Be the difference
that impacts our world
Annual
results
for the year ended 31 December 2021
see money differently
127
Statement of financial position
analysis
128
146
147
148
150
152
155
156
Loans and advances
Investment securities
Investments in associate companies
Intangible assets
Amounts owed to depositors
Liquidity risk and funding
Equity analysis
Capital management
161
Supplementary
information
165
166
168
168
169
170
172
174
175
176
177
180
IBC
Earnings per share and weighted-average shares
Nedbank Group employee incentive schemes
Long-term debt instruments
External credit ratings
Additional tier 1 capital instruments
Shareholders’ analysis
Basel III balance sheet credit exposure by business
cluster and asset class
Nedbank Limited consolidated statement
of comprehensive income
Nedbank Limited consolidated financial highlights
Nedbank Limited consolidated statement
of financial position
Definitions
Abbreviations and acronyms
Company details
Contents
1
2
Message from our
Chief Executive
Results
presentation
50
2021 results
commentary
64
Financial
results
65
66
68
70
71
Financial highlights
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Return-on-equity drivers
77
Segmental
analysis
78
80
82
86
100
104
108
Our organisational structure, products and services
Operational segmental reporting
Nedbank Corporate and Investment Banking
Nedbank Retail and Business Banking
Nedbank Wealth
Nedbank Africa Regions
Geographical segmental reporting
110
Income statement
analysis
111
114
120
122
124
124
125
Net margin analysis
Impairments
Non-interest revenue and income
Expenses
Headline earnings reconciliation
Taxation charge
Preference shares
Strong performance enabled by a more supportive
environment, ongoing strategic delivery and a good
operational performance
The operating environment in
2021 was more supportive for
Nedbank and our clients. The South
African economy performed better than
we expected at the start of the year,
resulting in upward revisions of gross
domestic product (GDP) growth to
4,9%. Off the low base in 2020, the
rebound in economic growth was
underpinned by higher commodity prices,
lower levels of lockdown restrictions
and some positive developments on
key reforms in SA. The low-interest-rate
environment supported demand for
retail credit and transactional activity
increased as lockdown levels eased.
Demand for corporate credit remained
muted, particularly in the first half of the
year as excess cash was used to repay
debt, and investment activity remained
low. Encouragingly, demand for corporate
credit saw a recovery in the second
half. In the third quarter, the negative
impacts of a prolonged third wave of
Covid-19 infections, tighter lockdown
restrictions, the July civil unrest in parts of
the country and frequent power outages
weighed heavily on economic activity.
Trading conditions improved in the last
quarter of 2021, supported by more lenient
lockdown restrictions despite the onset of
the fourth Covid-19 wave (Omicron variant).
The Nedbank Group’s financial
performance for 2021 reflects a strong
rebound off a low 2020 base. Headline
earnings (HE) in 2021 increased by 115% to
R11,7bn, but remains 7% below 2019 levels.
HE growth was driven by significantly
lower impairments, a higher net interest
margin, recovery in NIR growth, disciplined
expense management and a stronger
financial performance from our associate
investment in ETI. Preprovisioning
operating profit increased by 9% and
JAWS was positive at 0,8%. The key
drivers of shareholder value creation
were also positive, with net asset value per
share increasing by 11%, the group’s ROE
improving to 12,5% (2020: 6,2%) and a
full-year dividend of 1 191 cents per share
at 2,02 times cover.
Key balance sheet metrics have all
strengthened to above pre-Covid-crisis
levels. Capital and liquidity ratios
increased as reflected in our tier 1 capital
ratio of 14,3% (December 2020: 12,1%),
common equity tier 1 (CET1) ratio of
12,8% (December 2020: 10,9%), average
fourth-quarter liquidity coverage ratio
(LCR) of 128% (December 2020: 126%)
and net stable funding ratio (NSFR) of
116% (December 2020: 113%). Overall
impairment coverage increased to
multi-year highs of 3,32% (December
2020: 3,25%) and our credit loss ratio
(CLR) declined to 83 bps (December
2020: 161 bps) and is now back within
our board-approved through-the-cycle
(TTC) target range of 60–100 bps.
The strong financial performance
was supported by ongoing strategic
delivery. Our Managed Evolution (ME)
technology journey to create a modern,
modular and digital IT stack is at 85%
completion. The benefits of this are
evident in most of our digital metrics
showing double-digit growth, as well
as target operating model (TOM 2.0)
benefits of R967m being realised,
as we move forward towards our
target of R2,5bn by the end of 2023.
In the 2021 Consulta survey Nedbank
achieved the #2 ranking among the
five largest South African banks on
client satisfaction metrics, with our Net
Promoter Score (NPS) increasing further
to 47. Progress on our strategic portfolio
tilt strategy (SPT 2.0) was evident in
market share gains in key product
areas and main-banked clients, as well as
improved levels of cross-sell. Nedbank
recorded the largest retail main-banked
market share gain among the large South
African banks, while Corporate and
Investment Banking (CIB) gained 35 new
primary clients. We continued to create
positive impacts by delivering against the
United Nations Sustainable Development
Goals (SDG)s and increasing our focus
on environmental, social and governance
(ESG) matters. In 2021 we released our
Energy Policy and inaugural Taskforce
on Climate-related Financial Disclosures
(TCFD) report and successfully concluded
Africa’s first green AT1 instrument, while
maintaining ESG ratings at the top-end of
the local and international peer group.
After a strong rebound in South
African GDP in 2021, we currently
forecast the country's GDP to increase
by a more modest 1,7% in 2022. Good
strategic and operational delivery
should support delivery of a solid
financial performance for the full-year
2022, underpinned by revenue growth and
an ongoing cost focus. We are on track
to meet our medium-term targets* set
for the end of 2023. Pleasingly, we now
expect to meet the diluted headline
earnings per share (DHEPS) target
(greater than 2 565 cents per share)
in 2022, a year ahead of our previous
expectation. We continue to focus on
achieving a return on equity (ROE) greater
than the 2019 ROE level of 15%, reducing
our cost-to-income ratio to below 54%,
and ranking #1 on the NPS among South
African banks, all by the end of 2023.
The past two years have been
unprecedented and extraordinarily
difficult for our clients and employees.
Thank you to all our Nedbank employees
for remaining resilient throughout the
Covid-19 crisis, continuing to follow the
Covid-19 health protocols and diligently
supporting our clients and the economy
with unrelenting commitment. We extend
our heartfelt condolences to the families,
friends and communities of employees
and clients who have lost their loved ones
during this time.
Our Chairperson, Vassi Naidoo passed
away during 2021 after a long and brave
battle with cancer. He led our board with
integrity and passionately loved the
Nedbank brand and all that we stand
for. We will be forever grateful for his
contribution to Nedbank.
Mike Brown
Chief Executive
Headline earnings
CLR
ROE
CET1 RATIO
115% 83 bps
12,5%
12,8%
0
4
4
5
6
0
5
2
1
9
8
6
1
1
161
15,0
79
83
6,2
12,5
11,5
10,9
12,8
2019
2020
2021
2019
2020
2021
2019
2020
2021
2019
2020
2021
* These targets are not profit forecasts and have not been reviewed or reported on by the group’s joint auditors.
1
Resultspresentation2021 resultscommentaryFinancial resultsSegmentalanalysisIncome statementanalysisStatement of financialposition analysisSupplementaryinformationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
Be the difference
that impacts our world
Nedbank Group Annual Results
for the year ended 31 December 2021
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
2021 Annual
Financial Results
For the year ended 31 December 2021
9 March 2022
1
Overview
Mike Brown
Chief Executive
Agenda
• Operating environment &
strategic progress
• Financial overview
• Cluster overview
• Outlook & guidance
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
2
2
Notes:Notes:Nedbank Group Annual Results 2021 Overview
A more supportive
environment
Strong financial
performance
Strong operational
performance
Good strategic
delivery
▪ GDP growth recovery
off a low base
▪ Corporates cautious
▪ Low interest rates
supporting retail clients
▪ Less negative
economic impact from
Covid-19-related
lockdowns in Q4
▪ HE:
+ 115%
▪ ETI assoc: > 100%
▪ CET1:
12,8%
▪ LCR:
▪ NSFR:
▪ Coverage:
▪ Final DPS:
3,32%
128%
116%
758 cps
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
▪ PPOP: +9%
▪ JAWS: +0,8%
▪ Digital leadership
▪ Market-leading client
experiences
▪ Market share gains in
key areas
▪ Productivity
improvements
▪ ESG leadership
maintained
3
1. Operating environment – lower mortality & hospitalisations during the
Omicron wave & less negative economic impact from lockdowns in Q4 2021
SA positive Covid-19 cases1
(7-day average)
Stringency index2
25 000
20 000
15 000
10 000
5 000
100
75
50
25
0
Mar 20 Jun 20 Sep 20 Dec 20 Mar 21 Jun 21 Sep 21 Dec 21
0
Mar 20 Jun 20 Sep 20 Dec 20 Mar 21 Jun 21 Sep 21 Dec 21
Peak hospitalisations per wave (# 000, 7-day average)
India
Brazil
South Africa
Turkey
1 National Institute for Communicable Diseases: Peak average daily hospital admissions > 2 500 during the second wave & lowest during the fourth wave at ~1 400. | 2 Oxford University.
4
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
3
Notes:Notes:Resultspresentation2021 resultscommentaryFinancial resultsSegmentalanalysisIncome statementanalysisStatement of financialposition analysisSupplementaryinformationMessage from ourChief ExecutiveNedbank Group Annual Results 2021 Operating environment – vaccine roll-out has been slow, but closing in on
50% level
SA vaccination roll-out stages
Sisonke
study
Pfizer
roll-out
started
J&J
roll-out
started
Vaccine roll-out
(million doses administered)
<1%
5%
29%
BOOKLET SLIDE
60+ year
olds > 65%
46%
27,4
25,6
21,9
Apr 21 May Jun Jul Aug Sep Oct 21
Healthcare
workers
50+ years
of age
18+ years
of age
Booster
shots
approved
60+ years of age
& healthcare workers
35+ years
of age
12 to 17
years
of age
17,5
12,6
7,5
3,0
0,2 0,3
1,0
Apr
21
May
21
Jun
21
Jul
21
Aug
21
Sep
21
Oct
21
Nov
21
Dec
21
Up to
Mar
21
% of population vaccinated with at least 1 dose.
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
5
Operating environment – high-frequency data from our client transactional
turnover1 shows a continued improvement in operating conditions
Total monthly industry POS turnover
(Rbn)
Key sectors
(indexed to March 2020)
% of 2019
average
Telecoms
Retail
Healthcare
Restaurants
Entertainment
Hotels/Lodging
Airlines
Jan
19
Mar May Jul Sep Nov Jan
20
Mar May Jul Sep Nov Jan
21
Mar May Jul Sep Nov Jan
22
Mar May Jul Sep Nov Jan Mar May Jul Sep Nov
20 21
Hotels/Lodging & Airlines now above March 2020 levels, but at December 2021 only
87% & 50% of December 2019 levels, respectively.
1 Based on Nedbank POS & card-related digital payment data (client turnover).
Indicators March 2020 < 50% < 80% < 100% ≥ 100% > 120% of March 2020 levels
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
6
4
Notes:Notes:Nedbank Group Annual Results 2021 Operating environment – positive developments on key SA reforms, but
business confidence still low
Business confidence1 vs fixed investment
100
75
50
25
0
50%
▪ Business confidence remains below 50 (neutral position)
evident in new corporate loan demand that is still weak
▪ Positive developments on key SA reforms2
25%
‒ ‘Red tape reduction drive’
‒ Unbundling of Eskom transmission (by Dec 2022)
‒ Increased private energy generation capacity to 100 MW
0%
‒ RFP for public-private partnership in Ports
‒ Auctioning of 5G spectrum
‒ Third-party access to SA freight rail network
-25%
▪ Renewable energy
00
02
04
06
08
10
12
14
16
18
20
-50%
Business confidence index (LHS)
Public sector GDFI growth (RHS)
Private sector GDFI growth (RHS)
‒ Nedbank participated in 4 projects in the emergency
renewable-energy round (500 MW to finalise Q1 2022) |
Round 5 REIPPP concluded (2 600 MW) – thinly priced
market | Round 6 bids (2 600 MW) open in due course
▪ Commodity boom beneficial to some clients but resulted in
early repayments/limited financing needs
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
1 SA Bureau of Economic Research. | 2 Extracted from the SA President's State of the Nation Address 2022.
Operating environment – households benefiting from lower interest rates, but
pressure on consumers increasing
Debt as % of income
(LHS)
Debt service costs as
% of income (RHS)
90
80
70
60
50
40
94 96 98 00 02 04 06 08 10 12 14 16 18 20
Debt-to-income ratio
Debt service cost ratio
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
18
16
14
12
10
8
6
4
2
0
▪ Households have de-levered since the GFC
‒ Peak of 79% to current level of 68%
▪
Interest rates 250 bps lower since 2019,
supporting:
‒ Demand for prime-linked credit (home
loans, vehicle finance, etc) – evident in
solid RBB loan growth
‒ Easier for households, businesses &
corporates to service their debt – evident in
lower CLRs
▪ Rising pressure on consumers
‒ Transport (oil), electricity & food price
increases
7
8
5
Notes:Notes:Resultspresentation2021 resultscommentaryFinancial resultsSegmentalanalysisIncome statementanalysisStatement of financialposition analysisSupplementaryinformationMessage from ourChief ExecutiveNedbank Group Annual Results 2021 Nedbank Group strategy
Targets to 20231
DHEPS
> 2 565 cents
(2019 levels)
ROE
> 15%
(2019 levels)
Cost-to-income ratio
< 54%
Net Promoter Score
#1 bank
(from #2 in 2021)
Strategic value drivers
Growth
Productivity
Risk & capital management
Strategic value unlocks
Delivering
market-leading
client solutions
Ongoing disruptive
market activities
Driving efficient
execution
(TOM 2.0)
Focusing on areas
that create value
(SPT 2.0)
Creating positive
impacts
1 Set in March 2020.
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
Growth & productivity – trends improving, revenue drivers up & cost-to-
income down
Growth
10%
Revenue
5%
& advances
growth
(%)
0%
-5%
-10%
Dec
19
Jun
20
Dec
20
Jun
21
Dec
21
NII
NIR
Gross advances
Productivity
Excl MFVHA
adjustments: +16% yoy
H2 on H2
+21% yoy
PPOP
(Rm)
2
4
9
0
1
7
1
7
0
1
4
4
8
9
6
5
4
0
1
1
7
8
1
1
H2 19 H1 20 H2 20 H1 21 H2 21
Client
gains
& AUM
CIB new primary
clients
+35
NAR
clients1
+1%
Retail main-banked
clients
+1%
AUM growth
+13%
to R424bn
Cost-to-income
ratio (%)
Excl MFVHA
adjustments: 57,0%
5
,
6
5
Dec
19
1
,
8
5
Dec
20
7
,
7
5
Dec
21
1 Excl dormant-account closures growth was 14%.
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
6
9
10
Notes:Notes:Nedbank Group Annual Results 2021 Risk & capital management – balance sheet metrics strong & above 2019 levels
Capital
CET1 ratio (%)
Liquidity
LCR (%)
%
5
,
1
1
%
6
,
0
1
%
9
,
0
1
%
2
,
2
1
%
8
,
2
1
Dec
19
Jun
20
Dec
20
Jun
21
Dec
21
%
5
2
1
%
5
1
1
%
6
2
1
%
1
3
1
%
8
2
1
Dec
19
Jun
20
Dec
20
Jun
21
Dec
21
NSFR (%)
%
3
1
1
%
4
1
1
%
3
1
1
%
4
1
1
%
6
1
1
Dec
19
Jun
20
Dec
20
Jun
21
Dec
21
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
Dividends
Dividends/share
(cents)
5
9
6
d
n
e
d
v
d
i
i
d
n
e
d
v
d
i
i
o
N
o
N
3
3
4
8
5
7
Credit
CLR (%)
Total coverage
(%)
Dec
19
Jun
20
Dec
20
Jun
21
Dec
21
9
7
Dec
19
%
6
2
,
2
7
8
1
Jun
20
1
6
1
5
8
3
8
Dec
20
Jun
21
Dec
21
%
5
8
,
2
%
5
2
,
3
%
1
4
,
3
%
2
3
,
3
Dec
19
Jun
20
Dec
20
Jun
21
Dec
21
11
Nedbank Group strategy
Targets to 2023
DHEPS
> 2 565 cents
(2019 levels)
ROE
> 15%
(2019 levels)
Cost-to-income ratio
< 54%
Net Promoter Score
#1 bank
(from #2 in 2021)
Strategic value drivers
Growth
Productivity
Risk & capital management
Strategic value unlocks
1
2
3
4
5
Delivering
market-leading
client solutions
Ongoing disruptive
market activities
Driving efficient
execution
(TOM 2.0)
Focusing on areas
that create value
(SPT 2.0)
Creating positive
impacts
Enabled by
Managed
Evolution
technology
strategy
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
12
7
Notes:Notes:Resultspresentation2021 resultscommentaryFinancial resultsSegmentalanalysisIncome statementanalysisStatement of financialposition analysisSupplementaryinformationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
Managed Evolution – good progress on our technology strategy
Managed Evolution
85% complete
(2020: 78%)
Digital leadership
externally
acknowledged
Good ongoing
strategic progress
▪ 78 core systems (2020: 90)
▪
Individual & juristic digital
onboarding in place
▪ 6 of our top 10 product/client
journeys digitised + various
additional products
▪
▪
IT cash flow spend peaked in 2017
at R2,3bn & 2021: R1,6bn
Intangible software assets peaked
in 2021 at R9bn
▪ Most Innovative Digital Bank1
▪ Best Digital Bank2
▪ Best Mobile & Internet Banking3,4
▪ Best Bank for APIs1,2
▪ Best Technology Transformation1,
▪ Best Innovation in Retail Banking5
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
Source: 1 WorldEco.2 Global Banking & Finance Awards. 3 Global Business Outlook. 4 International Business Magazine. 5 International Banker.
13
Managed Evolution – materially complete & delivering benefits as per plan
Core systems (#)
Rationalise, standardise & simplify
Managed Evolution programme
~85% complete, R9,8bn by Dec 2021
(R13bn including new technologies)
Core banking
modernisation
Client systems
Enterprise
strategic
payments
5
7
-
5
6
1
7
1
2
5
1
2
4
1
8
2
1
9
1
1
7
1
1
0
9
8
7
5
7
-
5
6
= Dec 2019
Bubble size indicates
total estimated spend
Enterprise data
Foundations
ERPERP
BOOKLET SLIDE
IT software development spend (Rbn)
Annual cash flow spend peaked1
The group’s intangible software
assets are expected to have
peaked in 2021 at R9bn, in line
with reducing cash flow spend.
1,6
14 15 16 17 18 19 20 21 MT
0%
25%
50%
75%
100%
14 15 16 17 18 19 20 21 22 23 24
Completion
1 Project cash flow in 2021 was lower yoy as some large programmes came to an end. The expectation is to increase in 2022 as we aim to complete last few components of ME.
Illustrative only
Compliance-related
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
14
0
5
2
10
8
Notes:Notes:Nedbank Group Annual Results 2021
1
Delivering market-leading client solutions – client satisfaction & brand
metrics continue on an upward trajectory
SA Client Satisfaction Index1
Net Promoter Score1
Other metrics
90
85
80
75
70
#2
80
60
40
20
0
▪ Brand sentiment ranking (#2)
consistently above SA bank
average2
#2
▪ Nedbank brand value3: R15bn
▪ SA brand rank3 in SA: #8
▪ Multiple wholesale & retail
banking awards for business
impact & expertise
15
16
17
18
19
20
21
15
16
17
18
19
20
21
Absa
Capitec
FNB
Nedbank
Standard
1 Annual Consulta survey.
2 1 January 2020 to June 2020: Brandseye & July 2020 to December 2021: Salesforce Social Studio.
3 Top 8 among Top 50 SA companies (Brand Finance).
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
15
1
External recognition received across all business clusters in 2021
– enabled by business excellence, digital innovation & ESG leadership
The Banker
Bank of the
Year (South Africa)
2021
Nedbank Group
The Banker GLOBAL
2021 Deal of the Year
Africa: Infrastructure &
Project Finance:
Mozambique LNG 1
$15,4bn financing
FINANCE
2021 Global Finance
Investment Bank
Awards:
Best Debt Bank: Africa
BOOKLET SLIDE
GLOBAL
FINANCE
2021 Global Finance
Investment Bank
Awards:
Best Investment
Bank: South Africa
WorldEco
Most Innovative
Digital Bank:
2021
Nedbank
WorldEco
Best bank for API
initiatives:
2021
Nedbank
WorldEco
Best Technology
Transformation:
Global Business
Outlook
Best Digital Bank in
South Africa:
2021
Nedbank
2021
Nedbank
GLOBAL BANKING &
Financereview
GLOBAL BANKING &
Financereview
AAPPII
BBlloooommbbeerrgg
GLOBAL BANKING &
Financereview
Best Corporate Bank
South Africa | 2021
Best Investment Bank
South Africa | 2021
Nedbank CIB
Nedbank CIB
Top Real Estate Bank
of the Year
Africa | 2021
DCM rankings
South Africa | 2021
Best Digital Bank
| South Africa | 2021
#2 by volume
Nedbank
Nedbank CIB
& value
GLOBAL BANKING &
Financereview
Best Open Banking
APIs
South Africa | 2021:
Nedbank
INTERNATIONAL
BUSINESS MAGAZINE
INTERNATIONAL
BUSINESS MAGAZINE
Best Mobile Banking
Best Mobile Banking
Best Internet Banking
South Africa | 2021
Best Internet Banking
South Africa | 2021
Nedbank RBB
Nedbank NAR
2021 winner:
Infrastructure
Deal of the Year
INTERNATIONAL
BANKER
GLOBAL BUSINESS
Review Magazine
Best Innovation in
Retail Banking
2021
Nedbank RBB
Best Retail Bank
& Best CSR Bank
South Africa 2021
WWEEAALLTTHHBBRRIIEEFFIINNGG
MMIIDDDDLLEE EEAASSTT && NNOORRTTHH
AAFFRRIICCAA AAWWAARRDDSS
Best Boutique Private
Bank | 2021
Nedbank Private
Wealth International
(third year in a row)
GLOBAL BANKING &
Financereview
EEUURROOMMOONNEEYY
Best Bank for
Sustainable
Development
Best Bank for
Sustainable
Finance
South Africa | 2021
Nedbank
Africa | 2021
Nedbank
2021 winner:
Investment Bank of
the year (global award)
Nedbank CIB
Business-impact- & expertise-related
Technology & innovation-related
Purpose- & ESG-related
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
OLIVER TOP
EMPOWERMENT
AWARDS
Top Empowered
Business of the Year
2021
Nedbank
16
9
Notes:Notes:Resultspresentation2021 resultscommentaryFinancial resultsSegmentalanalysisIncome statementanalysisStatement of financialposition analysisSupplementaryinformationMessage from ourChief ExecutiveNedbank Group Annual Results 2021 1
Delivering market-leading client solutions – our digital journeys are
enabled by Eclipse & Nedbank Business Hub
End-to-end digital client onboarding & digitising our products
BOOKLET SLIDE
2019
Individual client
onboarding
Branch
Web & app
Clients
Channels
1
Personal
loans
2
Transactional
3 MVP
4 MVP
5 MVP
2020
Juristic client
onboarding
Branch
Overdraft
Credit card
Investments
2021
2022
2023
2024
Ongoing juristic client onboarding enhancements
Omnichannel1
Omnichannel2
Project Imagine
enhancements
6
Forex
Individual
Juristic
7
MVP
Home loans
8
Wealth: Stockbroking
Individual
Products
Nedgroup
Investments
MVP
MVP
Transactional
Investments
Overdraft, RCF, VAF,
Cash Online/Vault
Services
Individual
Juristic
130+
MVP
171
10
VAF
9
Student loans
MVP
Wealth: Insurance
MVP
Retail Relationship
Banking
Ongoing
enhancements
Wealth: Banking
MVP
Everyday Banking
Ongoing enhancements
CX enhancements
Payments (domestic & global)
Credit digitisation
Additional
individual
products
Agency banking
Juristic
Servicing
Onboarding
Corporate card Issuing
Card acquiring
Complex lending
All remaining services on legacy
applications migrated to Eclipse or
Nedbank Business Hub, incl juristic.
Wealth
Juristic
100+
Individual
Juristic
17
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
1 Branch, web, app, ATM, self-service kiosk, call centre. | 2 Branch, web, app, self-service devices.
1
Delivering market-leading client solutions – digital uptake & usage accelerated,
driven by world-class delivery, enablement & innovation, as well as client
behavioural shifts during Covid-19
Digitally active clients
(% of total active clients)
Digital sales
(% of new sales1)
Digital transaction volumes
(# m)
App transaction volumes
(# m)
%
8
2
19
%
2
3
20
%
6
3
21
%
2
1
19
%
8
2
20
%
2
3
21
8
5
19
+50%
8
6
20
7
8
21
2
2
19
+159%
7
3
20
7
5
21
Digitally active main-banked
clients
Money app active users
(# 000)
Digital transaction values
(Rbn)
App transaction values
(Rbn)
+96%
+21%
%
9
4
%
7
5
%
4
6
9
2
8
2
8
1
1
1
3
6
1
9
9
3
6
0
4
2
8
4
1
9
20
19
19
1 2019 based on applications, excl. MobiMoney. 2020 onwards measured on new funded sales – excl MobiMoney.
Digitally active clients & Money app users have been restated to align to the new client active definition ie Client has either a non-zero balance asset product or a non-zero
balance investment product; or a positive funded balance Transactional Product (TP), or a negative TP balance with a transaction done within the last 12 months.
21
20
21
21
19
19
20
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
10
+163%
9
3
1
20
9
3
2
21
Change since 2019
18
Notes:Notes:Nedbank Group Annual Results 2021 2
Ongoing disruptive market activities – Nedbank is connecting individuals &
businesses via marketplaces & APIs, now > 1 million clients1
Registered clients
(’000)
4,7x
2020
2021
B2C
>675 000
clients
3
1
Gross merchandise
value (Rm)
3x
2
>1/4 million
products & services
B2B
>20 250
businesses
11
verticals
Merchants & partners
(‘000)
3x
2020
2021
1 At the beginning of March 2022.
2020
2021
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
19
3
Driving efficient execution – the benefits from our Managed Evolution technology
investments & digitisation are being unlocked through TOM 1.0 & TOM 2.0
Cumulative TOM 1.0 & TOM 2.0 benefits
(Rbn)
TOM 2.0
Optimising the shape of our
infrastructure in a more digital
world, embedding a more
client-centred RBB structure
(incl back-office optimisation)
& optimise groupwide shared
services
TOM 1.0
Modernised technology
platform (ME), optimised
digital innovation capabilities
(DFL) & implementation of
end-to-end digital client
onboarding, & digital
products & services
e
t
a
r
n
u
r
s
t
i
f
e
n
e
B
LT
1,0
2,5
0,2 0,7 1,1 1,8 2,0
17
18
19
20
21
22
2,0
23
target
TOM 1.0
TOM 2.0
Shift to digital
payments –
optimise own
physical
channels
(Imagine)
Hybrid working
practices –
shrink own
property
Client-centred
model – leaner
RBB structure
(Phoenix)
Benefits from
technology
transformation
Efficient &
effective
central
Reset third-party
spend – smarter
supply chain &
procurement
functions
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
20
11
Notes:Notes:Resultspresentation2021 resultscommentaryFinancial resultsSegmentalanalysisIncome statementanalysisStatement of financialposition analysisSupplementaryinformationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
3
Driving efficient execution – benefits evident in optimisation of operations to enable
lower expense growth over time & meet our 2023 cost-to-income ratio target of 54%
Permanent employees
(# of)
SA outlets/branches
(# of)
Teller activity
(# m)2
(8%)
1
7
2
8
2
20
1
6
8
6
2
21
7
7
8
0
3
18
3
1
2
9
2
19
(9%)
9
4
5
20
8
3
5
21
4
0
6
18
9
8
5
19
(55%)
1
3
18
3
2
19
3
1
20
1
1
21
Branch floor space
(‘000 m2)1
Saved to date
Corporate real-estate floor
space (‘000 m2)
Saved to date
Annual amortisation charge
(% growth)
(3%)
65
2
8
1
21
2
1
2
18
4
0
2
19
0
9
1
20
116
5
6
2
21
6
5
3
18
8
2
3
19
3
1
3
20
1 Represents the total branch floor space we saved since 2018, equating to approximately 14% of our branch
floor space since 2018 – floor space saved since 2014 equates to 65k sqm – equivalent of 28% of the 2014 floor
space. | 2 Refers to the volume of interactions with tellers.
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
1
2
18
2
2
19
3
2
20
9
1
21
Change since 2019
21
4
Strategic portfolio tilt 2.0 – target growth where we are underweight & be
selective in areas of strength, while growing the transactional banking
franchise (main-banked client gains & higher cross-sell)
BA 900 market share (%)
Nedbank total lending
market share: 17,7%
Nedbank total deposit
market share: 17,9%
%
1
,
9
1
%
1
,
8
1
%
8
,
6
1
%
7
,
8
3
%
5
,
8
3
%
2
,
7
3
%
4
,
4
1
%
4
,
4
1
%
2
,
4
1
%
4
,
6
3
%
5
,
6
3
%
9
,
6
3
%
2
,
0
1
%
2
,
1
1
%
2
,
2
1
%
0
,
3
1
%
6
,
2
1
%
0
,
2
1
%
2
,
7
%
0
,
8
%
9
,
9
%
0
,
6
1
%
0
,
5
1
%
5
,
3
1
%
9
,
3
1
%
6
,
5
1
%
6
,
6
1
19 20 21
19 20 21
19 20 21
19 20 21
19 20 21
19 20 21
19 20 21
19 20 21
19 20 21
Wholesale
term loans
CPF
Home
loans
Vehicle
finance
Personal
loans
Credit
card
Retail
overdrafts
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
Retail
transactional
deposits
Commercial
transactional
deposits
22
12
Notes:Notes:Nedbank Group Annual Results 2021
5
Creating positive impacts – anchoring our position as an impact
financier
Sustainable funding
(Rbn)
Renewable energy (REIPPPP)
financing (exposures, Rbn)
Journey to zero exposure to fossil-
fuel-related activities by 2045
Board limit up
to R50bn
2020
Climate change resolutions passed with
100% votes of approval at our 53rd AGM
9,8
3,6x
7,6
2,7
19
20
21
Green AT1
IFC climate loan
Green bonds
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
10
15
15
16
19
17
23
18
25
19
32
20
29
21
Added >3 500 MW renewable energy to the national
grid (R35bn underwritten), excluding emergency
round (Round 4.5) & Round 5
2021
Adopted & disclosed our market-leading
energy policy & inaugural TCFD report
2025
No provision of project financing for
new thermal-coal mines
2030
Thermal-coal funding to be < 0,5% of
gross loans & advances
2035
No new finance for oil production
2045
Zero exposure to fossil-fuel-related
activities
2050
100% of lending & investing supporting
a net-zero carbon economy
23
5
Creating positive impacts – social/societal
> R360m
study loans to
students3
> R5bn
loans for student
accommodation3
R121m
CSI spend in 2021, with
47% allocated to education
R57bn
loans to SMEs, entrepreneurs,
professionals2
> 1 900
job opportunities supported for
unemployed youth (YES)
87%
of Nedbank-owned
buildings Green
Carbon-
neutral
operations
(since 2009)
R5bn
loans for
affordable
housing3
R25bn
loans for
green
buildings3
Star-rated
Level 1
BBBEE
status
(for past 4 years)
Black staff1:
> 79%
106
tons of food
& supplies to
employees, families
& communities
impacted by the
July 2021 riots
R800m
lending
towards
water
projects in
2021
Own operational
total water
consumption
down by
18% yoy
(39% since
2019)
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
1 African, Coloured & Indian population. | 2 Represents RRB loans & advances. | 3 Over past 5 years.
24
13
Notes:Notes:Resultspresentation2021 resultscommentaryFinancial resultsSegmentalanalysisIncome statementanalysisStatement of financialposition analysisSupplementaryinformationMessage from ourChief ExecutiveNedbank Group Annual Results 2021 5
Creating positive impacts – governance
Nedbank Board
Independent directors
up to 69% (2020: 67%)
Black (ACI1) directors
up to 62% (2020: 60%)
A supporting culture
ESG ratings
17
19
ESG
AA
rating
Top 33%
of global
banks
Great place
to work NPS:
7
19
20
21
4,3
out of 5
Top 6%
of global
banks
16,5
low risk
22nd
out of 420
diversified banks
C
rating
Top 20%
of all global
banks
25
Female directors
up to 23% (2020: 20%)
9%
employee attrition
Attrition:
(2020: 7% | 2019: 11%)
Regular shareholder
engagements
on ESG matters
(2021: eighth annual
roadshow)
1 Defined as African, Coloured & Indian population.
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
ESG incorporated
in performance
scorecards &
remuneration
Group-level corporate transactions completed in 2021
OM unbundling of its shareholding in
Nedbank Group
Repurchased 100% of Nedbank Limited
preference shares
15 Oct 2018: OM unbundled 32%
▪ Offer to shareholders: 30% premium to
▪
▪
8 Nov 2021: OM unbundled 12,2%
▪ No impact on strategy, day-to-day
management or operations of Nedbank,
our employees or clients. Existing
commercial relationship underpinned by
arm’s length agreements
▪ Benefits: Increased free float of Nedbank
shares (enhanced liquidity & more
favourable position in relevant indices)
▪ OML shareholding: 5,2% (31 Dec 2021)
the 30-day VWAP
▪ Rationale: Expensive funding that does
not contribute to Basel III requirements
▪ Outcome: 100% votes of approval at
Nedbank Limited AGM (19 Nov 2021)
▪ Shares suspended: 14 Dec 2021
▪ No material impact on Nedbank’s funding
or capital ratios
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
26
14
Notes:Notes:Nedbank Group Annual Results 2021 Financial
overview
Mike Davis
Chief Financial Officer
‘Strong HE recovery
ahead of expectations
& ROE up to 12,5%’
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
27
Key drivers of shareholder value creation – strong NAV growth &
ROE recovery, while dividend payments resumed
NAV per share (cents)
ROE & cost of equity (%)
Dividend per share (cents)
5
1
4
1
1
9
1
1
12,5
1
9
3
8
1
3
9
4
0
2
i
s
d
n
e
d
v
d
o
N
i
07
09
11
13
15
17
19
21
07
09
11
13
15
17
19
21
07
09
11
13
15
17
19
21
COE
ROE
Interim
Final
Strong NAV recovery +11% yoy
ROE improved to double digits
Final dividend at 1,75x cover
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
28
15
Notes:Notes:Resultspresentation2021 resultscommentaryFinancial resultsSegmentalanalysisIncome statementanalysisStatement of financialposition analysisSupplementaryinformationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
Strong capital & liquidity positions, supported by stronger profitability
& prudent levels of provisioning
yoy
115%
112%
223%
1%
2%
Headline earnings (Rm)
DHEPS (cents)
Basic EPS (cents)
ROE (%)
Gross banking advances (Rbn)
Deposits (Rbn)
NIM (bps)
Credit loss ratio (bps)
Total coverage (%)
Liquidity coverage ratio (%)
NSFR (%)
CET1 ratio (%)
Risk-weighted assets (Rbn)
(3%)
2021
11 689
2 362
2 317
2020
5 440
1 113
717
2019
12 506
2 565
2 500
12,5%
6,2%
15,0%
807
972
373
83
3,32%
128%
116%
12,8%
657
797
954
336
161
810
904
352
79
3,25%
2,26%
126%
113%
10,9%
674
125%
113%
11,5%
629
Profitability
Advances
& deposits
Asset quality
Liquidity
Capital
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
29
Headline earnings up by 115% – driven by a significant decrease in
impairments, strong revenue recovery & well-managed expenses
Headline earnings (Rm)
8%
4%
(50%)
6%
77%
1 868
347
6 593
2 129
2 419
887
5 440
HE
20
NII
NIR
Impairments
Expenses
Associate
income
Direct tax
1
& other
1 Other includes Indirect tax, net monetary loss, and minority & preference shareholders.
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
11 689
HE
21
30
16
Notes:Notes:Nedbank Group Annual Results 2021 Headline earnings up by 115% – driven by a significant decrease in
impairments, strong revenue recovery & well-managed expenses
BOOKLET SLIDE
Key earnings drivers (pre-tax, Rm)
+10% excl MFVHA
adjustments
+2% excl
incentives
8%
4%
(50%)
6%
77%
0
0
5
2
3
7
6
1
0
3
1
8
0
0
3
NII
7
2
0
5
2
7
9
9
5
2
0
4
1
4
2
NIR
4
3
5
6
9
2
1
6
7
2
1
3
1
9
7
1
2
3
2
7
7
1
3
9
3
6
3
3
3
9
7
2
5
4
9
9
7
Impairments
Expenses
Associate income
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
31
19
20
21
Strong PPOP growth across all our clusters
PPOP
(Rm)
CIB
yoy
2021
2020
2019
yoy
H1
2021
H1
2020
yoy
H2
2021
H2
2020
8%
8 734
8 092
8 920
1%
4 423
4 363
16%
4 311
3 729
RBB
5% 11 432
10 931
12 175
3%
5 291
5 136
6%
6 141
5 795
Wealth
22%
1 275
1 048
1 358
13%
600
531
31%
675
517
NAR
76%
736
419
626
16%
279
241
156%
457
178
Centre
111%
150
71
(502)
(131%)
(138)
446
177%
288
(375)
Group
9% 22 327
20 561
22 577
(2%)
10 456
10 717
21%
11 871
9 844
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
32
17
Notes:Notes:Resultspresentation2021 resultscommentaryFinancial resultsSegmentalanalysisIncome statementanalysisStatement of financialposition analysisSupplementaryinformationMessage from ourChief ExecutiveNedbank Group Annual Results 2021 Gross banking advances up 1% ‒ momentum in RBB continued, while CIB
reversed the downward growth trend in the second half of 2021
CIB gross banking advances (Rbn)
RBB gross banking advances (Rbn)
450
400
350
300
250
(2%)
1
+10%
I
B
C
B
B
R
+7%
Apr
Jan
19
Jul Oct Jan
20
Apr
Jul Oct Jan
21
Apr
Jul Oct
Apr
Jan
19
Jul Oct Jan
20
Apr
Jul Oct Jan
21
Apr
Jul Oct
1 Annualised.
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
33
Retail loan application volumes – initial impact of strict lockdowns in 2020 but
strong recovery on the back of lower interest rates & benefits from our enhanced
digital channels
BOOKLET SLIDE
Home loan applications
Vehicle finance applications
+10%
+15%
Apr
Jan
19
Jul Oct Jan
20
Apr
Jul Oct Jan
21
Apr
Jul Oct
Apr
Jan
19
Jul Oct Jan
20
Apr
Jul Oct Jan
21
Apr
Jul Oct
Personal-loan applications
Card applications
+30%
+35%
Apr
Jan
19
Jul Oct Jan
20
Apr
Apr
Jul Oct Jan
21
2019
Jul Oct
Apr
Jan
19
Jul Oct Jan
20
Apr
Jul Oct Jan
21
Apr
Jul Oct
2020
2021
Total 12-month yoy change
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
34
18
Notes:Notes:Nedbank Group Annual Results 2021 Deposits up by 2% – good growth in transactional & core deposits, while reliance
on wholesale funding continues to reduce
Deposits (Rbn, % change yoy)
Funding mix (% contribution 2021 vs 2019)
5%
8%
(5%)
(18%)
(1%)
4
6
3
7
3
3
6
2
3
9
6
2
5
5
2
5
9
1
5,9%
6,8%
32,3%
8
9
1
8
9
1
7
9
1
18,5%
9
1
1
0
0
1
2
8
7
6
3
6
0
6
36,5%
2019
2021
CASA & cash
management
Call
& term
Fixed
deposits
NCDs
Foreign
currency &
other
Wholesale
Commercial
Household
Dec 19
Dec 20
Dec 21
Capital markets
Foreign funding
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
35
NII up by 8% ‒ NIM expansion driven by higher levels of endowment (capital & CASA),
asset & liability mix changes, improved asset pricing, risk management & basis risk impact
Net interest margin (bps)
12
6
20
(14)
13
354
Dec
16
362
Dec
17
365
Dec
18
352
Dec
19
336
Dec
20
Endowment
pricing
Endowment
volume
Liability
mix & pricing
Asset
mix &
pricing
Balance
sheet
mgnt & other
Positively positioned for a rising rate cycle – NII sensitivity for 1% change in interest rates: R1,6bn
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
373
Dec
21
36
19
Notes:Notes:Resultspresentation2021 resultscommentaryFinancial resultsSegmentalanalysisIncome statementanalysisStatement of financialposition analysisSupplementaryinformationMessage from ourChief ExecutiveNedbank Group Annual Results 2021 NIR up by 4% – recovery in commission & fees, insurance income & equity
revaluations, partially offset by the impact of a high 2020 trading base & fair-value
unwinds
NIR (Rm)
4%
(15%)
24%
> 100% > (100%)
4
2
5
4
5
7
4
4
2
5
2
5
9
3
7
8
1
7
3
1
7
1
4
5
7
7
1
7
3
8
1
2
2
6
1
5
0
0
2
)
8
3
0
1
(
2
6
2
0
5
6
2
5
3
0
6
5
1
8
6
7
9
5
7
5
Commission
& fees
Trading
income
Insurance
income
Equity
revaluations
Fair
value
)
3
3
8
(
Other¹
19
20
21
1 Represents sundry income & investment income.
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
▪
▪
▪
▪
▪
Commission & fees – recovery evident in
increasing client transactional activity,
main-banked client gains & cross-sell
Trading – solid performance but growth
impacted by high 2020 base
Insurance – enhanced ALM strategy &
improved investment performance, partially
offset by an increase in death & funeral claims
Equity revaluations – non-recurrence of
negative revaluations in 2020
Fair value – unwind of the 2020 gains as a
result of the group’s macro fair-value hedge
accounting solution (no further volatility in H2
2021 & not expected to recur)
37
NIR – our technology strategy, along with shifts in RBB client transactional
behaviours are driving NIR growth & cost optimisation opportunities
Branch teller transactions1
POS volumes
(21%)
BOOKLET SLIDE
+32%
Apr
Jan
19
Jul Oct Jan
20
Apr
Jul Oct Jan
21
Apr
Jul Oct
Apr
Jul Oct Jan
20
Jan
19
Digital payment & transfers2
Apr
Jul Oct Jan
21
Apr
Jul Oct
ATM withdrawals
(1%)
+27%
Apr
Jan
19
Jul Oct Jan
20
Apr
Jul Oct Jan
21
2019
Apr
Jul Oct
Apr
Jan
19
Jul Oct Jan
20
Apr
Jul Oct Jan
21
Apr
Jul Oct
2020
2021
Total 12-month yoy change
1 Teller transactions include any cash-related transactions performed over the counter (eg deposits, withdrawals & transfers etc). | 2 App & web payment volumes combined.
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
38
20
Notes:Notes:Nedbank Group Annual Results 2021
Trading income & equity revaluations – growth impact of 2020 trading
base effects, normalising to 2019 levels
Trading income (Rm)
Equity revaluations (Rm)
BOOKLET SLIDE
3 129
2 174
2 350
2 123
2 273
2 202
293
396
254
H1 19
H2 19
H1 20
H2 20
H1 21
H2 21
H1 19
H2 19
H1 20
H2 20
H1 21
H2 21
Commodities & equities
Debt securities
Foreign exchange
Unrealised gains/losses
Realised gains, dividends, etc
(31)
(273)
(765)
▪ Equities – non-linear derivatives book well positioned
▪
in volatile equity markets
▪ Debt securities & FX – lower due to high base &
once-off income earned in H1 2020. Global macro
environment creating high volatility levels, low liquidity
& subdued client flows
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
IB – normalisation of equity revaluations driven by
improved underlying investee company profitability
resulting in increased valuations
▪ CPF – lower negative revaluations than the prior year
Insurance – improved investment returns due to strong JSE growth, offset
by higher claims in the life portfolio, with a slight decrease in H2 2021
Death claims
(volumes)
Funeral claims
(volumes)
JSE all share index1
(points)
+66%
+22%
80 000
60 000
40 000
20 000
0
39
+24%
Jan
19
Apr Jul Oct Jan
20
Apr Jul Oct Jan
21
Apr Jul Oct
Jan
19
Apr Jul Oct Jan
20
Apr Jul Oct Jan
21
Apr Jul Oct
Jan
19
Apr Jul Oct Jan
20
Apr Jul Oct Jan
21
Apr Jul Oct
2019
2020
2021
Total 12-month yoy change
1 Measured end of December 20 to end of December 21.
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
40
21
Notes:Notes:Resultspresentation2021 resultscommentaryFinancial resultsSegmentalanalysisIncome statementanalysisStatement of financialposition analysisSupplementaryinformationMessage from ourChief ExecutiveNedbank Group Annual Results 2021 Asset Management – 13% growth in AUM supported by positive net flows &
an increase in market share in international & money market funds
Assets under management (Rbn)
Market share (%)
424
s
n
o
i
l
l
i
B
375
331
312
297
273
257
212
190
151
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
12
13
14
15
16
17
18
19
20
21
12
13
14
15
16
17
18
19
20
21
Local
International
International
Passive
Money Market Funds
SA
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
41
Balance sheet ECL strong at R26,6bn – R6,5bn income statement charge,
while recoveries & write-offs increased (conservatism)
Balance sheet ECL (Rbn)
1,4
6,5
(8,1)
Write-offs & post-write-off
recoveries (Rbn)
Recoveries
1,3
1,2
1,2
1,4
(4,0)
(5,5)
(7,4)
(8,1)
15,8
Dec
18
18,2
Dec
19
26,1
Dec
20
IS
charge
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
Recoveries Write-offs
Other
26,6
Dec
21
Write-offs
Dec
18
Dec
19
Dec
20
Dec
21
42
22
Notes:Notes:Nedbank Group Annual Results 2021 Impairment charge down by 50%
Impairment charge (Rm)
Key drivers
13 127
(50%)
▪ Gross loans & advances up by 1%
9 471
2 734
922
391
(110)
Stage 1 Stage 2 Stage 3
& other
Dec
20
Stage 1 Stage 2 Stage 3
& other
Dec
21
▪ Significantly better collections experience –
benefits from interest rate cuts in 2020 & improved
risk profile
▪ Macroeconomic benefits coming through in
models – mainly as GDP growth improved
6 534
▪ D3 loans1 reduced to R3bn (Jun 20: R119bn)
6 253
▪ D7 loans2 reduced to R10bn (Dec 20: R13bn)
– restructured loans cured
▪ Judgemental & macroeconomic overlays –
R1,7bn emerged in our new IFRS models, R675m
released through the IS & R1,5bn remain in place
1 D3 loans: Covid-related relief loans provided under PA D3/2020. | 2 D7 loans: Distressed restructured loans provided under PA D7/2015.
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
43
Credit loss ratio reduced to 83 bps – within our TTC range of 60 to 100 bps
Group CLR (bps)
Cluster CLR (bps)
GFC
152
300
250
200
150
100
50
0
Covid-19
187
161
79
83
8
1
1
2
8
2
4
9
6
2
0
4
2
4
3
1
0
1
2
5
8
1
4
6
0
5
9
06 07 08 09 10 11 12 13 14 15 16 17 18 19 H1
20
20 21
CIB
RBB
Wealth
NAR
TTC target range
Dec 19
Jun 20
Dec 20
Dec 21
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
2
7
44
23
Notes:Notes:Resultspresentation2021 resultscommentaryFinancial resultsSegmentalanalysisIncome statementanalysisStatement of financialposition analysisSupplementaryinformationMessage from ourChief ExecutiveNedbank Group Annual Results 2021 CLR ‒ declines across all key business units & products due to conservative provisioning
in 2020 under IFRS 9, together with a materially better macroeconomic environment
Credit loss ratio (bps)
BOOKLET SLIDE
Home
loans
VAF
Unsecured
lending
Card
BB
2
5 8
2
2
4
4
2 6
1
)
9
(
1
8
1
6
4
1
9
6
2
8
8
0
1
5
1
0
1
6
1
6
2
4
5
4
9
8
2
3
6
0
1
0 1
5
4
8 6
1
9
5
8
1
1
0
1
2
7
)
1
2
(
19 20 21
19 20 21
19 20 21
19 20 21
19 20 21
19 20 21
19 20 21
19 20 21
19 20 21
CIB
RBB
Wealth
NAR
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
45
Credit risk – D3 (payment relief) loans & D7 (restructured) loans reduced
significantly from Dec 2020
D3/2020 relief provided (Rbn)
D7/2015 restructured loans (Rbn)
BOOKLET SLIDE
Balance sheet
ECL:
R2,9bn
R0,5bn
R0,2bn
Not
disclosed
R2,8bn R2,0bn
119
65
28
D3 ends
1 April 2022
9
3
No D3
loans
13
10
9
9
7
Dec 19
Jun 20 Sep 20 Dec 20
Jun 21 Dec 21
Dec 19
Jun 20 Dec 20
Jun 21 Dec 21
CIB
RBB
Wealth
NAR
RBB
CIB
Other
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
46
24
Notes:Notes:Nedbank Group Annual Results 2021 Covid-19 & macro-related adjustments/overlays – risks either emerged via
our new IFRS models, did not emerge or still remain in place
Covid-19 & macro-related adjustments/overlays
Dec 2020
Dec 2021
Changes 2020 to 2021
(Rm)
Other
▪ Central provision (emerging risk not yet in
models/data/macroeconomic forecasts)
▪ NAR & Nedbank Wealth overlays
CIB
▪
IB & TS overlays – D3/D7 migration risk
▪ CPF overlays
R750m
R500m
R168m
R75m
R386m
R440m
R76m
R370m
1 518
▪
Interest rate benefit neutralisation overlay (MFC, the rest
of Retail adjusted in the models from H2 20)
R370m
R0m
▪ Covid-19-related adjustments
RBB
‒ Overlays on Retail loans to cater for short-term residual
risk (reduction driven by RBB D3 loans declining to zero)
R334m
R0m
‒ BB overlays
‒ Longer-term impact using stressed forward-looking
information (FLI)
R416m
R257m
R1 027m
____________
R3 891m
R240m
____________
R1 518m
In addition to the R1,5bn Covid-19 overlays, new overlays were raised in RBB & CIB
675
1 698
Released through the IS
In new IFRS models
Remain in place (monitored)
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
47
Credit risk – strong coverage ratios across stage 1, 2 & 3 loans
Stage 1 loans
Stage 2 loans
Stage 3 loans
Coverage
ratio (%)
0,45
0,48
0,65
0,69
+2% yoy
5,0
5,3
6,6
6,4
36,8
37,9
38,0
0% yoy
31,5
(13%) yoy
Loans &
advances
(Rbn)
3
5
6
Dec
18
8
7
6
Dec
19
9
1
6
Dec
20
4
3
6
Dec
21
3
7
Dec
18
2
7
Dec
19
8
9
Dec
20
9
9
Dec
21
5
2
Dec
18
8
2
Dec
19
5
4
Dec
20
9
3
Dec
21
Stage 1 coverage – marginal
increase driven by mix changes
(RBB vs CIB growth)
Stage 2 coverage – decrease
driven by the reduction of the central
provision & other overlays
Stage 3 coverage – increase driven
by D7 loans curing & higher CIB
stage 3 coverage ratio
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
48
25
Notes:Notes:Resultspresentation2021 resultscommentaryFinancial resultsSegmentalanalysisIncome statementanalysisStatement of financialposition analysisSupplementaryinformationMessage from ourChief ExecutiveNedbank Group Annual Results 2021 Expenses up by 6% – excluding incentives expenses up by 2%, reflecting good
cost management, with focus on efficiencies & benefits from digitisation
Expenses (Rm)
▪ Staff costs
(1%)
75%
9%
2%
9
4
0
3
0
5
5
2
1
4
7
1
2
7
7
4
1
8
8
0
5
1
9
6
9
4
1
8
7
8
4
0
3
8
5
9
2
3
6
9
7
9
9
3
1
1
9
2
9
2
9
Staff packages
& other
Incentives
(STI & LTI)
Computer
processing
Other
19
20
21
‒
‒
‒
Annual salary increases: +3,5%
5% decline in headcount (mainly through
natural attrition)
Variable-pay incentives up by 75%,
aligned with improved profitability metrics
(down 32% in 2020 & down 24% in 2019)
▪ Computer processing – amortisation growth
rate slowing as ME journey matures (2021:
+19%, 2020: +23%, 2019: +22%)
▪ Other costs – up by 2% (some normalisation in
discretionary spend including marketing & YES,
partially offset by savings from lower
accommodation-related costs)
▪ TOM 2.0 – R967m benefits in 2021 (R2,5bn
targeted by end-2023)
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
49
Capital – CET1 ratio above pre-Covid levels & above the top-end of our revised
board-approved target range of 11% to 12%
CET1 ratio (%)
Active capital management
(0,3)
0,3
Board CET1
target1:
1,9
12%
to
11%
8,5%
SARB PA
minimum
CET12
11,5
10,6
10,9
Dec
19
Jun
20
Dec
20
Profits
Interim
dividend
RWA
12,8
Dec
2021
Maintain conservatism in a difficult,
uncertain & volatile environment
Retain adequate capital to
grow the business
~R6bn surplus
capital above
the top end of
target range
(12%) &
~R28bn
surplus capital
Pay dividends in line with board
above
regulatory
minimum
(8,5%)
policy of 1,75x – 2,25x cover
Other management actions
1 During 2020 Nedbank’s internal board-approved target ranges were adjusted to reflect the lower new regulatory minimum requirements, in line with PA Directive 2/2020. |
2 Excluding idiosyncratic buffers & including the D-SIB capital requirement of 100 bps, in line with PA Directive 5/2021 (from 50 bps in December 2020).
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
50
26
Notes:Notes:Nedbank Group Annual Results 2021 Risk-weighted assets – credit RWA optimisation & selective origination, along with
normalisation of market RWA as volatility normalised through the models
Risk-weighted assets (Rbn)
BOOKLET SLIDE
(4)
19
(3)
(14)
(0)
30
629
Dec
2019
Credit
Market
Other
RWA
674
Dec
2020
Credit
Market
Other
RWA
657
Dec
2021
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
51
Pricing of capital & funding – reduced over time & within industry ranges
Nedbank pricing vs SA banking peers (bps above JIBAR)
BOOKLET SLIDE
800
700
600
500
400
300
200
100
0
16
17
18
20
21
Ned 3 Year SUD
Ned 5 Year SUD
Ned 7 Year SUD
Ned Tier 2
Ned AT1
SA banks pricing during 2021
▪ AT1
‒ Peers: 391 to 480 (Ned: 391 to 467)
▪ Tier 2 debt
‒ Peers: 190 to 260 (Ned: 200 to 235)
▪ Senior unsecured
‒ Peers: 3 year: 101 to 110 (Ned: 110)
‒ Peers: 7 year: 145 to 149 (Ned: 135 to 150)
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
52
27
Notes:Notes:Resultspresentation2021 resultscommentaryFinancial resultsSegmentalanalysisIncome statementanalysisStatement of financialposition analysisSupplementaryinformationMessage from ourChief ExecutiveNedbank Group Annual Results 2021 Dividends – strong capital position supported a final dividend at 1,75 times cover
& dividend yield that is attractive for investors
Dividend payout ratio
(payout ratio %, times cover x)
Forward dividend yield1
(%)
1,99x 1,84x 2,50x
1,75x
Board-approved
dividend policy:
Dividend
coverage range
1,75x to 2,25x
e
n
i
l
n
i
d
e
r
a
c
e
d
l
&
0
2
0
2
/
4
G
h
t
i
w
1
2
0
2
/
3
G
40% 57%
i
s
d
n
e
d
v
d
o
N
i
50% 54%
12
10
8
6
4
2
0
Interim
2019
Final
2019
Interim
2020
Final
2020
Interim
2021
Final
2021
1 Refinitiv (at 9 February 2022 based on consensus broker forecasts).
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
12 13 14 15 16 17 18 19 20 21 22
Nedbank
All share
7,1
4,4
53
Return on equity
(%)
Cluster financial overview
Headline earnings
(Rbn, growth %)
+45%
Wealth
>100%
NAR
0,6
1,0
>100%
RBB
4,5
R11,7bn
>100%
5,6
+54%
CIB
%
3
,
5
1
%
7
,
3
1
%
2
,
1
2
%
3
9
,
CIB
RBB
Wealth
NAR
1 Average of 8 sell-side brokers.
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
28
Broker1
COE 14,4%
Group ROE
12,5%
54
Notes:Notes:Nedbank Group Annual Results 2021
Nedbank
CIB
Anél Bosman
Group Managing Executive
‘Strong HE recovery
driven by significantly
lower impairments,
widening NIM & solid
business performance’
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
55
CIB financial performance – solid HE driven by growth in NII, lower
impairments & NIR normalisation
Financial performance
17,7
E
O
R
)
%
(
i
s
g
n
n
r
a
e
e
n
i
l
d
a
e
H
)
m
R
(
7
6
1
6
19
9,4
6
3
6
3
20
15,3
▪ NII up 9%
‒ NIM increased by 48 bps benefitting from strategic
optimisation of the portfolio
+54%
‒ Lower banking loans & advances (down 2% yoy)
▪ Impairments declined by 56%
‒ CLR at 42 bps within TTC target range
‒ Improvement in macro-economic factors
▪ NIR grew 9%
‒ Excellent performance of the private equity portfolio
‒ Solid trading performance but growth impacted by high 2020
base
5
0
6
5
21
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
56
29
Notes:Notes:Resultspresentation2021 resultscommentaryFinancial resultsSegmentalanalysisIncome statementanalysisStatement of financialposition analysisSupplementaryinformationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
CIB financial performance – reduced credit risk & recorded second-half
banking advances growth while maintaining optimal capital levels
Credit loss ratio (%)
0,82%
0,25%
0,42%
Coverage ratios (%)
▪ Impairments declined by 56%
24,6%
23,7%
3,30%
2,24%
2,26%
14,9%
‒ Proactive risk management
‒ Below initial expectations
▪ Coverage ratios
‒ Adequate impairments raised
▪ Sector focus
0,30%
0,17%
0,20%
19
20
21
CLR
TTC
Stage 1
Stage 2
Stage 3
19
20
21
‒ Aviation & hospitality impacted by Covid-19
‒ Construction & SOEs continued focus
‒ Property portfolio adequately covered
Banking advances (Rbn)
Allocated capital (Rbn)
+10% *
(2%)
(6%)
▪ Banking advances declined by 2%
Mar
19
Jun
19
Sep
19
Dec
19
Mar
20
Jun
20
Sep
20
Dec
20
Mar
21
Jun
21
Sep
21
Dec
21
Mar
19
Jun
19
Sep
19
Dec
19
Mar
20
Jun
20
Sep
20
Dec
20
Mar
21
Jun
21
Sep
21
Dec
21
* H2 growth annualised.
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
‒ Strong performance in H2
‒ H1 2020 liquidity drawdowns repaid
‒ Unexpected early repayments
▪ Allocated capital declined by 6%
‒ RWA reduced by 9%
‒ Market risk reduced by 35%
57
BOOKLET SLIDE
Commercial property finance – a high-quality, well-diversified & collateralised
portfolio, with additional overlays for the risk of potential future stresses
What gives us comfort?
Credit loss ratio (bps) & Loan-to-value ratio (%)
▪ High-quality, well-diversified & collateralised
CLR
53
(5)
10
(2)
54
portfolio
▪ Portfolio LTVs remain low
‒ Average LTV increased to 53% ‒ due to
downward revaluations of collateral
‒ LTVs remain low, with adequate
collateralisation – significantly reduces the
risk of potential losses
▪ Covid-19-related and other overlays increased
to R670m (Dec 20: R440m) to buffer against
further deterioration in valuations & credit
migration
▪ Low levels of arrears
– 0 to 90 days: R5m (Dec 20: R22m)
▪ Minimal impact on debt servicing due to July
unrest – all properties impacted were insured
% of
loans:
30
53%
49%
42%
44%
48%
50%
LTV
GFC peak
Dec 17
Dec 18
Dec 19
Dec 20
Dec 21
LTV
56
35%
55
51
42
40
58
44
27%
19%
11%
4%
3%
1%
Retail
Office
Industrial
Residential
Other
Hotel
Hospital
Covid-19-impacted sectors:
High
Medium
Low
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
58
30
Notes:Notes:Nedbank Group Annual Results 2021 Nedbank commercial property finance – office portfolio
Office exposure by client type (%)
Vacancies (%)
Nedbank
Market*
BOOKLET SLIDE
% of
exposure
43% 31% 17%
8%
2%
Large Corporates
Other clients, LTV<61%
Non performing
Listed Funds
Other clients, LTV≥61%
Loan-to-value (%)
>91%
5%
81% - 90.99%
71% - 80.99%
61% - 70.99%
51% - 60.99%
41% - 50.99%
0 - 40.99%
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
* Based on SAPOA Q4 2021.
11%
14%
19%
20%
17%
13%
16%
Commercial vacancies
▪ Listed funds and large corporates comprise 74% of
exposure – generally low gearing & well-diversified
portfolios, able to absorb increased vacancies & reduced
rentals
8%
▪ Other clients LTV < 61% – low gearing – able to absorb
increased vacancies & reduced rentals while still meeting
debt obligations
▪ Other clients (LTV ≥ 61%) – risk not significant
‒ Exposure at elevated gearing levels (>81% LTV) is
less than R200m
‒ Lease expiry profile greater than 36 months across
all exposures
‒ Vacancy level: 6,2%
▪ 93% of exposure in higher LTV buckets (> 81%) is to
listed funds & large corporates
▪ While the office market will remain under pressure, the
quality of the collateral pool & composition of our
portfolio reduces our risk
59
Credit risk – CIB Covid-19 high-risk exposures
BOOKLET SLIDE
CIB high-risk sectors
48%
(47%)
Covid-19-impacted sectors (excl CPF)
% of CIB
exposure
D3 % of
sector exp
D7 & NP % of
sector exp
▪ SOEs/Municipalities – defaulted exposures being
restructured, with 19% government-guaranteed
5% (7%)
0% (0%)
5% (5%)
11%
(18%)
▪ Construction* – Stressed sector pre-Covid-19 with
reduction in high-risk & defaulted exposure in 2020
2% (3%)
0% (13%)
16% (6%)
41%
(35%)
Covid impacted sectors
Rest of CIB
CPF
▪ Aviation – 29% of exposure guaranteed &
remaining exposure secured at 70% average LTV
1% (1%)
9% (29%)
67% (28%)
▪ Hospitality – exposure to largest hotel & casino
groups with substantial asset/equity base
2% (2%)
0% (95%)
3% (0%)
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
* Construction includes Steel & Cement. | (%) denotes exposure at 31 December 2020.
60
31
Notes:Notes:Resultspresentation2021 resultscommentaryFinancial resultsSegmentalanalysisIncome statementanalysisStatement of financialposition analysisSupplementaryinformationMessage from ourChief ExecutiveNedbank Group Annual Results 2021 Strategic growth levers – optimising our growth
Portfolio optimisation
Active management of
the balance sheet to drive
enhanced returns
People
Focussed investment in our
people & capabilities to support
continued strategic growth
▪ Active portfolio positioning
▪ Sustainable people plan to
▪ Trusted advisor that
services clients across all
their financial needs
▪ Significant RWA savings
realised in 2020 & 2021
support strategic growth
▪ Attracting & retaining
best-in-market skills
▪ Key focus on diversity,
equity & inclusion
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
61
Digitising our transactional experience – the Nedbank Business Hub
delivers a differentiated, ‘warm digital’ client platform experience
The Nedbank Business Hub is an
evolving channel that provides an all-
in-one, convenient & self-serviced
solution that enables business
clients to:
▪ Apply for new products
▪ Transact
▪ Request & track services
▪ Set up & maintain user
permissions
Unlocking transactional
business growth:
▪ Enhanced client access to
products & services
▪ Strengthen client ‘stickiness’
& market share
62
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
32
Notes:Notes:Nedbank Group Annual Results 2021 Sustainably investing in South Africa
Being the difference
that impacts
our world
Sustainable
finance expertise
externally
acknowledged
Driving the
transition to
renewable
energy
▪ Committed to supporting
government’s infrastructure
programme
▪ Mobilising capital,
resources & networks to
play our part in sustainably
building South Africa
▪ Arranging innovative
green bond solutions
▪ RMIPPPP & Round 5
projects
▪ Partnering with clients to
drive ESG objectives
through sustainability
linked solutions
▪ Round 6 due out shortly
▪ Significant mining &
industrial sector activity
for Commercial &
Industrial Generation
2021 Winner: Best
Bank for Sustainable
Development | SA
Local Markets ESG and Sustainable
Finance Adviser of the Year 2021
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
63
Nedbank Corporate & Investment Banking – outlook
2022 outlook
▪ Capital – continued focus on optimisation & increase returns
▪ NII – targeting consistent NIM & optimal balance sheet growth
▪ NIR
‒ Trading conditions remain challenging with trading volumes under pressure
‒ Leverage our robust pipeline to increase fees & commissions
‒ Private equity to pursue new equity investments, continued focus on realisations & preserving
the existing portfolio
▪ Banking advances growth – convert a robust/strong pipeline subject to confidence
▪ CLR – maintain around the midpoint of TTC target range
Long-term outlook
▪ Position for growth while financing responsibly through differentiated offerings
▪ Global twin challenge of inflation & growth, increased levels of uncertainty
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
64
33
Notes:Notes:Resultspresentation2021 resultscommentaryFinancial resultsSegmentalanalysisIncome statementanalysisStatement of financialposition analysisSupplementaryinformationMessage from ourChief ExecutiveNedbank Group Annual Results 2021 Nedbank
RBB
Ciko Thomas
Group Managing Executive
‘Improved performance
in 2021, after a difficult
2020’
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
65
RBB financial performance – solid progress in building the franchise
Financial performance
17,3
E
O
R
)
%
(
i
s
g
n
n
r
a
e
e
n
i
l
d
a
e
H
)
m
R
(
3
9
2
5
19
5,4
5
9
5
1
20
13,7
> 100%
▪ NII up by 5%
‒ Advances growth momentum across all products
▪ Impairments down by 41%
‒ CLR at 134bps due to lower consumer stress &
strengthening macro environment
‒ Includes R713m of once off net benefits relating to curing of
accounts, re-grounding updates & release of Covid-19-
related overlays
‒ Normalised CLR of 153bps falls into the middle of the TTC
target range
▪ NIR up by 8%
2
3
5
4
21
‒ Strong recovery seen in client transaction activity
‒ Full recovery remains impacted by Covid-19 restrictions
▪ Expense growth of 6%
‒ Higher incentive costs, offset by ongoing cost optimisation
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
66
34
Notes:Notes:Nedbank Group Annual Results 2021
RBB clients segment & product returns
Return on equity (%)
BOOKLET SLIDE
Home
loans
VAF
Unsecured
lending
Transactional
Card
Fx &
investments
4
,
1
1
0
,
9
1
8
,
9
1
4
,
4
1
9
,
0
1
,
0
1
5
,
2
3
3
,
6
2
6
,
4
2
,
4
8 6
3
1
,
ROE 12,4%
including
insurance
5
,
2
2
6
,
4
1
6
,
5
3
,
7
1
1
,
2
2
1
,
2
8
,
4
3
,
3
1
6
,
3
2
,
9
2
7
,
0
9
,
4
1
0
,
5
3
5
,
9
3
6
,
8
2
19 20 21
19 20 21
19 20 21
19 20 21
19 20 21
19 20 21
19 20 21
19 20 21
19 20 21
Business
banking
Consumer
banking
Relationship
banking
Product views, excl BB
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
67
6
,
0
1
-
RBB metrics highlight the good quality of the book
Vehicle finance
New- vs used-vehicle distribution (%)
80%
Personal loans
Market share of disbursed business (%)1
Targeted risk
High risk
BOOKLET SLIDE
60%
40%
20%
0%
19
Home loans
New
Used
20
21
LTV distribution 2009 vs 2021
20%
15%
10%
5%
0%
18
19
20
21
Nedbank
60%
40%
20%
0%
18
19
20
21
80%
60%
40%
20%
0%
18
19
20
21
Tier 1
Tier 2
HL new business ‒ Low-risk clients proportion1
100%
80%
60%
40%
20%
0%
<=50
50-80
80-90
90-100
>100%
50%
40%
30%
20%
10%
0%
200912
2009
202112
2021
09
10
11
12
13
14
15
16
17
18
19
20
21
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
1 Source: Experian. Tier 1 refers to traditional 4 banks excluding Nedbank, while Tier 2 refers to remaining material
providers of unsecured personal loans. | 2 Source: Lightstone.
68
35
Notes:Notes:Resultspresentation2021 resultscommentaryFinancial resultsSegmentalanalysisIncome statementanalysisStatement of financialposition analysisSupplementaryinformationMessage from ourChief ExecutiveNedbank Group Annual Results 2021 RBB strategic focus areas
Delivering delightful client experiences through digital transformation
RBB strategic focus areas
Leading client
experiences
Digital First,
First in Digital
Efficient operating
model (TOM 2.0)
New growth
vectors (SPT 2.0)
Net Promoter Score
#1 bank
(from #2 in 2021)
Digital sales2
> 75%
(2021: 32% excl
MobiMoney)
Cost-to-income ratio1
< 57%
Main-banked clients
(2021: 3,1m)
1 Set in March 2021 ‒ target tor 2023. | 2 Long-term target.
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
69
Leading client experiences – RBB innovations
Insurance
Avo super app
Nedbank Business Hub
MyCover Life is a new life
cover proposition, offers
up to R2m cover with
limited underwriting
questions
MyCover Funeral is a new
funeral cover proposition
offers competitive premiums
for both individuals &
families
MyCover will offer
convenient car, home &
contents cover at one
affordable price point
Partnerships on Avo ‒ with 675 000
consumers1 & > 20 000 businesses registered
•
A partnership with Moya, a data-free instant
messaging app
A partnership with AfroCentric, a medical
aid with 3,9m members, to be their loyalty &
rewards and digital commerce partner.
•
Nedbank Business Hub enables
clients to access products &
services through a central point
Solar energy finance
Solar Energy Finance offering
through a home loan product
Consumer health
Money Tracker is a digital money
management tool that allows
clients to track finances & create
budgets
Credit Health gives clients unlimited
access to their credit profile &
provides credit-scoring tips
Money Message is a secure
platform enabling payments
through WhatsApp
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
70
1 At the beginning of March 2022: > 1 million.
36
Notes:Notes:Nedbank Group Annual Results 2021 Digital First, First in Digital – retail credit growth supported by our digital
channels, notwithstanding more stringent approval rates
Home loans
Vehicle finance
Personal loans
Credit card
BOOKLET SLIDE
Volume benefit from
MFC’s 70% used-
vehicle mix profile
Approval rates Take-up rates
Approval rates Take-up rates
Approval rates Take-up rates
Approval rates Take-up rates
13
11
11
(51%)
Branch
Digital
14,4 14,4 14,2
2
2
2
36,4 36,5 36,9
41
29
22
21
31
22
(78%)
(15%)
10,2 11,2 12,2
13,0 12,6 12,0
19
20
21
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
1 Vehicle finance share for households.
19
20
21
19
20
21
19
20
21
71
s
e
t
a
r
p
u
-
e
k
a
t
&
l
a
v
o
r
p
p
A
l
s
e
a
s
l
a
t
i
g
D
i
l
a
t
o
t
f
o
%
s
a
n
o
i
t
i
s
u
q
c
a
i
f
o
t
s
o
C
t
e
k
r
a
m
0
0
9
A
B
1
e
r
a
h
s
Digital First, First in Digital
BOOKLET SLIDE
Personal Loans – our first fully digitised client journey/product now delivering tangible benefits
Channels
Digital sales
Credit
Channels (% of total)
Personal loans market share (%)
Cross-sell
PL paid into a Nedbank Tx account
Existing Nedbank clients (out of 10)
70%
Physical
54%
11,2%
12,2%
5
7
30%
Q4 20
Nedbank API
Digital
46%
Q4 21
Dec 20
Dec 21
Q1 19
Q4 21
Client satisfaction score (SA-csi)
Loan approval & disbursal rates (%)
Rank: #3
#3
75,8
#1
#3
75,9
2018
2021
19
21
Approval rates
Disbursal rates
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
72
37
Notes:Notes:Resultspresentation2021 resultscommentaryFinancial resultsSegmentalanalysisIncome statementanalysisStatement of financialposition analysisSupplementaryinformationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
Efficient operating model (TOM 2.0) – RBB restructure to become more
client-centred & distribution footprint changes as we shift to smaller formats &
enable self-service
BOOKLET SLIDE
Nedbank branches
(# of)
Nedbank in retailers
(# of)
Coverage
(% coverage within 30 km)
(24%)
+18%
Remain very competitive on
coverage by against peers
TOM 2.0 includes:
▪ Optimising the shape of our
branch infrastructure
▪ Shifting our RBB structure
so that it is more client-
centred
559
15
427
21
Target
94
15
111
21
Target
86
15
85
21
85
Industry
▪ Optimising our shared-
services functions
ATMs, IDs & SSKs1
Branch square meterage
(‘000 m2)
(# of)
Sales staff ratio2
(% of staff)
RBB employees
(# of)
(20%)
Ongoing
reduction
driven by size
& number of
branches
+18%
Branches
supplemented by
a growing number
of convenient self-
service options
A larger % of our people will
focus on sales
(22%)
Phoenix phase 1 & 2
complete with 425
FTE reduction
227
15
182
21
<120
Target
3 695
4 699
15
21
Target
36
15
37
21
Target
20,9
15
16,3
21
Target
1 Automated teller machines, Intelligent Depositors & self-service kiosks. | 2 Consumer, which includes Boxer & BDO. | All targets set in January 2022 ‒ target tor 2024.
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
73
New growth vectors (SPT 2.0) – growth in main-banked clients &
improving levels of cross-sell on new sales
Retail client base breakdown (# million)
Cross-sell ratio1
Consulta2 main-banked market share
19
20
21
% growth on 19
3,1
3,0
3,1
2,3
2,1
1,8
2020
2021
Share
1.71
1.78
1.86
Nedbank
+0,0% +1,1% 12,4%
Capitec
+4,0% +0,9% 40,1%
Other banks
+0,0% +0,6% 1,8%
SBSA
FNB
Absa
(0,6%)
(0,4%)
13,6%
(2,1%)
(0,6%)
18,5%
(1,3%)
(1,6%)
13,6%
Main-banked
clients
Digitally active
clients
Cross-sell on
active clients
1 Based on new definition of active clients: Client has either a non-zero-balance asset product or a non-zero-balance investment product; or a positive-funded-balance
transactional product (TP), or a negative TP balance with a transaction done within the past 12 months. | 2 Consulta surveys: 2020 & 2021 (released November 2021).
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
74
38
Notes:Notes:Nedbank Group Annual Results 2021 New growth vectors (SPT 2.0) – focus on arresting household deposit market share
losses
CONSUMER
Total household deposit market contribution
Total household market share,
Qoq change in 2021, bps
Household notice market share,
Qoq change in 2021, bps
Term
31%
CASA
30%
-28
Q1
-26
Q2
-24
Q3
-16
Q4
-12
Q2
-28
Q1
-28
Q3
-26
Q4
Household CASA market share,
Qoq change in 2021, bps
Household term market share,
Qoq change in 2021, bps
Pricing
driven
1
39%
Notice
-14
Q1
-17
Q2
-23
Q3
Franchise driven
-9
Q4
-30
Q1
-60
Q2
-10
Q3
Q4
Q4 2021 was our best quarter of 2021 in arresting household deposit market share losses – driven by pricing
strategy on term deposits & CASA improvement driven by main-banked-client gains
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
Note: HH deposit categories have been adjusted for known differences in classification among the banks.
75
Nedbank Retail & Business Banking – outlook
2022 outlook
▪ Advances growth – momentum continues
▪ CLR – normalisation to around the midpoint of our TTC target range (130–180 bps)
▪ NIR – diversify revenue base & scale key growth vector strategies
▪ Expenses – optimisation continues
▪ Execution of key strategic initiatives
Long-term outlook
▪ Ongoing focus to reduce cost-to-income ratio & increase ROE
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
76
39
Notes:Notes:Resultspresentation2021 resultscommentaryFinancial resultsSegmentalanalysisIncome statementanalysisStatement of financialposition analysisSupplementaryinformationMessage from ourChief ExecutiveNedbank Group Annual Results 2021 Nedbank
Wealth
Iolanda Ruggiero
Group Managing Executive
‘Strong growth in HE
supported by improved
markets, positive net
flows & credit
impairment releases’
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
77
Wealth financial performance – strong growth in HE supported by improved
markets, positive net flows & credit impairment releases
Financial performance
E
O
R
)
%
(
24,8
15,3
21,2
45%
▪ Strong ROE above the group’s cost of equity
▪ Insurance HE up 77%
– Due to the implementation of enhanced ALM strategy & an
improved investment performance, offset by an increase in
death and funeral claims
i
s
g
n
n
r
a
e
e
n
i
l
d
a
e
H
)
m
R
(
2
4
0
1
19
2
6
6
20
2
6
9
21
▪ Asset Management HE up 12%
‒ Strong market rebound & positive net flows of R7bn
▪ Wealth Management HE up >100%
‒ Benefited from credit impairment releases due to a recovery
on a large single client
‒ Negatively impacted by record-low interest rates, particularly
in the international business
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
78
40
Notes:Notes:Nedbank Group Annual Results 2021
Strong growth in HE supported by improved markets, positive net flows &
credit impairment releases
Headline earnings per division (Rm)
BOOKLET SLIDE
+77%
+12%
>100%
▪ Improved investment returns
Insurance
▪ Implementation of an enhanced asset and liability matching
strategy
▪ Negatively impacted by higher death and funeral claims in the life
portfolio
Asset Management
▪ Strong market rebound
▪ Positive net flows
Wealth Management
▪ Lower credit impairment charges due to the recovery of a large
single client
▪ Strong growth in investment business lines in international
▪ Negatively impacted by record-low USD and GBP interest rates
79
1
7
4
1
0
3
2
3
5
9
1
3
1
4
3
0
8
3
0
5
0
2
2
5
2
Insurance
Asset
Management
Wealth
Management
19
20
21
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
Wealth strategic focus areas
Building a sustainable business for the future
Enhance client
experiences
Build data &
digital capability
Drive long-term
performance for
clients
Invest in people
& culture
Leverage and
collaborate
within the cluster
& across
Nedbank
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
80
41
Notes:Notes:Resultspresentation2021 resultscommentaryFinancial resultsSegmentalanalysisIncome statementanalysisStatement of financialposition analysisSupplementaryinformationMessage from ourChief ExecutiveNedbank Group Annual Results 2021 Insurance growth vectors – 20% growth in new business volumes
• Focus on the diversification &
digitisation of insurance products
• Grow the MyCover portfolio
• Accelerate mobile & digital delivery
• Collaborate across Nedbank to increase
client penetration
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
81
Asset management growth vectors – 13% growth in AUM driven by positive
net flows & an increase in market share
Maintain steady growth
in the Best of Breed range
Leverage access to
group distribution
& digital integration
Q4 2021
Nedgroup Investments ranked
• SA – fifth largest in total AUM
(7% market share)
• International – third largest in
total AUM (12% market share)
Grow institutional
offering both locally &
internationally
Continue on the journey to
become one of the leaders
in responsible investing
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
82
42
Notes:Notes:Nedbank Group Annual Results 2021 Wealth management growth vectors – 18% growth in NPW digital users &
41% growth in NPW app interactions yoy
South Africa
International
▪ Optimise business structure & operations
▪ Collaborate with Nedbank Group partners
▪ Continue to work closely with Nedbank Private
Wealth (International)
▪ Digitise key processes
▪ Enhance digital innovation and adoption
▪ Collaborate with Nedbank Private Wealth SA
▪
Investing in solutions
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
83
Nedbank Wealth – outlook
2022 outlook
▪ NII – widening of NIM due to improved interest rate environment and growth in HNW client base
▪ CLR – remaining in TTC target range
▪ NIR
‒ growth in the Insurance MyCover portfolio
‒ normalised claims trends
‒ increased cross-sell opportunities due to greater penetration within the Nedbank Group
‒ AUM growth ‒ increase in market share
▪ Expenses
‒ optimisation continues through automation
‒ investment in strategic growth initiatives
▪ Sale of the international trust business
Long-term outlook
▪ Maintain strong ROE above the group’s cost of equity
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
84
43
Notes:Notes:Resultspresentation2021 resultscommentaryFinancial resultsSegmentalanalysisIncome statementanalysisStatement of financialposition analysisSupplementaryinformationMessage from ourChief ExecutiveNedbank Group Annual Results 2021 Nedbank
Africa Regions
Terence G Sibiya
Group Managing Executive
‘SADC operations – growth
in NII & lower impairments
ETI associate investment –
strong performance
accompanied by balance
sheet improvement’
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
85
NAR financial performance – strong performance largely driven by ETI
E
O
R
)
%
(
i
s
g
n
n
r
a
e
e
n
i
l
d
a
e
H
)
m
R
(
Financial performance
7,7
0,2
9,3
▪ SADC operations HE up >100%
‒ HE of R71m up by >100% (R141m loss in 2020)
‒ Main drivers of performance: impairments declined by 62%
& NII increased by +9%
‒ Slight decrease in NIR by 2%, although > 2019 levels
> 100%
▪ ETI associate investment HE up > 100%
7
5
4
19
2
1
20
4
9
5
21
‒ HE of R523m (R153m in 2020), driven by strong recovery
across three core regions (UEMOA, AWA & CESA)
‒ Improved capital & liquidity – total CAR up to 14,5%
(2020: 12,3%), with an improved ROTE of 18,8%
‒ Dividend payment to resume, subject to AGM approval
‒ Although profitable, Ecobank Nigeria’s performance remains
suboptimal & continues to be a focus for shareholders
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
86
44
Notes:Notes:Nedbank Group Annual Results 2021
ETI associate investment financial performance – strong turnaround in financial
performance accompanied by a material improvement in the balance sheet
)
m
R
(
e
m
o
c
n
i
e
t
a
i
c
o
s
s
A
668
19
(178)
20
686
21
0,7
0,6
Value-in-use
>R2,8bn
s
r
e
v
i
r
d
e
u
l
a
v
g
n
i
y
r
r
a
C
2,2
Carrying
value
Dec 2020
)
n
b
R
(
2,3
1,2
1,7
2,4
Associate
income
FCTR
& other
Carrying
value
Dec 2021
Market
value
Dec 2020
Market
value
Dec 2021
Market
value
Feb 2022
ETI Associate Investment
▪ Leading West & Central Africa
franchise: top 3 in 13 of 16 countries
▪
Improvement in NPLs & liquidity,
with three core regions reporting lower
NPLs & higher coverage ratios
▪ Strong performance from three core
regions, with regional ROEs all
greater than 21%1
▪ Signs of improvement in Ecobank
Nigeria – with increased profitability &
strengthened capital position
1 ROEs of UEMOA:21,4%, AWA:24,9% & CESA:22,2%.
Note: ETI accounted for 1 quarter in arrear. | Associate income includes goodwill impairment.
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
87
SADC operations strategic growth drivers
Doing more with what we have
- Focus on growth opportunities in Mozambique
by leveraging enterprise capabilities
- Accelerate digital growth strategy
#1 in NPS
Top 2 in sentiment
scores across
four markets
#1 in loyalty
scores across
three markets
in Namibia &
Mozambique
- Continue to deliver great client experiences
& grow market share
Transform NAR
- Reconfigure the size and shape of the business
in line with TOM 2.0
- Leverage the group’s technology ecosystem to
achieve increased efficiencies & product
consistency
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
88
45
Notes:Notes:Resultspresentation2021 resultscommentaryFinancial resultsSegmentalanalysisIncome statementanalysisStatement of financialposition analysisSupplementaryinformationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
Nedbank Africa Regions – outlook
2022 outlook
SADC operations
▪ Transform the business & operating model
▪ Maximise Mozambique growth opportunities
▪ Accelerated digital growth strategy
ETI associate investment
▪ Resolution of Ecobank Nigeria challenges to increase shareholder value
Long-term outlook
▪
Increase ROE to > COE
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
89
Outlook
Mike Brown
Chief Executive
‘On track to meet our
2023 targets,
with DHEPS target
now expected to be
delivered a year
earlier’
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
90
46
Notes:Notes:Nedbank Group Annual Results 2021 Nedbank economic forecasts – 2022 & beyond
Forecast: February 2021
Forecast: February 2022
19
20
21
22
23
24
21
22
23
24
21
Medium
term
SA GDP growth
0,1% (6,4%)
3,4% 2,2% 1,8% 1,5%
4,8% 1,7% 1,8% 1,0%
YE prime
interest rate
10,0% 7,0%
7,0% 7,5% 7,5% 7,5%
7,25% 8,5% 9,0% 9,5%
Inflation (CPI)
4,1%
3,3%
4,2% 4,6% 4,3% 4,2%
4,6% 4,9% 4,2% 4,3%
Industry credit
growth
Rand/US$
(year-end)
SA fiscal deficit %
of GDP1
SA govt debt
% of GDP1
5,3%
1,2%
4,5% 5,7% 5,1% 5,2%
2,4% 4,5% 4,3% 4,7%
14,0
14,6
15,3
15,9
16,9
18,1
15,9
15,9
15,6
16,3
(3,6%)
(5,1%)
(14,2%) (10,6%) (9,8%) (9,7%)
(10,0%)
(6,5%) (5,7%)
(4,5%)
52%
56%
82%
85% 90% 94%
67%
67% 70% 71%
Source: Nedbank Group Economic Unit.
1 Year ending March.
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
2022 full-year financial guidance based on current economic forecasts
2021
performance
2022
guidance1
Key drivers
NII growth
+8%
CLR
83 bps
NIR growth
+4%
Expense growth
+6%
Upper single
digits
125 bps interest rate increases in 2022
▪
▪ RBB advances growth > CIB advances growth
▪ Continued NIM expansion
Within top half of
our 60 to 100 bps
TCC range
▪ Negative impact from mix change & rising interest
rates, offset by a quality portfolio
Upper single
digits
▪ Ongoing benefits from SPT 2.0 (main-bank client
gains, cross-sell, new revenue streams etc)
▪ MVFHA volatility removed
Above
mid-single digits
▪ Some costs return as lockdowns ease (eg travel,
sponsorships) & new regulatory costs (eg deposit
insurance, Twin Peaks)
▪ TOM 2.0 benefits
DHEPS growth
+112%
> GDP + CPI + 5%
Capital
(CET1 ratio)
12,8%
Dividend
2,02x cover
Above TTC range
of 11,0% to 12,0%
Within target range
of 1,75x to 2,25x
▪ Remain above the top end of board target range
1This guidance is not a profit forecast & has not been reviewed or reported on by the group’s joint auditors.
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
91
92
47
Notes:Notes:Resultspresentation2021 resultscommentaryFinancial resultsSegmentalanalysisIncome statementanalysisStatement of financialposition analysisSupplementaryinformationMessage from ourChief ExecutiveNedbank Group Annual Results 2021 Meeting our medium-term targets supports shareholder value creation
Targets to 2023
DHEPS
> 2 565 cents
(2019 levels)
ROE
> 15%
(2019 levels)
Cost-to-income ratio
< 54%
Net Promoter Score
#1 bank
(from #2 in 2021)
Supported by the CLR
remaining in the TTC range of
60 to 100 bps, meeting our
cost-to-income target &
delivering on SPT 2.0 & TOM
2.0 (targeting cumulative
R2,5bn benefits over 3 years)
CET1 ratio to remain
above the revised board-
approved TTC target range
of 11% to 12% & well
above regulatory levels.
Dividend within cover
range (1,75x ‒ 2,25x)
Focus on areas that create
value (SPT 2.0), ongoing
investment in the franchise,
efficient execution, cost
optimisation (TOM 2.0) & digital
leadership
Market-leading client
solutions, disruptive
market activities &
creating positive impacts
(caring for employees,
clients, society & the
environment)
Currently expected to
be achieved a year earlier
Remains a stretch target
in 2022
Remains a stretch target
Remains a stretch target
Long-term targets
DHEPS growth
> GDP + CPI +5%
ROE
> 18%
(COE + 3% to 4%)
Cost-to-income ratio
< 50%
Net Promoter Score
#1 bank
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
93
Conclusion – good strategic & operational delivery supports meeting our
2023 targets
Resilience – completed
Reimagine strategy – continue to execute well
▪ CET1 ratio:
12,8%
▪ LCR:
▪ NSFR:
128%
116%
▪ Coverage: 3,32%
▪ CLR back in TTC
range:
83 bps
Continue to lead in digital innovation & complete final
phases of Managed Evolution
Client satisfaction metrics – #1 ranking by 2023
Scale Avo beyond the 1 million clients (2022 target)
already achieved
SPT 2.0 – leverage our balance sheet to grow clients,
cross-sell, grow transactional income & grow deposits
Unlock R2,5bn in benefits via TOM 2.0 by 2023
▪ Dividend payments
resumed
Creating positive impacts – using our financial expertise
to do good. Continue to lead in SDG financing, ESG
practices & ratings
Focus on meeting our 2023 targets & thereby unlock shareholder value through:
DHEPS growth, improvements in ROE & efficiencies, & ongoing dividend growth
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
94
48
Notes:Notes:Nedbank Group Annual Results 2021 Thank you
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
95
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 information that may be defined as
'forward-looking statements' within the meaning of United States securities legislation.
Forward-looking statements may be identified by words such as ‘believe’,
'estimate', 'intend', 'project', 'target', 'predict' and 'hope'.
'anticipate',
'expect',
'plan',
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 are correct and undue reliance should not be
placed on such statements.
The risks and uncertainties inherent in the forward-looking statements contained in this document include,
but are not limited to: changes to IFRS and the interpretations, applications and practices subject thereto as
they apply to past, present and future periods; domestic and international business and market conditions
such as exchange rate and interest rate movements; changes in the domestic and international regulatory
and legislative environments; changes to domestic and international operational, social, economic and
political risks; and the effects of both current and future litigation.
Nedbank Group does not undertake to update any forward-looking statements contained in this document
and does not assume responsibility for any loss or damage arising as a result of the reliance by any party
thereon, including, but not limited to, loss of earnings or profits, or consequential loss or damage.
NEDBANK GROUP LIMITED – 2021 Annual Financial Results
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49
Notes:Notes:Resultspresentation2021 resultscommentaryFinancial resultsSegmentalanalysisIncome statementanalysisStatement of financialposition analysisSupplementaryinformationMessage from ourChief ExecutiveNedbank Group Annual Results 2021 2021 results
commentary
50
Nedbank Group Annual Results 2021 2021 results
commentary
Banking and
economic
environment
Global economic growth rebounded in 2021 following the
deep contraction in 2020 caused by strict Covid-19-induced
lockdowns. The International Monetary Fund (IMF) currently
predicts that global growth will be a robust 5,9% in 2021.
The relaxation of lockdowns, higher commodity prices and pent-up
demand supported the rebound during the year, but the upside
was contained by supply-chain constraints, rising inflation and
the ongoing impact of new variants of Covid-19. The rebound in
growth was broad-based, however, divergences between regions
and countries persisted. Significant fiscal and monetary policy
support coupled with widespread vaccinations supported growth
in advanced economies. Robust vaccination programmes allowed
many advanced economies to ease restrictions substantially,
thereby enabling a quicker return to near-normal trading conditions.
Despite the strong rebound in advanced economies, the pace of
the recovery slowed in the second half of the year. The rapid spread
of the Omicron variant towards the end of 2021 triggered renewed
lockdowns in some parts of the world, mainly Europe and
China. While Omicron proved far more contagious, it nonetheless
presented milder symptoms. Supply shortages and transport
disruptions persisted, contributing to global price pressures.
Inflation is proving more than transitory, triggering a rapid shift
towards faster monetary policy normalisation by major central
banks throughout the second half of last year.
Most emerging and developing countries entered the
Covid-19 pandemic in a vulnerable state, with minimal fiscal policy
space. As a result, output, investment, labour and consumption were
hard hit over the past two years. The stop-start nature of
recoveries throughout 2021 exacerbated the economic impact of
the pandemic, partly due to uneven and insufficient vaccination
rates. Despite these challenges, economic growth returned in
most countries off 2020’s low base. Emerging economies in Latin
America, Europe and Central Asia benefited from substantial
remittances, a recovery in labour markets and a rebound in
domestic and external demand. Higher commodity prices also
boosted output and exports in almost all developing and emerging
economies, particularly in the oil- and commodity-exporting nations
of the Middle East, Africa, Latin America and Asia. While strong
growth in China supported the recoveries of other developing
countries in the first half of 2021, underlying activity slowed
significantly over the second half of the year, weighed down by
numerous Covid outbreaks, severe lockdowns as well as stricter
environmental, property and financial regulations.
In 2021 the South African economy bounced back faster than most
forecasters expected from the low base of 2020 caused by the
economic impact of strict lockdowns. The local economy benefited
from a surge in global commodity prices and stronger global
demand. After growing by 7,5% in H1 2021, GDP slowed in H2 2021.
Multiple shocks disrupted SA’s economic recovery in the third
quarter of the year. A prolonged third wave of Covid-19 infections,
tighter lockdown restrictions, the July civil unrest in parts of the
country and frequent power outages resulted in a sharp contraction
in economic activity. Trading conditions improved in the fourth
quarter, enabled by government’s decision to leave the country
at the most lenient lockdown level 1 despite the onset of the
fourth Covid wave triggered by the Omicron variant. We forecast
South African GDP growth of 4,8% for calendar year 2021. High
frequency data from our point-of-sale devices and card-related
digital channels reflected strong growth in total turnover into
H2 2021. Overall turnover levels are back above pre-Covid levels
(March 2020) including in the telecommunication, retail, restaurant,
healthcare and entertainment sectors. However, sectors that were
most impacted by the various levels of Covid-19-related lockdowns,
such as hotels/lodging and airlines, recorded turnover levels that are
still below 2019 levels.
Labour market conditions remained highly depressed as the
many shocks experienced in Q3 2021 exacerbated job losses,
forcing the unemployment rate up to a record high of 34,9%.
The league of discouraged workers swelled to an unprecedented
3,8 million people. Towards the end of 2021, household income
growth was supported by the gradual normalisation in economic
activity following July’s unrest shocks, enabled by looser lockdown
restrictions throughout the Omicron-led surge in new Covid
cases over December. As a result, the fourth Covid wave was less
disruptive to economic activity than the previous waves. Most
South African households managed their finances relatively well
throughout the pandemic, limiting borrowing and maintaining
net savings. Household debt moderated to 66,7% of disposable
income in the third quarter, while savings rose to 1,2% of disposable
income. In the banking industry, credit growth improved in
H2 2021. Household credit demand remained positive throughout
last year, boosted by low interest rates, the economic recovery and
stronger income growth. Higher levels of growth were evident in
instalment sales and mortgages, but overdrafts declined further,
and personal-loan growth slowed.
Fixed-investment activity has generally remained
depressed, undermined by uncertain long-term growth
prospects, continued policy uncertainties and frequent power
outages. The July riots also weighed heavily on business confidence
and fixed investment decisions. Towards the end of 2021, growth
in fixed investment started to gradually recover off a low base.
The second half of the year saw a recovery in corporate credit
demand as companies started to utilise overdraft facilities again,
while vehicle finance also accelerated. Encouragingly, general loans
to companies, often used to finance capital projects, rose marginally
in November after eight months of steep declines.
Inflation drifted higher off a low base in 2021. The main
contributors were rising global oil and food prices and higher
prices of a wide range of imported goods, primarily caused by
global supply shortages and Covid-19-related disruptions to the
world’s transport networks. Upward pressure also came from a
weaker rand and higher electricity tariffs. The rate hiking cycle
started in November 2021 when the Monetary Policy Committee
(MPC) announced a 25 bps hike in the repo rate in response to the
mounting upside risks to the inflation outlook. The upward trend
continued in January 2022 when the MPC raised the repo rate by a
further 25 bps, in line with consensus forecasts.
After a volatile and difficult year for the South African banking
sector in 2020, 2021 saw client transactional activity rebound
and market volatility return to more normalised levels, although
corporate deal flow across various sectors remained weak.
Impairments declined significantly, underpinned by the improving
operating environment and due to the normalisation of
forward-looking IFRS 9 portfolio impairments. The South African
banking sector continues to demonstrate strong levels of resilience,
remaining well capitalised, liquid and profitable.
51
Nedbank Group Annual Results 20212021 resultscommentarySupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial resultsResultspresentationMessage from ourChief Executive Strategic progress
Our strategy gives us a clear framework on where we want to focus
as a purpose-led organisation and what we need to do to meet
our medium-term targets of achieving diluted headline earnings
per share (DHEPS) greater than the 2019 level (2 565 cents), an
ROE greater than the 2019 level (15,0%), a cost-to-income ratio
lower than 54% (2019: 56,5%) and the #1 ranking in NPS (2019: 3)
by the end of 2023. Through our strategy we seek to create value
by growing revenue and increasing levels of productivity, both
strongly enabled by technology, while maintaining world-class risk
and capital management metrics. We are focusing on growing our
share of transactional relationships and related deposits across
all our businesses, and ensuring we deliver market-leading client
experiences that will help us to attract new clients and a deepened
share of wallet among existing clients. To boost our productivity
and improve operational efficiency, we are building on and
accelerating existing efforts in optimising our operating model in a
more digital world, by leveraging the technology platforms we have
put in place. Our world-class risk management capabilities ensure
that we appropriately balance risk/reward trade-offs.
Our strategy is delivered through five strategic value unlocks
that include: delivering innovative market-leading client
solutions; engaging in ongoing disruptive market activities
(underpinned by digital leadership), focusing on areas that create
value (strategic portfolio tilt, known as SPT 2.0), driving efficient
execution (including target operating model enhancements,
known as TOM 2.0) and creating positive impacts, including
delivering on our purpose of using our financial expertise to
do good. Underpinning these strategic value unlocks is our
Managed Evolution (ME) strategy and technology transformation
programme to build a modern, modular and digital IT stack that has
reached 85% completion. Most foundational IT programmes
are either complete or nearing completion, and the group’s
intangible software assets are expected to have peaked in
2021 at around R9bn, in line with reducing levels of IT cash flow
spend. The rationalisation, standardisation and simplification of
our core banking systems that have resulted in a reduction from
250 systems down to 78 (final target of 65 to 75), are enabling
reduced infrastructure, support and maintenance costs, less
complexity and increased agility in adopting new innovations.
The benefits of ME are evident in the digital progress we have
made, as well as the realisation of benefits through TOM 1.0 and
TOM 2.0. In 2021, the ME programme was benchmarked against
a globally recognised peer group of 14 local and international
banks across five key dimensions (business case, digital readiness,
architecture, governance, people and adoption, and regulation
and risk) to give insights into Nedbank's relative positioning to this
peer group. The benchmarking exercise confirmed that the ME
philosophy and approach of a stepwise technology modernisation
was in line with that of successful international peers. The findings
were very encouraging and concluded that ME has delivered value
on an ongoing basis and that Nedbank is one of a few enterprises
in the benchmarking peer group that has achieved revenue uplift
from its IT transformation programme. Similarly, the assessment
concurs with Nedbank’s focus of creating distinctive client
experiences in support of digital penetration and sustainable client
retention through increased cross-sell. The following progress was
made in 2021:
• Delivering innovative, market-leading client solutions
• Digital client onboarding, sales and servicing (Eclipse for
retail clients and Nedbank Business Hub for business
clients): Our simplified digital client onboarding platforms for
individual and juristic (business) clients continue to mature and
expand, enabling clients to open FICA-compliant accounts
remotely through our employee-assisted and self-service
digital channels, by providing a seamless omnichannel
experience. The processing of product sales to individuals
via Eclipse currently includes six of our top retail products,
being transactional products, personal loans, card issuing,
52
home loans, investments and overdrafts, as well as more
than 170 services. Clients can also join the bank through
our self-service kiosks, with a card issued immediately.
Foreign exchange, the roll-out of student loans and selective
Nedbank Insurance products, including MyCover Funeral and
MyCover Life, will be available on the Eclipse platform during
2022. The Eclipse journey for individuals is now materially
complete. In 2021, juristic client onboarding in Retail and
Business Banking (RBB) and CIB started with the roll-out
of the Nedbank Business Hub, leveraging our new digital
token-less security and enabling a step change in client
experience for businesses. The hub provides a convenient
platform for clients from which they have a single view of
relevant digital offerings and are able to transact, apply for
products (transacting, lending and borrowing) or services
to name a few. While migration to this modernised platform
remains a key priority, the convergence of the various juristic
digital channels has gained momentum, with a first release
scheduled for July 2022. From a digital servicing perspective,
an additional 100+ juristic services are intended to be
digitised by the end of 2023.
• Apps: The Nedbank Money app, which makes banking more
convenient for our retail clients, continues to be rated highly
on the Apple and Google app stores, with an average client
rating of 4,4 (out of five). It is actively used by 1,6 million
clients, up by 38% (2020: 1,2 million). Transaction volumes
on the Money app increased by 54% and transaction
values increased by 72% when compared to full-year
2020. New features introduced during the period include
quote and fulfil functionality for funeral cover, life cover, car
insurance and homeowners’ cover (HOC), as well as claims
functionality for HOC and funeral policies. The functionality
to make payments to cellphones and new investments
has been enhanced and clients are now able to request
real-time credit limit increases via the app. Revenue from
value-added services increased by 53% across prepaid
data, vouchers, electricity purchases, LOTTO and Send-iMali.
The Nedbank Private Wealth app, which offers integrated
local and international-banking capabilities, has an average
rating of 4,6 (out of five) on the Apple and Google app stores.
The Nedbank Money App (Africa) has proven to be the
channel of choice across our Nedbank Africa Regions (NAR)
subsidiaries owing to the convenience, wide functionality
base and user experience, and achieved an app store rating
of 3,7 (out of 5). The total number of enrolments at the end
of December 2021 for the common monetary area (CMA)
countries exceeded 63 000 users, with the total number of
app users across NAR now more than 90 000. App volumes
increased by 35% year on year (yoy), while value-added
services (including airtime and electricity) purchases grew
by 26%.
• New innovations: During the period, in addition to the
various app enhancements, we launched a number of new
innovations. These include a new broad range of financial
wellness tools, including credit score ratings with helpful tips
for clients and enhanced MoneyTracker functionality tools
allowing for spend categorisation and management. Retail
Relationship Banking clients can now apply for an overdraft,
and informal traders can join the bank and obtain a paycode
through a simple USSD process. A host of user-friendly
features were introduced, including the ability to redeem
Greenbacks into a savings or investment account or to donate
them to a charity, enhanced statements, and more seamless
loan-offering processes. Significant transacting capabilities
like the ability to get cash at an ATM by scanning a QR code
(a first in SA), the ability for clients to withdraw cash using a
digital voucher code at a wide network of retailers including:
Pick n Pay, Shoprite and Checkers. RBB and Nedbank Private
Wealth launched Apple Pay, which allows clients to make
cashless, contactless payments using an Apple device. Since
its launch in March 2021, we have seen excellent uptake in
Nedbank Group Annual Results 2021 client usage and payments continue to grow on a monthly
basis. This mobile payment capability follows our scan-to-pay
capability as well as Samsung, Garmin and Fitbit Pay solutions
launched in prior periods. In addition, we launched Money
Message, an innovative invoice-and-payment solution that
enables small businesses to create and send invoices, and
receive payments easily and securely on WhatsApp, which is
the dominant messaging platform in SA. It also complements
Nedbank’s tap-on-phone solution, a payments solution that
enables businesses to accept payments by simply using an
Android smartphone for contactless card payments. Enbi,
our new artificial intelligence (AI)- driven chatbot, which
was launched to meet client expectations for immediate
and excellent personal assistance, now answers over
100 000 client enquiries a month. In NAR we continued to
release new features, including digital wallets, self-enrolment
and value-added services. The implementation of automated
credit scoring enhanced our credit decisioning capability
and provides integrated insights on managing credit risk
and understanding our clients. In Nedbank Insurance, we
have extended our insurance quoting, fulfilment and claims
functionality on digital channels to 10 Insurance product
offerings. As part of building Nedbank Private Wealth
in Namibia, we extended our stockbroking services and
international wealth offerings to clients.
• Digital outcomes: Our digital initiatives helped us to
increase the number of digitally active retail clients in SA
by 11% to 2,3 million (December 2020: 2,1 million). This now
represents 36% of total active clients (December 2020: 32%
and December 2019: 28%) and 64% of main-banked clients
(2020: 57% and 2019: 49%). Retail digital transaction volumes
in SA increased by 28% and transaction values by 19%.
Digitally active clients across the NAR business grew by 7%
and represents 54% of the total active client base.
• Creating great client experiences: The outcome of our digital
innovations is evident in higher levels of client satisfaction,
as illustrated in Nedbank again being rated the second-best
large bank on NPS in 2021. We increased our score to 47%
(2020: 41%) and similarly recorded an increase in the client
satisfaction SAcsi score to 82% (2020: 81%). Nedbank was
ranked the eighth most valuable brand among the top
50 South African companies for the second year in a row.
In 2021 we have seen a continuation of high brand sentiment
rankings; where Nedbank was consistently ranked as the
#2 bank on social media brand sentiment as measured by
Salesforce Social Studio. Independent external recognition,
as reflected in the number and quality of international awards
for business excellence, digital leadership and ESG, increased
in the 12 months when compared with prior years. In 2021,
relating to digital leadership, Nedbank won the Best Mobile
and Internet Banking Awards at the International Business
Magazine Awards, Best Digital Bank at the Global Business
Outlook Awards and Best Digital Bank and Best Open Banking
APIs (SA) at the 2021 Global Banking & Finance Awards.
• Ongoing disruptive market activities
• Avo super app: Our market-leading digital ecosystem Avo,
which is a one-stop super app enabling clients to buy essential
products and services online and have them delivered to
their home, with seamless payments and credit enabled by
the Avo digital wallet and Nedbank. Since its launch in June
2020, Avo has signed up more than 675 000 consumers
(4,7x growth yoy), along with over 20 250 businesses (3x
growth yoy) registering and offering their products and
services on this e-commerce platform. Product orders
continue to grow exponentially, with 3x yoy growth of gross
merchandise value (GMV). We continue to enjoy favourable
ratings across the Google and Apple app stores with ratings of
3,9 and 4,3 respectively. Avo Auto and the launch of Avo B2B
marketplace are expected to strongly support further scaling
efforts of the platform.
• APIs: After having been the first bank in Africa to launch
an API platform (API_Marketplace) that is aligned with the
Open Banking Standard (PSD2), we made good progress
in scaling the platform by allowing approved partners to
leverage the bank’s financial capabilities through integrating
into our standard, secure and scalable APIs. The number of
third parties active on API_Marketplace has increased to 45
(2020: 17). Third-party interest in API_Marketplace continues
to grow. The number of active APIs used increased from
eight (December 2020) to nine. An example of a successful
implementation is the enablement of personal-loans
disbursals, which increased by 360% yoy, supporting our
market share increase in this product.
• Karri app: The Karri payments app made a strong recovery
as schools reopened in 2021. Notwithstanding the big
impact of Covid-19 on traditional event and sport tour
collections (the main driver of usage and value of collections
pre-Covid-19), we managed to increase active users back
to pre-Covid-19 levels by adding new functionality and
increasing the value offered to schools, enabling the highest
active usage from March to May 2021. Karri now has well
over 800 organisations that are using the app. The Karri app
is now more relevant than ever, with a database of well over
one million potential users and one of the highest app store
ratings (currently 4,5). As schools return to normality, we are
expecting a return to exponential growth.
• Focusing on areas that create value (SPT 2.0)
• We focus on areas that create value, particularly through
strategic portfolio tilt (SPT 2.0) that is a groupwide
strategy focused on right-sizing certain advances market
shares, growing our transactional banking franchise and
cross-selling into transactional deposits through integrated
client value propositions.
• Over the past 12 months we increased market share in key
advances categories in line with the South African Reserve
Bank (SARB) BA 900 returns, including personal loans
(12,2% market share, up 1,0%) and household overdrafts
(9,9% market share, up 1,9%). We also increased our share in
vehicle finance (36,9% market share, up 0,4%), where we are
leveraging our market-leading position and unique business
model that is skewed to financing used and lower-value
vehicles. These gains were supported by increased
levels of client take-up rates, enabled by digital channels,
notwithstanding tightening of credit criteria. Our home
loans market share of 14,2% declined marginally by 0,2%.
In wholesale lending we were selective in granting loans as
we continued to manage risk and focus on increasing Net
interest margins (NIM), resulting in a decline in market share
(commercial mortgages 37,2% market share and wholesale
term-loan market share 16,8%, both down 1,3%).
• Main-banked clients in retail grew by 1% to 3,1 million and
cross-sell was 1,9 products (compared with 1,8 in 2020).
In the independent 2021 Consulta survey, Nedbank recorded
the largest increase in main-banked market share of all
large South African banks, increasing by 1,1% to 12,4%.
CIB gained 35 new primary clients in the period. In NAR total
clients increased by 1% to 338 000, of which 141 000 are
main-banked.
• From a deposit perspective, we have seen an increase in
commercial funding and a decrease in wholesale funding,
and gained market share in both commercial transactional
(16,6% market share, up 1,0%) and non-transactional
deposits (17,6%, market share, up 0,8%). Our focus on
household deposit market share continues, with ongoing
management actions focused on arresting household
deposit market share losses, notwithstanding aggressive
competition and pricing for retail deposits. Trends in
Q4 2021 were pleasing, with an uptick recorded in
term-related household deposit market share.
53
Nedbank Group Annual Results 20212021 resultscommentarySupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial resultsResultspresentationMessage from ourChief Executive • Driving efficient execution (TOM 2.0)
• Creating positive impacts
• Unlocking benefits through technology: After realising
cumulative TOM 1.0 savings of R2,0bn in 2020 relating to
the benefits from a modernised technology platform (ME)
and agile innovation methodologies, in 2021 we launched
TOM 2.0. TOM 2.0 is aimed at optimising the shape of
our infrastructure (branches and corporate real estate),
shifting our RBB organisational structure so that it is more
client-centred and optimising our shared-services functions
across the group as a direct result of the digital benefits
from ME. In 2021 we recorded benefits of R967m, on our
way to unlocking cumulative revenue uplift and cost savings
of R2,5bn by the end of 2023 (of which approximately 90%
relates to cost savings). The business case of our technology
investments, including ME, evident in the value unlocks
through TOM 1.0 and TOM 2.0, remains intact as the group’s
annual amortisation charge (R1,7bn in 2021) remains below the
cumulative benefit of these initiatives. In addition, annual IT
cash flow spend has declined, after having peaked in 2017.
• Branch optimisation: The digitisation of services in RBB
and changing client behaviour, along with the impact of the
Covid-19 lockdowns, has enabled us to reduce branch teller
volumes by 21%. To date, as we optimise the shape of our
infrastructure through Project Imagine, branch floor space has
decreased by around 65 000 m2 (December 2020: 57 000 m2)
from 2014 levels, while employee points of presence declined
by 13 yoy to 538. Over the past 12 months our total group
permanent headcount declined by 1 410, largely through
natural attrition.
• Real estate optimisation: Through our strategy of
consolidating, standardising and optimising our own
buildings to support new ways of working, our number of
campus sites (offices) has decreased from 31 to 24 over
the past four years, with a longer-term target of 19. Since
2016 we have saved over 116 000 m2 and over 47 000 m2 in
2021 alone. In the next few years, we will continue to optimise
the portfolio by enhancing workstation use by enabling flexible
office constructs to support more dynamic ways of work, as
well as leveraging successful work-from-home experiences
as a result of Covid-19, while creating further value and cost
reduction opportunities. Our optimal workplace distribution
mix is expected to settle at around 60% at Nedbank premises
and 40% as a mix of hybrid and permanent work-from-home
models to support an anticipated workforce distribution
model of 50% full-time on premises, 30% hybrid and 20%
permanent off-site.
• RBB reorganisation and shared-services optimisation: In
2020 we started the implementation of Project Phoenix,
which aims to shift our RBB organisational structure from
being ‘product-led, supported by client and channel views’ to
being ‘client-segment-led, supported by product and channel
views’. We concluded phase one and two of our journey during
2021, moving from product-focused expert knowledge to
centres of excellence with product insights present across
the value chain. We also concluded the restructure of the
cluster and divisional executive roles, as well as finalising the
next tiers in line with the competencies required to deliver
on the outcomes of the value chain accountabilities in 2021.
The client-centred technology investments we have made
enable digital client onboarding and enhanced cross-sell of
additional products through simplified processes – these
investments have assisted us in consolidating middle- and
back offices within the cluster, unlocking efficiencies.
• Groupwide shared-services optimisation: We have increased
our focus to ensuring efficient and effective central group
functions including marketing, risk, human resources (HR),
finance and technology. In addition, we are in the process of
further optimising smarter supply chain and procurement
capabilities.
• Understanding that banks play a central role in driving the
sustainable socioeconomic development of our continent,
Nedbank deliberately focuses on using its financial expertise
to do good for its stakeholders. This strategic imperative is
demonstrated through our market-leading Energy Policy
that was released in H1 2021, which seeks to guide the
transition away from fossil fuels, while accelerating efforts
to finance non-fossil energy solutions needed to support
socioeconomic development and build resilience to climate
change. The Energy Policy will ensure that Nedbank has
zero exposure to fossil-fuel-related activities (thermal coal,
upstream oil and gas, and power generation) by 2045, with
100% of lending and investment activity supporting a net-zero
carbon economy by 2050, while accelerating funding to key
sectors such as renewable and embedded energy. To achieve
this requires a significant amount of investment in innovation
by the bank and this was evidenced with underwriting R35bn
of renewable-energy lending to date and the launch of
Africa’s first green AT1 instrument in 2021 as we raised a total
of R910m, with the equivalent notional amount of funding
to be directed to supporting the financing of new green
infrastructure projects in SA. In addition, we successfully
structured and arranged a R1,1bn Green Residential
Development Bond for Nedbank Limited, issued under its
domestic medium-term note programme and listed on the
Sustainability Segment of the JSE in December 2021.
• It is pleasing to have our efforts in this regard externally
recognised, and we accept these awards of validation as
evidence that we are progressing well while acknowledging
there is always much more to be done. Recent awards
include Nedbank being recognised as Africa’s Best Bank
for Sustainable Finance 2021 by Euromoney and Best
Bank for Sustainable Development South Africa 2021 by
Global Banking & Finance. In recognition of the significant
contributions made in the sustainable finance space, Nedbank
won various awards including the Local Currency ESG and
Sustainable Finance Deal of the Year and Local Markets ESG
and Sustainable Finance Adviser of the Year at the Bonds,
Loans and Sukuk Africa Awards in 2021.
Review of results
Nedbank Group delivered a strong financial performance for the
year ended 31 December 2021 (the period), reflecting a significant
decline in the impairment charge and strong revenue growth when
compared to the low base in the year ended 31 December 2020
(the prior period). HE increased by 115% to R11 689m (2020:
R5 440m) but remains 7% below our full-year 2019 HE of
R12 506m. Preprovisioning operating profit growth increased by
9% (compared to a 2% decline reported at H1 2021).
Change
HE
(Rm)
ROE
(%)
(%)
2021
2020
2021
2020
54
5 605
> 100
4 532
45
> 100
962
594
3 636
1 595
662
12
(4)
(465)
15,3
13,7
21,2
9,3
9,4
5,4
15,3
0,2
115
11 689
5 440
12,5
6,2
CIB
RBB
Wealth
NAR
Centre
Group
54
Nedbank Group Annual Results 2021
HEPS and basic EPS increased by 114% to 2 410 cents and by
223% to 2 317 cents, respectively in line with the updated trading
statement released on 14 February 2022. In this trading statement
we noted that HEPS and basic EPS were expected to increase
by between 108% and 118%, and 218% and 228%, respectively.
DHEPS increased by 112% to 2 362 cents.
As a result of the group’s strong financial performance, ROE for
the period increased to 12,5%, well above the prior period of 6,2%,
although still below the cost of equity and below the 2019 level of
15%. Return on assets increased from 0,45% to 0,98%, while
return on risk-weighted assets (RWA) increased from 0,82% to
1,78%, assisted by an RWA decline of 3%. Net asset value (NAV) per
share increased strongly by 11% to 20 493 cents.
During the period, the group’s balance sheet strengthened
further as we closed out the resilience phase of our strategic
response to the Covid-19 pandemic. CET1 and tier 1 capital ratios
of 12,8% and 14,3% respectively improved on the prior period and
are now well above the pre-Covid 19 levels of 11,5% and 12,8%
respectively (December 2019). These ratios are also well above
the SARB minimum requirements and the group’s board-approved
target ranges. The average LCR for the fourth quarter of 128%
was well above the regulatory minimum level of 90%, with effect
from 1 January 2022, which will be increased to 100% with effect
from 1 April 2022, and an NSFR of 116% was well above the 100%
regulatory minimum. After not paying dividends in 2020 as a result
of Prudential Authority (PA) Guidance Note 4/2020, the group
resumed dividend payments in H1 2021, in line with PA Guidance
Note 3/2021, with an interim dividend of 433 cents at 2,50 times
cover (payout ratio of 40%). A final dividend of 758 cents
at 1,75 times cover (payout ratio of 57%) has been declared, at the
bottom end of the group’s board-approved dividend target range of
1,75 times to 2,25 times.
Cluster financial performance
Nedbank Group’s HE increase of 115% to R11 689m was supported
by strong growth in HE across all business clusters and group ROE
of 12,5% improved from the prior year’s 6,2%.
HE in CIB increased by 54% to R5,6bn, and the cluster delivered an
ROE of 15,3%, above the group’s cost of equity. HE was primarily
driven by a 56% decrease in impairments as reflected in the CLR
declining to 42 bps (2020: 82 bps). NIM expanded and net interest
income (NII) increased by 9%, despite average interest-earning
banking assets (AIEBA) decreasing by 13% to R339bn. Actual
gross banking advances decreased by 2% to R352bn due to
muted corporate demand for new loans, particularly in the property
sector, and early settlements as clients used excess liquidity to
repay committed facilities, across multiple sectors. Actual trading
advances decreased by 29% due to a decline in investments in
foreign repo assets. Non-interest revenue (NIR) increased by 9%,
benefiting from a normalisation of equity revaluations, partially
offset by a lower trading performance given the high base in 2020.
Expenses increased by 9%, driven by higher variable incentive
costs, resulting in a cost-to-income ratio of 44%.
HE in RBB increased by 184% to R4,5bn and ROE increased
to 13,7% and remained below the group’s cost of equity.
The main drivers for this performance were significantly lower
impairment charges, due to relatively lower stress on the
consumer driven by a stronger macroeconomic environment, as
well as better-than-expected performance of Directive 7/2015
(restructured) loans exiting their monitoring period. The RBB
CLR decreased to 134 bps from 240 bps in 2020 and from a
H1 2020 peak of 269 bps, and it is now back within the cluster’s
TTC target range of 130 bps to 180 bps. NII increased by 5%, driven
by solid average advances growth, continuing its momentum from
2020, benefiting from both client demand for secured loans as
a result of the 300 bps cuts in interest rates in 2020. Increased
lending volumes originated through the group’s digital channels,
notwithstanding lower loan approval rates across some products,
also supported the growth. NIR increased by 8% as client-related
transactional activity improved, evident in increased levels of
spend, cash withdrawals and purchase of value-added services.
An increase in expenses of 6% was driven by a higher incentive
charge and higher computer processing costs, partially offset
by good management of discretionary spend and ongoing
optimisation of operations.
HE in Nedbank Wealth increased 45% to R962m, with an ROE of
21,2%, above the group’s cost of equity. Insurance results were
positively impacted by improved investment returns and the
implementation of an enhanced asset and liability matching
strategy, but these were partially offset by significantly higher
death claims in the life portfolio. Asset Management delivered a
robust performance on the back of positive net flows of R7bn, a
13% growth in assets under management (AUM) to R424bn and
a strong market rebound. Wealth Management (SA) recorded
a substantial growth in earnings off a low base, due to credit
impairment releases and an increase in NII. Wealth Management
(International) earnings were negatively impacted by record-low
USD and GBP interest rates, offset by strong growth in
investment business lines and steady client lending activity.
HE in NAR increased to R594m, which is significantly higher than
the R12m reported in the prior period, with its ROE improving
to 9,3%, but still well below cost of equity. The performance
reflects the impact of significantly lower impairments (CLR
down to 72 bps from 185 bps) and a strong recovery in associate
income from ETI with related HE increasing to R523m (2020:
R153m). This was offset by a slight decline in NIR as a result of a
high base in 2020, as well as lower transactional activity and
general economic slowdown in some Southern African
Development Community (SADC) regions in the first half of
the year.
The performance in the Centre reflects the benefits of higher
levels of capital (endowment) held at the centre on NII and
a R250 (pre-tax) decrease in the group central provision to
R500m, partially offset by fair-value losses relating to the
unwind of prior-period profits from the group’s fair-value hedge
accounting solution.
Financial performance
Net interest income
NII growth accelerated strongly from 2020, increasing by 8% to
R32 500m. AIEBA declined by 3% to R870bn (compared to a 4%
decline in H1 2021), negatively impacted by the first half reduction
in CIB loans and advances as many clients used excess liquidity to
repay committed facilities and demand for new wholesale credit
was muted, offset by ongoing growth momentum in higher yielding
RBB loans.
NIM increased by 37 bps to 3,73% from 3,36% in 2020, and
by 21 bps from the 3,52% reported in 2019. This increase was
driven by higher levels of capital (endowment benefit), improved
asset pricing and asset mix changes (retail advances grew faster
than wholesale advances), improved liability mix, active balance
sheet management and basis risk impacts. The increase was
partially offset by the run-rate impact of the interest rate cuts in
2020 (endowment), as well as liability pricing pressure in a highly
competitive household deposits market. Nedbank is positively
positioned for a rise in interest rates, gaining an additional R1,6bn
NII (pre-tax) for each 100 bps increase in interest rates over a
12-month period.
55
Nedbank Group Annual Results 20212021 resultscommentarySupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial resultsResultspresentationMessage from ourChief Executive Impairment charge on loans and
advances
The group’s impairment charge decreased by 50% to R6 534m.
The key drivers of the decline include the benefits of an improved
macroeconomic environment (coming through in IFRS 9 models as
South African GDP growth in 2021 improved from the 6,4% decline
in 2020), better-than-expected collection outcomes in a low interest
rate environment, a reduction in stage 3 loans as clients cured,
including the decline in Directive 7/2015 (restructured) loans and
a reduction in some of the overlays that were raised during the
Covid-19 crisis as risks either did not emerge or are now captured
in the new IFRS 9 models. The group’s CLR decreased from 161 bps
in December 2020 to 83 bps in December 2021, an outcome that is
now back within the group’s TTC target range of 60 bps to 100 bps.
The support of clients in good standing and impacted by
the Covid-19-related events, provided through Directive
3/2020 payment relief, declined from a peak of R121bn in July
2020 to R28bn in December 2020 and to R3,2bn in December
2021. Restructured (Directive 7/2015) loans declined from R13bn
at December 2020 to R10bn as clients cured and exited their
monitoring period, leading to these loans moving from stage
3 to performing.
Average
banking
advances
(%)
2021
20201
TTC target
ranges
0,15–0,45
1,30–1,80
0,20–0,40
0,75–1,00
0,82
2,40
0,64
1,85
1,61
0,60–1,00
44
49
4
3
100
0,42
1,34
0,09
0,72
0,83
CLR (%)
CIB
RBB
Wealth
NAR
Group
1 CLR for 2020 restated due to reclassification of listed corporate bonds into
loans and advances.
In CIB impairments decreased by 56% to R1 418m and its CLR,
at 42 bps, is well below the 82 bps reported in 2020 and back
within its TTC target range of 15 bps to 45 bps. The reduction
in impairments was driven by the improvement in the latest
macroeconomic factors in forward-looking macro models against
the prior year, a decline in exposures as loans and advances
declined and a lower level of stage 3 impairment charge as stage
3 loans declined. The commercial-property portfolio continues
to perform ahead of expectations and reported a CLR of 30 bps,
improving from 54 bps in 2020. Stage 3 loans in CIB declined by
26% from December 2020 and impairments raised for specific
counters remain adequate. In RBB impairments decreased by 41%
to R5 172m, reflecting the same key drivers as described above for
the group, and its CLR, at 134 bps, is within its TTC target range of
130 bps to 180 bps. When the net benefit in RBB of once-off items
of R713m relating to the curing of accounts in line with Directive
7/2015, annual parameter regrounding updates as well as the
Covid-19-related overlay releases are normalised, the adjusted CLR
at 153 bps falls into the middle of the RBB target range. Nedbank
Wealth reported a CLR of 9 bps benefiting from a recovery on a
single large client in 2021. NAR reported a decline in impairments
of 62% to R168m, and CLR of 72 bps, at the lower end of its TTC
target range of 75 bps to 100 bps, driven by improved collections
and subdued growth in the loan portfolio.
The group decreased Covid-19- and macro-related judgemental
overlays to R1,5bn (December 2020: R3,9bn) as risks were either
now accounted for in the refined IFRS 9 models (R1 698m –
impairment neutral), released through the income statement
(R675m – credit to impairments as these risks did not emerge) or
retained (R1 518m – impairment neutral) and remain relevant
for elevated risk in specific portfolios or new risks identified.
56
The group’s central provision decreased by R250m to R500m as
some of these risks have been accounted for in new cluster
models and the remainder is held to cater for new risks that may
emerge, including inflation and interest rate vulnerability and
associated impacts on the credit portfolios.
The group’s balance sheet expected credit loss (ECL) increased from
R26,1bn (December 2020) to R26,6bn and is also higher than the
R18,2bn reported in 2019. This increase was driven by the R6,5bn
impairment charge and accounts for post-write-off recoveries
increasing to R1,4bn (December 2020: R1,2bn) and higher levels of
write-offs at R8,5bn (December 2020: R7,4bn). Overall coverage
increased from 3,25% of total loans and advances at December
2020 to 3,32% at December 2021, reflecting prudent credit risk
management. The stage 1 coverage ratio increased to 0,69% (June
2020: 0,63%; December 2020: 0,65%). Stage 2 coverage was
6,44% (June 2020: 7,04%; December 2020: 6,61%) reflecting the
impact of an improved macroeconomic environment moving clients
to stage 1, and a decrease in overlays, including the group’s central
provision. The stage 3 coverage ratio increased to 38,0% (June 2020:
34,6%; December 2020: 31,5%), as a result of a decrease in Directive
7/2015 loans in both RBB and CIB (so-called performing restructures
or technical cures), which attract a lower coverage than non-Directive
7/2015 restructures and the 13% decline in stage 3 loans after
successful implementation of restructures and sale of distressed
debt.
Non-interest revenue and income
NIR increased by 4% to R25 027m, primarily as a result of a more
favourable operating environment in H2 2021. The increase
was driven by increased levels of client-related transactional activity,
a normalisation of equity revaluations off the 2020 base and higher
levels of insurance income. This growth was partially offset by the
unwind of a significant proportion of the group’s fair-value gains
recorded in 2020 and the impact of a high trading revenue base
in the prior period. NIR growth, excluding macro fair-value hedge
accounting adjustments, was 10%.
• Commission and fee income increased by 4% to R17 754m, driven
by improving transactional activity as evident in increased levels
of client spend, cash withdrawals and purchase of value-added
services, main-banked client gains, as well as improved levels of
cross-sell.
• Insurance income increased by 24% to R2 005m, benefiting from
the implementation of a more appropriate asset-and-liability
matching strategy, increased investment performance and an
improved non-life claims experience. This was partially offset by
higher funeral and death claims in the life portfolio. Loss-of-income
claims declined from a high in September 2020, and while claims
were above pre-Covid-19 levels in the first quarter of 2021, they
declined to 2019 levels in June 2021.
• Trading income remained robust but decreased by 15% to
R4 475m, given the 2020 high base as a result of the benefit of the
volatile market conditions in the prior period.
• Equity revaluations of R650m (2020: R1 038m loss) were driven
by improved underlying investee company profitability, resulting in
increased valuations.
• Fair-value adjustments, including those from the group’s
fair-value hedge accounting solution, was a loss of R833m (2020:
R352m gain). The trend was stable into H2 2021 (H1 2021 loss
of R740m) as actions have been taken in models to reduce
volatility. The impact of Covid-19 and the resultant impact on
financial markets resulted in accounting volatility during 2020 and
H1 2021. The accounting volatility in the group’s macro fair-value
hedge accounting solution remained well within the accounting
effectiveness thresholds, but model methodology enhancements
were implemented during H2 2021 that are expected to reduce
accounting volatility going forward during periods of extreme
market movements.
Nedbank Group Annual Results 2021 Expenses
The increase in expenses of 6% to R33 639m reflects the impacts
of higher variable-pay incentives, off a low 2020 base, and ongoing
investment in technology and digital solutions, partially offset by
ongoing optimisation benefits. Excluding variable-pay incentive
costs, expenses increased by 2%, highlighting diligent cost
management.
Statement of financial position
Banking loans and advances
Gross banking loans and advances increased by 1% to R807bn
(improving from the 7% annualised decline reported in H1 2021),
driven by ongoing momentum in RBB advances growth and CIB
banking loans and advances growing from the June 2021 levels.
• Staff-related costs increased by 7% following:
• an average 2021 annual salary increase of 3,5% and a
5% reduction in permanent employee numbers since
31 December 2020 (8% decline since 2019), largely through
natural attrition; and
• a 67% increase in short-term incentives (STIs) and a 117%
increase in long-term incentives (LTIs) (combined variable
pay up 75%), driven by the impact of the group’s improved
financial performance on variable incentives off the low base
in 2020.
• Computer-processing costs increased by 9% to R6 329m,
reflecting an increase in the amortisation charge of 19%,
as well as investment in digital solutions, partially offset by
efficiency gains. As our ME technology strategy reaches material
completion, the growth rates in computer-processing costs and
amortisation are beginning to slow.
• Marketing costs increased by 24% to R1 332m off a low
2020 base and reflects the group’s increased focus on
increasing Nedbank’s share of voice in the market in support of
revenue growth.
• Other cost lines reflect the good management of discretionary
spend. Savings were recorded on lower levels of occupation and
accommodation.
The group’s increase in expenses of 6% was lower than the
increase in revenue and associate income of 7%, resulting in
a positive JAWS ratio of 0,8% and our cost-to-income ratio
decreasing to 57,7% (2020: 58,1%).
Hyperinflation accounting in Zimbabwe
Given the further depreciation of the Zimbabwean dollar and
slowing inflation, the group reported a net monetary loss
of R138m (2020: R205m loss).
Earnings from associates
Associate income of R686m, relating to the group’s 21%
shareholding in ETI for the period has been recognised (up more
than 100% when compared to a loss of R178m in 2020). This
includes accounting for our share of ETI’s Q4 2020 and 9M
2021 earnings (in line with our policy of accounting for our share
of ETI’s attributable earnings a quarter in arrear). The total effect
of ETI on the group’s HE was a profit of R523m (2020: R153m),
including the R245m (R177m post-tax) impact of funding costs.
On 28 January 2022, ETI reported unaudited attributable earnings
growth of more than 100% to US$257m and ROE of 18,8% (2020:
0,3%) for the 12 months to 31 December 2021. The performance
was supported by solid growth in their West and Central Africa
regions and ROEs in these regions were all above 21%. Ecobank
Nigeria remains a drag on the overall ETI performance and we
continue to work with management and other shareholders to
address this. Non-performing loans continued to decline, while
market-leading in-country franchises drove strong growth in
deposits. The group’s capital position strengthened further,
reflected in a total capital adequacy ratio (CAR) of 14,5% (ratio
published by ETI in February 2022) at 31 December 2021 (2020:
12,3%). On 28 February 2022, the ETI Board recommended the
payment of a dividend of USD 0,16 cents per share being a total
amount of circa $USD40m, subject to shareholders’ approval at
the upcoming Annual General Meeting of ETI. Our share of this
dividend from ETI is estimated to be just over $USD8m.
Gross banking loans and advances growth by cluster was
as follows:
Rm
CIB
RBB
Wealth
NAR
Centre2
Group
Change
(%)
(2)
7
(3)
(8)
(75)
2021
20203
352 487
400 301
30 729
22 325
1 112
361 280
375 385
31 567
24 186
4 438
1
806 954
796 856
2
Includes macro fair-value hedge-accounted portfolios and
disclosure reallocations.
3 The group reclassified listed corporate bonds of R22bn in December 2020 from
‘Government and other securities’ to ‘Loans and advances’ to align with peer
disclosure and so that they better reflect the group’s management of these
assets.
CIB gross banking loans and advances declined by 2% to
R352bn as a result of many clients using excess liquidity to
repay committed facilities in H1 2021 and muted corporate
demand. Current demand for new wholesale loans remains
low, with the timing of drawdowns uncertain, although recent
developments are encouraging, including the increase in private
renewable-energy-generation capacity up to 100 MW.
RBB gross loans and advances increased by 7% to R400bn. Gross
loans and advances growth in RBB continued its momentum from
2020, benefiting from both client demand for secured loans as a
result of the 300 bps cuts in interest rates in 2020, as well as an
increase in unsecured-lending volumes originated through the
group’s expanded digital channels, notwithstanding lower loan
approval rates due to tighter credit criteria. BB loans and advances
increased by 7%, driven by strong growth in new-loan payouts
achieved through judicious client acquisition and support given to
meet clients’ funding needs. Residential mortgage loans grew by
8%, broadly in line with the industry. MFC (vehicle finance) loans
increased by 6%, ahead of the industry average, as we continue
to benefit from our business model that is more geared towards
second-hand vehicles. Unsecured lending grew by 10% as a result
of the shift to digital, which continues to gain momentum and is
driving increased take-up rates of approved loans.
Deposits
Deposits increased by 2% to R972bn, with total funding-related
liabilities increasing by 2% to R1,0 trillion, while the loan-to-deposit
ratio decreased to 86% (December 2020: 88%).
Within the clusters, CIB grew deposits by 3% and RBB by
6%. Deposits in Wealth declined marginally by 0,2% and
NAR increased deposits by 5%.
Current and savings accounts (CASA), along with cash
management deposits, increased by 6%, driven by some clients
holding cash for short-term operational requirements and potential
rate hikes in 2022. Individually, current accounts increased by
8%, cash management accounts increased by 3% and savings
accounts increased by 5%. Call and term deposits increased by
8% and fixed deposits decreased by 5% as retail and commercial
57
Nedbank Group Annual Results 20212021 resultscommentarySupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial resultsResultspresentationMessage from ourChief Executive
clients opted to keep their cash short or in notice deposits due
to forecast rate hikes into the future. Negotiable certificate of
deposits (NCDs) decreased by 18%, as surplus cash was used to pay
down expensive marginal deposits. Nedbank’s wholesale funding
mix contribution has decreased by 4%, while the commercial funding
mix pleasingly increased by 4%. Foreign funding, although small in
relative terms for Nedbank, decreased by 9%.
Funding and liquidity
The group achieved a quarterly average long-term funding ratio of
26,6%, which is above the industry average of around 22,5% as a
result of proactively managing Nedbank’s long-term funding profile.
The group’s December 2021 average LCR of 128,1% (December
2020: 125,7%) exceeded the minimum regulatory requirement, with
the group maintaining appropriate operational buffers designed to
absorb seasonal, cyclical and systemic volatility observed in the LCR.
Nedbank Group LCR
2021
2020
HQLA (Rm)
Net cash outflows (Rm)
Liquidity coverage ratio (%)4
Regulatory minimum (%)
4 Average for the quarter.
207 105
161 678
128,1
80,0
206 943
164 583
125,7
80,0
More details on the LCR are available in the ‘Additional information’
section of the condensed consolidated interim financial results.
Nedbank’s portfolio of LCR-compliant HQLA increased marginally
to a December 2021 quarterly average of R207,1bn, while the
lower quarterly arithmetic average net cash outflows were driven
by an increased demand for longer-dated deposits. Nedbank’s
proactive management of its HQLA liquidity buffers, and close
monitoring of its net cash outflows, resulted in an increase in the LCR
to 128,1%. The HQLA portfolio, together with Nedbank’s portfolio of
other sources of quick liquidity, equated to total available sources of
quick liquidity of R264,2bn, representing 21,6% of total assets.
Nedbank exceeded the minimum NSFR regulatory requirement
of 100% effective from 1 January 2018 and reported a December
2021 ratio of 116,1% (December 2020: 112,8%). The structural
liquidity position of the group has strengthened from December
2020 as a result of the effective management of balance sheet
growth.
Capital
The group remains strongly capitalised, with ratios significantly
above the minimum regulatory requirements and a CET1 ratio
of 12,8% (December 2020: 10,9%) and a tier 1 ratio of 14,3%
(December 2020: 12,1%). The improvement in the CET1 ratio was
driven by strong organic earnings growth and lower RWA, including
the benefits of deliberate optimisation initiatives. This was partly
offset by the payment of the interim dividend of R2,2bn in August
2021. From 1 January 2022 the group’s CET1 capital adequacy target
range has been recalibrated to 11,0% to 12,0% (previously 10% to
12%) as the PA announced its intention to reinstate Pillar 2A in line
with Directive 5/2021.
The tier 1 ratio was also impacted positively by the issuance of
additional tier 1 instruments amounting to R3,5bn (including an
industry-first R910m green AT1 instrument), offset by redemptions
of R2bn, the buyback of old-style preference shares that still
qualified as capital in 2021 and the further grandfathering of these
old-style preference shares (R531m) from January 2021 in line with
the Basel III transitional arrangements. The total CAR was further
enhanced by the issuance of Basel III qualifying tier 2 instruments
of R2,95bn, offset by redemptions of R2bn, in line with group’s
capital plan.
Basel III capital
ratios (%)
2021
2020
Internal
target range
Regulatory
minimum5
CET1
Tier 1
12,8
14,3
10,9
12,1
10,0–12,0
> 11,25
Total CAR
17,2
14,9
> 13,0
8,0
9,5
11,5
(Ratios include unappropriated profits.)
5 PA minimum requirements are disclosed with Pillar 2A at 0% in line with
Directive 2/2020 (April 2020) and excluding bank-specific Pillar 2b capital
requirements. The Pillar 2A capital requirement will be reinstated back to
50 bps at CET 1, 75 bps at tier 1 and 100 bps for the total capital ratio, with
effect from 1 January 2022.
Using our financial expertise to
do good
Nedbank continues to play an important role in society and in the
economy, and we remain committed to delivering on our purpose
of using our financial expertise to do good and to contribute to
the well-being and growth of the societies in which we operate by
delivering value to our employees, clients, shareholders, regulators
and society.
Employees
• We maintained our focus on the physical, mental and financial
well-being of our employees through various interventions,
including a bankwide virtual campaign on mental well-being,
together with a variety of webinars that were attended by more
than 22 400 employees during the year. We are saddened by
the loss of 55 of our employees who succumbed to Covid-19 in
2021.
• Despite the difficult operating environment, employee
engagement levels remained high and our ‘Great place to work’
NPS improved to 19 (from 17 in 2020 and 7 in 2019).
• We have not retrenched any employees as a result of Covid-19.
Our Agility Centre successfully redeployed 242 employees
into alternative roles within Nedbank, while 70 employees
were regrettably retrenched as a result of changes in
operational requirements.
• We have paid our 26 861 employees’ salaries and benefits of
R18bn. We concluded annual salary increases of 4,0% for our
bargaining-unit employees, with non-bargaining-unit employees
receiving increases of 3,0% and the blended average employee
salaries increasing by 3,5% in 2021.
• In 2021 training spend increased to R1,1bn (2020:
R924m). Our Digital Learning platform was launched in February
2021 with more than 18 000 learners completing 982 417 digital
learning courses. The total number of learning hours (including
compliance training) increased to 49 hours per person
(2020: 31 per person) with 24 746 learning beneficiaries (2020:
24 391).
• During 2021, 62% of our employees worked from home
(excluding branch employees) as business continuity plans were
invoked on the back of Covid-19-related lockdown levels and
during the July civil unrest that broke out in parts of Gauteng and
KwaZulu-Natal.
• Nedbank has implemented a ‘hybrid work model’ approach
since the onset of the pandemic. A portion of our workforce
will continue to work from a Nedbank office or branch, while
a blended approach will be followed, with employees working
on-site or remotely. We plan to accommodate a split of
on-site/off-site employees, which will see approximately 60%
of all office employees working at the various Nedbank campus
sites on any given day.
58
Nedbank Group Annual Results 2021 • We continued to focus on transformation as a key imperative
to ensure that Nedbank remains relevant in a transforming
society. ACI (African, Indian, Coloured) representation at board
level improved to 61,5% (2020: 60,0%), at executive level it
was maintained at 46,2% and among our total employees
it was 79,9% (2020: 78,0%). Pleasingly, we have recorded
improvements in ACI employee representation at senior and
middle management levels. Female representation at board level
improved to 23,1% (2020: 20,0%), at executive level it remained
at 46,2% and among total employees it was 61,4% (2020: 61,2%).
• We were formally recognised for our efforts towards
transformation and diversity and won the Top Empowered
Business of the Year Award at the 2021 Oliver Top
Empowerment Awards. Nedbank also won the ‘Best digital
campaign’ for the #YoungDifferenceMaker and was as voted
as runner-up in the ‘2021 Employer of Choice: Commercial
and Retail Banking’ category by the South African Graduate
Employers Association (SAGEA).
Clients
• Delivering market-leading client experiences remains a key
priority for us. On the back of the 2020 Consulta survey, where
we achieved second position among the five largest South
African banks on client satisfaction metrics, we maintained this
position in 2021 and improved our scores further in both client
satisfaction (SAcsi score of 82%, 2020: 81%) and NPS (score of
47%, 2020: 41%).
• Nedbank’s brand ranking among South African companies, which
increased from 11th in 2019 to eighth in 2020, remained at
eighth position in 2021, in Brand Finance’s Most Valuable Brands
in SA report. Brand Finance estimates Nedbank’s brand value
at around R15bn. We also consistently ranked the #2 bank on
social-media net brand sentiment, measured by Salesforce
Social Studio.
• We safeguarded R972bn (2020: R954bn) of deposits at
competitive rates.
• We supported clients by advancing R228bn (2020: R210bn) in
new loans to enable them to finance their homes, vehicles and
education, as well as grow their businesses, and to help them
manage through a difficult period in 2021.
• The payment relief (payment holidays) we provided to clients
under the PA’s Directive 3/2020 has mostly matured after
assisting more than 400 000 clients on R121bn of loans since
the Covid-19 crisis emerged.
• Our clients’ access to banking improved, and as the
Covid-19 lockdowns resulted in an accelerated shift of clients
to digital channels, digitally active retail users increased by
11% to 2,3 million. Our end-to-end digital onboarding, sales
and servicing capabilities, as part of our ME technology
journey, supported the increase in digital sales as a percentage
of total sales in RBB to 32% (from 28% in 2020 and 12% in
2019).
• In recognition of the value-add to our clients and our
leadership position in key industries, segments and products,
Nedbank won various awards, including Global Finance’s
2021 Best Investment Bank in South Africa, Global Banking &
Finance’s 2021 Best Corporate Bank in South Africa, African
Banker’s 2021 Infrastructure Deal of the Year, Global Business
Review Magazine’s 2021 Best Retail Bank and City of London’s
2021 Best Private Bank.
Shareholders
• After declining by 40% in 2020, in 2021 the Nedbank Group
share price increased by 35%, outperforming the South
African bank index that increased by 29%. This strong
performance was underpinned by the group’s improved financial
results and good strategic and operational progress, supported
by enhanced disclosures to address key issues investors raised
in 2020, particularly in respect of our commercial-property
finance portfolio which has been significantly more resilient
than predicted at the onset of the Covid-19 lockdowns.
The group’s strong capital and liquidity position at
31 December 2021 supported the declaration of a final dividend
for 2021 of 758 cents per share.
• We successfully hosted our second virtual annual general
meeting (AGM) in May 2021. On the back of a remuneration
implementation vote of 65,9%, being below the required
75%, we reached out to engage with shareholders and we
have made a number of remuneration-related amendments
during 2021. Given the high level of our ongoing shareholder
engagements, only one shareholder requested a meeting after
the AGM and the meeting was constructive. Nedbank Group
continues to value feedback from our shareholders to enhance
our disclosures and ESG practices, including those from our
annual Board ESG Roadshow. In acknowledgement of Nedbank’s
leadership and progress made on ESG-related disclosures,
Nedbank was announced the winner of Best Sustainability
Reporting in Financials (Banking) and the overall winner, as well
as Best Climate-related Reporting, in ESG Investing’s 2021 ESG
Reporting Awards. Our ESG ratings remain on the top tier among
local and global peers – MSCI: AA (top 33% of global banks),
FTSE Russell: 4,3 (top 6% of global banks), Sustainalytics:
16,5 (top 6% of diversified banks) and ISS: C (top 20% of
global banks).
• We ensured transparent, relevant and timeous reporting;
enhanced our disclosures to shareholders; and participated in
numerous virtual investor engagements throughout 2021, which
were accompanied by high levels of investor attendance. Foreign
equity shareholding levels increased to 31,4% (December
2020: 24,1%).
• In November 2021 Old Mutual Limited (Old Mutual) concluded
the unbundling of 62,1 million Nedbank Group shares
(comprising 12,2% of the issued ordinary share capital of
Nedbank Group) to Old Mutual shareholders by way of a
distribution in specie. As expected, the Nedbank share’s
free-float increased further, resulting in a marked increase in
index-related shareholders as well as many of the group’s largest
20 shareholders increasing their holdings. At year-end, Old
Mutual owned 5,2% of Nedbank Group.
• In December 2021 Nedbank Group repurchased all the
non-redeemable, non-cumulative, non-participating, variable
rate preference shares of Nedbank Limited by way of a scheme
of arrangement, following approval by the requisite majority of
shareholders (100% votes of approval).
Regulators
• We continued to work closely with the government, regulators
and the Banking Association South Africa (BASA) to ensure the
safety and soundness of the South African banking system.
• Key developments included the following:
• On 31 March 2020, the PA issued Directive 1/2020, which
provided for the minimum regulatory LCR requirement to
be reduced from 100% to 80%. This requirement remained
effective for the 2021 financial year in line with Circular 1/2021.
With effect from 1 January 2022, the LCR temporary relief
measure was withdrawn in line with Directive 8/2021 issued
by the PA. Banks are now directed to comply with the revised
minimum regulatory LCR requirements with effect from
1 January 2022 of 90%, and from 1 April 2022 of 100%.
• Directive 3/2020 dealt with Covid-19-related distressed
restructures and remained effective for 2021 in line
with Circular 1/2021. However, as the PA has issued
Directive 7/2021, D3/2020 will not apply to any restructured
59
Nedbank Group Annual Results 20212021 resultscommentarySupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial resultsResultspresentationMessage from ourChief Executive credit exposures granted after 1 January 2022, whether new
or reapplications. Directive 3/2020 will be withdrawn with
effect from 1 April 2022.
• The PA issued Directive 2/2020, which allows for the
temporary removal of the systemic risk buffer, or Pillar 2A
capital requirement, which was reduced from 1% in total CAR
to zero, and which remained in effect for 2021 in line with
Circular 1/2021.
• Every year our sponsorship of the Thuthuka Education
Upliftment Fund supports 45 students who are pursuing
an academic qualification towards becoming chartered
accountants in SA, and in 2021 we have funded the qualification
of 62 (2020: 56) black chartered accountants.
• Our CSI spend totalled almost R121m (2020: R103m) in
2021 and included over R57m that was allocated to skills
development and education.
• The PA issued Directive 5/2021, which directs banks to
• Nedbank partnered with an alternative student funding
matters related to the prescribed minimum-required capital
ratios as well as the application of various components of
the previously mentioned capital requirements, such as the
systemic risk capital requirement (Pillar 2A), the domestic
systemically important bank (D-SIB) capital requirement, the
countercyclical buffer range and the capital conservation
buffer range. This in effect seeks to reinstate the Pillar
2A capital requirement back to the pre-Covid-19 levels of
50 bps, 75 bps and 100 bps for CET1, tier 1 and total capital
respectively. The Pillar 2A reinstatement has been in effect
from 1 January 2022.
• SARB believes the current money market shortage system
(cash deficit system) is proving to be both difficult and costly
to implement and it is therefore proposing a replacement
of the current monetary policy transmission mechanism to
a floor system (also known as a cash surplus system) where
the resultant effect is that the banking system will operate
on the basis of a surplus liquidity position. We believe that
movement from a cash deficit system to cash surplus
system should be net positive for the banking sector, with
the most significant potential benefit being a reduction in
the cost of funding at the short end of the funding curve,
while also offering banks an option to diversify their HQLA
portfolios and/or extend additional credit and liquidity to the
real economy.
• We continued to strengthen our capital position, with a tier
1 capital ratio of 14,3% and CET1 ratio of 12,8%.
• We maintained a strong liquidity position, with an average LCR
of 128% in the fourth quarter of 2021 and an NSFR of 116% at
31 December 2021. Both ratios improved on the levels achieved
at December 2020.
• We hold investments of over R175bn in government and public
sector bonds as part of our HQLA requirements.
• We made cash taxation payments across the group of R11,2bn,
up 29% (2020: R8,7bn), relating to direct, indirect and employee
taxes, as well as other taxation.
Society
Our long-term sustainability and success are contingent on
the degree to which we deliver value to society. Through the
considered development and delivery of products and services
that satisfy societal needs and through our own operations, we
aim to play our part in enabling a thriving society, create long-term
value and maintain trust to ensure the ongoing success of our
brand. This is particularly important in the current context of SA as
well as the broader African continent.
We have adopted the United Nations SDGs as a framework for
measuring delivery on our purpose, and this has proven very
important during this time. Key highlights include the following:
Quality education (SDG 4)
• Over the past five years we have provided approximately
5 977 students with student loans to the value of R364m, a
total of R36m of which was disbursed to support 575 students
in 2021. In addition, we have provided R5,1bn in funding for
the development of additional student accommodation for
over 42 758 student beds since 2015, including R169m and
573 beds in 2021.
60
organisation to provide a R10m facility to create approximately
800 new tertiary education loans for the students in the
‘missing middle’ – those who do not qualify for state funding
(the National Student Financial Aid Scheme) but are also unable
to obtain a traditional student loan.
Clean water and sanitation (SDG 6)
• During 2021 Nedbank was awarded five public
sector infrastructure finance tenders to the value of
R363m. The Mpumalanga Municipality will leverage the funds
for wastewater treatment and replacement of old water
networks and the Western Cape Municipality will upgrade and
replace ageing sewer infrastructure.
• During the 2021 financial year funding transactions were
completed to the value of R437m. Many of these transactions
were concluded in the agricultural sector, where recipients
used the money to replace ageing and inefficient irrigation
systems with improved technology. There has also been a
notable increase in interest in the funding solutions from
commercial and industrial businesses that are becoming
increasingly aware of the risks of water scarcity to their
sustainability, and the importance of water recycling, purifying
and rainwater harvesting.
• We decreased our own total water consumption by a
further 18% (2020 to 2021) and by 39% when compared to
the 2019 base year. This decline was driven by floorspace
consolidations and reduced levels of occupancy in our campus
sites due to the lockdowns.
Affordable and clean energy (SDG 7)
• We have achieved many firsts in this space. Our pioneering
green AT1 R910m issuance highlights the scope and breadth
of opportunity that the sustainability agenda holds for Africa.
To date we have raised a total of R6,8bn on green bonds, with
R2,1bn raised during 2021.
• In the Renewable Energy Independent Power Producer
Procurement Programme (REIPPPP) we have arranged
42 transactions in renewable-energy projects to date,
underwriting a total of R35bn and current exposures of R29bn.
• The lifting of the licensing floor for energy projects in the
private sector (embedded generation) from 1 MW to 100 MW
is a positive development that will enable many of our clients to
reduce their carbon footprint, while ensuring energy certainty.
Deal flow in 2021 saw our Investment Banking division complete
three material transactions totalling over R420m and our
Business Banking division complete 40 transactions totalling
R191m, with a healthy pipeline of future deals in place.
Decent work and economic growth (SDG 8)
• Nedbank’s Small Business Services continued to promote
our newly launched Startup Bundle for new small businesses,
offering zero monthly maintenance fees for the first six months,
access to a dedicated banker and beyond-banking support.
New merchant features were landed to support cashless
trading on smartphones (tap on phone) and on WhatsApp
(Money Message).
Nedbank Group Annual Results 2021 • A total of 662 new Nedbank Stokvel Accounts were opened in
2021, with an average of just over 32 000 active lives insured
through its innovative burial cover solution. With 55% new
Stokvel Accounts converted from the USSD channel following
the restrictions on movement and gatherings, the pandemic has
prompted stokvel members to adopt digital payment methods.
• In 2021 we reactivated our commitment to the Youth
Employment Service (YES), through which corporate SA aims
to provide internship opportunities for more than one million
South Africans. From our 2019 participation we have onboarded
239 YES participants into permanent Nedbank jobs and
another 1 390 at Nedbank’s partners. We have placed more
than 1 900 previously unemployed youth internally and through
sponsored placements, and we continue to encourage other
South African corporates to follow our example.
Reduced inequalities (SDG 10)
• We partnered with the 67CEOs Foundation, Gift of the
Givers and UNICEF, providing both rand value support and
on-the-ground assistance to rebuild small and micro businesses,
as well as to expedite humanitarian relief.
• We provided R6,4m to support initiatives, helping to clean up
and repair damage caused to communities and infrastructure
due to civil unrest, and, in addition, made a R7,5m donation to
the Humanitarian Crisis Relief Fund under the Solidarity Fund.
We supported employees, their families and communities
in KwaZulu-Natal with 106 tons and 5 000 food parcels and
supplies during the July 2021 civil unrest. In addition, we
contributed R1m assistance to informal traders, helping them
to rebuild their businesses and unlock economic activities,
while investing into the township economy to support micro
entrepreneurs with R2m additional funding.
• We maintained our level 1 BBBEE status and were
acknowledged at the Oliver Top Empowerment Awards as
2021’s Top Empowered Business of the Year. The award is
given to the organisation that best demonstrates excellence
in all spheres of the general criteria and the seven pillars
of empowerment.
• In our own operations, 76% of our procurement spend was used
to support South African businesses. In an effort to support the
cash flow needs of small businesses as part of our commitment
to the #PayIn30 Campaign, 91% of the total amount paid to
1 606 qualifying small and medium enterprises (SMEs) was paid
within 30 days of our receiving their invoices.
Sustainable cities and communities (SDG 11)
• We disbursed R640m towards the development of affordable
housing for lower-income households in 2021, bringing the total
invested in the sector to over R5bn over the past five years.
• To date, we have provided funding of R25bn for buildings that
are linked to green-certified properties and those that contain
sustainable features.
• We successfully structured and arranged a R1,1bn Green
Residential Development Bond for Nedbank Limited, issued
under its domestic medium-term note programme and listed on
the Sustainability Segment of the JSE on 10 December 2021.
Economic outlook
The world economic outlook has become murkier in recent weeks.
Initial expectations were for another year of relatively robust
global growth, with the IMF forecasting 4,4% growth for 2022.
However, downside risks have increased significantly. Russia’s
invasion of Ukraine adds another layer of uncertainty to the
outlook. The conflict is likely to push global oil prices higher for
longer, adding further fuel to the global inflationary fire already
raging on the back of persistent supply shortages, disruptions
to global logistics and transport networks, and the lingering
impact of the pandemic. Surging global oil prices amid already
high and rising inflation will erode households’ purchasing power,
companies’ profits and investors’ returns, weighing on confidence
and slowing global growth in the process. This situation also
complicates monetary policy decisions, possibly forcing the US
and other major central banks to tighten monetary policies more
aggressively. Fiscal policies in the US and other advanced countries
are also shifting towards rebuilding and expanding infrastructure
while accelerating the transition to clean energy to mitigate
climate change. The focus on infrastructure could boost the
demand for commodities in the years ahead, supporting growth in
commodity-exporting countries. However, these benefits are only
likely to materialise from 2023 onwards. The IMF projected slower
growth of 3,8% for advanced countries in 2022 from an estimated
5,2% in 2021. In emerging and developing economies, economic
growth was expected to slow to 4,8% in 2022, down significantly
from approximately 6,5% in 2021. Growth is expected to remain
fragile throughout 2022 as countries deal with geopolitical
tensions, new Covid-19 variants, slow vaccination progress, weak
policy support, sharply higher global oil prices, higher general
inflationary pressures, and tighter global financial conditions.
Expectations of slower Chinese economic growth will weigh on
the outlook for other emerging and developing economies, given
its significance as an export destination for most countries in this
group. The recovery in Sub-Saharan Africa is likely to continue,
slightly slower than the 4,0% in 2021. The region’s economy
is projected to expand by 3,7% in 2022. However, downside
risks have increased. The Russia-Ukraine war is likely to benefit
oil-exporting nations, but prices of non-energy commodities are
expected to ease off last year’s peak and stabilise at lower levels.
Given the region’s low vaccination rates, resurgent Covid infections
and associated lockdowns continue to pose downside risks.
SA’s economic recovery is expected to moderate off 2021’s
higher base in the year ahead. Encouragingly, consumer spending
is likely to increase steadily, underpinned by firmer income
growth and relatively favourable interest rates. Fragile consumer
confidence, hurt by a weak job market, will still limit the upside.
Fixed-investment spending is forecast to rise off a low base but
faces ongoing headwinds. A sustainable rise in private sector
capital outlays will only occur once government accelerates
structural reforms and eradicates electricity shortages.
The restocking of depleted inventories should support domestic
demand. In contrast, government spending will likely remain weak.
At the same time, softer global demand and commodity prices will
weigh on exports. Real GDP growth is forecast to grow by 1,7%
in 2022. Accelerated structural reforms and energy security remain
key to unlocking faster economic growth and job creation over the
medium-to-longer term.
Inflation is forecast to remain close to the upper 6% limit of SARB’s
target range throughout Q1 2022. The upside risks to the inflation
outlook are unlikely to recede quickly as bottlenecks and shortages
in the global supply chain are expected to ease only during
Q2 2022. The rand remains a major source of uncertainty for the
year ahead. Headline inflation is forecast to average 4,8% in 2022.
Price-sensitive domestic demand is expected to keep inflation in
check over the next three years. We expect another four interest
rate hikes of 25 bps each this year, followed by more hikes of a
cumulative 100 bps spread over the following two years, taking the
repo rate up to 6,00% by the end of 2024.
Conditions in the South African banking industry continue
to improve. Growth in loans to households and companies is
forecast to increase further in 2022, supported by the anticipated
normalisation in economic activity. However, the rise in household
demand could be dampened by a hesitancy to borrow given
rising interest rates and fragile confidence on concerns about job
losses. Corporate credit demand should hold up relatively well,
underpinned by improving profits and firmer fixed investment.
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Nedbank Group Annual Results 20212021 resultscommentarySupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial resultsResultspresentationMessage from ourChief Executive
Prospects
Our guidance on financial performance for the financial year 2022,
in a global and domestic macroeconomic environment with high
forecast risk and uncertainty, and based on our current economic
forecasts, is currently as follows:
• NII growth to be around high-single digits. Loan growth is
expected to be faster than the 1% reported in 2021 and the
group’s NIM is expected to increase from the 2021 level of 3,73%.
• CLR to be within the top half of our TTC target range of 60 bps to
100 bps, being 80 bps to 100 bps.
• NIR growth to be around high single digits as transactional
activity continues to recover, as strategic initiatives
including main-banked client gains, cross-sell and new revenue
streams contribute to growth and as the volatility relating to the
group’s fair-value hedge accounting solution is not expected
to recur.
• Expense growth to be above mid-single digits, reflecting the
impact of ongoing investment in our technology platform and
digital solutions, the return of some discretionary spend such
as sponsorships, and new regulatory costs such as deposit
insurance and Twin Peaks, partially offset by TOM 2.0 savings.
• Liquidity metrics, including LCR and NSFR, to remain well
above PA minimum requirements.
• CET1 capital ratio to remain above the top end of the
board-approved target range of 11% to 12%.
• Dividend payments, within the group’s board-approved
dividend policy and target range of between 1,75 times to
2,25 times.
• DHEPS growth greater than nominal South African GDP (GDP
+ CPI) +5%.
As part of 2020 year-end reporting we set new medium-term targets that we believe are appropriate to drive value creation in the current
and expected economic environment. These, together with our 2022 guidance for these, as well as long-term targets, are as follows:
Metric
2021
Full-year
performance6
2022 outlook
Medium-term
target
Long-term
target
ROE
12,5%
Improve on 2021
Greater than 2019 levels
(15%) by 2023.
> 18% (COE + 3% to 4%)
Growth in DHEPS
112%
Solid positive growth
Greater than 2019 levels
> consumer price index
(2 565 cents) by 2022, a year
earlier than initially planned.
+ GDP growth + 5%
CLR
83 bps
Between 80 bps and 100 bps
Between 60 bps and 100 bps
of average banking advances
Cost-to-income
ratio (including
associate income)
57,7%
Improve on 2021
Below 54% by 2023
< 50%
CET1 capital
adequacy ratio
12,8%
Above the top end of
target range
Dividend cover
2,02 times
Within our target range of
1,75–2,25 times
11,0–12,0%7
1,75–2,25 times
6 The COE is currently forecast to be around 14,5% to 15,0% in 2022 to 2024.
7 The group’s CET1 capital adequacy ratio target range has been refined by the board to 11,0% to 12,0%, previously 10,0% to 12,0%.
Shareholders are advised that all guidance is based on organic earnings and our latest macroeconomic outlook and has not been
reviewed or reported on by the group’s joint auditors.
Board and leadership changes during
the period
Iain Williamson stepped down as a non-executive director of
Nedbank Limited and Nedbank Group Limited (companies) with
effect from the close of the companies’ AGMs on 26 May and
28 May 2021 respectively. Iain’s appointment was in terms of the
relationship agreement previously concluded between Old Mutual
Limited (OML) and Nedbank Group, which provided for OML
to nominate one director to the boards of Nedbank Group and
Nedbank Limited for as long as OML’s shareholding was equal to or
greater than 15% in Nedbank Group. Following OML’s unbundling
of the majority of its shareholding in Nedbank Group to OML
shareholders, this provision no longer applies.
The companies’ previous Chairperson, Vassi Naidoo, was granted
medical leave of absence in January 2021 and Mpho Makwana
stepped in as Acting Chairperson. On 28 September 2021 a
SENS was released advising shareholders of the sad passing of
Vassi Naidoo. Mpho Makwana (the former Lead Independent
Director and Acting Chairperson) was appointed as Non-executive
Chairperson and Hubert Brody was appointed as Lead
Independent Director of the companies' boards on 2 December
2021.
Anna Isaac, Group Chief Compliance Officer, has resigned with
effect from 30 April 2022 to join a bank in the United Arab
Emirates. The appointment of a successor for Anna will be
announced once Nedbank Group's succession process has been
completed and regulatory approvals have been received.
Forward-looking statements
This announcement is the responsibility of the directors and
contains certain forward-looking statements with respect to
the financial condition and results of operations of Nedbank
Group and its group companies that, by their nature, involve risk
and uncertainty because they relate to events and depend on
circumstances that may or may not occur in the future. Factors
62
Nedbank Group Annual Results 2021
that could cause actual results to differ materially from those in the
forward-looking statements include global, national and regional
health conditions; political and economic conditions; sovereign
credit ratings; levels of securities markets; interest rates; credit
or other risks of lending and investment activities; as well as
competitive, regulatory and legal factors. By consequence, the
financial information on which all forward-looking statements is
based has not been reviewed or reported on by the group’s joint
auditors.
Final dividend declaration
Notice is hereby given that a final dividend of 758 cents per
ordinary share has been declared, payable to shareholders for the
year ended 31 December 2021. The dividend has been declared out
of income reserves.
The dividend will be subject to a dividend withholding tax rate of
20% (applicable in SA) or 151,6 cents per ordinary share, resulting
in a net dividend of 606,4 cents per ordinary share, unless the
shareholder is exempt from paying dividend tax or is entitled to a
reduced rate in terms of an applicable double-tax agreement.
Nedbank Group’s tax reference number is 9375/082/71/7 and the
number of ordinary shares in issue at the date of declaration is
508 870 678.
In accordance with the provisions of Strate, the electronic
settlement and custody system used by the JSE, the relevant dates
for the dividend are as follows:
Share certificates may not be dematerialised or rematerialised
between Wednesday, 06 April 2022, and Friday, 08 April 2022,
both days inclusive.
Where applicable, dividends in respect of certificated shares will
be transferred electronically to shareholders’ bank accounts on
the payment date. The acceptance/collection of cheques has
ceased, effective from 31 December 2020. In the absence of
specific mandates, the dividend will be withheld until such time
that shareholders provide their banking information. Holders of
dematerialised shares will have their accounts credited at their
participant or broker on Monday, 11 April 2022.
The above dates are subject to change. Any changes will be
published on SENS and in the press.
For and on behalf of the board
Mpho Makwana
Chairperson
Mike Brown
Chief Executive
Directors
PM Makwana (Chairperson), MWT Brown** (Chief Executive),
HR Brody*, BA Dames, MH Davis** (Chief Financial Officer), NP
Dongwana, EM Kruger, RAG Leith, L Makalima, Prof T Marwala,
Dr MA Matooane, MC Nkuhlu** (Chief Operating Officer),
S Subramoney.
Event
Date
* Lead Independent Director ** Executive
Last day to trade (cum dividend)
Tuesday, 05 April 2022
Shares commence trading
(ex dividend)
Record date (date shareholders
recorded in books)
Wednesday, 06 April 2022
Friday, 08 April 2022
Payment date
Monday, 11 April 2022
63
Nedbank Group Annual Results 20212021 resultscommentarySupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial resultsResultspresentationMessage from ourChief Executive Financial
results
65
66
68
70
74
Financial highlights
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Return-on-equity drivers
64
Nedbank Group Annual Results 2021 Financial highlights
for the year ended 31 December
Statistics
Number of shares listed
Number of shares in issue, excluding shares held by group entities
Weighted-average number of shares
Diluted weighted-average number of shares
Headline earnings
Profit attributable to ordinary shareholders
Total comprehensive income
Preprovisioning operating profit
Economic profit/(loss)
Headline earnings per share
Diluted headline earnings per share
Basic earnings per share
Diluted basic earnings per share
Ordinary dividends declared per share
Interim
Final
Ordinary dividends paid per share
Dividend cover
Total assets administered by the group
Total assets
Assets under management
Life insurance embedded value
Life insurance value of new business
Net asset value per share
Tangible net asset value per share
Closing share price
Price/earnings ratio
Price-to-book ratio
Market capitalisation
Number of employees (permanent staff)
Number of employees (permanent and temporary staff)
Key ratios (%)
ROE
Return on tangible equity
ROA
Return on RWA
NII to average interest-earning banking assets
NIR to total income
NIR to total operating expenses
CLR – banking advances
Cost-to-income ratio
Total income growth less expense growth rate (JAWS ratio)
Effective taxation rate
Group capital adequacy ratios (including unappropriated profits):
– CET1
– Tier 1
– Total
m
m
m
m
Rm
Rm
Rm
Rm
Rm
cents
cents
cents
cents
cents
cents
times
Rm
Rm
Rm
Rm
Rm
cents
cents
cents
historical
historical
Rbn
Change
%
2021
2020
1
1
>100
>100
>100
9
74
>100
>100
>100
>100
(38)
508,9
485,6
485,1
494,8
11 689
11 238
13 171
22 327
(1 735)
2 410
2 362
2 317
2 271
1 191
433
758
433
2,02
502,1
483,9
483,2
488,7
5 440
3 467
5 345
20 561
(6 580)
1 126
1 113
717
709
–
695
N/A
3
1 645 383
1 602 683
1 221 054
1 228 137
424 329
374 546
12
14
11
14
35
37
(5)
(4)
4 039
322
20 493
17 770
17 502
7,3
0,9
89,1
26 861
27 303
12,5
14,8
0,98
1,78
3,73
43,5
74,4
0,83
57,7
0,8
24,2
12,8
14,3
17,2
3 606
283
18 391
15 549
12 948
11,5
0,7
65,0
28 271
28 324
6,2
7,4
0,45
0,82
3,36
44,5
76,0
1,61
58,1
(2,7)
23,7
10,9
12,1
14,9
65
Financial resultsStatement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysis2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
Consolidated statement of comprehensive income
for the year ended 31 December
Rm
Interest and similar income
Interest expense and similar charges
Net interest income
Non-interest revenue and income
Net commission and fees income
Commission and fees revenue
Commission and fees expense
Net insurance income
Fair-value adjustments
Net trading income
Equity revaluation gains/(losses)
Investment income
Net sundry income
Share of gains/(losses) of associate companies
Total income
Impairments charge on financial instruments
Net income
Total operating expenses
Zimbabwe hyperinflation
Indirect taxation
Impairments charge on non-financial instruments and other gains and losses
Profit before direct taxation
Total direct taxation
Direct taxation
Taxation on impairments charge on non-financial instruments and other gains
and losses
Profit for the year
Other comprehensive income (OCI) net of taxation
Items that may subsequently be reclassified to profit or loss
Exchange differences on translating foreign operations
Share of OCI of investments accounted for using the equity method
Debt investments at FVOCI – net change in fair value
Items that may not subsequently be reclassified to profit or loss
Share of OCI of investments accounted for using the equity method
Remeasurements on long-term employee benefit assets
Property revaluations
Equity instruments at FVOCI – net change in fair value
Change
2020
Note
1
3
%
(9)
(21)
8
4
10
>100
8
(50)
26
6
(33)
(7)
(68)
>100
>100
2
4
5
6
2021
(restated)1
65 772
33 272
32 500
25 027
17 754
22 085
(4 331)
2 005
(833)
4 475
650
263
713
786
58 313
6 534
51 779
33 639
138
1 073
499
16 430
4 043
4 104
72 300
42 219
30 081
24 140
17 137
20 653
(3 516)
1 622
352
5 252
(1 038)
212
603
(76)
54 145
13 127
41 018
31 772
205
1 148
1 562
6 331
1 877
1 994
(61)
(117)
>100
(12)
12 387
784
4 454
891
1 029
(722)
(5)
(21)
389
36
78
672
(189)
119
395
(80)
(26)
Total comprehensive income for the year
>100
13 171
5 345
66
Nedbank Group Annual Results 2021
Rm
Profit attributable to:
– Ordinary shareholders
– Non-controlling interest – ordinary shareholders
– Non-controlling interest – holders of preference shares
– Non-controlling interest – holders of participating preference shares
– Non-controlling interest – holders of additional tier 1 capital instruments
Profit for the year
Total comprehensive income attributable to:
– Ordinary shareholders
– Non-controlling interest – ordinary shareholders
– Non-controlling interest – holders of preference shares
– Non-controlling interest – holders of participating preference shares
– Non-controlling interest – holders of additional tier 1 capital instruments
Total comprehensive income for the year
Headline earnings reconciliation
Profit attributable to equity holders of the parent
Less: Non-headline earnings items
Impairments charge on non-financial instruments and other gains and losses
Taxation on impairments charge on non-financial instruments and other gains
and losses
Share of associate impairment of goodwill
Headline earnings
Change
2020
Note
%
2021
(restated)1
7
7
7
7
>100
80
(25)
>100
>100
>100
>100
(25)
>100
>100
>100
70
98
>100
11 238
99
188
125
737
12 387
11 941
180
188
125
737
13 171
11 238
(438)
(499)
61
(13)
11 689
3 467
55
251
(58)
739
4 454
4 358
55
251
(58)
739
5 345
3 467
(1 445)
(1 562)
117
(528)
5 440
1 During the year, the group reviewed its statement of comprehensive income presentation. As a result of the review, certain line descriptions have been updated,
subtotals have been removed and the 'Non-interest revenue and income' line item has been disaggregated. These changes represent reclassifications to the
statement of comprehensive income presentation. It is the group's view that these changes provide more relevant disclosures on its financial performance.
To provide comparability, the prior-year balances have been restated accordingly. The reclassifications had no impact on the group’s statement of financial position,
statement of changes in equity and statement of cash flows.
67
Financial resultsStatement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysis2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
Consolidated statement of financial position
at 31 December
Rm
Assets
Cash and cash equivalents1
Other short-term securities
Derivative financial instruments
Government securities
Other dated securities
Loans and advances to clients
Trading loans and advances
Loans and advances to banks
Other assets
Current taxation assets
Investment securities
Non-current assets held for sale
Investments in associate companies
Deferred taxation assets
Investment property
Property and equipment
Long-term employee benefit assets
Intangible assets
Total assets
Equity and liabilities
Ordinary share capital
Ordinary share premium
Reserves
Total equity attributable to ordinary shareholders
Holders of preference shares
Holders of participating preference shares
Holders of additional tier 1 capital instruments
Non-controlling interest attributable to ordinary shareholders
Total equity
Derivative financial instruments
Amounts owed to depositors
Provisions and other liabilities
Current taxation liabilities
Non-current 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
Note
Change
%
2021
2020
(restated)1
8
8
8
9
10
11
12
8
14
(51)
14
(34)
3
(29)
(27)
>100
(24)
(4)
>100
2
35
(5)
14
(4)
44 586
60 037
39 179
41 382
52 605
80 325
149 340
130 468
1 158
751 656
50 431
29 648
33 877
124
1 753
731 214
71 251
40 838
16 802
164
25 498
26 425
638
3 395
889
28
10 739
6 610
13 221
69
3 322
657
11 334
5 777
13 751
(1)
1 221 054
1 228 137
486
18 768
80 259
99 513
59
9 319
620
109 511
36 042
971 795
23 451
330
80
458
2 427
17 959
842
58 159
484
18 583
69 925
88 992
3 222
(58)
7 822
466
100 444
65 130
953 715
23 704
590
390
2 604
20 868
922
59 770
1 111 543
1 127 693
1 221 054
1 228 137
1
15
12
(100)
>100
19
33
9
(45)
2
(1)
(44)
17
(7)
(14)
(9)
(3)
(1)
(1)
1 During the year, the group reviewed the presentation of the mandatory reserve deposits with central banks, which was previously disclosed separately on the
statement of financial position. As a result of this review, the mandatory reserve deposits with central banks have now been aggregated within the cash and cash
equivalents balance, as the nature of the mandatory reserve deposits represents cash and cash equivalents. The amount of mandatory reserve deposits with
central banks that was reclassified to cash and cash equivalents is R26 491m for 2020, and consequently the prior-year balances have been restated to provide
comparative information. The group is of the view that the updated disclosure provides more relevant information for users to better understand the group’s cash
and cash equivalents.
68
Nedbank Group Annual Results 2021
69
NotesFinancial resultsStatement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysis2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021 Consolidated statement of changes in equity
for the year ended 31 December
Rm
Number of
ordinary
shares
Ordinary
share
capital
Ordinary
share
premium
Foreign
currency
translation
reserve
Property
revaluation
reserve
Other non-
distributable
reserves1
FVOCI
reserve
Other
distri-
butable
reserves2
Total equity
attributable
to ordinary
shareholders
Holders of
preference
shares
Holders of
participating
preference
Holders of
additional
tier 1 capital
shares
instruments
shareholders
Non-
controlling
interest
attributable
to ordinary
Balance at 1 January 2020
481 174 379
481
18 096
(2 244)
1 839
(55)
594
67 374
87 597
3 222
6 850
780
98 449
Share movements in terms of long-term incentive and BEE
scheme3
2 718 388
3
487
Share-
based
payment
reserve
1 512
(435)
Additional tier 1 capital instruments issued
Preference share dividend paid
Additional tier 1 capital instruments interest paid
Dividends paid to shareholders
Total comprehensive income for the year
Profit attributable to ordinary shareholders and
non-controlling interest
Exchange differences on translating foreign operations
Movement in fair-value reserve
Property revaluations
Remeasurements of long-term employee benefit assets
Share of OCI of investments accounted for using the equity
method
Transfer (from)/to reserves
Value of employee services (net of deferred tax)4
Transactions with non-controlling interests
Other movements
146
(26)
–
–
456
672
(526)
103
(26)
(41)
(15)
119
337
(89)
(337)
292
401
(56)
(251)
251
251
(58)
(58)
972
(739)
739
739
(49)
55
(3 500)
5 345
55
4 454
(3 451)
3 782
(3 451)
4 358
3 467
3 467
(53)
(80)
395
66
173
(11)
2
–
–
–
672
119
(26)
(80)
206
–
292
205
(11)
Total
equity
2
972
(251)
(739)
672
119
(26)
(80)
206
–
292
(115)
(11)
(320)
Balance at 31 December 2020
483 892 767
484
18 583
(1 995)
1 757
1 032
290
961
67 880
88 992
3 222
(58)
7 822
466
100 444
1 Represents other non-distributable revaluation surpluses on capital items and non-distributable reserves transferred from other distributable reserves, to comply
with various banking regulations.
2 Represents the accumulated profits after distributions to shareholders and appropriations of retained earnings to other non-distributable reserves.
3 During the year, the group reviewed its presentation of the statement of changes in equity. As a result of this review, the 'Shares issued in terms of employee
incentive schemes' and 'Shares (acquired)/no longer held by group entities and BEE schemes' line items, which were previously presented in separate lines, have
been aggregated into one line item, 'Share movements in terms of long-term incentive and BEE scheme'. The group is of the view that the updated disclosure
provides more relevant information for users to better understand the group’s changes in equity.
4 Preference share dividends include total dividends paid of R209m less preference dividend earned in respect of preference shares, held by group entities,
of R188m.
70
Nedbank Group Annual Results 2021
Rm
scheme3
Balance at 1 January 2020
481 174 379
481
18 096
(2 244)
1 839
Share movements in terms of long-term incentive and BEE
2 718 388
3
487
Number of
ordinary
shares
Ordinary
share
capital
Ordinary
share
premium
Foreign
currency
translation
reserve
Property
revaluation
reserve
Share-
based
payment
reserve
1 512
(435)
Other non-
distributable
reserves1
FVOCI
reserve
Other
distri-
butable
reserves2
Total equity
attributable
to ordinary
shareholders
Holders of
preference
shares
Holders of
participating
preference
shares
Holders of
additional
tier 1 capital
instruments
Non-
controlling
interest
attributable
to ordinary
shareholders
Total
equity
(55)
594
67 374
87 597
3 222
6 850
780
98 449
(53)
2
–
–
–
(3 451)
3 782
(3 451)
4 358
3 467
3 467
(251)
251
251
(58)
(58)
972
(739)
739
739
2
972
(251)
(739)
(49)
55
(3 500)
5 345
55
4 454
Additional tier 1 capital instruments issued
Preference share dividend paid
Additional tier 1 capital instruments interest paid
Dividends paid to shareholders
Total comprehensive income for the year
Profit attributable to ordinary shareholders and
non-controlling interest
Exchange differences on translating foreign operations
Movement in fair-value reserve
Property revaluations
Remeasurements of long-term employee benefit assets
Share of OCI of investments accounted for using the equity
method
Transfer (from)/to reserves
Value of employee services (net of deferred tax)4
Transactions with non-controlling interests
Other movements
146
(26)
–
–
456
672
(526)
103
(26)
(41)
(15)
119
337
(89)
(80)
395
66
173
(11)
672
119
(26)
(80)
206
–
292
205
(11)
(337)
292
401
(56)
672
119
(26)
(80)
206
–
292
(115)
(11)
(320)
Balance at 31 December 2020
483 892 767
484
18 583
(1 995)
1 757
1 032
290
961
67 880
88 992
3 222
(58)
7 822
466
100 444
71
Financial resultsStatement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysis2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
Consolidated statement of changes in equity (continued)
for the year ended 31 December
Rm
Number of
ordinary
shares
Ordinary
share
capital
Ordinary
share
premium
Foreign
currency
translation
reserve
Property
revaluation
reserve
Share movements in terms of long-term incentive and BEE
scheme3
1 708 780
2
185
Additional tier 1 capital instruments issued
Additional tier 1 capital instruments redeemed
Preference share capital redeemed
Preference share dividend paid4
Additional tier 1 capital instruments interest paid
Dividends paid to shareholders
Total comprehensive income for the year
Profit attributable to ordinary shareholders and
non-controlling interest5
Exchange differences on translating foreign operations6
Movement in fair-value reserve
Property revaluations
Remeasurements of long-term employee benefit assets
Share of OCI of investments accounted for using the equity
method
Transfer (from)/to reserves
Value of employee services (net of deferred tax)7
Transactions with non-controlling interests
Other movements
499
28
–
–
(192)
11 606
180
13 171
956
(457)
(12)
28
(24)
3
Balance at 31 December 2021
485 601 547
486
18 768
(1 508)
1 764
1 205
273
769
77 756
99 513
–
59
9 319
620
109 511
Other non-
distributable
reserves1
FVOCI
reserve
Other
distri-
butable
reserves2
Total equity
attributable
to ordinary
shareholders
Holders of
preference
shares
Holders of
participating
preference
Holders of
additional
tier 1 capital
shares
instruments
shareholders
Non-
controlling
interest
attributable
to ordinary
Share-
based
payment
reserve
(132)
78
73
(265)
(332)
637
(95)
(3 222)
(188)
188
188
(8)
125
125
3 497
(2 000)
(737)
737
737
(2 178)
(2 178)
11 941
11 238
11 238
(36)
389
(21)
451
35
(2)
19
78
–
–
–
–
956
73
28
389
(743)
–
637
26
(2)
Total
equity
19
3 497
(2 000)
(3 144)
(196)
(737)
(2 178)
12 387
1 029
73
36
389
(743)
637
–
–
(2)
99
73
8
(26)
1 Represents other non-distributable revaluation surpluses on capital items and non-distributable reserves transferred from other distributable reserves, to comply
with various banking regulations.
2 Represents the accumulated profits after distributions to shareholders and appropriations of retained earnings to other non-distributable reserves.
3 During the year, the group reviewed its presentation of the statement of changes in equity. As a result of this review, the 'Shares issued in terms of employee
incentive schemes' and 'Shares (acquired)/no longer held by group entities and BEE schemes' line items, which were previously presented in separate lines, have
been aggregated into one line item, 'Share movements in terms of long-term incentive and BEE scheme'. The group is of the view that the updated disclosure
provides more relevant information for users to better understand the group’s changes in equity.
4 Preference share dividends include total dividends paid of R209m less preference dividend earned in respect of preference shares, held by group entities,
of R188m.
5 The R125m gains attributable to holders of participating preferences shares relate to economic gains allocated to participating preference shareholders in
accordance with an operating-profit-share preference share agreement.
6 Exchange differences of R1 029m disclosed in the statement of other comprehensive income includes R148m for the conversion of our investment in ETI from USD
to ZAR. The R499m decrease in the FCTR includes R457m relating to the conversion of our investment in ETI and a R881m decrease related to foreign subsidiaries.
7 During the year, the group reviewed its presentation of the statement of changes in equity presentation. As a result of this review, the 'Share-based payment
movements' line item was renamed 'Value of employee services (net of deferred taxation)' to better reflect the nature of the line item. The group is of the view that
the updated disclosure provides more relevant information for users to better understand the group’s changes in equity.
72
Nedbank Group Annual Results 2021
Rm
scheme3
Share movements in terms of long-term incentive and BEE
1 708 780
2
185
Number of
ordinary
shares
Ordinary
share
capital
Ordinary
share
premium
Foreign
currency
translation
reserve
Property
revaluation
reserve
Share-
based
payment
reserve
(132)
Other non-
distributable
reserves1
FVOCI
reserve
Other
distri-
butable
reserves2
Total equity
attributable
to ordinary
shareholders
Holders of
preference
shares
Holders of
participating
preference
shares
Holders of
additional
tier 1 capital
instruments
Non-
controlling
interest
attributable
to ordinary
shareholders
78
(36)
(2 178)
19
–
–
78
–
–
(2 178)
11 941
(3 222)
(188)
188
188
(8)
125
125
3 497
(2 000)
(737)
737
737
Total
equity
19
3 497
(2 000)
(3 144)
(196)
(737)
(2 178)
180
13 171
99
73
8
(26)
12 387
1 029
73
36
389
(743)
–
637
–
(2)
499
28
–
–
(192)
11 606
956
(457)
(12)
28
(24)
3
11 238
11 238
73
(265)
389
(21)
451
35
(2)
956
73
28
389
(743)
–
637
26
(2)
(332)
637
(95)
Additional tier 1 capital instruments issued
Additional tier 1 capital instruments redeemed
Preference share capital redeemed
Preference share dividend paid4
Additional tier 1 capital instruments interest paid
Dividends paid to shareholders
Total comprehensive income for the year
Profit attributable to ordinary shareholders and
non-controlling interest5
Exchange differences on translating foreign operations6
Movement in fair-value reserve
Property revaluations
Remeasurements of long-term employee benefit assets
Share of OCI of investments accounted for using the equity
method
Transfer (from)/to reserves
Value of employee services (net of deferred tax)7
Transactions with non-controlling interests
Other movements
Balance at 31 December 2021
485 601 547
486
18 768
(1 508)
1 764
1 205
273
769
77 756
99 513
–
59
9 319
620
109 511
73
Financial resultsStatement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysis2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
Return-on-equity drivers
for the year ended 31 December
Rm
NII
Impairments charge on financial instruments
Non-interest revenue and income
Income from normal operations
Total operating expenses
Zimbabwe hyperinflation
Share of gains of associate companies
Net profit before taxation
Indirect taxation
Direct taxation
Net profit after taxation
Non-controlling interest
Headline earnings
Daily average interest-earning banking assets
Daily average total assets
Daily average shareholders’ funds
Daily average shareholders’ funds, excluding goodwill
Note: Averages calculated on a 365-day (2020: 366-day) basis.
2021
2020
32 500
(6 534)
25 027
50 993
(33 639)
(138)
799
18 015
(1 073)
(4 104)
12 838
(1 149)
11 689
30 081
(13 127)
24 140
41 094
(31 772)
(205)
452
9 569
(1 148)
(1 994)
6 427
(987)
5 440
870 382
895 880
1 195 860
1 209 835
93 359
88 602
88 021
82 897
74
Nedbank Group Annual Results 2021 NII/Average interest-earning banking assets
Impairments/Average interest-earning banking assets
NIR/Average interest-earning banking assets
Total expenses/Average interest-earning banking assets
Zimbabwe hyperinflation/Average interest-earning banking assets
Associate income/Average interest-earning banking assets
100% – effective direct and indirect taxation rate
100% – income attributable to minorities
Headline earnings/Average interest-earning banking assets
Interest-earning banking assets/Daily average total assets
Return on total assets
Leverage
ROE
2021
2020
3,73%
3,36%
less
less
0,75%
1,47%
add
add
2,88%
2,69%
5,86%
4,58%
less
less
3,86%
3,55%
less
less
0,02%
0,02%
add
add
0,09%
0,05%
2,07%
1,06%
multiply
multiply
0,71
0,67
multiply
multiply
0,91
0,85
1,34%
0,60%
multiply
multiply
72,8%
74,0%
=
=
0,98%
0,45%
multiply
multiply
12,81
=
13,74
=
12,5%
6,2%
75
Financial resultsStatement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysis2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
76
NotesNedbank Group Annual Results 2021 Segmental
analysis
78
Our organisational structure, products and services
80 Operational segmental reporting
82
86
Nedbank Corporate and Investment Banking
Nedbank Retail and Business Banking
100 Nedbank Wealth
104 Nedbank Africa Regions
108 Geographical segmental reporting
Nedbank Group Annual Results 2021
77
Our organisational structure, products and services
We deliver our products and services through four main business clusters.
Cluster
Areas of strength and differentiation
Nedbank
Corporate and
Investment
Banking
Corporates, institutions and
parastatals with an annual
turnover of over R750m
• Market leader with strong expertise in commercial property, corporate
advances, advisory services and renewable-energy financing.
• Market-leading trading franchise with excellent trading capabilities across all
asset classes.
• Leading industry expertise in public sector, mining and resources,
infrastructure and telecoms.
Integrated model, delivering high levels of client service and better coverage.
•
• Ability to attract and retain high-quality intellectual capital.
• Efficient franchise.
Nedbank
Retail and
Business
Banking
Individual clients and
businesses
• Strong and growing market share across segments.
• Digital capabilities enabling clients to join and engage with the bank through multiple
channels, eg app, online, USSD, self-service kiosk, contact centre, ATMs/Intelligent
Depositors, third-party channels and branches, as well as end-to-end digital
onboarding capability for transactional and lending products across various channels.
• Differentiated and disruptive CVPs across our different client segments, including
Unlocked.Me, MobiMoney, Avo, MoneyTracker, the USSD-based Stokvel Account,
Home-buying Toolkit, Karri school payments app, tap on phone, SimplyBiz, Apple Pay,
Money Message and API_Marketplace.
In Business Banking, well-positioned and distinctive value propositions incorporating
unique lending solutions and digital network platforms to facilitate commercial
growth have been developed for public sector, as well as for the agriculture,
franchising and manufacturing sectors.
•
• Highly competitive relationship banking offering for our affluent and
small-business clients.
• Digitally enabled, reimagined distribution network with five different store types,
including retailer partnerships and flexible workforce.
Nedbank
Wealth
High-net-worth individuals,
and other retail, business and
corporate clients
Insurance
• Leverages existing distribution channels and digital platforms to market
short-term, life and other insurance products to Nedbank clients.
Asset Management
• Top fund managers identified through Nedgroup Investments' Best of Breed
investment approach.
• Nedgroup Investments is committed to responsible investing through
continuous engagement with partner fund managers to assess progress on
agreed ESG focus areas and to gain a deeper appreciation of the real-life
impact of investments.
Wealth Management
• An award-winning, integrated and holistic advice-led, high-net-worth offering
for local and international clients.
Nedbank
Africa
Regions
Retail, small and medium
enterprises, and business and
corporate clients across the
countries we operate in
SADC operations (own, manage and control banks)
• Presence in five SADC countries – well positioned for growth on the back of a
standardised model customised for market context.
• Ongoing technology investments to ensure digital leadership, and competitive
and locally relevant CVPs.
• Winner of the 2021 International Business Magazine Awards for Best Internet
Banking Africa and Best Mobile Banking Africa.
• Aiming for #1 in client service in every market that we operate in (#1 in NPS scores
in Namibia and Mozambique).
ETI associate investment (21,2% shareholding)
• Ecobank-Nedbank alliance is the widest banking network on the African continent,
covering 39 countries.
• Aiming to increase dealflow by leveraging ETI’s local presence and knowledge and
Nedbank’s structuring expertise.
• ETI has a very strong West and Central Africa franchise: it is in the top three in
13 of 16 countries in the region.
78
Nedbank Group Annual Results 2021 Outputs
Contribution to group
> 600 large corporate clients.
• Full suite of wholesale banking
solutions, including investment
banking and corporate
lending, global markets and
treasury, commercial-property
finance, transactional banking
and deposit-taking.
Approximately three million retail main-banked clients.
• > About 300 000 business clients are served
through our Small Business Service offering (tailored
to businesses with annual turnover of less than
R30m and the business owner).
• > 14 376 business-banking client groups catering to
mid- and large-sized commercial entities.
• Differentiated and disruptive client-centred value
propositions that help our clients manage money
better. Full range of Banking and Beyond services
including, transactional banking, card and payment
solutions, lending solutions, deposit-taking
services, risk management, investment products,
card-acquiring services for businesses, ecosystems
and platforms-based solutions.
> 18 100 high-net-worth clients
locally and internationally (SA, UK,
Jersey, Isle of Man and the UAE).
• Wide range of financial
services, including
high-net-worth banking and
wealth management offering,
as well as asset management
and insurance solutions.
Advances
HE Contribution
47,9%
47,9%
48,0%
48,0%
ROE
CIB
15,3%
R399bn
2020: R429bn
2019: R424bn
R5 605m
2020: R3 636m
2019: R6 167m
Advances
HE Contribution
45,8%
45,8%
38,8%
38,8%
2019
2020
2021
ROE
RBB
13,7%
R381bn
2020: R356bn
2019: R349bn
R4 532m
2020: R1 595m
2019: R5 293m
2019
2020
2021
Advances
HE Contribution
ROE
3,6%
3,6%
8,2%
8,2%
21,2%
R30bn
2020: R31bn
2019: R31bn
R962m
2020: R662m
2019: R1 042m
2019
2020
2021
> 337 800 clients.
• Full range of banking services, including
transactional, lending, deposit-taking services
and card products, as well as selected wealth
management offerings.
• Bancassurance offering in selected markets.
Advances
HE Contribution
2,6%
2,6%
5,1%
5,1%
ROE
NAR
9,3%
R21bn
2020: R23bn
2019: R22bn
R594m
2020: R12m
2019: R457m
2019
2020
2021
79
SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisMessage from ourChief ExecutiveResultspresentation2021 resultscommentaryFinancial resultsNedbank Group Annual Results 2021 Operational segmental reporting
for the year ended 31 December
Rm
Summary of consolidated statement of financial position (Rm)
Assets
Cash and cash equivalents
Other short-term securities
Derivative financial instruments
Government and other securities
Loans and advances
Other assets
Intergroup assets
Total assets
Equity and liabilities
Total equity1
Derivative financial instruments
Amounts owed to depositors
Provisions and other liabilities
Long-term debt instruments
Intergroup liabilities
Total equity and liabilities
Summary of consolidated statement of comprehensive income (Rm)
NII
NIR
Share of gains of associate companies2
Total income
Impairments charge on financial instruments
Net income
Total operating expenses
Zimbabwe hyperinflation
Indirect taxation
Profit before direct taxation
Direct taxation
Profit after taxation
Profit attributable to:
– Non-controlling interest – ordinary shareholders
– Holders of preference shares
– Holders of additional tier 1 capital instruments
Headline earnings/(losses)
Selected ratios
Average interest-earning banking assets (Rm)
Average risk-weighted assets (Rbn)
ROA (%)
RORWA (%)
ROE (%)
Interest margin (%)3
NIR to total income (%)
NIR to total operating expenses (%)
CLR – banking advances (%)
Cost-to-income ratio (%)
Effective taxation rate (%)
Nedbank Group
Corporate and
Investment Banking
Retail and
Business Banking
Wealth
Nedbank
Africa Regions
Centre
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
44 586
60 037
39 179
150 498
831 735
95 019
–
41 382
52 605
80 325
132 221
843 303
78 301
–
2 122
30 058
39 151
68 887
398 622
33 504
997
24 403
80 264
54 232
428 992
18 460
1 221 054
1 228 137
572 344
607 348
390 598
80 986
80 244
42 847
109 857
108 858
109 511
36 042
971 795
45 547
58 159
–
100 444
65 130
953 715
49 078
59 770
–
36 536
35 998
437 651
7 305
316
54 538
38 691
65 079
423 046
10 095
543
69 894
1 221 054
1 228 137
572 344
607 348
415 020
390 598
42 847
41 089
109 857
108 858
7 966
7 881
100
15 947
1 418
14 529
7 011
202
7 316
1 711
5 605
7 339
7 229
115
14 683
3 245
11 438
6 432
159
4 847
1 211
3 636
32 500
25 027
799
58 326
6 534
51 792
33 639
138
1 073
16 942
4 104
12 838
99
313
737
30 081
24 140
452
54 673
13 127
41 546
31 772
205
1 148
8 421
1 994
6 427
55
193
739
11 689
5 440
5 605
3 636
4 532
1 595
962
662
594
12
870 382
655 675
895 880
665 119
339 442
312 716
392 089
340 490
382 661
228 299
364 417
211 606
59 958
28 461
59 590
29 060
33 126
44 636
53 808
39 678
46 658
39 327
26 726
(548)
18
79 570
612
22 939
(19 460)
25 123
(542)
26
77 162
3 673
22 090
(18 674)
29 002
21 382
80 278
8 146
55 875
(63 444)
99 187
7 247
57 369
(76 327)
1 475
(856)
619
(252)
871
(629)
171
1 329
406
923
2
188
737
(4)
879
324
1 203
491
712
(207)
346
573
45
528
3
251
739
(465)
5 137
6 468
380 985
11 858
17 040
415 020
356 272
11 917
15 941
33 060
29 573
374 972
354 243
5 447
1 541
5 242
1 540
20 745
12 783
33 528
5 172
28 356
21 442
529
6 385
1 728
4 657
1,13
1,99
13,7
5,42
38,1
59,6
1,34
64,0
27,1
19 692
11 830
31 522
8 746
22 776
20 161
488
2 127
590
1 537
0,42
0,75
5,4
5,40
37,5
58,7
2,40
64,0
27,7
125
(58)
2 526
25 477
9
268
30 273
22 433
4 528
34
43 840
23 678
8 906
80 986
866
3 788
4 654
28
4 626
3 280
99
1 247
285
962
1,18
3,38
21,2
1,44
81,4
115,5
0,09
70,5
22,9
284
1 976
1 981
25 105
2
31 133
22 023
4 327
12
43 945
25 527
6 433
80 244
897
3 303
4 200
208
3 992
3 061
91
840
178
662
0,81
2,28
15,3
1,51
78,6
107,9
0,64
72,9
21,2
35
2 115
8 075
5 050
1
1 773
21 243
4 285
2 420
6 385
10
35 054
971
427
1 448
1 431
699
3 578
168
3 410
2 535
138
72
665
(26)
691
97
34 513
46 520
1,41
1,28
9,3
4,20
49,7
56,4
0,72
70,8
(3,9)
(365)
2 309
6 813
3 639
33
827
23 233
3 811
2 733
41 089
6 471
39
33 294
967
318
1 274
1 454
337
3 065
437
2 628
2 325
205
64
34
(30)
64
52
0,03
0,03
0,2
3,85
53,3
62,5
1,85
75,9
(88,2)
(929)
2 352
(428)
16 304
(2 693)
17 267
(1 351)
3 912
(1 019)
4 067
0,98
1,79
15,3
2,35
49,7
112,4
0,42
44,0
23,4
125
2 360
0,60
1,07
9,4
1,87
49,6
112,4
0,82
43,8
25,0
(1 974)
2 470
0,98
1,78
12,5
3,73
43,5
74,4
0,83
57,7
24,2
0,45
0,82
6,2
3,36
44,5
76,0
1,61
58,1
23,7
Contribution to group economic profit/(loss) (Rm)
Number of employees (permanent staff)
(1 735)
26 861
(6 580)
28 271
1 Total equity includes non-controlling interests in Centre. Total equity of the client-facing Clusters is based on average allocated capital whereas the group’s equity is
based on actual equity. The difference between average allocated capital and actual equity resides in Centre.
80
Nedbank Group Annual Results 2021
Rm
Assets
Cash and cash equivalents
Other short-term securities
Derivative financial instruments
Government and other securities
Loans and advances
Other assets
Intergroup assets
Total assets
Equity and liabilities
Total equity1
Derivative financial instruments
Amounts owed to depositors
Provisions and other liabilities
Long-term debt instruments
Intergroup liabilities
Total equity and liabilities
Summary of consolidated statement of comprehensive income (Rm)
NII
NIR
Share of gains of associate companies2
Total income
Impairments charge on financial instruments
Net income
Total operating expenses
Zimbabwe hyperinflation
Indirect taxation
Profit before direct taxation
Direct taxation
Profit after taxation
Profit attributable to:
– Non-controlling interest – ordinary shareholders
– Holders of preference shares
– Holders of additional tier 1 capital instruments
Headline earnings/(losses)
Selected ratios
Average interest-earning banking assets (Rm)
Average risk-weighted assets (Rbn)
ROA (%)
RORWA (%)
ROE (%)
Interest margin (%)3
NIR to total income (%)
NIR to total operating expenses (%)
CLR – banking advances (%)
Cost-to-income ratio (%)
Effective taxation rate (%)
44 586
60 037
39 179
150 498
831 735
95 019
–
109 511
36 042
971 795
45 547
58 159
–
32 500
25 027
799
58 326
6 534
51 792
33 639
138
1 073
16 942
4 104
12 838
99
313
737
0,98
1,78
12,5
3,73
43,5
74,4
0,83
57,7
24,2
41 382
52 605
80 325
132 221
843 303
78 301
–
100 444
65 130
953 715
49 078
59 770
–
30 081
24 140
452
54 673
13 127
41 546
31 772
205
1 148
8 421
1 994
6 427
55
193
739
0,45
0,82
6,2
3,36
44,5
76,0
1,61
58,1
23,7
2 122
30 058
39 151
68 887
398 622
33 504
36 536
35 998
437 651
7 305
316
54 538
7 966
7 881
100
15 947
1 418
14 529
7 011
202
7 316
1 711
5 605
0,98
1,79
15,3
2,35
49,7
112,4
0,42
44,0
23,4
125
2 360
997
24 403
80 264
54 232
428 992
18 460
38 691
65 079
423 046
10 095
543
69 894
7 339
7 229
115
14 683
3 245
11 438
6 432
159
4 847
1 211
3 636
0,60
1,07
9,4
1,87
49,6
112,4
0,82
43,8
25,0
(1 974)
2 470
Nedbank Group
Corporate and
Investment Banking
Retail and
Business Banking
Wealth
Nedbank
Africa Regions
Centre
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Summary of consolidated statement of financial position (Rm)
5 137
6 468
1 221 054
1 228 137
572 344
607 348
380 985
11 858
17 040
415 020
356 272
11 917
15 941
2 526
25 477
9
268
30 273
22 433
1 981
25 105
2
31 133
22 023
8 075
5 050
1
1 773
21 243
4 285
2 420
390 598
80 986
80 244
42 847
6 813
3 639
33
827
23 233
3 811
2 733
41 089
6 471
39
33 294
967
318
26 726
(548)
18
79 570
612
22 939
(19 460)
25 123
(542)
26
77 162
3 673
22 090
(18 674)
109 857
108 858
29 002
21 382
80 278
8 146
55 875
(63 444)
99 187
7 247
57 369
(76 327)
42 847
41 089
109 857
108 858
1 221 054
1 228 137
572 344
607 348
415 020
390 598
33 060
29 573
374 972
354 243
5 447
1 541
5 242
1 540
20 745
12 783
33 528
5 172
28 356
21 442
529
6 385
1 728
4 657
19 692
11 830
31 522
8 746
22 776
20 161
488
2 127
590
1 537
125
(58)
4 528
34
43 840
23 678
8 906
80 986
866
3 788
4 654
28
4 626
3 280
99
1 247
285
962
4 327
12
43 945
25 527
6 433
80 244
897
3 303
4 200
208
3 992
3 061
91
840
178
662
6 385
10
35 054
971
427
1 448
1 431
699
3 578
168
3 410
2 535
138
72
665
(26)
691
97
1 274
1 454
337
3 065
437
2 628
2 325
205
64
34
(30)
64
52
11 689
5 440
5 605
3 636
4 532
1 595
962
662
594
12
1 475
(856)
619
(252)
871
(629)
171
1 329
406
923
2
188
737
(4)
879
324
1 203
491
712
(207)
346
573
45
528
3
251
739
(465)
870 382
655 675
895 880
665 119
339 442
312 716
392 089
340 490
382 661
228 299
364 417
211 606
59 958
28 461
59 590
29 060
1,13
1,99
13,7
5,42
38,1
59,6
1,34
64,0
27,1
0,42
0,75
5,4
5,40
37,5
58,7
2,40
64,0
27,7
(428)
16 304
(2 693)
17 267
1,18
3,38
21,2
1,44
81,4
115,5
0,09
70,5
22,9
284
1 976
0,81
2,28
15,3
1,51
78,6
107,9
0,64
72,9
21,2
35
2 115
34 513
46 520
1,41
1,28
9,3
4,20
49,7
56,4
0,72
70,8
(3,9)
(365)
2 309
33 126
44 636
53 808
39 678
46 658
39 327
0,03
0,03
0,2
3,85
53,3
62,5
1,85
75,9
(88,2)
(929)
2 352
(1 351)
3 912
(1 019)
4 067
Contribution to group economic profit/(loss) (Rm)
Number of employees (permanent staff)
(1 735)
26 861
(6 580)
28 271
1 Total equity includes non-controlling interests in Centre. Total equity of the client-facing Clusters is based on average allocated capital whereas the group’s equity is
based on actual equity. The difference between average allocated capital and actual equity resides in Centre.
2 On an IFRS basis Nedbank Africa Regions earned associate income of R686m (2020: R178m loss) as IFRS require associate income to be presented net of our
share of ETI's goodwill impairment of R13m (2020: R528m). Our share of ETI's goodwill impairment is excluded from HE.
3 Cluster margins include internal assets.
81
SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisMessage from ourChief ExecutiveResultspresentation2021 resultscommentaryFinancial resultsNedbank Group Annual Results 2021
Nedbank Corporate and
Investment Banking
Headline earnings
(Rm)
Headline earnings
(Rm)
Return on equity
(%)
Return on equity
(%)
5
1
3
6
4
1
7
6
7
6
1
6
6
3
6
3
5
0
6
5
,
7
0
2
,
0
0
2
,
7
7
1
,
4
9
,
3
5
1
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
Financial performance
CIB continued on the path to recovery with a solid underlying
business performance. HE increased by 54% to R5 605m,
supporting ROE recovery to 15,3%. GOI increased by 9% to
R15 947m, with NII and NIR both growing by 9%. Impairments
decreased by 56% due largely to risk management efforts and
an improvement in the latest forecast macroeconomic factors
in the forward-looking models. The concerted efforts to balance
income, enhance returns and the needs of our clients, as well
as lower market volatility, resulted in a 6% reduction in capital
utilisation and a 9% reduction in RWA.
Financial highlights
Net interest income increased by 9% to R7 966m and the
NIM increased 48 bps while banking advances decreased by
2% to R352bn. The NIM benefited from management efforts
to optimise exposures, returns and capital utilisation across
all portfolios. The decline in banking advances was driven by
2020 liquidity drawdown repayments, muted corporate demand
for new loans and unexpected early settlements. However, we
have seen an increase in credit demand in the second half of the
year, with banking advances growing by 10% on an annualised
basis, most notably in the telecoms, mining and resources
and agriculture sectors. Average deposits increased by 2% to
R414bn, arising from a strategic focus on growing deposits
through the formation of a specialised working capital sales
team, which aims to retain operational deposits.
Change
%
54
9
(56)
9
9
9
Corporate and
Investment Banking
Property Finance
Corporate and
Investment Banking,
excluding Property
Finance
2021
2020
2021
2020
2021
2020
4 494
5 284
923
7 331
12 715
5 800
3 386
5 228
2 334
7 083
12 425
5 476
5 605
7 966
1 418
7 881
15 947
7 011
15,3
0,98
0,42
112,4
44,0
2,35
3 636
7 339
3 245
7 229
14 683
6 432
9,4
0,60
0,82
112,4
43,8
1,87
1 111
2682
495
550
3 232
1 211
11,8
0,56
0,30
45,4
37,5
1,40
250
2 111
911
146
2 258
956
2,7
0,12
0,54
15,3
42,4
1,07
(6)
(6)
(7)
(9)
3
2
(6)
572 344
607 348
171 035
174 587
401 309
432 761
569 247
608 288
170 934
172 680
398 313
435 608
398 622
428 992
165 635
168 832
232 987
260 160
405 553
446 176
164 981
166 942
240 572
279 234
437 651
423 046
414 248
407 418
262
303
341
357
437 389
422 705
413 945
407 061
36 536
38 691
9 416
9 222
27 120
29 469
Headline earnings (Rm)
NII (Rm)
Impairments charge (Rm)
NIR (Rm)
Gross operating income (Rm)
Operating expenses (Rm)
ROE (%)
ROA (%)
CLR – banking advances (%)
NIR to total operating expenses
Cost-to-income ratio (%)
Interest margin (%)
Total assets (Rm)
Average total assets (Rm)
Total advances (Rm)
Average total advances (Rm)
Total deposits (Rm)
Average total deposits (Rm)
Average allocated capital (Rm)
82
Nedbank Group Annual Results 2021
Impairments decreased by 56% to R1 418m (2020: R3 245m).
The CLR reduced to 42 bps, outperforming initial expectations,
and returning to the TTC target range of 15 to 45 bps. The total
coverage ratio increased from 107 to 135 bps, driven by
a conservative approach to higher-risk sectors and stage
3 impairments. Stage 3 advances decreased from R10,9bn to
R9,4bn, representing 2,7% of banking advances. The increased
stage 3 impairments relate mostly to a single counter. Altogether
R3,2bn of Directive 3 restructures, representing 0,9% of
banking advances, was still outstanding at the end of the period,
with exposures mainly in the hospitality and aviation sectors.
High-risk Covid-19-impacted sectors such as aviation and
hospitality are top of mind and pre-Covid-19 stressed sectors,
such as construction and state-owned entities, continue to be
challenging. Adequate impairments have been raised.
NIR increased by 9% to R7 881m mainly due to a good
performance from the private-equity portfolio after a difficult
2020. This was partly offset by lower trading income, down by
16% from a high base and once-off income in the prior year.
Trading conditions have remained challenging throughout
the year due to high volatility. Commission and fees income
decreased by 7% to R2 710m due to increased interchange fees
that was somewhat negated by the continued gains made in
primary-banked wins.
Expenses increased by 9% and the efficiency ratio declined
slightly to 44,0%, as a result of variable incentive costs
increasing. Positively the NIR:expense ratio remained at 112,4%.
Looking forward
The strong results from CIB in a challenging macroeconomic
environment are a testament to the overall resilience of the
business, the strength of our people and the depth of the
relationships we have with our clients. While the economic
environment remains challenging, CIB continues to focus
on optimising the business to increase the overall efficiency
while investing for growth. Portfolio optimisation is one of the
strategic levers for delivering value and ensuring deliberate
and considered asset growth. This improves our ability to
assess deals, ensuring appropriate returns at a client level,
and enhances our agility in positioning the portfolio for
Financial highlights
expected macroeconomic conditions and emerging themes
such as ESG. We believe that this enhanced agility is critical to
navigating the business through complexity and maximising
our ability to deliver enhanced returns on equity outcomes.
People remain core to delivering on our strategy and we have
a sustainable people plan, which will support the strategic
growth of the business. This will be achieved by addressing
the skills required to grow our business, with an emphasis on
accelerating our digital change agenda as well as developing
leadership programmes to build the right skill sets to lead
the agile organisation of the future. Focus will also be applied
to nurturing a culture with diversity, equity and inclusion at
its heart.
Transactional Services is a key enabler and remains focused
on client solutions and product innovation, allowing our clients
to manage their various products in a self-service manner.
To position us for the future, we will continue our focus on
digital technologies and internal optimisation to transform
and improve our juristic client experiences.
Our long-term sustainability and success are contingent on
the degree to which we play our role to add value to society
and be the difference that supports the development of a
sustainable SA and Africa as a whole. Through our sustainable
finance solutioning expertise, we have remained at the
forefront of arranging innovative green-funding instruments
and channelling these towards the further development of
the green economy through projects, such as renewable
energy and green building developments. We continue to
drive the energy transition with our support of government’s
renewable-energy programme, as well as commercial
and industrial generation projects. Our support of the energy
transition is underpinned by our Energy Policy.
The global twin challenge of inflation and growth, now
coupled with more uncertainty, continues to be top of mind
for us and our clients. Although the economic climate remains
challenging, our focus is on our strategy to deliver strong
financial results while making a meaningful contribution to
building a strong, equitable and inclusive SA. It is this focus on
fulfilling our purpose to be money experts who do good, that
empowers and drives our people to innovate, to be bold, and
to lead.
Property Finance
Investment Banking
Markets
Working capital and
Transactional Services
2021
2020
2021
2020
2021
2020
2021
2020
Gross operating
income (Rm)
Average total
advances (Rm)
3 232
2 258
4 270
3 460
5 299
5 682
3 146
3 283
164 981
166 942
151 916
198 942
70 658
58 455
17 998
21 837
83
SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisMessage from ourChief ExecutiveResultspresentation2021 resultscommentaryFinancial resultsNedbank Group Annual Results 2021
Strategic progress
The macroeconomic environment remains challenging, with
economic activity yet to return to 2019 levels. Macroeconomic
factors impact the financial sector’s operating environment in
an already fast-changing reality. As such, we are continuing our
focus on portfolio optimisation to maximise opportunities for
enhanced returns on our existing portfolio, increase our product
offerings and ultimately improving ROE and HE. This enables CIB
to take a much more active approach to managing the portfolio,
also responding to ESG and climate change challenges.
Our clients remain at the centre of our strategy, with key tilts to
address the areas where significant growth exists – Advisory
and Transactional Services. We are focused on identifying the
right clients and products in the sectors that we have selected
to optimise capital allocation. We aim to be a trusted advisor
that services clients across all their financial needs. Strong deal
closure across our franchise was a vital catalyst in the second
half, creating forward-looking momentum. This solid origination
across the franchise resulted in CIB being recognised for our
leading offering, with a number of accolades received over the
past year.
Technology is integral in running our business, while quality
client relationships are paramount to our success. Combined,
these form the basis for our ‘warm digital’ approach. This means
that we invest in meaningful client relationships while creating a
digital ‘self-service’ experience for our clients’ day-to-day needs.
Our recent digital investments such as the Nedbank Business
Hub alongside our other recognised products and solutions
ensure that we continue to deliver a seamless, end-to-end
warm digital client experience. The Nedbank Business Hub is a
single secure digital interface that enables CIB and RBB juristic
clients to apply for, maintain and transact on their accounts in
a self-service manner. It empowers our clients with full access
to the CIB and Business Banking product offerings through a
single platform.
Sustainably investing in SA and the rest of Africa is a key
focus for CIB. As we entrench this focus into the ethos of our
organisation, we believe we will enhance our broader impact
and outcomes for the communities we operate in, as well as our
shareholders. Thinking differently about environmental and social
performance can drive change that delivers more business value
while channelling the power of the enterprise to deliver better
outcomes for people and the planet.
We expanded our sustainable finance products to our client base
in 2021 and have structured and delivered sustainable finance
solutions to our clients under the sustainability-linked lending
product. We partnered with our clients to encourage sustainability
objectives by embedding sustainability performance targets
into financing products. Sustainability objectives have been
aligned with the following themes: reduction in carbon emissions,
improvements in water quality, energy efficiencies, local sourcing
of goods and improvement of overall ESG score. On the liabilities
side, we have delivered leading solutions such as the Green
Residential Development Bond and the Green AT1. We continue
to explore sustainable finance solutions for our clients to help
them adapt to the risks and opportunities within a green economy
and broader global environment that is increasingly focused on
sustainability. We are proud to have been recognised as the Best
Bank for Sustainable Finance in Africa by Euromoney for 2021.
We are also proud to have received the 2021 Investment Bank of
the Year Award by Environmental Finance as well as winning the
Infrastructure Deal of the Year in the 2021 African Banker Awards.
Segmental performance
Property Finance
The property sector has been significantly more resilient than
predicted at the onset of the lockdown period. While some
parts of the sector are likely to remain under pressure for the
foreseeable future, the sector as a whole has performed better
than expected and we anticipate this to continue. We believe
that the downward trend in property values in general will
ease and that further downward adjustments are likely to be
asset-specific or related to specific parts of the sector. We have
been impressed with the resilience of our client base and their
ability to service debt over the past two years, despite the impact
of Covid-19 and the related lockdowns as well as the impact of
the riots on many businesses. We will continue working with
clients to understand the ongoing themes that are evolving in
the sector.
Gross operating income increased by 43%, driven mainly by an
increase in NIR in excess of 100%, as a result of negative equity
revaluations in the prior year, coupled with NII increasing by
27%, due to higher margins. Banking advances decreased by
2% to R168bn, driven by deleveraging in the listed sector and
a slowdown in new business growth, given market conditions.
Our impairment experience has been better than expected in
2021, with the CLR improving to 30 bps (2020: 54 bps) and we
expect to remain within the TTC target range of 15 to 35 bps
going forward.
Importantly in this environment, our portfolio contains
good-quality collateralised assets and is well diversified. This
is underpinned by a strong client base and supported by an
experienced property team.
Investment Banking
The period under review for Investment Banking was
characterised by greater stability across its portfolios, although
certain sectors like aviation, hospitality and tourism remain under
pressure. There was a marked turnaround in the performance
of the business achieved via client origination, portfolio
optimisation and cross-sell initiatives to enhance the overall
returns of the business. NIR was driven by strong growth from
the private-equity and investment income portfolio. There was
positive momentum in the mining, agriculture and telecoms
sectors. We continue to work closely with our clients during the
continued waves of Covid-19 to ensure that they have access
to sufficient liquidity to navigate these uncertain conditions.
Cross-selling into the broader CIB offering will continue to be a
core focus. There has been a continued investment in people,
particularly in the advisory franchise.
Investment Banking gross operating income increased by
23%, driven by NIR increasing over 100% mainly due to a
stronger performance in underlying investee companies in
the private equity portfolio. Selective origination, unexpected
early repayments, extra-ordinary high drawdowns in the base
and enhanced focus on returns across the portfolio resulted
in NII decreasing by 6%, against banking advances, including
corporate bonds, decreasing by 9%. The lower impairment
charge was partly driven by the improvement in the latest
macroeconomic factors applied to the impairment models,
a decline in exposures as loans and advances declined and a
lower level of stage 3 impairment charge, as exposures returned
to performing buckets and stage 3 loans declined. The CLR
remained above our TTC target range of 20 to 50 bps, mainly
84
Nedbank Group Annual Results 2021 due to a single large stage 3 exposure that required further
restructuring and additional liquidity support. Commission and
fees decreased by 2%, due to some client activity rolling into
2022, with equity revaluations increasing in excess of 100%.
Investment Banking has leading industry expertise in mining
and resources, infrastructure, oil and gas, telecoms and energy.
The current advances pipeline is focusing on optimising return
on risk-weighted assets and cross-selling into the broader CIB
client offering.
Markets
Trading conditions have remained challenging throughout the
year, due to high volatility, which was driven by renewed global
inflationary expectations. This volatility was accompanied by
poor market liquidity, making monetisation more challenging.
Initial forecasts accounted for the expected drop-off in trading
income after a very high 2020, driven by once-off items and
outsized performance in the last three months of H1 2020.
The business was, however, able to deliver better outcomes than
projected over the first three quarters of 2021 with a significant
slowdown in the last quarter. GOI decreased by 7% and trading
income decreased by 16% for the comparable period. There was
a strong performance from equities, increasing by 31%. Debt
securities declined 28% as once-off benefits in the first half of
2020 impacted year-on-year performance. Foreign exchange
dropped by 8% with a sharp but expected fall-off in volatility
trading revenue, buffered by robust outcomes in our client
franchise. Trading conditions have remained challenging into
the first quarter of 2022, with an expectation of some recovery
after US Federal Reserve interest rate decisions towards the end
of the first quarter.
Transactional Services
The transactional business places strategic focus in enabling
our clients’ daily liquidity management with our working capital
and transactional solutions. Our range of products are aimed at
delivering value to our clients and supporting our strategic focus
on improving our clients’ experience.
Preprovisioning operating profit for the business decreased
by just under 1%. Reduced interest rates drove a decline in
endowment earned, however this was more than offset by an
increase in net interest income earned on deposits. Many of
our clients experienced a positive working capital cycle that
translated into increased deposits, with a corresponding drop
in working capital borrowings. The continuous support of our
clients’ working capital and transactional needs has resulted in
a healthy growth in our deposit balances during a time where
clients retained cash balances. The average amount owed to
depositors increased by 18% from R226bn in 2020 to R265bn
in 2021. This was driven by growth in both transactional and
investment deposits.
There was a 2% decline in non-interest revenue due to a slow
recovery in the documentary trade and guarantee business, and
on the payments portfolio. Economic recovery and additional
client wins achieved in 2021 should result in increased volumes
in these portfolios, which will support the growth in non-interest
revenue. Certain sectors, however, are expected to lag economic
recovery due to varying impacts from the past two years.
We recorded 35 new primary-banked client wins in the past year
and continue to see the accretive value of past primary-banked
client wins. We have a strong pipeline that we expect will further
increase our footprint in the transactional-banking space.
Ongoing and continued investment in the business is centred
around digitising our processes to improve our client experience,
built on the modernised technology stack invested in by the
bank. The first of these projects was the launch of the Nedbank
Business Hub. Transactional Services continues to deliver
innovation in our product offering that is supported by client
input. From an industry and regulatory perspective, the business
continues to play a significant role through its thought leadership
in cash and payment modernisation. Return on capital invested is
at the forefront of all decision-making, as the business continues
to optimise capital through higher-return products and deals.
Favourable
Unfavourable
• ROE increased to above cost of equity, driven by higher HE.
• Trading income down off a high base and once-off items in
• RWA and allocated capital reduced owing to lower advances
the prior year.
and portfolio optimisation.
• Improvement in NIM driven by optimisation of the portfolio.
• NIR increased owing to good performance from Private Equity
portfolio, coupled with 35 primary client wins for the year.
• Significant decline in impairments.
• Increase in expenses, driven by normalised incentive costs
resulting in a slightly higher cost-to-income ratio.
85
SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisMessage from ourChief ExecutiveResultspresentation2021 resultscommentaryFinancial resultsNedbank Group Annual Results 2021 Nedbank Retail and Business Banking
Headline earnings
(Rm)
Headline earnings
(Rm)
Return on equity
(%)
Return on equity
(%)
2
0
3
5
9
7
3
5
3
9
2
5
5
9
5
1
2
3
5
4
,
1
9
1
,
9
8
1
,
3
7
1
4
5
,
,
7
3
1
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
Financial performance
RBB’s financial performance has continued to show a good
recovery from the impact of the Covid-19 pandemic and
associated lockdown measures, with HE for the year increasing
by more than 180% to R4 532m.
Allocated capital increased off the back of balance sheet growth,
but given the much higher earnings, ROE increased significantly
to 13,7% from 5,4% in December 2020 but remains below the
cost of equity.
The main drivers of the HE growth were a 41% lower impairment
charge and 6% higher revenues, while expenses increased
by 6% on the back of higher incentive charges related to a
strong financial recovery off the base of 2020. The modest
increase in revenues is largely due to R1,6bn lower endowment
revenue, compared to 2020, as a result of lower interest rates.
The increase in revenues offset by higher incentive charges has
resulted in PPOP increasing by 5%.
Besides the stronger financial performance, RBB also showed
positive traction on several key non-financial metrics, including
a 11,4% increase in digitally active clients to 2,3 million and 1%
growth in main-banked clients to 3,1 million, with 12% growth
in the economic-profit-rich middle and affluent segments.
Nedbank’s share of main-banked clients grew to 12,4% (2020:
11,2%) in the annual independent Consulta Survey. We also saw
market share gains in small-business and business banking
single-banked clients as measured by an annual survey
conducted by KPI Research (to 24% from 23% and to 24% from
21% respectively). We received the Global Business Outlook
(GBO) Award for Best Digital Bank in South Africa 2021; the
Global Business Review Magazine Award 2021 for Best Retail
Bank in South Africa 2021; and the International Banker Award
for Best Innovation in Retail Banking 2021.
NII increased by 5% to R20 745m driven by an increase in
advances and a slight widening in the interest margin from
5,40% to 5,42%. The lending-book margin increased 26 bps due
to the widening of the prime-cost-of-funds differential, offset
by a 23 bps impact from lower endowment income. Deposit
margins have declined slightly as a result of our strategy to
adjust pricing in line with increased market pricing behaviour.
Average annualised banking advances increased by 5% to
R366bn, continuing the momentum from 2020, benefiting from
both client demand for secured loans following the 300 bps
cuts in interest rates in 2020, as well as increased unsecured
lending volumes originating through our digital channels,
notwithstanding lower loan approval rates across some
products. Overall new-loan payouts increased substantially to
R118bn. Household advances market share increased marginally
to 17,7% in December 2021, from 17,6% a year earlier.
Average annualised deposits increased by 5% to R359bn.
Our market share of household deposits declined to 14,5%
at December 2021 (15,7% December 2020), driven mainly by
reduced market share in notice deposits (to 14,4% from 16,1%);
term deposits (to 17,3% from 18,1%); and current account
deposits (to 13,0% from 13,7%). As from 1 May 2021, RBB
introduced a new pricing strategy to price more competitively
on term deposits. This strategy has stabilised the decline in
term deposits market share. Sales productivity in transactional
products is also growing in both digital and physical channels,
which is supporting efforts to stem overall household market
share declines.
Defaulted advances decreased by 15% to R26,7bn from
R31,3bn in December 2020, reducing the defaulted book to
6,7% from 8,3% in December 2020. Balance sheet impairments
decreased to 4,83% of total advances (December 2020: 5,09%)
and coverage on the performing stage 1 book increased to
1,08% (December 2020: 0,99%). The RBB CLR of 134 bps
decreased from 240 bps in December 2020 and from the June
2020 peak of 269 bps. The decrease in impairments was due
to relatively lower consumer stress driven by a strengthening
macroeconomic environment. When the net benefit of once-off
items of R713m relating to the curing of accounts in line with
Directive 7/2015, annual parameter regrounding updates, as
well as the Covid-19-related overlay releases (R652m) are
normalised, the adjusted CLR at 153 bps falls into the middle of
our-through-the-cycle target range of 130 bps to 180 bps.
NIR increased by 8% to R12 783m, driven by growth in client
activity, including increased levels of client spend, cash
withdrawals and purchase of value-added services. The recovery
of card-acquiring revenue, which was impacted negatively by
Covid-19-related lockdowns last year, has boosted NIR, with
domestic volumes recovering to 2019 levels. The July civil
unrest had a negative impact on sales as the related two-month
fee waivers reduced NIR and has impacted the full recovery to
pre-Covid-19 levels.
Expenses increased by 6% to R21 442m, driven primarily
by higher incentive costs as RBB’s financial performance
improved, but this was partially offset by additional cost-saving
initiatives of R495m. Permanent headcount decreased by
963 to 16 304 from December 2020, achieved mostly through
natural attrition as we continue to leverage our investment in
digital and Managed Evolution technology. In 2017 we launched
our cost optimisation programme through the Business
Transformation Office and by the end of 2020 we had achieved
R1,4bn in cumulative savings, driven mainly by our branch
optimisation programme and robotic process automation (RPA),
combined with continued digital transformation initiatives.
Our cost-to-income ratio remained flat at 64,0% (2020: 64,0%)
due to the higher incentive and sales-related charges, which
offset cost-saving initiatives.
86
Nedbank Group Annual Results 2021
Strategic progress
Clients – The number of main-banked clients was up 1% to
3,1 million at December 2021. This increase in main-banked
activity, the recovery of card spend and the digitisation of our
client base have all driven the NIR recovery this year. We also
continue to scale several key growth vector products to
supplement our value proposition and to support sustainable
NIR growth by diversifying the revenue base.
Nedbank Consumer Banking continues to significantly close the
gap on the #1 position in the market across Net Promoter Score
(NPS) and Client Satisfaction (CSAT) as per the Consulta South
African Customer Satisfaction Index (SA-csi). Having retained
our #2 position for both metrics, we have steadily increased our
NPS for the fourth consecutive year to 46,7 in 2021 (40,8 in
2020), and improved our SA-csi score to 82 points in 2021
(81 points in 2020).
The annual 2021 study concluded by KPI showed again that
Business Banking produced high-quality relationship scores and
continues to maintain high relative NPS scores at a business
manager level as an important outcome to its ‘high touch’
relationship-based service model.
Nedbank achieved #1 position in both NPS and CSAT for our
ATM channel and improved NPS across all physical and digital
channels. Continued improvements were made in loyalty,
perceived value and complaints-handling scores, as measured in
SA-csi. Nedbank has maintained #2 position on client loyalty and
perceived value.
Nedbank’s client experience (CX) continues to improve, in
support of the RBB goal to consistently deliver leading client
experiences. This is supported by the Service Excellence
Programme initiated in 2019, with 12 416 (75%) of employees
completing initial programme training to drive a client-centred
culture and the aspirational goal of setting the benchmark
for service excellence in SA. A gold standard client journey
management capability will enable improved solutions design
and the overall CX. Understanding and solving client pain points
through prioritised process and product enhancements will
simplify services to better meet client needs.
Nedbank remains a leader in client conduct, improving the
2021 Consulta Treat Customers Fairly (TCF) score by 1,7 points
and remaining #2.
After the July unrest that significantly impacted mostly informal
traders and small-business owners who did not have insurance
to rebuild their business, we launched a programme, Together
Beke le Beke. This was a campaign to provide funding and
support to informal traders and small businesses. We partnered
with Sefa and disbursed R40m in grant relief, targeting
13 000 informal traders, each receiving a R3 500 grant. By end
of 2021, we received more than 8 000 applications with R13m
already dispersed and the remainder to be dispersed in 2022.
Through our ‘Proud of my Town’ community programme in
partnership with Ranyaka, we assisted 113 small-business
owners in KwaZulu-Natal and Gauteng with grants ranging
from R500 to R50 000 to help rebuild structures and restock
shops. Thirty of these businesses have been onboarded onto
the Proud of my Town six-month Building Business programme
including mentorship and training. We also partnered with
Township Entrepreneurs Association (TEA). Lastly, through
our partnership with The Side Hustle – a daily grant and skills
development programme to help aspiring entrepreneurs
bring their ideas to fruition, in partnership with The Slow Fund,
founded and run by Nic Haralambous – we helped to support
over 20 000 individuals to start their own business by providing
grants of R2 500 and supporting with this business coaching to
the value of R10 000 each.
Through our financial wellness programme (Consumer Financial
Education and Financial Fitness) we reached more than three
million clients through education programmes delivered via a
combination of radio, virtual and face-to-face interventions.
We continue to be pleased with the progress we are making to
educate consumers and help them manage their money better.
Digital innovation – 2021 has seen a continuation of growth
in core digital metrics, with digitally active clients increasing
by 11,4% to 2,3 million, of which 1,6 million clients are now
using the Nedbank Money app (up 38% yoy). Digital sales grew
strongly by 28% yoy, with the digital contribution to total funded
consumer sales increasing from 28% in 2020 to 32% in 2021.
The new nedbank.co.za platform delivered client journeys
for personal loans, credit cards and transactional accounts,
which are showing a marked improvement in the generation
of sales leads. Digital payment volumes continued to grow,
up by 27% yoy, with Money app payment volumes increasing
by 54% yoy. Driving factors behind the growth have been
core capabilities built to make clients’ lives easier and more
convenient, enhanced security to counter cybercrime, improved
onboarding journeys, transactional capability, increased access
to services through API_Marketplace and our fast-growing
Beyond Banking offerings in Avo, all these enabled by the strong
commercialisation capability we built within the business.
Digital innovation continues to be at the heart of the
organisation, with a new broad range of financial wellness
tools, including credit health checks, as well as credit score
ratings, with helpful tips for clients and enhanced MoneyTracker
functionality tools allowing for spend categorisation and
management. Joining the bank and taking up banking products
via the digital platforms has never been easier, with continued
enhancements and automation of processes. Clients can now
apply for homeowner’s insurance and claim directly through the
bank’s digital platforms. Clients can now apply for an overdraft,
and informal traders can join the bank and obtain a paycode
through a simple USSD process. In 2021 we have onboarded
close to 8 000 new informal traders through this process,
helping us to drive inclusivity of informal traders through
simple, easy-to-use and cost-effective platforms. Clients can
also join the bank through our self-service kiosk devices, with
a card issued immediately. Our digital transformation journey
has enabled us to expand options from which clients can
join the bank and also take up more products like third- party
channels, API_ Marketplace and Avo our super app, which will be
discussed later.
Buying journeys and offerings were also improved, with a new
array of unit trusts, additional choice of over 230 airtime and
data products, an improved experience for claiming free basic
electricity for qualifying clients, and an enhanced gaming and
software product catalogue. A host of user-friendly features
were introduced, including the ability to redeem Greenbacks
into a savings or investment account or to donate them to a
charity, enhanced statements, and more seamless loan-offering
processes. Significant transacting capabilities like the ability
to get cash at an ATM by scanning a QR code (a first in SA),
the ability for clients to withdraw cash using a digital voucher
code at a wide network of retailers (including Pick n Pay,
Shoprite and Checkers and the launch of Apple Pay have
proved to be valuable and convenient features as the various
Covid-19 lockdown conditions prevailed through 2021.
87
SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisMessage from ourChief ExecutiveResultspresentation2021 resultscommentaryFinancial resultsNedbank Group Annual Results 2021 Financial highlights
for the year ended 31 December
Segmental view
Total Retail and
Business Banking
Business Banking Consumer Banking
Relationship
Banking
Other1
Change
%
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
>100
4 532
1 595
5
20 745
19 692
1 408
3 847
803
2 109
161
907
815
3 784
14 276
13 257
2 585
2 635
108
37
(184)
16
8
6
(41)
5 172
8 746
(167)
12 783
11 830
1 844
853
1 777
5 144
7 353
7 480
7 070
150
379
45
34
1 568
1 475
2 018
1 508
21 442
20 161
3 864
3 561
13 287
12 601
2 728
2 587
1 563
1 412
13,7
1,13
5,4
0,42
19,8
0,90
11,4
0,55
10,1
0,90
0,9
0,07
24,6
0,97
26,3
0,90
1,34
2,40
(0,21)
1,10
2,00
3,32
0,29
0,82
59,6
58,7
47,7
49,9
55,3
56,1
57,5
57,0
64,0
64,0
67,9
64,0
61,4
62,0
65,7
63,0
5,42
5,40
2,48
2,60
6,01
5,86
2,76
2,91
7 380 985 356 272
80 363
74 860 242 390 233 644
57 312
46 938
920
830
5 365 656 347 598
76 912
75 668 236 192 225 428
51 625
45 585
927
6 374 972 354 243 156 796 143 442 123 017 124 635
95 023
85 750
136
917
416
5 359 221 343 724 148 684 139 408 121 904
121 763
88 251
82 197
382
356
12
33 060
29 573
7 116
7 023
20 789
18 160
3 684
3 092
1 471
1 298
Headline
earnings (Rm)
NII (Rm)
Impairments
charge on
financial
instruments
(Rm)
NIR (Rm)
Operating
expenses (Rm)
ROE (%)
ROA (%)
CLR – banking
advances (%)
NIR to total
operating
expenses (%)
Cost-to-income
ratio (%)
Interest margin
(%)2
Total advances
(Rm)3
Average total
advances (Rm)
Total deposits
(Rm)3
Average total
deposits (Rm)
Average
allocated capital
(Rm)
1
“Other” includes income, impairments and costs relating to Channel, Card Acquiring, Central and Shared Services.
2 Consumer Banking interest-earning assets have been restated to reflect a net funding position vs the previous product-focused reporting, which resulted in a
restatement of the margin.
3 Consumer Banking assets and deposits have been restated to reflect a more accurate position vs the previous product-focused reporting.
Client expectations for immediate and excellent personal
assistance was addressed through the launch of Enbi, our new
AI-driven chatbot, now answering over 100 000 client queries
a month. Business Banking continues to roll out the Nedbank
Business Hub (NBH) to clients, enabling a positive change in
client experience for businesses, and remains on track to achieve
critical scale in 2022. The hub provides for a convenient platform
for clients from which they have a single view of relevant
digital offerings and will be able to transact, apply for products
(transacting, lending and borrowing) or services and more.
Nedbank’s partnership strategy enabled the establishment of
key strategic relationships that will consume products through
API_ Marketplace, further extending the digital distribution
capability beyond Nedbank-owned channels. Notably, Gumtree
has partnered with MFC to use the vehicle asset finance (VAF)
APIs to better connect buyers and sellers on Gumtree Auto.
Global small-business cloud accounting platform Xero has
collaborated with Nedbank to provide SME clients with access
to their financial data through a fully digital, API-enabled
bank feed. Legacy Group is consuming the Rewards API
88
Nedbank Group Annual Results 2021
to allow its customers to redeem Greenbacks into Legacy
Points. The Nedbank and Takealot relationship continues to
yield benefits for both parties, whereby Nedbank Personal
Loans are offered to Takealot customers. Several fintechs
are pilot-testing the Wallet API aiming to go live in H1 2022.
In addition to the afore-mentioned products, API_ Marketplace
launched the value-added services (VAS) API in Q1 2021 and
the Nedbank Credit Card Account Details API in Q4 2021 with
a select group of third parties for the initial commercialisation.
VAS API provides a single integration point for approximately
360 prepaid and voucher products, with new ones added to
the product catalogue as they become available. The Nedbank
Credit Card Details API retrieves various credit card account
and card-related details. The platform architecture is premised
on a cloud-first strategy, enhancing the support and product
capability, and further laying the foundation for the scaling of the
existing products.
Physical distribution – Our physical footprint reflects both the
increased drive towards client self-service and a diverse South
African consumer base that still requires face-to-face assistance.
In response to shifts in client behaviour and preferences that
were fast-tracked by Covid-19, we continued to optimise our
branch footprint, while investing in more mobile and self-service
channels, as we aim to change in line with the way clients bank in
a digital world.
During 2021 we closed 17 points of presence and opened
two new branches and four in-retailer outlets. This reduction
has not affected our coverage of the bankable population in
SA, which remains around 85%, very much in line with that
of the industry. Since 2014 we achieved actual floor space
reduction of 64 857 m2. In 2021 we tested a new operating
model in 40 branches, which will now be rolled out over the next
three-year cycle and includes an innovative mix of branches
from full service to express and easy-access smaller format
branches. By the end of 2024, 52% will be smaller than 150 sqm,
a significant shift from our current mix of branches. We have also
tested various in-market operating models through taxi rank
branches and nine mobile sales teams in township economies.
We expanded access to Nedbank’s products through new
partners both in market and online through APIs, acknowledging
that clients are coming to branch less and we need to be mobile
and in the community.
To complement our in-market and digital channels we have a
contact centre available to clients 24/7 through email, chat and
voice. Clients can now call our Contact Centre free of charge
through our 0800 number.
With self-service options expanding we further invested in our
ATM footprint by rolling out a further 37 devices, and during this
period cash dispensed through branches and ATMs decreased
by 3%. Altogether, 89% of client cash deposits at branches are
now being processed through cash-accepting ATM devices.
We continued to improve the experience of clients at our devices
through the rollout of our new ATM front-end, which enabled
first-in-market functionality such as app-initiated withdrawals
using QR codes, meaning that clients will not have to insert
cards into our ATMs when drawing cash. We have also landed
the ability to pay all Nedbank accounts and beneficiaries at
cash-deposit-taking devices and enabled real-time deposits in
Q4 2021 at deposit-taking ATM devices.
Significant progress has been made in enhancing functionality
across self-service and online channels, providing our clients
with enhanced convenience. In the past six months we
simplified the password reset function for Online Banking
and added great functions such as the ability to change card
PINs in-app. Our network of 438 self-service kiosks in our
branches allows clients to complete self-service actions at
their own convenience, such as changing their ATM limit,
maintaining their profile, issuing statements, and blocking and
replacing personalised cards for PAYU and Savvy Plus accounts.
The long-term aim is to offer this across all accounts and for all
clients, making the card process much faster as we continue
to offer convenient options for clients. Clients can also pick
up cards 24/7 without having to go into a branch. They can do
this from our 107 lockers or have their cards delivered to them.
The kiosks also now offer the ability to open PAYU accounts
seamlessly, including getting an instantly issued card, which we
are looking to expand to other third parties.
Ecosystems – Avo by Nedbank, the super app, continues to
scale significantly, having turned one year old in June 2021.
Consumers have grown by five times yoy to over 675 000 and
over 20 000 businesses have signed up on Avo, at the end
of 2021. The app continues to play a key part in consumers’
lives and helps them find solutions to their everyday needs
and wants conveniently, with great optionality, at great value
and with predictable delivery. We have seen three times the
growth in gross merchandise value (GMV) yoy and financial
services revenue growing by 22 times. Collaborating closely
with partners to help consumers and businesses grow, we
launched our partnership with the AfroCentric group that has
over 3,9 million medical aid members. Through this partnership,
Avo has been positioned as AfroCentric’s loyalty and rewards
and digital commerce partner serving their schemes’ members.
Avo has also been established as a data-free offering through
our partnership with Moya (the data-free instant-messaging
app). Through this partnership, Avo can reach 6,5 million
consumers and has seen significant growth in this consumer
market interacting with Avo’s offerings and value propositions.
As a growing business, Avo has launched a new vertical ‘Avo
Auto’, a platform for dealers to create a virtual dealership with
ease of consumer financing for vehicle purchases. Further,
Avo is readying to launch its B2B marketplace in Q1 2022,
which would allow businesses to trade with access to financial
service offerings.
Our collaboration with communities in the township economy
to test a new ecosystem-based go-to-market approach to
co-create simple, cost-effective and accessible solutions has
gathered momentum, with the first proof of concepts (POC)
showing green shoots. Traders have an option to choose
between four different types of digital payments options:
MobiMoney through Paycode (USSD-based); QR payments
through Masterpass; tap on phone, which enables businesses
to accept payments by simply using an Android smartphone;
Money Message, an innovative solution that allows clients to
make or receive payments through WhatsApp, and PocketPOS
– a contactless POS device from a minimum of R89 per device.
Through these solutions we have unlocked ecosystem-based
solutions between traders, their suppliers and consumers.
Business Banking continues to see pleasing progress following
the successful implementation of a unique ‘transformation
funding’ solution in the franchise sector for well-known fuel and
retail concepts. Since implementation, 58 outlets have been
afforded this type of funding to the tune of R180m, with R140m
of this directly supporting transformational funding transactions
in the fuel sector. To date 94% of Pick ‘n Pay market stores now
bank with Nedbank Business Banking, as a result of this lending
assistance being provided.
89
SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisMessage from ourChief ExecutiveResultspresentation2021 resultscommentaryFinancial resultsNedbank Group Annual Results 2021 Product views, excluding business banking
Home loans
VAF
Unsecured
lending1
Transactional
Card and
payments
Forex and
investment
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
NII (Rm)
2 979
2 729
5 121
4 392
3 998
3 613
1 820
2 299
1 488
1 435
1 475
1 525
Consumer banking
and other
2 215
1 907
4 977
4 272
3 862
3 551
766
1 080
1 488
1 435
Relationship banking
764
822
144
120
136
62
1 054
1 219
988
487
1 023
502
Impairments charge on
financial instruments
(Rm)
Consumer banking
and other
Relationship banking
NIR (Rm)
Consumer banking
and other
Relationship banking
Operating expenses
(Rm)
Consumer banking
and other
Relationship banking
(138)
9
275
212
63
551
291
252
206
46
(129)
842
1 727
3 015
2 619
2 521
1 702
2 958
2 502
2 489
25
57
117
32
64
64
44
1 059
1 472
44
1 059
1 472
708
701
726
656
4 992
4 858
3 904
3 450
230
194
694
14
690
11
676
50
621
35
3 670
3 581
3 879
3 428
1 322
1 277
25
22
136
94
110
84
1 683
1 655
1 662
1 548
1 843
1 648
7 107
6 961
3 582
3 349
1 500
1 368
Headline earnings (Rm)
1 215
334
1 612
422
Consumer banking
and other
Relationship banking
1 019
196
304
30
1 592
20
427
(5)
1 137
546
1 119
536
105
81
1 557
1 467
1 727
1 589
5 545
5 425
3 565
3 335
116
185
218
(33)
59
67
63
4
1 562
1 536
17
(276)
91
517
(862)
(600)
586
691
511
6
14
19
13
6
1 117
383
142
(1)
143
1 007
361
249
87
162
ROE (%)
CLR – banking
advances (%)
Cost-to-income ratio
(%)
Interest margin (%)
Average total
advances (Rm)
22,5
6,4
17,3
5,6
4,8
2,1
(10,6)
3,6
14,9
0,7
28,6
39,5
(0,09)
0,64
1,46
2,69
10,15
10,88
34,75
23,66
6,32
8,94
51,7
2,08
55,5
2,03
28,5
3,95
30,4
3,64
39,0
38,6
104,3
15,23
15,29
3,17
97,3
4,48
66,4
8,08
68,5
8,24
88,0
0,97
79,6
1,00
138 952 130 552 112 468 106 781
23 342
21 040
99
114
13 895
13 855
2
2
The table does not include BB HE of R1 408m (Dec 2020: R803m) and other unallocated costs of -R271m (Dec 2020: R391m) relating to Channel, Central and Shared
Services. Therefore, the table does not cross-cast.
1 Excludes additional insurance income in Nedbank Wealth which would result in ROE of 12,4%.
90
Nedbank Group Annual Results 2021
Nedbank Retail and Business
Banking segmental review
Internal transfers
In line with the strategic intent of Project Phoenix to service
clients holistically in a given segment, a clean-up of clients and
products was conducted to ensure all income is accounted for in
the correct segment.
As a result, R6,2bn of advances were transferred from Consumer
to Retail Relationship Banking in August 2021, with the full-year
impact as follows:
• R3,7bn in home loans (average balance impact of R1,5bn)
• R1,3bn in VAF (average balance impact of R0,5bn)
• R1,2bn in personal loans (average balance impact of R0,5bn)
• R19m in HE (for five months)
Business Banking
Business Banking provides relationship-based banking services
to mid- and large-sized commercial entities, including tailored
banking and financial propositions for agricultural, franchising,
manufacturing industries as well as the public sector.
Benefiting from impairment releases, Business Banking
generated HE of R1,4bn, up more than 75%, and achieved a
strong ROE of 19,8%.
New-loan payouts of R26,4bn were up by 12,5% yoy due to
judicious client acquisition and support given to meet clients’
funding needs, resulting in average advances growth of 2% yoy.
Business Banking remains a strong generator of funding, with
R83bn in net surplus funds generated, supported by an increase
of 5% in average deposits and, in particular, strong growth in
transactional deposits.
Following the significant Covid-19-related overlays that were
raised in the prior year, we welcomed the release of impairments
in the current year to achieve a negative CLR of 21 bps (2020:
+110 bps), as the Business Banking client portfolio showed
resilience despite a challenging operating environment. Despite
the reversals, we consider ourselves adequately provided
at an impairment coverage of 2%, which remains well above
pre-Covid levels.
Business Banking has provided assistance of R670m to
qualifying businesses via the SME loan guarantee scheme,
including R25m in H1 2021. Business Banking has also
been instrumental in actively driving awareness of our new
innovative market trading platform, Avo, to assist merchants in
their effort to sustain business and trade through the various
Covid-19 alert levels.
Our digital journey continues to advance and is underpinned
by both ongoing delivery toward a clear roadmap of strategic
digital priorities, as well as incremental positive shifts in client
experience, owing to the steady stream of functionality that
we are taking to market. At the forefront of this is our juristic
onboarding and servicing initiatives culminating in the release
of the Nedbank Business Hub (NBH) to employees and to the
market. The NBH aims to enhance client experience, reduce
attrition and increase cross-sell by providing a single point of
entry through which clients can self-service, apply for products,
or transact. Much of this year has been focused on crafting
and executing a migration plan to introduce clients to the
new capabilities with positive feedback thus far. At the end
of December 2021, 8 668 users were migrated to the NBH,
comprising 3 650 clients with 1 242 General Authorising
Extract of Minutes forms, which allow businesses to nominate
authorised persons to procure banking and financial products
and services. The overall migration remains well on track.
The employee version was rolled out in 2021 and was well
received with the focus in 2022 being on increasing adoption
and developing further enhancements. There was success in the
employee adoption at scale, evidenced by the 53 393 service
requests on behalf of our clients.
We have successfully implemented a service model aimed at
focusing the delivery of a unique proposition to the lucrative
mid-corporate segment, within Business Banking, and plan to
build on and evolve our proposition to support sustainability
through the provision of differentiated mechanisms to
finance our clients’ clean-energy investments coupled with
advisory-based services. Our plans for 2022 will see the
promotion of a bespoke industry-based proposition aimed at the
manufacturing sector, as well as introducing a shariah compliant
investment-based solution for the Islamic business market.
Retail Relationship Banking
Retail Relationship Banking (RRB) provides private-banking
services to affluent individuals and their households (salaried
and self-employed), to non-resident clients and embassies, as
well as small-business services to SMEs with a turnover of less
than R30m. The relationship banking CVP is designed for clients
seeking a personalised, flexible and proactive approach, and
caters for the more-complex financial needs typically associated
with the above-mentioned client segments.
Notwithstanding the protracted economic recovery to
pre-Covid-19 levels, the July riots and a >R400m post-tax
reduction in NII as a direct consequence of rate reductions, the
core business (excluding the benefits of the internal transfers)
delivered a 9% increase in HE to R888m at an attractive ROE of
24,9%. This affirms both the resilience of the client base (albeit
with small-business clients under more strain than affluent
clients) and the quality of the business itself.
The CLR decreased from 82 bps to 22 bps, which included
the reversal of Covid-19-related overlays, but also highlighted
the quality of the book and effectiveness of the risk practices.
Average advances growth of 8% was driven by record home loan
and good vehicle sales, while average deposits increased by 7%,
resulting in a net funding contribution to the group of R46,8bn.
Despite the lower base in 2020, core NIR grew moderately at
5,5%, as a result of various industrywide and Nedbank-specific
pricing concessions, impact of further lockdowns and overall
more muted activity in the small-business sector.
Professional Banking (now rebranded as Private Clients):
Nedbank provides a well-priced, high-value offering to the
sought-after affluent market. Main-banked client numbers
increased by 9% yoy, leading to a 1% improvement in Nedbank’s
affluent market share to 15%. Service levels and client
satisfaction remained stable yoy, with more clients willing to
promote Nedbank, off the back of continued efforts to provide a
seamless experience to this demanding client base.
Small Business: Nedbank also remains well positioned in
the small-business segment, with the urban market share
increasing by 1% to 24%, as a result of positive perceptions
regarding our ability to understand and serve the needs of this
91
SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisMessage from ourChief ExecutiveResultspresentation2021 resultscommentaryFinancial resultsNedbank Group Annual Results 2021 important sector. According to the 2021 Small Business Tracker
(a Nedbank-commissioned survey that has been running for
13 years and is conducted by independent research company
KPI Research), small-business owners continue to rank Nedbank
as the market leader in the provision of banking services to this
market for the second year running.
The above client momentum enabled strides in market share
on the advances side of our business, notably in personal loans,
overdrafts and vehicle finance. The home loans market share
was relatively flat in 2021. On the deposits side, we experienced
a decline in market share, however, we started to see some
green shoots of recovery in the closing months of the year.
Consumer Banking increased HE to R2,1bn (2020 R0,2bn) and
ROE to 10,1% (2020: 0,9%), largely off the back of a material
improvement in impairments, with the CLR improving to 200 bps
(2020: 332 bps). This improvement in CLR was enabled by
improved loan repayment behaviour in our client base as the
macroeconomy improved, releases of Covid-19-related overlays,
and annual parameter regrounding updates.
Strong NII growth of 8% was the second-largest contributor to
the HE growth. The strong NII growth was enabled by robust
average gross advances growth of 5%, including 10% on average
in personal loans, 5% yoy on average in home loans, and 5% on
average in vehicle loans. Margins were also relatively similar to
prior year at 6,0%.
Deposit growth was flat at 0,1% on average. Within this, we
recorded a pleasing 11% average growth in transactional
deposits, offset by a reduction of 3% on average in notice and
term deposits. Transactional deposits growth was supported by
a 1% yoy growth in main-banked clients to 3,1 million.
This growth was skewed towards the higher-economic-profit
segments of the middle market (up 13% to 1,00 million
main-banked clients). While main-banked clients declined by 4%
yoy to 1,31 million in entry-level banking and declined by 8% to
0,42 million in youth, this was largely due to material migrations
of clients to the middle segments. In both ELB and youth,
acquisition rates improved materially from 2020, and in each of
these segments exceeded rates of attrition from Nedbank.
In Consumer Banking, we enhanced Nedbank’s client value
proposition with the launch of several exciting products in 2021.
We launched a simple life insurance product called MyCover
Life, offering clients cover up to R2m, with minimal, simple
underwriting questions. We launched MyCover Funeral, with
extremely competitive price points for Nedbank main-banked
clients. In addition, we launched a Gold Credit Card with a
monthly fee of R40 per month, which matches the lowest-cost
credit card in the market. These products are seeing extremely
encouraging sales performance in the first few months since
their launch and will support growth in NIR going forward.
We have also seen encouraging sales growth in insurance
funeral plan sales over the last year.
We have materially improved enablement of cross-sell in
our Eclipse onboarding platform with the launch of Everyday
Banking. Everyday Banking makes it materially easier for clients
to know if they qualify for an overdraft facility or a credit card
as they apply for a transactional product. This will enable us to
more easily fulfil more client needs at onboarding, and support
improvements in our cross-sell ratio.
SimplyBiz, a free business development platform powered by
Nedbank, available to all entrepreneurs, (whether banked with
Nedbank or not), has provided over 43 000 business owners free
Beyond Banking assistance, in the form of advertising, coaching,
relevant business support materials and strategic initiatives. This
represents an 84% yoy growth and actively supports the
United Nations Sustainability Goals (SDG 4 and SDG 9) through
an expert community with resources, ongoing learning and
tangible support.
The many enhancements made to Online Banking and the Money
app since the full migration of clients to the new platform in early
2021 have driven an improvement in digital satisfaction. Some
of the highlights for this client base include the ability to receive
and make international payments and to access and manage
wealth products (stockbroking, unit trusts, retirement annuities
and life cover); the launch of MoneyTracker, an integrated
financial management tool; and the ability for clients to book
appointments with their banker.
Despite another tumultuous year and economic challenges,
there are still many opportunities for Nedbank to grow in both
markets. The recently landed digital onboarding capabilities
for both private clients and small businesses with more than
one director or shareholder is expected to boost acquisition
volumes. MyCover comprehensive personal-lines insurance and
life cover have better positioned us to compete in insurance, and
we see significant cross-sell opportunities with regard to our
wealth offerings, just to name a few. Over and above, financial
performance will be boosted by the growth in endowment
earnings in an increasing rate cycle.
Consumer Banking
Consumer Banking predominantly serves individuals earning less
than R750 000 per year, in three subsegments – middle market,
entry-level banking and youth. Consumer Banking also serves a
few non-individual client types, such as stokvels, clubs, societies
and informal traders.
The year 2021 saw improvements in all major client metrics.
Main-banked clients grew 1% yoy, which supported growth in
Nedbank’s share of main-banked clients to 12,4% (2020: 11,2%),
as measured by an independent survey by Consulta. Main-banked
client growth was driven by improved sales performance
particularly in digital channels, a focus on cross-selling
transactional products to lending clients, as well as reductions in
levels of client attrition, as client lifecycle management initiatives
bore fruit.
The cross-sell ratio grew to 1,81 (2020: 1,72), driven by several
purposeful cross-sell strategies including Core+ in the frontline,
and the use of artificial intelligence to enable ‘Next Best Action’
recommendations to clients. The share of consumer clients
who are digitally active grew to 33%, powered by a strong rise in
clients on the Money app to 1,4 million (2020: 1,0 million). We also
grew the share of sales done on digital channels to 32% (2020:
28%), reflecting a digital-first go-to-market strategy. Client
experience scores improved significantly, for instance, NPS rose
to 46,7 (2020: 40,8).
92
Nedbank Group Annual Results 2021 Looking forward
Despite expectations of economic growth being slower than
in 2021, we are encouraged by the multiple opportunities
the economic landscape presents to us, with easing
Covid-19 restrictions worldwide, offering businesses some
reprieve. Consumers should feel some pressure on income as
higher inflation and interest rates increase the cost of living.
Digital adoption by both businesses and consumers continues
to accelerate, causing shifts to the client experience and
operating models, with businesses reinventing operations to
design seamless interactions between digital and physical
sales and servicing channels, as well as their operations.
We also remain cognisant of continuing disruption and
intensifying competition in the banking landscape as retailers,
telcos and fintechs democratise banking-leveraging-evolving
technologies. We have built solid capabilities that enable us to
continue to support our clients, and we will do so through our
ongoing commitment to delivering delightful client experiences,
enabled by digitally transforming the bank. Our client-centred
growth strategy and execution plans focus on five core strategic
levers to help us achieve our aspirations. These are set out
below and the strong capabilities we have built over the years,
more so our digital and data capabilities, will allow us to create
new and disruptive products and solutions to address clients’
rapidly evolving needs and expectations, allowing us to expand
access to new markets, reduce operational costs and help
develop new revenue generating opportunities.
Create leading client experiences – We are enhancing our client
value propositions in the Consumer and Relationship Banking
segments. The enhancements will see improvements across
components such as financial wellness, ease of access and
service quality. We will also continue to enhance client journeys,
to build on the improvements in client experience metrics over
the past years.
Digital first and first in digital – We have seen pleasing
improvements in key digital metrics, such as the number of
active Money app users, and the share of our sales delivered on
digital channels. We will continue to use digital to drive a lower
cost-operating model, and improved client experience.
Efficient and agile operating model – Project Phoenix is a total
restructure of our Retail and Business Banking cluster into a
more client-centred organisational model. Project Phoenix
has also enabled the efficiencies that derive from centralised
important capabilities such as solution innovation, credit and
pricing, and operations. Project Imagine sees us fundamentally
transform our frontline branch infrastructure, so it is fit for a
digital world, more cost-effective, and more geared to growing
market share at micro-market level. As part of our digital
transformation, we have adopted the Scaled Agile Framework
(SAFE) to ensure more effective and efficient delivery of
technology.
Exploring new growth vectors – We are driving several new
growth vectors. These include improving Retail cross-sell,
which has improved to 1,86 (2020 1,78); growth through digital
eco-systems such as Avo (which reached over 675 000 users
by Dec 2021); enhanced growth in insurance funeral plan sales;
and enhanced penetration of the township economy.
Equipping our people – The group has instituted several major
initiatives for our employees, in areas including leadership
development, wellness and improved benefits. We are also
investing enormously in better communication with our people,
including regular Exco stand-ups, which serve to energise and
align our people.
Nedbank Retail and Business
Banking Product review
Transactional Banking
Transactional Banking provides fully inclusive access to banking
by offering affordable and meaningful banking to clients across
all income levels, enabling financial inclusion and effective money
management through key innovations such as MobiMoney,
Unlocked.Me, PAYU (consumers and small businesses) and
savings pockets.
The business continues to improve onboarding and servicing
capabilities across physical and digital channels. The year
2021 was characterised by a strong recovery in transaction
volumes as the economy rebounded from the pandemic and
severe lockdown restrictions implemented in 2020 to curb the
spread of the virus. This has also led to an accelerated adoption
of self-service and digital channels. There is a sustained shift in
behaviour away from the branch to ATMs and digital channels for
cash withdrawals and deposits. Payments for goods and services
resulted in increased usage of EFTs, instant payments, which
grew by 69%, and payments to a cellphone number, which grew
by 37%. The purchasing of value-added services such as airtime,
electricity and LOTTO also increased, demonstrating the value
and convenience of the availability of these services. The launch
of our voucher capability, which allows clients to purchase
vouchers for retailers such as Google Play, Makro, Pick n Pay and
Spotify, has seen volume growth of over 500%. Savings pockets
opened during the year have grown by 84%. Key servicing
capabilities introduced have seen significant growth, including
debit order switching instructions by 70% and card activation
by 295%.
As we continue on our digital journey, all our transactional
products are now enabled for straight-through processing on
the Money app and Online Banking. This supports the delivery
of delightful client experiences that enable convenient and
seamless account activation. The client experience has been
further enhanced with card delivery to lockers, home or office,
thereby ensuring our clients can bank safely. We endeavour
to ensure clients get access to relevant product offerings with
up-to-date features and benefits and continue to migrate clients
to these enhanced products in a frictionless manner.
We continue to deliver client-centred innovations with
MobiMoney. Our targeted acquisition strategies have been
focused on key industries and client subsegments, enabling
wallets for previously underserviced individuals. We have
opened over 1,4 million wallets to date and this innovative and
market-leading solution has zero monthly maintenance fees,
allows free deposits up to R4 000 per month, and gives clients
the ability to pay bills, buy airtime and electricity, and withdraw
and deposit money at retailers. Payment options have been
increased through the enablement of Masterpass and a unique
feature called Paycode, which enables informal traders with a
MobiMoney wallet to receive payments from customers, and for
traders to be able to pay for goods from wholesalers and other
retailers.
Card and Payments
Card and Payments provides card issuing, card acceptance and
payment products and solutions across all client segments,
extending beyond RBB into Nedbank Private Wealth. It is also
responsible for the bank’s commercial card offerings. These
offerings include key innovations such as tap on phone, scan to
pay, Market Edge, GAP Access and the recently launched Apple
Pay and Money Message.
93
SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisMessage from ourChief ExecutiveResultspresentation2021 resultscommentaryFinancial resultsNedbank Group Annual Results 2021 Nedbank Card and Payments is poised for growth as the
economy emerges from the pandemic and unrests experienced
in 2021.This is evidenced by the strong growth in card issuing
of 16%, and card acquiring volume growth at 31% for the same
period. This joint growth was driven by the economic recovery,
seasonality, increased client acquisition, limit increases for card
issuing as well as new innovations and enhanced CVPs.
Digital payment trends where further accelerated in 2021 as
consumers and merchants are minimise the risk of exposure to
Covid-19 through person-to-person contact or shared surfaces.
The pandemic has prompted surges in online shopping and the
use of contactless payment technologies. It has also fuelled the
popularity of recent shopping innovations, including app-based
shopping, curbside pick-up and QR-code-based ordering and
purchasing. There was a significant increase in the use of our
digital payment methods, with growth of 52% in e-commerce
volumes, over 237% growth in contactless payments and 4%
growth in QR payments. These trends are fast becoming the new
normal in transacting behaviour.
Our Card and Payments innovation agenda was dominated by
digitally enabled, simple, secure and cost-effective payments.
Nedbank is a leader in mobile payments and during 2021 enabled
clients to use the much-anticipated Apple Pay. This mobile
payment capability was created in addition to the existing
scan-to-pay capability, Masterpass acceptance, Samsung,
Garmin and Fitbit Pay solutions, as well as market-leading
e-commerce solutions across a broad network of merchants.
Nedbank is also the first in Africa to launch tap on phone, a
payments solution that enables businesses to accept payments
by simply using an Android smartphone for contactless card
payments. This in addition to the market-leading PocketPos
offering. Nedbank also launched Money Message during 2021,
an innovative solution that allows clients to make or receive
payments through WhatsApp, which is the dominant messaging
platform in SA.
Card and Payments digitised its client onboarding and
servicing capabilities by going live on the Eclipse platform in
the consumer card segment, enabling our frontline channels
and client self-service area to digitally onboard clients, assess
their credit, open accounts and issue cards covered under
Consumer Banking as Everyday Banking. Similarly, in the
commercial card environment, Nedbank has launched a juristic
servicing and onboarding platform aimed at enabling digital
statements, real-time transaction listings and balances, as well
as offering other unique commercial card services to a range of
small-business, business banking and corporate clients.
Investments
We continue to expand our digital investment capabilities with
a number of new features landed in 2021, which have enabled
clients to:
• open an account online for Nedbank and non-Nedbank clients;
• switch investments on-app and online and transfer between
differing term offerings;
• redeem Greenbacks into a notice deposit, into which we have
seen growing redemptions to date;
• place a notice of withdrawal in-app without the need of a
Nedbank transactional account; and
• make use of USSD channels for investment servicing requests,
to cater to all markets.
Planned enhancements include enabling new-to-Nedbank
clients to open an investment account in-app and differentiated
notice deposit pricing.
New digital investments sales now contribute to 72% of total
sales and 84% of withdrawals notices.
According to the 2020 SA-csi report on notices and savings,
client-perceived value, client satisfaction and client loyalty
increased by 1%, 2% and 3% respectively.
The above improvements in digital capabilities, together
with competitive investment pricing strategies in select
product categories, has resulted in a reversal of our declining
household term deposit market share, improving to 17,3% at
December 2021.
Forex
The forex business continues to create and improve segment
CVPs enabling clients to transact, trade and invest across a
number of foreign currencies, further supporting their financial
goals.
Forex-related NIR has gradually started to recover and is now
20% up yoy and 5% above pre-Covid levels. Digital adoption
of key forex capabilities continues to increase and is now on
average above 60% across key services and segments.
We continue to focus on digital transformation and in the past
year have:
• enhanced our international payments offering in-app and web,
enabling small-business clients, in addition to individual clients,
to process incoming payments digitally in over 25 currencies;
• enhanced our Send Money to Africa remittance solution, in
partnership with Ecobank, allowing clients to submit payments
24x7 and improving ease of access; and
•
increased campaigning of our foreign currency accounts (FCA)
resulting in FCA market share growth from 6,1% to 8,5% and
account growth of 29%, moving us from fifth to third position.
Unsecured Lending
Unsecured Lending provides personal loans, overdrafts and
student loan products and solutions across all client segments.
The gross loan book grew by 9% to R28bn, mainly driven by a
17% increase in personal loan disbursals, with the shift to digital
continuing to gain momentum and now contributing to 40% of
total sales in Q4 2021 from 24% in Q4 2020. Our Personal Loans
market share increased to 12,2% from 11,2% in the prior year.
New-business market share in targeted lower-risk segments was
maintained at approximately 17% compared to historic levels
of about 13%. This reflects close management of risks while
striking a balance with our SPT 2.0 targets.
HE remained subdued at R218m due to credit risk levels
remaining elevated in the personal loans portfolio with the core
CLR remaining near the top of the target range. HE including
insurance profits reported in Nedbank Wealth is R429m at an
ROE of 12,4%. Credit risk management and collections remain
the key priority in a challenging environment. Nedbank was first
to market in migrating to DebiCheck and efforts will now focus
on increasing onboarding levels to improve collections.
94
Nedbank Group Annual Results 2021 Overdrafts continue to benefit from being enabled on a new
technology stack. This has enabled yoy growth of 178% across
the overdraft product spectrum. In total, 67% of overdrafts
were originated via digital channels, an increase from 62% in
2020. Our overdrafts market share increased to 9.9% from
8.0% in 2020.
Our fully digital personal-loans API solution launched in July
2020 enables both Nedbank and non-Nedbank clients to take
out personal loans or pay for goods and services with just a
few clicks in less than 10 minutes. The loans API solution has
shown good growth with loan volumes increasing by 345%
since its launch in 2020 and now represents 5% of the total of
new-business sales. This, together with other digital initiatives, is
supporting our market share increase in this product.
A free credit health monitoring tool was launched for all Nedbank
clients in-app in September 2021 allowing clients to monitor
their credit scores and receive guidance on how to improve
credit behaviour. At the end of December 2021, 280 000 clients
have registered on the tool of which the majority are actively
engaging monthly with insights shared.
Home Loans
Home Loans provides home ownership product solutions to the
consumer and relationship segments.
The South African property market has shown strong growth
during 2021, house price inflation (HPI) ended 2021 at 4,35%,
up from 3,05% in 2020. The year started strongly with HPI
growing steadily each month to a five-year high of 5,07% in
June 2021. This growth was primarily driven by the low interest
rate environment, as well as increased activity in the luxury
(R1,5m—R3m) and high value (R700 000–R1,5m) segments
of the property market, driven by consumers adjusting to
their new post-Covid way of living, which increased demand
for properties with space for home offices, as well as some
semigration. The second half of the year saw a slowdown
and then a decline in HPI as the interest rate impact started
to fade, while unemployment and salary cuts started to play
more of a role in curbing demand growth and we saw more
sale-in-execution notices being issued by lenders as borrowers
got into difficulty.
Nedbank’s new business granted increased by 10%, with
application volumes exceeding the pre-Covid-19 levels by 62%.
The residential market share declined marginally to 14,2%.
HE recovered strongly to R1 215m at an ROE of 22,5%, aided by
the reduction in the CLR ratio to a negative -9 bps. The core CLR,
excluding once-offs, is however within the target range.
Given the muted GDP growth outlook together with the
expectation of rising rates, we expect the downward trend in HPI
that we have witnessed throughout H2 2021 to continue into
2022.
To capitalise on the favourable outlook and to ensure sustained
value, Home Loans seeks continually to improve client
experience, launch new CVPs, strengthen existing business
relationships and seek ways to support our clients. Highlights
include the following:
• We continue to develop our relationship with the mortgage
origination channel to enhance access for our clients.
• As part of our commitment to sustainable development goals
we have developed a green residential mortgage CVP linked to
EDGE accreditation. This CVP offers clients LTV up to 103% in
EDGE-certified developments for first-time home buyers and
provides main-banked clients rate discounts on their bonds.
• We launched a product to assist first-time home buyers,
which includes bond plus costs up to 105% LTV and affords
main-banked clients rate discounts on their bonds.
• We are bolstering our offering for self-employed individuals by
improving the ease of doing business.
• Nedbank is currently offering solar finance through our home
loan product features (NedRevolve, Readvance or a further
loan). Through this offering our clients who wish to install a
solar solution are connected with a reputable supplier.
• Another major area of focus is to significantly reduce our
cost-to-income ratio by streamlining and re-engineering the
origination and operational processes that link with providing
better client service and improve the ease of doing business
with us.
MFC
MFC provides secured-lending products to the consumer,
relationship and business banking segments. RRB and Business
Banking vehicle finance is booked directly to their respective
segments, leveraging off the MFC product line infrastructure for
several administrative processes.
The South African vehicle finance market, according to the
National Association of Automobile Manufacturers of South
Africa, has shown a reassuring recovery, with new-vehicle sales
volumes growing at 22% in H2 2021, albeit still 13,8% lower
than 2019 levels. Lower interest rates have provided more
affordable financing and new and used-vehicle price inflation has
normalised to 2% and 7% respectively (according to TransUnion).
Despite the negative impacts of the July civil unrest and
destruction of numerous dealerships, together with new vehicle
stock shortages, MFC’s sales volume and value grew by 14%
and 22% respectively. New-business market share increasing
to 30,39% (TransUnion, December 2021), 36,9% (BA900,
December 2021) and overall vehicle finance balances increasing
by 5%. New-vehicle finance deal sizes have increased to an
average of R323 000, while used-vehicle deal sizes increased to
R243 000. MFC’s used-to-new-vehicle finance ratio remained
flat at 70:30 (2020: 70:30).
HE recovered strongly to R1,6bn at an ROE of 17,3%, aided by the
reduction in the CLR ratio to 146 bps. The core CLR, excluding
once-off impacts, is within the through-the-cycle target range.
To ensure the safety of our clients during the current pandemic,
a fully integrated digital origination and finance payout process
has been implemented. Going forward, we will continue
leveraging our digital channels and platforms, including working
with our dealer partners to grow their reach and efficacy while
providing a superior client experience to clients searching for a
vehicle that suits their needs.
The Avo Auto Channel launched in H2 2021, linked into the MFC
API app to bring bank-approved dealers to our clients offering
them a platform to showcase their vehicles in a virtual dealer
mall to afford our clients the comfort and safety of shopping for
their vehicles online. To date there are 101 dealers, 3 644 cars
listed and 8 000 views a day.
Our intention is to maintain market share while cross-selling
transactional and insurance products.
95
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• Sector specific earnings still being impacted by the
Covid-19 national lockdown, particularly related
to foreign-travel.
• Aggressive competitor pricing driving lower household
deposit market share.
• The cost-to-income and ROE ratios recovering but still
requiring further improvement.
• Lower endowment income, driven by lower average
interest rates.
Favourable
• Improvement in CLR.
• Accelerated digital uptake ( incl Avo) and usage continues,
with several awards.
• Landing of multiple client-led solutions including the Money
Management tools such as Money Coach, the credit health
tool and SimplyBiz Academy and digital café.
• Digital solutions landed include microloans on USSD,
and enabling MyCoverLife insurance and onboarding for
small businesses on the MoneyApp (companies with up to
3 directors).
• Strong franchise in card acquiring, MFC and Small Business.
• Various types of funding and support offered to informal
traders and small business after the July civil unrest.
• Increase in NPS maintaining number 2 spot, reducing the gap
to market leader.
• Improving enablement of cross-sell in our Eclipse onboarding
platform using strong data capability.
• Project Phoenix gaining traction with continued headcount
reductions driving efficiencies.
96
Nedbank Group Annual Results 2021 Retail and Business Banking: Key business statistics
2021
2020
Business Banking
New client acquisitions – groups
Average product holding
Home Loans
Number of applications received
Average loan-to-value percentage of new business registered
Average balance-to-original-value percentage of portfolio
Proportion of new business written through own channels
Proportion of book written since 2009
Owned-properties book
MFC
Number of applications received
Percentage of used vehicles financed
Personal Loans
Number of applications received
Average loan size
Average term
Retail deposits
Total value of deposits taken in
Total value of deposit withdrawals
Number of clients at period-end1
Retail active clients
Retail main-banked clients2
Retail cross-sell ratio3
Business Banking groups
Small Business Services segment
Home Loans4
MFC
Personal Loans
Card Issuing
Investment products
Distribution
Number of business banking locations
Number of retail outlets
Number of new-image branches5
Number of ATMs
Number of ATMs with cash-accepting capabilities6
Digitally active retail clients7
Money app clients
POS devices
336
4,85
200
94
79
53
85
48
1 832
70
1 419
59,5
43,3
79
83
6 417
3 052
1,86
14 376
299
364
580
433
1 079
1 428
59
538
366
4 261
1 278
2 289
1 631
105
278
4,56
182
93
78
52
83
32
1 601
70
1 088
61,4
44,2
73
78
6 390
3 017
1,78
14 583
297
348
574
433
1 067
1 462
58
549
364
4 224
1 244
2 054
1 182
102
thousands
%
%
%
%
Rm
thousands
%
thousands
R000s
months
rand billions
rand billions
thousands
thousands
ratio
thousands
thousands
thousands
thousands
thousands
thousands
thousands
thousands
thousands
1 All Retail clients are based on the new active client rule, which defines active clients as those that have either a non-zero-balance asset or investment product or a
positive-funded-balance transactional product (TP), or a negative TP balance with a transaction done within the past 12 months.
2 The main-bank rule has been updated to include clients that achieved a minimum deposit or number of quality transactions on average per month over three
months, and includes stabilisation assumptions.
3 The number of needs met (products) per active client.
4 Home Loans now includes joint-bond clients.
5
Included in the number of retail outlets – shown separately for additional disclosure.
6 Cash-accepting devices and Interactive teller machines are included in total number of ATMs.
7 The definition of digitally active clients has been updated to include clients that are part of the active client base.
97
SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisMessage from ourChief ExecutiveResultspresentation2021 resultscommentaryFinancial resultsNedbank Group Annual Results 2021
Balance sheet average advances and impairments
Daily gross
average
advances
Rm
Stage 1
%
Stage 21
%
Stage 3
%
% of
total advances
Credit loss ratio1
%
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Home loans
VAF
141 629 132 437
118 450 111 965
Personal loans
25 812
23 177
Card
Other loans
16 717
16 414
3 294
2 754
Total Retail
305 902 286 747
Business Banking
78 860
77 361
85,1
81,2
65,8
79,3
81,3
81,6
83,1
82,8
80,3
67,2
76,8
83,3
80,2
75,0
Total RBB
384 762 364 108
81,9
79,1
9,8
13,4
13,6
6,8
6,7
11,4
11,7
11,4
10,4
11,5
14,2
9,4
6,4
11,1
18,2
12,5
5,1
5,4
20,6
14,0
12,0
7,0
5,2
6.7
6,8
8,3
18,6
13,8
10,3
8,7
6,8
36,7
31,3
6,7
4,0
0,8
79,5
20,5
36,4
31,5
6,5
4,4
0,8
79,5
20,5
(0,09)
1,46
9,82
6,33
4,46
1,75
(0,21)
0,64
2,69
10,62
8,97
3,78
2,75
1,10
8,3
100,0
100,0
1,34
2,40
1
Impairments charge and resultant CLR include charges housed centrally within RBB.
Balance sheet impairment as a percentage of book
%
of total
Stage 1
%
Stage 2
%
Performing
stage 3
%
Non-performing
stage 3
%
Total stage 3
%
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Home loans
VAF
1,64
4,82
2,02
5,29
Personal loans
22,75
20,04
Card
Other loans
Total Retail
Business Banking
16,81
12,80
5,54
2,05
17,57
11,17
5,73
2,61
0,19
1,32
6,18
4,67
1,95
1,28
0,34
0,23
1,16
4,27
4,36
1,66
1,10
0,54
3,38
10,74
24,22
5,07
11,47
9,11
10,78
28,04
17,29
21,72
62,92
24,18
71,80
22,32
19,31
42,71
36,84
24,51
58,35
56,99
55,20
49,58
20,44
34,64
77,12
70,12
76,73
74,69
73,43
76,47
67,08
69,40
29,36
27,51
30,00
50,00
78,33
79,11
77,10
77,78
10,61
3,43
11,94
3,68
19,13
21,31
57,16
54,84
46,76
40,28
26,10
22,66
26,10
22,66
Total RBB
4,83
5,09
1,08
0,99
9,11
9,48
19,13
21,31
50,67
46,44
43,43
37,35
Balance sheet actual advances
Total advances
Rm
Stage 1
Rm
Stage 2
Rm
Performing
stage 3
Rm
Non-performing
stage 3
Rm
Total stage 3
Rm
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Home loans
VAF
147 005 136 703 125 083 113 190
14 407
14 268
2 272
3 359
5 243
5 886
7 515
9 245
125 250 118 103 101 647
94 781
16 839
13 552
2 996
6 820
3 768
2 950
6 764
9 770
Personal loans
26 687
24 274
17 563
16 307
3 625
3 440
16 040
16 474
12 714
12 658
1 087
1 545
3 273
2 963
2 662
2 468
218
189
713
137
10
758
384
14
4 786
3 769
5 499
4 527
2 102
1 887
2 239
383
292
393
2 271
306
Card
Other loans
Total Retail
318 255 298 517 259 669 239 404
36 176
32 994
6 128
11 335
16 282
14 784
22 410
26 119
Business Banking
82 046
76 868
68 191
57 659
9 559
13 988
4 296
5 221
4 296
5 221
Total RBB
400 301 375 385 327 860 297 063
45 735
46 982
6 128
11 335
20 578 20 005
26 706
31 340
98
Nedbank Group Annual Results 2021
Balance sheet actual impairments
Total
impairments
Rm
Stage 1
Rm
Stage 2
Rm
Performing
stage 3
impairments
Rm
Non-performing
stage 3
impairments
Rm
Total stage 3
impairments
Rm
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Home loans
2 404
2 766
240
257
487
724
VAF
6 043
6 250
1 346
1 097
1 808
1 554
Personal loans
6 071
4 864
1 086
Card
Other loans
2 696
2 894
419
331
594
52
697
552
41
878
600
64
843
766
52
207
518
416
28
3
362
1 470
1 423
1 677
1 785
1 481
2 371
2 118
2 889
3 599
432
133
3 691
2 892
4 107
3 324
1 474
1 443
1 502
1 576
7
300
231
303
238
Total Retail
17 633 17 105
3 318
2 644
3 837
3 939
1 172
2 415 9 306
8 107 10 478 10 522
Business Banking
1 683
2 008
234
310
328
515
1 121
1 183
1 121
1 183
Total RBB
19 316
19 113
3 552
2 954
4 165
4 454
1 172
2 415 10 427
9 290 11 599 11 705
Income statement impairments
Income
statement
impairments
charge1,2
Rm
Stage 1
Rm
Stage 2
Rm
Stage 3
Rm
Interest on
impaired
advances
Rm
Post-write-off
recoveries
Rm
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Home loans
(129)
842
(5)
VAF
1 727
3 014
Personal loans
2 536
2 460
Card
Other loans
1 059
1 473
146
104
Total Retail
5 339
7 893
Business Banking
(167)
853
307
389
36
13
740
(83)
16
441
87
14
375
92
(199)
274
59
(56)
(166)
11
179
212
358
455
1
205
776
1 745
2 917
(75)
14
(82)
(42)
(55)
(45)
(613)
(448)
3 173
2 927
(792)
(653)
(293)
1 611
172
1 411
133
(34)
(29)
(58)
(25)
(388)
(21)
(264)
(279)
(21)
(21)
1 205 6 906
8 164
(916)
(860)
(1 370)
(1 057)
(207)
366
150
415
(6)
5
(21)
(20)
Total RBB
5 172
8 746
657
528
(228)
1 571
7 056
8 579
(922)
(855)
(1 391)
(1 077)
1
Impairment charge and resultant CLR include charges housed centrally within RBB.
2 The income statement charge includes the charge associated with unutilised balances.
99
SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisMessage from ourChief ExecutiveResultspresentation2021 resultscommentaryFinancial resultsNedbank Group Annual Results 2021
Nedbank Wealth
Headline earnings
Headline earnings
(Rm)
(Rm)
Headline earnings
(Rm)
Return on equity
(%)
Return on equity
(%)
2
6
6
2
2
6
6
9
6
2
6
9
1
0
3
2
1
3
0
5
3
2
3
5
1
4
3
0
1
8
4
3
3
0
8
3
2
0
5
2
2
2
0
0
5
5
2
2
0
5
,
5
7
2
,
8
6
2
,
8
4
2
,
3
5
1
,
2
1
2
Cluster
total
Cluster
total
Insurance
Insurance
Asset
Management
Asset
Management
Wealth
Management
Wealth
Management
2020
2020
2021
2021
Financial highlights
for the year ended 31 December
Change
%
2021
2020
Headline earnings (Rm)
NII (Rm)
Impairments charge (Rm)
NIR (Rm)
Operating expenses (Rm)
ROE (%)
ROA (%)
CLR – banking advances (%)
NIR to total operating expenses
Cost-to-income ratio (%)
Interest margin (%)
45
(3)
(87)
15
7
962
866
28
3 788
3 280
21,2
1,18
0,09
115,5
70,5
1,44
662
897
208
3 303
3 061
15,3
0,81
0,64
107,9
72,9
1,51
Assets under management (Rm)
13 424 329 374 546
Life assurance embedded value
(Rm)
Life assurance value of new
business (Rm)
Total assets (Rm)
Average total assets (Rm)
Total advances (Rm)
Average total advances (Rm)
Total deposits (Rm)
Average total deposits (Rm)
Average allocated capital (Rm)
12
14
1
(3)
(4)
(2)
5
4 039
3 606
322
283
80 986
80 244
81 673
81 428
30 273
31 133
30 978
32 134
43 840
43 945
44 070
45 170
4 528
4 327
100
2017
2018
2019
2020
2021
Financial performance
Nedbank Wealth reported a strong recovery from the impact
of Covid-19 in the prior year, delivering growth in HE of 45% to
R962m, with an ROE of 21,2%, above the group’s cost of equity.
Insurance results were positively impacted by a significant
market rebound, offset by higher claims in the life portfolio.
Asset Management delivered a robust performance on the back
of strong growth in AUM. Wealth Management (SA) recorded
a substantial growth in earnings largely due to lower credit
impairments. Wealth Management (International) earnings were
negatively impacted by record-low USD and GBP interest rates,
partially offset by strong growth in investment business lines.
NII declined by 3% to R866m due to record-low interest rates
both locally and internationally, which led to NIM contracting to
1,44% from 1,51% in the prior year.
CLR improved significantly to 9 bps as a result of credit
impairment releases due to a recovery on a large single client
locally, and IFRS 9 model releases in the international business,
on the back of an improved economic outlook.
NIR increased by 15% to R3 788m due to strong investment
returns, the implementation of an enhanced asset-and-liability
matching strategy and a reduced non-life claims ratio in
Insurance, partially offset by an increase in death and funeral
claims in the life portfolio. Asset Management further
contributed to the strong growth in NIR, with positive net
flows both locally and internationally and a rebound in markets.
Higher investment fees in the local and international Wealth
Management businesses, combined with an increase in foreign
exchange income due to strong client activity in the international
business, also led to an improved NIR.
Expenses increased by 7% off a low base in the prior
year, due to investment in people and strategic initiatives.
The cost-to-income ratio decreased to 70,5% (2020: 72,9%),
due primarily to strong growth in NIR.
Strategic progress
Nedbank Wealth remains committed to providing market-leading
client experiences, building data and digital capabilities, investing
in people and culture, driving long-term performance for clients
and collaborating across the Nedbank Group.
Insurance continued to focus on diversification and digitisation
of solutions, with the business having made good traction on
two new products launched in late 2021. MyCover, a personal
lines solution with a total sum insured of almost R3bn, and
Nedbank Group Annual Results 2021
MyCover Life, a semi-underwritten life solution with a total sum
assured of more than R3bn. MyCover and MyCover Life are
both available on various digital channels, Nedbank call centres,
Nedbank branches and through risk consultants. The business
has extended its insurance quoting, fulfilment and claims
functionality on digital channels to 10 Insurance product
offerings. Nedbank Insurance aims to further improve sales
through digital and in-branch campaigns in collaboration with
Nedbank Group partners.
Asset Management experienced solid growth in AUM, with
good traction in the key multi-asset, cash, global and passive
ranges. According to the Q4 2021 ASISA stats, Nedgroup
Investments ranked fifth largest in total AUM locally with a 7%
market share, and third largest in total AUM internationally,
maintaining its 12% market share. The Best of Breed range has
shown steady growth, with R270bn in AUM locally and $5,2bn in
AUM internationally. The Nedgroup Investments SA multi-asset
Assets under management
(Rbn)
2
1
3
6
5
6
5
2
7
9
2
6
5
1
4
2
1
3
3
7
6
4
6
2
5
7
3
8
7
7
9
2
4
2
4
9
9
5
2
3
2017
2018
2019
2020
2021
International
Local
Looking forward
On the back of a solid market rebound, strong JSE growth
and a significant improvement in the credit environment in
2021, Nedbank Wealth expects moderate market growth and
an improved interest rate environment in 2022, both locally
and internationally. The volume of death and funeral claims
in Insurance will depend on the impact of possible future
Covid-19 waves, as well as progress made on the national
vaccination programme. The business will continue to focus
on attracting positive net flows into Asset Management
and growing the high-net-worth client base in Wealth
Management SA and International. Nedbank Wealth expects
an increase in expenses due to the continued investment in
strategic growth initiatives across the business.
Insurance will focus on enhancing client experiences, growing
the MyCover portfolio, improving data capabilities, expanding
its mobile and digital offerings, and collaborating within the
group to increase client penetration. Nedbank Insurance
products, including MyCover Funeral and MyCover Life, will be
available on the Eclipse platform during 2022.
Asset Management remains committed to delivering
long-term investment performance, acting in the best interest
of clients, and taking further steps towards becoming a
leader in responsible investing. The business will continue
to integrate with the Nedbank Money app and other online
digital channels.
Wealth Management (SA) will focus efforts on entrenching
its market presence as an advice-led business that connects
client’s wealth and developing digital assets to create
efficiencies and enhance client experiences. In addition,
the business will continue to optimise its structure and
operations to remain future-fit and aligned with client needs.
Collaboration with the Nedbank Group will be paramount to
increasing client penetration and providing a full spectrum of
services for high-net-worth clients.
Wealth Management (International) will continue to raise its
profile within the client base and collaborate with the local
business to provide an integrated, holistic high-net-worth
client experience. The business is committed to simplifying
the technology landscape by investing in solutions, with a
specific focus on digital, data, integration and automation.
fund range (Flexible Income, Opportunity, Stable and Balanced
funds) and global range continue to perform well and present
opportunities for further growth. The business has focused on
digital automation, with more than 80% of transactions now
automated. Furthermore, the 2021 edition of the Nedgroup
Investments Responsible Investments Research Report, which
assessed 25 local and 21 global asset managers on their ESG
efforts, has been published and is a further step in the business’s
journey towards becoming one of the leaders in responsible
investing. This is the second report since the inaugural
publication in 2020.
Wealth Management (SA) continued to optimise its business
structure and operations to enhance client experiences through
improved segment-specific client value propositions, a single
distribution business and digitisation of key processes. In line
with current trends, the business has experienced an increase
in digital activity on the Nedbank Private Wealth app, with 41%
more interactions yoy. The app, which offers integrated local and
international banking capabilities, has an average rating of 4,6 on
the Apple and Google app stores. Wealth Management (SA)
has made good progress in collaborating with Nedbank Group
partners to increase cross-sell opportunities and continues to
work closely with Nedbank Private Wealth (International) to
enhance the integrated high-net-worth client experience and
increase flows. In the 2022 Euromoney Private Banking and
Wealth Management Survey, Nedbank Private Wealth (SA) took
top honours in SA in the Family Governance/Succession Planning
category.
Wealth Management (International) has made steady progress
on digital innovation and adoption, with the business deploying
digital signatures to improve client experience and help
reduce its carbon footprint, with eKYC technology to follow
in the coming months. Visa self-service functions have been
incorporated in online wealth services to improve security and
combat fraud. Nedbank Private Wealth (International) has won
Best Boutique Private Bank for the third consecutive year and
Best Private Bank, Overall Service at the 2021 WealthBriefing
Middle East and North Africa (MENA) Awards. In 2021 Nedbank
Private Wealth achieved an NPS of 42%, which is higher than the
industry benchmark of 38%.
Nedbank Private Wealth (International) has signed an agreement
to sell its Channel Islands trust businesses, Nedgroup Trust
Limited (Guernsey) and Nedgroup Trust Limited (Jersey),
to Suntera Global, an independent global provider of fund,
101
SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisMessage from ourChief ExecutiveResultspresentation2021 resultscommentaryFinancial resultsNedbank Group Annual Results 2021 corporate and private-wealth services. This transaction is subject
to regulatory approval and is expected to be completed by no
earlier than 31 March 2022. This will enable Nedbank Private
Wealth to focus on its core business of investment management,
wealth planning, lending and banking.
Segmental performance
Insurance
The life insurance industry continues to be severely impacted
by Covid-19-related death claims, while non-life claims have
improved compared to the prior year. Insurance experienced
an increase in HE of 77% to R532m, due primarily to improved
investment performance as a result of a rebound in markets, and
a better non-life claims experience. The business also benefited
from the implementation of an enhanced asset-and-liability
matching strategy in 2021 to minimise the impact of future
interest rate moves on earnings. The life portfolio has been
substantially impacted by an increase in death and funeral claims
due to the pandemic, and includes reserves raised for the next
Covid-19 wave.
Life EV increased by 12% to R4 039m due to higher profits
as a result of a better-than-expected retrenchment claims
experience, offset by increased mortality rate and higher
dividends compared to prior year. VNB improved by 14% to
R322m due to a significant increase (20%) in new business
volumes, off a low base in the prior year. Non-life GWP increased
by 3% toR1 113m owing to higher average premium increases
and improved pricing on the existing portfolio.
Asset Management
The asset management industry continues to experience
pressure on fees due to the shift to cash and lower-margin
asset classes. Notwithstanding this, AUM increased by 13% to
R424bn, supported by positive net flows of R7bn. The business
delivered strong HE of R380m, up by 12% due to a solid overall
performance, strict expense control and growth in market share.
Wealth Management
The wealth management industry continues to be impacted
by low interest rates and cautious investor sentiment both
locally and internationally. Overall, Wealth Management’s HE
improved by >100% to R50m, driven mainly by credit impairment
recoveries and an increase in NIR, partially offset by a reduction
in NII due to the low-interest-rate environment.
Wealth Management (SA) benefited from credit impairment
releases due to a recovery on a large single client. In addition,
the business recorded improved margins, an increase in banking
and investment management fees, and higher new-business
volumes in financial planning. This was offset by lower brokerage
income, off a high base in the prior year, and continued delays in
the winding up of estates due to the impact of Covid-19 on the
Master’s Office.
Wealth Management (International) earnings were impacted by
record-low USD and GBP interest rates, resulting in lower NII,
with lending balances remaining steady compared to the prior
year. The business has maintained good growth in AUM and AUA
due to strong inflows and a focus on client retention, resulting in
solid growth rates as markets have rallied. NIR increased due to
strong growth in AUM and AUA, partially offset by lower foreign
exchange fees, off a high base in the prior year.
Favourable
Unfavourable
• Credit impairment recoveries.
• Significant market rebound.
• Strong AUM net flows.
• Enhanced asset and liability matching strategy.
• Numerous awards received during the year.
• Low non-life claims ratio.
• Increased digital activity.
• Launch of MyCover and MyCover Life products.
• Significantly higher death and funeral claims.
• Competitive lending environment, particularly in the
international business.
• Low US and UK interest rate environment impacting NII.
102
Nedbank Group Annual Results 2021 Assets under management
Rm
Fair value of funds under management – by type
Unit trusts
Third party
Private clients
Fair value of funds under management – by geography
SA
Rest of the world
Rm
Reconciliation of movement in funds under management – by type
Opening balance at 31 December 2020
Inflows
Outflows
Mark-to-market value adjustment
Foreign currency translation differences
2021
2020
359 404
314 539
1 105
63 820
957
59 050
424 329
374 546
325 318
99 011
296 971
77 575
424 329
374 546
Unit trusts
Third party
Private
clients
Total
314 539
675 612
(666 918)
29 483
6 688
957
59 050
374 546
13
(32)
95
72
6 647
682 272
(8 129)
(675 079)
5 711
541
35 289
7 301
Closing balance – 31 December 2021
359 404
1 105
63 820
424 329
Rm
Reconciliation of movement in funds under management – by geography
Opening balance at 31 December 2020
Inflows
Outflows
Mark-to-market value adjustment
Foreign currency translation differences
SA
Rest of
the world
Total
296 971
668 816
77 575
13 456
374 546
682 272
(665 345)
(9 734)
(675 079)
24 876
10 413
7 301
35 289
7 301
Closing balance – 31 December 2021
325 318
99 011
424 329
103
SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisMessage from ourChief ExecutiveResultspresentation2021 resultscommentaryFinancial resultsNedbank Group Annual Results 2021
Nedbank Africa Regions
Headline earnings
(Rm)
Headline earnings
(Rm)
Return on equity
(%)
2
0
7
7
5
4
2
1
4
9
5
,
3
0
1
7
7
,
,
2
0
,
3
9
)
0
1
8
(
)
,
6
2
1
(
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
Financial performance
HE of the Nedbank Africa Regions (NAR) business was up by
greater than 100%, with performance largely driven by ETI.
Overall, NAR HE was up from R12m in 2020 to R594m in 2021,
with ROE improving from 0,2% in 2020 to 9,3% for 2021.
Although positive, ROE was below our ambition of greater than
COE. The results reflect a muted performance from the SADC
subsidiaries and an improvement in ETI’s performance.
The main drivers of the performance were the decline in
impairments by 62% and an increase in NII of 14% to R1 448m.
Despite an improved H2 2021, NIR for full-year 2021 declined by
2% due to lower client transactional activity. Given the further
depreciation of the Zimbabwean dollar and slowing inflation, NAR
reported a net monetary loss of R138m (2020: R205m loss).
Average total advances grew by less than 1% to R22,5bn, while
average total deposits grew by 6% to R34,4bn. NIM improved
to 4,20% from 3,85% in 2020. Despite sluggish growth in loans
and advances, NII growth was driven by high lending rates in
Zimbabwe, coupled with increased investments in high-interest
yielding assets, as well as lower cost of funds in Mozambique.
NIR declined marginally by 2% to R1 431m due to subdued
transactional activity and lower foreign exchange translation
gains. The third wave of the pandemic in H1 2021 saw extended
lockdowns across the regions we have a presence in, which
resulted in lower economic activity.
Branches
Branches
The impairment charge declined by 62% to R168m as economic
conditions improved during 2021 with improved collections and
recoveries. CLR decreased to 72 bps (2020: 185 bps), which is
also below 2019 levels (101 bps).
Expenses increased by 9% to R2 535m mainly due to
hyperinflationary pressures in Zimbabwe. Excluding Zimbabwe,
NAR expenses were well managed and up by only 3% to
R2 088m off a low base in the prior year. Headcount decreased
by 2% to 2 309 as we focused on managing overall costs, but at
the same time filling key vacancies. NAR’s cost-to-income ratio
decreased to 70,8% from 75,9% in the prior period.
Associate income, relating to the group’s 21% shareholding in
ETI for the period, increased significantly to R686m in 2021 from
a R178m loss in 2020, including a goodwill impairment. This
includes accounting for our share of ETI’s Q4 2020 and 9M
2021 earnings (in line with our policy of accounting for our share
of ETI’s attributable earnings a quarter in arrear). The total effect
of ETI on the Nedbank Group’s HE was a profit of R523m (2020:
R153m), including a R245m impact of funding costs. The ETI
Board has recommended a dividend of USD 0.16 cents per share
(circa US$40m), which will be presented to shareholders for
approval at the upcoming AGM.
ATMs
ATMS
3
9
8
9
3
0
1
4
8
0
8
8
0
2
0
2
2
8
1
2
3
9
1
2
9
1
2017
2018
2019
20201
2021
2017
2018
2019
20201
2021
1 Malawi disposed of in H12020 (11).
1 Malawi disposed of in H12020 (22).
104
Nedbank Group Annual Results 2021 Strategic progress
Our strategy on the continent remains to own, manage and
control banking operations in the SADC and East Africa, and to
give our clients access to a banking network in West and Central
Africa regions through our strategic associate investment in
the pan-African banking group ETI, which has subsidiaries in
33 African countries. As part of the Ecobank–Nedbank alliance,
Nedbank Group offers clients access to the widest banking
network in Africa, with a presence in 39 countries on the
continent. Nedbank’s strategy is to achieve scale in the current
markets where we operate, while exploring opportunities to
expand in large, fast-growing markets on the continent, when
opportunities arise.
We are continuing to transform the NAR business to ensure
readiness for the future and to also ensure we get our fair
share of revenue pools. As part of portfolio optimisation, we
have made good progress in integrating the Mozambican
business into the group, so that we can leverage our enterprise
capabilities to unlock value. Having increased our stake in the
business to 87,5% in H1 2020, in June 2021 we rebranded
Banco Único as Nedbank Mozambique. Operating as Nedbank
in Mozambique has served as a catalyst in addressing
opportunities in growth sectors.
We have made progress in reconfiguring the Zimbabwe business
and the impact of monetary loss due to hyperinflation has
reduced. As of 9 February 2022, Nedbank Zimbabwe completed
its recapitalisation to ensure that the bank complies with the
minimum capital requirement of a Zimbabwe dollar equivalent
of US$30m as required by the Reserve Bank of Zimbabwe.
Nedbank and Old Mutual Zimbabwe, the main shareholders, took
up the capital issue on a pro rata basis. As part of optimisation
and improving efficiency, the bank closed three branches in
2021 and has continued its transformation to be more digital and
automated, with a special focus on wholesale and transactional
banking, trade finance and cash management.
We are also transforming and reimagining the NAR business
to be more digital, automated, more competitive and more
client obsessed. In 2021, digitally active clients across NAR made
up 54% of the total active client base. The Nedbank Money
App (Africa) has proven to be the channel of choice in Namibia,
Lesotho and Eswatini, with payment and transfer volumes
up 35% yoy and value-added services (airtime, data, prepaid
electricity, etc) maintaining a steady upward trajectory of
26% yoy. A total of 29 new functionalities and enhancements
were deployed on the app in 2021. Nedbank Zimbabwe and
Mozambique each have their unique apps, called Nedbank
Mobile and Nedbank Mobile Banking respectively.
Financial highlights
Headline earnings (Rm)
NII (Rm)
Impairments charge (Rm)
NIR (Rm)
Operating expenses (Rm)
Associate income1
ROE (%)2
ROA (%)
Return on cost of ETI investment (%)
CLR (%)
NIR to total operating expenses
Cost-to-income ratio (%)
Interest margin (%)
Total assets (Rm)
Average total assets (Rm)
Total advances (Rm)
Average total advances (Rm)
Total deposits (Rm)
Average total deposits (Rm)
Average allocated capital (Rm)
Nedbank Africa Regions
SADC
ETI
2021
2020
2021
2020
2021
2020
594
1 448
168
1 431
2 535
686
9,3
1,41
11,0
0,72
56,4
70,8
4,20
42 847
39 235
21 243
22 469
35 054
34 413
6 385
12
1 274
437
1 454
2 325
(178)
0,2
0,03
5,6
1,85
62,5
75,9
3,85
41 089
38 739
23 233
22 409
33 294
32 470
6 471
71
1 693
168
1 431
2 535
1,3
0,20
0,72
56,4
81,1
5,68
40 575
37 070
21 243
22 469
35 054
34 413
5 614
(141)
1 549
437
1 454
2 325
(2,6)
(0,42)
1,85
62,5
77,8
5,42
38 909
36 004
23 233
22 409
33 294
32 470
5 366
523
(245)
153
(275)
686
67,8
7,62
11,0
(178)
14,0
2,09
5,6
2 272
2 165
2 180
2 735
771
1 105
Change
%
>100
14
(62)
(2)
9
>100
4
1
(9)
5
6
(1)
1 Associate income on an IFRS basis is R686m (Dec 2020: R178m loss) as IFRS requires associate income to be presented net of our share of ETI's goodwill
impairment of R13m (Dec 2020: R528m). Our share of ETI's goodwill impairment is excluded from HE.
2 December 2021 ROE on subsidiary in-country statutory capital is 5,2% with Namibia 7,6% (2020: 4,1%); Eswatini 14,0% (2020: 9,2%); Lesotho 5,3% (2020: 5,1%);
Zimbabwe 26,9% (2020: 6,8%); Nedbank Mozambique 5,4% (2020:-4,5%).
105
SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisMessage from ourChief ExecutiveResultspresentation2021 resultscommentaryFinancial resultsNedbank Group Annual Results 2021
We received the following awards in 2021:
• Best Internet Banking Africa and Best Mobile Banking Africa
for 2021, awarded by International Business Magazine.
• Best Bank for Digital Banking Services in Lesotho for
2021, awarded by the Global Banking & Finance Review
(Nedbank Lesotho).
• Most Innovative Retail Banking App in Eswatini for
2021, awarded by Global Banking & Finance Review
(Nedbank Eswatini).
Nedbank Mozambique won four awards:
• Digital Banking Brand of the Year Mozambique in 2021,
awarded by Global Banking & Finance Review,
• Most Innovative Digital Branch Design in Mozambique
for 2021, for the Business Lounge by Nedbank
Mozambique, awarded by Global Banking & Finance Review,
• Best Digital Transformation Bank in Mozambique for 2021,
awarded by International Finance Magazine.
• Best Digitally Re-engineered and Rebranded Bank
in Mozambique for 2021, awarded by International
Finance Magazine.
• Nedbank Zimbabwe was recognised as the first runner-up for
Best Digital Innovation in the Banks and Banking Survey 2021.
Nedbank’s bold aspiration is to be rated #1 in client experiences
in most markets in which we operate. To deliver improved client
experiences across the NAR business, we rolled out the Service
Excellence programme to all NAR employees in H1 2021. In 2021,
we achieved improvements in many key client metrics. During
2021 Namibia and Mozambique businesses achieved the
highest NPS in their respective markets, while four of our
businesses (Lesotho, Mozambique, Namibia and Zimbabwe)
achieved #2 position for net sentiment in their markets. Nedbank
Eswatini, Namibia and Zimbabwe also have the highest loyalty
score in their markets.
In ETI our focus remains to increase the value of our investment.
We are working through our representation on the board to
ensure an appropriate focus on capital, liquidity and growth to
underpin value creation. We are collaborating with the other
major shareholders to resolve the challenges in Ecobank Nigeria
so that we can unlock shareholder value. We are continuing to
work with the ETI team to increase business flows across the
two businesses.
Looking forward
Economic growth in sub-Saharan Africa is forecast to
accelerate slightly to 3,7% in 2022 and rise further in
2023. For 2022, we expect to build on the improved
businesses performance in 2021. Of course, risks remain -
new Covid-19 variants and socioeconomic and political
issues across the continent may still negatively impact
African economies, and in turn our business performance.
The ongoing unrest in Eswatini is something we are
continuingly monitoring for its impact on the economy in
the country. In Mozambique, even as SADC forces have
helped stabilise the areas affected by jihadist insurgents,
there remains a risk if the main causes of the attacks are
not addressed. Stabilisation will facilitate the resumption of
construction operations at the liquefied-natural-gas fields.
Other issues to consider include the impact of inflationary
106
pressures due to global supply challenge and the renewed
monetary policy tightening by central banks and its impact on
the population. Rising commodity prices on the other hand
will also likely benefit commodity-driven economies.
Performance in the SADC operations for 2022 is expected
to continue to improve yoy. We expect yoy improvements in
revenue (NIR and NII) and normalised impairment charges,
while continuing to manage overall expenses. From an ETI
perspective, the recovery is expected to continue, especially
from the three core regions, as evident in their recently
released FY 2021 results.
Our key focus areas for 2022 are the following:
• Accelerating the implementation of our Africa digital
growth strategy, leveraging our group capabilities.
• Maximising growth opportunities in Mozambique on
the back of our increased stake in the business and the
successful rebranding of the business, focusing on the key
sectors of energy, agriculture and agro-processing.
• Continuing the transformation of our NAR business and
operating model for overall efficiency, while driving overall
growth to achieve scale.
• Increasing business flows while working with the other
major ETI shareholders to resolve challenges in Ecobank
Nigeria to increase shareholder value.
Nedbank is committed to the long-term and profitable
growth of our NAR business. Our ambition is to give our
clients access to the best financial services network in Africa
and we will deploy capital to optimise returns for the group.
In the medium to long term, we expect the NAR business to
continue to grow its overall contribution to group earnings
and improve its returns earnings to closer to our ambition
of ROE>COE.
Segmental performance
SADC operations
Our SADC operations generated an HE of R71m, up by >100%
from a loss of R141m in 2020. The business achieved these
results even though the Namibian economy has been in
recession over the past few years, as well as hyperinflation in
Zimbabwe, the ongoing unrest in Eswatini and the slowdown in
the economies across the region that was exacerbated by the
extended Covid-19-related lockdowns. HE in SADC operations,
excluding Zimbabwe, improved from a loss of R193m in 2020 to
a loss of R12m. HE in the Zimbabwe business increased to R84m
from R53m in 2020.
NIR in SADC operations declined by 2% to R1 431m, with NII
increasing by 9% to R1 693m (2020: R1 549m). The impairment
charge declined by 62% to R168m as economic conditions
improved during 2021, improved collections and recoveries, and
subdued growth in the loan portfolio. CLR decreased to 72 bps
(2020: 185 bps), which is also below 2019 levels (101 bps), which
is at the lower end of its TTC target range of 75 bps to 100 bps.
Nedbank Group Annual Results 2021 Clients – The overall number of clients in the NAR business grew
by 1% in 2021 to 337 860 (2020: 334 000) with the growth
rate impacted by bulk closure of small-business tobacco farmer
accounts in Zimbabwe that were dormant due to their seasonal
usage. Altogether, 42% of these are main-banked clients.
Distribution – We are transforming our business model for overall
efficiency while driving growth to achieve scale. In line with this,
we have been reviewing our distribution strategy to ensure an
efficient, optimally staffed, fit-for-purpose distribution model for
our business. We reduced our branches by 5% to 80 and ATMs by
1% to 192. As we tilt to become more digital, new investments into
our physical presence are limited to high-growth micro-markets
and the minimum presence that regulation requires. We have
also focused on growing our point-of-sale (POS) devices across
the region. We have grown the number of POS devices by 9% to
9 574 (2020: 8 780), resulting in an increase in card-acquiring
turnover of 21% to R14,3bn (2020: R11,7bn) with NIR up 23% to
R175m (2020: R142m). The number of merchant devices in NAR
now make up 9,5% of the Nedbank devices across the group.
ETI associate investment
ETI’s financial recovery continued, resulting in an increase
in Nedbank HE of >100% to R523m (2020: R153m),
including the R245m (R177m post-tax) impact of funding
costs. Associate income increased significantly from a loss of
R178m in 2020 to R686m in 2021, which is also higher than
its 2019’s performance of R668m. Overall, ETI achieved solid
revenue growth despite pandemic-induced headwinds.
ETI’s performance was driven by the following:
• Strong financial performance and solid returns registered
in its three core regions, namely Francophone West Africa
(UEMOA), Anglophone West Africa (AWA) and Central, Eastern
and Southern Africa (CESA). Ecobank is a market leader in six
countries and among the top three in 16 countries where it
does business.
• Continued stabilisation of the Nigerian business. Although it is
profitable, Ecobank Nigeria’s performance remains suboptimal.
Its NPL levels reduced to 16,3% (2020: 19,9%) although still
elevated. In December 2021, ETI reported further reduction
in NPLs by $66m as asset quality metrics improved.
The improvement was predominantly driven by recoveries of
$32m in the resolution vehicle (RV).
Ecobank’s strengths include management experience, number
of clients, technology, digital platforms and geographic
footprint. Its focus is on growing the business and to remain
at the forefront of trade, payments, remittances and financial
inclusion by continually leveraging technology and appropriate
partnerships. To improve its operational and financial
performance, it has restructured its businesses in Nigeria and
the CESA regions, implementing a suite of efficiency initiatives,
including closing physical branches and reducing headcount.
The firm’s cost base has been reset through stringent cost
management, operational discipline, and overall strategy of
manufacture centrally’ and distribute locally, which has begun
delivering efficiency gains.
The majority of CESA countries delivered returns above the
cost of equity and had a robust return profile driven by strong
net interest income growth and fees and commission income
across payments and trade. Macro headwinds in Zimbabwe
are progressively improving. From a Nigeria perspective, there
are signs of a turnaround from successful cost reduction
efforts, a focused NPL recovery strategy and conservative
lending. In December 2021, the business reported that profit
before tax increased by $19m to $54m and had an ROE of
6,9%. The turnaround strategy is in progress, supported by
improvement in asset quality metrics, while capital and funding
have been strengthened, with successful local tier 2 issuance
in 2020 and senior issuance of US$300m Eurobonds in Feb
2021. Nigeria holds upside future potential for the Ecobank
Group, given it’s the largest market in sub-Saharan Africa for
the group. The business has made progress in managing costs,
portfolio issues are more under control and the business now
has improved capital.
ETI is focusing on delivering returns above the cost of
equity. The group has been focusing on improving business
performance by regions. The group reported strong profitability
across most regions. ROEs were 21,4%, 24,9%, 22,2% and
6,9% for UEMOA, AWA, CESA and Nigeria respectively.
Focus has been on entrenching the leadership positions in
UEMOA and AWA, which is reflected in the strong financial
performance across both regions. CESA’s ROE has improved
following restructuring exercises. Although still profitable,
Nigeria’s performance remains suboptimal and a drag on the
group’s overall financial performance and returns. ETI has
achieved a material improvement in capital position – total
CAR was up, at 14,5% (estimated ratio published by ETI in
February 2022) on 31 December 2021 (2020: 12,3%). The firm’s
capital metrics have improved since 2019 continuing to meet
increasing requirements.
Favourable
Unfavourable
• Good liquidity and capital positions across subsidiaries.
• Zimbabwe affected by hyperinflation, resulting in a monetary
• Excellent growth in digitally active clients.
• Increasing recognition for digital progress resulting in
many awards.
• Strong and growing returns from ETI's three core regions.
• Significant improvement in associate income from ETI.
• Top 2 in brand sentiment score in four of the markets we
operate in.
• Leading net promoter scores in Namibia and Mozambique.
• Significant reduction in impairments.
• Well managed expenses.
loss, albeit improving.
• SADC subsidiaries negatively impacted by Covid-19 and
socio-political issues.
• Low but improving return on equity.
• Growing market share of revenue pools, but still sub-scale.
• Low growth in main banked clients.
• Ecobank Nigeria (ENG) improved but performance
remains suboptimal.
107
SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisMessage from ourChief ExecutiveResultspresentation2021 resultscommentaryFinancial resultsNedbank Group Annual Results 2021 Geographical segmental reporting
for the year ended 31 December
Rm
Summary of consolidated statement of financial position
Assets
Cash and cash equivalents
Other short-term securities
Derivative financial instruments
Government and other securities
Loans and advances
Other assets
Intergroup assets
Total assets
Equity and liabilities
Total equity
Derivative financial instruments
Amounts owed to depositors
Provisions and other liabilities
Long-term debt instruments
Intergroup liabilities
Total equity and liabilities
Summary of consolidated statement of comprehensive income
NII
NIR
Share of income of associate companies
Total income
Impairments charge on financial instruments
Net income
Total operating expenses
Zimbabwe hyperinflation
Indirect taxation
Profit before direct taxation
Direct taxation
Profit after taxation
Profit attributable to non-controlling interest
Headline earnings/(losses)
1
Includes all group eliminations.
Nedbank Group
2021
2020
South Africa1
Nedbank Africa Regions2
Rest of the world
2021
2020
2021
2020
2021
2020
44 586
60 037
39 179
150 498
831 735
95 019
–
41 382
52 605
80 325
132 221
843 303
78 301
–
1 221 054
1 228 137
1 106 191
1 115 045
42 847
41 089
72 016
72 003
109 511
36 042
971 795
45 547
58 159
–
100 444
65 130
953 715
49 078
59 770
–
1 221 054
1 228 137
1 106 191
1 115 045
42 847
41 089
72 016
72 003
32 500
25 027
799
58 326
6 534
51 792
33 639
138
1 073
16 942
4 104
12 838
1 149
11 689
30 081
24 140
452
54 673
13 127
41 546
31 772
205
1 148
8 421
1 994
6 427
987
5 440
878 759
854 767
35 054
33 294
34 563
34 459
39 099
148 722
767 051
84 717
(2 420)
32 642
27 702
80 173
131 277
777 395
68 589
(2 733)
89 896
35 956
43 341
57 732
507
30 296
22 289
100
52 685
5 810
46 875
30 146
979
15 750
4 100
11 650
1 052
81 974
65 004
46 924
59 452
6 924
27 703
21 559
115
49 377
11 815
37 562
28 576
1 065
7 921
1 986
5 935
935
8 075
5 050
1
1 773
21 243
4 285
2 420
6 385
10
971
427
1 448
1 431
699
3 578
168
3 410
2 535
138
72
665
(26)
691
97
594
6 813
3 639
33
827
23 233
3 811
2 733
6 471
39
967
318
1 274
1 454
337
3 065
437
2 628
2 325
205
64
34
(30)
64
52
12
1 948
20 528
79
3
43 441
6 017
1 927
21 264
119
117
42 675
5 901
13 230
11 999
76
57 982
1 235
87
65 654
1 187
(507)
(6 924)
756
1 307
2 063
556
1 507
958
22
527
30
497
1 104
1 127
2 231
875
1 356
871
19
466
38
428
10 598
5 000
497
428
2 The Nedbank Africa Regions geographical segmental income statement and balance sheet consist of the SADC banking subsidiaries and the investment in ETI.
These statements do not include transactions concluded with clients resident in the rest of Africa by other group entities within CIB, or transactional-banking
revenues. For example, CIB has a credit exposure to clients resident in the Africa regions of R41,5bn (December 2020: R34,0bn).
108
Nedbank Group Annual Results 2021
Summary of consolidated statement of financial position
Rm
Assets
Cash and cash equivalents
Other short-term securities
Derivative financial instruments
Government and other securities
Loans and advances
Other assets
Intergroup assets
Total assets
Equity and liabilities
Total equity
Derivative financial instruments
Amounts owed to depositors
Provisions and other liabilities
Long-term debt instruments
Intergroup liabilities
Total equity and liabilities
Summary of consolidated statement of comprehensive income
NII
NIR
Share of income of associate companies
Total income
Impairments charge on financial instruments
Net income
Total operating expenses
Zimbabwe hyperinflation
Indirect taxation
Profit before direct taxation
Direct taxation
Profit after taxation
Headline earnings/(losses)
1
Includes all group eliminations.
Profit attributable to non-controlling interest
Nedbank Group
2021
2020
South Africa1
Nedbank Africa Regions2
Rest of the world
2021
2020
2021
2020
2021
2020
34 563
34 459
39 099
148 722
767 051
84 717
(2 420)
32 642
27 702
80 173
131 277
777 395
68 589
(2 733)
8 075
5 050
1
1 773
21 243
4 285
2 420
6 813
3 639
33
827
23 233
3 811
2 733
1 948
20 528
79
3
43 441
6 017
1 927
21 264
119
117
42 675
5 901
1 221 054
1 228 137
1 106 191
1 115 045
42 847
41 089
72 016
72 003
89 896
35 956
81 974
65 004
6 385
10
6 471
39
878 759
854 767
35 054
33 294
43 341
57 732
507
46 924
59 452
6 924
971
427
967
318
13 230
11 999
76
57 982
1 235
87
65 654
1 187
(507)
(6 924)
1 221 054
1 228 137
1 106 191
1 115 045
42 847
41 089
72 016
72 003
30 296
22 289
100
52 685
5 810
46 875
30 146
979
15 750
4 100
11 650
1 052
27 703
21 559
115
49 377
11 815
37 562
28 576
1 065
7 921
1 986
5 935
935
10 598
5 000
1 448
1 431
699
3 578
168
3 410
2 535
138
72
665
(26)
691
97
594
1 274
1 454
337
3 065
437
2 628
2 325
205
64
34
(30)
64
52
12
756
1 307
2 063
556
1 507
958
22
527
30
497
1 104
1 127
2 231
875
1 356
871
19
466
38
428
497
428
44 586
60 037
39 179
150 498
831 735
95 019
–
109 511
36 042
971 795
45 547
58 159
–
32 500
25 027
799
58 326
6 534
51 792
33 639
138
1 073
16 942
4 104
12 838
1 149
11 689
41 382
52 605
80 325
132 221
843 303
78 301
–
100 444
65 130
953 715
49 078
59 770
–
30 081
24 140
452
54 673
13 127
41 546
31 772
205
1 148
8 421
1 994
6 427
987
5 440
2 The Nedbank Africa Regions geographical segmental income statement and balance sheet consist of the SADC banking subsidiaries and the investment in ETI.
These statements do not include transactions concluded with clients resident in the rest of Africa by other group entities within CIB, or transactional-banking
revenues. For example, CIB has a credit exposure to clients resident in the Africa regions of R41,5bn (December 2020: R34,0bn).
109
SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisMessage from ourChief ExecutiveResultspresentation2021 resultscommentaryFinancial resultsNedbank Group Annual Results 2021
Income
statement
analysis
111 Net margin analysis
114
Impairments
120 Non-interest revenue and income
122 Expenses
124 Headline earnings reconciliation
124 Taxation charge
125 Preference shares
110
Nedbank Group Annual Results 2021 1 Net margin analysis
Net interest income
(Rm)
Net interest income
(Rm)
Interest margin trends versus prime rate
(%)
Net interest margin
(Rm)
10,39
10,09
10,14
7,85
7,03
4
2
6
7
2
9
1
8
8
2
7
6
1
0
3
1
8
0
0
3
0
0
5
2
3
2
6
3
,
5
6
3
,
2
5
3
,
6
3
3
,
3
7
3
,
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
Nedbank Group NIM
Average prime rate
2021
2020
Nedbank Group
Bps
Rm
Bps
Rm
Closing average interest-earning banking assets (year-to-date
average)
870 382
895 880
336
30 081
352
Opening NIM/NII
Growth in banking assets
Endowment
Endowment rate impact
Endowment mix impact
Asset margin pricing and mix
Impact due to pricing
Impact due to mix change
Liability margin pricing and mix
Deposits pricing and mix
Impact due to pricing
Impact due to mix change
Impact of changes in the funding profile
Impact due to pricing
Impact due to mix change
Balance sheet management and other
Closing NIM/NII for the period
(1)
(14)
13
20
8
12
6
3
(2)
5
3
1
2
(856)
(111)
(1 293)
1 182
1 744
683
1 061
504
207
(162)
369
297
62
235
12
373
1 138
32 500
30 167
1 333
(2 128)
(2 821)
693
1 237
1 357
(120)
(788)
(742)
(851)
109
(46)
(28)
(18)
260
(24)
(32)
8
14
15
(1)
(9)
(9)
(10)
1
–
3
336
30 081
111
Income statementanalysisSupplementaryinformationStatement of financialposition analysisSegmentalanalysisFinancial results2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
Net interest margin
(Bps)
Net interest margin
(Bps)
(14)
13
8
12
(1)
7
12
336
373
2020
Endowment
rate impact
Endowment
mix impact
Asset
pricing
Asset
mix
Liability
pricing
Liability
mix
Balance sheet
management
and other
2021
Favourable
Version 3 - 17 FEB 2022
Unfavourable
• Endowment mix benefit largely due to strong growth in CASA
deposits and capital levels due to higher earnings and the
issuance of tier 1 capital instruments.
• Negative endowment rate impact due to the full run rate
impact of the 2020 interest rate cuts.
• Liability pricing pressure in highly competitive household and
• Improved asset pricing on new retail and
commercial deposit markets.
commercial advances.
• Positive asset mix changes due to higher-yielding retail
advances growing faster than lower-yielding CIB advances.
• Liability mix benefits as a result of stronger growth in
higher-margin deposits relative to wholesale funding.
• Stronger growth in higher margin Nedbank Africa
Region businesses.
NII sensitivity
• At December 2021 the NII sensitivity of the group’s banking book for a 1% parallel increase in interest rates, measured over
12 months, was 1,58% of total group ordinary shareholders’ equity, which is below the board’s approved risk limit of < 2,25%.
• This exposes the group to an increase in NII of approximately R1 577m before tax, should interest rates increase by 1% across the
yield curve, measured over a 12-month period. Nedbank London branch and Wealth International NII sensitivities are, however,
measured at a 0,5% instantaneous increase in interest rates and Nedbank Zimbabwe is measured at a 3,0% instantaneous increase
in interest rates.
• The group’s NII sensitivity exhibits very little convexity and will therefore also result in a decrease in pretax NII of approximately
similar amounts should interest rates decrease by 1%.
• The group’s NII sensitivity is actively managed through on- and off-balance-sheet interest rate risk management strategies for the
group’s expected interest rate view and impairment sensitivity over the cycle.
• Nedbank Limited’s economic value of equity (EVE) for a 1% increase in interest rates remains at a low level of 0,39% (+R300m) of
ordinary shareholders’ equity, which is below the board’s approved risk limit of 1,25%.
112
Nedbank Group Annual Results 2021
%
7,85
6,80
7,39
7,43
9,81
13,47
8,21
6,40
20,53
8,04
8,67
3,56
8,07
Average banking statement of financial position and related interest
2021
2020
Average
balance
Margin statement interest
Average
balance
Margin statement interest
Rm
Assets
Received
%
Assets
Received
Average prime rate
Assets
7,03
Listed corporate bonds
22 236
1 287
5,79
28 138
1 912
Home loans (including properties in
possession)
Commercial mortgages
Instalment debtors
Credit card balances
Overdrafts
Term loans and other1
Personal loans
173 839
187 550
134 137
17 072
21 316
195 198
28 454
11 314
12 516
12 199
2 138
1 576
11 357
5 528
6,51
6,67
9,09
12,52
7,39
5,82
19,43
165 603
186 240
128 006
16 752
23 554
236 647
25 963
12 234
13 834
12 559
2 256
1 933
15 147
5 330
Gross banking loans and advances
779 802
57 915
7,43
810 903
65 205
Impairment of loans and advances
Government and other securities
Short-term funds and securities
Interest-earning banking assets
Other2
Total assets
(25 214)
76 635
39 159
870 382
188 668
6 837
1 020
8,92
2,60
(21 268)
64 884
41 361
5 623
1 472
65 772
7,56
895 880
72 300
141 385
1 059 050
65 772
6,21
1 037 265
72 300
6,97
Liabilities
Paid
%
Liabilities
Paid
%
Equity and liabilities
Deposit and loan accounts
Current and savings accounts
Negotiable certificates of deposit
Other interest-bearing liabilities
Long-term debt instruments
513 248
140 660
91 839
104 440
58 278
18 957
523
4 378
5 465
3 949
Interest-bearing banking liabilities
908 465
33 272
Revaluation of FVTPL-designated
liabilities
Ordinary and minority shareholders'
equity
Other3
5 285
103 619
41 681
3,69
0,37
4,77
5,23
6,78
3,66
483 084
22 943
127 150
114 620
104 982
61 035
663
7 212
6 683
4 718
890 871
42 219
4,75
0,52
6,29
6,37
7,73
4,74
146 394
Total shareholders’ equity and liabilities
1 059 050
33 272
3,14
1 037 265
42 219
4,07
Interest margin on average
interest-earning banking assets
870 382
32 500
3,73
895 880
30 081
3,36
1
2
3
Includes term loans, preference shares, factoring debtors, foreign lending, loans to banks and other lending-related instruments.
Includes cash and banknotes, derivative financial instruments, insurance assets, associates and investments, property and equipment, mandatory reserve deposits
with central banks, intangible assets and other assets.
Includes derivative financial instruments, investment contract liabilities, other liabilities, equity and elimination entries.
113
Income statementanalysisSupplementaryinformationStatement of financialposition analysisSegmentalanalysisFinancial results2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021 2 Impairments
Nedbank Group impairments charge
Nedbank Group impairments charge
(Rm)
(Rm)
Nedbank Group credit loss ratio trends
Group credit loss ratio trends
(%)
(Rm)
4
0
3
3
8
8
6
3
9
2
1
6
7
2
1
3
1
4
3
5
6
1,00
0,60
9
4
0
,
3
5
0
,
9
7
0
,
1
6
1
,
3
8
0
,
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
CLR
TTC upper range
TTC lower range
Covid-19 restructured credit exposures in line with Directive 3/2020 and
Directive 7/2015
Restructured credit exposure transactions
Directive 3/2020 restructures
Directive 7/2015 restructures
GLAA,
excluding
trading
book
Directive
3/2020
restructures
as a % of
cluster/
business unit
GLAA
Total
number
Exposure
(Rm)
Impairments
(Rm)
Total
number
Exposure
(Rm)
Impairments
(Rm)
Exposure
(Rm)
%
0,92
0,19
1,73
3 249
345
2 904
167
38
129
18
5
13
2 513
400
352 487
2 258
255
360
40
184 965
167 522
14
1
13
–
–
–
35 603
6 852
1 462
400 301
0,00
67
35 536
29
104
115
6 737
194
275
26
82 046
1 436
318 255
67
75
30 729
22 325
1 112
14
3 249
167
35 754
9 834
2 004
806 954
0,40
Nedbank
cluster/business unit
2021
Corporate and
Investment Banking
CIB, excl Property
Finance
Property Finance
Retail and Business
Banking
Business Banking
Retail
Wealth
Nedbank Africa
Regions
Centre
Group
114
Nedbank Group Annual Results 2021
Restructured credit exposure transactions
Directive 3/2020 restructures
Directive 7/2015 restructures
GLAA,
excluding
trading
book
Directive
3/2020
restructures
as a % of
cluster/
business unit
GLAA
Total
number
Exposure
(Rm)
Impairments
(Rm)
Total
number
Exposure
(Rm)
Impairments
(Rm)
Exposure
(Rm)
53
19
34
25 355
18 160
7 195
15 241
2 051
61
15 180
1
179
1 872
4
281
250
31
189
4
185
138
333
3
24
6
18
2 061
1 792
269
516
361 280
433
83
190 891
170 389
59 073
10 540
2 196
375 385
257
448
51
76 868
58 816
10 092
2 145
298 517
73
143
249
144
14
34
31 567
24 186
4 438
%
7,02
9,51
4,22
0,55
0,23
0,63
0,01
1,38
15 433
27 743
473
59 313
12 994
2 760
796 856
3,48
Nedbank
cluster/business unit
2020
Corporate and
Investment Banking
CIB, excluding
Property Finance
Property Finance
Retail and Business
Banking
Business Banking
Retail
Wealth
Nedbank Africa
Regions
Centre
Group
Favourable
Unfavourable
• The group’s impairment charge has decreased to R6,5bn (Dec
2020: R13,1bn) as a result of an improved macro-economic
environment and proactive credit risk management.
• The central provision decreased to R500m (2020: R750m),
driven by a release of overlays that were raised in the clusters.
• The Unsecured Lending impairment charge increased, driven
by higher-than-anticipated risk emergence in the portfolio.
• Retail overlays were raised for elevated risk in Card and
for changes in the collection environment based on the
DebiCheck implementation.
• The CLR decreased to 83 bps (2020: 161 bps) and returned to
• Amounts written off increased 10% to R8 139m (2020:
within the target range of 60 bps to 100 bps.
• There were better-than-expected collection outcomes, a
reduction in stage 3 loans as some clients cured and Directive
7/2015 (restructured) loans decreased.
R7 419m), offset by an increase in post-write-off recoveries of
22% to R1 425m (2020: R1 165m).
115
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Nedbank Group income statement impairment charge and credit loss ratio
Stage 1
Stage 2
Stage 3
FVOCI
balance-sheet
net of recoveries
banking advances
CLR
Target CLR range
Non-LAA and
Off-
Impairment charge,
Mix of average
2021
Corporate and Investment Banking (CIB)
CIB, excluding Property Finance
Property Finance
Retail and Business Banking (RBB)
Business Banking
Retail
Wealth
Nedbank Africa Regions
Centre
Nedbank Group
2020
Corporate and Investment Banking (CIB)
CIB, excluding Property Finance
Property Finance
Retail and Business Banking (RBB)
Business Banking
Retail
Wealth
Nedbank Africa Regions
Centre
Nedbank Group
Nedbank Group impairment drivers
(Rm)
Rm
(291)
(129)
(162)
669
(75)
744
(18)
16
376
Rm
453
150
303
(207)
(187)
(20)
(3)
(7)
(249)
(13)
Rm
1 178
824
354
4 763
141
4 622
49
170
6 160
Stage 1
Stage 2
Stage 3
FVOCI
balance-sheet
net of recoveries
banking advances
CLR
Target CLR range
Non-LAA and
Off-
Impairment charge,
Mix of average
Rm
271
137
134
519
10
509
22
101
Rm
435
136
299
1 533
366
1 167
31
54
500
Rm
1 941
1 463
478
6 619
415
6 204
155
267
(1)
913
2 553
8 981
389
13 127
100,0
1,61
0,60–1,00
Rm
290
290
–
(2)
(3)
285
Rm
293
293
–
6
(8)
291
(274)
6 534
1 00,0
0,83
0,60–1,00
Rm
(212)
(212)
(53)
(46)
(7)
(9)
Rm
305
305
75
62
13
9
Rm
1 418
923
495
5 172
(167)
5 339
28
168
(252)
Rm
3 245
2 334
911
8 746
853
7 893
208
437
491
%
43,6
22,3
21,3
49,1
10,1
39,0
4,0
3,0
0,3
%
48,4
29,6
18,8
44,7
9,5
35,2
4,0
2,9
0,0
%
0,42
0,53
0,30
1,34
(0,21)
1,75
0,09
0,72
%
0,82
1,03
0,54
2,40
1,10
2,75
0,64
1,85
%
0,15–0,45
0,20–0,50
0,15–0,35
1,20–1,75
0,50–0,70
1,60–2,40
0,20–0,40
0,85–1,20
%
0,15–0,45
0,20–0,50
0,15–0,35
1,30–1,80
0,50–0,70
1,60–2,40
0,20–0,40
0,75–1,00
(537)
(2 566)
(2 821)
13 127
(6)
(663)
2020
Stage 1
Stage 2
Stage 3
FVOCI
and non-LAA
Off-
balance-sheet
116
6 534
2021
Nedbank Group Annual Results 2021
2021
Corporate and Investment Banking (CIB)
CIB, excluding Property Finance
Property Finance
Retail and Business Banking (RBB)
Business Banking
Retail
Wealth
Centre
Nedbank Group
Nedbank Africa Regions
2020
Corporate and Investment Banking (CIB)
CIB, excluding Property Finance
Property Finance
Retail and Business Banking (RBB)
Business Banking
Retail
Wealth
Centre
Nedbank Group
Nedbank Africa Regions
Rm
(291)
(129)
(162)
669
(75)
744
(18)
16
376
Rm
271
137
134
519
10
509
22
101
Rm
453
150
303
(207)
(187)
(20)
(3)
(7)
(249)
(13)
Rm
435
136
299
1 533
366
1 167
31
54
500
Rm
1 178
824
354
4 763
141
4 622
49
170
6 160
Rm
1 941
1 463
478
6 619
415
6 204
155
267
(1)
913
2 553
8 981
Nedbank Group income statement impairment charge and credit loss ratio
Stage 1
Stage 2
Stage 3
Non-LAA and
FVOCI
Off-
balance-sheet
Impairment charge,
net of recoveries
Mix of average
banking advances
CLR
Target CLR range
Rm
290
290
–
(2)
(3)
285
Rm
(212)
(212)
(53)
(46)
(7)
(9)
Rm
1 418
923
495
5 172
(167)
5 339
28
168
(252)
%
43,6
22,3
21,3
49,1
10,1
39,0
4,0
3,0
0,3
%
0,42
0,53
0,30
1,34
(0,21)
1,75
0,09
0,72
%
0,15–0,45
0,20–0,50
0,15–0,35
1,20–1,75
0,50–0,70
1,60–2,40
0,20–0,40
0,85–1,20
(274)
6 534
1 00,0
0,83
0,60–1,00
Stage 1
Stage 2
Stage 3
Non-LAA and
FVOCI
Off-
balance-sheet
Impairment charge,
net of recoveries
Mix of average
banking advances
CLR
Target CLR range
Rm
293
293
–
6
(8)
291
Rm
305
305
75
62
13
9
Rm
3 245
2 334
911
8 746
853
7 893
208
437
491
%
48,4
29,6
18,8
44,7
9,5
35,2
4,0
2,9
0,0
%
0,82
1,03
0,54
2,40
1,10
2,75
0,64
1,85
%
0,15–0,45
0,20–0,50
0,15–0,35
1,30–1,80
0,50–0,70
1,60–2,40
0,20–0,40
0,75–1,00
389
13 127
100,0
1,61
0,60–1,00
Nedbank Group credit loss ratio per cluster
(%)
1,06
1,02
0,09
0,06
2017
1,06
0,51
0,13
0,04
2018
1,38
1,01
0,25
0,18
2019
2,40
1,85
0,82
0,64
2020
CIB
RBB
Wealth
Africa Regions
1,34
0,72
0,42
0,09
2021
117
Income statementanalysisSupplementaryinformationStatement of financialposition analysisSegmentalanalysisFinancial results2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
Impairments charge of financial instruments
2021
Corporate
and
Investment
Banking
Retail and
Business
Banking
Nedbank
Group
Nedbank
Africa
Regions
Wealth
Balance at the beginning of the year
26 077
4 638
19 257
Stage 1 ECL allowance
Stage 2 ECL allowance
Stage 3 ECL allowance
4 237
6 772
15 068
935
1 306
2 397
3 015
4 504
11 738
Statement of comprehensive income
charge net of recoveries
6 534
1 418
5 172
Stage 1 ECL allowance
Stage 2 ECL allowance
Stage 3 ECL allowance
Off-balance-sheet allowance
Non-loans and advances
FVOCI loan impairment charge
376
(13)
6 160
(274)
(5)
290
(291)
453
1 178
(212)
290
669
(207)
4 763
(53)
434
46
56
332
28
(18)
(3)
49
(6 030)
(942)
(5 023)
(6)
Adjusted for:
Recoveries
Interest in suspense
Amounts written off
Foreign exchange and other transfers
Non-loans and advances
FVOCI loans
1 425
1 062
(8 139)
(19)
5
(364)
4
152
(691)
(43)
(364)
1 391
922
(7 380)
44
Centre
765
748
17
(252)
(249)
(3)
(13)
(16)
3
983
241
158
584
168
16
(7)
170
(9)
(2)
(46)
30
(12)
(63)
(3)
2
1 105
500
248
118
739
1 105
1 082
23
500
500
500
(5)
(1)
456
44
39
373
456
456
ECL allowance – closing balance
26 581
5 114
19 406
Stage 1
Stage 2
Stage 3
4 573
6 543
15 465
681
1 692
2 741
3 600
4 194
11 612
Split by measurement category
26 581
5 114
19 406
Loans and advances
25 650
4 296
19 316
Loans and advances in FVOCI
Off-balance-sheet allowance
535
396
535
283
90
118
Nedbank Group Annual Results 2021
2020
Corporate
and
Investment
Banking
Retail and
Business
Banking
Nedbank
Group
Nedbank
Africa
Regions
Wealth
Centre
Balance at the beginning of the year
18 152
2 745
14 144
Stage 1 ECL allowance
Stage 2 ECL allowance
Stage 3 ECL allowance
3 428
3 931
10 793
658
767
1 320
2 507
2 819
8 818
Statement of comprehensive income
charge net of recoveries
13 127
3 245
8 746
Stage 1 ECL allowance
Stage 2 ECL allowance
Stage 3 ECL allowance
Off-balance-sheet allowance
Non-loans and advances
FVOCI loan impairment charge
Adjusted for:
Recoveries
Interest in suspense
Amounts written off
Foreign exchange and other transfers
Non-loans and advances
FVOCI loans
913
2 553
8 981
389
(2)
293
271
435
1 941
305
293
519
1 533
6 619
75
(5 178)
(1 328)
(3 633)
1 165
1 059
(7 419)
15
2
(24)
6
74
(1 378)
(30)
(24)
1 077
855
(5 979)
414
ECL allowance – closing balance
26 077
4 638
19 257
Stage 1
Stage 2
Stage 3
Split by measurement category
Loans and advances
Loans and advances in FVOCI
Off-balance-sheet allowance
4 237
6 772
15 068
26 077
24 804
609
664
935
1 306
2 397
4 638
3 539
609
490
3 015
4 504
11 738
19 257
19 113
144
229
24
25
180
208
22
31
155
(3)
(3)
434
46
56
332
434
434
771
240
72
459
437
101
54
267
9
6
(225)
82
130
(59)
(372)
(6)
983
241
158
584
983
953
30
263
(1)
248
16
491
500
(1)
(8)
11
3
8
765
748
17
765
765
119
Income statementanalysisSupplementaryinformationStatement of financialposition analysisSegmentalanalysisFinancial results2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
3 Non-interest revenue and income
Non-interest revenue
(Rm)
Non-interest revenue
(Rm)
Non-interest revenue to total operating expenses
(%)
Non-interest revenue to total operating expenses
(%)
3
6
0
4
2
6
7
9
5
2
7
9
9
5
2
0
4
1
4
2
7
2
0
5
2
,
7
0
8
,
1
2
8
,
8
0
8
,
0
6
7
,
4
4
7
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
Rm
Net commission and fees income
Administration fees
Card fees
Cash-handling fees
Exchange commission
Guarantees income
Insurance commission
Other commission
Other fees
Service charges
Insurance income
Fair-value adjustments
Fair-value adjustments
Hedge-accounted portfolios
Trading income
Commodities
Debt securities
Equities
Foreign exchange
Change
%
4
6
15
1
(8)
(14)
9
1
3
1
24
>(100)
62
>(100)
(15)
(51)
(28)
31
(5)
Realised gains, dividends, interest and other income
Unrealised gains/(losses)1
Investment income
Sundry income/(expenses)2
Total non-interest revenue and income
10
95
24
18
4
Nedbank Group
Corporate and
Investment Banking
Retail and
Business Banking
Wealth
Nedbank Africa Regions
Centre
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
17 754
17 137
2 710
2 907
1 403
3 646
1 027
648
267
442
3 958
2 041
4 322
2 005
(833)
(128)
(705)
1 327
3 178
1 017
707
311
406
3 910
1 989
4 292
1 622
352
(338)
690
50
21
193
192
195
1 250
753
56
(83)
(94)
11
57
17
202
200
229
1 420
724
58
(357)
(373)
16
4 475
5 252
4 295
5 094
11 965
505
3 511
802
242
41
243
2 623
98
3 900
487
25
25
109
109
43
43
16
138
11 268
525
3 065
785
216
51
245
2 386
98
3 897
329
29
29
74
74
(19)
(19)
12
137
2021
2 210
766
1
110
194
(178)
1 264
53
1 474
–
–
–
2020
2 099
664
1
120
156
(110)
1 221
47
1 250
–
–
–
161
(57)
4
(50)
953
68
111
31
129
31
5
250
15
313
65
(14)
(14)
71
71
–
356
1 431
839
67
95
29
96
31
5
201
25
290
70
8
8
84
84
(15)
(15)
13
455
1 454
(84)
14
3
(25)
13
(89)
(21)
(761)
(20)
(741)
–
(59)
(59)
(1)
70
(856)
24
14
1
75
13
(79)
(27)
672
27
645
–
(143)
(144)
1
29
(231)
324
26
2 267
842
1 160
666
786
(120)
87
206
53
3 142
642
1 257
(861)
818
(1 679)
154
292
727
(77)
263
713
659
(1 697)
212
603
25 027
24 140
7 881
7 229
12 783
11 830
3 788
3 303
26
2 267
842
1 340
53
3 142
642
1 415
Equity revaluation gains/(losses)
>100
650
(1 038)
1 Unrealised losses relate to equity investments in associates and joint ventures, which are estimated and converted to realised or dividends once earned.
2 Sundry income comprises mainly security dealings, rental income, fair-value movements on non-trading investments and forex gains and losses.
120
Nedbank Group Annual Results 2021
Favourable
Unfavourable
• Commission and fee growth recovering off the low 2020 base,
• Solid trading performance, with growth impacted by a high
driven by increased levels of client transactional activity.
2020 base.
• Insurance benefited from the implementation of an enhanced
• Unwinding of 2020 gains from the group's fair-value hedge
asset and liability matching strategy.
accounting solution (no volatility into H2 2021).
• Unrealised equity revaluation losses in 2020 not repeated.
Nedbank Group
Corporate and
Investment Banking
Retail and
Business Banking
Wealth
Nedbank Africa Regions
Centre
Net commission and fees income
17 754
17 137
2 710
2 907
Administration fees
Card fees
Cash-handling fees
Exchange commission
Guarantees income
Insurance commission
Other commission
Other fees
Service charges
Insurance income
Fair-value adjustments
Fair-value adjustments
Hedge-accounted portfolios
Trading income
Commodities
Debt securities
Equities
Foreign exchange
Change
24
>(100)
62
>(100)
%
4
6
15
1
(8)
(14)
9
1
3
1
(15)
(51)
(28)
31
(5)
10
95
24
18
4
1 403
3 646
1 027
648
267
442
3 958
2 041
4 322
2 005
(833)
(128)
(705)
26
2 267
842
1 340
727
(77)
263
713
1 327
3 178
1 017
707
311
406
3 910
1 989
4 292
1 622
352
(338)
690
53
3 142
642
1 415
659
(1 697)
212
603
50
21
193
192
195
1 250
753
56
(83)
(94)
11
26
2 267
842
1 160
666
786
(120)
87
206
57
17
202
200
229
1 420
724
58
(357)
(373)
16
53
3 142
642
1 257
(861)
818
(1 679)
154
292
4 475
5 252
4 295
5 094
Equity revaluation gains/(losses)
>100
650
(1 038)
Realised gains, dividends, interest and other income
Unrealised gains/(losses)1
Investment income
Sundry income/(expenses)2
Rm
2021
2020
2021
2020
2021
2020
11 965
505
3 511
802
242
41
243
2 623
98
3 900
487
25
25
109
109
43
43
16
138
11 268
525
3 065
785
216
51
245
2 386
98
3 897
329
29
29
74
74
(19)
(19)
12
137
2021
2 210
766
1
110
194
(178)
1 264
53
1 474
–
–
–
2020
2 099
664
1
120
156
(110)
1 221
47
1 250
–
–
–
161
(57)
4
(50)
Total non-interest revenue and income
25 027
24 140
7 881
7 229
12 783
11 830
3 788
3 303
1 Unrealised losses relate to equity investments in associates and joint ventures, which are estimated and converted to realised or dividends once earned.
2 Sundry income comprises mainly security dealings, rental income, fair-value movements on non-trading investments and forex gains and losses.
2021
2020
2021
2020
953
68
111
31
129
31
5
250
15
313
65
(14)
(14)
71
71
–
356
1 431
839
67
95
29
96
31
5
201
25
290
70
8
8
84
84
(15)
(15)
13
455
1 454
(84)
14
3
(25)
13
(89)
(21)
(761)
(20)
(741)
–
(59)
(59)
(1)
70
(856)
24
14
1
75
13
(79)
(27)
672
27
645
–
(143)
(144)
1
29
(231)
324
121
Income statementanalysisSupplementaryinformationStatement of financialposition analysisSegmentalanalysisFinancial results2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
4 Expenses
Total operating expenses
(Rm)
Cost-to-income ratio
(%)
Cost-to-income ratio
(%)
2
1
8
9
2
2
3
6
1
3
9
7
1
2
3
2
7
7
1
3
9
3
6
3
3
,
6
8
5
,
2
7
5
,
5
6
5
,
1
8
5
,
7
7
5
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
Excluding hedge-accounted portfolios, the group’s cost-to-income ratio would
be 57,0% (2020: 58,8%).
Rm
Staff costs
Salaries and wages
Total incentives
Short-term incentives
Long-term incentives
Other staff costs
Computer processing
Depreciation of computer equipment
Depreciation of right-of-use assets: computer
equipment
Amortisation of intangible assets
Operating lease charges for computer processing
Other computer processing expenses
Fees and insurances
Occupation and accommodation1,2
Marketing and public relations
Communication and travel
Other operating expenses3
Activity-justified transfer pricing
Total operating expenses
Change
%
7
2
75
67
>100
<(100)
9
(6)
(6)
19
(12)
9
(5)
24
3
6
Analysis of total IT-related function spend
included in total expenses
Change
%
IT staff-related costs within Group Technology
Depreciation and amortisation of computer
equipment, software and intangibles
Other IT costs (including licensing, development,
maintenance and processing charges)4
Total IT-related functional spend
11
10
7
9
Nedbank Group
Corporate and
Investment Banking
Retail and
Business Banking
Wealth
Nedbank Africa Regions
Centre
2021
2020
2021
2020
18 018
16 829
3 172
2 721
2021
7 963
2020
7 486
2021
1 719
2020
1 608
2021
1 113
2020
1 084
2021
2020
4 051
3 930
15 412
3 049
2 427
622
15 171
1 741
1 455
286
(443)
(83)
6 329
5 830
481
501
2 625
2 267
414
365
425
379
2 384
2 318
574
212
58
260
108
2 146
7 011
664
233
43
287
58
1 925
6 432
2 563
1 844
698
328
540
4 881
21 442
2 494
1 933
562
317
462
4 640
20 161
230
153
48
23
37
656
207
156
54
27
45
599
291
192
56
83
61
314
260
179
42
64
18
299
451
(216)
472
24
202
469
(197)
376
22
338
(7 997)
(7 463)
3 280
3 061
2 535
2 325
(629)
(207)
718
760
83
1 705
198
3 625
4 109
2 185
1 332
718
948
–
88
1 436
224
3 322
4 094
2 304
1 077
717
921
–
33 639
31 772
2021
2020
2 326
2 094
2 506
2 284
3 881
8 713
3 613
7 991
1
2
3
4
Includes the depreciation of right-of-use assets of R863m (December 2020: R915m).
Includes a building depreciation charge of R385m (December 2020: R422m).
Includes a furniture depreciation charge of R332m (December 2020: R352m), consumables and sundry expenses.
Includes consulting and professional fees (that are included in fees and insurance), communication and travel, and other IT-related spend (included in
computer processing).
122
Nedbank Group Annual Results 2021
Total income growth rate less expenses growth rate
(JAWS ratio)
(%)
Total income growth rate less expenses growth rate
(JAWS ratio)
(%)
Total employees
(Permanent staff)
Total employees
(Permanent staff)
,
7
2
3
1
,
)
0
3
,
(
)
,
7
2
(
,
8
0
1
6
8
6
2
1
3
5
1
3
7
8
8
0
3
3
1
2
9
2
1
7
2
8
2
1
6
8
6
2
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
Excluding hedge-accounted portfolios, the group’s JAWS ratio would be
3,4% (2020: -3,8%).
Nedbank Group
Corporate and
Investment Banking
Retail and
Business Banking
Wealth
Nedbank Africa Regions
Centre
Change
2021
2020
2021
2020
18 018
16 829
3 172
2 721
2021
7 963
2020
7 486
2021
1 719
2020
1 608
2021
1 113
2020
1 084
2021
2020
4 051
3 930
6 329
5 830
481
501
2 625
2 267
414
365
425
379
2 384
2 318
574
212
58
260
108
2 146
7 011
664
233
43
287
58
1 925
6 432
2 563
1 844
698
328
540
4 881
21 442
2 494
1 933
562
317
462
4 640
20 161
230
153
48
23
37
656
207
156
54
27
45
599
291
192
56
83
61
314
260
179
42
64
18
299
451
(216)
472
24
202
469
(197)
376
22
338
(7 997)
(7 463)
3 280
3 061
2 535
2 325
(629)
(207)
Favourable
Unfavourable
• As client digital adoption increases, employee numbers
decreased by 1 021, largely through natural attrition.
• Increased incentive costs as a result of the group's improved
financial performance.
• Good management of discretionary spend during the
• Increased computer-processing costs, driven by an increase
crisis contributed to savings being recorded across travel,
communication, occupation and accommodation.
• Optimisation initiatives delivered cost savings, including
cumulative run-rate savings from TOM 2.0 of R967m.
in the amortisation charge of 19%.
• Increased levels of marketing spend off a low base.
Includes the depreciation of right-of-use assets of R863m (December 2020: R915m).
Includes a building depreciation charge of R385m (December 2020: R422m).
1
2
3
4
computer processing).
Includes a furniture depreciation charge of R332m (December 2020: R352m), consumables and sundry expenses.
Includes consulting and professional fees (that are included in fees and insurance), communication and travel, and other IT-related spend (included in
123
Depreciation of computer equipment
718
760
Rm
Staff costs
Salaries and wages
Total incentives
Short-term incentives
Long-term incentives
Other staff costs
Computer processing
Depreciation of right-of-use assets: computer
equipment
Amortisation of intangible assets
Operating lease charges for computer processing
Other computer processing expenses
Fees and insurances
Occupation and accommodation1,2
Marketing and public relations
Communication and travel
Other operating expenses3
Activity-justified transfer pricing
>100
<(100)
(443)
(83)
15 412
3 049
2 427
622
83
1 705
198
3 625
4 109
2 185
1 332
718
948
–
15 171
1 741
1 455
286
88
1 436
224
3 322
4 094
2 304
1 077
717
921
–
Total operating expenses
33 639
31 772
Analysis of total IT-related function spend
Change
included in total expenses
2021
2020
IT staff-related costs within Group Technology
2 326
2 094
Depreciation and amortisation of computer
equipment, software and intangibles
Other IT costs (including licensing, development,
maintenance and processing charges)4
Total IT-related functional spend
2 506
2 284
3 881
8 713
3 613
7 991
%
7
2
75
67
9
(6)
(6)
19
(12)
9
(5)
24
3
6
%
11
10
7
9
Income statementanalysisSupplementaryinformationStatement of financialposition analysisSegmentalanalysisFinancial results2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
5 Headline earnings reconciliation
2021
2020
Rm
Profit attributable to ordinary shareholders
Non-trading and capital items
IAS 16 – loss on disposal of property and
equipment
IAS 36 – impairment of associates: ETI
IAS 36 – impairment of goodwill
IAS 36 – impairment of intangible assets
IAS 40 – loss on revaluation of investment
properties
IFRS 5 – impairment of non-current assets held
for sale
IFRS 10 – profit on sale of subsidiaries/associates
IFRS 16 – impairment of right-of-use assets
Share of losses/(gains) of associate companies
IAS 36 share of associate impairment of goodwill
Change
%
>100
(70)
Gross
499
41
306
153
(11)
10
13
Net of
taxation
11 238
438
26
306
110
(11)
7
Gross
1 562
89
750
345
207
2
17
Net of
taxation
3 467
1 445
72
750
345
149
2
17
152
110
13
528
528
5 440
Headline earnings
>100
11 689
6 Taxation charge
Direct taxation
Taxation rate reconciliation (excluding non-trading and capital items) (%)
Standard rate of South African normal taxation
Reduction of taxation rate:
Dividend income
Capital items
Foreign income and section 9D attribution
Additional tier 1 capital instruments
Revenue losses not recognised
Exempt income and special allowances
NAR non-taxable amounts
Share of gains of associate companies
Non-deductible expenses
Prior-year adjustments
Total taxation on income as percentage of profit before taxation
Effective tax rate, excluding associate headline earnings
2021
2020
4 104
1 994
28,0
28,0
(1,3)
(0,1)
(0,5)
(1,2)
0,1
(0,4)
(0,5)
(1,3)
1,0
0,4
24,2
25,4
(2,4)
0,4
(1,1)
(2,5)
1,2
(0,2)
(0,5)
(1,5)
3,0
(0,7)
23,7
26,8
During the year, the group reviewed the presentation of its taxation rate reconciliation. As a result of this review, certain
reconciling line items have been disaggregated in order to provide our users with additional information. 'Non-taxable income'
has been disaggregated into 'Dividend income' (2020: -2,4%) and 'NAR non-taxable amounts' (2020: -0,5%) and 'Exempt income
and special allowances' (2020: -0,2%). 'Non-deductible expenses' (2020: 2.3%) has been aggregated with 'Net monetary loss'
(2020: 0,7%). To provide comparability, the prior-year balances have been restated accordingly.
124
Nedbank Group Annual Results 2021
7 Preference shares
Profit attributable to preference shareholders
2020
Number of
shares
Cents per
share
Amount
Rm
Nedbank – final (dividend no 34) declared for 2019 – paid April 2020
358 277 491
42,11186
Nedbank – interim (dividend no 35) declared for 2020 – paid September 2020
358 277 491
35,94033
Total of dividends declared
Less: Dividends declared in respect of shares held by group entities
Dividends declared to holders of preference shares
Nedbank (MFC) – participating preference shares1
2021
Nedbank – final (dividend no 36) declared for 2020 – paid April 2021
358 277 491
29,45696
Nedbank – interim (dividend no 37) declared for 2021 – paid September 2021
358 277 491
28,92693
Total of dividends declared
Less: Dividends declared in respect of shares held by group entities
Dividends declared to holders of preference shares
Nedbank (MFC) – participating preference shares1
1 Share in economic profit/(loss) calculated semi-annually.
151
129
280
(29)
251
(58)
193
106
103
209
(21)
188
125
313
125
Income statementanalysisSupplementaryinformationStatement of financialposition analysisSegmentalanalysisFinancial results2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
126
NotesNedbank Group Annual Results 2021 Statement
of financial
position
analysis
128
Loans and advances
146
Investment securities
147
Investments in associate companies
148
Intangible assets
150 Amounts owed to depositors
152 Liquidity risk and funding
155 Equity analysis
156 Capital management
127
Nedbank Group Annual Results 2021 8 Loans and advances
Loans and advances segmental breakdown
Rm
Home loans
Commercial mortgages
Properties in possession
Credit cards
Overdrafts
Personal loans
Term and other loans
Overnight loans
Foreign client lending
Instalment debtors
Preference shares and debentures
Factoring accounts
Listed corporate bonds
Fair-value hedge-accounted portfolios
Trade, other bills and bankers' acceptances
Loans and advances before impairments
Impairment of advances
Total banking loans and advances
Comprises:
– Loans and advances to clients
– Loans and advances to banks
Change
%
6
(1)
26
(3)
(2)
8
(4)
(7)
4
5
(1)
40
6
(82)
(75)
1
(3)
1
3
(27)
Nedbank Group
Corporate and
Investment Banking
Retail and
Business Banking
Wealth
Nedbank Africa Regions
Centre1
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
178 840
189 576
187
16 297
23 042
29 175
168 900
190 583
149
16 721
23 593
26 916
19
152 413
33
155 016
3 733
4 008
168 584
175 489
146 040
9 479
5 793
10 175
5 580
142 559
135 269
12 204
7 188
23 279
750
1
12 274
5 130
21 910
4 163
4
8 341
3 799
2 880
11 977
23 279
6
153 534
8 681
3 146
2 877
11 973
21 910
102
806 954
796 856
352 487
(25 650)
(24 804)
(4 296)
361 280
(3 539)
400 301
375 385
(19 316)
(19 113)
30 729
(456)
31 567
(434)
22 325
(1 082)
24 186
(953)
781 304
772 052
348 191
357 741
380 985
356 272
30 273
31 133
21 243
23 233
751 656
29 648
731 214
40 838
321 379
26 812
323 233
34 508
380 985
356 269
3
29 185
1 088
28 027
3 106
19 495
1 748
20 012
3 221
612
3 673
17 257
8 424
13
17 135
9 014
13
151
188
154 272
26 782
68
16 154
16 048
27 277
13 278
878
330
16
7 185
144 512
24 879
50
16 584
16 089
24 954
11 562
909
206
133
5 084
138 013
130 423
32
211
46
168
4 641
5 003
261
244
2021
7 292
1 855
106
143
3 110
1 898
4 364
260
1 664
1 629
3
1
2020
7 220
1 550
86
137
3 308
1 962
5 146
585
2 228
1 914
46
4
102
124
5
9
744
4 061
1 112
(500)
612
4 438
(765)
3 673
Total loans and advances after impairments
1
781 304
772 052
348 191
357 741
380 985
356 272
30 273
31 133
21 243
23 233
612
3 673
Trading loans and advances
(29)
50 431
71 251
50 431
71 251
1 Centre includes the group’s centrally managed macro fair-value hedge accounting adjustment and a central impairment provision.
Market share according to BA900
Home loans (2018–2021)
(%)
Commercial mortgage loans (2018–2021)
(%)
,
2
4
1
,
5
9
1
,
2
5
3
,
5
3
2
6
7
,
,
2
7
3
0
7
,
,
6
6
1
,
3
6
1
,
9
2
2
Nedbank
FirstRand
Standard Bank
Absa
Other
Nedbank
FirstRand
Standard Bank
Absa
Other
128
Nedbank Group Annual Results 2021
8 Loans and advances
Loans and advances segmental breakdown
Rm
Home loans
Commercial mortgages
Properties in possession
Credit cards
Overdrafts
Personal loans
Term and other loans
Overnight loans
Foreign client lending
Instalment debtors
Preference shares and debentures
Factoring accounts
Listed corporate bonds
Fair-value hedge-accounted portfolios
Trade, other bills and bankers' acceptances
Loans and advances before impairments
Impairment of advances
Comprises:
– Loans and advances to clients
– Loans and advances to banks
Change
%
6
(1)
26
(3)
(2)
8
(4)
(7)
4
5
(1)
40
6
(82)
(75)
(3)
1
1
(27)
3
1
Nedbank Group
Corporate and
Investment Banking
Retail and
Business Banking
Wealth
Nedbank Africa Regions
Centre1
2021
2020
2021
2020
2021
2020
2021
2020
168 584
175 489
146 040
153 534
178 840
189 576
187
16 297
23 042
29 175
9 479
5 793
12 204
7 188
23 279
750
1
168 900
190 583
149
16 721
23 593
26 916
10 175
5 580
12 274
5 130
21 910
4 163
4
142 559
135 269
19
33
152 413
155 016
3 733
4 008
8 341
3 799
2 880
11 977
23 279
6
8 681
3 146
2 877
11 973
21 910
102
154 272
26 782
68
16 154
16 048
27 277
13 278
878
330
144 512
24 879
50
16 584
16 089
24 954
11 562
909
206
17 257
8 424
13
17 135
9 014
13
151
188
4 641
5 003
138 013
130 423
16
7 185
133
5 084
32
211
46
168
2021
7 292
1 855
106
143
3 110
1 898
4 364
260
1 664
1 629
3
1
2020
7 220
1 550
86
137
3 308
1 962
5 146
585
2 228
1 914
46
4
Total banking loans and advances
781 304
772 052
348 191
357 741
380 985
356 272
30 273
31 133
21 243
23 233
806 954
796 856
352 487
(25 650)
(24 804)
(4 296)
361 280
(3 539)
400 301
375 385
(19 316)
(19 113)
30 729
(456)
31 567
(434)
22 325
(1 082)
24 186
(953)
2021
2020
102
124
261
244
5
9
744
4 061
1 112
(500)
612
4 438
(765)
3 673
Total loans and advances after impairments
781 304
772 052
348 191
357 741
380 985
356 272
30 273
31 133
21 243
23 233
612
3 673
751 656
29 648
731 214
40 838
321 379
26 812
323 233
34 508
380 985
356 269
3
29 185
1 088
28 027
3 106
19 495
1 748
20 012
3 221
612
3 673
Trading loans and advances
(29)
50 431
71 251
50 431
71 251
1 Centre includes the group’s centrally managed macro fair-value hedge accounting adjustment and a central impairment provision.
Credit cards (2018–2021)
(%)
Personal loans (2018–2021)
(%)
,
0
2
1
,
4
5
2
,
5
5
2
,
4
5
2
,
8
1
1
,
2
2
1
,
,
3
1
2
,
,
4
7
1
,
,
2
0
1
,
,
,
9
8
3
Nedbank
FirstRand
Standard Bank
Absa
Other
Nedbank
FirstRand
Standard Bank
Absa
Other
Core corporate loans (2018–2021)
(%)
Instalment sales and leases (2018–2021)
(%)
,
7
9
1
,
7
0
2
,
7
0
2
,
9
2
2
,
0
6
1
1
,
,
9
2
1
,
,
4
2
,
,
0
0
2
,
,
6
2
2
Nedbank
FirstRand
Standard Bank
Absa
Other
Nedbank
FirstRand
Standard Bank
Absa
Other
,
2
4
,
129
Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
Summary of loans and advances and coverage ratios
Stage 1 and stage 2 coverage
(%)
Stage 3 advances and coverage ratio
(Rm)
(%)
6,61
6,44
5,30
0,48
0,65
0,69
37,90
37,97
31,55
3
4
2
5
4
4
9
5
7
2
5
3
3
9
3
2019
2020
2021
2019
2020
2021
Stage 1 coverage
Stage 2 coverage
Stage 3 coverage
Stage 3 loans and advances
GLAA, ECL and coverage ratios, by cluster, by stage
Stage 1
Stage 2
Stage 3
TOTAL
GLAA
ECL
Coverage
GLAA
ECL
Coverage
GLAA
ECL
Coverage
GLAA
ECL
Coverage
trading book
trading book
%
Rm
Rm
%
Rm
Rm
%
Rm
Rm
2021
Rm
Corporate and Investment Banking (CIB)
260 775
CIB, excluding Property Finance
Property Finance
116 082
144 693
Rm
529
382
147
0,20
49 193
1 543
0,33
0,10
31 747
17 446
631
912
Retail and Business Banking (RBB)
327 860
3 552
1,08
45 735
4 165
Business Banking
Retail
Wealth
Nedbank Africa Regions
Centre
Gross loans and advances/ECL held at amortised
cost
68 191
259 669
25 453
19 118
302
234
3 318
44
230
0,34
1,28
0,17
1,20
9 559
36 176
2 538
1 248
62
328
3 837
39
112
500
3,14
1,99
5,23
9,11
3,43
10,61
1,54
8,97
633 508
4 355
0,69
98 776
6 359
6,44
39 335
14 936
37,97
771 619
25 650
3,32
806 954
5,06
GLAA/ECL for assets held at FVOCI
Trading GLAA held at FVTPL
Banking book GLAA held at FVTPL
GLAA for fair-value hedge-accounted portfolios
21 279
50 431
9 131
750
60
2 694
48
1 481
427
Off-balance-sheet ECL
Total GLAA/ ECL
130
158
136
102
715 099
4 573
101 470
6 543
40 816
15 465
857 385
26 581
857 385
GLAA excluding
of GLAA excluding
Stage 3
GLAA as a %
%
3,08
4,33
1,71
6,67
5,24
7,04
4,17
8,77
%
1,35
1,56
1,14
4,83
2,05
5,54
1,56
4,85
Rm
352 487
184 965
167 522
400 301
82 046
318 255
30 729
22 325
1 112
50 431
26 706
11 599
43,43
400 301
19 316
9 384
6 520
2 864
4 296
22 410
1 282
1 959
4
2 224
1 396
828
1 121
10 478
373
740
23,70
319 352
21,41
28,91
154 349
165 003
26,09
46,76
29,10
37,77
82 046
318 255
29 273
22 325
368
25 454
50 431
9 131
750
4 296
2 409
1 887
1 683
17 633
456
1 082
500
535
396
Nedbank Group Annual Results 2021
Nedbank Group coverage
(%)
Stage 3 advances as a percentage of gross
banking loans and advances
(Rm)
5,82
3,46
1,15
2
4
4
9
0
5
8
7
2
2
8,35
5,89
3,51
4
3
5
4
9
2
6
5
4
4
6,67
5,06
3,08
7
6
1
3
8
3
0
9
4
3
2019
2020
2021
RBB
Total Nedbank Group
CIB
Stage 3 loans and advances
6
2
2
,
2019
5
2
3
,
2020
2
3
3
,
2021
GLAA, ECL and coverage ratios, by cluster, by stage
Stage 1
Stage 2
Stage 3
TOTAL
GLAA
ECL
Coverage
GLAA
ECL
Coverage
GLAA
ECL
Coverage
GLAA
ECL
Coverage
GLAA excluding
trading book
Stage 3
GLAA as a %
of GLAA excluding
trading book
Rm
%
Rm
Rm
%
Rm
Rm
%
Rm
Rm
Corporate and Investment Banking (CIB)
260 775
0,20
49 193
1 543
9 384
6 520
2 864
2 224
1 396
828
23,70
319 352
21,41
28,91
154 349
165 003
4 296
2 409
1 887
Retail and Business Banking (RBB)
327 860
3 552
1,08
45 735
4 165
26 706
11 599
43,43
400 301
19 316
4 296
22 410
1 282
1 959
4
1 121
10 478
373
740
26,09
46,76
29,10
37,77
82 046
318 255
29 273
22 325
368
1 683
17 633
456
1 082
500
%
1,35
1,56
1,14
4,83
2,05
5,54
1,56
4,85
Rm
352 487
184 965
167 522
400 301
82 046
318 255
30 729
22 325
1 112
%
3,08
4,33
1,71
6,67
5,24
7,04
4,17
8,77
633 508
4 355
0,69
98 776
6 359
6,44
39 335
14 936
37,97
771 619
25 650
3,32
806 954
5,06
60
2 694
48
1 481
427
158
136
102
25 454
50 431
9 131
750
535
396
50 431
715 099
4 573
101 470
6 543
40 816
15 465
857 385
26 581
857 385
131
Rm
529
382
147
234
3 318
44
230
0,33
0,10
31 747
17 446
631
912
0,34
1,28
0,17
1,20
9 559
36 176
2 538
1 248
62
328
3 837
39
112
500
3,14
1,99
5,23
9,11
3,43
10,61
1,54
8,97
2021
Retail
Wealth
Centre
cost
CIB, excluding Property Finance
Property Finance
Business Banking
Nedbank Africa Regions
Gross loans and advances/ECL held at amortised
GLAA/ECL for assets held at FVOCI
Trading GLAA held at FVTPL
Banking book GLAA held at FVTPL
GLAA for fair-value hedge-accounted portfolios
Off-balance-sheet ECL
Total GLAA/ ECL
116 082
144 693
68 191
259 669
25 453
19 118
302
21 279
50 431
9 131
750
Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
2020
Corporate and Investment Banking (CIB)
CIB, excluding Property Finance
Property Finance
Rm
272 163
120 921
151 242
Rm
812
504
308
0,30
48 642
1 093
0,42
0,20
32 918
15 724
485
608
Retail and Business Banking (RBB)
297 063
2 954
0,99
46 982
4 454
Business Banking
Retail
Wealth
Nedbank Africa Regions
Centre
Gross loans and advances/ECL held at amortised
cost
57 659
239 404
28 511
20 489
383
310
2 644
46
217
0,54
1,10
0,16
1,06
13 988
32 994
735
2 072
515
3 939
56
152
748
2,25
1,47
3,87
9,48
3,68
11,94
7,62
7,34
Stage 1
Stage 2
Stage 3
TOTAL
GLAA
ECL
Coverage
GLAA
ECL
Coverage
GLAA
ECL
Coverage
GLAA
ECL
Coverage
%
Rm
Rm
%
Rm
Rm
%
Rm
Rm
Stage 3
GLAA as a %
of total GLAA
excluding
trading
book
GLAA, excluding
trading book
%
1,07
1,23
0,91
5,09
2,61
5,73
1,42
3,94
Rm
361 280
190 891
170 389
375 385
76 868
298 517
31 567
24 186
4 438
71 251
%
3,51
4,90
1,95
8,35
6,79
8,75
4,18
6,72
5,89
10 964
1 634
14,90
331 769
3 539
7 643
3 321
993
641
12,99
19,30
161 482
170 287
1 982
1 557
31 340
11 705
37,35
375 385
19 113
5 221
26 119
1 320
1 625
(6)
1 183
10 522
332
584
17
22,66
40,28
25,15
35,94
76 868
298 517
30 566
24 186
377
18 811
71 251
11 599
4 163
2 008
17 105
434
953
765
609
664
618 609
4 029
0,65
98 431
6 503
6,61
45 243
14 272
31,55
762 283
24 804
3,25
796 856
GLAA/ECL for assets held at FVOCI
Trading GLAA held at FVTPL
Banking book GLAA held at FVTPL
GLAA for fair-value hedge-accounted portfolios
12 501
71 251
11 599
4 163
54
4 599
71
1 711
484
Off-balance-sheet ECL
Total GLAA/ECL
154
198
312
718 123
4 237
103 030
6 772
46 954
15 068
868 107
26 077
868 107
132
Nedbank Group Annual Results 2021
Stage 1
Stage 2
Stage 3
TOTAL
GLAA
ECL
Coverage
GLAA
ECL
Coverage
GLAA
ECL
Coverage
GLAA
ECL
Coverage
Stage 3
GLAA as a %
of total GLAA
excluding
trading
book
GLAA, excluding
trading book
Rm
812
504
308
310
2 644
46
217
0,42
0,20
0,54
1,10
0,16
1,06
32 918
15 724
485
608
13 988
32 994
735
2 072
515
3 939
56
152
748
2,25
1,47
3,87
9,48
3,68
11,94
7,62
7,34
2020
Retail
Wealth
Centre
cost
CIB, excluding Property Finance
Property Finance
Business Banking
Nedbank Africa Regions
Gross loans and advances/ECL held at amortised
GLAA/ECL for assets held at FVOCI
Trading GLAA held at FVTPL
Banking book GLAA held at FVTPL
GLAA for fair-value hedge-accounted portfolios
Off-balance-sheet ECL
Total GLAA/ECL
Rm
272 163
120 921
151 242
57 659
239 404
28 511
20 489
383
12 501
71 251
11 599
4 163
Corporate and Investment Banking (CIB)
0,30
48 642
1 093
10 964
1 634
14,90
331 769
3 539
%
Rm
Rm
%
Rm
Rm
%
Rm
Rm
7 643
3 321
993
641
12,99
19,30
161 482
170 287
1 982
1 557
Retail and Business Banking (RBB)
297 063
2 954
0,99
46 982
4 454
31 340
11 705
37,35
375 385
19 113
5 221
26 119
1 320
1 625
(6)
1 183
10 522
332
584
17
22,66
40,28
25,15
35,94
76 868
298 517
30 566
24 186
377
2 008
17 105
434
953
765
%
1,07
1,23
0,91
5,09
2,61
5,73
1,42
3,94
Rm
361 280
190 891
170 389
375 385
76 868
298 517
31 567
24 186
4 438
618 609
4 029
0,65
98 431
6 503
6,61
45 243
14 272
31,55
762 283
24 804
3,25
796 856
54
4 599
71
1 711
484
154
198
312
18 811
71 251
11 599
4 163
609
664
71 251
718 123
4 237
103 030
6 772
46 954
15 068
868 107
26 077
868 107
%
3,51
4,90
1,95
8,35
6,79
8,75
4,18
6,72
5,89
Favourable
Unfavourable
• RBB gross loans and advances (GLAA) continued growth
momentum from 2020, benefiting from the 300 bps total cut
in interest rates in 2020.
• Total group ECL increased 2,3% yoy, slightly higher than the
banking book growth of 1,3% and reflective of the higher
contribution from Retail of 39,4% (2020: 37,5%).
• An increase in lending volumes originated through the group’s
• CIB GLAA declined, driven by subdued credit demand in the
digital channels.
current environment.
• Continuing to benefit from our MFC business model that is
more geared towards lower-value and second-hand vehicles
as clients buy down in a difficult economic environment.
• Turnaround in CIB GLAA in the second half of the year, up 10%
annualised from June 2021.
133
Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
Stage 1
Stage 2
Stage 3
TOTAL
ECL
Coverage
GLAA
ECL
Coverage
Stage 1
Stage 2
Stage 3
TOTAL
ECL
Coverage
GLAA
ECL
Coverage
Coverage
Coverage
39 335
14 936
37,97
25 650
3,32
GLAA
Rm
9 887
4 825
7 275
3 964
11 161
2 187
36
GLAA
Rm
11 656
5 644
10 468
4 277
10 847
2 293
58
45 243
ECL
Rm
2 340
1 119
3 106
2 460
5 260
651
ECL
Rm
2 318
999
3 876
2 476
4 331
272
Coverage
%
23,67
23,19
42,69
62,06
47,13
29,77
%
19,89
17,70
37,03
57,89
39,93
11,86
14 272
31,55
GLAA
Rm
177 374
186 821
142 558
31 214
136 941
88 369
8 342
771 619
GLAA
Rm
167 893
185 298
135 269
32 889
152 698
80 636
7 599
762 282
ECL
Rm
3 157
2 315
6 339
4 159
8 031
1 705
(56)
ECL
Rm
3 469
2 069
6 660
4 404
6 780
1 483
(61)
24 804
Coverage
%
1,78
1,24
4,45
13,32
5,86
1,93
%
2,07
1,12
4,92
13,39
4,44
1,84
3,25
3,26
4,81
10,16
16,49
6,23
4,59
6,44
%
5,01
3,78
9,84
14,43
4,94
7,39
6,61
GLAA, ECL and coverage, by product
2021
Residential mortgages
Commercial mortgages
Instalment debtors
Credit cards and overdrafts
Term loans
Other client loans
Other including credit and zero balances
GLAA
Rm
151 227
161 636
117 158
21 890
103 688
69 617
8 292
Rm
Rm
%
Rm
287
217
1 392
815
1 395
294
(45)
%
0,19
0,13
1,19
3,72
1,35
0,42
16 260
20 360
18 125
5 360
22 092
16 565
14
530
979
1 841
884
1 376
760
(11)
GLAA/ECL held at amortised cost
633 508
4 355
0,69
98 776
6 359
2020
Residential mortgages
Commercial mortgages
Instalment debtors
Credit cards and overdrafts
Term loans
Other client loans
Other including credit and zero balances
GLAA
Rm
140 249
161 287
108 290
21 031
115 254
64 978
7 519
Rm
350
376
1 159
834
1 136
223
(49)
%
0,25
0,23
1,07
3,97
0,99
0,34
Rm
15 988
18 367
16 511
7 581
26 597
13 365
22
Rm
801
694
1 625
1 094
1 313
988
(12)
GLAA/ECL held at amortised cost
618 608
4 029
0,65
98 431
6 503
134
Nedbank Group Annual Results 2021
GLAA, ECL and coverage, by product
2021
Residential mortgages
Commercial mortgages
Instalment debtors
Credit cards and overdrafts
Term loans
Other client loans
Other including credit and zero balances
2020
Residential mortgages
Commercial mortgages
Instalment debtors
Credit cards and overdrafts
Term loans
Other client loans
Other including credit and zero balances
GLAA
Rm
151 227
161 636
117 158
21 890
103 688
69 617
8 292
GLAA
Rm
140 249
161 287
108 290
21 031
115 254
64 978
7 519
ECL
Coverage
GLAA
ECL
Coverage
Rm
Rm
%
Rm
287
217
1 392
815
1 395
294
(45)
Rm
350
376
1 159
834
1 136
223
(49)
%
0,19
0,13
1,19
3,72
1,35
0,42
%
0,25
0,23
1,07
3,97
0,99
0,34
16 260
20 360
18 125
5 360
22 092
16 565
14
Rm
15 988
18 367
16 511
7 581
26 597
13 365
22
530
979
1 841
884
1 376
760
(11)
Rm
801
694
1 625
1 094
1 313
988
(12)
3,26
4,81
10,16
16,49
6,23
4,59
6,44
%
5,01
3,78
9,84
14,43
4,94
7,39
6,61
ECL
Coverage
GLAA
ECL
Coverage
GLAA/ECL held at amortised cost
618 608
4 029
0,65
98 431
6 503
Stage 1
Stage 2
Stage 3
TOTAL
GLAA/ECL held at amortised cost
633 508
4 355
0,69
98 776
6 359
39 335
14 936
37,97
Stage 1
Stage 2
Stage 3
GLAA
Rm
9 887
4 825
7 275
3 964
11 161
2 187
36
ECL
Rm
2 340
1 119
3 106
2 460
5 260
651
Coverage
%
23,67
23,19
42,69
62,06
47,13
29,77
GLAA
Rm
11 656
5 644
10 468
4 277
10 847
2 293
58
45 243
ECL
Rm
2 318
999
3 876
2 476
4 331
272
Coverage
%
19,89
17,70
37,03
57,89
39,93
11,86
14 272
31,55
GLAA
Rm
177 374
186 821
142 558
31 214
136 941
88 369
8 342
771 619
GLAA
Rm
167 893
185 298
135 269
32 889
152 698
80 636
7 599
762 282
ECL
Rm
3 157
2 315
6 339
4 159
8 031
1 705
(56)
Coverage
%
1,78
1,24
4,45
13,32
5,86
1,93
25 650
3,32
TOTAL
ECL
Rm
3 469
2 069
6 660
4 404
6 780
1 483
(61)
24 804
Coverage
%
2,07
1,12
4,92
13,39
4,44
1,84
3,25
135
Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
Economic scenarios
Scenario
Probability
weighting
(%)
Total ECL
allowance
Difference
to weighted
scenarios
Percentage
difference
to weighted
scenarios
(%)
2021
Economic
measures
GDP
Base case
50
26 491
(90)
(0,33) Prime
HPI
GDP
Mild stress
21
26 857
276
1,04
Prime
HPI
GDP
Positive outcome
21
26 263
(319)
(1,20) Prime
High stress
8
27 259
678
2,55
Prime
HPI
GDP
Weighted
scenarios
100
26 581
1 Forecast at 31 December 2021.
Scenario
Probability
weighting
(%)
Total ECL
allowance
Difference
to weighted
scenarios
HPI
2020
Percentages
difference
to weighted
scenarios
(%)
Economic
measures
GDP
Base case
50
25 949
(128)
(0,5) Prime
Mild stress
21
26 466
389
1,5
Prime
HPI
GDP
Positive outcome
21
25 613
(464)
(1,8) Prime
HPI
GDP
High stress
8
27 034
957
3,7
Prime
HPI
Weighted
scenarios
100
26 077
HPI
GDP
136
Economic forecast1 (%)
2022
2023
2024
1,75
8,25
4,04
(0,09)
8,50
3,54
3,08
7,50
4,90
(1,41)
8,75
3,04
1,74
8,75
3,96
0,66
9,75
3,39
2,86
7,50
4,89
(0,23)
10,00
2,82
0,97
9,25
4,15
0,61
10,75
3,50
1,92
7,75
5,00
0,30
11,00
2,85
Economic forecast (%)
2021
2022
2023
3,04
7,00
2,10
2,84
7,25
1,81
3,85
7,00
3,60
2,14
7,42
1,51
2,22
7,38
2,30
1,65
8,00
2,12
2,44
7,00
4,10
1,68
8,46
1,94
1,52
7,50
3,50
1,15
8,00
3,08
1,57
7,00
4,80
0,92
8,50
2,66
Nedbank Group Annual Results 2021
Climate-related disclosures
Thermal coal1
Limit2
Drawn exposure
Upstream oil3
Limit2
Drawn exposure
Upstream gas3
Limit2
Drawn exposure
Non-renewable-power-generation exposure
Limit2
Drawn exposure
Renewable Energy Independent Power Producer
Procurement Programme4
Limit2
Drawn exposure
Embedded-energy generation projects5
Limit2
Drawn exposure
African renewable-energy projects
Limit2
Drawn exposure
Total renewable energy
Limit2
Drawn exposure
Rm
% of GLAA
2021
2020
Change
2021
2020
2 817
1 221
5 707
3 600
(2 890)
(2 379)
13 559
9 110
15 900
10 900
(2 341)
(1 790)
468
424
4 600
1 800
(4 132)
(1 376)
10 741
6 557
11 480
10 240
(739)
(3 683)
35 347
28 741
36 200
31 500
(853)
(2 759)
513
417
614
438
365
246
657
550
148
171
(43)
(112)
36 474
29 596
37 222
32 296
(748)
(2 700)
0,3
0,1
1,6
1,1
0,1
0,0
1,3
0,8
4,1
3,4
0,1
0,0
0,1
0,1
4,3
3,5
0,7
0,4
1,8
1,3
0,5
0,2
1,3
1,2
4,2
3,6
0,0
0,0
0,1
0,1
4,3
3,7
1 Excludes derivative products and environmental guarantees.
2 Limits include all committed facilities approved to clients, in respective portfolios, aligned to the Nedbank Energy Policy.
3
Includes all limits and exposures, including all products and derivatives, aligned to the Nedbank Energy Policy.
4 Board-approved limit of R50bn, as well as a 15% (R7,5bn) buffer to be applied for a period of 6 months.
5 Board-approved limit of R2bn.
137
Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
Gross advances and ECL movement
Reconciliation of loss allowance relating to financial assets measured at amortised cost and FVOCI because of changes in
the associated ECL is recognised in impairment charges. The reconciliation excludes loans measured at FVTPL and fair-value
hedge-accounted portfolios because changes in fair values are recognised in NIR.
Repayments net of readvances, capitalised interest, fees and ECL remeasurements1
(174 538)
31 581
(62 010)
(13 375)
2 791
3 673
1 208
(3 694)
(3 902)
113
–
(178 211)
30 373
(58 316)
(9 473)
2 678
Stage 1
Stage 2
Stage 3
Total
GLAA
ECL
Amortised
cost
611 089
229 678
4 183
2 932
606 906
226 746
625 216
4 513
620 703
98 762
6 495
92 267
39 299
15 038
24 261
763 277
26 046
737 231
8 292
8 292
14
14
36
36
8 342
8 342
633 508
4 513
628 995
98 776
6 495
92 281
39 335
15 038
24 297
771 619
26 046
745 573
21 279
50 431
9 131
750
60
21 219
50 431
9 131
750
2 694
48
2 646
1 481
427
1 054
535
715 099
4 573
710 526
101 470
6 543
94 927
40 816
15 465
25 351
857 385
26 581
830 804
GLAA
ECL
GLAA
ECL
cost
GLAA
ECL
Amortised
Amortised
cost
Amortised
cost
98 409
6 701
91 708
45 185
14 584
30 601
754 683
25 468
729 215
(32 518)
(26 595)
66 795
(7 880)
551
(1 379)
(31 139)
(713)
(25 882)
4 221
(2 391)
56
62 574
(5 489)
495
(8 139)
(9 963)
(4 986)
(4 785)
21 255
732
(8 139)
3 207
(495)
(527)
6 293
115
229 678
2 932
226 746
(8 139)
(8 139)
(13 170)
(217 019)
5 501
(222 520)
(4 491)
(4 258)
14 962
–
–
–
617
4 074
284
3 790
–
–
–
–
–
25 454
50 431
9 131
750
–
–
–
–
–
–
–
–
–
–
–
24 919
50 431
9 131
750
535
396
831 735
–
–
–
–
–
Loans and advances (Rm)
Net balance at 31 December 2020
New loans and advances originated
Loans and advances written off
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Foreign exchange and other movements
Net balances
Total credit and zero balances
Balance at 31 December 2021
GLAA for assets held at FVOCI
Trading book GLAA held at FVTPL
Banking book GLAA held at FVTPL
GLAA for fair-value hedge-accounted portfolios
Total GLAA/ ECL
ECL on loans at FVOCI
Off-balance-sheet ECL
Loans and advances at 31 December 2021
138
Nedbank Group Annual Results 2021
Gross advances and ECL movement
Reconciliation of loss allowance relating to financial assets measured at amortised cost and FVOCI because of changes in
the associated ECL is recognised in impairment charges. The reconciliation excludes loans measured at FVTPL and fair-value
hedge-accounted portfolios because changes in fair values are recognised in NIR.
Repayments net of readvances, capitalised interest, fees and ECL remeasurements1
(174 538)
Loans and advances (Rm)
Net balance at 31 December 2020
New loans and advances originated
Loans and advances written off
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Foreign exchange and other movements
Net balances
Total credit and zero balances
Balance at 31 December 2021
GLAA for assets held at FVOCI
Trading book GLAA held at FVTPL
Banking book GLAA held at FVTPL
GLAA for fair-value hedge-accounted portfolios
Total GLAA/ ECL
ECL on loans at FVOCI
Off-balance-sheet ECL
Loans and advances at 31 December 2021
Stage 1
Stage 2
Stage 3
Total
GLAA
ECL
Amortised
cost
GLAA
ECL
Amortised
cost
GLAA
ECL
Amortised
cost
98 409
6 701
91 708
45 185
14 584
30 601
754 683
25 468
729 215
–
–
(32 518)
(26 595)
66 795
(7 880)
551
(1 379)
(31 139)
(713)
(25 882)
4 221
(2 391)
56
62 574
(5 489)
495
(8 139)
(9 963)
(4 986)
(4 785)
21 255
732
(8 139)
3 207
(495)
(527)
6 293
115
–
–
229 678
2 932
226 746
(8 139)
(8 139)
–
(13 170)
(217 019)
5 501
(222 520)
(4 491)
(4 258)
14 962
–
–
–
–
–
–
–
–
–
617
4 074
284
3 790
625 216
4 513
620 703
98 762
6 495
92 267
39 299
15 038
24 261
763 277
26 046
737 231
8 292
8 292
14
14
36
36
8 342
–
8 342
633 508
4 513
628 995
98 776
6 495
92 281
39 335
15 038
24 297
771 619
26 046
745 573
60
2 694
48
2 646
1 481
427
1 054
–
–
–
–
–
–
25 454
50 431
9 131
750
535
–
–
–
24 919
50 431
9 131
750
715 099
4 573
710 526
101 470
6 543
94 927
40 816
15 465
25 351
857 385
26 581
830 804
GLAA
ECL
Amortised
cost
611 089
229 678
4 183
2 932
606 906
226 746
3 673
1 208
(3 694)
(3 902)
113
–
(178 211)
30 373
(58 316)
(9 473)
2 678
31 581
(62 010)
(13 375)
2 791
21 279
50 431
9 131
750
21 219
50 431
9 131
750
535
396
831 735
139
Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
CIB, excluding Property Finance (Rm)
Net balance at 31 December 2020
New loans and advances originated
Loans and advances written off
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Foreign exchange and other movements
Net balances
Total credit and zero balances
Balance at 31 December 2021
GLAA for assets held at FVOCI
Trading book GLAA held at FVTPL
Banking book GLAA held at FVTPL
GLAA for fair-value hedge-accounted portfolios
Off-balance-sheet ECL
Stage 1
Stage 2
Stage 3
Total
GLAA
120 921
81 519
(61 962)
7 359
(32 829)
(1 023)
2 097
ECL
573
445
(113)
635
(959)
(120)
13
Amortised
cost
120 348
81 074
–
(61 849)
6 724
(31 870)
(903)
2 084
ECL
627
Amortised
cost
32 291
(517)
(337)
970
(24)
13
(25 862)
(6 954)
31 904
(585)
221
GLAA
7 643
–
(534)
(2 203)
(68)
(45)
1 632
95
ECL
1 272
–
(534)
893
(298)
(11)
144
20
230
(34)
1 488
75
Amortised
cost
GLAA
ECL
Amortised
cost
6 371
161 482
2 472
159 010
81 519
(534)
445
(534)
263
81 074
(3 096)
(90 544)
(90 807)
2 426
46
2 380
116 082
474
115 608
31 747
732
31 015
6 520
1 486
5 034
154 349
2 692
151 657
116 082
474
115 608
732
31 015
6 520
1 486
5 034
154 349
2 692
151 657
–
21 279
50 431
5 156
6
21 279
50 431
5 156
6
92
(92)
2 694
1 481
1 481
101
(90)
90
(283)
Loans and advances at 31 December 2021
192 954
382
192 572
34 441
33 810
8 001
1 396
6 605
235 396
2 409
232 987
Stage 1
Stage 2
Stage 3
Total
Property Finance (Rm)
Net balance at 31 December 2020
New loans and advances originated
Loans and advances written off
GLAA
151 242
40 004
ECL
308
116
Amortised
cost
150 934
39 888
–
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
(44 468)
(279)
(44 189)
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Foreign exchange and other movements
Balance at 31 December 2021
Banking book GLAA held at FVTPL
3 914
(5 607)
(384)
(8)
56
(51)
(3)
3 858
(5 556)
(381)
(8)
144 693
147
144 546
17 446
912
16 534
2 864
828
2 036
165 003
1 887
163 116
2 519
2 519
2 519
2 519
Loans and advances at 31 December 2021
147 212
147
147 065
17 446
912
16 534
2 864
828
2 036
167 522
1 887
165 635
GLAA
32 918
(26 379)
(7 291)
32 874
(609)
234
31 747
2 694
GLAA
15 724
269
(3 753)
5 615
(409)
(101)
631
ECL
608
279
(22)
51
(4)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6
–
25 454
50 431
5 156
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
25 454
50 431
5 156
6
283
Amortised
cost
39 888
–
–
–
–
(8)
–
–
–
–
–
–
–
–
–
–
–
–
–
Amortised
cost
GLAA
cost
GLAA
ECL
Amortised
15 116
3 321
2 680
170 287
1 557
168 730
ECL
641
(157)
371
(34)
7
(10)
(3 731)
5 564
(405)
(157)
(924)
(161)
(8)
793
40 004
(157)
116
(157)
371
(1 295)
(45 123)
(45 494)
(127)
(8)
786
–
–
–
(8)
140
Nedbank Group Annual Results 2021
Stage 1
Stage 2
Stage 3
Total
–
–
–
2 426
46
2 380
230
(34)
1 488
75
–
–
81 519
(534)
(3 096)
(90 544)
445
(534)
263
–
–
–
81 074
–
(90 807)
–
–
–
Amortised
cost
GLAA
ECL
Amortised
cost
6 371
161 482
2 472
159 010
GLAA
32 918
(26 379)
(7 291)
32 874
(609)
234
ECL
627
(517)
(337)
970
(24)
13
Amortised
cost
32 291
–
–
(25 862)
(6 954)
31 904
(585)
221
GLAA
7 643
–
(534)
(2 203)
(68)
(45)
1 632
95
ECL
1 272
–
(534)
893
(298)
(11)
144
20
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
CIB, excluding Property Finance (Rm)
Net balance at 31 December 2020
New loans and advances originated
Loans and advances written off
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Foreign exchange and other movements
Net balances
Total credit and zero balances
Balance at 31 December 2021
GLAA for assets held at FVOCI
Trading book GLAA held at FVTPL
Banking book GLAA held at FVTPL
GLAA for fair-value hedge-accounted portfolios
Off-balance-sheet ECL
Property Finance (Rm)
Net balance at 31 December 2020
New loans and advances originated
Loans and advances written off
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Foreign exchange and other movements
Balance at 31 December 2021
Banking book GLAA held at FVTPL
GLAA
120 921
81 519
(61 962)
7 359
(32 829)
(1 023)
2 097
21 279
50 431
5 156
6
GLAA
151 242
40 004
3 914
(5 607)
(384)
(8)
ECL
573
445
(113)
635
(959)
(120)
13
Amortised
cost
120 348
81 074
–
(61 849)
6 724
(31 870)
(903)
2 084
–
21 279
50 431
5 156
6
92
Amortised
cost
150 934
39 888
–
3 858
(5 556)
(381)
(8)
(92)
ECL
308
116
56
(51)
(3)
116 082
474
115 608
31 747
732
31 015
6 520
1 486
5 034
154 349
2 692
151 657
116 082
474
115 608
31 747
2 694
Loans and advances at 31 December 2021
192 954
382
192 572
34 441
–
–
–
–
–
732
31 015
6 520
1 486
5 034
154 349
2 692
151 657
2 694
1 481
–
–
–
101
1 481
–
–
–
90
25 454
50 431
5 156
6
–
–
–
–
–
(283)
25 454
50 431
5 156
6
283
(90)
33 810
8 001
1 396
6 605
235 396
2 409
232 987
(101)
631
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
(44 468)
(279)
(44 189)
Stage 1
Stage 2
Stage 3
Total
GLAA
15 724
269
(3 753)
5 615
(409)
ECL
608
279
(22)
51
(4)
Amortised
cost
GLAA
15 116
3 321
–
–
(10)
(3 731)
5 564
(405)
–
(157)
(924)
(161)
(8)
793
ECL
641
(157)
371
(34)
7
Amortised
cost
GLAA
ECL
Amortised
cost
2 680
170 287
1 557
168 730
–
–
40 004
(157)
(1 295)
(45 123)
116
(157)
371
39 888
–
(45 494)
(127)
(8)
786
–
–
–
–
(8)
–
–
–
–
–
–
–
(8)
Loans and advances at 31 December 2021
147 212
147
147 065
17 446
912
16 534
2 864
828
2 036
167 522
1 887
165 635
144 693
147
144 546
17 446
912
16 534
2 864
828
2 036
165 003
1 887
163 116
2 519
2 519
–
–
2 519
–
2 519
141
Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
Stage 1
Stage 2
Stage 3
Total
Business Banking (Rm)
Net balance at 31 December 2020
New loans and advances originated
Loans and advances written off
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
GLAA
57 659
26 450
(17 560)
7 853
(5 037)
(1 174)
ECL
310
185
(352)
258
(55)
(108)
Amortised
cost
57 349
26 265
–
(17 208)
7 595
(4 982)
(1 066)
Amortised
cost
GLAA
ECL
cost
GLAA
ECL
Amortised
13 473
5 221
1 183
4 038
–
–
(1 965)
(7 190)
5 706
(812)
(232)
(1 377)
(459)
(877)
2 020
(232)
247
(54)
(153)
142
(405)
(724)
1 878
76 868
26 450
(232)
–
–
2 008
185
(232)
(243)
–
–
–
(1 624)
(21 040)
(20 797)
Amortised
cost
74 860
26 265
Balance at 31 December 2021
68 191
238
67 953
9 212
4 296
1 133
3 163
82 046
1 718
80 328
Off-balance-sheet impairment allowance
(4)
4
19
(12)
12
(35)
35
Loans and advances at 31 December 2021
68 191
234
67 957
9 559
9 231
4 296
1 121
3 175
82 046
1 683
80 363
Stage 1
Stage 2
Stage 3
Total
Retail — Mortgage loans (Rm)
Net balance at 31 December 2020
New loans and advances originated
Loans and advances written off
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Net balances
GLAA
113 027
8 829
3 385
5 266
(3 885)
(1 740)
ECL
257
35
330
12
(187)
(206)
Amortised
cost
112 770
8 794
–
3 055
5 254
(3 698)
(1 534)
Amortised
cost
GLAA
ECL
cost
GLAA
ECL
Amortised
Amortised
cost
13 540
9 236
1 785
7 451
136 527
2 766
133 761
–
–
(42)
(3 906)
5 671
(1 348)
(295)
(1 348)
(1 352)
(2 062)
3 325
(295)
(163)
(4)
(89)
443
8 829
(295)
1 728
–
–
(1 185)
(1 348)
(1 973)
2 882
35
(295)
(100)
–
–
–
8 794
1 828
–
–
–
–
124 882
241
124 641
14 403
488
13 915
7 504
1 677
5 827
146 789
2 406
144 383
Total credit and zero balances/Off-balance-sheet impairment allowance
201
(1)
202
4
(1)
5
11
11
216
(2)
218
Loans and advances at 31 December 2021
125 083
240
124 843
14 407
487
13 920
7 515
1 677
5 838
147 005
2 404
144 601
GLAA
13 988
(2 103)
(7 394)
5 914
(846)
9 559
GLAA
14 264
(309)
(3 914)
5 947
(1 585)
ECL
515
(138)
(204)
208
(34)
347
(19)
328
ECL
724
(267)
(8)
276
(237)
Retail — Instalment debtors (Rm)
Net balance at 31 December 2020
New loans and advances originated
Loans and advances written off
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Net balances
Stage 1
Stage 2
Stage 3
Total
GLAA
ECL
Amortised
cost
GLAA
ECL
GLAA
ECL
cost
GLAA
ECL
Amortised
Amortised
cost
Amortised
cost
94 781
46 962
(31 132)
5 072
(9 317)
(4 719)
1 097
629
1 603
139
(1 282)
(840)
93 684
46 333
–
(32 735)
4 933
(8 035)
(3 879)
101 647
1 346
100 301
16 839
1 808
15 031
6 764
3 875
125 250
6 043
119 207
Total credit and zero balances
–
Loans and advances at 31 December 2021
101 647
1 346
100 301
16 839
1 808
15 031
6 764
2 889
3 875
125 250
6 043
119 207
142
13 552
1 554
11 998
9 770
3 599
6 171
118 103
(2 282)
(2 994)
10 656
(2 093)
(616)
(71)
1 458
(517)
(1 666)
(2 923)
9 198
(1 576)
–
–
–
(2 425)
(3 976)
(2 078)
(1 339)
6 812
(2 425)
602
(68)
(176)
1 357
2 889
(2 010)
(1 163)
5 455
–
–
–
6 250
629
111 853
46 333
46 962
(2 425)
(2 425)
(4 578)
(37 390)
1 589
(38 979)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Nedbank Group Annual Results 2021
Stage 1
Stage 2
Stage 3
Total
GLAA
13 988
(2 103)
(7 394)
5 914
(846)
9 559
9 559
GLAA
14 264
(309)
(3 914)
5 947
(1 585)
ECL
515
(138)
(204)
208
(34)
347
(19)
328
Amortised
cost
GLAA
ECL
Amortised
cost
GLAA
ECL
Amortised
cost
13 473
5 221
1 183
4 038
–
–
(1 965)
(7 190)
5 706
(812)
(232)
(1 377)
(459)
(877)
2 020
(232)
247
(54)
(153)
142
76 868
26 450
(232)
–
–
(1 624)
(21 040)
(405)
(724)
1 878
–
–
–
2 008
185
(232)
(243)
–
–
–
74 860
26 265
–
(20 797)
–
–
–
9 212
4 296
1 133
3 163
82 046
1 718
80 328
19
(12)
12
–
(35)
35
9 231
4 296
1 121
3 175
82 046
1 683
80 363
Stage 2
Stage 3
Total
ECL
724
(267)
(8)
276
(237)
Amortised
cost
GLAA
ECL
Amortised
cost
GLAA
ECL
Amortised
cost
13 540
9 236
1 785
7 451
136 527
2 766
133 761
–
–
(42)
(3 906)
5 671
(1 348)
(295)
(1 348)
(1 352)
(2 062)
3 325
(295)
(163)
(4)
(89)
443
–
–
(1 185)
(1 348)
(1 973)
2 882
8 829
(295)
1 728
–
–
–
35
(295)
(100)
–
–
–
8 794
–
1 828
–
–
–
Total credit and zero balances/Off-balance-sheet impairment allowance
201
(1)
202
4
(1)
5
11
11
216
(2)
218
Loans and advances at 31 December 2021
125 083
240
124 843
14 407
487
13 920
7 515
1 677
5 838
147 005
2 404
144 601
124 882
241
124 641
14 403
488
13 915
7 504
1 677
5 827
146 789
2 406
144 383
Stage 1
Stage 2
Stage 3
Total
GLAA
ECL
Amortised
cost
GLAA
ECL
Amortised
cost
GLAA
ECL
Amortised
cost
GLAA
ECL
Amortised
cost
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
Balance at 31 December 2021
68 191
238
67 953
Off-balance-sheet impairment allowance
(4)
4
Loans and advances at 31 December 2021
68 191
234
67 957
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
GLAA
57 659
26 450
(17 560)
7 853
(5 037)
(1 174)
GLAA
113 027
8 829
3 385
5 266
(3 885)
(1 740)
ECL
310
185
(352)
258
(55)
(108)
Amortised
cost
57 349
26 265
–
(17 208)
7 595
(4 982)
(1 066)
Stage 1
ECL
257
35
330
12
(187)
(206)
Amortised
cost
112 770
8 794
–
3 055
5 254
(3 698)
(1 534)
94 781
46 962
(31 132)
5 072
(9 317)
(4 719)
1 097
629
1 603
139
(1 282)
(840)
93 684
46 333
–
(32 735)
4 933
(8 035)
(3 879)
–
Business Banking (Rm)
Net balance at 31 December 2020
New loans and advances originated
Loans and advances written off
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Retail — Mortgage loans (Rm)
Net balance at 31 December 2020
New loans and advances originated
Loans and advances written off
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Net balances
Retail — Instalment debtors (Rm)
Net balance at 31 December 2020
New loans and advances originated
Loans and advances written off
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Net balances
Total credit and zero balances
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
(2 282)
(2 994)
10 656
(2 093)
(616)
(71)
1 458
(517)
–
–
(1 666)
(2 923)
9 198
(1 576)
(2 425)
(3 976)
(2 078)
(1 339)
6 812
101 647
1 346
100 301
16 839
1 808
15 031
6 764
(2 425)
602
(68)
(176)
1 357
2 889
46 962
–
–
(2 425)
(2 425)
6 250
629
111 853
46 333
–
(4 578)
(37 390)
1 589
(38 979)
(2 010)
(1 163)
5 455
–
–
–
–
–
–
–
–
–
3 875
125 250
6 043
119 207
13 552
1 554
11 998
9 770
3 599
6 171
118 103
Loans and advances at 31 December 2021
101 647
1 346
100 301
16 839
1 808
15 031
6 764
2 889
3 875
125 250
6 043
119 207
–
–
–
–
–
143
Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
Stage 1
Stage 2
Stage 3
Total
Retail — Card, term and other (Rm)
Net balance at 31 December 2020
New loans and advances originated
Loans and advances written off
GLAA
ECL
Amortised
cost
24 077
16 694
1 290
1 277
22 787
15 417
–
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
(10 409)
2 593
(13 002)
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Net balances
1 109
(3 049)
(3 572)
87
(1 098)
(2 374)
1 022
(1 951)
(1 198)
24 850
1 775
23 075
4 920
1 551
3 369
8 106
2 193
37 876
9 239
28 637
Total credit and zero balances/Off-balance-sheet impairment allowance
8 089
(43)
8 132
10
(9)
19
25
(1)
26
8 124
(53)
8 177
Loans and advances at 31 December 2021
32 939
1 732
31 207
4 930
1 542
3 388
8 131
5 912
2 219
46 000
9 186
36 814
Stage 1
Stage 2
Stage 3
Total
Wealth (Rm)
Net balance at 31 December 2020
New loans and advances originated
Loans and advances written off
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Foreign exchange and other movements
Net balances
Banking book GLAA held at FVTPL
Loans and advances at 31 December 2021
Nedbank Africa Regions (Rm)
Net balance at 31 December 2020
New loans and advances originated
Loans and advances written off
GLAA
28 511
5 558
(6 990)
129
(1 960)
(416)
621
25 453
1 456
26 909
GLAA
20 489
3 594
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
(5 399)
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Foreign exchange and other movements
Net balances
Off-balance-sheet ECL
879
(265)
(342)
162
19 118
ECL
46
69
19
1
(10)
(78)
(3)
44
Amortised
cost
28 465
5 489
–
(7 009)
128
(1 950)
(338)
624
25 409
1 456
44
26 865
2 538
39
2 499
1 282
373
909
30 729
456
30 273
Stage 1
Stage 2
Stage 3
Total
ECL
241
176
(66)
20
(52)
(173)
102
248
(18)
Amortised
cost
20 248
3 418
–
(5 333)
859
(213)
(169)
60
18 870
18
Loans and advances at 31 December 2021
19 118
230
18 888
1 136
1 959
1 219
22 325
1 082
21 243
144
ECL
56
Amortised
cost
679
Amortised
cost
GLAA
Amortised
cost
988
30 566
GLAA
ECL
GLAA
ECL
cost
GLAA
ECL
Amortised
Amortised
cost
Amortised
cost
5 156
1 661
3 495
7 056
5 138
1 918
36 289
16 694
8 089
1 277
28 200
15 417
(4 428)
(4 428)
(10 679)
4 301
(14 980)
(744)
(845)
3 493
(2 140)
245
(68)
1 199
(1 486)
–
–
(989)
(777)
2 294
(654)
(4 428)
474
(264)
(444)
5 712
–
–
–
–
–
–
–
–
–
–
–
–
30 132
5 489
(7 443)
639
Amortised
cost
23 203
3 418
(6 228)
–
–
–
–
–
–
–
–
ECL
434
69
(5)
(42)
983
176
(63)
(263)
–
–
–
–
–
(989)
(245)
(343)
1 852
(312)
(136)
(40)
404
–
–
5
–
1 041
–
–
(102)
(450)
27
200
504
–
–
–
–
–
–
–
5 558
(5)
(7 485)
–
–
–
639
24 186
3 594
(63)
(6 491)
(4 428)
1 463
(19)
(101)
3 860
5 913
ECL
332
(5)
(59)
–
(4)
107
2
373
ECL
584
(63)
(143)
(18)
7
245
127
739
1
740
2 499
1 282
909
29 273
456
28 817
1 456
1 456
Amortised
cost
GLAA
cost
GLAA
ECL
Amortised
1 914
1 625
GLAA
735
(124)
7
2 004
(95)
11
2 538
GLAA
2 072
(847)
(411)
231
(103)
306
1 248
1 248
GLAA
1 320
(5)
(371)
(136)
(44)
511
7
(63)
(245)
(468)
34
445
631
(122)
1 990
(66)
10
–
–
8
–
–
–
(793)
(409)
186
(31)
263
6
(2)
(1)
14
(29)
1
39
ECL
158
(54)
(2)
45
(72)
43
118
(6)
112
1 130
1 959
1 220
22 325
1 105
21 220
1 099
272
827
(1)
(23)
23
Nedbank Group Annual Results 2021
Stage 1
Stage 2
Stage 3
Total
GLAA
ECL
Amortised
cost
GLAA
ECL
Amortised
cost
GLAA
ECL
Amortised
cost
GLAA
ECL
Amortised
cost
2 193
37 876
9 239
28 637
–
–
(989)
(245)
(343)
1 852
5 156
1 661
3 495
7 056
5 138
1 918
36 289
16 694
8 089
1 277
(4 428)
(4 428)
28 200
15 417
–
(10 679)
4 301
(14 980)
–
–
–
–
–
–
–
–
–
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
(10 409)
2 593
(13 002)
(744)
(845)
3 493
(2 140)
245
(68)
1 199
(1 486)
–
–
(989)
(777)
2 294
(654)
(4 428)
474
(264)
(444)
5 712
24 850
1 775
23 075
4 920
1 551
3 369
8 106
(4 428)
1 463
(19)
(101)
3 860
5 913
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
Retail — Card, term and other (Rm)
Net balance at 31 December 2020
New loans and advances originated
Loans and advances written off
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Net balances
Wealth (Rm)
Net balance at 31 December 2020
New loans and advances originated
Loans and advances written off
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Net balances
Foreign exchange and other movements
Banking book GLAA held at FVTPL
Loans and advances at 31 December 2021
Nedbank Africa Regions (Rm)
Net balance at 31 December 2020
New loans and advances originated
Loans and advances written off
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Net balances
Off-balance-sheet ECL
Foreign exchange and other movements
24 077
16 694
1 290
1 277
1 109
(3 049)
(3 572)
87
(1 098)
(2 374)
22 787
15 417
–
1 022
(1 951)
(1 198)
GLAA
28 511
5 558
(6 990)
129
(1 960)
(416)
621
25 453
1 456
26 909
GLAA
20 489
3 594
879
(265)
(342)
162
19 118
ECL
46
69
19
1
(10)
(78)
(3)
44
ECL
241
176
(66)
20
(52)
(173)
102
248
(18)
Amortised
cost
28 465
5 489
–
(7 009)
128
(1 950)
(338)
624
25 409
1 456
Amortised
cost
20 248
3 418
–
(5 333)
859
(213)
(169)
60
18 870
18
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
(5 399)
Loans and advances at 31 December 2021
19 118
230
18 888
Total credit and zero balances/Off-balance-sheet impairment allowance
8 089
(43)
8 132
10
(9)
19
25
(1)
26
8 124
(53)
8 177
Loans and advances at 31 December 2021
32 939
1 732
31 207
4 930
1 542
3 388
8 131
5 912
2 219
46 000
9 186
36 814
Stage 1
Stage 2
Stage 3
Total
GLAA
735
(124)
7
2 004
(95)
11
2 538
ECL
56
(2)
(1)
14
(29)
1
39
Amortised
cost
GLAA
679
1 320
–
–
(122)
8
1 990
(66)
10
(5)
(371)
(136)
(44)
511
7
2 499
1 282
ECL
332
(5)
(59)
–
(4)
107
2
373
Amortised
cost
GLAA
988
30 566
–
–
(312)
(136)
(40)
404
5
5 558
(5)
(7 485)
–
–
–
639
ECL
434
69
(5)
(42)
–
–
–
–
Amortised
cost
30 132
5 489
–
(7 443)
–
–
–
639
909
29 273
456
28 817
–
–
1 456
–
1 456
44
26 865
2 538
39
2 499
1 282
373
909
30 729
456
30 273
Stage 1
Stage 2
Stage 3
Total
GLAA
2 072
(847)
(411)
231
(103)
306
1 248
1 248
ECL
158
(54)
(2)
45
(72)
43
118
(6)
112
Amortised
cost
GLAA
1 914
1 625
–
–
(793)
(409)
186
(31)
263
(63)
(245)
(468)
34
445
631
1 130
1 959
6
1 136
1 959
ECL
584
(63)
(143)
(18)
7
245
127
739
1
740
Amortised
cost
GLAA
ECL
Amortised
cost
1 041
–
–
(102)
(450)
27
200
504
24 186
3 594
(63)
(6 491)
–
–
–
983
176
(63)
(263)
–
–
–
23 203
3 418
–
(6 228)
–
–
–
1 099
272
827
1 220
22 325
1 105
21 220
(1)
–
(23)
23
1 219
22 325
1 082
21 243
145
Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
9 Investment securities
Rm
Equity investments
Associates – Property Partners
Associates – Investment Banking
Unlisted investments – Property Partners
Unlisted investments – Investment Banking
Listed investments
Unlisted investments
Taquanta Asset Managers portfolio
Strate Limited
Other
Total listed and unlisted investments
Listed policyholder investments at market value
Unlisted policyholder investments at directors' valuation
Total policyholder investments
Total investment securities
Equity risk in the banking book
Total equity portfolio
Accounted for at fair value
Equity-accounted, including investment in ETI
Percentage of total assets
Percentage of group minimum economic-capital requirement
2021
2020
6 287
1 799
1 020
1 228
2 240
23
3 349
550
163
2 636
7 380
1 842
1 128
1 339
3 071
136
3 150
470
143
2 537
9 659
10 666
11 638
4 201
13 129
2 630
15 839
15 759
25 498
26 425
2021
2020
13 054
13 988
9 659
3 395
1,1
4,8
10 666
3 322
1,1
4,8
Rm
Rm
Rm
%
%
• Equity risk in the banking book is primarily assumed in CIB, which actively makes investments with clearly defined strategies.
• Additional investments are undertaken as a result of operational requirements or strategic decisions, or as part of
debt restructuring.
• The equity portfolio that is held at fair value declined by R1bn year on year, largely due to the realisation of assets.
• The value of the portfolio that is equity-accounted increased by R73m to R3 395m (2020: R3 322m ). This was largely due to a
R92m increase in the ETI carrying value. The strong financial performance from ETI is accompanied by a material improvement
in the balance sheet.
• The ETI investment is accounted for under the equity method of accounting and is therefore not carried at fair value.
• The board sets the overall risk appetite and strategy of the group for equity risk, and business develops portfolio objectives and
investment strategies for its investment activities. These address the types of investment, expected business returns, desired
holding periods, diversification parameters and other elements of sound investment management oversight.
146
Nedbank Group Annual Results 2021
10 Investments in associate companies
Equity-accounted earnings
Rm
Carrying amount
Rm
Net exposure to/(from)
associates1
Rm
Name of company and nature of
business
2021
2020
2021
2020
2021
2020
Associates
Listed
ETI2
Unlisted
Equity investments: Tracker
Technology Holdings Proprietary
Limited
Other equity investments
Other strategic investments
Total
686
(178)
2 272
2 180
81
(7)
51
33
16
786
56
37
9
480
237
406
570
156
416
(76)
3 395
3 322
1 246
271
35
1 633
774
767
1
Includes on-balance-sheet and off-balance-sheet exposure.
2 ETI is a pan-African bank and its shares are listed on the stock exchanges of Nigeria, Ghana and Ivory Coast.
The percentage holding in ETI at 31 December 2021 was 21,2% (31 December 2020: 21,2%).
Accounting recognition of ETI
Rm
Opening carrying value
Share of associate gains/(losses)1,3
Share of other comprehensive (losses)/income2,3
Foreign currency translation4
Closing carrying value pre-impairment provision
Impairment provision
Closing carrying value
2021
2020
3 930
3 674
686
(742)
148
4 022
(1 750)
(178)
207
227
3 930
(1 750)
2 272
2 180
1 Applicable period: 1 October 2020 (audited) – 30 September 2021 (audited).
2 Applicable period: 1 October 2020 (audited) – 31 December 2021 (unaudited).
3 Applicable average exchange rate: 1 January 2021 – 31 December 2021.
4 Applicable period: 1 January 2021 – 31 December 2021, ie the cumulative difference at each quarter of the earnings and other comprehensive income
converted at an average USD/ZAR rate when compared with the related US dollar balances converted at the quarter-end spot rate. The USD/ZAR exchange
rate weakened from R14,70 on 31 December 2020 to R15,90 on 31 December 2021.
The market value of the group’s investment in ETI, based on its quoted share price, was R1,7bn on 31 December 2021 and R2,1bn
on 03 March 2022.
147
Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
11 Intangible assets
Rm
Computer software and capitalised development costs
Goodwill
Client relationships, contractual rights and other
Computer software and capitalised development costs –
Carrying amount
Rm
Computer software
Core product and client systems
Support systems
Digital systems
Payment systems
Amortisation
periods
2–10 years
Development costs not yet commissioned
none
Core product and client systems
Support systems
Digital systems
Payment systems
Computer software
Opening balance
Additions
Commissioned during year
Foreign exchange and other moves
Amortisation charge for the year
Impairments
Closing balance
Development costs not yet commissioned
Opening balance
Additions
Commissioned during the year
Foreign exchange and other moves
Impairments
Closing balance
148
2021
2020
8 901
4 295
25
8 981
4 747
23
13 221
13 751
2021
2020
7 763
1 928
2 244
2 790
801
1 138
390
327
296
125
7 352
1 724
2 438
2 492
698
1 629
523
343
578
185
8 901
8 981
7 352
272
1 928
15
(1 705)
(99)
6 502
475
1 949
18
(1 436)
(156)
7 763
7 352
1 629
1 495
(1 928)
(4)
(54)
1 752
1 877
(1 949)
(51)
1 138
1 629
Nedbank Group Annual Results 2021
149
NotesStatement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021 12 Amounts owed to depositors
Segmental breakdown
Rm
Current accounts
Savings accounts
Other deposits and loan accounts
Call and term deposits
Fixed deposits
Cash management deposits
Other deposits
Foreign currency liabilities
Negotiable certificates of deposit
Macro fair-value hedge accounting adjustment
Deposits received under repurchase agreements
Total amounts owed to depositors
Comprises:
– Amounts owed to clients
– Amounts owed to banks
Change
%
8
5
3
8
(5)
3
(3)
7
(18)
(94)
26
2
4
Nedbank Group
Corporate and
Investment Banking
Retail and
Business Banking
Wealth
Nedbank Africa Regions
Centre
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
106 751
46 343
98 886
44 233
6 170
8 105
698 075
675 363
400 175
389 077
267 822
255 150
363 857
60 238
115 634
158 346
22 688
82 429
83
15 426
337 197
137 404
63 429
111 832
162 905
14 361
102 170
146 240
123 311
16 404
97 678
151 684
21 146
15 880
13 597
6 741
7 025
100 405
1 415
12 267
15 426
12 267
87 005
13 404
206 433
42 237
11 287
7 865
79 768
12 300
192 121
43 562
11 748
7 719
2 256
32 066
9 471
7 652
651
382
786
47
1 874
31 083
10 957
9 311
614
424
608
31
11 224
873
19 182
12 364
2 989
1 702
2 127
20
3 755
9 052
850
18 947
12 451
2 857
1 893
1 746
493
3 952
96
87
1 425
1 232
4
93
1 328
3
(8)
89
1 148
78 674
83
96 453
1 415
971 795
953 715
437 651
423 046
374 972
354 243
43 840
43 945
35 054
33 294
80 278
99 187
941 506
905 081
409 719
(38)
30 289
48 634
27 932
378 581
44 465
375 078
353 315
43 840
43 945
(106)
928
33 972
1 082
32 240
1 054
78 897
1 381
97 000
2 187
Total amounts owed to depositors
2
971 795
953 715
437 651
423 046
374 972
354 243
43 840
43 945
35 054
33 294
80 278
99 187
Market share according to BA900
Household deposits1 (2018–2021)
(%)
Non-financial corporate deposits2 (2018–2021)
(%)
,
5
4
1
,
2
2
2
,
5
8
1
,
1
2
2
,
7
2
2
,
1
7
1
,
7
6
2
,
6
4
2
,
4
8
1
,
2
3
1
Nedbank
FirstRand
Standard Bank
Absa
Other
Nedbank
FirstRand
Standard Bank
Absa
Other
1
2
Includes households according to the BA900 return.
Includes private non-financial corporate sector deposits, unincorporated businesses, as well as non-profit organisations and charities according to the
BA900 return.
150
Nedbank Group Annual Results 2021
Segmental breakdown
Rm
Current accounts
Savings accounts
Call and term deposits
Fixed deposits
Cash management deposits
Other deposits
Foreign currency liabilities
Negotiable certificates of deposit
Macro fair-value hedge accounting adjustment
Deposits received under repurchase agreements
Comprises:
– Amounts owed to clients
– Amounts owed to banks
Change
%
8
5
3
8
(5)
3
(3)
7
(18)
(94)
26
2
4
2
Other deposits and loan accounts
698 075
675 363
400 175
389 077
Nedbank Group
Corporate and
Investment Banking
Retail and
Business Banking
Wealth
Nedbank Africa Regions
Centre
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
87 005
13 404
79 768
12 300
267 822
255 150
206 433
42 237
11 287
7 865
192 121
43 562
11 748
7 719
21 146
15 880
13 597
6 741
7 025
106 751
46 343
98 886
44 233
6 170
8 105
337 197
137 404
14 361
102 170
146 240
123 311
16 404
97 678
151 684
363 857
60 238
115 634
158 346
22 688
82 429
83
15 426
63 429
111 832
162 905
100 405
1 415
12 267
15 426
12 267
2 256
32 066
9 471
7 652
651
382
786
47
1 874
31 083
10 957
9 311
614
424
608
31
11 224
873
19 182
12 364
2 989
1 702
2 127
20
3 755
9 052
850
18 947
12 451
2 857
1 893
1 746
493
3 952
96
87
1 425
1 232
4
93
1 328
3
(8)
89
1 148
78 674
83
96 453
1 415
Total amounts owed to depositors
971 795
953 715
437 651
423 046
374 972
354 243
43 840
43 945
35 054
33 294
80 278
99 187
Total amounts owed to depositors
971 795
953 715
437 651
423 046
374 972
354 243
43 840
43 945
35 054
33 294
80 278
99 187
941 506
905 081
409 719
(38)
30 289
48 634
27 932
378 581
44 465
375 078
353 315
43 840
43 945
(106)
928
33 972
1 082
32 240
1 054
78 897
1 381
97 000
2 187
Wholesale deposits3 (2018–2021)
(%)
Foreign currency liabilities4 (2018–2021)
(%)
,
,
3
0
2
,
2
4
1
,
,
,
0
5
2
,
,
4
2
2
,
1
8
1
,
,
0
2
1
,
3
7
1
,
9
8
2
,
2
4
1
,
6
7
2
Nedbank
FirstRand
Standard Bank
Absa
Other
Nedbank
FirstRand
Standard Bank
Absa
Other
3
4
Includes insurers, pension funds, private financial corporate-sector deposits, collateralised borrowings and repurchase deposits according to the
BA900 return.
Includes foreign currency deposits and foreign currency funding according to the BA900 return.
151
Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
Liquidity risk and funding
Summary of Nedbank Group liquidity risk and funding profile
Total sources of quick liquidity
Total HQLA
Other sources of quick liquidity
Total sources of quick liquidity (as a percentage of total assets)
Long-term funding ratio (three-month average)
Senior unsecured debt, including green bonds
Green bonds
Total capital market issuance (excluding additional tier 1 capital)
Reliance on NCDs (as a percentage of total deposits)
Reliance on foreign currency deposits (as a percentage of total deposits)
Loan-to-deposit ratio
Basel III liquidity ratios
LCR1
Minimum regulatory LCR requirement2
NSFR3
Minimum regulatory NSFR requirement
2021
2020
264 224
254 400
207 105
206 943
57 119
47 457
21,6
26,6
39 193
3 829
58 159
8,5
2,3
85,6
128,1
80,0
116,1
100,0
20,7
25,4
41 649
2 628
59 770
10,5
2,2
88,4
125,7
80,0
112,8
100,0
Rm
Rm
Rm
%
%
Rm
Rm
Rm
%
%
%
%
%
%
%
1 Only banking and/or deposit-taking entities are included in the group LCR and the group ratio represents an aggregation of the relevant individual net cash outflows
(NCOF) and the individual HQLA portfolios across all banking and/or deposit-taking entities, where surplus HQLA holdings in excess of the minimum requirement of
100% have been excluded from the aggregated HQLA number in the case of all non-South African banking entities. The above figures reflect the simple average of
daily observations over the quarter ending December 2021 for Nedbank Limited and the simple average of the month-end values at 31 October 2021, 30 November
2021 and 31 December 2021 for all non-South African banking entities.
2 The PA issued Directive 1/2020 on 31 March 2020 reducing the minimum LCR requirement from 100% to 80%, with effect from 1 April 2020. The PA subsequently
issued Directive 8/2021 specifying a phased-in approach to increase the minimum LCR regulatory requirement from 80% to 90%, with effect from 1 January 2022,
and subsequently to 100%, with effect from 1 April 2022.
3 Only banking and/or deposit-taking entities are included in the group NSFR and the group data represents a consolidation of the relevant individual assets, liabilities
and off-balance-sheet items.
• Nedbank Group remains well funded, with a strong liquidity position, underpinned by a significant quantum of long-term funding, an
appropriately sized surplus liquid-asset buffer, a strong loan-to-deposit ratio that is consistently below 100% and a low reliance on
interbank and foreign currency funding.
• The group's LCR exceeded the minimum regulatory requirement, with the group maintaining appropriate operational liquidity
buffers designed to absorb seasonal, cyclical and systemic volatility observed in the LCR. On 31 March 2020 the PA issued
Directive 1/2020 temporarily reducing the minimum regulatory LCR requirement from 100% to 80%, with effect from 1 April 2020.
The reduction in the minimum regulatory LCR requirement was in direct response to financial market volatility brought on by the
Covid-19 pandemic and the resulting lockdown. This requirement currrently remains effective for 2021 in line with Circular 1/2021.
As a result of observed normalisation in the financial markets and banks demonstrating healthy liquidity positions during 2021,
on 29 October 2021 the PA issued Directive 8/2021 specifying a phased-in approach to increase the minimum regulatory LCR
requirement from 80% to 90%, with effect from 1 January 2022, and subsequently to 100%, with effect from 1 April 2022.
• The LCR, calculated using the simple average of daily observations over the quarter ending December 2021 for Nedbank Limited,
and the simple average of the month-end values at 31 October 2021, 30 November 2021 and 31 December 2021 for all non-South
African banking entities, was 128,1%.
– Nedbank's portfolio of LCR-compliant HQLA (mainly comprising government bonds and treasury bills) increased slightly to a
quarterly average of R207,1bn, up from December 2020, when the portfolio amounted to R206,9bn.
– The increase in the LCR is primarily attributable to a decrease in the quarterly arithmetic average net cash outflows driven by
increased demand for longer-term deposits.
– Nedbank will continue to manage the HQLA portfolio, taking into account balance sheet growth, while maintaining appropriately
sized surplus liquid-asset buffers based on cyclical, seasonal and systemic market conditions.
– In addition to the HQLA portfolio maintained for LCR purposes, Nedbank also identifies other sources of quick liquidity, which
can be accessed in times of stress. Nedbank Group has significant sources of quick liquidity, as is evident in the combined
portfolio of HQLA and other sources of quick liquidity, collectively amounting to R264,2bn at December 2021 and representing
21,6% of total assets.
152
Nedbank Group Annual Results 2021
Nedbank Group LCR exceeds minimum regulatory requirements
Nedbank Group LCR exceeds minimum regulatory requirements
(Rm)
125,0
125,7
128,1
116,2
109,4
,
2
8
3
1
,
0
9
1
1
,
7
2
6
1
,
7
8
4
1
,
0
8
7
1
,
4
2
4
1
,
9
6
0
2
,
6
4
6
1
,
1
7
0
2
,
7
1
6
1
2017
2018
2019
2020
2021
HQLA (Rbn)
Net cash outflows (Rbn)
LCR (%)
Total sources of quick liquidity
(Rbn)
Other sources of quick liquidity contribution
(%)
,
4
5
9
1
,
2
7
5
,
2
8
3
1
,
0
9
1
1
,
3
3
1
2
,
6
0
5
,
7
2
6
1
,
7
7
2
2
,
7
9
4
,
0
8
7
1
,
7
8
4
1
,
4
4
5
2
,
5
7
4
,
4
2
4
1
,
9
6
0
2
3,9%
20,2%
0,1%
,
2
4
6
2
,
1
7
5
,
1
7
0
2
2017
2018
2019
2020
2021
Total HQLA
Other sources of quick liquidity
R57,1bn
9,6 5,6
31,5
48,2
5,1
2021
Corporate bonds and listed equities
Unencumbered trading securities
Price-sensitive overnight loans
Other banks’ paper and
unutilised bank credit lines
Other assets
– Nedbank exceeded the minimum regulatory NSFR requirement of 100%, with effect from from 1 January 2018, with a December
2021 ratio of 116,1%. The structural liquidity position of the group has strengthened from December 2020 as a result of the
effective management of the balance sheet growth. The key focus in terms of the NSFR is to achieve ongoing compliance in the
context of balance sheet optimisation.
Nedbank Group NSFR exceeds minimum regulatory requirements
Nedbank Group NSFR exceeds minimum regulatory requirements
(Rm)
114,4
114,0
113,0
112,8
116,1
,
6
7
4
6
,
7
5
6
5
,
5
4
6
6
,
7
2
8
5
,
7
9
0
7
,
3
8
2
6
,
7
9
4
7
,
5
4
6
6
,
1
7
6
7
,
0
1
6
6
2017
2018
2019
2020
2021
Available stable funding (Rbn)
Required stable funding (Rbn)
NSFR (%)
153
Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
• A strong funding profile was maintained in 2021, with Nedbank recording a three-month, average long-term funding ratio of 26,6%
in the fourth quarter of the year. The focus on proactively managing Nedbank’s long-term funding profile contributed to a strong
balance sheet position and sound liquidity risk metrics. Nedbank has continued to run a more prudent long-term funding profile
when compared with the industry average of 22,5%.
– Nedbank successfully issued R3,4bn in senior unsecured debt, while R5,9bn matured during the year.
– Nedbank issued tier 2 capital instruments of R3,0bn and redeemed R2,0bn during 2021, in line with the group’s capital plan.
• While foreign currency funding reliance remains small, at 2,3% of total deposits, Nedbank continues to focus on growing this
funding source in support of funding base diversification, where the proceeds can be applied to meet funding requirements for
foreign advances growth.
• The group's 2021 Internal Capital Adequacy Assessment Process (ICAAP) and Internal Liquidity Adequacy Assessment
Process (ILAAP) reports were approved by the board and submitted to the PA, in accordance with annual business-as-usual
process. The group’s recovery plans, which incorporate Nedbank London, were updated and approved by the board on 4 March
2022. The parliamentary processes relating to the promulgation of the Financial Sector Laws Amendment Bill (FSLAB) have
been concluded and the Bill was endorsed by the National Council of Provinces (NCOP) in December 2021, after which it was
transmitted for assent by the President and promulgation took place on 28 January 2022. With SARB now having been established
as SA’s Resolution Authority (RA), the industry is awaiting further discussion papers and draft resolution standards to be issued in
order to establish SA's Resolution Framework.
Nedbank Group funding and liquidity profile, underpinned by strong liquidity risk metrics
92,1
27,0
,
0
0
1
0
0
,
2017
89,2
26,5
91,2
30,2
88,4
25,4
85,6
26,6
,
2
4
5
0
4
,
2018
,
6
8
7
,
1
3
2019
,
3
9
4
0
0
,
2020
,
1
8
1
)
,
6
1
(
2021
Loan-to-deposit
ratio (%)
Three-month average
long-term funding
ratio (%)
Annual growth
in deposits (Rbn)
Annual growth in capital market issuance,
excluding additional tier 1
capital (Rbn)
Exchange rates
UK pound to rand
US dollar to rand
US dollar to naira
Rand to naira
154
Average
Closing
Change
%
2021
2020
Change
%
2021
2020
6
7
8
(3)
21,11
15,86
408,99
25,88
19,99
14,87
381,21
26,64
7
8
11
21,48
15,90
424,83
25,86
20,07
14,70
381,20
25,94
Nedbank Group Annual Results 2021
Equity analysis
Analysis of changes in net asset value
Balance at the beginning of the year
Additional shareholder value
Profit attributable to equity holders of the parent
Currency translation movements
Exchange differences on translating foreign operations – foreign subsidiaries1
Exchange differences on translating foreign operations – ETI1
Share of other comprehensive income of investments accounted for using the
equity method – ETI2
Fair-value adjustments
Fair-value adjustments on equity and debt instruments
Share of other comprehensive income of investments accounted for using the
equity method2
Defined-benefit fund adjustment
Share of other comprehensive income of investments accounted for using the equity
method (included in other distributable reserves)
Property revaluations
Change
%
>100
2021
2020
100 444
11 941
11 238
499
808
148
(457)
(192)
73
(265)
389
(21)
28
98 449
4 358
3 467
146
445
227
(526)
456
119
337
(80)
395
(26)
Transactions with ordinary shareholders
52
(1 418)
(2 952)
Dividends paid
Value of employee services (net of deferred tax)
Other transactions
Transaction with non-controlling shareholders3
Additional tier 1 capital instruments
Other movements
Balance at the end of the year
(2 178)
(3 451)
637
123
(2 951)
1 497
(2)
292
207
(372)
972
(11)
109 511
100 444
<(100)
54
82
9
1 Exchange differences on translating foreign operations as shown in the statement of comprehensive income of R1 029m (December 2020: R672m).
2 Share of other comprehensive income of investments accounted for using the equity method as shown in the statement of comprehensive income of R722m
(December 2020: R189m).
3 The group repurchased all of the non-redeemable, non-cumulative, non-participating preference shares in issue on 21 December 2021.
Movements in group foreign currency translation reserve
Balance at the beginning of the year
Foreign currency translation reserve (FCTR)
ETI
Nedbank Mozambique
Other subsidiaries
Change
%
96
2021
2020
(1 995)
487
(309)
198
598
(2 244)
249
(299)
(116)
664
Balance at the end of the year
24
(1 508)
(1 995)
The movements in the group FCTR table have been revised from prior years to provide more granular information. Comparative
information has been reclassified accordingly.
155
Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
Capital management
Regulatory capital adequacy and leverage
CET1 Capital ratio
(%)
CET1 capital ratio
(%)
Board
CET1
target1
11,5
SARB PA
minimum
CET12
10,6
10,9
1,9
(0,3)
0,3
12,8
12,0%
to
11,0%
8,5%
Dec
2019
Jun
2020
Dec
2020
Profits
Interim
dividend
RWA
decrease
Dec
2021
1 During 2020 Nedbank’s internal board-approved target ranges were adjusted to reflect the lower new regulatory minimum requirements according to Directive
2/2020. In line with Directive 5/2021 which results in the reinstatement of the Pillar 2A capital requirements, the board has recalibrated the targets to 11% to 12%
(currently 10% to 12%), with effect from 1 January 2022.
2 Excluding idiosyncratic buffers and including the D-SIB capital requirement of 100 bps, in line with PA Directive 5/2021 (from 50 bps in December 2020).
Risk-weighted assets
(Rbn)
19
(4)
30
(3)
(14)
(0)
629
674
657
Dec
2019
Credit
risk
Market
risk
Other
RWA
Dec
2020
Credit
risk
Market
risk
Other
RWA
Dec
2021
Nedbank Group strengthened its capital adequacy position significantly, on the back of strong organic earnings generation in 2021 and
lower RWA.
Nedbank Group manages its capital levels based on the board-approved risk appetite, taking cognisance of rating agency and
shareholder expectations, in line with regulatory requirements. The group further seeks to ensure that its capital structure uses the
full range of capital instruments and capital management activities available to optimise the financial efficiency and loss absorption
capacity of its capital base.
Nedbank performs extensive and comprehensive stress testing to ensure that the group remains well capitalised relative to its
business activities, the board's strategic plans, risk appetite, risk profile and the external environment in which the group operates.
During H1 2021, the PA published Guidance Note 3/2021, which encouraged boards of banks to be prudent when making decisions
relating to distributions of dividends on ordinary shares and the payment of cash bonuses to executive officers and material-risk-takers
in 2021. Within the context of this guidance, Nedbank resumed paying dividends after the release of the 2021 interim results.
Furthermore, the PA published Directive 5/2021, which confirmed the recalibration of the D-SIB capital requirement to 100 bps at a
CET1 level and the reinstatement of the Pillar 2A to 50bps.
156
Nedbank Group Annual Results 2021 Nedbank Group
Including unappropriated profits
Total CAR
Total tier 1
CET1
Surplus tier 1 capital
Dividend cover
Cost of equity
Excluding unappropriated profits
Total CAR
Total tier 1
CET1
Leverage
Nedbank Limited
Including unappropriated profits
Total CAR
Total tier 1
CET1
Surplus tier 1 capital
Excluding unappropriated profits
Total CAR
Total tier 1
CET1
PA minimum1
Internal targets 2
2021
2020
%
%
%
Rm
times
%
%
%
%
times
%
%
%
Rm
%
%
%
> 13,0
> 11,25
10,0–12,0
1,75–2,25
<20
> 13,0
> 11,25
10,0–12,0
17,2
14,3
12,8
31 292
2,02
15,1
16,4
13,4
12,0
14,3
17,6
14,0
12,3
14,9
12,1
10,9
19 462
N/A
14,5
14,8
12,1
10,8
15,4
15,3
12,0
10,4
23 993
15 219
16,7
13,1
11,3
15,0
11,8
10,1
11,5
9,5
8,0
<25
11,5
9,5
8,0
1 PA minimum excludes the idiosyncratic buffer and includes the recalibrated D-SIB capital requirement in line with Directive 5 of 2021, with the Pillar 2A currently at
nil, but increasing by 50 bps, 75 bps and 100 bps at a CET1, tier 1 and total level when it is reinstated from 1 January 2022, in line with Directive 5/2021.
2 Taking into account Directive 5/2021 the internal targets have been increased effective from 1 January 2022 as follows: Total CAR > 14,5%, tier 1 > 12,0%, CET1 11%
to 12%.
157
Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
Nedbank Group overview of risk-weighted assets
Credit risk (excluding counterparty credit risk)
438 544
50 433
436 948
2021
RWA
MRC1
2020
RWA
Standardised approach (TSA)
Supervisory slotting approach
Advanced internal ratings-based approach (AIRB)
Counterparty credit risk
Standardised approach (SA-CCR)2
Credit valuation adjustment
Equity risk3
Equity positions under simple risk-weight approach
Equity investments in funds – look-through approach
Equity investments in funds – fall-back approach
Securitisation exposures in banking book
Internal ratings-based approach
External ratings-based approach, including internal assessment approach
Market risk
Standardised approach
Internal model approach (IMA)
Operational risk
Standardised approach
Advanced measurement approach (AMA)
Floor adjustment
Amounts below the thresholds for deduction (subject to 250% risk
weighting)
Other assets (100% risk weighting)
39 511
6 375
392 658
15 932
15 932
18 797
35 601
30 195
4 017
1 389
415
83
332
26 815
2 222
24 593
74 879
7 151
64 730
2 998
19 203
26 360
4 544
733
45 156
1 832
1 832
2 162
4 094
3 472
462
160
48
10
38
3 084
256
2 828
8 611
822
7 444
345
2 208
3 031
36 951
7 287
392 710
16 613
16 613
22 279
42 291
42 291
445
91
354
40 916
3 024
37 892
73 665
7 318
63 973
2 374
13 989
26 542
Total
656 546
75 503
673 688
1 Total minimum required capital (MRC) is measured at 11,5% and excludes bank-specific Pillar 2b add-on.
2 The standardised approach for measuring counterparty credit risk (SA-CCR) was applied from 1 January 2021, to calculate counterparty credit risk exposure (in line
3
with Guidance Note 7/2020), while the current exposure method (CEM) was applied in prior periods.
In line with Guidance Note 7/2020, Nedbank implemented the Capital Requirements for Equity Investments in Funds (CREIF) Framework. The RWA for the
investments in funds was previously measured using the simplified risk weight approach.
• The group's total RWA/total assets density improved marginally to 53,8% in 2021 from 54,9% in 2020 , driven by a decrease of 2,5%
in RWA relative to a decrease in total assets of 0,6%.
• The decrease in total RWA is attributable mainly to the following:
• Credit risk RWA increased due to growth in banking booking advances, particularly in RBB and NAR portfolios.
• Counterparty credit risk RWA was impacted by the implementation of the new SA-CCR methodology, with effect from 1 January
2021. The increase due to the implementation of SA-CCR, was offset by a significant change in the profile of the counterparty
credit risk portfolio.
• Market risk RWA decreased due the calibration of the bank’s historical VaR model and the subsequent roll-off in 2021 of the
Covid-19 extreme market movements observed during 2020.
• Equity risk RWA decreased as a result of the implementation of the CREIF Framework and the realisation of a number of
equity investments.
• The increase in amounts below the thresholds for deduction was driven by increases in deferred tax assets due to temporary
differences and investments in financial entities.
158
Nedbank Group Annual Results 2021
Nedbank Limited overview of risk-weighted assets
2021
RWA
MRC1
2020
RWA
Credit risk (excluding counterparty credit risk)
361 345
41 555
364 557
Standardised approach (TSA)
Supervisory slotting approach
144
5 510
17
634
134
6 375
Advanced internal ratings-based approach (AIRB)
355 691
40 904
358 048
Counterparty credit risk
Standardised approach (SA-CCR)2
Credit valuation adjustment
Equity risk3
Equity positions under simple risk-weight approach
Equity investments in funds – look-through approach
Equity investments in funds – fall-back approach
Securitisation exposures in banking book
Internal ratings-based approach
External ratings-based approach, including internal assessment approach
Market risk
Standardised approach
Internal model approach (IMA)
Operational risk
Standardised approach
Advanced measurement approach (AMA)
Floor adjustment
Amounts below the thresholds for deduction (subject to 250% risk
weighting)
Other assets (100% risk weighting)
12 856
12 856
18 283
19 742
18 832
503
407
415
83
332
26 081
1 678
24 403
62 360
60 246
2 114
7 596
19 821
1 478
1 478
2 103
2 270
2 165
58
47
48
10
38
2 999
193
2 806
7 171
6 928
243
874
2 279
14 898
14 898
21 620
25 841
25 841
445
91
354
39 322
1 624
37 698
61 818
1
59 848
1 969
1 633
20 514
Total
528 499
60 777
550 648
1 Total MRC is measured at 11,5% and excludes the bank-specific Pillar 2b add-on.
2 The SA-CCR was applied from 1 January 2021 to calculate counterparty credit risk exposure (in line with Guidance Note 7/2020), while the CEM was applied in
3
prior periods.
In line with Guidance Note 7/2020, Nedbank implemented the CREIF Framework. The RWA for the investments in funds was previously measured using the
simplified risk weight approach.
159
Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
Summary of regulatory qualifying capital and reserves1
Rm
2021
2020
2021
2020
Nedbank Group
Nedbank Limited
Including unappropriated profits
Total tier 1 capital
CET1
Share capital and premium
Reserves
Minority interest: Ordinary shareholders
Deductions
Additional tier 1 capital
93 664
84 345
19 254
80 259
623
(15 791)
9 319
Preference share capital and premium
Perpetual subordinated debt instruments
9 319
Regulatory adjustments
Tier 2 capital
Subordinated debt instruments
Excess of eligible provisions over downturn
expected losses
General allowance for credit impairment
Regulatory adjustments
19 425
16 554
2 496
385
(10)
81 779
73 455
19 067
69 925
463
74 200
64 881
20 111
57 322
66 154
57 269
20 111
49 771
(16 000)
(12 552)
(12 613)
8 324
1 063
7 822
(561)
18 574
15 604
2 626
391
(47)
9 319
9 319
18 913
16 554
2 357
2
8 885
1 063
7 822
18 014
15 604
2 408
2
Total capital
113 089
100 353
93 113
84 168
Excluding unappropriated profits
Tier 1 capital
CET1 capital
Total capital
88 130
78 811
107 555
81 380
73 056
99 954
69 267
59 948
88 179
64 769
55 884
82 783
1 For comprehensive 'composition of capital' and 'capital instruments main features' disclosure please refer to
https://www.nedbank.co.za/content/nedbank/desktop/gt/en/investor-relations/information-hub/capital-and-risk-management-reports.html.
• The group's tier 1 capital position was positively impacted by the issuance of new-style additional tier 1 instruments of R3,5bn, which
was offset by the, redemptions of R2,0bn and the buyback of old-style preference shares that still qualified as regulatory capital.
• The group's total capital was further impacted by the issuance of Basel III qualifying tier 2 capital instruments of R2,95bn, offset by
the redemptions of R2,0bn, in line with the group's capital plan.
• The focus remains on issuing fully loss-absorbent capital, with Basel III fully compliant capital making up 99,95% of the group's total
capital structure.
• The group's gearing remains below the Regulatory Leverage Ratio Framework requirement of less than 25 times, at 14,3 times.
160
Nedbank Group Annual Results 2021
Regulated banking subsidiaries
Nedbank Group banking subsidiaries are well capitalised for the environments in which they operate, with CARs well in excess of
respective host regulators’ minimum requirements.
2021
2020
Total capital
requirement
(host country)
%
12,0
10,0
8,0
8,0
12,0
13,0
RWA
Rm
5 251
13 057
5 397
2 076
1 908
10 184
Total
capital
ratio
%
15,5
16,7
17,2
29,2
26,3
17,4
RWA
Rm
3 697
14 419
5 549
2 033
1 184
8 986
Total
capital
ratio
%
17,4
13,1
14,8
28,1
21,1
16,2
Nedbank Africa Regions
Nedbank Mozambique
Nedbank Namibia Limited
Nedbank Eswatini Limited
Nedbank Lesotho Limited
Nedbank Zimbabwe Limited1
Isle of Man
Nedbank Private Wealth Limited
1 The Reserve Bank of Zimbabwe confirmed on 9 February 2022 that Nedbank Zimbabwe met the minimum capital requirement of USD 30m equivalent, following a
rights issue of USD 8m.
161
Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
Economic capital adequacy
Nedbank Group economic capital requirement
Credit risk
Market risk
Business risk
Operational risk
Insurance risk
Other assets risk
Minimum economic capital requirement
Add: Stress-tested capital buffer (10%)
Total economic capital requirement
AFR
Tier A capital
Tier B capital
Total surplus AFR
AFR: Total economic capital requirement (%)
2021
2020
Rm
Mix %
Rm
Mix %
47 902
6 020
7 930
5 426
492
3 953
71 723
7 172
78 895
117 769
91 943
25 826
38 874
149
67
8
11
8
< 1
6
100
100
78
22
45 101
5 852
6 601
4 020
505
3 301
65 380
6 538
71 918
105 111
80 669
24 442
33 193
146
69
9
10
6
< 1
5
100
100
77
23
• Nedbank Group’s minimum economic capital requirement increased by R6,3bn during the year, driven primarily by the following:
• The annual model parameter updates, which resulted in an increase of R1,3bn and R1,4bn in business risk economic capital and
operational risk economic capital, respectively.
• A R2,8bn increase in credit risk economic capital, driven primarily by a combination of advances growth in RBB and rating
migrations of clients in both RBB and CIB due to the prevailing macroeconomic environment.
• Nedbank Group’s AFR increased by R12,7bn in 2021, mainly as a result of the following:
• A R11,3bn increase in tier A capital, which was driven by growth in organic earnings over the period.
• A R1,4bn increase in tier B capital following the issuance of R3,5bn new-style additional tier 1 capital and R3,0bn of new-style
tier 2 capital instruments, which was offset by the buyback of old-style preference shares that qualified as regulatory capital, the
redemption of R2,0bn new-style additional tier 1 capital and R2,0bn new-style tier 2 capital instruments, in line with the group’s
capital plan.
162
Nedbank Group Annual Results 2021
163
NotesStatement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021 Supplementary
information
165 Earnings per share and weighted-average shares
166 Nedbank Group employee incentive schemes
168 Long-term debt instruments
168 External credit ratings
169 Additional tier 1 capital instruments
170 Shareholders’ analysis
172 Basel III balance sheet credit exposure by business cluster and asset class
174 Nedbank Limited consolidated statement of comprehensive income
175 Nedbank Limited consolidated financial highlights
176 Nedbank Limited consolidated statement of financial position
177 Definitions
180 Abbreviations and acronyms
IBC Company details
164
Nedbank Group Annual Results 2021 Earnings per share and weighted-average shares
Earnings per share
2021
Earnings for the year
Basic
Diluted
basic
Headline
Diluted
headline
11 238
11 238
11 689
11 689
Weighted-average number of ordinary shares
485 071 919 494 841 155 485 071 919 494 841 155
Earnings per share (cents)
2020
Earnings for the year
2 317
2 271
2 410
2 362
3 467
3 467
5 440
5 440
Weighted-average number of ordinary shares
483 208 526 488 738 145 483 208 526 488 738 145
Earnings per share (cents)
717
709
1 126
1 113
Basic earnings and headline earnings per share are calculated by dividing the relevant earnings amount by the weighted-average
number of shares in issue.
Fully diluted basic earnings and fully diluted headline earnings per share are calculated by dividing the relevant earnings amount by the
weighted-average number of shares in issue after taking the dilutive impact of potential ordinary shares to be issued into account.
Number of weighted-average dilutive potential ordinary shares (000)
Traditional schemes
Nedbank Group Restricted-share Scheme (2005)
Nedbank Group Matched-share Scheme
Total BEE schemes
BEE schemes – SA
Community
BEE schemes – Namibia
Total
2021
2020
Weighted-
average
dilutive
shares
Weighted-
average
dilutive
shares
Potential
shares1
17 755
15 128
2 627
1 593
1 559
1 559
33
8 210
6 729
1 481
1 559
1 559
1 559
3 840
2 846
994
1 690
1 690
1 690
19 348
9 769
5 530
1 Potential shares are the total number of shares arising from historic grants, schemes or awards available for distribution.
165
SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
Nedbank Group employee incentive schemes
for the year ended 31 December
Nedbank Group employee incentive schemes
2021
2020
Summary by scheme
Nedbank Group Restricted-share Scheme (2005)
Nedbank Group Matched-share Scheme (2005)
Instruments outstanding at the end of the year
Analysis
Performance-based – restricted shares
Non-performance-based – restricted shares
Performance-based – matched shares (CBSS1)
Non-performance-based – matched shares (VBSS2)
Instruments outstanding at the end of the year
Movements
Instruments outstanding at the beginning of the year
Granted
Accelerated
Exercised
Surrendered
Instruments outstanding at the end of the year
1 Compulsory Bonus Share Scheme.
2 Voluntary Bonus Share Scheme.
Matched shares
Instrument expiry date
1 April 2022
1 April 2023
1 April 2024
Matched shares outstanding not exercised at 31 December 2021
Shares exercised and forfeited during the year
Shares not expected to vest
Total potential shares
Weighted-average dilutive shares applicable for the year
16 193 982
11 054 244
3 296 042
3 302 997
19 490 024
14 357 241
9 291 564
6 319 602
6 902 418
4 734 642
2 118 190
2 216 960
1 177 852
1 086 037
19 490 024
14 357 241
14 357 241
11 303 275
9 349 301
7 298 988
(16 011)
(2 675)
(3 253 593)
(3 584 901)
(946 914)
(657 446)
19 490 024
14 357 241
Number of
shares
784 187
1 724 422
787 433
3 296 042
728 320
(1 397 658)
2 626 705
1 481 071
– The obligation to deliver the matched shares issued under the Voluntary and Compulsory Bonus Share Schemes is subject to time
and other performance criteria.
– This obligation exists over 31 December 2021 and therefore has a dilutive effect.
– Matched shares are not issued and are therefore not recognised as treasury shares. However, until they are issued, there remains a
potential dilutive effect.
166
Nedbank Group Annual Results 2021
Nedbank Group (2005) Restricted- and Matched-share Schemes
Restricted shares1
Details of instruments granted and not exercised at 31 December 2021 and the resulting dilutive effect:
Instrument expiry date
15 March 2022
16 March 2022
16 August 2022
17 August 2022
20 March 2023
21 March 2023
26 March 2024
27 March 2024
20 August 2024
21 August 2024
Restricted shares not exercised at 31 December 2021
Unallocated shares
Treasury shares
Shares exercised and forfeited during the year
Shares not expected to vest
Total potential shares
Weighted-average dilutive shares applicable for the year
P
P
P
P
P
Number of
shares
1 707 799
1 231 115
51 604
51 589
2 867 794
2 043 827
4 578 504
3 500 029
85 863
75 858
16 193 982
541 989
16 735 971
1 840 356
(3 448 159)
15 128 168
6 728 717
1 Restricted shares are issued at a market price for no consideration to participants, and are held by the schemes until the expiry date (subject to achievement of
performance conditions). Participants have full rights and receive dividends.
P Performance-based instruments.
167
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Long-term debt instruments
Instrument code
Subordinated debt
Callable notes (rand-denominated)1
Callable notes and long-term debenture (Namibian-dollar-denominated)
Green bonds (rand-denominated)1
Securitised liabilities – callable notes (rand-denominated)
Senior unsecured debt – senior unsecured notes (rand-denominated)
Unsecured debentures (rand-denominated)
Senior unsecured green bonds (rand-denominated)
2021
2020
17 059
15 994
14 620
13 665
426
2 013
1 856
35 364
51
3 829
317
2 012
2 084
39 021
43
2 628
Total long-term debt instruments in issue
58 159
59 770
1 Loss absorbing instruments.
Further information can be accessed on our group website
Capital and risk management reports:
https://www.nedbank.co.za/content/nedbank/desktop/gt/en/investor-relations/information-hub/capital-and-risk-management-reports.html
Debt investors programme:
https://www.nedbank.co.za/content/nedbank/desktop/gt/en/investor-relations/debt-investor/debt-investors-programme.html
External credit ratings
Standard & Poor’s
Moody’s Investors Service
Nedbank
Limited
Sovereign
rating SA
Nedbank
Limited
Sovereign
rating SA
Feb 2022
May 2021
Dec 2021
May 2021
Stable
Stable
Negative
Negative
BB-
B
BB
B
BB-
B
Ba2
Ba2
Not prime
Not prime
BB
B
Ba2
Not prime
Ba2
N/A
zaAA
zaA-1+
zaAAA
zaA-1+
Aa1/NP
P-1.za
Outlook
Foreign currency deposit ratings
Long term
Short term
Local currency deposit ratings
Long term
Short term
National scale rating
Long-term deposits
Short-term deposits
168
Nedbank Group Annual Results 2021
Additional tier 1 capital instruments
The group issued new-style (Basel III-compliant) additional tier 1 capital instruments as follows:
Instrument code
Subordinated
Callable notes (rand-denominated)
NEDT1A
NEDT1B
NGLT1A
NGLT1B
NGT103
NGT104
NGT105
NGT106
NGT107
NGT108
NGT1G – Green AT1
NGT109
NGT110
Instrument terms
2021
2020
3-month JIBAR + 7,00% per annum
3-month JIBAR + 6,25% per annum
3-month JIBAR + 5,65% per annum
3-month JIBAR + 4,64% per annum
3-month JIBAR + 4,40% per annum
3-month JIBAR + 4,50% per annum
3-month JIBAR + 4,25% per annum
3-month JIBAR + 4,95% per annum
3-month JIBAR + 4,55% per annum
3-month JIBAR + 4,67% per annum
3-month JIBAR + 4,10% per annum
3-month JIBAR + 3,91% per annum
3-month JIBAR + 3,91% per annum
1 500
500
600
750
671
1 829
1 000
500
472
600
750
671
1 829
1 000
500
472
1 537
910
700
350
Total non-controlling interest attributable to
additional tier 1 capital instruments
9 319
7 822
The additional tier 1 notes represent perpetual, subordinated instruments, with no redemption date. The instruments are redeemable
subject to regulatory approval at the sole discretion of the issuer from the applicable call date and following a regulatory or a tax event.
The payment of interest is at the discretion of the issuer and interest payments are non-cumulative. In addition, if certain conditions
are reached, the regulator may prohibit Nedbank from making interest payments. Accordingly, the instruments are classified as equity
instruments and disclosed as part of the non-controlling interest.
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SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
Shareholders’ analysis
Register date:
31 December 2021
Authorised share capital:
600 000 000 shares
Issued share capital:
508 870 678 shares
Major shareholders/managers1
Nedbank Group treasury shares
BEE trusts
Eyethu scheme – Nedbank SA
Omufima scheme – Nedbank Namibia
Nedbank Group (2005) Restricted- and Matched-share Schemes
Nedbank Namibia Limited
Public Investment Corporation (SA)
Allan Gray Investment Council (SA)
Coronation Fund Managers (SA)
Old Mutual Life Assurance Company (SA) Limited and associates (includes funds
managed on behalf of other beneficial owners)
BlackRock Incorporated (international)
Lazard Asset Management (international)
The Vanguard Group Incorporated (international)
Sanlam Investment Management Proprietary Limited (SA)
GIC Asset Management Proprietary Limited (international)
Ninety One (SA)
Major beneficial shareholders2
Government Employees Pension Fund (SA)
Allan Gray Balanced Fund (ZA)
Old Mutual Life Assurance Company (SA) Limited and associates (SA)
1 Source: JP Morgan Cazenove.
2 Source: Vaco Ownership.
Number
of
shares
2021
% holding
2020
% holding
23 269 131
6 485 648
6 336 586
149 062
16 735 971
47 512
69 667 537
54 083 505
35 632 689
26 326 444
23 143 128
16 438 722
15 729 896
15 663 050
15 100 406
14 830 894
76 316 690
38 066 319
24 662 527
4,58
1,28
1,25
0,03
3,29
0,01
13,69
10,63
7,00
5,17
4,55
3,23
3,09
3,08
2,97
2,91
15,00
7,48
4,85
3,62
1,32
1,29
0,03
2,29
0,01
10,39
8,95
8,58
21,96
4,17
2,79
2,51
2,16
1,69
0,32
11,36
5,74
21,47
Index classified shareholding
Index classified shareholding
(%)
(December, %)
Foreign shareholding
Foreign shareholding
(%)
(December, %)
,
5
1
1
,
8
9
1
,
3
1
2
,
1
1
2
,
5
6
2
,
1
8
1
,
3
9
2
,
2
6
2
,
1
4
2
,
4
1
3
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
170
Nedbank Group Annual Results 2021
Geographical distribution of shareholders1
Domestic
SA
Namibia
Unclassified
Foreign
USA
Asia
Europe
UK and Ireland
Other countries
Total shares listed
Less: Treasury shares held
Net shares reported
1 Source: JP Morgan Cazenove.
Number
of
shares
2021
% holding
2020
% holding
349 309 703
68,64
318 612 839
13 211 454
17 485 410
159 560 975
79 164 152
28 019 991
21 447 861
14 908 598
16 020 373
62,61
2,59
3,44
31,36
15,56
5,51
4,21
2,93
3,15
75,91
71,70
3,06
1,15
24,09
12,67
3,56
3,51
2,47
1,88
508 870 678
100,00
100,00
23 269 131
485 601 547
171
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Nedbank
CIB
Property
Finance
Nedbank
Retail and
Business
Banking
Nedbank
Wealth
Nedbank
Africa
Regions
Centre
Nedbank
Group
2021
Downturn
Risk
expected loss
weighting1
(dEL)2
BEEL3
Nedbank
Group
2020
Downturn
expected
loss (dEL)2
387 446
168 096
399 083
22 056
79 599
–
888 184
8 490
14 000
957 110
Basel III balance sheet credit exposure
by business cluster and asset class
Specialised lending – HVCRE4
5 072
5 073
167 156
52 623
16 874
110
60
44
Specialised lending – IPRE5
105 994
105 834
1 543
5 389
Specialised lending – project finance
45 577
1
6 613
4 417
36 825
1 928
13 660
9 493
5 920
27 767
45
149
56
1 480
10
1
145 610
16 480
147 176
32 853
30
107
79 465
90
3 075
9 632
65
135
1 525
149
174
Rm
AIRB Approach
Corporate
SME – corporate
Public sector entities
Local governments and municipalities
Sovereign
Banks
Retail mortgage
Retail revolving credit
Retail – other
SME – retail
Securitisation exposure
TSA6
Corporate
SME – corporate
Public sector entities
Local government and municipalities
Sovereign
Banks
Retail mortgage
Retail revolving credit
Retail – other
SME – retail
PiPs
Non-regulated entities
16 399
184 184
5 132
112 926
45 578
45 366
13 746
10 973
85 502
30 933
155 242
16 545
147 311
34 423
323
135
34 522
–
39 314
73 971
18,03
50,14
–
–
62 674
–
–
135
918
8 421
16 798
6 812
599
974
13
68
104
5 923
244
22
10 365
9 225
7 304
315
3 312
2 604
106
5 923
1 053
244
22
18 786
26 023
14 116
315
3 911
3 578
187
16 503
Mix
(%)
90,74
18,82
0,52
11,52
4,66
4,63
1,40
1,12
8,73
3,16
15,86
1,69
15,05
3,52
0,03
0,002
7,56
0,61
0,11
0,02
1,92
2,66
1,44
0,03
0,40
0,37
0,02
1,69
Change
(%)
(7,20)
(11,72)
(6,62)
(2,07)
(3,28)
9,33
(29,65)
(9,92)
0,37
(64,51)
7,35
(1,83)
6,43
(0,95)
(5,65)
(43,68)
(35,31)
(60,22)
(20,09)
2,54
214,02
0,60
(44,14)
(21,20)
(3,85)
25,28
(2,64)
(5,60)
38,55
45,01
103,13
28,28
52,69
50,90
33,09
40,44
12,95
39,71
25,44
62,77
50,55
42,04
128,59
102,00
67,04
83,09
96,96
68,30
20,59
38,84
34,16
63,76
63,22
1 601
52
233
148
243
20
21
21
63
786
823
3 967
512
750
167
693
132
536
324
26
–
1 933
1 587
6 946
906
BEEL3
13 626
1 030
52
469
103
418
207
16
1 947
1 619
6 837
928
7 700
1 480
62
225
119
233
70
8
17
48
746
789
3 388
515
208 648
5 496
115 317
47 124
41 493
19 539
12 181
85 184
87 161
144 608
16 854
138 411
34 752
342
10 518
1 627
614
27
18 320
8 287
14 032
565
4 963
3 721
149
16 950
22 489
8 490
14 000
(24 985)
(2 496)
21 326
7 700
13 626
(24 643)
(3 317)
Total Basel III balance sheet exposure7 8
403 845
168 096
399 390
56 591
79 705
39 314
978 845
100,00
8 490
14 000
1 036 883
7 700
13 626
dEL (AIRB Approach)
Expected loss performing book
BEEL on defaulted advances
IFRS impairment on AIRB loans and
advances
Excess of downturn expected loss over
eligible provisions9
1 Risk weighting is shown as a percentage of exposure at default (EAD) for the AIRB Approach and as a percentage of total credit extended for The Standardised
Approach (TSA).
2 dEL is in relation to performing loans and advances.
3 Best estimate of expected loss (BEEL) is in relation to defaulted loans and advances.
4 High-volatility commercial real estate.
5
Income-producing real estate.
6 A portion of the legacy Imperial Bank book in Nedbank RBB, Nedbank Private Wealth (UK) and the non-South African banking entities in Africa are covered by TSA.
7 Balance sheet credit exposure includes on-balance-sheet, repurchase and resale agreements and derivative exposure.
8 The decreases in credit exposure for the bank, corporate and public sector entity asset classes are attributable mainly to the implementation of the new standardised
approach for the measurement of counterparty credit risk (SA-CCR). Previously total credit exposure included a gross exposure measure including potential future
exposure (PFE) for OTC derivative exposure, the new measurement takes into account counterparty netting and collateralisation.
9 Excess impairments compared to downturn expected loss for IRB exposures total R2 496m at 31 December 2021. However, in line with the Bank’s Act Regulations the
total amount that may be included in tier 2 unimpaired reserve funds is limited to 0,6% of total IRB risk-weighted assets, which amounts to R2 587m at 31 December
2021 (2020: R2 626m).
172
Nedbank Group Annual Results 2021
Mix
(%)
90,74
18,82
0,52
11,52
4,66
4,63
1,40
1,12
8,73
3,16
15,86
1,69
15,05
3,52
0,03
7,56
0,61
0,11
0,02
0,002
1,92
2,66
1,44
0,03
0,40
0,37
0,02
1,69
Total Basel III balance sheet exposure7 8
403 845
168 096
399 390
56 591
79 705
39 314
978 845
100,00
Nedbank
Property
Business
Nedbank
CIB
Finance
Banking
Wealth
Regions
Centre
Nedbank
Africa
Nedbank
Group
2021
Nedbank
Retail and
387 446
168 096
399 083
22 056
79 599
–
888 184
167 156
52 623
16 874
44
Specialised lending – HVCRE4
5 072
5 073
Specialised lending – IPRE5
105 994
105 834
1 543
5 389
Specialised lending – project finance
45 577
6 613
4 417
36 825
1 928
Local governments and municipalities
1
56
1 480
10
1
145 610
16 480
147 176
32 853
13 660
9 493
5 920
27 767
45
149
107
79 465
90
Securitisation exposure
149
174
TSA6
135
34 522
–
39 314
73 971
Local government and municipalities
135
918
Rm
AIRB Approach
Corporate
SME – corporate
Public sector entities
Sovereign
Banks
Retail mortgage
Retail revolving credit
Retail – other
SME – retail
Corporate
SME – corporate
Public sector entities
Sovereign
Banks
Retail mortgage
Retail revolving credit
Retail – other
SME – retail
PiPs
184 184
5 132
112 926
45 578
45 366
13 746
10 973
85 502
30 933
155 242
16 545
147 311
34 423
323
5 923
1 053
244
22
18 786
26 023
14 116
315
3 911
3 578
187
16 503
5 923
244
22
10 365
9 225
7 304
315
3 312
2 604
110
60
30
3 075
9 632
65
135
1 525
8 421
16 798
6 812
599
974
13
Non-regulated entities
16 399
68
104
106
dEL (AIRB Approach)
Expected loss performing book
BEEL on defaulted advances
IFRS impairment on AIRB loans and
advances
Excess of downturn expected loss over
eligible provisions9
Change
(%)
Risk
weighting1
Downturn
expected loss
(dEL)2
Nedbank
Group
2020
Downturn
expected
loss (dEL)2
BEEL3
(7,20)
(11,72)
(6,62)
(2,07)
(3,28)
9,33
(29,65)
(9,92)
0,37
(64,51)
7,35
(1,83)
6,43
(0,95)
(5,65)
38,55
45,01
103,13
28,28
52,69
50,90
33,09
40,44
12,95
39,71
25,44
62,77
50,55
42,04
128,59
8 490
14 000
957 110
1 601
52
233
148
243
20
21
21
63
786
823
3 967
512
750
167
693
132
536
324
26
–
1 933
1 587
6 946
906
208 648
5 496
115 317
47 124
41 493
19 539
12 181
85 184
87 161
144 608
16 854
138 411
34 752
342
7 700
1 480
62
225
119
233
70
8
17
48
746
789
3 388
515
BEEL3
13 626
1 030
52
469
103
418
207
16
1 947
1 619
6 837
928
18,03
50,14
–
–
62 674
–
–
102,00
67,04
83,09
96,96
68,30
20,59
38,84
34,16
63,76
63,22
(43,68)
(35,31)
(60,22)
(20,09)
2,54
214,02
0,60
(44,14)
(21,20)
(3,85)
25,28
(2,64)
(5,60)
10 518
1 627
614
27
18 320
8 287
14 032
565
4 963
3 721
149
16 950
8 490
14 000
1 036 883
7 700
13 626
22 489
8 490
14 000
(24 985)
(2 496)
21 326
7 700
13 626
(24 643)
(3 317)
173
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Nedbank Limited consolidated statement
of comprehensive income
for the year ended 31 December
Rm
Interest and similar income
Interest expense and similar charges
Net interest income
Non-interest revenue and income
Net commission and fee income
Commission and fee revenue
Commission and fee expense
Net insurance income
Fair-value adjustments
Net trading income
Equity revaluation gains/(losses)
Investment income
Net sundry income
Share of gains of associate companies
Total income
Impairments charge on financial instruments
Net income
Total operating expenses
Indirect taxation
Impairments charge on non-financial instruments and other losses
Profit before direct taxation
Total direct taxation
Direct taxation
Taxation on impairments charge on non-financial instruments and other losses
Change
%
(9)
(21)
9
(1)
2021
62 452
32 348
30 104
18 801
2020
(restated)1
68 654
41 146
27 508
19 026
14 838
14 393
18 012
(3 174)
15
(827)
3 654
516
98
507
79
48 984
6 169
42 815
29 314
935
205
12 361
3 113
3 175
(62)
16 846
(2 453)
1
336
4 550
(945)
183
508
115
46 649
12 425
34 224
27 705
1 017
417
5 085
1 164
1 283
(119)
(31)
5
(50)
25
6
(8)
(51)
>100
>100
Profit for the year
>100
9 248
3 921
174
Nedbank Group Annual Results 2021
Rm
Other comprehensive income (OCI) net of taxation
Items that may subsequently be reclassified to profit or loss
Exchange differences on translating foreign operations
Debt investments at FVOCI – net change in fair value
Items that may not subsequently be reclassified to profit or loss
Property revaluations
Remeasurements on long-term employee benefit assets
Equity instruments at FVOCI – net change in fair value
Change
%
>100
2020
(restated)1
256
199
96
(40)
1
2021
560
222
9
9
322
(2)
Total comprehensive income for the year
>100
9 808
4 177
Profit attributable to:
– Ordinary and preference shareholders
– Non-controlling interest – ordinary shareholders
Profit for the year
Total comprehensive income attributable to:
– Ordinary and preference shareholders
– Non-controlling interest – ordinary shareholders
Total comprehensive income for the year
Headline earnings reconciliation
Profit attributable to ordinary shareholders
Less: Non-headline earnings items
Impairments charge on non-financial instruments and other losses
Taxation on impairments charge on non-financial instruments and other losses
>100
>100
>100
>100
>100
52
9 246
2
9 248
9 806
2
9 808
9 121
(143)
(205)
62
3 919
2
3 921
4 175
2
4 177
3 977
(298)
(417)
119
Headline earnings attributable to ordinary and preference shareholders
>100
9 264
4 275
1 During the year, the group reviewed its statement of comprehensive income presentation. As a result of the review, certain line descriptions have been updated,
subtotals have been removed and the 'Non-interest revenue and income' line item has been disaggregated. These changes represent reclassifications to the
statement of comprehensive income presentation. It is the group's view that these changes provide more relevant disclosures on its financial performance.
To provide comparability, the prior-year balances have been restated accordingly. The reclassifications had no impact on the group’s statement of financial position,
statement of changes in equity and statement of cash flows.
Nedbank Limited consolidated financial highlights
for the year ended
Rm
ROE (%)
ROA (%)
NII to average interest-earning banking assets (%)
CLR – banking advances (%)
Cost-to-income ratio
2021
2020
12,2
0,86
3,77
0,81
59,8
6,0
0,39
3,35
1,61
59,4
175
SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021
Nedbank Limited consolidated statement
of financial position
at 31 December
Rm
Assets
Cash and cash equivalents1
Other short-term securities
Derivative financial instruments
Government securities
Other dated securities
Loans and advances to clients
Trading loans and advances
Loans and advances to banks
Other assets
Current taxation assets
Investment securities
Non-current assets held for sale
Investments in associate companies
Deferred taxation assets
Property and equipment
Long-term employee benefit assets
Intangible assets
Total assets
Total equity and liabilities
Ordinary share capital
Ordinary share premium
Reserves
Total equity attributable to equity holders of the parent
Preference share capital and premium
Holders of participating preference shares
Holders of additional tier 1 capital instruments
Non-controlling interest attributable to ordinary shareholders
Total equity
Derivative financial instruments
Amounts owed to depositors
Provisions and other liabilities
Current taxation liabilities
Deferred taxation liabilities
Long-term employee benefit liabilities
Long-term debt instruments
Total liabilities
Total equity and liabilities
Change
%
2021
2020
(restated)1
4
23
(51)
14
(31)
4
(29)
(22)
(7)
(44)
(17)
84
(9)
66
(5)
14
(1)
34 056
33 425
38 840
32 597
27 082
79 933
147 297
129 710
1 144
1 670
760 028
729 807
50 431
26 813
9 664
42
6 867
127
944
573
9 140
6 487
10 142
71 251
34 510
10 407
75
8 269
69
1 037
346
9 661
5 709
10 225
(1)
1 136 020
1 152 358
28
20 073
60 694
80 795
59
9 319
13
90 186
35 623
937 736
13 942
260
120
2 268
55 885
28
20 073
53 512
73 613
3 561
(58)
7 822
11
84 949
64 649
929 761
12 359
516
155
2 366
57 603
1 045 834
1 067 409
1 136 020
1 152 358
13
10
(100)
>100
19
18
6
(45)
1
13
(50)
(23)
(4)
(3)
(2)
(1)
1 During the year, the group reviewed the presentation of the mandatory reserve deposits with central banks, which was previously disclosed separately on the
statement of financial position. As a result of this review, the mandatory reserve deposits with central banks have now been aggregated within the cash and cash
equivalents balance, as the nature of the mandatory reserve deposits represents cash and cash equivalents. The amount of mandatory reserve deposits with
central banks that was reclassified to cash and cash equivalents is R24 482m for 2020, and consequently the prior-year balances have been restated to provide
comparative information. The group is of the view that the updated disclosure provides more relevant information for users to better understand the group’s cash
and cash equivalents.
176
Nedbank Group Annual Results 2021
Definitions
12-month expected credit loss (ECL) This expected credit loss represents an ECL that results from default events on financial
instruments occurring within the 12 months after the reporting date (or a shorter period if the expected life of the financial
instrument is less than 12 months), weighted by the probability of the defaults occurring.
Assets under administration (AUA) (Rm) Market value of assets held in custody on behalf of clients.
Assets under management (AUM) (Rm) Market value of assets managed on behalf of clients.
Basic earnings per share (cents) Attributable income divided by the weighted-average number of ordinary shares.
Central counterparty (CCP) A clearing house that interposes itself between counterparties for contracts traded in one or more
financial markets, becoming the buyer to every seller and the seller to every buyer, thereby ensuring the future performance of
open contracts.
Common-equity tier 1 (CET1) capital adequacy ratio (%) CET1 regulatory capital, including unappropriated profit, as a percentage of
total risk-weighted assets.
Cost-to-income ratio (%) Total operating expenses as a percentage of total income, being net interest income, non-interest revenue
and income, and share of profits or losses from associates and joint arrangements.
Coverage (%) On-balance-sheet ECLs divided by on-balance-sheet gross banking loans and advances. Coverage excludes ECLs on
off-balance-sheet amounts, ECL and gross banking loans and advances on the fair value through other comprehensive income
(FVOCI) portfolio, and loans and advances measured at fair value through profit or loss (FVTPL).
Credit loss ratio (CLR) – (% or bps) Income statement impairment charge on banking loans and advances as a percentage of daily
average gross banking loans and advances. Includes the ECL recognised in respect of the off-balance-sheet portion of loans
and advances.
Default In line with the Basel III definition, default occurs in respect of a client in the following instances:
• When the bank considers that the client is unlikely to pay their credit obligations to the bank in full without the bank having
recourse to actions such as realising security (if held).
• When the client is past due for more than 90 days on any material credit obligation to the bank. Overdrafts will be considered
as being past due if the client has breached an advised limit or has been advised of a limit smaller than the current
outstanding amount.
• In terms of Nedbank‘s Group Credit Policy, when the client is placed under business rescue in accordance with the Companies
Act, 71 of 2008, and when the client requests a restructure of their facilities as a result of financial distress, except where debtor
substitution is allowable in terms of the regulations.
At a minimum a default is deemed to have occurred where a material obligation is past due for more than 90 days or a client
has exceeded an advised limit for more than 90 days. A stage 3 impairment is raised against such a credit exposure due to a
significant perceived decline in the credit quality.
For retail portfolios this is product-centred, and a default would therefore be for a specific advance. For all other portfolios,
except specialised lending, it is client- or borrower-centred, meaning that should any transaction with a legal-entity borrower
default, all transactions with that legal-entity borrower would be treated as having defaulted.
To avoid short-term volatility, Nedbank employs a six-month curing definition where subsequent defaults will be an extension of
the initial default.
Diluted headline earnings per share (DHEPS) (cents) Headline earnings divided by the weighted-average number of ordinary shares,
adjusted for potential dilutive ordinary shares.
Directive 1/2020 A directive from the Prudential Authority (PA) that provides temporary measures to aid compliance with the liquidity
coverage ratio during the Covid-19 pandemic stress period. The PA deemed it appropriate to amend the minimum liquidity
coverage ratio (LCR) requirement temporarily to 80%, effective from 1 April 2020.
Directive 2/2020 A directive from the PA that provides temporary capital relief to alleviate risks posed by the Covid-19 pandemic.
The PA has implemented measures to reduce the specified minimum requirement of capital and reserve funds to be maintained
by banks, to provide temporary capital relief to enable banks to counter economic risks to the financial system as a whole, and to
individual banks. These measures are intended to provide relief to banks in response to the Covid-19 pandemic, thereby enabling
banks to continue providing credit to the real economy during this period of financial stress.
Directive 3/2020 A directive from the PA that implements measures to ensure that various types of relief to qualifying borrowers that
were up to date at 29 February 2020, such as payment holidays, do not result in unintended consequences such as inappropriate
higher capital requirements. The PA has provided temporary relief for qualifying loans from portions of Directive 7/2015 dealing
with distressed restructures. Importantly, this relief covers retail, small and medium enterprises (SMEs) and corporate loans,
including all specialist asset classes such as commercial property.
Directive 7/2015 A directive from the PA that provides clarity on how banks should identify restructured credit exposures and how
these exposures should be treated for purposes of the definition of default.
177
SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021 Dividend cover (times) Headline earnings per share divided by dividend per share.
Economic profit (EP) (Rm) Headline earnings less the cost of equity (total equity attributable to equity holders of the parent, less
goodwill, multiplied by the group's cost-of-equity percentage).
Effective taxation rate (%) Direct taxation as a percentage of profit before direct taxation, excluding impairments charged on
non-financial instruments and sundry gains or losses.
Earnings per share (EPS) (cents) Earnings attributable to ordinary shareholders, divided by the weighted-average number of ordinary
shares in issue.
Forward-looking economic expectations The impact of forecast macroeconomic conditions in determining a significant increase in
credit risk (SICR) and ECL.
Guidance Note 4/2020 A guidance note from the South African Reserve Bank that recommends banks no longer make dividend
distributions on ordinary shares to conserve capital, in light of the negative economic impact of the Covid-19 pandemic and the
temporary regulatory-capital relief provided.
Guidance Note 3/2021 A guidance note from the South African Reserve Bank that recommends banks be prudent and consider the
adequacy of their current and forecast capital and profitability levels, internal capital targets and risk appetite, as well as current
and potential future risks posed by the ongoing pandemic, when making distributions of dividends on ordinary shares and the
payment of cash bonuses to executive officers and material risk-takers. Guidance Note 3/2021 replaces Guidance Note 4/2020.
Headline earnings (Rm) The profit attributable to equity holders of the parent, excluding specific separately identifiable
remeasurements, net of related tax and non-controlling interests.
Headline earnings per share (HEPS) (cents) Headline earnings divided by the weighted-average number of ordinary shares in issue.
Lifetime ECL The ECL of default events between the reporting date and the end of the lifetime of the financial asset, weighted by the
probability of the defaults occurring.
Life insurance embedded value (Rm) The embedded value (EV) of the covered business is the discounted value of the projected future
after-tax shareholder earnings arising from covered business in force at the valuation date, plus the adjusted net worth.
Life insurance value of new business (Rm) A measure of the value added to a company as a result of writing new business. Value of
new business (VNB) is calculated as the discounted value, at the valuation date, of projected after-tax shareholder profit from
covered new business that commenced during the reporting period, net of frictional costs and the cost of non-hedgeable risk
associated with writing new business, using economic assumptions at the start of the reporting period.
Net asset value (NAV) (Rm) Total equity attributable to equity holders of the parent.
Net asset value (NAV) per share (cents) NAV divided by the number of shares in issue, excluding shares held by group entities at the
end of the period.
Net interest income (NII) to average interest-earning banking assets (AIEBA) (%) NII as a percentage of daily average total assets,
excluding trading assets. Also called net interest margin (NIM).
Net monetary gain/(loss) (Rm) Represents the gain or loss in purchasing power of the net monetary position (monetary assets less
monetary liabilities) of an entity operating in a hyperinflation environment.
Non-interest revenue and income (NIR) to total income (%) Non-interest revenue and income as a percentage of total income,
excluding the impairments charge on loans and advances and share of gains/losses of associate companies.
Number of shares listed (number) Number of ordinary shares in issue, as listed on the JSE.
Off-balance-sheet exposure Undrawn loan commitments, guarantees and similar arrangements that expose the group to credit risk.
Ordinary dividends declared per share (cents) Total dividends to ordinary shareholders declared in respect of the current period.
Performing stage 3 loans and advances (Rm) Loans that are up to date (not in default) but are classified as defaulted due to regulatory
requirements, ie Directive 7/2015 or the curing definition.
178
Nedbank Group Annual Results 2021 Preprovisioning operating profit (PPOP) (Rm) Headline earnings plus direct taxation plus impairment charge on loans and advances.
Price/earnings ratio (historical) Closing share price divided by the headline earnings multiplied by total days in the year divided by total
days in the period.
Price-to-book ratio (historical) Closing share price divided by the net asset value per share.
Profit attributable to equity holders of the parent (Rm) Profit for the period less non-controlling interests pertaining to ordinary
shareholders, preference shareholders and additional tier 1 capital instrument noteholders.
Profit for the period (Rm) Income statement profit attributable to ordinary shareholders of the parent before non-controlling interests.
Return on assets (ROA) (%) Net contribution (headline earnings) divided by the average daily assets multiplied by the total days in the
year divided by the total days in the period.
Return on equity (ROE) (%) Headline earnings as a percentage of daily average ordinary shareholders’ equity.
Return on cost of ETI investment (%) Headline earnings from the group’s ETI investment pre-funding costs divided by the group’s
original cost of investment (R6 265m).
Return on tangible equity (%) Headline earnings as a percentage of daily average ordinary shareholders' equity, less intangible assets.
Return on risk-weighted assets (RWA) (%) Headline earnings as a percentage of monthly average risk-weighted assets.
Risk-weighted assets (RWA) (Rm) On-balance-sheet and off-balance-sheet exposures after applying prescribed risk weightings
according to the relative risk of the counterparty.
SME loan guarantee scheme An initiative by National Treasury and the South African Reserve Bank, in partnership with participating
commercial banks, aimed at giving financial support to SMEs affected by the lockdown.
Stage 1 Financial assets for which the credit risk (risk of default) at the reporting date has not significantly increased since
initial recognition.
Stage 2 Financial assets for which the credit risk (risk of default) at the reporting date has significantly increased since
initial recognition.
Stage 3 Any advance or group of loans and advances that has triggered the Basel III-definition of default criteria, in line with South
African banking regulations. At a minimum, a default is deemed to have occurred where a material obligation is past due for more
than 90 days or a client has exceeded an advised limit for more than 90 days. A stage 3 impairment is raised against such a credit
exposure due to a significant perceived decline in the credit quality.
Stage 3 ECL (Rm) ECL for banking loans and advances that have been classified as stage 3 advances.
Tangible net asset value (Rm) Equity attributable to equity holders of the parent, excluding intangible assets.
Tangible net asset value per share (cents) Tangible NAV divided by the number of shares in issue, excluding shares held by group
entities at the end of the period.
Tier 1 capital adequacy ratio (CAR) (%) Tier 1 regulatory capital, including unappropriated profit, as a percentage of total
risk-weighted assets.
Total capital adequacy ratio (CAR) (%) Total regulatory capital, including unappropriated profit, as a percentage of total
risk-weighted assets.
Total income growth rate less expenses growth rate (JAWS ratio) (%) Measure of the extent to which the total income growth rate
exceeds the total operating expenses growth rate.
Value in use (VIU) (Rm) The present value of the future cash flows expected to be derived from an asset or cash-generating unit.
Weighted-average number of shares (number) The weighted-average number of ordinary shares in issue during the period listed on
the JSE.
Year-to-date annualised or ytd annualised The growth rate for the six-month period to 30 June annualised by 366 days, divided by
182 days.
179
SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2021 resultscommentaryResultspresentationMessage from ourChief ExecutiveNedbank Group Annual Results 2021 Abbreviations and acronyms
ACI African, Coloured and Indian
AFR available financial resources
AGM annual general meeting
AI artificial intelligence
AIEBA average interest-earning banking assets
AIRB advanced internal ratings-based
AMA advanced measurement approach
AML anti-money-laundering
API application programming interface
AUA assets under administration
AUM assets under management
BBBEE broad-based black economic empowerment
BEE black economic empowerment
bn billion
bps basis point(s)
CAGR compound annual growth rate
CAR capital adequacy ratio
CCP central counterparty
CET1 common-equity tier 1
CIB Corporate and Investment Banking
CIPC Companies and Intellectual Property Commission
CLR credit loss ratio
COE cost of equity
CPI consumer price index
CPF commercial-property finance
CSI corporate social investment
CVP client value proposition
DHEPS diluted headline earnings per share
D-SIB domestic systemically important bank
ECL expected credit loss
EE employment equity
ELB entry-level banking
EP economic profit
EPS earnings per share
ESG environmental, social and governance
EV embedded value
ETI Ecobank Transnational Incorporated
FCTR foreign currency translation reserve
FSC Financial Sector Code
FSCA Financial Sector Conduct Authority
FVOCI fair value through other comprehensive income
FVTPL fair value through profit or loss
GDP gross domestic product
GFC great financial crisis
GLAA gross loans and advances
GLC great lockdown crisis
GOI gross operating income
HE headline earnings
HEPS headline earnings per share
HQLA high-quality liquid asset(s)
IAS International Accounting Standard(s)
ICAAP Internal Capital Adequacy Assessment Process
IFRS International Financial Reporting Standard(s)
ILAAP Internal Liquidity Adequacy Assessment Process
IMF International Monetary Fund
JIBAR Johannesburg Interbank Agreed Rate
JSE JSE Limited
LAA loans and advances
LAP liquid-asset portfolio
LCR liquidity coverage ratio
LIBOR London Interbank Offered Rate
LTI long-term incentive
m million
180
M&A mergers and acquisitions
MFC Motor Finance Corporation (vehicle finance lending division
of Nedbank)
MRC minimum required capital
MZN Mozambican metical
N/A not applicable
Nafex The Nigerian Autonomous Foreign Exchange Rate
Fixing Methodology
NAR Nedbank Africa Regions
NCA National Credit Act, 34 of 2005
NCD negotiable certificate of deposit
NCOF net cash outflows
NGN Nigerian naira
NII net interest income
NIR non-interest revenue and income
NIM net interest margin
NPL non-performing loan(s)
NPS Net Promoter Score
NSFR net stable funding ratio
nWoW New Ways of Work
OCI other comprehensive income
OM Old Mutual
PA Prudential Authority
PAT profit after tax
PAYU Pay-as-you-use account
Plc Public limited company
PPOP preprovisioning operating profit
PRMA postretirement medical aid
R rand
RBB Retail and Business Banking
Rbn South African rand expressed in billions
REITs real estate investment trusts
Rm South African rand expressed in millions
ROA return on assets
ROE return on equity
RORWA return on risk-weighted assets
RPA robotic process automation
RRB Retail Relationship Banking
RTGS real-time gross settlement
RWA risk-weighted assets
SA South Africa
SAcsi The South African Customer Satisfaction Index
SADC Southern African Development Community
SAICA South African Institute of Chartered Accountants
SARB South African Reserve Bank
SDGs Sustainable Development Goals
SICR Significant increase in credit risk
SME small to medium enterprise
STI short-term incentive
TSA The standardised approach
TTC through the cycle
UK United Kingdom
USA United States of America
USD United States dollar (currency code)
USSD unstructured supplementary service data
VAF vehicle and asset finance
VaR value at risk
VIU value in use
VNB value of new business
YES Youth Employment Service
yoy year on year
ytd year to date
ZAR South African rand (currency code)
Nedbank Group Annual Results 2021 Company details
Nedbank Group Limited
Incorporated in the Republic of SA
Registration number 1966/010630/06
Registered office
Nedbank Group Limited, Nedbank 135 Rivonia Campus,
135 Rivonia Road, Sandown, Sandton, 2196
PO Box 1144, Johannesburg, 2000
Transfer secretaries in SA
JSE Investor Services Proprietary Limited,
19 Ameshoff Street, Braamfontein, Johannesburg, 2001, SA.
PO Box 4844, Marshalltown, 2000, SA.
Namibia
Transfer Secretaries Proprietary Limited
Robert Mugabe Avenue No 4, Windhoek, Namibia
PO Box 2401, Windhoek, Namibia
Instrument codes
Nedbank Group ordinary shares
NED
JSE share code:
NSX share code:
NBK
ISIN:
ZAE000004875
JSE alpha code:
ADR code:
ADR CUSIP:
NEDI
NDBKY
63975K104
For more information contact
Investor Relations
Email: NedGroupIR@nedbank.co.za
Mike Davis
Chief Financial Officer
Email: MichaelDav@nedbank.co.za
Alfred Visagie
Executive Head, Investor Relations
Tel: +27 (0)10 234 5329
Email: alfredv@nedbank.co.za
This announcement is available on the group’s website at nedbankgroup.co.za, together with the following additional information:
• Financial results presentation.
• Link to a webcast of the presentation to investors.
For further information please contact Nedbank Group Investor Relations at NedGroupIR@nedbank.co.za.
Company Secretary: J Katzin
Sponsors in SA:
Merrill Lynch SA Proprietary Limited
Nedbank Corporate and Investment Banking, a division of Nedbank Limited
Sponsor in Namibia
Old Mutual Investment Services (Namibia) Proprietary Limited
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 information that may be defined as ‘forward-looking 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 be correct and undue reliance should not be placed on such statements.
The risks and uncertainties inherent in the forward-looking statements contained in this document include, but are not limited to: changes to IFRS
and the interpretations, applications and practices subject thereto as they apply to past, present and future periods; domestic and international
business and market conditions such as exchange rate and interest rate movements; changes in the domestic and international regulatory and
legislative environments; changes to domestic and international operational, social, economic and political risks; and the effects of both current and
future litigation.
Nedbank Group does not undertake to update any forward-looking statements contained in this document and does not assume responsibility for
any loss or damage arising as a result of the reliance by any party thereon, including, but not limited to, loss of earnings, profits, or consequential loss
or damage.
Nedbank Group Annual Results 2021
nedbankgroup.co.za