2012 restated to reflect the adoption of IAS 19 Employee Benefits (revised 2011).
3 These items may be subsequently reclassified as profit or loss.
120
(56)
11
(67)
6
11 946
27
11 973
3 016
3 033
(18)
1
8 957
1 675
690
32
731
222
(18)
33
(51)
(12)
10 651
1
10 652
2 865
2 861
4
1
7 787
171
162
43
(76)
42
10 632
7 958
8 637
28
292
8 957
10 295
45
292
10 632
1 877
1 822
7 449
45
293
7 787
7 620
45
293
7 958
1 632
1 583
cents
cents
NedbaNk Group | Integrated report 2013 CONsOlIdaTed sTaTemeNT Of fINaNCIal POsITION
at 31 December
Assets
Cash and cash equivalents
Other short-term securities
Derivative financial instruments
Government and other securities
Loans and advances
Other assets
Current taxation assets
Investment securities2, 3
Non-current assets held for sale
Investments in private-equity associates, associate companies and
joint arrangements2
Deferred taxation assets1
Investment property
Property and equipment
Long-term employee benefit assets1
Mandatory reserve deposits with central banks
Intangible assets
Total assets
Equity and liabilities
Ordinary share capital
Ordinary share premium
Reserves1
Total equity attributable to equity holders of the parent
Non-controlling interest attributable to:
– ordinary shareholders1
– preference shareholders
Total equity
Derivative financial instruments
Amounts owed to depositors
Provisions and other liabilities
Current taxation liabilities
Other liabilities held for sale
Deferred taxation liabilities1
Long-term employee benefit liabilities1
Investment contract liabilities
Insurance contract liabilities
Long-term debt instruments
Total liabilities
Total equity and liabilities
1 2 012 restated to reflect the adoption of IAS 19 Employee Benefits (revised 2011).
2
2013
Rm
2012
Rm
Restated
2011
Rm
Restated
Notes
20 842
42 451
13 390
32 091
14 445
43 457
13 812
26 753
13 457
35 986
12 840
30 176
6
579 372
527 166
499 023
8 673
565
19 348
12
1 101
216
214
6 818
2 980
13 231
8 290
9 488
246
16 213
508
1 032
541
205
6 398
2 095
12 677
7 922
12 051
698
13 881
8
968
354
614
6 312
2 102
11 952
7 777
749 594
682 958
648 199
461
16 343
43 813
60 617
246
3 473
64 336
16 580
602 952
14 682
301
789
1 842
11 523
3 321
33 268
685 258
749 594
457
16 033
37 111
53 601
213
3 561
57 375
13 454
455
15 934
32 307
48 696
174
3 561
52 431
13 853
550 878
524 130
15 526
193
36
793
1 913
9 513
2 979
30 298
625 583
682 958
14 751
200
1 341
1 809
8 237
2 005
29 442
595 768
648 199
7
Certain investments were reclassified from investment securities to investments in private-equity associates, associate companies and joint arrangements to align better with industry
practice. No adjustments to the carrying value of the financial instruments arose as a result of the reclassification. Furthermore, no changes were made to the categorisation of the
financial instruments and they remain classified as designated at fair value through profit or loss.
3 Includes Nedbank Group Ltd’s right to subscribe for 2 478 341 936 ordinary shares in Ecobank Transnational Incorporated (ETI), exercisable between November 2013 and November
2014, at an aggregate price of USD 285m and to acquire further shares at market-related prices to become a 20% shareholder in ETI.
121
ENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderSdelIVerInG to oUr StaKeholderSmaKInG thInGS haPPen Loans and advances
Other assets
Intergroup assets
Total assets
Equity and liabilities
Total equity
segmeNTal RePORTINg
for the year ended 31 December
Rm
Statement of financial position
Cash and cash equivalents
Nedbank
Group
Nedbank
Capital
Nedbank
Corporate
Nedbank Retail
and Business
Banking
Nedbank
Retail
Nedbank Business
Banking
Nedbank
Wealth
Shared
Services
Central Management,
including
Rest of Africa1
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
Restated
Restated
Restated
Restated
Restated
Restated
Restated
Restated
Restated
34 073
27 122
10 986
4 399
2 755
2 623
2 616
2 088
2 616
2 088
58
Other short-term securities
42 451
43 457
30 969
26 972
Derivative financial instruments
13 390
13 812
13 327
13 672
(52)
(99)
–
–
Government and other securities
32 091
26 753
9 635
7 820
6 117
–
–
–
379
250 762
195 435
190 647
62 785
60 115
5 989
379
162 730 258 220
579 372
527 166
109 549
82 494
175 274
48 217
44 648
6 242
6 933
4 269
3 830
5 014
5 463
4 725
5 337
–
–
36 142
31 885
749 594 682 958
180 708
142 290
188 363
175 073
302 371
290 198
203 155
198 072
50 911
42 270
7 346
6 048
19 895
27 079
64 336
57 375
5 863
5 632
8 514
8 089
26 683
25 478
21 903
21 077
4 780
4 401
2 487
2 420
1 528
1 532
19 261
14 224
1 706
6 847
2
433
5 042
22 082
20 274
19 864
16 931
7 346
5 990
289
36 142
99 216
126
31 885
92 126
439
535
1
21 704
16 560
15 897
14 276
755
1 215
486
51
4 355
6 851
8 651
15 502
11 705
11 697
8
217
3 928
6 731
7 962
14 693
10 849
10 839
10
171
3 108
410
2 698
1 729
4 427
3 119
3 116
3
25
2 924
206
2 718
1 578
4 296
2 939
2 936
3
25
3 580
1 003
2 577
3 673
1 084
2 589
1 283
354
929
1 332
388
944
531
59
472
3 081
3 553
2 218
2 216
2
108
1 227
(1)
1 226
326
900
494
118
376
2 617
2 993
1 912
1 909
3
90
991
(2)
989
271
718
(211)
289
78
(140)
(177)
37
155
63
63
(96)
159
(213)
217
4
(51)
(90)
39
195
(140)
(140)
(180)
40
38
2 539
37
2 552
929
944
900
718
159
40
16 010
4 635
113
15 960
14 247
5 072
17 521
11 443
239
12 944
11 316
5 501
(36 142)
(31 885)
33
35
96 105
86 844
3 267
2 137
30 223
27 233
1 453
50
1 403
589
1 992
1 192
1 193
(1)
28
772
2
774
309
465
39
254
172
969
36
933
432
1 365
972
958
14
20
373
5
378
101
277
40
256
(19)
Derivative financial instruments
16 580
13 454
16 546
13 419
–
–
Amounts owed to depositors
Provisions and other liabilities
Long-term debt instruments
Intergroup liabilities
Total equity and liabilities
602 952 550 878
30 953
32 458
106 226 100 908
8 480
6 372
33 268
30 298
1 051
849
176 234
160 618
201 928
186 125
107 931
98 935
93 997
87 190
2 042
2 266
3 002
1 994
3 743
2 216
–
–
44 650
13 002
1 573
4 100
68 764
72 636
749 594 682 958
180 708
142 290
188 363
175 073
302 371
290 198
203 155
198 072
99 216
92 126
10 159
50 911
9 677
42 270
3 848
7 346
3 979
(128 994)
(103 394)
6 048
19 895
27 079
2 563
1 994
3 208
2 216
68 764
72 636
Consolidated statement of comprehensive income
Net interest income
21 220
19 680
1 608
1 521
3 525
3 326
14 314
13 583
11 206
10 659
(211)
(213)
Impairments charge on loans and advances
5 565
5 199
306
Income from lending activities
15 655
14 481
1 302
526
995
Non-interest revenue
Operating income
Total expenses
Operating expenses
BEE transaction expenses
Indirect taxation
385
3 140
1 944
385
4 765
4 134
2 941
9 549
9 449
1 469
10 380
9 540
19 361
17 324
3 078
3 049
35 016
31 805
4 380
4 044
5 084
4 410
19 929
18 989
22 419
20 563
22 362
20 485
57
601
78
561
2 156
2 152
4
36
1 974
1 969
5
31
2 169
2 165
4
32
1 968
14 824
13 788
1 964
14 813
13 775
4
29
11
242
13
196
Profit/(Loss) from operations
11 996
10 681
2 188
2 039
2 883
2 413
4 863
5 005
3 580
3 673
1 283
1 332
Share of profits of associate companies and
joint arrangements
27
1
26
(2)
–
–
Profit/(Loss) before direct taxation
12 023
10 682
2 188
2 039
2 909
2 411
4 863
5 005
Direct taxation
Profit/(Loss) after direct taxation
3 033
8 990
2 861
7 821
473
1 715
603
664
594
1 357
1 436
2 245
1 817
3 506
1 472
3 533
Profit attributable to non-controlling interest:
– ordinary shareholders
– preference shareholders
headline earnings
1 Includes all group eliminations.
28
292
45
293
(11)
5
–
38
–
37
8 670
7 483
1 726
1 431
2 245
1 817
3 468
3 496
The segmental results for 2012 have been restated to reflect the adoption of IAS 19 Employee Benefits (2011) and the transfer of a
subsidiary from Shared Services to Central Management, including Rest of Africa. The amendments to IAS 19 include revised
requirements for pensions and other postretirement benefits, termination benefits and certain other changes.
122
NedbaNk Group | Integrated report 2013 Loans and advances
Other assets
Intergroup assets
Total assets
Equity and liabilities
Total equity
Amounts owed to depositors
Provisions and other liabilities
Long-term debt instruments
Intergroup liabilities
Total equity and liabilities
Non-interest revenue
Operating income
Total expenses
Operating expenses
BEE transaction expenses
Indirect taxation
Nedbank
Group
Nedbank
Capital
Nedbank
Corporate
Nedbank Retail
and Business
Banking
Nedbank
Retail
Nedbank Business
Banking
Nedbank
Wealth
Shared
Services
Central Management,
including
Rest of Africa1
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
Rm
Restated
Restated
Restated
Restated
Restated
Restated
Restated
Restated
Restated
Statement of financial position
Cash and cash equivalents
Other short-term securities
Derivative financial instruments
13 390
13 812
13 327
13 672
(52)
(99)
42 451
43 457
30 969
26 972
–
–
–
–
–
34 073
27 122
10 986
4 399
2 755
2 623
2 616
2 088
2 616
2 088
Government and other securities
32 091
26 753
9 635
7 820
6 117
5 989
379
379
579 372
527 166
109 549
82 494
175 274
162 730 258 220
250 762
195 435
190 647
62 785
60 115
48 217
44 648
6 242
6 933
4 269
3 830
5 014
5 463
4 725
5 337
–
–
36 142
31 885
749 594 682 958
180 708
142 290
188 363
175 073
302 371
290 198
203 155
198 072
289
36 142
99 216
126
31 885
92 126
1 706
6 847
2
433
5 042
58
22 082
20 274
19 864
16 931
7 346
5 990
16 010
4 635
113
15 960
14 247
5 072
17 521
11 443
239
12 944
11 316
5 501
(36 142)
(31 885)
50 911
42 270
7 346
6 048
19 895
27 079
Derivative financial instruments
16 580
13 454
16 546
13 419
–
–
64 336
57 375
5 863
5 632
8 514
8 089
26 683
25 478
21 903
21 077
4 780
4 401
2 487
2 420
1 528
1 532
19 261
14 224
602 952 550 878
106 226 100 908
176 234
160 618
201 928
186 125
107 931
98 935
93 997
87 190
32 458
30 953
6 372
8 480
2 042
2 266
3 002
33 268
30 298
1 051
849
3 743
2 216
1 994
–
–
44 650
13 002
1 573
4 100
68 764
72 636
2 563
1 994
3 208
2 216
68 764
72 636
439
535
749 594 682 958
180 708
142 290
188 363
175 073
302 371
290 198
203 155
198 072
99 216
92 126
1
21 704
16 560
15 897
14 276
755
1 215
486
51
33
35
96 105
86 844
3 267
2 137
30 223
27 233
10 159
50 911
9 677
42 270
3 848
7 346
3 979
(128 994)
(103 394)
6 048
19 895
27 079
Consolidated statement of comprehensive income
Impairments charge on loans and advances
5 565
5 199
306
Income from lending activities
15 655
14 481
1 302
526
995
Net interest income
21 220
19 680
1 608
1 521
3 525
3 326
14 314
13 583
11 206
10 659
35 016
31 805
4 380
4 044
5 084
4 410
19 929
18 989
19 361
17 324
3 078
3 049
22 419
20 563
22 362
20 485
57
601
78
561
2 156
2 152
4
36
1 974
1 969
5
31
385
3 140
1 944
2 169
2 165
4
32
385
4 765
4 134
2 941
9 549
9 449
1 469
10 380
9 540
1 968
14 824
13 788
1 964
14 813
13 775
4
29
11
242
13
196
4 355
6 851
8 651
15 502
11 705
11 697
8
217
3 928
6 731
7 962
14 693
10 849
10 839
10
171
3 108
410
2 698
1 729
4 427
3 119
3 116
3
25
2 924
206
2 718
1 578
4 296
2 939
2 936
3
25
Profit/(Loss) from operations
11 996
10 681
2 188
2 039
2 883
2 413
4 863
5 005
3 580
3 673
1 283
1 332
3 580
1 003
2 577
3 673
1 084
2 589
1 283
354
929
1 332
388
944
531
59
472
3 081
3 553
2 218
2 216
2
108
1 227
(1)
1 226
326
900
494
118
376
2 617
2 993
1 912
1 909
3
90
991
(2)
989
271
718
(211)
(213)
(211)
289
78
(140)
(177)
37
155
63
63
(96)
159
(213)
217
4
(51)
(90)
39
195
(140)
(140)
(180)
40
38
2 539
37
2 552
929
944
900
718
159
40
Share of profits of associate companies and
joint arrangements
27
1
26
(2)
–
–
Profit/(Loss) before direct taxation
12 023
10 682
2 188
2 039
2 909
2 411
4 863
5 005
Direct taxation
Profit/(Loss) after direct taxation
3 033
8 990
2 861
7 821
473
1 715
603
664
594
1 357
1 436
2 245
1 817
3 506
1 472
3 533
Profit attributable to non-controlling interest:
– ordinary shareholders
– preference shareholders
headline earnings
1 Includes all group eliminations.
28
292
45
293
(11)
5
–
38
–
37
8 670
7 483
1 726
1 431
2 245
1 817
3 468
3 496
The segmental results for 2012 have been restated to reflect the adoption of IAS 19 Employee Benefits (2011) and the transfer of a
subsidiary from Shared Services to Central Management, including Rest of Africa. The amendments to IAS 19 include revised
requirements for pensions and other postretirement benefits, termination benefits and certain other changes.
1 453
50
1 403
589
1 992
1 192
1 193
(1)
28
772
2
774
309
465
39
254
172
969
36
933
432
1 365
972
958
14
20
373
5
378
101
277
40
256
(19)
123
ENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderSdelIVerInG to oUr StaKeholderSmaKInG thInGS haPPen summaRIsed CONsOlIdaTed sTaTemeNT Of ChaNges
IN equITy
Total equity
attributable
to equity
holders
of the
parent
Rm
48 946
(250)
48 696
(3 248)
Non-
controlling
interest
attributable
to ordinary
shareholders
Rm
Non-
controlling
interest
attributable
to preference
shareholders
Rm
178
(4)
174
(8)
3 561
3 561
(293)
14
119
7 620
396
2
2
53 601
(3 821)
475
(132)
10 295
206
(4)
(3)
60 617
45
293
2
213
(9)
3 561
(292)
45
292
(3)
246
(88)
3 473
Total
equity
Rm
52 685
(254)
52 431
(3 256)
(293)
14
119
7 958
396
2
2
2
57 375
(3 830)
(292)
475
(132)
10 632
206
(4)
(88)
(3)
(3)
64 336
Balance at 2011
Adoption of IAS 19 Employee Benefits (revised 2011)
Restated balance at 2011
Dividend to shareholders
Preference share dividend
Issues of shares net of expenses
Shares (acquired)/no longer held by group entities and
BEE trusts
Total comprehensive income for the year1
Share-based payment reserve movement
Regulatory risk reserve provision
Acquisition of subsidiary
Other movements
Balance at 2012
dividend to shareholders
Preference share dividend
Issues of shares net of expenses
shares (acquired)/no longer held by group entities and
Bee trusts
Total comprehensive income for the year
share-based payment reserve movement
Regulatory-risk reserve provision
Preference shares held by group entities
disposal of subsidiary
Other movements
Balance at 2013
1 Restated to reflect the adoption of IAS 19 Employee Benefits (revised 2011).
geOgRaPhICal segmeNTal RePORTINg
for the year ended 31 December
SA
Business operations1
BEE transaction expenses
Profit attributable to non-controlling interest –
preference shareholders
Rest of Africa1
Rest of world – business operations1
Total
1 2012 restated to reflect the adoption of IAS 19 Employee Benefits (revised 2011).
124
Operating income
Headline earnings
2013
Rm
32 721
32 721
2012
Restated
Rm
29 748
29 748
1 427
868
35 016
1 259
798
31 805
2013
Rm
8 054
8 409
(63)
(292)
335
281
8 670
2012
Restated
Rm
6 869
7 230
(68)
(293)
297
317
7 483
NedbaNk Group | Integrated report 2013
summaRIsed CONsOlIdaTed sTaTemeNT Of CashflOws
for the year ended 31 December
Cash generated by operations2
Change in funds for operating activities 2
Net cash from operating activities before taxation
Taxation paid
Cashflows from operating activities
Cashflows utilised by investing activities
Cashflows utilised by financing activities
Effects of exchange rate changes on opening cash and cash equivalents
(excluding foreign borrowings)
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year1
Cash and cash equivalents at the end of the year1
1 Including mandatory reserve deposits with central banks.
2 2012 restated to reflect the adoption of IAS 19 Employee Benefits (revised 2011).
headlINe eaRNINgs ReCONCIlIaTION
for the year ended 31 December
2013
Rm
20 553
(4 507)
16 046
(3 890)
12 156
(4 341)
(800)
(64)
6 951
27 122
34 073
2012
Rm
Restated
18 769
(5 912)
12 857
(3 914)
8 943
(4 696)
(2 552)
18
1 713
25 409
27 122
Profit attributable to equity holders of the parent1
Less: non-headline earnings items
Net profit on sale of subsidiaries, investments, and property and
equipment
Net impairment of investments, property and equipment,
and capitalised development costs
Fair-value adjustments of investment properties
Headline earnings
1 2012 restated to reflect the adoption of IAS 19 Employee Benefits (revised 2011).
2013
Rm
gross
(50)
11
(67)
6
2013
Rm
Net of
taxation
8 637
(33)
11
(49)
5
8 670
2012
Rm
Restated
Gross
(30)
33
(51)
(12)
2012
Rm
Restated
Net of
taxation
7 449
(34)
29
(51)
(12)
7 483
125
ENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderSdelIVerInG to oUr StaKeholderSmaKInG thInGS haPPen
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December
1
INTEREST AND SIMILAR INCOME
Home loans (including properties in possession)
Commercial mortgages
Finance lease and instalment debtors
Credit cards
Overdrafts
Term loans
Personal loans
Other term loans
Government and other securities
Short-term funds and securities
Other loans
Interest and similar income may be analysed as follows:
– interest and similar income from financial instruments not at fair value through profit and loss
– interest and similar income from financial instruments at fair value through profit or loss
2
INTEREST EXPENSE AND SIMILAR CHARGES
Deposit and loan accounts
Current and savings accounts
Negotiable certificates of deposit
Other interest-bearing liabilities
Long-term debt instruments
Interest expense and similar charges may be analysed as follows:
– interest expense and similar charges from financial instruments not at fair value through profit and loss
– interest expense and similar charges from financial instruments at fair value through profit or loss
2013
Rm
9 818
8 117
7 753
1 473
1 263
9 412
4 662
4 750
3 571
1 673
3 007
46 087
38 288
7 799
46 087
14 751
584
5 134
2 042
2 356
24 867
20 705
4 162
24 867
2012
Rm
10 222
7 883
7 293
1 311
1 284
8 867
4 325
4 542
3 360
1 719
2 791
44 730
38 358
6 372
44 730
14 078
590
5 867
1 998
2 517
25 050
20 297
4 753
25 050
An unaudited margin analysis of the interest income and interest expense by asset and liability category is presented in the
additional information to the annual financial statements available at nedbankgroup.co.za.
3
IMPAIRMENT OF LOANS AND ADVANCES
Impairment of loans and advances
Balance at the beginning of the year
Impairments charge
Statement of comprehensive income
charge net of recoveries:
Loans and advances
Advances designated as at fair value
through profit or loss
Recoveries
Amounts written off against the
impairment/other transfers
Impairment of loans and advances
4
NON-INTEREST REVENUE
Commission and fee income1
Insurance income
Fair-value adjustments
Net trading income2
Private-equity income2
Investment income
Net sundry income
Total impairment
Specific impairment
2013
Rm
10 870
6 453
5 565
5 591
(26)
888
2012
Rm
11 497
6 065
5 199
5 169
30
866
2013
Rm
7 443
5 906
5 018
5 044
(26)
888
2012
Rm
8 749
5 384
4 518
4 488
30
866
Portfolio impairment
2012
Rm
2013
Rm
3 427
547
547
547
2 748
681
681
681
(5 867)
11 456
(6 692)
10 870
(5 879)
7 470
(6 690)
7 443
12
3 986
(2)
3 427
14 023
1 927
40
2 564
225
56
526
19 361
12 538
1 695
(265)
2 464
391
107
394
17 324
1 Commission and fee income includes R1 947m (2012: R1 563m) related to trust and fiduciary fees.
2 An amount of R180m was reclassified from net trading income (equities) to private-equity income (securities dealing – unrealised) to reflect the effect on non-interest revenue
resulting from the corresponding reclassification of a financial instrument from held-for-trading to designated at fair value through profit or loss.
126
NEDBANK GROUP | INTEGRATED REPORT 2013
5
TOTal OPeRaTINg eXPeNses
Staff costs
Computer processing
Communication and travel
Occupation and accommodation
Marketing and public relations
Fees and insurances
Furniture, office equipment and consumables
Other operating expenses
Operating expenses
BEE transaction expenses
Total operating expenses
6
lOaNs aNd advaNCes
Mortgage loans
Home loans
Commercial mortgages
Net finance lease and instalment debtors
Gross investment
Unearned finance charges
Credit cards
Other loans and advances
Properties in possession
Overdrafts
Term loans
Personal loans
Other term loans
Overnight loans
Other loans to clients
Foreign client lending
Remittances in transit
Other loans
Preference shares and debentures
Factoring accounts
Deposits placed under reverse repurchase agreements
Trade, other bills and bankers’ acceptances
Impairment of loans and advances (note 3)
Comprises:
– loans and advances to customers
– loans and advances to banks
7
amOuNTs Owed TO dePOsITORs
Current accounts
Savings deposits
Other deposits and loan accounts
Call and term deposits
Fixed deposits
Cash management deposits
Other deposits and loan accounts
Foreign currency liabilities
Negotiable certificates of deposit
Deposits received under repurchase agreements
Comprises:
– amounts owed to depositors1
– amounts owed to banks1
Portfolio impairment
2013
Rm
12 629
2 720
820
1 838
1 451
2 042
454
408
22 362
57
22 419
2013
Rm
242 481
136 156
106 325
85 038
106 234
(21 196)
11 441
251 868
772
15 048
97 528
21 145
76 383
17 927
70 976
12 658
237
58 081
18 984
4 796
25 796
41
590 828
(11 456)
579 372
557 956
32 872
590 828
58 704
22 631
407 593
237 393
38 289
56 571
75 340
14 309
87 457
12 258
602 952
557 645
45 307
602 952
2012
Rm
11 425
2 461
793
1 730
1 281
1 801
449
545
20 485
78
20 563
2012
Rm
234 033
136 301
97 732
75 764
79 322
(3 558)
10 019
218 220
574
13 694
88 354
22 969
65 385
18 341
51 482
5 760
193
45 529
16 948
4 461
24 338
28
538 036
(10 870)
527 166
508 134
29 902
538 036
55 843
17 373
374 052
216 333
32 911
56 609
68 199
10 161
76 888
16 561
550 878
511 756
39 122
550 878
1 2012 deposits received under repurchase agreements of R9 076m have been reclassified from business sector to banks in line with the group’s 2013 sectoral disclosure.
127
ENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderSdelIVerInG to oUr StaKeholderSmaKInG thInGS haPPen
Notes to the fiNaNcial statemeNts (CONTINUED)
8
ResTaTemeNTs aNd ReClassIfICaTIONs
During the year the group restated certain prior-year information due to the mandatory adoption of IAS 19 Employee Benefits
and other reclassifications identified. The impact of the relevant restatements and reclassifications are detailed below:
CONsOlIdaTed sTaTemeNT Of fINaNCIal POsITION
december 2012
January 2012
Other
re-
classifi-
cations2
as
pre-
viously
Other
re-
classifi-
cations2
as
pre-
viously
reported
Ias 191
Ias 191
88
(16)
142
364
400
(163)
(364)
2 102
(400)
2 258
2 095
Restated
reported Restated
968
354
614
6 312
568
266
614
6 312
668
399
205
6 398
1 032
541
205
6 398
12 677
7 922
682 958
14 445
43 457
13 812
26 753
527 166
9 488
246
16 577
508
14 445
43 457
13 812
26 753
527 166
9 488
246
16 213
508
13 457
35 986
12 840
30 176
499 023
12 051
698
14 281
8
13 457
35 986
12 840
30 176
499 023
12 051
698
13 881
8
Rm
Assets
Cash and cash equivalents
Other short-term securities
Derivative financial instruments
Government and other securities
Loans and advances
Other assets
Current taxation assets
Investment securities3
Non-current assets held for sale
Investments in private-equity
associates, associate companies
and joint arrangements
Deferred taxation assets
Investment property
Property and equipment
Long-term employee benefit
assets
Mandatory reserve deposits with
central banks
Intangible assets
Total assets
Equity and liabilities
Ordinary share capital
Ordinary share premium
Reserves1
Total equity attributable to equity
holders of the parent
Non-controlling interest
attributable to:
– ordinary shareholders
– preference shareholders
Total equity
Derivative financial instruments
Amounts owed to depositors
Provisions and other liabilities
Current taxation liabilities
Other liabilities held for sale
Deferred taxation liabilities
Long-term employee benefit
liabilities
Investment contract liabilities
Insurance contract liabilities
Long-term debt instruments
Total liabilities
Total equity and liabilities
1 On 1 January 2013 the group adopted IAS 19 Employee Benefits (revised 2011) (IAS 19R). The adoption of IAS 19R resulted in the group restating its previously reported
213
3 561
57 375
13 454
550 878
15 526
193
36
793
219
3 561
57 730
13 454
550 878
15 526
193
36
781
174
3 561
52 431
13 853
524 130
14 751
200
–
1 341
178
3 561
52 685
13 853
524 130
14 751
200
1 479
8 237
2 005
29 442
595 442
648 127
1 913
9 513
2 979
30 298
625 583
682 958
1 591
9 513
2 979
30 298
625 249
682 979
1 809
8 237
2 005
29 442
595 768
648 199
12 677
7 922
682 979
11 952
7 777
648 199
11 952
7 777
648 127
457
16 033
37 460
455
15 934
32 307
455
15 934
32 557
457
16 033
37 111
334
(21)
326
72
48 946
48 696
53 950
53 601
(250)
(250)
1 345
(349)
(349)
(254)
(355)
2 118
–
–
–
–
330
322
(21)
(6)
(4)
(4)
72
12
–
–
–
–
–
–
financial results in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.
2 Certain investments were reclassified from investment securities to investments in private-equity associates, associate companies and joint arrangements to align better with
industry practice. No adjustments to the carrying value of the financial instruments arose as a result of the reclassification. Furthermore, no changes were made to the
categorisation of the financial instruments and they remain classified as designated at fair value through profit or loss.
3 An amount of R846m was reclassified from held for trading to designated at fair value to reflect management’s original intention.
128
NedbaNk Group | Integrated report 2013 CONsOlIdaTed sTaTemeNT Of COmPReheNsIve INCOme
Rm
Interest and similar income
Interest expense and similar charges
Net interest income
Impairments charge on loans and advances
Income from lending activities
Non-interest revenue
Operating income
Total operating expenses
Operating expenses
BEE transaction expenses
Indirect taxation
december 2012
Restated
Ias 19
44 730
25 050
19 680
5 199
14 481
17 324
31 805
20 563
20 485
78
561
–
–
–
35
35
as
previously
reported
44 730
25 050
19 680
5 199
14 481
17 324
31 805
20 528
20 450
78
561
Profit from operations before non-trading and capital items
10 681
(35)
10 716
Non-trading and capital items
Fair-value adjustments of investment properties
Profit from operations
Share of profits of associate companies and joint arrangements
Profit before direct taxation
Direct taxation
Profit for the year
Other comprehensive income/(loss) net of taxation
Exchange differences on translating foreign operations
Fair-value adjustments on available-for-sale assets
Remeasurements on long-term employee benefit assets
Gains on property revaluations
Total comprehensive income for the year
Profit attributable to:
Equity holders of the parent
Non-controlling interest – ordinary shareholders
Non-controlling interest – preference shareholders
Total comprehensive income attributable to:
Equity holders of the parent
Non-controlling interest – ordinary shareholders
Non-controlling interest – preference shareholders
Total comprehensive income for the year
Basic earnings per share (cents)
Diluted earnings per share (cents)
(18)
(12)
10 651
1
10 652
2 865
7 787
171
162
43
(76)
42
(18)
(12)
(35)
10 686
(35)
(10)
(25)
(76)
(76)
1
10 687
2 875
7 812
247
162
43
42
7 958
(101)
8 059
7 449
45
293
7 787
7 620
45
293
7 958
1 632
1 583
(27)
2
(25)
(99)
(2)
(101)
(6)
(5)
7 476
43
293
7 812
7 719
47
293
8 059
1 638
1 588
129
ENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderSdelIVerInG to oUr StaKeholderSmaKInG thInGS haPPen woRldclass
at
Managing
Risk
Risk and Balance sheet ManageMent
Nedbank Group has a strong risk culture and follows worldclass
enterprisewide risk management (ERM), which aligns strategy,
policies, people, processes, technology and business intelligence
in order to optimise the opportunities and uncertainties the
group may face in its ongoing efforts to maximise sustainable
shareholder value.
Background to risk and balance sheet management
in Nedbank Group
It is the group’s view that a strong risk governance process is the
foundation for successful risk management and balance sheet
management, which is why this model represents the core of the
business’s Enterprisewide Risk Management Framework (ERMF).
The ERMF places emphasis on accountability, responsibility,
independence, reporting, communications and transparency,
and comprises 17 key risk categories that are managed,
monitored, measured and reported on by the first, second and
third line-of-defence functions across the group.
The 17 key risks that comprise Nedbank Group’s risk universe are
reassessed, reviewed and challenged on a regular basis in terms
of their materiality. The ERMF, in turn, specifically allocates the
17 key risks at each of three levels of responsibility, namely:
■ board (non-executive directors) committees;
■ executive management committees [at Group Executive
Committee (Exco) level and those within business
clusters]; and
■ individual functions, roles and responsibilities (at group level
and across business clusters).
GRI
FSSS: FS1
FS2
GRI: 3.1:
1.2,
EC1,
EC2
Supplementary
information:
Risk and
Balance Sheet
Management
Review
Supplementary
information:
Risk and Capital
Management
Pillar 3 Public
Disclosure
Report
130
NedbaNk Group | Integrated report 2013
EntErprisEwidE risk
’
i
E
s
r
E
v
n
u
k
s
i
r
s
p
u
o
r
G
k
n
a
b
d
E
n
ACCOuNTING AND
TAxATION RISkS
CAPITAl RISk
COMPlIANCE RISk
CREDIT RISk
INFORMATION
TEChNOlOGy RISk
MARkET RISk
INSuRANCE AND
ASSuRANCE RISk
uNDER-
WRITING
INSuRANCE
RISk
INSuRANCE
RISk
TRADING
BOOk
BANkING
BOOk
NEW BuSINESS RISk
INvESTMENT RISk
lIquIDITy RISk
OPERATIONAl
RISk
PEOPlE RISk
REPuTATIONAl
RISk
SOCIAl AND
ENvIRONMENTAl
RISk
STRATEGIC RISk
TRANSFORMATION
RISk
ResponsiBilities of the thRee lines of defence
fiRst line
The board and management of Nedbank Group are responsible for the implementation and
management of risk.
second line
Group Risk and Enterprise Governance and Compliance perform a policy-setting and monitoring
role to ensure implementation of risk management principles and adherence to regulation
and legislation.
thiRd line
Group Internal Audit (GIA), external auditors and independent actuaries provide additional
assurance on the effectiveness of risk management in the organisation.
In these various committees the 17 key risks are contained in formal
terms of reference (or charters) and linked to the agendas of
meetings. Comprehensive reporting on the risk universe thus occurs
regularly, where their status, materiality and the effectiveness of
management are assessed, reviewed and challenged.
the iterative reassessment of the 17 key risks. Escalation criteria
have been formalised and significant risk issues and/or limit
breaches are raised and included in the key issues control log,
which is a key feature of the ERMF and risk reporting across
Nedbank Group.
This process originates in the business clusters; then, based on
materiality, risks are escalated up to the group executive level and
then to the non-executive board level. The process is overlaid by
the group’s three lines of defence governance model as set out
above, so that the assessment, review and challenge are not only
the responsibility of management and the board, but also of
Group Risk, Group Compliance, and Group Internal Audit and the
external auditors in the second and third lines of defence.
Within this recurring ERM process, and additionally via the
strategic and business planning process, new and/or emerging
risks are identified, captured and addressed within the ERMF and
its associated process. A residual heat map is used and supports
The ERMF, fully embedded in business and central functions
across Nedbank Group, is supplemented by individual frameworks
such as those for risk appetite in respect of credit risk, market risk,
liquidity risk, operational risk and capital risk, as well as a
comprehensive set of risk policies and limits. These also comprise
the role of the board, which includes setting and monitoring the
group’s risk appetite and oversight of the ERMF, duly assisted by
its board committees. At executive management level the Group
Exco is also assisted with its risk, strategic, operational and asset,
responsibilities by six
liability and capital management
subcommittees and the Group Operations Committee (Opcom),
Taxation, Property and Procurement Committees, and the Group
Transformation Forum.
131
ENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderSdelIVerInG to oUr StaKeholderSmaKInG thInGS haPPen
Worldclass aT MaNaGING rIsK (CONTINUED)
Nedbank Group has also developed individual risk frameworks
for the effective management of social, environmental and
transformation risks. These frameworks serve as best-practice
guidelines for the management of risks associated with these
pillars of sustainability within the organisation, offering clear
governance structures (eg committees, charters and policies) to
deal with risks associated with the group’s sustainability
objectives. The ERMF thus facilitates effective challenge and
debate at executive management and board levels, and strong
interaction across the group between the businesses and the
functions. Our stress-testing
independent central group
scenarios examine nine of the macroeconomic factors in the
proprietary model, which provides important input into a three-
year plan and risk strategy.
Risk strategy
During the annual strategy and business planning process a
comprehensive risk strategy is formulated. The salient features
include evolving our strong risk foundation, with a particular
focus on the following initiatives:
■ As regulatory requirements increase rapidly, Nedbank
continues to invest heavily in resources, programme
implementation and monitoring. Combating money
laundering, combating terrorist financing, the Foreign
Account Tax Compliance Act, Treating Customers Fairly, the
protection of personal information, the Banks Amendment
Act, the Financial Sector Regulation Bill (Twin Peaks and
market conduct), the Financial Services laws General
Amendment Act, the National Credit Amendment Bill and a
Basel III consultative paper for the fundamental review of the
trading book feature as high-focus areas. Arising from these
is the increased oversight required by regulators of financial
institutions, and in this regard Nedbank prides itself on the
strong, regular and transparent relationships with its
regulators and stakeholders.
■ Nedbank continues to rely heavily on the strong foundation
provided by the ERMF with the intention to employ
worldclass risk management practices. It is therefore
important further to maximise the benefits that can be
derived from the advanced approaches for operational, credit
and market risks. We will also continue to manage the risk
complexity through appropriate models, validation and skills.
■ In support of the overall Nedbank strategy relating to the rest
of Africa, a second-line-of-defence focus will be assisting the
business to enhance the control environment in existing
operations, while the Pan-African strategy will remain a
top priority.
■ In terms of innovation we will continue to leverage technology
to support risk processes, improve our client experience,
minimise the onslaught of fraud and, where necessary,
increase the focus on data access and data risk management.
■ We will continue the sound management of the Corporate
Insurance programme.
■ There will be an ongoing focus on credit risk management in
the current economic environment, especially with adverse
interest rate and currency moves, job losses, fuel prices, etc.
■ While enabling business innovation and the business to deliver
on its strategy, Nedbank will maintain sound risk principles
during a period of focus on non-interest revenue growth.
132
■ In line with our Deep Green aspiration to become ‘highly
involved in the community and environment’, Nedbank
embraces the analysis that informed SA’s National
Development Plan (NDP) in its Fair Share 2030 initiative and
will ensure that credit and investment decisionmakers are
cognisant of these.
■ Although 2013 demonstrated good overall balance sheet
growth in line with portfolio tilt objectives, deposit mix trends
will be the focus for 2014 and beyond.
■ unlike Basel II that was implemented in 2008, Basel III will be
phased in over several years until 2019 and there are
therefore several items that are still regarded as work in
progress, with a detailed plan to meet timelines. Work-in-
progress issues remaining are, among others, fundamental
reviews of the trading book, fundamental revision of the
operational-risk and securitisation frameworks, peer reviews
of Basel III implementation and recovery and resolution plans.
oveRview of 2013
Successes and concerns
During the year Nedbank maintained its focus on actively
managing and maintaining a strong risk culture within an
embedded ERMF, supplemented by individual frameworks and
comprehensive risk policies and risk governance, which includes
best-practice reporting and disclosure.
including
The Group Risk and Capital Management Committee (GRCMC)
manages the bank’s risk,
liquidity and capital
optimisation, proactively. This committee acts as the board’s
expert monitors of liquidity, operational, legal, investment,
insurance and assurance, strategic and all market risks.
Committee members meet quarterly and consider any buildup
or concentration in the various risks and also emerging risks to
which the group is exposed. The ERMF risk policies and limits are
continuously reviewed by this committee. In its commitment to
improving existing risk and governance practices continually, the
GRCMC completed an initiative to streamline and rationalise the
policies covering the risks included in its mandate.
GRCMC focused on embedding the group operational-risk
profile compiled from different data elements and monitoring
the identified risks by aligning the components of operational-
risk measurement and the management approach. Active
involvement, participation and proactive response to new
regulations ensured that Nedbank’s operational-risk practices
remained sound and aligned with new international operational-
risk standards. There was a greater focus on coordination to
enhance understanding of
interrelationship between
the
operational risk and other risk types across the organisation,
supported by directors’ operational-risk management training.
A further major responsibility of the committee is its focus on
is
liquidity and capital management, ensuring the bank
adequately funded with prudent levels of capital adequacy in
compliance with the Basel III requirements.
In line with international and local trends Nedbank observed an
increase in regulatory scrutiny and inspections, which highlighted
areas where administrative
regulatory controls can be
strengthened.
The period saw an increased awareness and responsiveness to
the top five global emerging operational risks in the financial
services sector. Cybercrime issues, the regulatory environment,
outsourcing, fraud and conduct risk were rated the top five risks
in 2013. Primary matters attended to comprised major litigation
NedbaNk Group | Integrated report 2013 and claims against the bank, security risk (physical, information
and staff), business continuity, recovery and resolution plans,
monitoring of regulatory risks, the implementation of the group
regulatory programmes, oversight of capital and
liquidity
management in compliance with Basel III, combating of money
laundering and terrorist financing, sanctions control, privacy
(protection of personal information), occupational health and
safety, the Companies Act and the Foreign Account Tax
Administration Act.
in the deployment of nedbank’s risk strategy during the
financial year of 2013 we managed to achieve the following
successes:
■ The ERMF was maintained and continued to be resilient in
2013, encompassing strong and effective risk and balance
sheet management, governance and compliance, fully aligned
with the latest international Basel and local requirements.
■ Basel III was implemented on 1 January 2013 without any
interruption to our operations. This was largely a result of our
proactive approach to Basel III, preplanning and strong capital
positioning leading up to 2013.
■ While Basel II was implemented together with external
consultants, Basel III was implemented by our internal resources.
■ We improved on our credit loss ratios (ClRs). Although our
ClR target is set at 60 basis points to 100 basis points, we
are continuously working towards decreasing it further from
its current position of 1,06%. ClR target ranges have been
revised from 2014 for Nedbank Group at 80 basis points to
120 basis points.
■ Expertise and good decisionmaking skills allowed commercial
property to exceed expected growth in 2013, while remaining
within the target range set for its ClR.
■ Strong capital adequacy levels were supported by internal
stress-testing results.
■ We continued with the sound implementation and ongoing
enhancement of the advanced approaches for operational,
credit and market risks.
■ Nedbank experienced a stable operational-risk environment
against a backdrop of high-profile external operational-risk
events locally and internationally. The group remained
focused on anticipating, recognising and proactively
responding to the challenges and emerging risks in the
operating environment. The group’s top and emerging
operational risks mainly related to financial crime; execution,
delivery and process management; and information security.
Fraud and transaction processing were also the main reasons
for internal losses by frequency and severity. These were,
however, contained within approved risk appetite limits and
significant material loss events were limited. As the business
evolves, the associated growth and level of operational
complexity expose the group to additional operational risks.
In response, the group continued to focus on improving the
internal control environment to minimise the potential for
losses, with emphasis on making it easy to do business
with Nedbank.
■ Compliance and regulatory risk has become increasingly
compliance with applicable local and international laws,
regulations and supervisory requirements, guided by an
established and comprehensive set of board-approved
policies, procedures and governance structures.
■ The redesigning of our physical security systems at
our branches and offices allowed us to save an amount
of R36,5m.
■ Although we have experienced a decrease in the number of
fraud cases (6 026 in 2013 from 8 139 in 2012), the overall
value of these cases has increased. In addition, the number of
internal fraud cases has decreased – evidence that preventing
fraud rather than dealing with the consequences is a more
effective strategy. As part of Nedbank’s recruitment process,
staff integrity checks are conducted on all prospective
staffmembers, including non-permanent staffmembers such
as contractors.
■ As part of industry requirements by the Regulator we started
to benchmark our risk management performance against that
of other banks and against feedback from the South African
Reserve Bank (SARB). We are proud to report that no issues
were raised on our Internal Capital Adequacy Assessment
Process (ICAAP) by SARB.
however, the following concerns were also noted:
■ Increased valuations of listed shares in 2013 have given rise
to concerns about a possible future reduction in share prices,
and therefore we are monitoring our exposure to listed shares
daily and improving the liquidity of our exposure.
■ Industry concerns resulted in our decreasing our exposure to
unsecured lending.
■ Continuous changes to regulations create the need to update
our systems and processes in order to meet new
requirements.
■ A sovereign downgrade, rand weakness and volatility, weak
growth, higher inflation, rising interest rates and the
uncertainty associated with the national elections will impact
the business.
■ There is a growing need for effective controls and procedures
to enhance all aspects of regulatory compliance, especially as
far as combating money laundering and the financing of
terrorist activities is concerned.
theMes
Innovation and client centricity
Banking requires continuous innovation, the enabling of the
risk-mitigating processes and
business with efficient
the improvement of the client experience. Recent examples of
these in the quest to combat fraud include:
■ Approve-it™, a solution to increase electronic online banking
security, which has resulted in a significant decrease in the
number of phishing scams in 2013 compared with those
recorded in 2012.
■ Risk Net, a transactional card fraud prevention tool that is
used to detect suspicious account activity.
significant, given the heightened regulatory environment in
which Nedbank operates. The group sought to achieve
As a result of these measures to improve our risk management
systems we experienced no major security breaches in 2013.
133
ENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderSdelIVerInG to oUr StaKeholderSmaKInG thInGS haPPen Worldclass aT MaNaGING rIsK (CONTINUED)
Top of mind at Nedbank is the smart implementation of the
Protection of Personal Information Act, which will ensure that
client data is protected to minimise compromise and abuse.
We have proactively embraced this legislation, while also
focusing on implementing Treating Customers Fairly (TCF)
requirements in all our business activities. The board and
management benefited from interacting with the Financial
Services Board (FSB), who provided insight into the fair
treatment of clients. Initiatives to date include awareness
campaigns, focused and directed programme management,
board and executive oversight and assessments to identify
gaps in the fair treatment of clients at all levels of the
organisation.
foRwaRd looking
Regulatory landscape
The volume and speed of regulatory change remain challenging
both globally and locally, requiring agility from a bank aspiring to
be worldclass at managing risk.
Furthermore, market conduct and behaviour will be the
cornerstones of maintaining confidence. An innate focus on
these risk exposures will have far-reaching implications for
reputational risk, and the Twin Peaks legislation governing
conduct is expected to improve risk mitigation in this regard.
Also on the horizon is the Basel Committee’s Fundamental
Review of the Trading Book, which represents a significant
change in the way regulatory capital will be calculated for trading
market risk.
Macroeconomic factors
The unpredictable macro environment will also create volatility
and uncertainty.
The greatest risk for us is a sovereign downgrade of SA’s credit
rating, which will impact:
■ our pricing and our ability to issue new forms of funding and
capital, particularly outside SA;
■ our margins; and
■ our growth.
Because we are capped at the sovereign ceiling, all SA banks will
be downgraded in such an event.
Innovation imperative
While Nedbank invests in appropriate prevention and detection
mechanisms for cybercrime, information security breaches and
fraud, these risks remain key in shaping the operational-risk
landscape. Technology and innovation are strong forces driving
change in the business environment. Nedbank continues to
invest in the capability and capacity required to meet and
exceed demands from an information technology systems
perspective.
Risk and Balance sheet ManageMent
Review
Highlights
The 2013 financial performance, delivered amid continuing
difficult macroeconomic conditions, is underpinned by a strong,
robust balance sheet across all the core dimensions of capital
adequacy, liquidity, provisioning and sound asset quality, aided
by the group’s strategic portfolio tilt focus, an enabling but
prudent risk appetite, excellence in risk management and a
seamless transition to Basel III.
134
capital adeQUacY and leveRage
■ The common-equity tier 1 (CET1) capital ratio strengthened to
12,5% (2012: 11,6% pro forma Basel III) to the top end of the
group’s new Basel III target range, well positioned to support
growth and pursue strategic opportunities.
■ The successful issuance of R3bn of new-style Basel III
subordinated debt tier 2 capital at competitive pricing,
culminating in a total capital ratio of 15,7% (2012: 15,1%
pro forma Basel III).
■ The risk-weighted assets (RWA) density of 52,4% (2012:
52,7%), which compares conservatively with international
levels.
■ Sound Internal Capital Adequacy Assessment Process
(ICAAP) and, in line with Basel III, a comprehensive new
Recovery Plan.
■ Dividend growth of 19% above headline earnings per share
(hEPS) growth of 14,9% is at a 2,11 times dividend cover as
the group continues to migrate to the midpoint of its dividend
cover range (1,75 times to 2,25 times).
■ Migration to Basel III is seamless.
■ In January 2014 the Basel Committee on Banking Supervision
(Basel Committee) announced changes to the Basel III
leverage ratio, easing the international requirements.
Nedbank also compares favourably with international peers
on leverage, with a pro forma Basel III ratio of 6,4% (Basel III
minimum 3%; SARB minimum 4%) or 15,6 times, while the
current financial International Financial Reporting Standards
(IFRS) accounting-based ratio is 7,9% (or 12,7 times).
liQUiditY and fUnding
■ Nedbank is pro forma-compliant with the new Basel III
liquidity coverage ratio (lCR), which becomes effective on
1 January 2015. This includes R28bn (2012: R24bn) of surplus
liquid assets held at year-end.
¨ Total sources of quick liquidity are a significant R107,3bn or
14,3% of total assets (2012: R105,4bn or 15,4%).
■ A strong funding profile has been maintained throughout 2013,
with Nedbank recording a three-month average long-term
funding ratio of 26,2% in the last quarter of 2013, up slightly
from 26,0% in 2012.
¨ Nedbank issued its first-ever commercial-mortgage-backed
securities (CMBS) during March 2013, successfully raising
R2,0bn, while also diversifying its long-term funding sources.
− Nedbank issued R3,2bn in senior unsecured debt in July
2013, followed by a further issue of R2,6bn in November
2013 at competitive pricing.
¨ In January 2014 the Basel Committee announced the much
anticipated proposed revisions to the Basel III net stable
funding ratio (NSFR), which is effective from 2018. While the
SA banking industry’s gap to compliance with the NSFR will
have substantially improved, full compliance remains a
structural challenge.
■ Deposits grew 9,5% to R603,0bn. The growth in deposits
across Corporate, Retail, Business Banking and Wealth supports
Nedbank Group’s key objective of enhancing an already strong
retail and commercial banking franchise through continued
emphasis on meeting client needs through product, pricing and
innovation, and the group’s strategic portfolio tilt focus.
NedbaNk Group | Integrated report 2013 ¨ The loan-to-deposit ratio remains favourably positioned,
■ Total gross new-advances payouts increased by 10,1% to
consistently below 100% at 96,1% (2012: 95,7%).
R158,9bn (2012: R144,3bn).
pRovisioning and defaUlted advances
■ Nedbank has established prudent and conservative
provisioning across all its credit portfolios.
■ With significant action already taken in home loans and, in
recent years, in Personal loans, the bank is placed in a sound
position ahead of the rising interest rate cycle.
■ Sound asset quality and proactive risk management have
enabled lower levels of inflows into defaulted advances, which
declined by 9,4% to R17 455m (2012: R19 273m) and
amounted to 2,95% of gross advances (2012: 3,58%).
¨ Defaulted advances in Nedbank Retail declined to 5,4% of
the advances portfolio (2012: 6,3%) as the result of
sustained excellence in collection efforts, effective client
rehabilitations (including restructures and rearrangements)
and higher-quality new business.
¨ The six-month writeoff period for personal loans and steps
taken from h2 2012 to reduce risk resulted in personal-loans
defaulted advances peaking mid-year and the ClR improving
since June 2013.
¨ Investment Banking, Nedbank Property Finance, Corporate
Banking and MFC contributed 64,8% of gross payouts.
¨ Personal loans gross payouts decreased by 56,2% during
2013 due to intentionally low, risk-mitigated growth
strategies in the business.
■ Also in line with our portfolio tilt strategy, Nedbank’s credit
concentration risk (expressed on a percentage of total gross loans
and advances) has been actively managed over time, including:
¨ Residential mortgages were managed down from 32,3%
(2009) to 23,0% (2013).
¨ Commercial mortgages were maintained around 18,0%
during the last three years, but increased from 16,5% in
2009. Nedbank has a market-leading commercial property
franchise, which aligns with our preference to be more
weighted in this economically attractive portfolio and less
in residential mortgages, relative to the peer group.
¨ lease and instalment sales increased from 13,9% (2009)
to 14,4% (2013).
¨ Personal loans comprises only 3,6% (2009: 2,1%) and the
¨ The coverage ratio for total and specific impairments
intention is to maintain this below 4%.
increased to 65,6% (2012: 56,4%) and 42,8% (2012: 38,6%)
respectively. Portfolio coverage on the performing book
continued to strengthen to 0,70% (2012: 0,66%).
¨ Within Nedbank Retail balance sheet impairments
strengthened further, which was reflected in both specific
coverage increasing to 51,0% (2012: 45,2%) and portfolio
coverage increasing to 1,37% (2012: 1,21%), aided by R323m
pretax additional impairments as downside risk protection in
anticipation of the effects of the systemic risk of high
industry unsecured lending growth rates in preceding years
and increasing consumer indebtedness.
asset QUalitY
■ Strategic portfolio tilt has been a key focus area of Nedbank
since 2009, including selective origination of lower or higher
growth in varying credit portfolios together with a strong
emphasis on risk-based pricing and client value management.
¨ This has considerably strengthened the balance sheet as
summarised above and quality of the asset mix, resulting in
good net interest margin (NIM) growth, despite the tough
economic environment, the 40-year low interest rates
negatively impacting endowment and the significant new
costs associated with Basel III, while placing Nedbank
favourably going into the rising interest rate cycle in 2014.
■ In 2013 solid advances growth was delivered across several key
businesses, including MFC (14,8%), Card (13,5%), Property
Finance (11,0%), Investment Banking (36,5%) and Rest of
Africa (17,5%), supporting the growth in total loans and
advances of 9,9% to R579,4bn.
¨ There was selective advances growth to mitigate against
downside risk in personal loans and home loan products,
which decreased by 7,9% and 0,1% respectively.
■ Significant levels of cash and securities were maintained in
2013, including high-quality liquid assets (hqlAs) (R56,7bn)
and cash reserves (R13,0bn) in line with Basel III.
¨ As part of the group’s 2013 interest rate risk strategy,
higher levels of unhedged fixed-rate short-dated securities
were accumulated within cash and securities compared
with government bonds.
■ Intangible assets of R8bn represent only 1% of total assets.
■ Nedbank Wealth assets under management grew 26,4% to
R190,3bn (2012: R150,5bn), reflective of the significant
growth of this business, providing further favourable
diversification and portfolio tilt for the group.
¨ The insurance businesses are on track with Solvency
Assessment and Management (SAM) implementation
through a proactive approach that has been imbedded in
risk management frameworks, strategic initiatives and
system enhancements.
MaRgin ManageMent
■ NIM has continued to improve in a challenging
macroeconomic environment, on the back of the group’s
strategic portfolio tilt and strong balance sheet management.
■ NIM improved by four basis points to 3,57% from 3,53%
in 2012.
¨ Margin gains were underpinned by sound risk-adjusted
pricing of advances, deposit growth and mix benefits, a
reduction in the marginal cost of wholesale funds, slightly
lower levels of long-term debt, and the benefit of an
interest rate risk strategy offset by asset-mix changes, a
squeeze on funding spreads due to Basel III and the impact
of lower interest rates.
¨ During 2013 industry pricing became increasingly aggressive
in the MFC, Business Banking and Corporate Banking
portfolios.
■ Nedbank Group’s lending spread increased from 2,22% in 2010
to 2,83% in 2013 as a result of asset mix enhancements driven
by strategic portfolio tilt, improved pricing and backbook runoff.
¨ under the portfolio tilt strategy, economic profit (EP)
¨ This reinforces the increased ClR target range that has
increased significantly from R57m in 2009 to R2,1bn in 2013.
been in effect from 2014, discussed on the following page.
135
ENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderSdelIVerInG to oUr StaKeholderSmaKInG thInGS haPPen Worldclass aT MaNaGING rIsK (CONTINUED)
Risk ManageMent
■ Nedbank’s ERMF has remained resilient through 2013,
together with a prudent but enabling Risk Appetite
Framework, comprehensive stress and scenario testing and
the comprehensive new Recovery Plan under Basel III.
Credit risk
■ The ClR of 1,06% remained at a similar level to that of 2012,
having improved from 1,31% at June 2013, mainly due to
timeous positioning in Personal loans and a large client-
specific impairments charge included in June 2013 that had
normalised at year-end.
¨ All business clusters and within that all business units’
ClRs were within their through-the-cycle target ranges,
with the one exception being Personal loans as a
consequence of R323m additional impairments as
downside risk protection for deteriorating levels of
consumer credit health, fuelled by the high industrywide
unsecured-lending growth rates in preceding years and
resultant industry tightening of credit availability,
particularly as interest rates rise from 40-year lows. The
embedding of sound risk management practices and early
comprehensive risk-mitigating actions ensured the ClR of
2,16% for the full year remained within the Retail ClR
target range.
− Overall defaulted loans continued to decline, while
further strengthening the coverage ratios.
¨ From 2014 onwards the group has revised the following
ClR target ranges:
%
Nedbank Group
Nedbank Retail
new clR
target
range
Old CLR
target
range
0,80 – 1,20
0,60 – 1,00
1,90 – 2,60
1,50 – 2,20
− The drivers of the above changes are the significant
asset-mix change in Retail since 2009, on the back of
strategic portfolio tilt and more prudent retail
provisioning methodologies implemented in recent years,
and with a commensurate increase in credit spreads and
NIM, and the group’s Pan-African strategy.
■ The Group Credit Risk Framework and mandate/limit
structure was maintained substantially unchanged.
■ Close scrutiny was in particular maintained over:
¨ Pending changes to the National Credit Act and related
strategic implications
¨ Consumer indebtedness
¨ Personal loans and execution of our strategy
¨ home loans backbook
¨ Collections
¨ Nedbank Capital’s renewable-energy programme of
expansion
¨ Expansion into the rest of Africa
¨ Credit concentration risk
¨ Implications of the pending finalisation of a new accounting
standard, IFRS 9, on impairments
¨ Continually improving the management of the Advanced
Internal-ratings Based (AIRB) credit risk system
Market risks
■ Interest rate risk in the banking book (IRRBB) reflects net
interest income (NII) sensitivity to a 1% change in interest
rates at R936m (2012: R813m) over one year or 1,54%
(2012: 1,51%) of capital, positioned for an upward interest
rate cycle.
■ Market risk associated with group’s hqlA portfolio continues
to be well managed, eliminating any material market risks on
these portfolios for significant market volatility.
■ Trading market risk and equity risk in the banking book
remain low at just 1,2% and 3,7% of total group economic
capital respectively, as the primary focus is flow trade, client
facilitation and marketmaking.
¨ The bulk of the derivative book relates to vanilla interest
rate and foreign currency derivatives.
■ Foreign currency translation risk (FCTR) is also a low risk,
with sensitivity of a 10% change in the value of the rand only
having a 0,1% impact on the group’s total regulatory capital
adequacy ratio (CAR).
Operational risk
■ Nedbank’s management of operational risk remained sound
and the AMA Framework effective.
■ Continuous sound management of operational risk, including
the investment in Information Technology systems and
experienced operational risk management staff, benefited the
group’s risk-weighted asset and capital adequacy ratios.
■ Nedbank operated within approved operational risk appetite
limits for all categories, namely operational risk capital to
gross operating income (GOI), internal losses to GOI and
earnings at risk at a 90th percentile.
Regulatory reform
■ Strong, engaged and transparent relationships were
maintained with all the group’s regulators throughout 2013.
■ The group continued to proactively manage the pervasive,
ongoing regulatory reforms and its impact on the business in
particular:
¨ Anti-money-laundering regulations on combating terrorist
finance activity
¨ Basel III (given the phasing-in from 2013 through 2019)
¨ NCA
¨ Twin Peaks legislation
¨ Consumer Protection Act
¨ Solvency II/SAM (insurance)
¨ IFRS 9 (provisioning)
¨ Companies Act
136
NedbaNk Group | Integrated report 2013 diffeRent RepoRts foR diffeRent aUdiences and diffeRent pURposes
This report focuses on the integrated narrative and thinking within Group Risk and Balance Sheet Management. Other reports, such as
Pillar 3 and ICAAP, are more focused on compliance with regulation 43 and Basel III.
Report
Results
booklet
Topics
The analyst booklet is a document presented to financial analysts, biannually along with
the announcement of the group’s results.
Audience
Investors
and analysts
Issuance
February/
August
2014
Web content Stakeholders March 2014
Pillar 3
General
Public,
Regulators
Full
disclosure:
March/
September
2014
Minimum
capital
adequacy
disclosure:
May/
October
2014
ICAAP
Internal,
Regulators
July 2014
ILAAP
Internal,
Regulators
July 2014
The report consists of three sections: the analyst presentation, financial results and risk
and balance sheet management review, and provides an overview of the group’s
financial performance, risk and capital position.
Provides information on operations, financial and non-financial performance and
integrated sustainability developments during the year. The report covers all group
clusters, operational areas and businesses of Nedbank Group.
Pillar 3 of Basel III focuses on market discipline and aims to complement the minimum
capital requirements (Pillar 1) and the supervisory review process (Pillar 2). The Pillar 3
Public Disclosure Report is based on regulation 43 of the SARB regulations.
Requirements specified include:
■ qualitative and quantitative information relating to capital position and allocation
and risk management;
■ information pertaining to the financial performance and financial position of the
bank (including capital adequacy, capital structure, and liquidity);
■ risk management objectives and policies; and
■ the nature and extent of risk exposures as well as how these are managed.
The Pillar 3 report is an extension of the information disclosed in the risk and balance
sheet management section of the analyst booklet. This report is also published
biannually on the group’s website.
The full regulation 43 disclosure is published for year-end and interim results,
while the minimum capital adequacy requirements disclosure, as specified in
regulation 43(1)(e)(iii), is published for the first and third quarter results along with
the group’s trading update. These documents are published on the group’s website.
As part of Pillar 2 (Supervisory Review Process) of the Basel III Framework, banks are
required to develop an ICAAP and set capital targets that are commensurate with the
bank’s risk profile and control environment, including under stress conditions.
ICAAP is primarily concerned with Nedbank’s comprehensive approach, measurement
and management of risk and capital from an internal perspective, that is, over and above
the minimum regulatory rules and requirements of Basel III. In view of the significance
of liquidity risk in banking, Nedbank also produces an Internal liquidity Adequacy
Assessment Process (IlAAP) (along with the ICAAP).
The report is a confidential document that is compiled annually and is reviewed and
signed off by the board (through the GRCMC), Group Asset and liability Committee,
Group Exco and GIA before being sent to the SARB.
The IlAAP involves an ongoing and rigorous assessment of Nedbank’s liquidity self-
sufficiency under a continuum of stress liquidity scenarios, taking cognisance of the
board-approved risk appetite. The IlAAP also involves an ongoing review and
assessment of all components which collectively make up and/or support the liquidity
Risk Management Framework. The objective of this review and assessment process is
to ensure that the framework remains sound in terms of measuring, monitoring,
managing and mitigating liquidity risk, taking cognisance of best practise and regulatory
developments.
The report is a confidential document that is compiled annually and is reviewed and
signed-off by the board (through the GRCMC), Group AlCO, Group Exco and GIA
before being sent to the SARB.
Recovery
Plan
Internal,
Regulators
August 2014 The recovery plan sets out Nedbank’s detailed approach to dealing with a capital,
liquidity and/or business continuity crisis. Within the plan early warning signals and
trigger levels are identified as part of the ongoing monitoring process relating to a
potential or occurring crisis situation. The recovery plan provides Nedbank Group with
a clear framework of actions that can be taken during a crisis with the aim of ensuring
that the group’s management is able to act quickly and decisively to minimise or
mitigate a crisis event.
The report is a confidential document that is compiled annually and is reviewed and
signed-off by the board (through the GRCMC), Group AlCO, Group Exco and GIA
before being sent to the SARB.
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back on
RemuneRation
Statement FRom tHe cHaiRman oF
tHe gRoup RemuneRation committee
I am pleased to present to you, our stakeholders, our
annual Remuneration Report. The report sets out our
remuneration policy and details of Nedbank Group’s
remuneration practices during the 2013 financial year.
Remuneration, and particularly executive remuneration,
continues to receive a great deal of attention globally by
firms and their shareholders, governments, regulators
for Sound
and the media. While the Principles
Compensation Practice of the International Financial
Stability Board (IFSB), issued under the auspices of the
G20
in 2009, still globally underpin remuneration
regulation in financial services firms, many developed
markets have gone considerably beyond
these.
Legislation has been promulgated in the UK regarding
the
introduction of binding shareholder votes on
remuneration. The EU continues to press ahead with the
implementation of bonus caps, a measure Switzerland
has also adopted. The US is increasing disclosure
requirements on pay differentials. While these measures
have been
from many quarters, some
commentators (and at least one national government)
postulate that elements of these either may have
significant unintended consequences such as a material
reduction of national competitiveness in the financial
services sector, or may not add any material value to how
stakeholders engage with companies on matters related
to executive remuneration.
lauded
In SA good governance regarding remuneration
is
primarily informed by the King III Code of Corporate
Governance. Banks also align with the IFSB principles and
are required to include specific disclosures in their annual
reports in terms of regulation 43 of the Banks Act.
Through these, a comprehensive governance framework
applies to financial services remuneration in SA. I am
pleased
that Nedbank has responded
appropriately to all of these requirements.
to report
GRI 3.1: 4.5,
EC3
Paul Mpho Makwana
Independent Non-executive
Director
138
NedbaNk Group | Integrated report 2013 A key consideration for firms operating within a principles-based
governance framework is that there is a degree of expert judgement
inherent in determining compliance with these principles. A further
consideration is how a firm achieves appropriate compliance with
the governance principles and standards, while ensuring the
its remuneration-related competitive position,
protection of
thereby retaining and attracting the talent to achieve its strategic
objectives, including the protection of its franchise. This has been
a critical issue for the Group Remuneration Committee (Group
Remco) during 2013.
We have, over the past several years, kept our core remuneration
policy and principles largely consistent. In 2009 amendments were
introduced that provided for deferral of short-term incentive (STI)
awards, and included forfeiture provisions, which have been refined
subsequently.
While no material changes were made to the remuneration
in 2013, we will, from
policy and associated practices
1 January 2014, introduce the requirement that all future long-
term incentive (LTI) awards made to executive directors be
subject to corporate performance targets on 100% of the award,
up from 50% in previous award cycles. This is dealt with in more
detail on page 166 of this Remuneration Report.
The implementation of the policy and principles in practice has
seen a reduction in the STI pool in circumstances where business
performance has declined, and has seen the
lapsing of
performance share awards in instances where the corporate
performance targets were not met. These arrangements continue
to apply, having been found fit for purpose.
The bank produced another set of very good results this year, and
continues to deliver strong progress against all of our major
strategic objectives. This is dealt with in detail in other parts of
this integrated report. A summary of some of the key relevant
financial and non-financial metrics
that
influence our
remuneration outcomes is provided below:
Key relevant financial and non-financial metrics
Headline earnings (Rm)
Economic profit (Rm)
Return on equity (excluding goodwill) (%)
Year-end share price (cents)
Fini 15 Index
Nedbank Staff Survey (%)2
Barrett Staff Survey entropy level (%)3
2013
8 6701
2 114
17,21
21 000
12 745
76,7 P
11 P
2012
7 483
1 521
16,4
18 800
10 644
75,5
10
Yoy
change
%
15,9
39
11,7
19,7
1,59
-10
1 Audited.
2 Re-baselined to account for 14 dimensions on the survey, up from 13 applied in 2012.
3 The decline in the Barrett score manifests in a higher score. This is therefore reflected as a negative.
The bank’s performance continues to improve year on year and, as a consequence, STI pools earned and approved over the past two
years have increased. Following the lapsing of all LTI awards allocated between 2005 and 2009, we are now seeing vesting levels
commensurate with the overall performance of the group, and the returns delivered to all stakeholders.
The high levels of engagement between members of Group Remco remain an important contribution to the effective implementation
of the core principles of the Remuneration Policy and its alignment with both strategy and performance.
Readers of our Remuneration Report will observe that we have refined our Remuneration Policy. While there have been no material
changes to the substance of the policy, we have sought to achieve the following core objectives:
■ Improve the readability and clarity of the policy.
■ Enhance the Remuneration Policy objectives to ensure greater clarity about the group’s remuneration philosophy.
■ Remove duplication between the Remuneration Policy and the Remuneration Report by enhancing, in particular, the descriptions of
our remuneration elements.
■ Include details of performance management and recognition in the Remuneration Policy, as these are key aspects of the overall
remuneration environment.
The Remuneration Policy is, in accordance with King III, put to a non-binding advisory vote annually at our annual general meeting.
I recommend, on behalf of Group Remco, that shareholders vote positively in this regard.
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In the Group Remco Chairman’s Statement in the 2012 Remuneration Report several key matters to be considered in 2013 were
highlighted. These, together with the actions initiated to address them, are set out below:
Issues raised in the 2012 Remuneration Report
action taken in 2013
Reviewing of the overall competitiveness and fitness for purpose
of our total remuneration and benefits offering relative to the
markets in which we compete, while remaining appropriately
commercial and agile to respond to changes in market
conditions.
Detailed review of our approach to performance management.
Ongoing monitoring of and adaptation to the evolving
remuneration governance requirements applicable to financial
services firms.
We, as Group Remco, have a comprehensive agenda that ensures
broad coverage of all major remuneration and benefit elements.
This has enabled the committee to review all the remuneration
arrangements in place in the group.
Group Remco remains of the view that the remuneration and
benefits in place in the group continue to meet the necessary
commercial, regulatory and risk requirements. Accordingly, there
have been no material changes to the remuneration and benefit
practices during the year.
We have also, for 2014, introduced the requirement that all future
LTI awards made to executive directors will be subject to
corporate performance targets on 100% of the award, up from
50% in previous award cycles.
A comprehensive review process was launched by the group in
the second half of 2013. This first phase of the project, a discovery
phase, was concluded. During this phase international best
practice regarding performance management was researched
and examined, a range of internal Nedbank staff survey-related
information was consolidated and we drew on outcomes from
employee focus groups regarding the
implementation of
performance management. The outcomes of the review are that
the process of more comprehensively reviewing the group’s
approach to performance management will continue in 2014.
Remuneration governance is high on our agenda. In addition to a
comprehensive training session conducted by PwC on latest
global trends, a remuneration governance update has been added
as a standard agenda item for the committee. In addition, Group
Remco commissioned specific research on remuneration
governance in Canada and Australia, complementing the focus
on Europe, the UK and the US.
The committee is pleased with the level of Nedbank’s compliance
with the relevant regulatory and statutory codes pertaining to
remuneration.
Our remuneration strategy is reviewed regularly to ensure that it continues to adapt to changing market conditions and that it remains
competitive and appropriately aligned with our overall business strategy. Some of the key themes that Group Remco will consider in
2014 will be:
■ Conclusion of the performance management review project.
■ Improved shareholder engagement through our governance roadshows conducted annually by the Chairman of the board.
■ Review of the structure, composition and effectiveness of our employee benefits suite.
■ Consideration of the possible implementation of a focused LTI programme for a limited number of senior executives in the group.
This will be funded by Old Mutual plc and is proposed to apply across all of its operations in SA, including Nedbank. Further
information in this regard is available on page 164 of the Remuneration Report.
I took over as Chairman of Group Remco following the resignation of Ms TCP Chikane from the board on 13 August 2013. I would like
to express my appreciation to Ms Chikane for her contribution to the committee during her tenure. I would also like to commend my
fellow Group Remco members on the way in which they have engaged in the important issues related to remuneration in the group. I am
grateful for the levels of rigour they have applied to the debates on our Remuneration Policy and remuneration practices in these
dynamic times.
pm makwana
21 February 2014
140
NedbaNk Group | Integrated report 2013 RemuneRation poLicY
tHe poLicY
The group defines total reward as a combination of various types
of rewards, including financial and non-financial, indirect and
direct, and intrinsic and extrinsic rewards. The Remuneration
Policy provides a framework for the management of total reward
in the group, and supports the Nedbank employee value
proposition (EVP).
Scope of the Remuneration Policy
The Nedbank Group Remuneration Policy (’the policy‘) is board-
approved and forms part of the group’s operating philosophy,
policies and standards. It sets out how total remuneration is to
be managed in the group, and is supported by detailed operating
policies, procedures and practices at business unit level.
The policy applies to all entities in Nedbank Group, including
wholly owned subsidiaries and subsidiaries or joint ventures in
which Nedbank has a majority interest, and excludes companies
in which the group has only a private-equity investment. The
policy applies uniformly in all such jurisdictions, except where it
is in conflict with either local statutes or regulations, in which
case such statutes or regulations will apply. Where a particular
operating jurisdiction has a more onerous regulatory or statutory
framework, the local standards of governance in that jurisdiction
will apply.
Aims of the policy
The group’s reward arrangements should:
■ enable it to attract, motivate and retain people of high calibre,
with the right mix of experience, skills and knowledge to
deliver on the strategy;
■ support and reinforce its desired culture and encourage
behaviour consistent with its values, thereby stimulating
employee engagement;
■ create appropriate balance and alignment between the needs,
expectations and risk exposures of its stakeholders, including
our staffmembers, clients, shareholders, regulators and
communities, to ensure the creation of sustainable long-term
value for each of these;
■ incentivise employees to deliver sustained high levels of
performance and excellent execution of its strategic priorities,
while being cognisant of the impact this delivery has on the
risk profile and exposure of the organisation;
■ enable appropriate transparency in the development of
remuneration programmes and the allocation of individual
remuneration to ensure equity and fairness based on valid
and appropriate external and internal benchmarks; and
■ align with the principles of good corporate and compensation
governance, ensuring an appropriate share of value for the
relevant stakeholders in its business.
In the above regard Nedbank’s fixed and variable remuneration is
aimed at enabling it to remain competitive. In this context
‘competitive’ encompasses market relativity, sustainability and
commercial sensibility in the allocation and delivery of remuneration.
Remuneration governance
The group complies with the relevant remuneration governance
codes that apply in its various operating jurisdictions. These
include groupwide compliance with the International Financial
Stability Board’s (IFSB’s) Principles for Sound Compensation
Practice. In SA the group complies with the provisions of King III
and the requirements of regulation 43 of the Banks Act. For
group operations domiciled in the UK, the provisions of the
Prudential Regulatory Authority (previously the Financial
Services Authority Remuneration Code) apply.
The Nedbank Group Remuneration Committee (Group Remco)
is mandated by the group’s board to oversee and govern all
aspects of remuneration and operates according to an approved
charter. Outcomes of Group Remco meetings are reported to the
board. Group Remco also conducts an annual self-assessment of
its effectiveness.
Group Remco has independent advisers, both in SA and
input, advice on
internationally, who provide strategic
international and local best practice and benchmarking. Group
Remco
is further supported by the Group Reward and
Performance function.
Group Remco works closely with the Group Risk and Capital
Management Committee (GRCMC) to ensure a comprehensive
approach to risk and reward.
The group publishes a comprehensive annual Remuneration
Report as part of its overall governance requirements.
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Components of Nedbank’s Total Remuneration Framework
Nedbank’s Total Remuneration Framework is made up as follows:
Recognition
Short-to-
medium-term
focus,
performance
orientation
SPECIAl-PURPOSE
ShORT-TERM
ARRANGEMENTS
ShORT-TERM
INCENTIvES
(INClUDING DEFERRAl
AND FORFEITURE)
lONG-TERM INCENTIvES
Long-term focus,
ownership
orientation
EMPlOYEE
OwNERShIP PlAN
PERFORMANCE
MANAGEMENT
GUARANTEED
PACKAGE
Short-term
focus, day-to-day
orientation
Performance management
The group’s performance management process ensures
appropriate alignment of individual, team, business unit and
cluster performance objectives with those of the group. This
enables translation of the group’s strategic focus areas into
individual action plans.
The core principles of the group’s performance management
process are as follows:
■ Performance management is consistently applied across the
group to ensure effective alignment of strategic objectives
and individual outputs.
■ Performance objectives are based on a scorecard of metrics
featuring both financial and non-financial indicators, which
align with the group’s strategic imperatives.
■ Performance management is an ongoing process rather than
an event.
■ Performance outcomes are appropriately differentiated to
reflect the different levels of contribution made by employees
to the success of the group. Where performance deficits are
identified, these are dealt with actively, with the primary
objective of returning the employee to full performance.
■ Performance management is a primary input into the group’s
remuneration programmes, with the aim, among others, of
ensuring appropriate differentiation in remuneration based
on contribution.
Guaranteed remuneration
Guaranteed remuneration comprises salary and employee
benefits and is delivered to employees in a form determined by
local market conditions. Guaranteed remuneration usually
reflects the prevailing ‘rate for the role’ within a remuneration
range, with actual remuneration being distributed about the
median of the range.
In SA, and in some non-SA operations, this will take the form of a
guaranteed package (GP). This represents the fixed cost of
employment and, depending on local market practice, comprises
a combination of the following:
■ Cash salary
■ Retirement benefits
■ Medical benefits
■ Death and disability benefits
■ Contributions towards postretirement medical funding, where
applicable
■ Motor vehicle benefits
A core principle under a GP model is that changes to benefit
contribution levels are typically cost neutral to the group:
changes to benefit pricing result in a corresponding increase or
decrease in the monthly cash salary for the individual.
Where appropriate, local market conditions may necessitate a
basic-salary-plus-add-on benefit approach. In these instances
the salary is typically fixed, with benefit costs being a function of
utilisation (that is, if the benefit is not used, there is no cash
compensation in lieu of the benefit). The group carries the upside
risk of increases in the cost of benefits.
142
NedbaNk Group | Integrated report 2013 The primary determinant of guaranteed remuneration is market-
relatedness. The group conducts annual benchmarking against
comparable firms in the relevant jurisdictions to assess market
competitiveness. The combination of distribution of guaranteed
remuneration within the earnings ranges and the market relativity
of the group’s guaranteed remuneration is a primary input into
the annual salary review process, but in all instances this is
subject to affordability and appropriate consideration of the
sustainability of the group’s remuneration practices.
In support of remuneration benchmarking there is a robust
process of job profiling and evaluation. This ensures consistency
in the evaluation and sizing of roles, and the associated
benchmarking of guaranteed-remuneration levels.
At an individual decisionmaking level performance is used as a
determinant of the extent of an individual’s progression within an
earnings range. Thus, performance and
individual market
position are used concurrently when remuneration increases
are determined.
Adjustments to guaranteed remuneration outside of the annual
review process are typically exceptional, linked to changes in
responsibility or the intention to retain specific talent. These are
subject to appropriate approval based on the relevant delegations
of authority.
All employee benefits, whether offered on a cost-to-company or
a basic-salary-plus-add-on basis, are subject to appropriate
oversight and governance to ensure that the financial and
reputational risks associated with the provision of employee
benefits are effectively and prudently managed.
Short-term incentives, including deferrals
Short-term incentives (STIs) are delivered primarily through the
group’s discretionary STI arrangements. Where appropriate, and
subject to the appropriate governance and approval, bespoke
plans may be implemented, subject to Group Remco oversight.
As a general rule, all STI plans are funded from the group’s overall
STI pool. Thus, bespoke plans will result in a ‘drawdown’ on the
pool. Where there is a specific dispensation to exclude a bespoke
plan from the overall STI pool (usually in cases of low-
guaranteed/high-variable remuneration models), Group Remco
approval for such exclusion is required.
The group does not operate any individual ‘line of sight’ schemes
that could be deemed to encourage inappropriate risk-taking or
increase the risk of moral hazard. Where commission-type
arrangements operate (usually in respect of low-risk income-
generating sales roles), appropriate safeguards are included to
mitigate any potential moral hazard.
STI participation is discretionary, and therefore there is no right
to a performance incentive award in any given year. STIs are, at
an individual level, determined primarily on the basis of
performance, with the overall objective of exceptional reward for
exceptional performance. Differentiation of awards based on the
range of performance outcomes in the group is therefore a core
principle. Furthermore, employees performing below a minimum
acceptable level are not typically eligible for consideration for an
STI award.
the group has
STIs are typically in the form of cash and the employee must be
in service on the date of payment. However, in accordance with
global financial services governance and prudent
risk
management principles,
introduced an
arrangement of compulsory deferral into shares of STI awards
paid in excess of a threshold approved by Group Remco from
time to time, which has been effective from 2010 onwards.
Where deferral applies under this arrangement, any awards
made are subject to specific release from forfeiture criteria and
may, at the discretion of Group Remco, be subject to forfeiture.
Where forfeiture applies, the group will not retest conditions or
extend the period over which shares must be held.
Group Remco approval is required for all individual awards that
exceed 200% of guaranteed remuneration.
The group may, as a component of its approved long-term
incentive (LTI) programme, offer a share-matching arrangement
on compulsory STI deferrals, subject to the participant’s retention
of the award in the plan for a minimum period of 36 months
(which is longer than the standard deferral timeframe), and
subject to the release of the awards from potential forfeiture.
Additional matching is further subject to the fulfilment of a
specific group performance condition.
Special-purpose short-term variable remuneration
arrangements
The group uses, on an exceptional basis, special-purpose short-
term variable remuneration arrangements to assist in the
attraction and retention of key talented employees and holders
of scarce skills. These include signon awards and deferred short-
term incentive (DSTI) arrangements, both of which are subject
to individual performance and time-based conditions to ensure
an appropriate return on the remuneration investment.
The group is cognisant of the regulatory concerns raised
regarding so-called ‘guaranteed variable remuneration’, and the
potential downside of such payments. A high level of governance
is therefore applied to both the operation of the respective
programmes and the actual inclusion of individuals. In this regard
a specified pool is approved by Group Remco for each financial
year for each of the programmes. This pool is placed under the
direct control of the Chief Executive (CE) and is subject to review
by Group Remco at each meeting.
As a core principle, guaranteed variable remuneration awards
are highly exceptional and are utilised primarily in the context of
the appointment or retention of key, critical talent. Furthermore,
participants are typically only able to receive an award under the
respective plans once during their tenure with the group.
The group does not award guaranteed bonuses.
Employee ownership plans
The group offers two broad types of employee ownership plans:
broad-based participation based on local statutory or regulatory
requirements (these
include broad-based black economic
empowerment arrangements and ‘indigenisation’ or ‘localisation’
programmes) and employee subscription arrangements, where
employees may invest a portion of their after-tax STI in Nedbank
shares, with the possibility of matched shares.
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Broad-based schemes operate in jurisdictions where local
regulations or statutes require specific economic participation
by employees, usually by means of ownership of a stake in the
business. In most (but not necessarily all) instances these plans
are put in place to redress past imbalances in participation in the
in such plans
respective country’s economy. Participation
therefore may be limited to certain employees, based on
demographic specifications. Further, failure to adhere to the
requirements may have material legal or regulatory implications
for the relevant business. Broad-based schemes are typically
implemented at zero cost to employees.
directors being subject to performance conditions on 100%
of the award).
■ Awards subject to performance conditions may be lapsed in
full or in part in the event that the conditions are not met.
There is also appropriate upward leverage to a maximum of
130% in the event that conditions are exceeded. Where
awards are lapsed because of non-fulfilment of the
performance conditions, the conditions will not be retested.
■ Awards are subject to vesting over a period of no less than
three years from the date of the grant.
Employee subscription arrangements are typically voluntary
and give employees the opportunity to invest in Nedbank,
currently on a posttax basis, over a stipulated period. This allows
the employee to participate in both potential share price
appreciation and the application of matching arrangements if
the shares are retained in the plan for a prespecified period of
36 months. In this regard the group operates a voluntary STI
deferral scheme, which allows eligible participants to receive
matching shares, provided such shares remain in the programme
for a stipulated period.
All employee ownership plans are subject to board or Group
Remco approval (and may, subject to the nature of the
transaction, require regulatory, stock exchange or shareholder
approval). Accordingly, strict governance and approval
processes apply in every instance.
long-term incentive plans
The group’s shareholders have approved the implementation of
a restricted-share-plan (RSP) arrangement, through which LTI
awards are made. Where deemed necessary to address local
taxation and exchange control issues, cash-settled phantom
RSP arrangements have been implemented to ensure that
operations outside SA may also participate in LTI arrangements
linked to the group’s share price performance, and therefore
ensure appropriate alignment of the interests of executives
based abroad with those of the group’s shareholders.
LTI awards are based on the following considerations:
■ Strategy and individuals key to driving the business strategy.
■ Talent management strategy and succession planning.
■ Retention of key talent and scarce skills.
■ Transformation objectives.
■ Potential and performance.
■ Leadership.
The following are the core principles applicable to the group RSP
arrangements (including phantom RSPs):
■ Awards under the relevant RSPs may typically be made at
only two intervals per year – the annual pay review (typically
March) and one off-cycle award (typically August). All
awards are subject to the necessary governance and
approval processes.
■ All plans are subject to corporate performance targets (CPTs)
on at least 50% of the total award (with awards for executive
■ Where awards are lapsed, there is no replacement
compensation issued.
■ Employees may not take steps to hedge or otherwise insure
themselves against potential losses in respect of their LTI
participation prior to vesting.
■ The pool available for allocation under the group’s LTI
arrangements is approved in advance by Group Remco.
■ Group Remco assesses and confirms the CPT outcomes,
ensuring that the interests of all stakeholders are
appropriately considered.
Changes to remuneration arrangements
The group reserves the right, subject to compliance with the
relevant legislation or collective agreements, to change or
withdraw any aspect of its total remuneration framework. All
programmes are subject to the applicable rules from time to time.
Recognition
In addition to the core remuneration elements set out above,
the group also prides itself on the recognition of excellence
among employees. To this end the group operates a
comprehensive recognition programme comprising both formal
and informal recognition.
The core principles of the recognition process are as follows:
■ Recognition should be timely and spontaneous.
■ Recognition should be specific in that employees must know
what behaviours were found desirable and what actions
should be repeated.
■ Business units determine how recognition will be conducted
in their area within specified guidelines.
■ The recognition programme incorporates both informal and
formal processes. These processes run concurrently
throughout the year and support the achievement of the
group’s business objectives.
■ Any awards made under the recognition programme are
compliant with the relevant tax legislation.
Non-executive directors’ remuneration
The fees of non-executive directors are reviewed annually. In
accordance with the relevant corporate governance requirements,
these are subject to approval in advance by shareholders at the
annual general meeting. Changes to fees, where approved,
become applicable on 1 July of each year.
144
NedbaNk Group | Integrated report 2013 Roles and accountabilities
Oversight and approval of
Remuneration Policy and
reward programmes;
approval of senior executive
remuneration.
Proposal of reward
programmes and structures
to Group Remco; oversight
and implementation of
approved remuneration
programmes.
BOARD
Accountable for organisational
governance. Provides mandate to
Group Remco.
Oversight and input regarding
risk and remuneration. Works
with Group Remco to ensure
GROUP
REMUNERATION
COMMITTEE
GROUP ExCO
GROUP RISK AND CAPITAl
MANAGEMENT COMMITTEE
appropriate risk
adjustment in
remuneration
structures.
INDEPENDENT ADvISERS
Independent advice on best practice,
benchmarking and remuneration
governance issues.
Implementation
of reward
programmes,
with employees
adhering to
reward policies
and processes.
GROUP REwARD AND
PERFORMANCE
Reward strategy and supporting
policies and programmes;
execution of reward initiatives.
lINE MANAGEMENT
hUMAN RESOURCES
Implementation
of reward policy
and strategy;
line management support
and advice.
EMPlOYEES
Adherence to reward policies and processes.
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RemuneRation RepoRt
is enabled and
The Nedbank Group Remuneration Policy
supported by decisions made by Group Remco, which is informed
by internal rules, procedures and processes. These ensure that
the group’s predominant approach remains one of consistency
and stability, while being cognisant of evolving legislation and
remuneration practice. Any changes made are considered
carefully to mitigate any unintended consequences or negative
effects on the group’s stakeholders. In this regard the only
material change made to remuneration practice in the group was
the implementation of the requirement that future LTI awards
made to executive directors will now be subject to performance
conditions on 100% of the award, up from 50% in previous
award cycles. This is set out in more detail on page 166 of this
Remuneration Report.
This Remuneration Report sets out the consistent implementation
of the Nedbank Group Remuneration Policy within the group during
2013, as well as subsequent events in 2014, where applicable.
RemuneRation goVeRnance
Remuneration regulation
Group Remco recognises that, globally, the remuneration
environment is becoming increasingly regulated. This requires
that Group Remco members keep abreast of the changing
regulatory landscape, as well as prevailing stakeholder sentiment
regarding remuneration matters, and take proactive steps to
ensure that the group continues to meet its regulatory obligations
in this regard.
Group Remco receives regular updates from either its external
advisers or the Group Reward and Performance team on the
evolving regulatory environment to ensure that it is able to
respond to changes in this regard appropriately and timeously.
There have also, for the past two years, been dedicated training
sessions, to which all boardmembers are invited, dealing in depth
with the issues of remuneration governance.
Interaction with regulators
During 2013 the group confirmed to the South African Reserve
Bank (SARB) that it continues to comply with the IFSB Principles
and the associated implementation standards. All matters
previously raised with the group by the SARB as part of its
ongoing engagement with SA banks were confirmed as having
been closed during 2012. These items specifically related to
increased disclosures in the Remuneration Report in terms of
regulation 43 of the Banks Act. The relevant issues were
evidenced in the disclosures outlined in our 2012 Remuneration
Report, and again in this report.
Composition of Group Remco
Group Remco currently consists of four members, the majority of whom are independent non-executive directors. The committee has
an independent chairman.
Group Remco membership in 2013 was as follows:
Name
Directorship status
Current membership
Ms TCP Chikane (past Chairman)
Mr MA Enus-Brey
Independent non-executive director
Non-executive director
Mr DI Hope
Mr PM Makwana (Chairman)
Non-executive director
Independent non-executive director
Ms NP Mnxasana
Mr JVF Roberts
Mr MI Wyman
Independent non-executive director
Non-executive director
Senior independent non-executive
director
Resigned as a director 13 August 2013.
Resigned from Group Remco
18 January 2013.
Resigned as a director 30 June 2013.
Current member. Appointed Chairman
2 September 2013.
Current member.
Appointed to Group Remco
21 February 2013.
Current member.
Group Remco met six times during 2013. Details of attendance at
the meetings are set out in the supplementary Governance and
Ethics section available online.
The CE, Chief Operating Officer and Group Executive: Human
Resources, are permanent invitees to Group Remco meetings.
However, none of these attendees are present for discussions on
their own remuneration. The meetings are also attended by the
executive responsible for the Reward and Performance function
in the group, as well as any external advisers whom Group Remco
may deem necessary from time to time.
All members of Group Remco act as trustees of the Nedbank
Group (2005) Employee Share Trust. The trustee meeting for
this scheme was held on 22 November 2013.
Functioning of Group Remco
Group Remco is delegated by the board to discharge its corporate
governance duties related to remuneration strategy, policy and
practices. The board ensures that Group Remco is:
■ constituted in a way that enables it to exercise competent and
independent judgement on remuneration policy and practices,
while also considering the management of related risk;
■ independently engaged by the GRCMC for specific risk-
related decisions;
■ functioning in compliance with statutory requirements, codes
of relevant best remuneration practice as well as applicable
regulatory requirements and its board-approved charter; and
■ remaining responsive in terms of risk-adjusted
remuneration practices.
146
NedbaNk Group | Integrated report 2013 Group Remco’s responsibilities, which are groupwide in their application and are set out in the Group Remco Charter, are to:
Approve
Recommend
Review
Report
■ in an annual remuneration
report for the board for
publication in the integrated
report; and
■ to the board after each
meeting and more
frequently if required.
■ to the board for approval all
elements of remuneration
on an individual basis for the
CE, executive directors and
other members of Group
Exco; and
■ to the board, based on the
research and
recommendations of an
independent subcommittee
(comprised of individuals
not impacted by the
proposals in this regard), the
remuneration of the
Chairman of the board, and
the non-executive directors
for onward recommendation
to the shareholders.
■ the annual performance
scorecards of the CE,
executive directors and
prescribed officers, and
other members of the
Group Executive Committee
(Group Exco), and the
resultant outcomes in
respect of each performance
year;
■ the CPTs related to the
vesting of LTI allocations
and matched shares;
■ the annual STI pool, and the
rules of any bespoke
incentive schemes;
■ the overall guaranteed
remuneration increase budget
or mandate for all staff;
■ the proposed STI awards to
individuals in excess of a
defined limit;
■ on an individual basis, all
share-based LTI allocations in
excess of a defined limit; and
■ all elements of remuneration
for the Company Secretary.
■ remuneration proposals and
practices for the group to
ensure alignment with best
practice and the latest
governance principles;
■ the overall financial liability
related to all elements of
remuneration for the entire
group;
■ the material terms and
conditions of service of
all group staff (where
appropriate) to ensure
that they are fair and
competitive;
■ the proposals for non-
executive directors’ fees,
which is the responsibility of
the independent committee;
■ the appropriate peer group
against which group
remuneration will be
evaluated;
■ any issues raised by the
GRCMC that are related to
remuneration;
■ the allocation of guaranteed
variable remuneration
awards; and
■ the use of independent
external advice where
necessary.
Group Remco applies the guiding principles of the Remuneration
Policy as far as is feasible, but retains the right to apply discretion
to deviate from this policy in exceptional circumstances. There
were no requirements for such deviation in 2013.
Group Remco’s self-assessment to evaluate its effectiveness
against the objectives of its charter revealed no material issues.
Advice to Group Remco
Group Remco has full access to
independent executive
remuneration consultants, and has utilised the services of
Vasdex Associates (Pty) Ltd and PwC during 2013.
Group Remco is provided, through the Group Reward and
remuneration
function, with market-related
Performance
information based on a number of independent remuneration
surveys in which we participate. These include PwC Remchannel
surveys, the Global Remuneration Solutions Top Executive
Remuneration Survey, the LMO Executive Remuneration Survey
and a number of smaller niche remuneration surveys.
RemuneRation eLementS: mateRiaL
pRogRammeS
The group’s remuneration elements are set out in detail in the
Remuneration Policy on pages 141 to 145 of this Remuneration
Report. In this section material remuneration programmes or
practices are highlighted.
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REPORTING BACK ON REMUNERATION (CONTINUED)
Total remuneration mix
The Nedbank total remuneration mix is depicted as follows:
GUARANTEED REMUNERATION
VARIABLE REMUNERATION
Guaranteed package
OR
Salary
Benefits
Short-term incentives
Cash award
Deferral (subject to forfeiture)
Long-term incentives
Matched shares
LTI awards
Details of the items in the diagram set out above are included
in the Remuneration Policy on pages 141 to 145 of this
Remuneration Report. However, in some instances, further
details which are set out on the pages that follow, are
provided to ensure greater understanding of Nedbank’s
approach in this regard.
Retirement schemes
Our principal position on retirement schemes remains that
these should be of a defined-contribution nature, with
appropriate employee involvement in the governance of
these schemes through representation on boards of trustees.
We are, however, cognisant of the fact that the scheme
design and governance will be largely influenced by local
statutory and regulatory conditions. Detailed financial
disclosures are set out in the consolidated annual financial
statements available online.
SA employees (part of guaranteed package)
The majority of SA employees (and specifically all
appointees since 1 January 1994) are members of the
Nedgroup Defined-contribution Pension or Provident Fund.
Both include flexible contribution levels and member
investment choice. At 31 December 2013 a total of 8 446
employees were members of the Defined-contribution
Pension Fund and 17 829 employees were members of the
Defined-contribution Provident Fund.
We also have the closed Nedgroup Defined-benefit (DB)
Pension Fund, with 283 active members and 2 666 pensioners
at 31 December 2013. The Nedgroup DB Pension Fund is fully
funded, with an actuarial surplus.
Employees outside SA (either provided as part of the
guaranteed package or as a standalone employee benefit)
Our non-SA operations run a variety of defined-contribution
and legacy defined-benefit schemes for the benefit of
employees. These are all governed in accordance with the
local regulatory environment. Where defined-benefit plans
are in deficit, appropriate steps are in place to manage the
financial impact of such deficits. Existing defined-benefit-
plan deficits are not regarded as posing any material risk to
the financial sustainability of the group.
Postretirement medical aid fund subsidisation
A postretirement medical aid fund exists, which provides
qualifying employees in SA with a postretirement medical aid
subsidy promise. Approximately 72% of active employees
participate in the benefit. This promise is contingent on the
employee actually retiring from the bank, and is not
transferable. The fund is currently fully funded.
148
Short-term incentive schemes
STIs aim to drive the achievement of sustainable results
within an agreed risk appetite framework and to encourage
behaviours that are consistent with our values and are aligned
with the best interests of our stakeholders. Our STI schemes
are structured to support collaborative work across different
clusters. Group Remco has agreed a set of principles and all
group and cluster incentive schemes are designed according
to those principles.
Performance is measured at a group, cluster and business
unit level against preagreed financial and non-financial
targets after the finalisation of the audited year-end results.
income-generating clusters
incentive pools are
In the
structured with a weighting linked to the group, cluster and,
where appropriate, divisional performance. The five income-
generating clusters within the group (Capital, Corporate,
Business Banking, Retail and Wealth) are measured against a
combination of performance targets, namely economic profit
(EP), headline earnings and a set of non-financial targets. The
incentive pools for all central clusters are based on a
combination of group performance relative to the targets in
respect of EP, headline earnings and cluster-specific non-
financial performance scorecards.
Group Remco continues to institute a control limit whereby
there may be no more than a 10% variance between the
group topdown performance calculation and the independent
bottomup cluster performance calculations for determining
the Group STI pool.
The detailed process for setting the STI pools is outlined on
page 165 of this Remuneration Report.
Distribution of the STI pools at an individual level is on a
discretionary basis, is aligned with market practice and
utilises
individual performance relative to the agreed
deliverables in the performance management process. In
view of the importance of long-term sustainability of
performance, a portion of the STI earned above a
predetermined threshold is deferred, and remains at risk over
a future settlement period.
The total STI pool approved for distribution by Group Remco
in respect of the 2013 financial year was R1 825m (2012:
R1 579m). Furthermore, in accordance with the provisions of
its charter, Group Remco approved 31
individual STI
payments (2012: 13) in excess of 200% of GP in respect of
the 2013 financial year.
NEDBANK GROUP | INTEGRATED REPORT 2013 Deferral of short-term incentives
STIs above R1m are subject to deferral into the Compulsory
Bonus Share Scheme, which operates under the terms of the
Nedbank Group (2005) Matched Share Scheme. This
arrangement has been in place since 2010. Deferral takes place
in respect of 50% of any amount over R1m, and applies on a
posttax basis. Amounts are deferred over a period of 30 months,
with releases from forfeiture taking place in equal proportions at
six months, 18 months and 30 months from the date of award.
However, to be eligible for a match on these shares the individual
must retain the shares in the scheme for a full period of
36 months. This is addressed in further detail below.
Awards in each tranche are subject to a formal release-from-
forfeiture decision, which is subject to board approval and dependent
on there having been no material events that would, at the absolute
discretion of Group Remco, warrant forfeiture of the particular
tranche of the individual awards. If a forfeiture event is declared, the
awards for the applicable tranche lapse in part or full, without any
option for retesting. Awards are subject to forfeiture in the event of
resignation or dismissal for cause (a so-called ‘fault’ termination).
held in the scheme for 36 months to qualify for the match, as set
out below.
matching of deferred short-term performance incentive awards
In terms of the Matched Share Scheme rules, should there be no
forfeiture of awards as outlined above and the employee retains the
shares in the scheme for a period of 36 months, he or she may
receive matched shares of either 50% or 100% of the number of
shares held by him or her in the scheme for the relevant allocation
year. The former is based on the employee remaining in the scheme
for the stipulated period, whereas the latter is based on both time
and the achievement of a predefined CPT. In practice, this means
that where the employee is at the highest marginal tax rate and the
full after-tax amount of the STI is committed to the Matched Share
Scheme for 36 months and the performance condition is met, the
STI can increase by 30% on its original value, before taking account
of any movement in the share price.
A cash-settled compulsory STI deferral is used for all employees
employed in the UK who earned an STI in excess of £150 000.
A total of 2 (2012: 2) UK-based employees earned STIs in excess
of the threshold for financial year 2013 (payable in 2014).
Employees may also elect to defer a portion of their posttax STI
voluntarily into the Matched Share Scheme, subject to the total
deferral (including compulsory deferral) not exceeding 50% of the
total posttax STI award. Any voluntary deferral must similarly be
Special-purpose short-term variable remuneration
In exceptional circumstances, typically in the context of hiring
senior and key employees, we use preapproved special-purpose
short-term variable remuneration arrangements.
Scheme type
Signon bonuses
DSTI awards
Number of awards
Ten awards (2012: 20)
totalling R2,86m
(2012: R12,7m).
Six awards (2012: 21)
totalling R6,1m
(2012: R13,3m).
Scheme description
Scheme governance
Cash awards made to
prospective employees on joining
the group, typically awarded to
compensate for loss of certain
accrued benefits, or to make
them whole in terms of existing
contractual obligations.
DSTI awards are cash-based
awards, comprising an upfront
payment (typically 40% of
the award), with a deferred
component (the remaining 60%)
payable subject to a minimum
time-based condition.
Group Remco approves an annual
pool from which the CE may allocate
awards. Recommendations are
received from Group Exco members.
Awards are subject to clawback
provisions in respect of termination
of services before a prestipulated
timeframe.
Group Remco approves an annual
pool for DSTIs. Motivations for
awards are made by Group Exco
members and approved by the CE.
Awards may not be considered for
the current CE or for existing
members of Group Exco, but may be
considered on a highly exceptional
basis as part of the total
remuneration package in the event
of appointment of new Group Exco
members from outside the group.
Awards are subject to contract, to
clawback (for the component already
paid) and to forfeiture of the
remaining portion in the event that
the recipient leaves the employ of
the group during the tenure of the
award. Awards are also subject to an
ongoing minimum individual
performance requirement, which, if
not met, may result in the lapse of
the deferred tranche in full.
The group does not, as a matter of course, award guaranteed bonuses.
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long-term incentives
LTIs are awarded with the joint aims of aligning performance
with the interests of stakeholders and of retaining key employees.
Criteria and the quantum of allocations are benchmarked to the
market annually. The allocation of LTIs is discretionary and is
based on the following key eligibility criteria:
■ Strategy and individuals key to driving the business strategy.
■ Talent management strategy and succession planning.
■ Retention of key talent and scarce skills.
■ Transformation objectives.
■ Potential and performance.
■ Leadership.
All LTI allocations are motivated by Group Exco and approved by
Group Remco members in their capacity as trustees of the
Nedbank (2005) Employee Share Scheme Trust. Specific
approval is also required for all LTI awards greater than 100%
of GP.
The various LTI schemes are indicated below. The operation of the
international Long-term Incentive Plan (LTIP) has been brought in
line with the Nedbank SA LTIP, but on a phantom basis.
Overview of the group’s long-term incentive arrangements under the Nedbank (2005) Employee Share Scheme
the option Scheme
No awards have been made in terms of this section of the scheme since 2007 and there are no unvested awards in this scheme.
Restricted Share Scheme: annual allocations
Group Remco issued restricted shares with a three-year vesting period to eligible participants on the following basis:
■ 50% performance shares: restricted shares with CPTs.
■ 50% retention shares: restricted shares without CPTs.
With effect from 2014 all future awards made to executive directors will be subject to CPTs on 100% of the award.
Restricted Share Scheme: on-appointment allocations
On-appointment, restricted-share allocations with a three-year vesting period are offered at the discretion of Group Remco to new
senior managers and also to employees who have been appointed to more senior positions and have been recommended for an
allocation by Group Exco.
On-appointment allocations take place biannually (and by exception on the date of appointment, with specific approval), three
trading days after the announcement of the annual or interim financial results. Allocations are made on the following basis:
■ 50% performance shares: restricted shares with CPTs.
■ 50% retention shares: restricted shares without CPTs.
With effect from 2014 all future on-appointment awards made to executive directors (including on appointment to an executive
director role) will be subject to CPTs on 100% of the award.
matched Share Scheme
The Matched Share Scheme provides a vehicle for the compulsory deferral of STI awards in excess of R1m. There is also an
opportunity for employees to participate in the scheme by way of a voluntary investment. The details applicable to deferral and
potential matching of deferred awards are set out on page 149 of this Remuneration Report.
In this regard employees also have a voluntary opportunity to allocate a portion of their STI to a maximum of 50% of their total
after-tax STI (inclusive of any compulsory deferral) towards the acquisition of Nedbank Group shares. Employees may also deposit
personally held Nedbank Group shares to the equivalent value into the trust that administers this scheme. The incentive to do so is a
matching of this investment to a maximum equivalent value on a one-for-one basis.
The scheme’s obligation to deliver or procure the delivery of the matched shares in both the compulsory and voluntary arrangements
rests on two conditions, namely that:
■ for 50% of the matched shares, employees are still in the service of the group on the vesting date three years after allocation under
the Matched Share Scheme; and
■ for the remaining 50% of the matched shares, the group has met an agreed performance target over a three-year period.
Other long-term incentive schemes in operation
phantom cash-settled Restricted Share plan
During 2007 Group Remco approved the Phantom Cash-settled Restricted Share Plan (the Nedbank UK LTIP) for key employees in
the UK. The design principles and rules mirror the Nedbank (2005) Employee Share Scheme.
nedbank africa subsidiary schemes
There are approved schemes in Nedbank Namibia and Nedbank Swaziland.
Full details of the number and value of awards granted during the year in terms of our share-based plans are included in the Consolidated
Annual Financial Statements, which are available online.
150
NedbaNk Group | Integrated report 2013 Corporate performance targets
Group Remco approved the use of a combination of equally weighted internal absolute and external relative CPTs for the performance
shares awarded in 2013, which have remained unchanged since these targets were originally set in 2010. The details of these targets
are set out on page 167 of this Remuneration Report.
CPTs may not be altered once they have been set. This is in accordance with global best practice and the provisions of the relevant
remuneration regulations.
vesting profile of long-term incentives
The vesting profiles of the various employee share plans are as follows:
2010 2011 2012 2013 2014 2015 2016
Issue date
Nedbank
(2005)
Employee Share
Scheme:
– Restricted
Share Scheme
02/03/2010
03/03/2010
05/08/2010
06/08/2010
07/03/2011
08/03/2011
04/08/2011
05/08/2011
07/03/2012
08/03/2012
06/08/2012
07/08/2012
07/03/2013
08/03/2013
14/08/2013
15/08/2013
Performance shares issued with CPTs
ROE + Fini 15. Status: Proportionally
vested 03/2013
ROE + Fini 15. Status: Proportionally
vested 08/2013
ROE + Fini 15. Status: Proportionally
vesting 03/2014
ROE + Fini 15. Status: Proportionally
vesting 08/2014
ROE + Fini 15. Status: Proportionally
vesting 08/2015
ROE + Fini 15. Status: Too soon to assess
ROE + Fini 15. Status: Too soon to assess
ROE + Fini 15. Status: Too soon to assess
Retention shares issued
without CPTs
No CPTs. Status: Fully vested
03/2013
No CPTs. Status: Fully vested
08/2013
No CPTs. Status: Fully
vesting 03/2014
No CPTs. Status: Fully
vesting 08/2014
No CPTs. Status: Fully
vesting 03/2015
No CPTs. Status: Fully
vesting 08/2015
No CPTs. Status: Fully
vesting 08/2016
No CPTs. Status: Fully
vesting 08/2016
Issue date
2010 2011 2012 2013 2014 2015 2016
Performance and match conditions
Outcome
Nedbank
(2005)
Employee Share
Scheme:
– Compulsory
Bonus Share
Scheme
01/04/2010
01/04/2011
01/04/2012
01/04/2013
Release from forfeiture decision on
6-, 12- and 18-month anniversary of
date of grant.
For matching:
ROE of Nedbank Group of greater than
or equal to the COE (to be determined
annually) +2% over three financial
years.
Match only applies to shares held in the
plan for 36 months.
No forfeiture: All tranches
released in full.
0,5:1 match confirmed
No forfeiture: All tranches
released in full.
1:1 match confirmed
Tranche 1 and 2 released.
Tranche 3 and match still to
be tested.
Tranche 1 released.
Tranche 2 and 3 and match
still to be tested.
Issue date
2010 2011 2012 2013 2014 2015 2016
Performance and match conditions
Nedbank
(2005)
Employee Share
Scheme:
– Voluntary
Bonus Share
Scheme
01/04/2010
01/04/2011
01/04/2012
01/04/2013
ROE – Return on equity (excluding goodwill).
COE – Cost of equity.
For matching:
ROE of Nedbank Group of greater than
or equal to the COE (to be determined
annually) +2% over three financial
years.
Match only applies to shares held in
the plan for 36 months.
Outcome
0,5:1 match
1:1 match
Too soon to assess
Too soon to assess
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vesting of share awards in 2014
Nedbank Group issued restricted shares in March 2011, with
vesting thereof linked in equal proportions to a combination of
time and the group’s meeting certain performance conditions.
In respect of the time-based awards vesting took place at 100%
and in respect of the performance-condition-based awards
vesting took place at 85,9% of the award. The same vesting
arrangements applied in respect of the awards issued to all
employees who participate in the scheme. Where necessary, in
the case of executive directors and the Company Secretary,
the necessary Securities Exchange News Service (SENS)
announcements were
in
this regard.
issued at the prescribed times
Nedbank Eyethu employee schemes
We implemented our black economic empowerment staff
schemes in August 2005. The following employee schemes
were approved at that time:
Scheme name
Black Executive Trust
Black Management Scheme
Evergreen Trust1
Broad-based Scheme
new awards during 2013
7
0
1 123 qualifying employees received
vouchers to assist with school uniform
purchases (2012: 6)
Fully vested on 27 July 2010
total beneficiaries at
31 December 2013
53 (2012:60)
1 038 (2012: 1 366)
Once-off awards are made
1 The Evergreen Trust was created with the specific purpose of improving the living standards and personal circumstances of black permanent employees at the lower-income levels
by providing grants and/or benefits to qualifying employees.
Share and share option allocations are made to new and internally
appointed employees, in accordance with the scheme rules and
the respective trust deeds.
Rest of Africa empowerment schemes
No allocations were made under the Nedbank Swaziland
Sinakekelwe Employee Share Scheme and the Nedbank Namibia
Ofifiya Black Management Scheme in 2013.
Empowerment or
‘indiginisation’ schemes were approved
during 2013 for the group’s subsidiaries in Lesotho, Malawi
and Zimbabwe. These are currently in the process of being
implemented.
Collective bargaining regarding remuneration
increases
Certain categories of employees in SA are covered under
collective bargaining agreements with Sasbo: The Finance Union
and the Insurance and Banking Staff Association (IBSA). At
31 December 2013 a total of 69% of our employees constituted
the bargaining unit. In April 2013 the bargaining unit guaranteed-
remuneration bill was increased by 8% and non-bargaining unit
and executive guaranteed remuneration bill by approximately
5,5% and 5% respectively. The minimum GP for all SA entities
was increased by 14,6% to R110 000 per annum.
Collective-bargaining arrangements also exist in our Rest
of Africa subsidiaries in Lesotho, Namibia, Swaziland and
Zimbabwe. Care is taken in respect of these that salary increase
settlements are appropriate within the context of local market
and economic conditions.
eXecutiVe DiRectoRS anD pReScRibeD
oFFiceRS
Prescribed officers
income-
The managing executives of the four frontline,
generating clusters are included in the disclosures set out below.
The board has approved the executives to be regarded as
prescribed officers.
Increase in guaranteed package
The remuneration for the CE, executive directors and prescribed
officers were adjusted with effect from 1 April 2013. Increases for
executive directors and prescribed officers took into account
market benchmarks, performance and remuneration levels
relative to those of peers. There was also appropriate
consideration of calls for restraint in regard to remuneration. The
GPs of the CE and other executive directors were considered and
recommended to the board by Group Remco, with a further
approval by Old Mutual plc for the CE.
152
NedbaNk Group | Integrated report 2013 The following adjustments to GP were approved by Group Remco for implementation on 1 April 2014:
Guaranteed package1
Yoy movement
New GP
effective
April
2014
(R000)
7 200
5 000
3 900
4 650
4 000
3 750
3 750
gp at april
2013
(R000)
GP at April
2012
(R000)
2013–2014
% change
2012–2013
% change
6 600
4 435
3 570
4 200
3 780
3 300
3 500
6 330
4 225
3 400
4 000
3 600
3 000
3 325
9,1
12,7
9,2
10,7
5,8
13,6
7,1
4,3
5,0
5,0
5,0
5,0
10,0
5,3
MWT Brown
GW Dempster
RK Morathi
IG Johnson
B Kennedy
D Macready
MC Nkhulu
1 Audited.
The above proposals were informed by an extensive role
evaluation and remuneration benchmarking exercise conducted
with GRS/Mercer SA in respect of each individual executive
director and prescribed officer.
Retirement schemes
All executive directors and prescribed officers are members of
the Nedgroup Defined-contribution Pension or Provident Fund.
There are no defined-benefit liabilities in respect of the executive
directors and prescribed officers. Contributions to the retirement
funds form part of the GP.
Service contracts
Service contracts of executive directors and prescribed officers
are aligned with the general conditions of service applicable to all
group employees based in SA, except for specific provisions
relating to notice periods.
Service contracts are subject to the following notice and
retirement conditions:
Notice
period
Retirement
age
Chief Executive
Executive directors
Prescribed officers
12 months
Six months
One to
three months
60
60
60
Termination arrangements
Executive directors and prescribed officers are entitled to
severance pay equal to two weeks’ GP per completed year of
service if their services are terminated by the company on a no-
fault basis. Contractual notice (where applicable) and accrued
leave will also be paid out in the normal course.
Treatment of any unpaid bonus, unvested deferrals or
unvested LTI awards will be dealt with in accordance with the
rules of the various schemes, and will in all instances be
subject to Group Remco and board oversight and approval.
There are no special termination arrangements or golden-
parachute agreements in place.
Short-term incentive scheme targets
STI amounts awarded for 2013 to all executive directors and
prescribed officers were based on a combination of performance
against preagreed targets in respect of the level of group and
respective cluster EP, headline earnings and performance against
their individual performance scorecards, incorporating financial
and non-financial measures.
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reporting back on remuneration (CONTINUED)
The dimensions used to measure individual performance were:
Theme
Financial and business
Client and relationships
Management and internal processes
Organisational learning, leadership and
transformation
Broad objectives
linkage to strategic focus areas
Delivering sustainable financial
outperformance.
Investing for growth by expanding into
the entry-level and middle markets, the
public sector and business banking, and
implementing the rest of Africa strategy;
improving our client relations by
empowering our clients through delivery
of affordable banking; and leading as a
corporate citizen.
Enhancing productivity and execution;
managing risk as an enabler; growing
regulatory and government relationships;
and growing stakeholder relations.
Accelerating transformation in support of
achieving our transformation targets,
objectives and behaviours; and building
an innovative and differentiated culture
and becoming an employer of choice by
creating a great place to work.
Manage for value
Client-centred
Green and caring bank
Risk as an enabler
Productivity and execution
Leading transformation
Unique and innovative culture
These are broadly consistent with the dimensions applied in 2012, except that certain metrics will have been updated to include the
evolving group strategy.
The following table presents the way in which the STI awards have been determined, based on the assessment of the group and
respective cluster headline earnings and EP performance as well as the performance of each executive director and prescribed officer
against his or her agreed individual performance scorecard:
% of GP
achieved
for group
and
cluster
financial
measures
% of GP
achieved
for
individual
perfor-
mance
and
discretion
B
183
183
183
169
319
199
194
C
14
18
10
10
25
13
20
Final
STI as
% of on
target
STI
E=D/A
131
134
129
119
138
141
143
Final
STI as
% of GP
D=B+C
197
201
193
179
344
212
214
Ontarget
STI
% of GP
Maximum
target STI
% of GP
A
150
150
150
150
250
150
150
250
250
250
250
400
250
250
executive directors
MWT Brown
GW Dempster
RK Morathi
prescribed officers
IG Johnson
B Kennedy
D Macready
MC Nkuhlu
(Rounded)
Minimum shareholding requirements
In November 2012 Group Remco approved a minimum shareholding policy, which will apply to all current and future members of Group
Exco, including executive directors and prescribed officers.
In terms of these arrangements the following minimum shareholding levels must be reached within five years from the date of the
March 2013 LTI awards or five years from the date of appointment to Group Exco, if later:
154
NedbaNk Group | Integrated report 2013
Chief Executive
Executive directors and prescribed officers
Other members of Group Exco
2 times guaranteed package
1,5 times guaranteed package
1 times guaranteed package
As previously reported, the CE has already reached the required two times GP holding level in 2012, and has maintained compliance
with the requirements.
totaL RemuneRation oF eXecutiVe DiRectoRS anD pReScRibeD oFFiceRS (auDiteD*)
MwT Brown
Gw Dempster
RK Morathi
Executive
directors
R000
Cash portion of package
Other benefits
Defined contribution
retirement fund
guaranteed remuneration
2013*
5 614
118
800
6 532
Cash performance incentive
7 000
Deferred performance
incentive (delivered in shares) 6 000
total Sti1
total remuneration2
13 000
19 532
2012
5 376
106
765
6 247
6 250
5 250
11 500
17 747
Value of share-based awards
(face value at award)5
total direct remuneration3
13 000
32 532
11 000
28 747
other payments4
%
2013*
3 521
129
732
4 382
4 950
3 950
8 900
13 282
8 250
21 532
4,6
13,0
10,1
18,2
13,2
2012
3 420
121
627
4 168
4 400
3 400
7 800
11 968
7 000
18 968
21
%
2013*
2012
2 647
282
409
3 338
3 500
2 500
6 000
9 338
2 953
142
432
3 527
3 950
2 950
6 900
10 427
7 000
17 427
6 000
15 338
5,1
14,1
11,0
17,9
13,5
%
5,7
15,0
11,7
16,7
13,6
%
%
%
%
B Kennedy
2012
IG Johnson
2012
MC Nkuhlu
2012
D Macready
2012
6,4
261
625
587
248
485
444
3 735
2013*
2013*
2013*
2013*
3 381
93
2 931
102
2 573
166
3 255
58
2 358
148
2 789
90
3 462
63
2 790
512
4 150 3 900
Prescribed officers
R000
Cash portion of
package
Other benefits
Defined contribution
retirement fund
guaranteed
remuneration
Cash performance
incentive
Deferred performance
incentive (delivered in
shares)
total Sti1
total remuneration2
Value of share-based
awards (face value at
award)5
total direct
remuneration3
other payments4
1 In terms of the rules of the Matched Share Scheme, this amount may increase by up to 30% (before share price movement), subject to fulfilment of the CPT, and subject to continued
6 000 4 900
0,0 13 000 10 800
2,2 16 735 14 350
3 250
3 250
7 500
7 500
11 650 11 400
2 500
3 250
7 500 6 000
9 281
16,6 16 974 14 450
1
3 000
20,4 7 000
16,6 10 224
27,3
21,0 10 956
2 250
5 500
8 450
25,0 7 000 6 000
11,6 23 735 20 350
10 000 8 000
21 650 19 400
7 000 5 900
6 750 6 000
17,5 19 456
25,0
18,0
4 000
16 781
8 500
7 500
3 500
4 250
4 250
4 250
2 950
3 250
3 550
3 456
3 224
3 281
402
423
15,9
16,7
12,5
13,3
5,2
9,3
5,3
investment of the amount in the scheme for 36 months.
2 Total remuneration is the sum of guaranteed remuneration and total STI.
3 Total direct remuneration is the sum of total remuneration and the value of share-based awards made.
4 Other payments are typically non-recurring payments and include leave pay and special payments, but exclude gains from vesting share awards, which are set out in the table on
pages 156 to 163 of this Remuneration Report.
5 Awards listed under 2013 were granted in March 2014, and apply in respect of the 2014–2016 financial years. Awards listed under 2012 were granted in March 2013, and apply
in respect of the 2013 – 2015 financial years.
155
ENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderSdelIVerInG to oUr StaKeholderSmaKInG thInGS haPPen reporting back on reMuneration (CONTINUED)
SHARE-BASED PAYMENTS TO EXECUTIVE DIRECTORS AND PRESCRIBED OFFICERS (AUDITED)
Payments from prior years’ deferred bonus, LTIs and outstanding share plan awards, including participation in the group’s
empowerment arrangements:
Opening balance at 1 January 2013
Awards made during 2013
Awards vesting/lapsing during 2013
Number
of
Number of
restricted
restricted
shares/
options
released
shares/
options
lapsed
Market
price at
vesting
(R)
Vesting/
Exercise
date
Value
gained on
vesting
(R)
Notional
value of
loss on
lapsing(5)
(R)
30 655
43 360
12 705
194,55 2013/03/03
5 963 930
(2 471 758)
194,55 2013/03/04
8 435 688
Number of
restricted
shares/
options
Date of
issue/
inception
Issue
price
(R)
Vesting
date
Number of
restricted
shares/
options
Date of
issue/
inception
Issue
price
(R)
Final
vesting/
exercise
date
43 360 2010/03/02
43 3602 2010/03/03
23 357 2011/03/07
23 3572 2011/03/08
32 431 2012/03/07
32 4312 2012/03/08
121,08 2013/03/03
121,08 2013/03/04
128,44 2014/03/08
128,44 2014/03/09
161,88 2015/03/08
161,88 2015/03/09
4 895 2010/03/31
10 584
2011/03/31
15 192 2012/03/31
137,88
2013/04/01
141,72 2014/04/01
171,79 2015/04/01
Own shares 2010/03/31
2011/03/31
Own shares
Own shares 2012/03/31
137,88
2013/04/01
141,72 2014/04/01
171,79 2015/04/01
20 647 2010/03/02
20 6472 2010/03/03
15 571 2011/03/07
15 5712 2011/03/08
27 798 2012/03/07
27 7982 2012/03/08
121,08 2013/03/03
121,08 2013/03/04
128,44 2014/03/08
128,44 2014/03/09
161,88 2015/03/08
161,88 2015/03/09
4 351 2010/03/31
5 292
2011/03/31
10 477 2012/03/31
2013/04/01
137,88
141,72 2014/04/01
171,79 2015/04/01
Own shares 2010/03/31
Own shares
2011/03/31
Own shares 2012/03/31
137,88
2013/04/01
141,72 2014/04/01
171,79 2015/04/01
28 962
2013/03/07
189,90 2016/03/08
28 9622 2013/03/08
189,90 2016/03/09
2 4483 2013/04/01
193,49
2013/04/01
7 343
193,49
2013/04/01
1 420 797
16 099
2013/03/31
195,66 2016/04/01
2 1763
2013/04/01
193,49
2013/04/01
2 176
193,49
2013/04/01
421 034
Own shares 2013/03/31
195,66 2016/04/01
16 241 449
(2 471 758)
1 715 395
1 715 395
14 597
20 647
6 050
194,55 2013/03/03
2 839 846
(1 177 028)
194,55 2013/03/04
4 016 874
18 430 2013/03/07
18 4302 2013/03/08
189,90 2016/03/08
189,90 2016/03/09
2 1763 2013/04/01
193,49
2013/04/01
6 527
193,49
2013/04/01
1 262 909
10 426
2013/03/31
195,66 2016/04/01
1 3613 2013/04/01
193,49
2013/04/01
1 361
193,49
2013/04/01
263 340
Own shares
2013/03/31
195,66 2016/04/01
8 382 969 (1 177 028)
1 219 266
1 219 266
Executive directors
MWT Brown
Nedbank restricted shares
Compulsory Bonus Share
Scheme1
Voluntary Bonus Share
Scheme4
Total value of dividends
Total
GW Dempster
Nedbank restricted shares
Compulsory Bonus Share
Scheme1
Voluntary Bonus Share
Scheme4
Total value of dividends
Total
156
Dividends
Total
value
dividends
respect of
all plans(7)
(R)
of
Number
paid in
restrict-
of
ed
shares/
options
Closing balance at
31 December 2013
End
of
perfor-
mance
period
Final
vesting/
exercise
date
23 357
23 357
32 431
32 431
2013/12/31 2014/03/08
2013/12/31 2014/03/09
2014/12/31 2015/03/08
2014/12/31 2015/03/09
28 962
2015/12/31 2016/03/08
28 962
2015/12/31 2016/03/09
10 584
2013/12/31 2014/04/01
15 192
2014/12/31
2015/04/01
16 099
2015/12/31
2016/04/01
15 571
15 571
27 798
27 798
18 430
18 430
2013/12/31 2014/03/08
2013/12/31 2014/03/09
2014/12/31 2015/03/08
2014/12/31 2015/03/09
2015/12/31 2016/03/08
2015/12/31 2016/03/09
5 292
2013/12/31 2014/04/01
10 477
10 426
2014/12/31
2015/04/01
2015/12/31
2016/04/01
NedbaNk Group | Integrated report 2013 SHARE-BASED PAYMENTS TO EXECUTIVE DIRECTORS AND PRESCRIBED OFFICERS (AUDITED)
Payments from prior years’ deferred bonus, LTIs and outstanding share plan awards, including participation in the group’s
empowerment arrangements:
Opening balance at 1 January 2013
Awards made during 2013
Awards vesting/lapsing during 2013
Number
of
restricted
shares/
options
released
Number of
restricted
shares/
options
lapsed
Market
price at
vesting
(R)
Vesting/
Exercise
date
Value
gained on
vesting
(R)
Notional
value of
loss on
lapsing(5)
(R)
30 655
43 360
12 705
194,55 2013/03/03
194,55 2013/03/04
5 963 930
8 435 688
(2 471 758)
4 895 2010/03/31
137,88
2013/04/01
2 4483 2013/04/01
193,49
2013/04/01
7 343
193,49
2013/04/01
1 420 797
Own shares 2010/03/31
137,88
2013/04/01
2 1763
2013/04/01
193,49
2013/04/01
2 176
193,49
2013/04/01
421 034
Dividends
Total
value
of
dividends
paid in
respect of
all plans(7)
(R)
Number
of
restrict-
ed
shares/
options
Closing balance at
31 December 2013
End
of
perfor-
mance
period
Final
vesting/
exercise
date
23 357
23 357
32 431
32 431
28 962
2013/12/31 2014/03/08
2013/12/31 2014/03/09
2014/12/31 2015/03/08
2014/12/31 2015/03/09
2015/12/31 2016/03/08
28 962
2015/12/31 2016/03/09
10 584
15 192
16 099
2013/12/31 2014/04/01
2015/04/01
2014/12/31
2016/04/01
2015/12/31
16 241 449
(2 471 758)
1 715 395
1 715 395
14 597
20 647
6 050
194,55 2013/03/03
194,55 2013/03/04
2 839 846
4 016 874
(1 177 028)
4 351 2010/03/31
137,88
2013/04/01
2 1763 2013/04/01
193,49
2013/04/01
6 527
193,49
2013/04/01
1 262 909
18 430 2013/03/07
189,90 2016/03/08
18 4302 2013/03/08
189,90 2016/03/09
5 292
2011/03/31
141,72 2014/04/01
10 477 2012/03/31
171,79 2015/04/01
10 426
2013/03/31
195,66 2016/04/01
Own shares 2010/03/31
137,88
2013/04/01
1 3613 2013/04/01
193,49
2013/04/01
1 361
193,49
2013/04/01
263 340
Own shares
2011/03/31
141,72 2014/04/01
Own shares 2012/03/31
171,79 2015/04/01
Own shares
2013/03/31
195,66 2016/04/01
15 571
15 571
27 798
27 798
18 430
18 430
2013/12/31 2014/03/08
2013/12/31 2014/03/09
2014/12/31 2015/03/08
2014/12/31 2015/03/09
2015/12/31 2016/03/08
2015/12/31 2016/03/09
5 292
10 477
10 426
2013/12/31 2014/04/01
2015/04/01
2014/12/31
2016/04/01
2015/12/31
8 382 969 (1 177 028)
1 219 266
1 219 266
157
Number of
restricted
shares/
options
Date of
issue/
inception
Issue
price
(R)
Vesting
date
Number of
restricted
shares/
options
Date of
issue/
inception
Issue
price
(R)
Final
vesting/
exercise
date
Executive directors
MWT Brown
Nedbank restricted shares
43 360 2010/03/02
121,08 2013/03/03
43 3602 2010/03/03
121,08 2013/03/04
23 357 2011/03/07
128,44 2014/03/08
23 3572 2011/03/08
128,44 2014/03/09
32 431 2012/03/07
161,88 2015/03/08
32 4312 2012/03/08
161,88 2015/03/09
28 962
2013/03/07
189,90 2016/03/08
28 9622 2013/03/08
189,90 2016/03/09
10 584
2011/03/31
141,72 2014/04/01
15 192 2012/03/31
171,79 2015/04/01
16 099
2013/03/31
195,66 2016/04/01
Own shares
2011/03/31
141,72 2014/04/01
Own shares 2012/03/31
171,79 2015/04/01
Own shares 2013/03/31
195,66 2016/04/01
Nedbank restricted shares
20 647 2010/03/02
121,08 2013/03/03
20 6472 2010/03/03
121,08 2013/03/04
15 571 2011/03/07
128,44 2014/03/08
15 5712 2011/03/08
128,44 2014/03/09
27 798 2012/03/07
161,88 2015/03/08
27 7982 2012/03/08
161,88 2015/03/09
Compulsory Bonus Share
Scheme1
Voluntary Bonus Share
Scheme4
Total value of dividends
Total
GW Dempster
Compulsory Bonus Share
Scheme1
Voluntary Bonus Share
Scheme4
Total value of dividends
Total
ENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderSdelIVerInG to oUr StaKeholderSmaKInG thInGS haPPen Number
of
Number of
restricted
restricted
shares/
options
released
shares/
options
lapsed
Market
price at
vesting
(R)
Vesting/
Exercise
date
Value
gained on
vesting
(R)
Notional
value of
loss on
lapsing(5)
(R)
25 265
35 736
10 471
194,55 2013/03/03
4 915 306
(2 037 133)
194,55 2013/03/04
6 952 439
Dividends
Total
value
dividends
respect of
all plans(7)
(R)
of
Number
paid in
restrict-
of
ed
shares/
options
Closing balance at
31 December 2013
End
of
perfor-
mance
period
Final
vesting/
exercise
date
15 571
15 571
13 899
13 899
15 797
15 797
2013/12/31 2014/03/08
2013/12/31 2014/03/09
2014/12/31 2015/03/08
2014/12/31 2015/03/09
2015/12/31 2016/03/08
2015/12/31 2016/03/09
3 175
6 636
7 666
2013/12/31 2014/04/01
2014/12/31
2015/04/01
2015/12/31
2016/04/01
6 600
6 600
6 800
19 800
19 800
20 400
2014/03/04
2015/03/04
2016/03/04
2014/03/04
2015/03/04
2016/03/04
12 078 262
(2 037 133)
1 026 648
1 026 648
reporting back on reMuneration (CONTINUED)
Opening balance at 1 January 2013
Awards made during 2013
Awards vesting/lapsing during 2013
Number of
restricted
shares/
options
Date of
issue/
inception
Issue
price
(R)
Vesting
date
Number of
restricted
shares/
options
Date of
issue/
inception
Issue
price
(R)
Final
vesting/
exercise
date
35 736 2010/03/02
35 7362 2010/03/03
15 571 2011/03/07
15 5712 2011/03/08
13 899 2012/03/07
13 8992 2012/03/08
121,08 2013/03/03
121,08 2013/03/04
128,44 2014/03/08
128,44 2014/03/09
161,88 2015/03/08
161,88 2015/03/09
3 175
2011/03/31
6 636 2012/03/31
141,72 2014/04/01
171,79 2015/04/01
Own shares 2010/03/31
2011/03/31
Own shares
Own shares 2012/03/31
137,88
2013/04/01
141,72 2014/04/01
171,79 2015/04/01
6 600 2010/03/03
6 600 2010/03/03
6 800 2010/03/03
19 800 2010/03/03
19 800 2010/03/03
20 400 2010/03/03
121,08 2014/03/04
121,08 2015/03/04
121,08 2016/03/04
121,08 2014/03/04
121,08 2015/03/04
121,08 2016/03/04
2013/03/07
15 797
15 7972 2013/03/08
189,90 2016/03/08
189,90 2016/03/09
7 666
2013/03/31
195,66 2016/04/01
1 0883 2013/04/01
193,49
2013/04/01
1 088
193,49
2013/04/01
210 517
Own shares
2013/03/31
195,66 2016/04/01
Executive directors
RK Morathi
Nedbank restricted shares
Compulsory Bonus Share
Scheme1
Voluntary Bonus Share
Scheme4
Eyethu restricted shares
Eyethu restricted options6
Total value of dividends
Total
158
NedbaNk Group | Integrated report 2013 35 7362 2010/03/03
121,08 2013/03/04
15 571 2011/03/07
128,44 2014/03/08
15 5712 2011/03/08
128,44 2014/03/09
13 899 2012/03/07
161,88 2015/03/08
13 8992 2012/03/08
161,88 2015/03/09
3 175
2011/03/31
141,72 2014/04/01
6 636 2012/03/31
171,79 2015/04/01
Compulsory Bonus Share
Scheme1
Voluntary Bonus Share
Scheme4
Own shares
2011/03/31
141,72 2014/04/01
Own shares 2012/03/31
171,79 2015/04/01
Eyethu restricted shares
6 600 2010/03/03
121,08 2014/03/04
Eyethu restricted options6
19 800 2010/03/03
121,08 2014/03/04
6 600 2010/03/03
121,08 2015/03/04
6 800 2010/03/03
121,08 2016/03/04
19 800 2010/03/03
121,08 2015/03/04
20 400 2010/03/03
121,08 2016/03/04
Total value of dividends
Total
15 797
2013/03/07
189,90 2016/03/08
15 7972 2013/03/08
189,90 2016/03/09
7 666
2013/03/31
195,66 2016/04/01
Own shares
2013/03/31
195,66 2016/04/01
Opening balance at 1 January 2013
Awards made during 2013
Awards vesting/lapsing during 2013
Number of
restricted
shares/
options
Date of
issue/
inception
Issue
price
(R)
Vesting
date
Number of
restricted
shares/
options
Date of
issue/
inception
Issue
price
(R)
Final
vesting/
exercise
date
Executive directors
RK Morathi
Nedbank restricted shares
35 736 2010/03/02
121,08 2013/03/03
Number
of
restricted
shares/
options
released
Number of
restricted
shares/
options
lapsed
Market
price at
vesting
(R)
Vesting/
Exercise
date
Value
gained on
vesting
(R)
Notional
value of
loss on
lapsing(5)
(R)
25 265
35 736
10 471
194,55 2013/03/03
194,55 2013/03/04
4 915 306
6 952 439
(2 037 133)
Own shares 2010/03/31
137,88
2013/04/01
1 0883 2013/04/01
193,49
2013/04/01
1 088
193,49
2013/04/01
210 517
Dividends
Total
value
of
dividends
paid in
respect of
all plans(7)
(R)
Number
of
restrict-
ed
shares/
options
Closing balance at
31 December 2013
End
of
perfor-
mance
period
Final
vesting/
exercise
date
15 571
15 571
13 899
13 899
15 797
15 797
2013/12/31 2014/03/08
2013/12/31 2014/03/09
2014/12/31 2015/03/08
2014/12/31 2015/03/09
2015/12/31 2016/03/08
2015/12/31 2016/03/09
3 175
6 636
7 666
2013/12/31 2014/04/01
2015/04/01
2014/12/31
2016/04/01
2015/12/31
6 600
6 600
6 800
19 800
19 800
20 400
2014/03/04
2015/03/04
2016/03/04
2014/03/04
2015/03/04
2016/03/04
12 078 262
(2 037 133)
1 026 648
1 026 648
159
ENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderSdelIVerInG to oUr StaKeholderSmaKInG thInGS haPPen Number
of
Number of
restricted
restricted
shares/
options
released
shares/
options
lapsed
Market
price at
vesting
(R)
Vesting/
Exercise
date
Value
gained on
vesting
(R)
Notional
value of
loss on
lapsing(5)
(R)
17 517
24 777
7 260
194,55 2013/03/03
3 407 932
(1 412 433)
194,55 2013/03/04
4 820 365
Dividends
Total
value
dividends
respect of
all plans(7)
(R)
of
Number
paid in
restrict-
of
ed
shares/
options
Closing balance at
31 December 2013
End
of
perfor-
mance
period
Final
vesting/
exercise
date
reporting back on reMuneration (CONTINUED)
Opening balance at 1 January 2013
Awards made during 2013
Awards vesting/lapsing during 2013
Prescribed officers
IG Johnson
Nedbank restricted shares
Compulsory Bonus Share
Scheme1
Voluntary Bonus Share
Scheme4
Total value of dividends
Total
B Kennedy
Nedbank restricted shares
Number of
restricted
shares/
options
Date of
issue/
inception
Issue
price
(R)
Vesting
date
Number of
restricted
shares/
options
Date of
issue/
inception
Issue
price
(R)
Final
vesting/
exercise
date
24 777 2010/03/02
24 7772 2010/03/03
2011/03/07
19 464
19 4642 2011/03/08
24 709 2012/03/07
24 7092 2012/03/08
121,08 2013/03/03
121,08 2013/03/04
128,44 2014/03/08
128,44 2014/03/09
161,88 2015/03/08
161,88 2015/03/09
3 807 2010/03/31
2011/03/31
5 292
10 477 2012/03/31
137,88
2013/04/01
141,72 2014/04/01
171,79 2015/04/01
2013/03/07
21 063
21 0632 2013/03/08
189,90 2016/03/08
189,90 2016/03/09
1 9043 2013/04/01
193,49
2013/04/01
5 711
193,49
2013/04/01
1 105 021
Own shares
2011/03/31
141,72 2014/04/01
Own shares 2013/03/31
195,66 2016/04/01
9 966
2013/03/31
195,66 2016/04/01
24 777 2010/03/02
24 7772 2010/03/03
15 571 2011/03/07
15 5712 2011/03/08
18 532 2012/03/07
18 5322 2012/03/08
121,08 2013/03/03
121,08 2013/03/04
128,44 2014/03/08
128,44 2014/03/09
161,88 2015/03/08
161,88 2015/03/09
Compulsory Bonus Share
Scheme1
4 786 2010/03/31
4 022
2011/03/31
6 548 2012/03/31
137,88
2013/04/01
141,72 2014/04/01
171,79 2015/04/01
Voluntary Bonus Share
Scheme4
Own shares
2011/03/31
Own shares 2012/03/31
141,72 2014/04/01
171,79 2015/04/01
Total value of dividends
Total
15 797
2013/03/07
15 7972 2013/03/08
2 3933 2013/04/01
189,90 2016/03/08
189,90 2016/03/09
2013/04/01
193,49
15 026
2013/03/31
195,66 2016/04/01
Own shares
2013/03/31
195,66 2016/04/01
160
19 464
19 464
24 709
24 709
21 063
21 063
2013/12/31 2014/03/08
2013/12/31 2014/03/09
2014/12/31 2015/03/08
2014/12/31 2015/03/09
2015/12/31 2016/03/08
2015/12/31 2016/03/09
5 292
2013/12/31 2014/04/01
10 477
2014/12/31
2015/04/01
9 966
2015/12/31
2016/04/01
15 571
15 571
18 532
18 532
15 797
15 797
2013/12/31 2014/03/08
2013/12/31 2014/03/09
2014/12/31 2015/03/08
2014/12/31 2015/03/09
2015/12/31 2016/03/08
2015/12/31 2016/03/09
4 022
6 548
2013/12/31 2014/04/01
2014/12/31
2015/04/01
15 026
2015/12/31
2016/04/01
9 333 318
(1 412 433)
1 268 465
1 268 465
17 517
24 777
7 260
194,55 2013/03/03
3 407 932
(1 412 433)
194,55 2013/03/04
4 820 365
7 179
193,49
2013/04/01
1 389 065
9 617 362
(1 412 433)
1 025 364
1 025 364
NedbaNk Group | Integrated report 2013 Number of
restricted
shares/
options
Date of
issue/
inception
Issue
price
(R)
Vesting
date
Number of
restricted
shares/
options
Date of
issue/
inception
Issue
price
(R)
Final
vesting/
exercise
date
Prescribed officers
IG Johnson
Nedbank restricted shares
24 777 2010/03/02
121,08 2013/03/03
24 7772 2010/03/03
121,08 2013/03/04
19 464
2011/03/07
128,44 2014/03/08
19 4642 2011/03/08
128,44 2014/03/09
24 709 2012/03/07
161,88 2015/03/08
24 7092 2012/03/08
161,88 2015/03/09
21 063
2013/03/07
189,90 2016/03/08
21 0632 2013/03/08
189,90 2016/03/09
5 292
2011/03/31
141,72 2014/04/01
10 477 2012/03/31
171,79 2015/04/01
Own shares
2011/03/31
141,72 2014/04/01
Own shares 2013/03/31
195,66 2016/04/01
9 966
2013/03/31
195,66 2016/04/01
Compulsory Bonus Share
Scheme1
Voluntary Bonus Share
Scheme4
Total value of dividends
Total
B Kennedy
Nedbank restricted shares
24 777 2010/03/02
121,08 2013/03/03
24 7772 2010/03/03
121,08 2013/03/04
15 571 2011/03/07
128,44 2014/03/08
15 5712 2011/03/08
128,44 2014/03/09
18 532 2012/03/07
161,88 2015/03/08
18 5322 2012/03/08
161,88 2015/03/09
Scheme1
4 022
2011/03/31
141,72 2014/04/01
6 548 2012/03/31
171,79 2015/04/01
Voluntary Bonus Share
Own shares
2011/03/31
141,72 2014/04/01
Scheme4
Own shares 2012/03/31
171,79 2015/04/01
Total value of dividends
Total
15 797
2013/03/07
189,90 2016/03/08
15 7972 2013/03/08
189,90 2016/03/09
15 026
2013/03/31
195,66 2016/04/01
Own shares
2013/03/31
195,66 2016/04/01
Opening balance at 1 January 2013
Awards made during 2013
Awards vesting/lapsing during 2013
Number
of
restricted
shares/
options
released
Number of
restricted
shares/
options
lapsed
Market
price at
vesting
(R)
Vesting/
Exercise
date
Value
gained on
vesting
(R)
17 517
24 777
7 260
194,55 2013/03/03
194,55 2013/03/04
3 407 932
4 820 365
Notional
value of
loss on
lapsing(5)
(R)
(1 412 433)
Dividends
Total
value
of
dividends
paid in
respect of
all plans(7)
(R)
Number
of
restrict-
ed
shares/
options
Closing balance at
31 December 2013
End
of
perfor-
mance
period
Final
vesting/
exercise
date
3 807 2010/03/31
137,88
2013/04/01
1 9043 2013/04/01
193,49
2013/04/01
5 711
193,49
2013/04/01
1 105 021
9 333 318
(1 412 433)
1 268 465
1 268 465
17 517
24 777
7 260
194,55 2013/03/03
194,55 2013/03/04
3 407 932
4 820 365
(1 412 433)
Compulsory Bonus Share
4 786 2010/03/31
137,88
2013/04/01
2 3933 2013/04/01
193,49
2013/04/01
7 179
193,49
2013/04/01
1 389 065
9 617 362
(1 412 433)
1 025 364
1 025 364
19 464
19 464
24 709
24 709
21 063
21 063
2013/12/31 2014/03/08
2013/12/31 2014/03/09
2014/12/31 2015/03/08
2014/12/31 2015/03/09
2015/12/31 2016/03/08
2015/12/31 2016/03/09
5 292
10 477
9 966
2013/12/31 2014/04/01
2015/04/01
2014/12/31
2016/04/01
2015/12/31
15 571
15 571
18 532
18 532
15 797
15 797
2013/12/31 2014/03/08
2013/12/31 2014/03/09
2014/12/31 2015/03/08
2014/12/31 2015/03/09
2015/12/31 2016/03/08
2015/12/31 2016/03/09
4 022
6 548
15 026
2013/12/31 2014/04/01
2015/04/01
2014/12/31
2016/04/01
2015/12/31
161
ENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderSdelIVerInG to oUr StaKeholderSmaKInG thInGS haPPen reporting back on reMuneration (CONTINUED)
Opening balance at 1 January 2013
Awards made during 2013
Awards vesting/lapsing during 2013
Prescribed officers
D Macready
Nedbank restricted shares
Compulsory Bonus Share
Scheme1
Voluntary Bonus Share
Scheme4
Total value of dividends
Total
MC Nkuhlu
Nedbank restricted shares
Compulsory Bonus Share
Scheme1
Voluntary Bonus Share
Scheme4
Eyethu restricted shares
Eyethu restricted options6
Number of
restricted
shares/
options
Date of
issue/
inception
Issue
price
(R)
Vesting
date
Number of
restricted
shares/
options
Date of
issue/
inception
Issue
price
(R)
Final
vesting/
exercise
date
16 518 2010/03/02
16 5182 2010/03/03
15 571 2011/03/07
15 5712 2011/03/08
15 443 2012/03/07
15 4432 2012/03/08
121,08 2013/03/03
121,08 2013/03/04
128,44 2014/03/08
128,44 2014/03/09
161,88 2015/03/08
161,88 2015/03/09
1 218 2010/03/31
3 704
2011/03/31
6 548 2012/03/31
137,88
2013/04/01
141,72 2014/04/01
171,79 2015/04/01
24 777 2010/03/02
24 7772 2010/03/03
19 464 2011/03/07
19 4642 2011/03/08
15 443 2012/03/07
15 4432 2012/03/08
121,08 2013/03/03
121,08 2013/03/04
128,44 2014/03/08
128,44 2014/03/09
161,88 2015/03/08
161,88 2015/03/09
1 269 2010/03/31
6 985 2012/03/31
2013/04/01
137,88
171,79 2015/04/01
3 960 2009/03/03
3 960 2009/03/03
4 080 2009/03/03
11 880 2009/03/03
11 880 2009/03/03
12 240 2009/03/03
75,74 2013/03/04
75,74 2014/03/04
75,74 2015/03/04
75,74 2013/03/04
75,74 2014/03/04
75,74 2015/03/04
15 797
2013/03/07
15 7972 2013/03/08
189,90 2016/03/08
189,90 2016/03/09
6093 2013/04/01
193,49
2013/04/01
1 827
193,49
2013/04/01
353 506
6 899
2013/03/31
195,66 2016/04/01
Own shares 2013/03/31
195,66 2016/04/01
19 747
2013/03/07
19 7472 2013/03/08
189,90 2016/03/08
189,90 2016/03/09
6353 2013/04/01
193,49
2013/04/01
7 666
2013/03/31
195,66 2016/04/01
Own shares 2013/03/31
195,66 2016/04/01
Number
of
Number of
restricted
restricted
shares/
options
released
shares/
options
lapsed
Market
price at
vesting
(R)
Vesting/
Exercise
date
Value
gained on
vesting
(R)
11 678
16 518
4 840
194,55 2013/03/03
194,55 2013/03/04
2 271 955
3 213 577
Notional
value of
loss on
lapsing(5)
(R)
(941 622)
Dividends
Total
value
dividends
respect of
all plans(7)
(R)
of
Number
paid in
restrict-
of
ed
shares/
options
Closing balance at
31 December 2013
End
of
perfor-
mance
period
Final
vesting/
exercise
date
15 571
15 571
15 443
15 443
15 797
15 797
2013/12/31 2014/03/08
2013/12/31 2014/03/09
2014/12/31 2015/03/08
2014/12/31 2015/03/09
2015/12/31 2016/03/08
2015/12/31 2016/03/09
3 704
6 548
6 899
2013/12/31 2014/04/01
2014/12/31
2015/04/01
2015/12/31
2016/04/01
19 464
19 464
15 443
15 443
19 747
19 747
2013/12/31 2014/03/08
2013/12/31 2014/03/09
2014/12/31 2015/03/08
2014/12/31 2015/03/09
2015/12/31 2016/03/08
2015/12/31 2016/03/09
2 328
7 666
2014/12/31
2015/04/01
2015/12/31
2016/04/01
3 960
4 080
11 880
12 240
2014/03/04
2015/03/04
2014/03/04
2015/03/04
5 839 038
(941 622)
893 417
893 417
17 517
24 777
7 260
194,55 2013/03/03
194,55 2013/03/04
3 407 932
4 820 365
(1 412 433)
1 904
2 3288
2 3288
193,49
2013/04/01
184,00 2013/08/08
217,00
2013/10/31
368 405
428 352
505 176
3 960
194,55 2013/03/04
770 418
11 880
192,43 2013/03/04
1 386 2449
11 686 892
(1 412 433)
1 054 781
1 054 781
Matching on the Compulsory Bonus Share Scheme occurs only on shares in the scheme at the vesting date. If the CPT is met, 100% matching occurs, otherwise a 50% matching occurs.
Restricted share awards with time-based vesting only.
Total value of dividends
Total
1
2
3 Match occurred at 0,5 shares for each share in the Compulsory Bonus Share Scheme and Voluntary Bonus Share Scheme, at the vesting date.
4
For the Voluntary Bonus Share Scheme employees invest their own Nedbank shares into the scheme. After three years, if the CPTs are met, a 100% matching occurs, otherwise a 50% matching occurs.
5
Value determined based on number of shares lapsing multiplied by the market share price on scheduled vesting date.
6
Eyethu restricted options have a life span of seven years from the date of issue.
7
Value of dividends excludes dividends paid in respect of the Voluntary Bonus Share Scheme, as these are the participants’ own shares.
8 Mr Nkuhlu elected to withdraw from the Matched Share Scheme following the release from forfeiture of the relevant award tranches.
9
The value gained in respect of the Eyethu restricted options is determined based on the difference between the exercise price (R192,43) and the issue price (R75,74). The former figure is rounded in the
table above.
162
NedbaNk Group | Integrated report 2013 Opening balance at 1 January 2013
Awards made during 2013
Awards vesting/lapsing during 2013
Number
of
restricted
shares/
options
released
Number of
restricted
shares/
options
lapsed
Market
price at
vesting
(R)
Vesting/
Exercise
date
Value
gained on
vesting
(R)
11 678
16 518
4 840
194,55 2013/03/03
194,55 2013/03/04
2 271 955
3 213 577
Notional
value of
loss on
lapsing(5)
(R)
(941 622)
Dividends
Total
value
of
dividends
paid in
respect of
all plans(7)
(R)
Number
of
restrict-
ed
shares/
options
Closing balance at
31 December 2013
End
of
perfor-
mance
period
Final
vesting/
exercise
date
1 218 2010/03/31
137,88
2013/04/01
6093 2013/04/01
193,49
2013/04/01
1 827
193,49
2013/04/01
353 506
5 839 038
(941 622)
893 417
893 417
17 517
24 777
7 260
194,55 2013/03/03
194,55 2013/03/04
3 407 932
4 820 365
(1 412 433)
1 904
2 3288
2 3288
2013/04/01
193,49
184,00 2013/08/08
2013/10/31
217,00
368 405
428 352
505 176
Eyethu restricted shares
3 960 2009/03/03
75,74 2013/03/04
3 960
194,55 2013/03/04
770 418
Eyethu restricted options6
11 880 2009/03/03
75,74 2013/03/04
11 880
192,43 2013/03/04
1 386 2449
11 686 892
(1 412 433)
1 054 781
1 054 781
15 571
15 571
15 443
15 443
15 797
15 797
2013/12/31 2014/03/08
2013/12/31 2014/03/09
2014/12/31 2015/03/08
2014/12/31 2015/03/09
2015/12/31 2016/03/08
2015/12/31 2016/03/09
3 704
6 548
6 899
2013/12/31 2014/04/01
2015/04/01
2014/12/31
2016/04/01
2015/12/31
19 464
19 464
15 443
15 443
19 747
19 747
2013/12/31 2014/03/08
2013/12/31 2014/03/09
2014/12/31 2015/03/08
2014/12/31 2015/03/09
2015/12/31 2016/03/08
2015/12/31 2016/03/09
2 328
7 666
2014/12/31
2015/12/31
2015/04/01
2016/04/01
3 960
4 080
11 880
12 240
2014/03/04
2015/03/04
2014/03/04
2015/03/04
163
Number of
restricted
shares/
options
Date of
issue/
inception
Issue
price
(R)
Vesting
date
Number of
restricted
shares/
options
Date of
issue/
inception
Issue
price
(R)
Final
vesting/
exercise
date
Prescribed officers
D Macready
Nedbank restricted shares
16 518 2010/03/02
121,08 2013/03/03
16 5182 2010/03/03
121,08 2013/03/04
15 571 2011/03/07
128,44 2014/03/08
15 5712 2011/03/08
128,44 2014/03/09
15 443 2012/03/07
161,88 2015/03/08
15 4432 2012/03/08
161,88 2015/03/09
3 704
2011/03/31
141,72 2014/04/01
6 548 2012/03/31
171,79 2015/04/01
15 797
2013/03/07
189,90 2016/03/08
15 7972 2013/03/08
189,90 2016/03/09
6 899
2013/03/31
195,66 2016/04/01
Own shares 2013/03/31
195,66 2016/04/01
Nedbank restricted shares
24 777 2010/03/02
121,08 2013/03/03
24 7772 2010/03/03
121,08 2013/03/04
19 464 2011/03/07
128,44 2014/03/08
19 4642 2011/03/08
128,44 2014/03/09
15 443 2012/03/07
161,88 2015/03/08
15 4432 2012/03/08
161,88 2015/03/09
19 747
2013/03/07
189,90 2016/03/08
19 7472 2013/03/08
189,90 2016/03/09
1 269 2010/03/31
137,88
2013/04/01
6353 2013/04/01
193,49
2013/04/01
6 985 2012/03/31
171,79 2015/04/01
7 666
2013/03/31
195,66 2016/04/01
Own shares 2013/03/31
195,66 2016/04/01
3 960 2009/03/03
75,74 2014/03/04
4 080 2009/03/03
75,74 2015/03/04
11 880 2009/03/03
75,74 2014/03/04
12 240 2009/03/03
75,74 2015/03/04
Compulsory Bonus Share
Scheme1
Voluntary Bonus Share
Scheme4
Total value of dividends
Total
MC Nkuhlu
Compulsory Bonus Share
Scheme1
Voluntary Bonus Share
Scheme4
Total value of dividends
Total
1
2
4
5
6
7
9
table above.
Matching on the Compulsory Bonus Share Scheme occurs only on shares in the scheme at the vesting date. If the CPT is met, 100% matching occurs, otherwise a 50% matching occurs.
Restricted share awards with time-based vesting only.
3 Match occurred at 0,5 shares for each share in the Compulsory Bonus Share Scheme and Voluntary Bonus Share Scheme, at the vesting date.
For the Voluntary Bonus Share Scheme employees invest their own Nedbank shares into the scheme. After three years, if the CPTs are met, a 100% matching occurs, otherwise a 50% matching occurs.
Value determined based on number of shares lapsing multiplied by the market share price on scheduled vesting date.
Eyethu restricted options have a life span of seven years from the date of issue.
Value of dividends excludes dividends paid in respect of the Voluntary Bonus Share Scheme, as these are the participants’ own shares.
8 Mr Nkuhlu elected to withdraw from the Matched Share Scheme following the release from forfeiture of the relevant award tranches.
The value gained in respect of the Eyethu restricted options is determined based on the difference between the exercise price (R192,43) and the issue price (R75,74). The former figure is rounded in the
ENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderSdelIVerInG to oUr StaKeholderSmaKInG thInGS haPPen reporting back on reMuneration (CONTINUED)
Deferred short-term incentive awards
There are no outstanding DSTI awards in respect of current
executive directors and prescribed officers, who are not eligible
for these awards.
Old Mutual long-term incentive proposal
A core component of the strategy of Old Mutual plc is to enhance
the effectiveness of its three businesses in Africa by increasing
collaboration. Nedbank, Old Mutual Emerging Markets (OMEM)
and Mutual & Federal (M&F) have made good strides in working
together; however, the potential for further revenue enhancement,
cost savings and capital efficiency remains.
The Old Mutual plc board believes that further collaboration on
revenue, cost and capital synergies should be supported and
rewarded as it brings benefit to all three businesses. Therefore,
Old Mutual plc has proposed to the Nedbank board to implement
an LTI plan in Old Mutual plc shares (funded by Old Mutual plc)
for senior executives in Nedbank, OMEM and M&F. The
Old Mutual plc board believes a cohesively structured plan with
appropriate measures and targets will ensure that performance
in this area is rewarded.
Nedbank’s board will evaluate the details of this proposal and its
impact on existing and future Nedbank remuneration practices,
and prior to any implementation, will consult with major
shareholders.
the GRCMC
RISK AND REMUNERATION
We have an integrated process of managing the relationship
between risk and remuneration. There is cooperation between
Group Remco and
to ensure appropriate
consideration of the overall risk environment when making
remuneration decisions. Key matters related to risk aspects of
remuneration are discussed with the GRCMC. This reflects our
commitment to achieving a balance between the prudent
management of remuneration within the context of both our risk
appetite and risk profile, and the need to attract, retain and
motivate key talent to enable the delivery of our strategic
objectives.
Taking account of future and current risks in the
remuneration process
The STI scheme has been designed to incentivise a combination
of profitable returns, appropriate risk-taking and growth. It is
driven from an EP and headline earnings basis, using risk-based
economic capital allocation as set out in the Risk and Balance
Sheet Review available online.
We operate a comprehensive
internal capital adequacy
assessment process blueprint that addresses the nature and type
of risk incorporated into the overall framework. The framework
integrates with our STI pool arrangements and
individual
performance scorecard assessments, which in turn inform the
distribution of STIs from the derived business STI pools.
As in previous years, the STI pools incorporate ex ante or ‘before
the fact’ risk adjustments. This is built into the pool allocation
process, which is set out on the opposite page:
■ Group Remco approves an ontarget STI pool at the beginning
of the year. At year-end the overall group pool is 50% based
on performance versus headline earnings targets and 50%
based on performance against EP targets, together with a
non-financial modifier, as set out below.
■ Prior to distribution, the cluster pools may be adjusted (either
up or down) by a maximum of 15% by using the relevant
Group Exco member’s individual non-financial scorecard
assessment, which itself incorporates further risk assessment
metrics.
■ Altogether 50% of each cluster STI pool is determined by
using performance versus headline earnings targets and 50%
is based on performance versus EP targets (for line clusters
there is a 30/70 split between group and cluster
performance, except for Nedbank Capital, where the split
is 15/85).
■ EP per cluster is determined by using economic capital
allocated to each cluster, incorporating the various risk
elements described in the Group Enterprisewide Risk
Management Framework (ERMF).
■ These mechanical calculations and adjustments (which
include the application, where appropriate, of a group-level
non-financial modifier) are presented to Group Remco, which
then ratifies a final set of cluster pools (the group bottomup
cluster pools), which may not differ more than 10% from the
total STI pool determined based on group EP and headline
earnings alone (the group topdown pool).
■ The total allocated STIs (for all employees across all
jurisdictions and including the pools for stockbrokers and
analysts mentioned below) must stay within the totals
approved by Group Remco.
■ Any individual STI payment in excess of 200% of GP must
be individually motivated and approved by Group Remco.
The following categories of employees are excluded from the
distribution process outlined above:
■ Stockbrokers, since they are paid on a six-monthly basis
from a bespoke STI arrangement based on predetermined
contractual arrangements (certain business risk elements are
included in the formulaic determination for the stockbrokers’
pool). The pool allocated is included in the overall Nedbank
Wealth pool.
■ Analysts in Nedbank Capital, since their STIs are
predominantly determined using Financial Mail-published
ratings.
■ Private-equity ‘locked box’ remuneration, which is the market
norm for private-equity collective investment performance-
based remuneration, based on a sharing of ‘carried interest’
on realised investments.
We utilise a three-year budgeting, forecasting and planning
process, which is fully cognisant of projected risk parameters,
capital buffers and impairment provisions, and the likely impact
thereof on future remuneration practices. There have been no
material changes in the measures used over the past year.
164
NedbaNk Group | Integrated report 2013 linking performance and reward
The annual STI process is indicated in the diagram below, which describes the process of STI pools creation and distribution
based on individual performance and discretion, using both quantitative and qualitative steps in the process.
Total group
pool
The overall group
pool is approved by
Group Remco relative
to benchmarks.
The allocation of the
Group Remco-
approved group pool
to each cluster for
ontarget performance
is done by the CE,
with input from
Group Exco.
1
headline
earnings and Ep
performance
A total of 50% of the
year-end cluster pools
is determined based
on year-end EP
performance relative
to target.
A total of 50% of the
year-end cluster pools
is determined
based on year-end
headline earnings
performance
relative to target.
There is a 10% limit
set for the bottomup
cluster pools relative to
the overall group pool.
2
Balanced
scorecard
Bonus pool
adjustments
Individual bonus
proposals
The financially
determined pools
(topdown and
bottomup) are
adjusted by a
maximum of ±15%
based on the non-
financial elements of
relevant Group Exco
members’ scorecards.
Risk metrics are
included in the
relevant scorecards
and aligned with the
group three-year plan
and risk frameworks.
3
The CE makes
discretionary
adjustments to
quantitatively
determined cluster
pools based on
judgement and
non-quantifiable
metrics.
Group Remco makes
discretionary
adjustments to the
group pool to effect
any required
corrections based on
non-quantifiable
metrics, including risk
assessment.
4
Individual bonus
proposals are
discretionary and no
fixed formulaic
approach is used by
the bank.
All cluster executive
bonus proposals are
analysed by Group
Exco and the necessary
adjustments made to
ensure appropriate
consistency across
the bank.
All Group Exco bonus
proposals are
individually motivated
and recommended
by Group Remco to the
board.
The CE bonus requires
Nedbank board
approval and approval
by the Old Mutual
plc Remco.
All senior functional
bonuses (including risk
and finance) are
reviewed and ratified
by the relevant Group
Exco member.
All proposed bonuses
in excess of 200% of
GP require motivation
and Group Remco
approval.
5
QUaNTITaTIvE apprOaCh sTEps
QUalITaTIvE apprOaCh sTEps
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Mitigating the effect of inappropriate performance
metrics
Inappropriate performance metrics would typically manifest
when the year-on-year change in remuneration is seen to be
abnormal (either too high or too low relative to performance and
market benchmarks) or is unduly volatile. We witnessed this in
the 2008 financial year when, after changing to a purely EP
measure for STI pooling, the flaws inherent in this change
became evident.
The current STI scheme was implemented in 2009 and ensures
a more balanced approach to the determination of the STI pool.
A similar situation emerged as a consequence of the previous
application of 100% performance-based shares and options.
This resulted in a material misalignment of the vesting profile of
the LTI scheme relative to the overall performance of the group
over the performance period, with awards lapsing in full. In this
regard none of the allocations made between 2005 and 2009
that were subject to performance conditions vested, due to the
performance metrics that were set at the time.
As a result of the performance measures set out above and their
disproportionately negative effect on employee compensation
relative to peers and the market, we issued a number of deferred
cash- and share-based retention awards in 2009 and 2010 to
prevent attrition of key skills and enable effective succession
management in the business.
While appropriate in the context in which these awards were
made, our aim would be to avoid a similar situation from arising
in the future. Accordingly, awards made from 2010 onwards are
subject 50% to performance conditions and 50% to time-based
vesting. The historical and possible future vesting profile of our
restricted-share plans is shown on page 151 of this Remuneration
Report, and illustrates how this approach has enabled a more
graduated vesting profile, as opposed to the ‘all or nothing’
arrangements in place for awards made up to 2009. It is also
noted that, with effect from 2014, all future LTI awards made to
executive directors will be subject to performance conditions on
100% of the award.
Managing the franchise risk inherent in reward
programmes
The impact of inappropriate performance metrics on reward
programmes has a material franchise risk implication. This is
exacerbated when, in spite of highly competitive business
results, shareholder returns or share price performance, deferred
or LTI remuneration lapses. This risk manifests in increased
turnover of skilled employees, the erosion of perceptions of the
competitiveness of the firm’s remuneration offering (and in
‘discounting’ of the value of LTI awards by participants), a
reduction in external perceptions of the firm’s being a preferred
employer and an increase in hiring cost (and the associated
opportunity cost of getting employees to full performance in a
new role).
It is a key principle of our Remuneration Policy that there should
be appropriate sharing of value among stakeholders. Thus, while
material disadvantage or prejudice should not result for
employees due to remuneration design issues, we are cognisant
of the fact that remuneration programmes should equally not be
166
designed to favour or benefit employees at the expense of other
stakeholders.
It is within this context that we conducted a review of certain
aspects of our employee share plans. Specifically, we focused on
the application of performance conditions in our LTI scheme, and
the ongoing operation of the Matched Share Scheme. The
conclusion reached in our review is that the schemes remain fit
for purpose and should not be changed at this stage, except in
respect of the application of performance conditions for awards
made to executive directors.
In this regard all awards made to executive directors from
1 March 2014 will be subject to performance conditions on
100% of the award, as opposed to the current arrangement of
50%, which will remain in place for all other employees. Executive
directors will therefore have 50% of their LTI award subject to
the ROE (excluding goodwill) versus the COE condition, and
50% of the award will be subject to the relative Fini 15 condition.
Further details of the conditions and the vesting arrangements
related to these are set out on pages 167 and 168 of this
Remuneration Report.
We set out some of the details of our review to place the decision
in context:
■ Exposure of remuneration programmes to the group’s share
price is inherently risk-adjusted. The experience of
participants in the share plans (for whom awards are part of
annual remuneration, which is deferred over a prespecified
period) therefore mirrors that of shareholders in terms of
share price movements.
■ The component of our LTI programme that is subject to
performance conditions is not highly leveraged. Significant
outperformance against the measures results in a maximum
upside of 130% for performance shares. Downside risk, on
the other hand, could see performance share awards reduced
to zero in instances of material underperformance. This
provides protection against inappropriate windfall.
■ Our ‘value at award’ for LTIs is not adjusted or grossed up for
projected vesting probability. This means that awards are
made with a reasonable assumption that full vesting may be
likely. This risk is, for us, an inherent consequence of
participation in the scheme.
■ The component of awards made under the retention share
element of the plan is a powerful retention mechanism for key
talent and scarce skills. We have one of the lowest levels of
employee turnover in the financial services sector and have
received positive commentary on the stability and combined
experience in the group of our leadership team. Awards are
also typically only made to individuals who are meeting the
requisite minimum performance standards.
■ Our Matched Share Scheme introduces a strong incentive for
our leadership team to co-invest in the group. The
requirement to remain in the Matched Share Scheme for a
minimum of 36 months (against the backdrop of releases
from forfeiture – and therefore entitlement to encash the
deferrals – at six, 18 and 30 months) assists in creating a
longer-term focus for our senior leadership. The performance
condition attached to one half of the match also ensures that
there is a minimum return before any such benefit accrues to
NedbaNk Group | Integrated report 2013 participants. In practice this means that, where the employee
is at the highest marginal tax rate and the full after-tax
amount of the STI is committed to the Matched Share
Scheme for 36 months and the performance condition is met,
the STI can increase by 30% on its original value, before
taking account of any movement in the share price.
■ Clawback provisions are in place to enable mitigation of
inappropriate risk-taking and enable an appropriate penalty in
instances of malus or misconduct.
■ We acknowledge that there are many different aspects that
could be considered in terms of what metrics are used in
setting performance conditions. Having considered various
alternatives, we are comfortable that the absolute internal
measure of ROE (excluding goodwill) versus COE and the
relative external measure of the performance of the Nedbank
Group share relative to the Fini 15 Index remain fit for
purpose, and enable the necessary focus on delivering
competitive and sustainable returns to shareholders and
associated benefits to other stakeholders.
We have also been unequivocal about our adherence to other
aspects of good corporate governance in relation to share plans.
In this regard share awards in either the Restricted Share Plan or
Matched Share Scheme are not, under any circumstances,
backdated. Further, no retrospective adjustments are made to
performance conditions to mitigate the
impact of weak
performance. Therefore, we are of the view that our remuneration
practices, and the levels at which these occur, are appropriately
competitive relative to those of our peer group.
adjustments to remuneration based on long-term
performance
We are involved in retail banking, wholesale banking and
investment banking operations, as well as wealth management
and other financial services. The forward-looking business model
is based on a rolling three-year plan approach. The mandatory
deferral of STIs for up to 30 months and three-year vesting of LTI
share allocations (with not less than half of the award subject to
CPTs) align with this forward-looking business cycle. The deferral
period provides for risk-based outcomes to be monitored over the
three-year period subsequent to the deferral and enables clawback
to be applied where appropriate.
The compulsory deferral of STIs continues for awards made in
respect of financial year 2013 performance on a basis consistent
with that previously applied. The structure and vesting profile
applicable to the deferral of STI awards are set out on page 151 of
this Remuneration Report.
Conditional vesting of long-term incentives
The performance share element of the LTI allocation is aligned
with both the group three-year medium-to-long-term published
ROE (excluding goodwill) target of COE plus 5% (absolute
internal target) and the relative performance of the share price
(relative external target). The current targets used and previously
described in the 2012 Remuneration Report (these targets
having remained unchanged since the 2010 financial year) are
as follows:
■ A total of 50% of all share-based awards are granted as retention shares, whereby the vesting criterion applied is continuous
employment for a three-year period.
■ The remaining 50% carry the following additional vesting criteria:
¨ For 25% of the total award vesting will be based on the simple-average published ROE (excluding goodwill) over a three-year
period, compared with the simple-average COE over the same timeframe, according to the following sliding scale (that is, there is
a straight-line vesting arrangement based on the actual performance relative to the target):
Vesting ratios (for 50% of the allocation) based on ROE (excluding goodwill):
COE
+ 0% or worse
0%
COE
+ 1,25%
25%
COE
+ 2,5%
50%
COE
+ 3,75%
75%
COE
+5%
100%
COE
+6%
110%
COE
COE
+7% +8% or better
120%
130%
¨ For 25% of the total award vesting will be based on the relative performance of the Nedbank share price versus the Fini 15 Index
over the same three-year period, where the Nedbank share price starting and end values are calculated based on a 30-day
volume-weighted average price (VWAP) and the Fini 15 Index is based on a 30-day simple average.
Vesting ratios (for 50% of the allocation) based on share price relative to the Fini 15 Index:
Fini 15
-20% or worse
0%
Fini 15
-15%
25%
Fini 15
-10%
50%
Fini 15
-5%
75%
Fini 15
100%
Fini 15
+10%
110%
Fini 15
Fini 15
+20% +30% or better
120%
130%
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As with the COE target, there is a straight-line vesting (on a basis
of actual achievement along the continuum as set out in the
tables above, rather than on a ‘hurdle’ basis) arrangement based
on the actual performance relative to the target.
release from forfeiture of short-term incentive
deferral
The deferral and release from forfeiture process is described on
page 149 of this Remuneration Report.
The board has absolute discretion as to the quantum and nature
of any forfeiture or malus triggers related to the compulsory
deferral of STI awards. In this regard the deferred amount will be
forfeited should the employee resign or be dismissed for cause
before the end of the release of the outstanding forfeiture
obligations, as well as in cases where, at the sole discretion of the
board, material irregularities or misrepresentation of financial
results come to light during the deferral period. The board has
absolute discretion as to the nature of any action to be taken
against the individual, or group of individuals, who may have
transgressed. The deferral policy is reviewed annually.
This category of deferred compensation allows any adverse
business deals or intentional misrepresentation to come to light
in the three years subsequent to the allocation and appropriate
action to be taken if deemed appropriate by the board.
ADDITIONAL REGULATION 43/PILLAR 3
DISCLOSURES
The disclosure requirements of regulation 43 of the Banks Act
set out extensive quantitative and qualitative disclosures that are
required to help stakeholders understand the approaches
adopted by financial services organisations in respect of risk and
remuneration. The majority of these disclosures are addressed
elsewhere in this Remuneration Report.
Specific disclosures relating to senior managers and material
risk-takers, the quantum of remuneration paid in the year, signon
awards, guaranteed bonuses, severance payments and the
amount of remuneration subject to adjustment are set out below.
aggregate remuneration of senior managers and
material risk-takers
The tables below set out the aggregate 2013 (and comparative
2012) remuneration of those employees regarded as senior
managers and material risk-takers.
Senior managers include executive directors and prescribed
officers, members of Group Exco, as well as other members of
the group’s senior management with executive responsibility for
a material part of the group’s business.
Material risk-takers include employees whose individual actions
have a material impact on the risk exposure of the group, as well as
those responsible for setting and monitoring trader mandates and
risk and stop-loss limits. Included in this category are the heads of
risk and finance, heads of major trading functions and those
responsible for material investment decisions within the group.
These criteria have not changed from those applied in 2012.
For 2013 a total of 41 (2012: 41) individuals were classified as
senior managers and a further 35 (2012: 35) were classified as
material risk-takers. There was, however, some movement within
the categories and thus there may be different individuals for
whom amounts reported relative to the prior year.
Senior managers
Material risk-takers
2013
Total value of remuneration in the 2013 financial year1
Unrestricted
Deferred
Unrestricted
Deferred
Fixed remuneration (Rm)
Variable remuneration – cash award (Rm)
Variable remuneration – deferred performance incentive (Rm)
Variable remuneration – long-term incentive awards (Rm)
Total 2013 remuneration
(unrestricted and deferred remuneration) (Rm)
Total number of employees
108,3
105,4
213,7
41
64,4
136,9
201,3
71,5
51,8
123,3
35
Value of outstanding deferred remuneration at
31 December 2013
Compulsory Bonus Share Scheme (Rm)
Restricted Share Scheme (Rm)
Total deferred remuneration outstanding (Rm)
Value of deferred remuneration paid out during 2013 (Rm)
Value of deferred remuneration forfeited during 20132 (Rm)
Senior managers
Material risk-takers
86,7
468,1
554,8
180,2
27,0
21,6
37,6
59,2
25,6
143,7
169,3
60,3
8,0
168
NedbaNk Group | Integrated report 2013 Total value of remuneration in the 2012
financial year1
Fixed remuneration (Rm)
Variable remuneration – cash award (Rm)
Variable remuneration – deferred performance incentive (Rm)
Variable remuneration – long-term incentive awards (Rm)
Total 2012 remuneration
(unrestricted and deferred remuneration) (Rm)
Total number of employees
value of outstanding deferred remuneration at
31 December 2012
Compulsory Bonus Share Scheme (Rm)
Restricted Share Scheme (Rm)
Total deferred remuneration outstanding (Rm)
Value of deferred remuneration paid out during 2012 (Rm)
Value of deferred remuneration forfeited during 20122 (Rm)
2012
senior managers
Material risk-takers
Unrestricted
Deferred
Unrestricted
Deferred
101,5
84,4
185,9
41
46,7
126,6
173,3
64,6
45,9
110,3
35
13,5
34,9
48,4
senior managers
Material risk-takers
45,9
458,4
504,3
84,4
101,8
11,7
157,0
168,7
11,6
35,9
1 The amounts reflected in the tables above relate to actual awards made or remuneration received in the period from 1 January to 31 December.
2 Forfeiture of deferred remuneration due to non- or partial fulfilment of performance conditions on share awards.
remuneration subject to adjustment in 2013
The total amount of outstanding deferred remuneration exposed to ex post explicit and/or implicit adjustments is indicated in the
following table:
Year
FY2013
FY2012
amount
R2 347m1
R2 053m1
1 Based on the 30-day VWAP to 31 December.
This is a combination, at 31 December of
each year, of the following:
■ All unvested RSP awards
■ All unvested CBSS awards
The total amount of reductions during the financial year due to ex post explicit adjustments (adjustments as a consequence of non-
fulfilment of specified performance conditions) is indicated in the following table:
Year
FY2013
FY2012
amount
R97,1m1
R507,2m1
1 Based on the share price at the scheduled vesting date.
Value of RSP awards lapsed due to new or
partial fulfilment of CPT conditions.
The total amount of reductions during the financial year due to ex post implicit adjustments (adjustments as a consequence of specific
clawback decisions, either based on individual or group considerations) is indicated in the following table:
Year
FY2013
FY2012
amount
R0m
R0m
No forfeitures or clawback arrangements
were applied in the normal course.
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remuneration of risk and compliance specialists
Consistent with good corporate governance and the requirements
of the various local and international regulations dealing with
remuneration in financial services firms, special attention is paid
to the process of remunerating risk and compliance specialists
within the group. This serves to ensure that individuals in these
functions remain sufficiently independent from the functions or
businesses they service.
The remuneration of senior risk and compliance specialists is not
determined within the relevant business unit alone. Initial
proposals are initiated by the business unit management;
however, Group Exco members with overall accountability for the
specific control function (the Chief Risk Officer and the Chief
Compliance Officer) have codecision rights
in respect of
performance management and direct remuneration decisions for
employees within the respective control functions. This ensures
appropriate independence in setting remuneration for the
applicable control function employees.
Other remuneration disclosures
Further disclosures specifically required in terms of regulation 43 of the Banks Act are set out below:
Other remuneration disclosures
Number of employees who received variable remuneration during the year
Total guaranteed bonuses
Total signon awards
Total severance awards1
2013
Rm
–
2,86
3,73
N
23 706
–
10
7
2012
rm
–
12,7
5,4
N
23 945
–
20
6
1 For the purpose of this disclosure severance payments mean payments that exceed the bank’s contractual redundancy payment.
Our policy is not to award guaranteed bonuses. Where specific
compensation is indicated for new employees for the loss of an
accrued benefit, the forfeiture of a performance bonus or in
respect of a specific outstanding contractual obligation, a signon
or DSTI award may be made. This is subject to time and, in the
case of DSTI awards, ongoing individual performance conditions.
NON-EXECUTIVE DIRECTORS
The terms of engagement of the non-executive directors
(excluding the Group Chairman) cover a period of three years, as
determined by the rotation requirements of our memorandum of
incorporation. A non-executive director is required to retire at
age 70, unless the board determines otherwise. Any non-
executive director serving for a period in excess of nine years
is required to retire from the board at the next annual
general meeting.
In terms of the memorandum of incorporation the Group
Chairman is reelected annually by the board.
remuneration
The fees of the Group Chairman and the non-executive directors
reflect the specific responsibilities relating to their membership
of the board and, where applicable, board committees. The
Group Chairman receives a single fee for his role. Non-executive
directors are paid a fixed fee for board membership and receive
additional fees for their participation in board committees.
Premiums are paid to the chairmen of all board committees, with
the exception of the Directors’ Affairs Committee, which is
chaired by the Group Chairman. A premium is applicable for the
Senior Independent Non-executive Director. Neither the Group
Chairman nor boardmembers receive any performance-related
pay or any benefits.
Board and board committee meeting attendance is recorded on
pages 60 and 61 of this integrated report.
170
NedbaNk Group | Integrated report 2013 Non-executive directors’ remuneration for the years ended 31 December 2013 and 31 December 2012 was as follows:
NON-EXECUTIVE DIRECTORS’ REMUNERATION (*AUDITED)
Termination
date
Note
Board
fees*
(r000)
Committee
fees*
(r000)
2013*
(R000)
2012
(r000)
TA Boardman
TCP Chikane
A de VC Knott-Craig
MA Enus-Brey
B de L Figaji
ID Gladman
DI Hope
RJ Khoza
WE Lucas-Bull
PM Makwana
NP Mnxasana
JK Netshitenzhe
JVF Roberts
GT Serobe
MI Wyman
Total
August 2013
February 2012
May 2012
June 2013
November 2012
f
d
b
j
h
1, i
1, g
c
a
1, e
323
196
323
323
158
4 100
323
323
323
323
323
323
610
421
497
288
115
338
380
125
137
363
776
3 261
8 150
933
617
–
820
–
611
273
668
900
87
837
279
292
527
4 100
3 888
–
661
703
448
460
686
1 099
11 411
771
483
640
422
360
593
997
11 744
Fees for JVF Roberts, DI Hope and ID Gladman were paid to Old Mutual (SA) Ltd for 2012 and 2013.
1
a PM Makwana was appointed as the Chairman of Group Remco on 2 September 2013 and to the Group Audit Committee on 2 September 2013.
b A de VC Knott-Craig resigned from the board and all committees on 24 February 2012.
c WE Lucas-Bull resigned from the board and all committees on 5 November 2012.
d TCP Chikane resigned from the board and all committees on 13 August 2013.
e
f
g DI Hope resigned from the board and all committees on 30 June 2013.
h B de L Figaji retired from the board, and as Chairman of Group Remco and member of all other committees on 4 May 2012.
i
j On 18 January 2013 MA Enus-Brey resigned as a member of Group Remco and resigned as Chairman of the Group Credit Committee and Large-exposure Approval Committee.
JVF Roberts was appointed as a member of Group Remco on 21 February 2013.
TA Boardman was appointed as Chairman of the Group Credit Committee and to the Large-exposure Approval Committee on 18 January 2013.
ID Gladman was appointed a member of the Group Finance Oversight Committee on 2 August 2013.
However, he remains a member of the Group Credit Committee and Large-exposure Approval Committee.
Non-executive directors are accountable for decisions made
regardless of attendance at meetings. Non-executive directors
are also required, as a matter of course, to represent
stakeholders and to make the necessary preparations for
meetings and other engagements. Group Remco is satisfied
that the fee structure applied in respect of non-executive
directors remains appropriate.
Non-executive directors’ fees
An independent subcommittee, consisting of Messrs MWT
Brown and JVF Roberts, evaluated the respective committee fees
from a number of perspectives, including peer group comparisons,
effective rates per committee and year-on-year increases.
This year a thorough review of the competitiveness of the group’s
non-executive director remuneration was conducted, as Group
Remco had become concerned that the group’s competitive
position in this regard had weakened. As a consequence, the board
is recommending to shareholders that the necessary adjustments
are made in several key areas. These include:
■ Increasing the level of fees paid to all boardmembers by 14,9%.
■ Increasing the premium paid to the Chairman of the Audit
Committee, the GRCMC, Group Remco and of the Credit
Committee to 2,5 times the fee paid to a member.
■ Increasing the fees payable to members of the Audit
Committee, the GRCMC and Group Remco by 11,1%, 9,3%
and 10% respectively.
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The board and committee fees proposed for non-executive directors and for committee membership are as follows:
NON-EXECUTIVE DIRECTORS’ REMUNERATION (*AUDITED)
Boards
Chairman of the board1
Senior independent director premium
Nedbank Group Ltd
Nedbank Ltd
Committees
Group Audit Committee
Chairman
Member
Group Finance and Oversight Committee
Chairman
Member
Group Remuneration Committee
Chairman
Member
Group Risk and Capital Management Committee
Chairman
Member
Group Credit Committee
Chairman
Member
Group Directors’ Affairs Committee
Chairman
Member
Group IT Committee
Chairman
Member
Group Transformation, Social and Ethics Committee
Chairman
Member
1 The Group Chairman’s fee includes fees for board, subsidiary board and committee memberships.
2 On a like-for-like basis this represents a year-on-year increase of 12,8%.
2014 (R)*
Proposed
2013
(r)
4 500 000
40% of board fee
206 900
173 100
4 200 000
40% of board fee
180 075
150 675
500 000
200 000
52 000
26 000
275 000
110 000
350 000
140 000
437 500
175 000
360 000
180 000
49 350
24 675
200 000
100 000
256 200
128 100
320 000
160 000
part of Group
Chairman’s fee
61 000
Part of Group
Chairman’s fee
57 750
170 000
85 000
170 000
85 000
157 000
78 750
157 500
78 750
%2
7,1
14,9
14,9
14,9
38,9
11,1
5,4
5,4
37,5
10,0
36,6
9,3
36,7
9,4
5,6
7,9
7,9
7,9
7,9
The above increases are effective from 1 July 2014, subject to shareholders’ approval at the 13 May 2014 annual general meeting.
DIRECTORS’ INTERESTS (*AUDITED)
At 31 December 2013 the directors’ interests in ordinary shares in Nedbank Group Ltd and preference shares in Nedbank Ltd were
as follows:
Number of shares*
TA Boardman
TA Boardman (preference shares)
MWT Brown
GW Dempster
MA Enus-Brey
ID Gladman
RJ Khoza
PM Makwana
NP Mnxasana
RK Morathi
JK Netshitenzhe
JVF Roberts
GT Serobe
MI Wyman
Total ordinary shares
Total preference shares
172
Beneficial*
direct
2013
Beneficial
direct
2012
Beneficial*
indirect
2013
Beneficial
indirect
2012
4 012
24 012
55 049
17 822
55 049
17 822
28 593
243 000
288 108
134 273
2 113
62 758
85 000
294 648
123 211
2 113
7 800
7 800
6 974
6 974
12 615
12 615
11 620
160 887
11 620
155 762
97 298
117 298
632 568
243 000
657 086
85 000
NedbaNk Group | Integrated report 2013
INCENTIVE SCHEMES
FOR OUR PEOPLE
Nedbank Group employee incentive schemes
Movements
Instruments outstanding at the beginning of the year
Granted
Exercised
Surrendered
Instruments outstanding at the end of the year
Analysis
Performance-based restricted shares
Non-performance-based restricted shares
Performance-based matched shares
Non-performance-based matched shares
Instruments outstanding at the end of the year
Summary by scheme
Nedbank Group Share Option and Restricted Share Scheme (2005)
Nedbank Group Matched Share Scheme (2005)
Instruments outstanding at the end of the year
2013
2012
12 239 342
4 127 553
(3 801 643)
(580 334)
11 984 918
p
p
5 355 178
5 355 178
637 281
637 281
11 984 918
10 710 356
1 274 562
11 984 918
12 732 254
4 204 482
(949 007)
(3 748 387)
12 239 342
5 660 881
5 660 880
458 791
458 790
12 239 342
11 321 761
917 581
12 239 342
p
p
NEDBANK GROUP (2005) SHARE OPTION, MATCHED AND RESTRICTED SHARE SCHEME
restricted shares
Restricted shares are issued at a market price for no consideration to participants and are held by the scheme until the expiry date
(subject to achievement of performance and time-based conditions). Participants have full rights and receive dividends.
The following instruments granted had not been exercised at 31 December 2013:
Instrument expiry date
8 March 2014
9 March 2014
5 August 2014
6 August 2014
18 October 2014
18 October 2014
8 March 2015
9 March 2015
7 August 2015
8 August 2015
7 March 2015
8 March 2016
15 August 2016
16 August 2016
Total
Number of shares
1 780 552
1 780 552
145 398
145 398
12 539
12 539
1 667 303
1 667 303
55 185
55 185
1 648 095
1 648 095
46 106
46 106
10 710 356
P
P
P
P
P
P
P
MATCHED SHARES
The obligation to deliver the following matched shares, 50% of which is subject to time-based conditions and the other 50% to
performance conditions, exists at 31 December 2013:
Instrument expiry date
1 April 2014
1 April 2015
1 April 2016
Total
P Performance-based instruments.
Number of shares
252 822
424 195
597 545
1 274 562
173
ENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderSdelIVerInG to oUr StaKeholderSmaKInG thInGS haPPen INFORMATION
TO OUR
SHAREHOLDERS
Invitation from our Chairman
Our financial calendar for 2014
Question form for our annual general meeting
Notice of our annual general meeting
Form of proxy
Notes to form of proxy
Analysis of shareholders
Terms used in our report
Abbreviations, acronyms and
initialisms used in our report
Codes for our financial instruments
174
175
176
177
Inserted
Inserted
187
Our contact details
Inside back cover
INVITATION FROM OUR
CHAIRMAN
I extend a warm invitation to you to attend the 47th annual general meeting of Nedbank Group Ltd to be held in the Auditorium,
Retail Place West, Nedbank 135 Rivonia Campus, 135 Rivonia Road, Sandown, Sandton, on Tuesday, 13 May 2014, at 08:30.
Included in this document are the following:
■ The notice of the annual general meeting setting out the resolutions to be proposed.
■ Annexure 1 to the notice of the annual general meeting setting out explanatory notes regarding the resolutions as well as important
notes about the annual general meeting.
■ A form of proxy and explanatory notes regarding proxies.
The resolutions as set out in the notice will be put to shareholders to vote by way of a poll. This is to ensure an exact reflection of the
views of the shareholders. An interactive electronic voting system will be used, which will reflect both proxy votes submitted prior to
the meeting and the votes by shareholders present at the meeting.
I would like to remind shareholders of their right to raise questions, at the appropriate time, at the annual general meeting. As it is not
always possible to answer every question raised at the annual general meeting, and to ensure that all matters of particular interest to
shareholders are covered, shareholders may use the attached question form to raise any questions in advance. From these question
forms the most popular topics will be assessed and I will endeavour to address these at the annual general meeting. This advance
notice of relevant questions will, of course, not prevent any shareholder from raising questions, at the appropriate time, during the
meeting.
The question form can be forwarded to the Company Secretary, Ground Floor, Block A, 135 Rivonia Road, Sandown, Sandton, 2196
(PO Box 1144, Johannesburg, 2000), to be received no later than 08:30 on Monday, 12 May 2014, or handed in at the time of registering
attendance at the annual general meeting, should the first option not have been chosen.
Should you require an interpreter (sign language or a translator from English to any of the other official languages of SA) to be in
attendance at the annual general meeting, please advise the Company Secretary’s office of this requirement on +27 (0)11 294 9107, or
send an email to JackieK@nedbank.co.za by no later than Friday, 2 May 2014.
Shareholders wishing to participate in the meeting through electronic facilities are also requested to contact the Company Secretary’s
office by Friday, 2 May 2014, for access to be arranged.
Yours faithfully
Dr RJ Khoza
Chairman
Sandown
11 March 2014
HEADOFFICE
Nedbank 135 Rivonia Campus, 135 Rivonia Road, Sandown, Sandton, 2196
PO Box 1144, Johannesburg, 2000
Tel: +27 (0)11 294 4444
nedbankgroup.co.za
Nedbank Group Ltd Reg No 1966/010630/06
Directors: Dr RJ Khoza (Chairman) MWT Brown (Chief Executive) DKT Adamakoh** TA Boardman GW Dempster (Chief Operating
Officer) MA Enus-Brey ID Gladman* PM Makwana NP Mnxasana RK Morathi (Chief Financial Officer) JK Netshitenzhe JVF Roberts*
GT Serobe MI Wyman* (*British) (**Ghanaian)
Company Secretary: TSB Jali
174
NedbaNk Group | Integrated report 2013 OUR FINANCIAl CAlENDAR
FOR 2014
2013
December
Financial year-end – 31 December
2014
January
February
March
March
April
May
June
July
Annual results and announcement of final dividend – 24 February
Final dividend payment – 24 March, for Nedbank Ltd preference shares
Publication and posting of integrated report – 31 March
Final dividend payment – 7 April, for Nedbank Group Ltd ordinary shares
Annual general meeting – 13 May
First-quarter trading update – 13 May
August
Interim results and announcement of interim dividend – 5 August
September
Interim dividend payment
October
November
Third-quarter trading update – 3 November
December
Financial year-end – 31 December
2015
January
February
March
April
May
Annual results and announcement of final dividend
Publication and posting of integrated report
Final dividend payment
Annual general meeting
175
DELIVERING TO OUR STAKEHOLDERSMAKING THINGS HAPPENENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderS
QUEsTION FORM FOR OUR
ANNUAl GENERAl MEETING
Name of member
Address
Contact details
Telephone number
Fax number
Email
Questions
176
NedbaNk Group | Integrated report 2013 NOTICE OF OUR ANNUAl
GENERAl MEETING
Nedbank Group Ltd
(Incorporated in the Republic of South Africa)
Reg No 1966/010630/06
JSE share code: NED; NSX share code: NBK
ISIN: ZAE000004875
(‘Nedbank Group’ or ‘the company’)
GRI 3.1: 4.4
Notice is hereby given to shareholders recorded in the securities register of Nedbank Group on Thursday, 20 March 2014, that the 47th
annual general meeting of shareholders will be held in the Auditorium, Retail Place West, Nedbank 135 Rivonia Campus, 135 Rivonia
Road, Sandown, Sandton, on Tuesday, 13 May 2014, at 08:30 to deal with such business as may lawfully be dealt with at the meeting
and to consider and, if deemed fit, pass, with or without modification, the ordinary and special resolutions set out hereunder in the
manner required by the Companies Act, 71 of 2008 (as amended) (’the Companies Act‘), as read with the Listings Requirements of
JSE Ltd (’JSE Listings Requirements‘), which meeting is to be participated in and voted at by shareholders recorded in the company’s
securities register on the record date of Friday, 2 May 2014.
The quorum requirement for the ordinary and special resolutions set out below is sufficient persons being present to exercise, in
aggregate, at least 25% of all voting rights that are entitled to be exercised on the resolutions, provided that at least three shareholders
of the company are present at the annual general meeting. The percentage of voting rights required to pass the ordinary resolutions is
more than 50% of the voting rights exercised, and the percentage of voting rights required to pass the special resolutions is at least 75%
of the voting rights exercised thereon.
Kindly note that meeting participants (including proxies) will be required to provide reasonably satisfactory identification before being
entitled to attend or participate in the meeting. Forms of identification include valid identity documents, driving licences and passports.
When reading the resolutions below, please refer to the explanatory notes for the resolutions on pages 183 to 186.
AGENDA
1
PRESENTATION OF ANNUAL FINANCIAL STATEMENTS AND REPORTS
The annual financial statements of the company, incorporating among others the Directors’ Report, Auditors’ Report and Report
of the Audit Committee, for the financial year ended 31 December 2013, and the report of the Group Transformation, Social and
Ethics Committee in terms of regulation 43(5)(c) of the Companies Act, 71 of 2008 (as amended), have been distributed as
required and will be presented to the shareholders. The summarised audited annual financial statements, together with the
reports, are contained in this integrated report.
2 ORDINARY DIVIDENDS
To note the interim dividend of 390 cents per ordinary share declared by the board of directors on 6 August 2013, and the final
dividend of 505 cents per ordinary share declared by the board of directors on 24 February 2014.
REsOlUTIONs
3 ORDINARY RESOLUTION 1
REElECTION OF DIRECTORs OF THE COMPANY
The following directors retire by rotation in terms of the company’s memorandum of incorporation and, being eligible, make
themselves available for reelection, each by way of a separate vote. Biographical details of the directors to be reelected are set out
on pages 74 and 75 of this integrated report.
3.1
‘Resolved that Mr TA Boardman be and is hereby reelected as a director of the company.’
Independent non-executive director;
Date of appointment: 1 November 2002 as an executive director, 1 March 2010 as a non-executive director, and 1 January 2014
classified as an independent non-executive director;
Educational qualifications: BCom, CA (SA);
Board committees: Nedbank Group Information Technology Committee (Chairman), Nedbank Group Transformation, Social and
Ethics Committee, Nedbank Group Credit Committee (Chairman), Large-exposure Approval Committee, Nedbank Group Finance
and Oversight Committee, Nedbank Group Directors’ Affairs Committee.
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DELIVERING TO OUR STAKEHOLDERSMAKING THINGS HAPPENENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderS
NotiCe of our ANNuAl GeNerAl MeetiNG (CONTINUED)
3.2
3.3
‘Resolved that Mr MWT Brown be and is hereby reelected as a director of the company.’
Chief Executive;
Date of appointment: 17 June 2004 as Chief Financial Officer and 1 March 2010 as Chief Executive;
Educational qualifications: BCom, Dip Acc, CA (SA), AMP (Harvard Business School, USA);
Board committees: Large-exposure Approval Committee, Nedbank Group Credit Committee.
‘Resolved that Mr MA Enus-Brey be and is hereby reelected as a director of the company.’
Non-executive director;
Date of appointment: 16 August 2005;
Educational qualifications: BCompt (Hons), CA (SA);
Board committees: Nedbank Group Risk and Capital Management Committee (Chairman), Nedbank Group Directors’ Affairs Committee,
Nedbank Group Credit Committee, Nedbank Group Finance and Oversight Committee, Large-exposure Approval Committee.
3.4 ‘Resolved that Mr JK Netshitenzhe be and is hereby reelected as a director of the company.’
Independent non-executive director;
Date of appointment: 5 August 2010;
Educational qualifications: MSc (University of London, UK);
Board committees: Nedbank Group Risk and Capital Management Committee, Nedbank Group Information Technology Committee.
4 ORDINARY RESOLUTION 2
ElECTION OF DIRECTORs OF THE COMPANY
During the year the board appointed Mr Adomakoh as a director of the company. Mr Adomakoh retires in terms of the company’s
memorandum of incorporation and, being eligible, makes himself available for election. His biographical details are set out on
page 74 of this integrated report.
4.1
‘Resolved that Mr DKT Adomakoh be and is hereby elected as a director of the company.’
Independent non-executive director;
Date of appointment: 21 February 2014;
Educational qualifications: BSc (Econs) Hons (London School of Economics), Diplome de Langue et de Civilisation (La Sorbonne,
Universite de Paris).
5 ORDINARY RESOLUTION 3
REAPPOINTMENT OF EXTERNAl AUDITORs
‘Resolved, on recommendation of the Nedbank Group Audit Committee, that Deloitte & Touche (with Mr S Jordan as designated
auditor) and KPMG Inc (with Ms H Berrange as designated auditor) be and are hereby reappointed as joint auditors to hold office
from the conclusion of the 47th annual general meeting until the conclusion of the next annual general meeting of Nedbank Group.’
6 ORDINARY RESOLUTION 4
EXTERNAl AUDITORs’ REMUNERATION
‘Resolved that the Nedbank Group Audit Committee be and is hereby authorised to determine the remuneration of the company’s
auditors and the auditors’ terms of engagement.’
7 ORDINARY RESOLUTION 5
CONTROl OF AUTHORIsED, BUT UNIssUED, ORDINARY sHAREs
‘Resolved that the board be and is hereby authorised, as it in its discretion thinks fit, to issue ordinary shares of R1,00 each in the share
capital of the company, subject to the provisions of the Companies Act, 71 of 2008 (as amended), the Banks Act, 94 of 1990 (as
amended), and the JSE Ltd Listings Requirements. The issuing of shares granted under this authority will be limited to Nedbank
Group’s existing contractual obligations to issue shares, including for purposes of Nedbank Group’s BEE transaction approved in 2005
and the NedNamibia BEE transaction approved in 2006, any scrip dividend and/or capitalisation share award, shares required to be
issued for the purpose of carrying out the terms of the Nedbank Group share incentive schemes, as well as any alternative coupon
settlement mechanism relating to issues, from time to time, of the Nedbank Ltd tier 1 hybrid debt capital instruments, and to support
the conversion and/or writeoff of all additional tier 1 and tier 2 instruments into common equity on the occurrence of a trigger event,
as determined by the relevant authority, which means the SA Reserve Bank or the equivalent governmental authority.
Such authority will endure until the forthcoming annual general meeting of the company (whereupon this authority will lapse,
unless it is renewed at the aforementioned annual general meeting), provided that it will not extend beyond 15 months from the
date of this meeting.’
178
NedbaNk Group | Integrated report 2013
8 ADVISORY ENDORSEMENT OF REMUNERATION POLICY
‘To endorse through a non-binding advisory vote the company’s Remuneration Policy (excluding the remuneration of the non-
executive directors for their services as directors and members of the board committees), as set out in the Remuneration Report
contained in the annual financial statements.’
9 SPECIAL RESOLUTION 1
REMUNERATION OF NON-EXECUTIVE DIRECTORs
‘Resolved that the non-executive directors’ fees for their services as directors be and are hereby approved as follows:
Committee
Chairman1
Senior independent director premium (40%)
Nedbank Group boardmember
Nedbank Ltd boardmember
Committees
Nedbank Group Audit2
Nedbank Group Risk and Capital Management2
Nedbank Group Credit2
Nedbank Group Remuneration2
Nedbank Group Transformation, Social and Ethics3
Nedbank Group Directors’ Affairs
Nedbank Group Information Technology3
Nedbank Group Finance and Oversight3
Current annual
fee (1/7/2013 to
30/6/2014)
R
4 200 000
132 300
180 075
150 675
180 000
128 100
160 000
100 000
78 750
57 750
78 750
24 675
Proposed annual
fee4 (1/7/2014 to
30/6/2015)
R
4 500 000
152 000
206 900
173 100
200 000
140 000
175 000
110 000
85 000
61 000
85 000
26 000
1 The chairman will be paid a single fee, inclusive of committee chairmanship and membership fees.
2 The committee Chairman will be paid 2,5 times the member fees.
3 The committee Chairman will be paid double the member fees.
4 Subject to shareholders’ approval at the May 2014 annual general meeting. On a like-for-like basis the proposed increase represents a 12,8% increase overall.
10 SPECIAL RESOLUTION 2
GENERAl AUTHORITY TO REPURCHAsE sHAREs
PREAMBLE
The board of directors of the company has considered the impact of a repurchase or purchase, as the case may be, of up to 10% of
the company’s shares, which falls within the amount permissible under a general authority in terms of the JSE Listings Requirements
and, in respect of acquisitions by a subsidiary of the company, the Companies Act, 71 of 2008 (as amended).
Should the opportunity arise and should the directors deem it to be advantageous to the company, or any of its subsidiaries, to
repurchase or purchase, as the case may be, such shares, it is considered appropriate that the directors (and relevant subsidiaries)
be authorised to repurchase or purchase, as the case may be, the company’s shares.
‘Resolved that the company and/or its subsidiaries be and are hereby authorised by way of a general authority to repurchase or
purchase, as the case may be, shares issued by the company, from any person, on such terms and conditions and in such numbers
as the directors of the company or the subsidiary may from time to time determine, subject to the applicable requirements of the
company’s memorandum of incorporation, to the approval, to the extent required, of the Registrar of Banks, the provisions of
the Companies Act, 71 of 2008 (as amended), the Banks Act, 94 of 1990 (as amended), and the JSE Ltd (the JSE) Listings
Requirements, and subject further to the restriction that the repurchase or purchase, as the case may be, by the company and/or
any of its subsidiaries of shares in the company under this authority will not, in aggregate in any one financial year, exceed 10% of
the shares in issue at the commencement of such financial year.
It is recorded that the JSE Listings Requirements provide, among others, that the company or any subsidiary of the company may
only make a general repurchase of the shares of the company subject to the following limitations:
179
DELIVERING TO OUR STAKEHOLDERSMAKING THINGS HAPPENENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderS
NotiCe of our ANNuAl GeNerAl MeetiNG (CONTINUED)
(a) the repurchase of securities must be effected through the order book operated by the JSE trading system and done without
any prior understanding or arrangement between the company and the counterparty;
(b) authorisation thereto must be given by the company’s and its subsidiaries’ memorandum of incorporation;
(c) this general authority will be valid only until the company’s next annual general meeting, provided that it does not extend
beyond 15 months from the date of the passing of this special resolution;
(d) in determining the price at which the company’s ordinary shares are repurchased by the company in terms of this general
authority, the maximum premium at which such ordinary shares may be repurchased will be 10% of the weighted average of
the market price at which such ordinary shares are traded on the JSE, as determined over the five trading days immediately
preceding the date of the repurchase of such ordinary shares by the company;
(e) the board will have acknowledged by resolution that the company will satisfy the solvency and liquidity test immediately after
the repurchase and that since the test was done there have been no material changes to the financial position of the company
and the group;
(f)
neither the company nor its subsidiaries will repurchase securities during a prohibited period, as defined in paragraph 3.67 of
the JSE Listings Requirements, unless a repurchase programme is in place in terms of which the dates and quantities
of securities to be traded during the relevant period are fixed (not subject to any variation), full details of which programme
have been disclosed in an announcement on the Securities Exchange News Service (SENS) prior to the commencement of the
prohibited period;
(g) when the company has cumulatively repurchased 3% of the initial number of the relevant class of securities, and for each 3%
in aggregate of the initial number of that class acquired thereafter, an announcement will be published on SENS and in the
financial press; and
(h) at any time the company will appoint only one agent to effect any repurchase(s) on its behalf.’
In terms of the proposed special resolution 2 the maximum number of Nedbank Group shares that may be repurchased during the
term of this authority, subject to (b) above, is 51 030 239 shares (10% of 510 302 393 shares in issue at 1 January 2014).
This resolution is required to be passed on a show of hands by not less than 75% of the number of shareholders of the company
who are entitled to vote on a show of hands and who are present at the meeting in person or by proxy or, where a poll has been
demanded, by not less than 75% of the total votes to which the shareholders present in person or by proxy are entitled.
The directors of the company undertake that they will not effect a general repurchase of shares as contemplated above, unless the
following conditions are met:
1)
2)
the company and the group are in a position to repay their debt in the ordinary course of business for a period of 12 months
after the date of the notice of the annual general meeting;
the company’s and the group’s assets at fair value will be in excess of the liabilities of the company and the group for a period
of 12 months after the date of the notice of the annual general meeting. For this purpose the assets and liabilities will be
recognised and measured in accordance with the accounting policies used in the latest audited consolidated annual financial
statements, which comply with the Companies Act, 71 of 2008 (as amended);
3)
the share capital and reserves of the company and the group are adequate for a period of 12 months following the date of the
notice of the annual general meeting; and
4)
the available working capital of the company and the group will be adequate for ordinary business purposes for a period of
12 months after the date of the notice of the annual general meeting.
Disclosure in terms of section 11.26 of the JsE listings Requirements
The JSE Listings Requirements require the following disclosures, which are disclosed in the Nedbank Group Ltd Integrated Report
2013, as set out below:
Management and directors (pages 76 to 81 and 72 to 75).
Major shareholders of Nedbank Group (pages 187 and 188).
Directors’ interests in securities (page 172).
Share capital of Nedbank Group (page 121).
180
NedbaNk Group | Integrated report 2013
MATERIAl CHANGE
Other than the facts and developments reported on in this integrated report, there have been no material changes in the affairs or
financial position of Nedbank Group and its subsidiaries from 31 December 2013 to the date of the audit report forming part of the
annual financial statements.
DIRECTORs’ REsPONsIBIlITY sTATEMENT
The directors, whose names are given on pages 72 to 73 of this integrated report, collectively and individually accept full
responsibility for the accuracy of the information pertaining to special resolution 2 and certify that, to the best of their knowledge
and belief, no facts have been omitted that would make any statement false or misleading, and that all reasonable enquiries to
ascertain such facts have been made and that this resolution and additional disclosure in terms of section 11.26 of the JSE Listings
Requirements pertaining thereto contain all such information required by law and the JSE Listings Requirements.
lITIGATION sTATEMENT
In terms of section 11.26 of the JSE Listings Requirements and other than as set out in note 44 (contingent liabilities and undrawn
facilities) of the annual financial statements online, the directors, whose names are given on pages 72 and 73 of this integrated
report, are not aware of any legal or arbitration proceedings, including proceedings pending or threatened, that may have or may
have had in the recent past, being at least the previous 12 months, a material effect on Nedbank Group’s financial position.
11 SPECIAL RESOLUTION 3
GENERAl AUTHORITY TO PROVIDE FINANCIAl AssIsTANCE TO RElATED AND INTERRElATED COMPANIEs
‘Resolved that, subject to the provisions of the Companies Act, 71 of 2008 (as amended) (’the Companies Act‘), the shareholders
of the company hereby approve, as a general approval, the company providing direct or indirect financial assistance (’financial
assistance‘) as contemplated in sections 44 and 45 of the Companies Act, whether in the form of advances for expenses, assisting
with administration of transactions, loans, loan facilities, extending credit, discharging debts, performing obligations, contractual
undertakings, sureties, guarantees, guarantee facilities, mortgages, pledges, cessions, bonds, charges or otherwise, on such terms
as may be authorised by the board of directors of the company having regard to the funding and commercial requirements of the
Nedbank group of companies (’the Group‘) as contemplated in the Companies Act from time to time and in accordance with the
following:
1
2
3
4
5
6
the financial assistance can be provided to any company that is currently, or in the future, ‘related’ to or ‘interrelated’ with the
company (and any person ‘related’ to any of such companies) as contemplated by the Companies Act or any other person
(a ‘recipient’) (which, for the avoidance of doubt, excludes financial assistance provided to any directors or prescribed officers
of the company or of any such recipients);
the financial assistance may be provided for the purpose of, or in connection with, the subscription to any option, or any
securities, issued or to be issued by the company or a company related to or interrelated with the company or for the purchase
of any securities of the company or a company or corporation that is related to or interrelated with the company, as
contemplated in section 44 of the Companies Act or any other purpose regulated by section 45 of the Companies Act;
authorisation by the board of any financial assistance pursuant to this resolution must be provided within a period of two years
following the date of the adoption of this special resolution;
any related corporate action must be duly authorised in compliance with the JSE Listings Requirements, the Companies Act,
and the Banks Act where applicable;
this approval is subject to the board complying with sections 44 and 45 of the Companies Act; and
nothing in this approval will limit the provision by the company of financial assistance that does not require approval by way
of a special resolution of the shareholders in terms of sections 44 and 45 of the Companies Act or falls within any exemption
provided in these sections.’
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DELIVERING TO OUR STAKEHOLDERSMAKING THINGS HAPPENENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderS
NotiCe of our ANNuAl GeNerAl MeetiNG (CONTINUED)
VOTING BY PROXY
A shareholder entitled to attend and vote at the annual general meeting may appoint a proxy or proxies to attend, speak and vote
or abstain from voting in his/her/its/their stead. A proxy need not be a shareholder of the company. Completed proxy forms are
requested to be received at the office of the transfer secretaries no later than 24 hours before the time appointed for the holding of
the annual general meeting.
By order of the board
TsB Jali
Company Secretary
Sandown
21 February 2014
Registered office
Nedbank Group Ltd
Reg No 1966/010630/06
Nedbank 135 Rivonia Campus,
135 Rivonia Road, Sandown,
Sandton, 2196
PO Box 1144
Johannesburg, 2000
Tel: +27 (0)11 294 4444
Transfer secretaries in sA
Transfer secretaries in Namibia
Computershare Investor Services (Pty) Ltd
Transfer Secretaries (Pty) Ltd
Ground Floor
70 Marshall Street
Johannesburg, 2001
PO Box 61051
Marshalltown, 2107
Tel: +27 (0)11 370 5000
Fax: +27 (0)11 688 5238
Robert Mugabe Avenue No 4
Windhoek, Namibia
PO Box 2401
Windhoek, Namibia
Tel: +264 (0)61 227 647
Fax: +264 (0)61 248 531
182
NedbaNk Group | Integrated report 2013
ANNEXURE 1
EXPlANATORY NOTEs TO REsOlUTIONs FOR THE ANNUAl GENERAl MEETING
1 Presentation of annual financial statements and reports
In terms of the Companies Act, 71 of 2008, as amended (‘the Companies Act’), the directors are required to present to shareholders
at the annual general meeting the annual financial statements, incorporating among others the Directors’ Report, Auditors’ Report
and the Report of the Audit Committee, for the financial year ended 31 December 2013.
2 Payment of dividends
An interim dividend of 390 cents per share was declared by the board of directors on 6 August 2013 and paid on 2 September 2013.
A final dividend of 505 cents per ordinary share was declared by the board of directors on 24 February 2014. Shareholders are
asked to note the dividends paid/payable.
3 Reelection and election of directors who retire by rotation or retire as a result of filling a casual vacancy
In terms of the company’s memorandum of incorporation not less than one-third of the directors are required to retire at each
annual general meeting and may make themselves available for reelection. Any person appointed to fill a casual vacancy on the
board, or as an addition thereto, since the last annual general meeting is required to retire and is eligible for election at the annual
general meeting. Biographical details of the directors of the company retiring by rotation, or as a result of an appointment during
the year, are set out on pages 74 and 75 of the Nedbank Group Ltd Integrated Report 2013.
An assessment of each of the retiring directors was performed by the Nedbank Group Directors’ Affairs Committee and reported to
the Nedbank Group Ltd Board, who recommends that shareholders approve the election and/or reelection of the retiring directors.
4 Reappointment of external auditors
This resolution proposes the reappointment of the company’s existing joint auditors, Deloitte & Touche (the designated auditor
being Mr M Jordan) and KPMG Inc (the designated auditor being Ms H Berrange), until the next annual general meeting. The
appointments are recommended by the directors of the company following the review and recommendation thereof by the Group
Audit Committee.
5 Remuneration of external auditors
This resolution gives authority to the Nedbank Group Audit Committee to fix the remuneration and the terms of engagement of
the auditors (proposed to be reappointed in terms of the above resolution). The aggregate auditors’ remuneration for audit and
other services paid to the auditors for the financial year ended 31 December 2013 amounted to R129m (2012: R114m). Particulars
of the auditors’ remuneration can be found in note 16 on page 76 of the Nedbank Group Annual Financial Statements 2013 online.
6 Placing of authorised but unissued ordinary shares under the control of the directors
The shareholders of the company are requested to approve the placement of authorised but unissued shares under the control of
the directors. The authority is limited to shares being issued for purposes of Nedbank Group’s existing contractual obligations,
including Nedbank Group’s black economic empowerment (BEE) transaction approved in 2005 and the NedNamibia BEE
transaction approved in 2006, for the issue of shares for capitalisation share awards and scrip dividends and for the various
Nedbank Group share incentive schemes as well as any alternative coupon settlement mechanism relating to issues, from time to
time, of the Nedbank Ltd tier 1 hybrid debt capital instruments.
7 Remuneration Policy
In accordance with the principles of King III an advisory vote is being put to shareholders for the endorsement of Nedbank Group’s
Remuneration Policy. As the votes on this resolution are non-binding, the results would not be binding on the board. However, the
board will take cognisance of the outcome of the vote when considering its Remuneration Policy in future.
183
DELIVERING TO OUR STAKEHOLDERSMAKING THINGS HAPPENENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderS
ANNexure 1 (CONTINUED)
8 Non-executive directors’ remuneration
In terms of article 27 of the company’s memorandum of incorporation remuneration will be payable to the directors as may be
approved from time to time by special resolution. Full particulars of all fees and remuneration are contained on pages 171 and 172
of this integrated report. The Nedbank Group Ltd Board has recommended the non-executive directors’ fees as set out in special
resolution 1 in the notice of the annual general meeting. The board deliberated on the requirement of King III that non-executive
directors fees should comprise a base fee and an attendance fee per meeting. The board is of the view that this requirement is less
pertinent to directors of Nedbank Group due to the practicalities and responsibilities of being a director of a bank, and the need for
the board to provide inputs on an ongoing basis, even when they are not able to attend a board meeting in person.
9 Repurchase of shares
The company’s memorandum of incorporation contains a provision allowing the company or any of its subsidiaries to repurchase
(acquire) the company’s issued shares. This is subject to the Companies Act, the Banks Act, 94 of 1990 (as amended) and the
JSE Listings Requirements. In terms of sections 46 and 48 of the Companies Act the company or its subsidiaries are allowed to
repurchase the company’s shares. The existing general authority, granted by shareholders at the last annual general meeting on
3 May 2013, is due to expire, unless renewed.
The reason for and effect of special resolution 2 is to authorise the company and/or its subsidiaries by way of a general authority
to acquire its/their own issued shares on such terms and conditions and in such numbers as determined from time to time by the
directors of the company, subject to the limitations set out in special resolution 2. Should the general authority for the acquisition
of shares be granted at Nedbank Group’s annual general meeting, it will provide the board with the flexibility to repurchase such
shares as and when the best interests of the company require it to do so.
The directors are of the opinion that it would be in the best interests of the company to extend such general authority and thereby
allow the company to be in a position to repurchase its own shares on the open market, should market conditions and price justify
such action. The proposed authority would enable the company to repurchase up to 51 030 239 ordinary shares in the capital of
the company, with a stated upper limit on the price payable, in terms of the JSE Listings Requirements. The board manages the
company’s equity on a proactive and dynamic basis, and repurchases would be made, only after the most careful consideration, in
cases where the directors believe that such purchases would be in the best interests of the company and its shareholders.
10 General authority to provide financial assistance
Section 44 of the Companies Act essentially requires, subject to limited exceptions, approval by way of special resolution for the
provision of financial assistance for the purpose of, or in connection with, the subscription of any option, or any securities, issued
or to be issued by the company or a related or interrelated company, or for the purchase of any securities of the company or a
related or interrelated company. Section 45 of the Companies Act essentially requires, subject to limited exceptions, approval by
way of special resolution for the provision of financial assistance, among others, to companies ‘related’ to and ‘interrelated’ with
the company. Both sections 44 and 45 provide, among others, that the regulated financial assistance may only be provided
pursuant to a special resolution passed by shareholders within the previous two years.
The provision of any direct or indirect financial assistance by the company will always be subject to the board being satisfied that,
immediately after providing such financial assistance, the company will satisfy the solvency and liquidity test referred to in
section 45(3)(b)(i) of the Companies Act, and that the terms under which such financial assistance is to be given are fair and
reasonable to the company, as referred to in section 45(3)(b)(ii) of the Companies Act.
The directors would like the authority to be able to provide financial assistance to companies ‘related’ and ‘interrelated’ to the
company and persons related to such companies, including for the acquisition of securities issued by the company and related
companies, where they regard it as desirable. For example, such authorisation is generally required for providing loans and
guarantees and other financial assistance to subsidiaries and group companies, which is often necessary or desirable for the
conduct of Nedbank Group’s business.
184
NedbaNk Group | Integrated report 2013
Important notes about the annual general meeting
Venue:
Date:
Time:
Proof of identity and
admission:
The Auditorium, Retail Place West, Nedbank 135 Rivonia Campus, 135 Rivonia Road, Sandown, Sandton.
Tuesday, 13 May 2014, at 08:30.
The annual general meeting will start promptly at 08:30. Shareholders wishing to attend are advised
to be in the auditorium no later than 08:15. The reception area will be open from 08:00, from which
time refreshments will be served.
Shareholders and others attending the annual general meeting are asked to register at the registration
desk in the auditorium reception area. For purposes of section 63(1) of the Companies Act, 71 of 2008
(as amended) any person attending or participating at the annual general meeting is required to
present reasonably satisfactory identification to the satisfaction of the presiding chairman. Forms of
identification include valid identity documents, driving licences and passports.
Housekeeping:
Cellphones should be switched off for the duration of the proceedings.
Parking:
Questions:
Electronic voting:
Interpreter:
Secure parking is provided at Nedbank 135 Rivonia Campus, Entrance 4, off Fredman Drive.
Shareholders who wish to ask questions relating to the business of the annual general meeting or on
other related matters, but have not lodged their question forms with or faxed them to the Company
Secretary, are requested to register their names and addresses and hand in their question forms at the
registration desk. A question form is enclosed on page 176 for this purpose. Staff will be on hand to
provide any advice and assistance required.
Nedbank Group will once again be taking advantage of the benefits that electronic meeting
management can offer. On arrival you will be registered, be linked to your profile on the share register
and be given an electronic keypad with which to cast your vote. As your vote is received, a message
will be displayed on the keypad screen, confirming that your vote has been registered. Results of votes
cast on each resolution will be displayed on an overhead screen within minutes of voting.
Shareholders wishing to participate in the meeting through electronic facilities are also requested to
contact the Company Secretary’s office no later than Friday, 2 May 2014, in order for reasonable
access to be arranged.
Should you require an interpreter (for sign language or translation from English into any of the other
official languages of SA) to be in attendance at the annual general meeting, please do not hesitate to
advise the Company Secretary’s office on +27 (0)11 294 9107 or at JackieK@nedbank.co.za
no later than Friday, 2 May 2014, for this facility to be arranged.
185
DELIVERING TO OUR STAKEHOLDERSMAKING THINGS HAPPENENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderS ANNexure 1 (CONTINUED)
Certificated shareholders and own-name dematerialised registration
Holders of certificated Nedbank Group ordinary shares wishing to attend the annual general meeting should verify beforehand with the
transfer secretaries of the company that their shares are in fact registered in their own name and check the number of shares so
registered. Should their shares not be registered in their own name but in any other name or form, shareholders wishing to attend
and/or vote at the annual general meeting should follow the instructions and explanatory notes that accompany the notice of the
annual general meeting. Similarly, shareholders who are holding dematerialised Nedbank Group ordinary shares and believe these to
be held in their own name should check with the transfer secretaries and take the appropriate action in accordance with the instructions
and guidance contained herein or obtain assistance from the transfer secretaries, if necessary.
A person who holds a beneficial interest in any certificated Nedbank Group shares may vote on a matter at the annual general meeting,
only to the extent that:
1
2
3
the beneficial interest includes the right to vote on the matter; and
the person’s name is on the company’s register of disclosures as the holder of a beneficial interest; or
the person holds a proxy appointment in respect of that matter from the registered holder of the relevant Nedbank Group shares.
Participant (previously known as central securities depository participant) or nominee holdings
Holders of Nedbank Group ordinary shares (whether certificated or dematerialised) through a nominee should timeously make the
necessary arrangements with that nominee or, if applicable, participant or broker to furnish such nominee, participant or broker with
the necessary authority to attend and vote at the annual general meeting or they should instruct their nominee, participant or broker on
how they wish their votes to be cast on their behalf at the annual general meeting. As far as holdings in a participant are concerned,
these will be guided by the terms of the agreement entered into between shareholders and their participant or broker.
Proxies
Shareholders completing a form of proxy are requested to ensure that their form of proxy reaches the address indicated in note 10 on
page 184 no later than 08:30 on Monday, 12 May 2014.
Enquiries
Any shareholders experiencing difficulties or having questions pertaining to the annual general meeting or the above are invited to
contact the Company Secretary’s office on +27 (0)11 294 9107.
Results of the annual general meeting
The results of the annual general meeting will be posted on SENS as soon as is practicable after the annual general meeting.
186
NedbaNk Group | Integrated report 2013 FORM OF PROXY
GRI 3.1: 4.4
NEDBANK GROUP lTD
(Incorporated in the Republic of south Africa)
Reg No 1966/010630/06
JSE share code: NED; NSX share code: NBK
ISIN: ZAE000004875
(‘Nedbank Group’ or ‘the company’)
For use by registered holders of certificated Nedbank Group securities and holders of dematerialised Nedbank Group securities
registered in their own name (‘shareholders’) and any persons who are not shareholders, but who at the record date of Friday,
2 May 2014, are entitled to exercise any voting rights (irrespective of the form, title or nature of the securities to which those voting
rights are attached) (collectively ‘holders’) in relation to the resolutions to be proposed at the annual general meeting to be held in the
Auditorium, Retail Place West, Nedbank 135 Rivonia Campus, 135 Rivonia Road, Sandown, Sandton, on Tuesday, 13 May 2014, at 08:30
and at any adjournment thereof.
Holders of dematerialised securities who wish to attend the annual general meeting must inform their nominee, participant (previously
referred to as central securities depository participant) or broker of their intention and the nominee, participant or broker will furnish
such holder with the necessary authority to attend and vote at the annual general meeting. Alternately, should a holder not wish to attend
the annual general meeting in person, such holder may provide his/her nominee, participant or broker with his/her voting instruction and
such nominee, participant or broker will complete all necessary documentation and action same in order for the holders’ vote(s) to be
taken account of at the annual general meeting.
I/We
of (address)
being the holder(s) of
ordinary shares in the company, appoint (see notes 1 and 4):
1
2
or failing him/her
or failing him/her
the chairman of the annual general meeting as my/our proxy to act for me/us and on my/our behalf at the annual general meeting that will
be held for the purpose of considering and, if deemed fit, passing, with or without modification, the ordinary and special resolutions to be
proposed thereat and at any adjournment thereof, and to vote for and/or against such resolutions and/or to abstain from voting in respect of
the ordinary shares registered in my/our name(s), in accordance with the following instructions (see note 5):
Number of votes
(one vote per ordinary share)
Against
For
Abstain
Resolutions
Reappointment of the external auditors
1.1 Reelection as a director of TA Boardman, who is retiring by rotation
1.2 Reelection as a director of MWT Brown, who is retiring by rotation
1.3 Reelection as a director of MA Enus-Brey, who is retiring by rotation
1.4 Reelection as a director of JK Netshitenzhe, who is retiring by rotation
2.1 Election of DKT Adomakoh, who was appointed as a director during the year
3
4 Determination of the remuneration of the external auditors
5
6 Advisory endorsement on a non-binding basis of company’s Remuneration Policy
7 Approval of the non-executive directors’ fees
8 General authority to repurchase shares
9 General authority to provide financial assistance to related and interrelated companies
Placing of unissued ordinary shares under the control of the directors
On a show of hands a person entitled to vote is only entitled to one vote irrespective of the number of the relevant Nedbank Group
shares he/she holds or represents.
On a poll, a person entitled to vote at the annual general meeting present in person or by proxy/proxies is entitled to that proportion
of the total votes in the company that the aggregate amount of the nominal value of the Nedbank Group shares held or represented by
him/her bears to the aggregate amount of the nominal value of all the Nedbank Group shares issued by the company and carrying the
right to vote.
A proxy/proxies may delegate his/her/their authority in terms of this proxy to another person. This proxy form will lapse and cease to
be of force and effect immediately after the annual general meeting of the company to be held in the Auditorium, Retail Place West,
Nedbank 135 Rivonia Campus, 135 Rivonia Road, Sandown, Sandton, on Tuesday, 13 May 2014, at 08:30 or at any adjournment
thereof, unless it is revoked earlier.
Signed at (place)
Signature
Assisted by me
(where applicable)
Please read the notes on the reverse side hereof.
on (date)
2014
DELIVERING TO OUR STAKEHOLDERSMAKING THINGS HAPPENENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderS NOTEs TO FORM OF PROXY
sUMMARY OF RIGHTs OF A HOlDER TO BE REPREsENTED BY PROXY As CONTAINED IN sECTION 58
OF THE COMPANIEs ACT AND NOTEs TO FORM OF PROXY
1
Each holder entitled to attend and vote at the annual general meeting is entitled to appoint one or more individuals as proxy/
proxies who need not be a person(s) entitled to vote at the annual general meetings to attend, participate in, speak and vote or
abstain from voting in place of that holder at the annual general meeting.
The proxy/proxies may delegate the authority received from the holder to a further person, subject to any restriction set out in this form
of proxy.
2
3 A proxy appointment must be in writing, dated and signed by the holder appointing the proxy/proxies.
4 A holder may insert the name of a proxy or the names of two alternative proxies of the holder’s choice in the space provided, with
or without deleting ‘the chairman of the annual general meeting’. The person whose name stands first on this form of proxy and
who is present at the annual general meeting will be entitled to act as proxy to the exclusion of the persons whose names follow.
Further, a holder may appoint more than one proxy to exercise voting rights attached to different securities held by that holder.
5 A holder’s instructions to the proxy/proxies have to be indicated by the insertion of the relevant number of votes exercisable by
that holder in the appropriate box provided. Failure to comply with this will be deemed to authorise the chairman of the annual
general meeting, if the chairman is the authorised proxy, to vote in favour of the ordinary and special resolutions at the annual
general meeting, or the appointed proxy/proxies to vote or to abstain from voting at the annual general meeting, without direction
as he/she/they deem(s) fit, in respect of all the holder’s votes exercisable thereat.
6 A holder or his/her proxy/proxies is/are not obliged to vote in respect of all the ordinary shares held by such holder or represented
by such proxy/proxies, but the total number of votes for or against the ordinary and special resolutions and in respect of which any
abstention is recorded may not exceed the total number of votes to which the holder or his/her proxy/proxies is/are entitled.
7 Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity has to be attached
to this form of proxy, unless previously recorded by the company’s transfer secretaries or waived by the chairman of the annual general
meeting. Examples of satisfactory identification include a valid identity document, a valid driving licence or a valid passport.
8 Any alterations or corrections to this form of proxy must be initialled by the signatory/signatories.
9
The completion and lodging of this form of proxy will not preclude the relevant holder from attending the annual general meeting
and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof, should such holder wish to do
so, in which case this proxy will be suspended accordingly.
10 Forms of proxy have to be lodged with or posted to the Company Secretary’s office (for the attention of Ms Jackie Katzin, Block A,
Ground Floor, Nedbank 135 Rivonia Campus, 135 Rivonia Road, Sandown, Sandton, 2196, or PO Box 1144, Johannesburg, 2000) or
the company’s transfer secretaries in SA, namely Computershare Investor Services (Pty) Ltd (‘Computershare’), 70 Marshall
Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107), or in Namibia, namely Transfer Secretaries (Pty) Ltd, Robert
Mugabe Avenue No 4, Windhoek, Namibia (PO Box 2401, Windhoek, Namibia), before a proxy/proxies may exercise any voting
rights of a holder at the annual general meeting. The forms of proxy are requested to be received no later than 08:30 on Monday,
12 May 2014. Forms of proxy can also be submitted by fax to Computershare (fax number +27 (0)11 688 5238), subject to the
proxy instructions meeting all other criteria. Any form of proxy not received by the company or the company’s transfer secretaries
in accordance with the above, must be handed to the Company Secretary at the annual general meeting before a proxy/proxies
may exercise any voting rights of a holder at the annual general meeting.
This form of proxy may be completed by:
11
11.1 those holders who are holding Nedbank Group shares in a certificated form; or
11.2 those holders who are recorded in the subregister as holding Nedbank Group shares in dematerialised electronic form in their own name; or
11.3 persons who are not shareholders but who are entitled to exercise any voting rights (irrespective of the form, title or nature of the
securities to which those voting rights are attached) at the record date at the annual general meeting.
12 Holders of Nedbank Group ordinary shares (whether certificated or dematerialised) through a nominee should timeously make the
necessary arrangements with that nominee or, if applicable, participant (previously referred to as central securities depository
participant) or broker on how they wish their votes to be cast on their behalf at the annual general meeting. As far as holdings in a
participant are concerned, these will be guided by the terms of the agreement entered into between shareholders and their
participant or broker.
13 Holders attending the annual general meeting will be afforded the opportunity of putting questions to the directors and management.
A perforated question form has been included for this purpose.
14 If this form of proxy has been delivered to the company in accordance with paragraph 10, as long as that appointment remains in
effect, any notice that is required by the Companies Act or the company’s memorandum of incorporation to be delivered by the
company to a holder must be delivered by the company to the holder or, alternatively, if a holder has directed the company to do
so in writing and has paid any reasonable fees charged by the company for doing so, to such holder’s proxy/proxies.
15 Save if a holder provides in this proxy form that a proxy appointment is irrevocable, a holder may revoke the proxy appointment by:
(i) cancelling it in writing, or making a later inconsistent appointment of a proxy/proxies; and (ii) delivering a copy of the revocation
instrument to the proxy/proxies and to the Company Secretary’s office at Nedbank 135 Rivonia Campus, 135 Rivonia Road,
Sandown, Sandton, 2196, for attention Ms Jackie Katzin, to be received before the replacement proxy/proxies exercise(s) any
rights of the holder at the annual general meeting of the company or any adjournment thereof.
16 The revocation of a proxy appointment constitutes a complete and final cancellation of the proxy’s/proxies’ authority to act on
behalf of the holder as of the later of: (i) the date stated in the revocation instrument, if any; or (ii) the date on which the revocation
instrument was delivered as required in paragraph 15 above.
NedbaNk Group | Integrated report 2013 ANAlYsIs OF sHAREHOlDERs
for the year ended 31 December
Register date:
Authorised share capital:
Issued share capital:
27 December 2013
600 000 000 shares
510 302 393 shares
shareholder spread
1 – 1 000 shares
1 001 – 10 000 shares
10 001 – 100 000 shares
100 001 – 1 000 000 shares
1 000 001 shares and over
Total
Distribution of shareholders
Banks
Close corporations
Empowerment
Endowment funds
Individuals
Insurance companies
Investment companies
Medical aid schemes
Mutual funds
Nominees and trusts
Old Mutual Life Assurance Company (SA) Ltd and associates
Other corporations
Treasury shares
Private companies
Public companies
Retirement funds
Share trusts1
Total
Public/Non-public shareholders
Non-public shareholders
Directors and associates of the company2
Old Mutual Life Assurance Company (SA) Ltd and associates
Treasury shares
Nedbank/Nedbank Group pension funds
Nedbank Group Ltd and associates (share trusts)1
Nedbank Group Ltd and associates (mutual funds)
Nedbank Group BEE trusts – SA1
Nedbank Group BEE trusts – Namibia
Public shareholders
Total
1 Excludes shares held by directors in share trusts (executive directors only) and Eyethu schemes.
2 Includes shares held by directors in share trusts (executive directors only) and Eyethu schemes.
Number of
shareholdings
15 643
3 118
831
202
38
Number of
shares
%
78,88
3 727 788
15,72
8 526 855
4,19
1,02
26 996 245
57 386 757
0,19 413 664 748
%
0,73
1,67
5,29
11,25
81,07
19 832
100,00
510 302 393
100,00
206
110
22
146
1,03
56 306 868
0,55
120 050
0,11
23 886 583
0,73
1 143 703
15 196
76,62
10 473 301
132
49
34
400
2 603
35
72
1
298
19
495
14
0,67
0,25
0,17
2,02
13,13
5 141 236
3 232 747
484 566
48 919 077
4 372 401
0,18
265 490 771
0,36
0,01
1,50
0,10
2,49
0,07
206 345
14 715 049
1 464 532
166 300
63 116 822
11 062 042
11,03
0,03
4,68
0,23
2,05
1,01
0,63
0,09
9,59
0,86
52,03
0,04
2,88
0,29
0,03
12,37
2,17
19 832
100,00
510 302 393
100,00
91
9
35
1
5
14
6
10
11
19 741
19 832
0,46
317 374 638
0,04
731 512
0,17
265 490 771
0,01
0,03
0,07
0,03
0,05
0,06
14 715 049
228 923
11 062 042
1 814 498
22 531 022
800 821
99,54
192 927 755
62,19
0,13
52,03
2,88
0,04
2,17
0,36
4,42
0,16
37,81
100,00
510 302 393
100,00
187
DELIVERING TO OUR STAKEHOLDERSMAKING THINGS HAPPENENSURING A SUSTAINABLE BUSINESSInformatIon to oUr ShareholderS ANAlySiS of ShAreholDerS (CONTINUED)
Major shareholders/managers
Old Mutual Life Assurance Company (SA) Ltd and associates
Nedbank Group treasury shares
BEE trusts:
Eyethu schemes – Nedbank SA
Omufima schemes – Nedbank Namibia
Nedbank Group (2005) Share Option, Matched Share and Restricted
Share Schemes
Nedbank Group Ltd and associates (Capital Management)
Nedbank Namibia Ltd
Public Investment Corporation (SA)
Coronation Fund Managers (SA)
Lazard Asset Management (US and UK)
Sanlam Investment Management (SA)
BlackRock Inc
Dimensional Fund Advisors
Beneficial shareholders holding 5% or more
Old Mutual Life Assurance Company (SA) Ltd and associates (SA)
Government Employees Pension Fund (SA)
Geographical distribution of shareholders
Domestic
South Africa
Namibia
Unclassified
Foreign
United States of America
United Kingdom and Ireland
Europe
Other countries
Number
of shares
2013
% holding
2012
% holding
265 490 771
49 108 934
52,03
9,63
22 531 022
753 309
11 062 042
14 715 049
47 512
32 502 268
30 565 164
16 067 397
9 937 801
8 485 499
7 455 278
265 490 771
38 339 338
443 191 472
435 580 625
5 101 359
2 509 488
67 110 921
40 554 064
6 538 436
7 527 330
12 491 091
4,42
0,15
2,17
2,88
0,01
6,37
5,99
3,15
1,95
1,66
1,46
52,03
7,51
86,85
85,36
1,00
0,49
13,15
7,95
1,28
1,48
2,44
52,13
9,90
4,55
0,15
2,29
2,90
0,01
7,27
2,68
2,93
1,96
1,45
1,40
52,13
8,22
86,37
83,64
1,90
0,83
13,63
8,17
1,58
1,60
2,28
510 302 393
100,00
100,00
188
NedbaNk Group | Integrated report 2013 NedbaNk Group | IntegrateD report 2013
nedbank group prides itself on
supplying stakeholders with updated
information on a regular basis.
this information can be found at
nedbankgroup.co.za or through
the Nedbank app SuiteTM.
reference gUiDe
Crossreferencing
reporting standard
2013 nedbank group pillar 3 Basel III
public Disclosure report
2013 nedbank group transformation report
Content available at nedbankgroup.co.za
Supplementary information is available at
nedbankgroup.co.za
Scan with your smart
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Accessing informAtion
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the 2013 report is extensively crossreferenced to ensure that
related information is easy to find and that the global
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requirements are easily identifiable.
Detailed supplementary information can be accessed at
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mAKing
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ensUring A
sUstAinABLe
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to oUr
shArehoLDers
OUR cONTAcT DETAILs
NEDBANK GROUP LTD
Incorporated in the republic of Sa
reg no 1966/010630/06
BUsINEss ADDREss AND REGIsTERED OFFIcE
nedbank 135 rivonia Campus
135 rivonia road
Sandown, Sandton, 2196, Sa
POsTAL ADDREss
po Box 1144
Johannesburg, 2000, Sa
tel: +27 (0)11 294 4444
Website: nedbankgroup.co.za
TRANsFER sEcRETARIEs:
Sa: CoMpuTerSHare INVeSTor
SerVICeS (pTy) LTd
BUsINEss ADDREss
70 Marshall Street
Johannesburg, 2001, Sa
POsTAL ADDREss
po Box 61051
Marshalltown, 2107, Sa
tel: +27 (0)11 370 5000
Fax: +27 (0)11 688 5238
NaMIbIa: TraNSFer SeCreTarIeS (pty) Ltd
BUsINEss ADDREss
robert Mugabe avenue no 4
Windhoek, namibia
POsTAL ADDREss
po Box 2401
Windhoek
namibia
tel: +264 (0)61 227 647
Fax: +264 (0)61 248 531
AUDITORs:
DELOITTE & TOUcHE
poSTaL addreSS
private Bag X6
gallo Manor, 2052, Sa
tel: +27 (0)11 806 5000
Fax: +27 (0)11 806 5003
KPMG INc
poSTaL addreSS
private Bag X9
parkview, 2122, Sa
tel: +27 (0)11 647 7111
Fax: +27 (0)11 647 8000
NEDBANK GROUP INTEGRATED
REPORT 2013
Should you wish to engage on the content of this report or if you
require an additional copy of the nedbank group Ltd Integrated
report 2013, please email your address details to nedbank group
Investor relations at nedbankgroupir@nedbank.co.za or send a fax
to +27 (0)11 294 6549.
INVEsTOR RELATIONs
alfred Visagie: Head of Investor relations
tel: +27 (0)11 295 6249
email: nedbankgroupir@nedbank.co.za
cOMPANY sEcRETARY
tSB Jali: group Company Secretary
tel: +27 (0)11 295 9696 Fax: +27 (0)11 294 9696
email: thabanij@nedbank.co.za
DIscLAIMER
nedbank 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
‘forward-looking
that may be defined as
information
statements’ within the meaning of US 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 prove to 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 International Financial reporting
Standards 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 whatsoever and
howsoever 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.
ABOUT THIs REPORT
this report is printed on Sappi triple green – a paper grade
manufactured according to three environmental pillars: a
minimum of 60% of the pulp used in the production of this
paper is sugar cane fibre, which is the material remaining after
raw sugar has been extracted from sugar cane; the bleaching
process is elemental chlorine-free; and the remaining pulp
used in the production process comprises wood fibre, which is
internationally certified
obtained
afforestation, using independently audited chains of custody.
from sustainable and
the carbon emissions generated through the production of this
report have been included in the calculation of nedbank group’s
total 2013 carbon footprint that will be offset during 2014.
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A Tribute to Nelson Rolihlahla Mandela
The Children’s Champion
To a man who made our land his life
And forgiveness his focus
Who turned hatred into humility
And made peace with the past
Who made his captors his comrades
And his prison cell his podium
Who turned imprisonment into freedom
And a divided people into a nation
Who made children his cause
And love his legacy.
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Nedbank is a proud partner of:
nedbank.co.za
Nedbank Limited Reg No 1951/000009/06. Authorised financial services and registered credit provider (NCRCP16).
NEDBANK GROUP LIMITED
INTEGRATED
REPORT
for the year ended 31 December 2013