Nedbank Group Ltd.
Annual Report 2022

Plain-text annual report

Using our financial expertise to do good Annual results for the year ended 31 December 2022 see money differently Message from our Chief Executive 135 Statement of financial position analysis 136 154 155 156 158 160 163 164 Loans and advances Investment securities Investments in associate companies Intangible assets Amounts owed to depositors Liquidity risk and funding Equity analysis Capital management 170 Supplementary information 171 172 174 174 175 176 178 180 181 182 183 186 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 1 2 Results presentation 52 2022 results commentary 68 Financial results 69 70 72 74 78 Financial highlights Consolidated statement of comprehensive income Consolidated statement of financial position Consolidated statement of changes in equity Return-on-equity drivers 81 Segmental analysis 82 84 88 92 106 110 116 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 118 Income statement analysis 119 122 128 130 132 132 133 Net margin analysis Impairments Non-interest revenue and income Expenses Headline earnings reconciliation Taxation charge Preference shares Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Strong revenue growth enabled headline earnings growth of 20% to R14bn, an increase in ROE to 14% and a CET1 ratio of 14% In 2022 the South African (SA) economy faced multiple global and domestic challenges, including the war in Ukraine, lockdowns in China, slower global growth, lower commodity prices, destructive floods in KwaZulu-Natal, persistent power outages that accelerated into the last quarter of 2022, as well as 325-bps-higher interest rates and inflation that peaked at 7,8% in July. Despite this difficult and uncertain environment, the economy was resilient and is forecast to have expanded by 2,3% in 2022. Against this challenging macroeconomic backdrop, Nedbank Group’s 2022 financial performance was strong, as headline earnings (HE) grew by 20% to R14bn and return on equity (ROE) increased to 14,0% (2021: 12,5%), but still remains below both the 2019 level of 15% and our estimated cost of equity (COE) of 14,9%. The HE increase was supported by double-digit revenue growth, a slightly higher credit loss ratio (CLR) at 89 bps (2021: 83 bps) and a well-managed expense base. All our business clusters reported pleasing earnings growth and higher ROEs. A strong balance sheet and excess levels of capital enabled the group to declare a record-high final dividend of 866 cents per share as well as announce a R5bn capital optimisation initiative to be executed through both a share repurchase and an odd-lot offer. We have made excellent progress on our strategic value drivers of growth, productivity, and risk and capital management. Growth trends across net interest income (+12%), non-interest revenue (+10%) and gross banking advances (+7%) increased when compared with those reported during our 2022 interim results. Levels of productivity improved, evident in our cost-to-income ratio declining to 56,5% (2021: 57,8%) and the 15% increase in pre-provisioning operating profit. Capital and liquidity ratios increased to multi-year highs, with a common equity tier 1 (CET1) ratio of 14,0% (Dec 2021: 12,8%), an average fourth-quarter liquidity coverage ratio (LCR) of 161% (Dec 2021: 128%) and a net stable funding ratio (NSFR) of 119% (Dec 2021: 116%). The group’s total ECL coverage increased to 3,37% (2021: 3,32%) and remained well above pre-Covid-19 levels of 2,26%. Our strategy to build a modern, modular and agile technology platform (Managed Evolution or ME) has reached 91% completion of the IT build, enabling continued double-digit growth in digital metrics, client satisfaction scores at the top-end of the South African banking peer group, higher levels of cross-sell, main-banked client gains, market share gains in household deposits as well as improved efficiencies evidenced by cumulative operating model (TOM 2.0) cost savings of R1,5bn. We also continued to create positive impacts through R123bn of exposures that support sustainable-development finance, aligned to the United Nations Sustainable Development Goals (UN SDGs), and retained our top-tier rankings on environmental, social and governance (ESG) scores, including MSCI upgrading Nedbank’s ESG rating to AAA (now within the top 5% of global banks) and maintaining our Level 1 BBBEE status under the amended FSC codes for the fifth year in a row. Looking forward, we currently expect the economic environment in SA to remain challenging, particularly given the high levels of electricity shortages that we expect to continue. The Nedbank Group Economic Unit forecasts SA’s gross domestic product (GDP) to increase by only 0,7% in 2023; interest rates to increase by a further 50 bps from December 2022 levels, taking the repo rate to 7,5% and the prime lending rate to 11,0% by the end of the year; and for inflation to reduce from 2022 levels and average 5,5% in 2023. The network infrastructure provided largely by state-owned monopolies and needed to enable higher levels of GDP growth and sustainable job creation in SA, has been deteriorating over many years, including, in particular, the crises being experienced in the areas of electricity supply and distribution, transport and logistics, and water infrastructure. In addition, municipal service delivery is poor and levels of crime and corruption are unacceptably high. Progress on structural reforms to address these matters has been far too slow and the will of the political and public sector to make meaningful changes is uneven and actual delivery is poor. This cannot continue and more urgent and decisive leadership and action are required. Nedbank remains committed to working with all like-minded South Africans to accelerate delivery of structural reforms in these key areas. We have made good progress towards our published 2023 targets* by exceeding our 2019 diluted-headline- earnings-per-share (DHEPS) level of 2 565 cents in 2022 (a year earlier than planned) and aim to achieve an ROE greater than the 2019 ROE level of 15%, a cost-to-income ratio of below 54% and maintain our #1 ranking on NPS among South African banks by the end of 2023. Given our strong 2022 performance, we have set ourselves revised medium-term (2025) and long-term targets*. In 2025 we aim to achieve an ROE of 17% (around COE plus 2%) and a cost-to-income ratio of 52%. Over the longer term we aim to improve these to above 18% (around COE plus 3%) and below 50% respectively. Achieving these targets should be value-creating for shareholders. Thank you to our dedicated employees for their commitment and hard work in difficult conditions – I appreciate the value they strive to deliver to our clients at every touchpoint. We thank our more than seven million retail and wholesale clients for choosing to bank with Nedbank every single day, and we appreciate the support of the investment community, regulators and our other stakeholders. As Nedbank, we will continue to play our role in society as we fulfil our purpose of using our financial expertise to do good. Mike Brown Chief Executive Headline earnings CLR ROE CET1 RATIO 20% 89 bps 14,0% 14,0% 14 049 11 689 5 440 12 506 89 83 161 79 14,0 12,5 6,2 15,0 14,0 12,8 10,9 11,5 * These targets are not profit forecasts and have not been reviewed or reported on by the group’s joint auditors. Nedbank Group Annual Results 2022 1 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveMessage from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Overview Environment Strategic Operational Financial A challenging operating environment ▪ 2,3% SA GDP growth ▪ Severe electricity shortages ▪ 325 bps interest rate increases ▪ 6,9% average inflation ▪ Muted markets ‒ JSE down 1% ‒ SA 10-year bond yield: +1,0% yoy to 10,8% Strategic delivery on track Good operational performance Strong earnings growth & fortress balance sheet ▪ Strong digital growth ▪ Leading client experiences ▪ Market share gains in key areas ▪ Productivity improvements ▪ ESG leadership ▪ PPOP: +15% ▪ HE: ▪ JAWS: +2,5% ▪ Cost-to-income: 56,5% ▪ Revenue: ▪ ROE ▪ CET1: ▪ LCR: ▪ NSFR: ▪ Coverage: ▪ Full-year DPS: 2023 targets: DHEPS | NPS | Good momentum towards 15% ROE & 54% cost-to-income targets Medium- & long-term targets: Ongoing focus to achieve higher ROEs & lower cost-to-income ratios aa aa +20% +11% 14,0% 14,0% 161% 119% 3,37% +38% 3 2022 Annual Financial Results For the year ended 31 December 2022 7 March 2023 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 1 NEDBANK GROUP LIMITED – 2022 Annual Financial Results Notes: Notes: Operating environment – global economic pressures & domestic challenges impacted the local market, with the SA economy demonstrating high levels of resilience Global environment SA economy relatively resilient Agenda Operating environment Strategic progress Financial overview Cluster overview Outlook & guidance Overview Mike Brown Chief Executive ▪ Ongoing impact of Russian war in Ukraine ▪ Supply chain/Covid-19 constraints from China lockdowns, but easing ▪ Inflationary pressures particularly energy & food ▪ Monetary policy tightening ahead of expectations ▪ Increased risk of recession in key developed markets NEDBANK GROUP LIMITED – 2022 Annual Financial Results 2 NEDBANK GROUP LIMITED – 2022 Annual Financial Results Notes: Notes: Annual SA GDP growth (%) Annual average SA inflation (%, ye) 7,5 5,0 2,5 0,0 -2,5 -5,0 -7,5 2,3 7,5 5,0 2,5 0,0 7,2 06 08 10 12 14 16 18 20 22 06 08 10 12 14 16 18 20 22 SA prime interest rate (bps) Electricity load-shedding1 (# of days) 15,0 12,5 10,0 7,5 5,0 10,5 250 200 150 100 50 0 06 08 10 12 14 16 18 20 22 208 75 16 15 1 Source: The Outlier, EskomSePush 18 20 17 19 21 22 4 2 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 3 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryMessage from ourChief ExecutiveResultspresentationOperating environment SA’s potential SA’s challenges failing state-owned monopolies, in particular: SA’s economic potential remains compelling ▪ Energy/Eskom ▪ Logistics/Transnet ▪ Water but requiring … and high levels of crime & corruption are collectively binding constraints to higher levels of investment, economic growth & job creation urgent & decisive action by government, labour, civil society & business Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Operating environment – SA placed on FATF’s greylist (‘jurisdiction under increased monitoring’) The Financial Action Task Force (FATF) Mutual Evaluation Report identified significant weaknesses in parts of SA’s AML, CFT & CPF systems. In February 2023, SA was placed on the FATF greylist, with the following key findings: Booklet slide Need for further & sustained progress in 1. Sustained increase in outbound MLA requests that help facilitate ML/TF investigations & confiscations of assets ‘FATF … recognised the significant & positive progress made by the country in addressing the 67 recommended actions or deficiencies…’ – National Treasury eight areas of strategic deficiency 2. by no later than the end of January 2025 ‘No items on the action plan that relate directly to the preventive measures in respect of the financial sector. This reflects the significant progress in the application of a risk- based approach to the supervision of banks & insurers. Treasury therefore expects that the increased monitoring will have limited impact on financial stability & costs of doing business with South Africa.’ – SA National Treasury Nedbank has adequate AML/CFT & sanctions measures in place & is well prepared to deal with any potential higher levels of due diligence Improve risk-based supervision of DNFBPs & demonstrating AML/CFT supervisors apply effective, proportionate, & effective sanctions for non-compliance 3. Competent authorities have timely access to accurate & up-to-date beneficial ownership information 4. Sustained increase in law enforcement agencies’ requests for financial intelligence from the FIC for its ML/TF investigations 5. Increased investigations & prosecutions of serious & complex money laundering & the full range of TF activities 6. Enhanced identification, seizure & confiscation of proceeds & instrumentalities of a wider range of predicate crimes 7. TF risk assessment to inform the implementation of a comprehensive national counter financing of terrorism strategy 8. Effective implementation of targeted financial sanctions & effective mechanisms to identify individuals & entities that meet the criteria for domestic designation NEDBANK GROUP LIMITED – 2022 Annual Financial Results 5 NEDBANK GROUP LIMITED – 2022 Annual Financial Results ML: Money laundering. | TF: Terrorist financing | MLA: Mutual Legal Assistance | DNFBP: Designated non-financial businesses & professions. 7 Notes: Notes: Operating environment – but the reality of failures of many state-owned monopolies & poor service delivery in key network industries has led to very disappointing outcomes, particularly in energy, logistics, water & crime SA’s potential SA’s challenges Operating environment – Eskom, electricity security & the impact of load-shedding SA’s potential SA’s challenges Electricity production Rail passengers transported SA on FATF greylist Unemployment rate 16% 97% (since 2012) (since 2012) Need for further & sustained progress in 8 areas of strategic deficiency 33% (up from 25% in 2012) Stats SA PRASA annual reports 11/12 & 21/22 FATF Stats SA Goods moved by rail Serious crimes 30% (since 2012) 54% 16% murder robbery (since 2012) 37% of total municipal water supply lost due to poor infrastructure WEF 2023 top 5 SA risks ▪ State collapse ▪ Debt crisis ▪ Collapse of services & public infrastructure ▪ Cost-of-living crisis ▪ Employment & livelihood crisis As a result, on average, South Africans are becoming poorer SA GDP per capita (‘000, US$) 8,2 (13%) 7,1 12 13 14 15 16 17 18 19 20 21 Eskom & electricity security Impact of load-shedding ▪ SA’s path to net zero is a path to energy security ▪ 2023 GDP forecast reduced to 0,7%, with downside risk ‒ Requires 7 GW renewable energy per annum to 2030 (assuming at least stage 4 load-shedding) ▪ NECOM plan by 20301 – optimistic in scale & timeline ▪ Nedbank diesel costs up >100% to R59m ‒ Improve existing Eskom generation: 10,4 GW ▪ Operations – no material impact on operational activity, ‒ Procurement of new capacity (wind, solar & battery storage): >18 GW ATMs, branches, POS devices, etc ▪ Credit growth – significant opportunity in renewable- o RMIPPP & REIPPP round 5: 2,6 GW energy finance for private power generation (financial close in H1 2023) ‒ Private investment in generation: >12,7 GW ‒ Business & household rooftop solar: >0,8 GW ▪ Grid allocation & capacity constraints – to be addressed immediately (limiting ability to support new REIPPP & private generation connections) ▪ Credit quality – stress becoming more evident in SME segment, while corporates, in general, are better positioned to manage through it ▪ Risks – risks increase with higher stages & as load- shedding prolongs Stats SA SAPS official crime statistics Business Live WEF The World Bank More detail provided in the booklet slide. 1Numbers may be double-counted. More detail provided in the booklet slide. NEDBANK GROUP LIMITED – 2022 Annual Financial Results 6 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 8 Notes: Notes: 4 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 5 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryMessage from ourChief ExecutiveResultspresentationMessage from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Booklet slide Booklet slide Operating environment – SA government/NECOM plan to end load-shedding Minister of Electricity to be appointed to oversee electricity crisis response As outlined in the JET IP, over R200bn worth of Eskom’s project pipeline to be completed between 2023 & 2030 R254bn debt relief package announced to strengthen Eskom’s balance sheet 2 890 km of new high-voltage lines & 60 transformers planned by 2027 (cost of R72bn) More than 100 private generation projects expected to deliver over 9 GW ▪ South Africa’s Just Energy Transition requirements ‒ More renewable energy required every year to 2030 than the total constructed over the past 10 years o 7 GW per annum (difficult but achievable) o 6,3 GW built in REIPPP rounds 1 to 4 ▪ NECOM plan3 (optimistic in scale & timeline) 10,4 GW ‒ Improve existing Eskom generation: ‒ Private investment in generation: >12,7 GW ‒ Procurement of new capacity (wind, solar & battery storage): >18 GW o REIPPP o Emergency (RMIPP) o Bid window 5 o Bid window 6 o Battery storage o Future potential 0,8 GW (H1 20231) 1,8 GW (H1 20231) 1,0 GW (of 4,2 GW) 0,5 GW (H1 20232) >9,5 GW ‒ Business & household rooftop solar: >850 MW ▪ Address transmission grid capacity constraints ─ Significant investment in power lines & substations to match the change in the geographical location of generation facilities, particularly renewable energy Operating environment – negative impact of higher levels of load-shedding on our clients, but some opportunities do arise SA economy Our own operations Our clients ▪ Higher costs – diesel generation Credit growth Credit quality costs up >100% to R59m, generator usage up >200% ▪ Load- shedding stage Nominal GVA lost (Rm per day) 1-2 R0m-R1m 3 4 5 6 R204m R408m R725m R899m Source: SARB. Impact of load-shedding on weekdays, with weekends & holidays lower. GVA = gross value added, similar to GDP. 2023 GDP growth forecast of 0,7%, constrained by lack of reliable electricity supply1 ▪ No material impact on ATMs, branches & POS devices – leveraging our wide coverage of sustainable backup power solutions. While our physical points of presence remain largely unaffected, call centre & digital channels have seen an increase in utilisation ▪ Flexibility in operations – No material impact on operational processing (working around load-shedding schedules) – Employees WFH go to the office as a contingency, when needed 1 Assuming at least level 4 load-shedding on average, with downside risk. NEDBANK GROUP LIMITED – 2022 Annual Financial Results Load-shedding increasingly a catalyst for renewable private power generation (to support SA’s Just Energy Transition & for individuals/companies to reduce their exposure to Eskom) – a strong runway for bank advances growth ▪ No immediate signs of delayed capex spend by corporates, but negative sentiment & negative impact of a weaker economy in 2023 & beyond ▪ Decreasing attractiveness of going into business (SMEs) ▪ Impact on Nedbank not yet material, but a growing concern ▪ SME & business clients: Agriculture, manufacturing, restaurants, food services, retail (supply chain) & tourism industries more exposed – will incur some losses & higher operational costs (eg generators) ▪ Corporate clients: Strong balance sheets after deleveraging post Covid-19 ▪ Banks well provided with high levels of coverage 11 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 1 Financial close. | 2 Opening submissions. | 3Numbers may be double-counted. 9 Notes: Notes: Operating environment – SA government/NECOM plan to end load-shedding Operating environment – SA’s potential remains compelling, but … SA’s potential SA’s challenges Booklet slide Abundant natural resources SA a top 10 global producer of platinum, palladium, chrome ore, manganese ore, vanadium, iron ore, diamonds & gold + 2nd largest global citrus & 6th largest grape exporter Strong, profitable & well-regulated banking sector Capital & liquidity metrics remain exceptionally healthy, while SARB is highly respected for its independence, competence & transparency Resilient corporate sector Highly regarded & credible management teams, strong balance sheets & low debt burdens Attractive tourist destination Contributed 9% to GDP at its peak in 2006. Tourist arrivals continue to improve post Covid-19, with a strong acceleration seen in Dec 22 Sophisticated & liquid financial market A well-regulated, deep & liquid market, with the rand one of the top 20 most traded currencies in the world Gateway to Africa Economic connections to the rest of the continent & SA’s 2nd largest export destination NEDBANK GROUP LIMITED – 2022 Annual Financial Results 10 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 12 Notes: Notes: 6 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 7 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryMessage from ourChief ExecutiveResultspresentationOperating environment – households generally resilient, but early signs of stress emerging as a result of higher interest rates & inflation Booklet slide Nedbank Group strategy Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Household debt ratios (% of PDI) Household debt service costs (% of PDI) 90 80 70 60 50 62,8 15 10 5 0 7,5 Households have delevered since the GFC 08 10 12 14 16 18 20 22 08 10 12 14 16 18 20 22 Rising pressure on consumers, but not likely to be as severe as during the GFC Household savings rate (% of PDI) 2,0 Unemployment rate (%) 0,5 40 30 20 10 0 32,7 Households have accumulated savings, providing some buffer against rising interest rates Inflation impact more pronounced on lower-income segments Prime interest rate at 10,75% in January 2023, 75 bps above pre-Covid-19 levels 08 10 12 14 16 18 20 22 08 10 12 14 16 18 20 22 NEDBANK GROUP LIMITED – 2022 Annual Financial Results PDI = Personal disposable income. 1,0 0,0 -1,0 -2,0 -3,0 Notes: Our purpose To use our financial expertise to do good for individuals, families, businesses & society 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 Enabled by our Managed Evolution technology strategy 13 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 15 Notes: Operating environment – our high-frequency card & POS data show a continued SA recovery in 2022 Booklet slide Total monthly industry POS turnover1 (Rbn) Growth – revenue growth trends improving Nedbank revenue1 & gross advances growth (%) Strategic value drivers Growth Productivity Risk & capital management All underlying industries now above 2019 levels Amex volumes above 2019 levels since April 2022 Corporate spend2 up 65% E-commerce spend up >100% Foreign cardholder spend3 up >200% 15% 10% 5% 0% -5% -10% Jan 19 May Sep Jan 20 May Sep Jan 21 May Sep Jan 22 May Sep Dec 19 Dec 20 Dec 21 Dec 22 Structural benefit from higher interest rates – R1,6bn (pre-tax) for every 1% increase, partially offset by lower growth/higher impairments/active deposit management (average prime rate: 21: 7,0%, 22: 8,8%, 232: 11,0%) Strong client-driven growth ▪ New primary client wins in CIB: 25 ▪ Retail main-banked clients: +6% to 3,2m ▪ NAR client gains: +7% to 360k ▪ App volumes +34% yoy & +253% since 2019 ▪ Insurance income +18% yoy Negative impact from weak financial markets ▪ AUM down 7% to R393bn (H1 22: -9% ytd) 1 Based on Nedbank POS & card-related digital payment data (client turnover).| 2 Total FY 2022 versus 2021. | 3 Monthly volumes in December 2022 vs December 2021. 1 2021 NIR restated to take into account net monetary loss reclassification. 2019 & 2020 impact is immaterial therefore NIR not restated. | 2 Nedbank Group Economic Unit forecast. NEDBANK GROUP LIMITED – 2022 Annual Financial Results 14 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 16 NII NIR Gross banking advances ▪ Trading income down 7% (H1 22: -10% yoy) Notes: Notes: 8 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 9 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryMessage from ourChief ExecutiveResultspresentationMessage from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Productivity – optimisation benefits becoming more evident but inflation pressures rising Strategic value drivers Growth Productivity Risk & capital management l s e e y o p m e t n e n a m r e P e m o c n i - o t - t s o c k n a b d e N ) # ( 1 ) % ( o i t a r 3% Structural cost optimisation benefits 3 1 2 9 2 19 1 7 2 8 2 20 1 6 8 6 2 21 4 2 9 5 2 22 5 , 6 5 Dec 19 1 , 8 5 Dec 20 , 8 7 5 Dec 21 5 , 6 5 Dec 22 4 5 < 2 5 < 0 5 < 2023 target 2025 target LT target ▪ Managed Evolution IT build 91% complete, enabling TOM 2.0 savings of R1,5bn to date (R2,5bn by 2023 & higher run rate thereafter) ▪ Significantly increased levels of digital usage ▪ Headcount down 3% yoy & down 11% since 2019 ▪ Intangible software assets peaked at R9bn in 2021 & IT cash flow spend peaked in 2017 at R2,3bn ▪ Flexible work practices & real-estate optimisation enabling ongoing cost savings PPOP growth +15% to R26bn Board & Group Exco changes – experienced leadership & seamless succession Board chairperson Chief Risk Officer Chief Information Officer Daniel Mminele Dave Crewe-Brown Ray Naicker Effective 1 May 2023, chairperson from 2 June 2023 Pic Effective 1 April 2023 Pic Effective 1 July 2023 PIc Mpho Makwana to 2 June 2023 Trevor Adams to 31 March 2023 Fred Swanepoel to 30 June 2023 Daniel has significant banking & financial services experience, including as Chairperson of Alexander Forbes Group, CE of Absa, two 5-year terms as Deputy Governor of SARB, as well as various other global & local banking roles. In 2022 he served as Head of the Presidential Climate Finance Task Team. Dave is a CA(SA) & has completed an AMP at Duke University. He is currently the Chief Finance & Operating Officer for RBB. He has significant industrywide experience in finance, operations, credit, capital management and regulatory reporting, having worked in financial services for over 28 years. Ray holds various degrees including BSc Chem Eng, BEng (Hons) Tech Mgnt & MEng Eng Mgnt & completed, among others, the Global Executive Development Programme at GIBS & AMP at Harvard. He is currently the group’s Chief Digital Officer & has >20 years’ banking experience. 12021 NIR restated to take into account net monetary loss reclassification, impacting the cost-to-income ratio. 2019 & 2020 impact is immaterial therefore NIR not restated. NEDBANK GROUP LIMITED – 2022 Annual Financial Results 17 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 19 Notes: Notes: Risk & capital management – fortress balance sheet & record-high coverage, capital, liquidity metrics and dividend declaration Strategic value drivers Growth Productivity Risk & capital management Capital CET1 ratio (%) Liquidity LCR (%) % 5 , 1 1 % 9 , 0 1 % 8 , 2 1 % 0 , 4 1 Dividends Dividends declared (cents/share) 5 1 4 1 o N s d n e d v d i i 1 9 1 1 9 4 6 1 Dec 19 Dec 20 Dec 21 Dec 22 2019 2020 2021 2022 % 5 2 1 % 6 2 1 % 8 2 1 % 1 6 1 Credit CLR (%) 9 7 1 6 1 3 8 9 8 Q4 19 Q4 20 Q4 21 Q4 22 2019 2020 2021 2022 NSFR (%) % 3 1 1 % 3 1 1 % 6 1 1 % 9 1 1 % 6 2 , 2 Total ECL coverage (%) % 5 2 , 3 % 2 3 , 3 % 7 3 , 3 Dec 19 Dec 20 Dec 21 Dec 22 Dec 19 Dec 20 Dec 21 Dec 22 ‘Strategic delivery on track, underpinned by our world-class technology platform’ Strategic overview Mfundo Nkuhlu Chief Operating Officer NEDBANK GROUP LIMITED – 2022 Annual Financial Results 18 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 20 Notes: Notes: 10 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 11 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryMessage from ourChief ExecutiveResultspresentation Nedbank Group strategy Our purpose To use our financial expertise to do good for individuals, families, businesses & society 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 Enabled by our Managed Evolution technology strategy Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Managed Evolution technology programme – IT cash flow spend peaked in 2017 & intangible software assets peaked in 2021 at R9bn Strategic value unlocks Booklet slide Core systems (#) Rationalise, standardise & simplify IT software development spend (Rbn) Annual cash flow normalising System downtime & IT changes (h, #) Industry-leading stability despite significant increase in IT changes 2,3 Within target range 1,6 1,3 16k 0 5 2 1 7 1 2 5 1 2 4 1 8 2 1 9 1 1 7 1 1 0 9 8 7 9 6 5 7 – 0 6 8k 10 14 15 16 17 18 19 20 21 22 MT 14 15 16 17 18 19 20 21 22 23 24 25 08 10 12 14 16 18 20 22 Illustrative only Compliance-related System downtime Changes into production 42% of the incidents resulting in downtime in 2019 were attributable to external factors beyond the control of Nedbank. 23 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 21 NEDBANK GROUP LIMITED – 2022 Annual Financial Results Notes: Notes: Managed Evolution technology programme: building a world-class technology platform – 91% complete & delivering benefits as per plan Strategic value unlocks Benefits from our world-class technology platform & enhanced digital innovation Strategic value unlocks Managed Evolution programme Invested R10,2bn to 31 Dec 2022, 91% of planned investment Key IT build components to completion Investment vs benefit realisation to date (%) Core banking modernisation Client systems Enterprise strategic payments Enterprise data Foundations ERPERP = Dec 2019 Bubble size indicates total estimated spend 2022: 58% of the full 2025 run-rate benefits achieved Core banking modernisation (79% complete, R0,4bn remaining) Generic deposit, loan & transaction products, product lifecycle management Onboarding & servicing (92% complete, R0,3bn remaining) Foreign currency account, home loans & vehicle asset finance Complete payments modernisation (86% complete, R0,1bn remaining) 0% 25% 50% 75% 100% Completion 13 15 17 19 21 23 25 Spend Benefits Benefits for our clients Benefits for Nedbank Client onboarding Eclipse1 99% NBH2 >75% (1Individual & juristic FICA-compliant onboarding via Eclipse. % of juristics using NBH2) Digital services Retail >170 Juristic >280 (Client self-service) Speed of innovation IT changes into production per annum 63% (vs 2014) Systems uptime 99,3% (IT systems downtime 75% vs 2007, 52% vs 2019) Digital product sales Operational efficiencies Great client experiences NPS #1 bank (2019: #3) % of new sales 53% (2019: 12%) Floor space 24% Headcount 11% (since 2019) Target operating model benefits R3,5bn (cumulative 1.0 & 2.0 to date) Imagine/branch picture Revenue growth VAS revenue 129% (vs 2019) Retail cross-sell 1,94 (2019: 1,71) 24 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 22 NEDBANK GROUP LIMITED – 2022 Annual Financial Results Notes: Notes: 12 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 13 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryMessage from ourChief ExecutiveResultspresentationOur digital journeys are enabled by client onboarding and servicing via Eclipse & Nedbank Business Hub End-to-end digital client onboarding & digitising our products Strategic value unlocks 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 Ongoing juristic client onboarding enhancements Omnichannel1 Omnichannel2 Project Imagine enhancements 7 MVP 6 8 Forex Home loans VAF ▪ Products Nedgroup Investments MVP Wealth: Banking MVP Wealth: Insurance MVP Retail Relationship Banking Ongoing enhancements 2023 & beyond ▪ Top 10 products on Eclipse – finalise secured lending (home loans & vehicle asset finance), stockbroking & student loans Juristic products – finalise domestic & global payments, agency banking, complex lending, credit digitisation, corporate card issuing (onboarding) & Nedfleet MVP Everyday Banking Ongoing enhancements ▪ Complete the core banking CX enhancements Payments (domestic & global) modernisation MVP MVP Transactional Investments Overdraft, RCF, VAF, Cash Online/Vault Credit digitisation Servicing Corporate card issuing Services Individual Juristic 130+ MVP 171 Remaining services on legacy applications digitised Wealth Card acquiring 289 ▪ NAR harmonisation – moving our NAR subsidiaries onto the modernised SA technology stack to enable them with the latest innovations & digital servicing Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information External recognition received in 2022 – business excellence & digital innovation Booklet slide 2022 Asian Banker Excellence in Retail Financial Services Awards Best Retail Bank in Africa and South Africa (winner) 2022 Asian Banker Excellence in Retail Financial Services Awards Best SME Bank in South Africa (winner) 9th Africa Bank 4.0 Awards – Bill World Outstanding Contribution in Commercial Payments Products award for the SADC region (winner) 2022 Wealth Briefing MENA Awards for Excellence Best Boutique Private Bank (winner) 2022 Intellidex/ Investors Monthly Archetype Award for Internationally Wealthy Family (winner) 2022 City of London Wealth Management Awards Best Private Bank in the UK (winner) 2022 Private Asset Managers Awards Total Wealth Planning – High Net Worth (winner) 2022 Wealth Briefing MENA Awards for Excellence Best Private Bank – Overall Client Service (winner) 2022 International Activeops Awards Excellence in Running Insurance Operations (winner) 2022 Global Finance Investment Bank Awards Best Investment Bank: SA (winner) 2022 Global Finance Investment Bank Awards Best M&A Bank: Africa (winner) The Banker Deals of the Year 2022 Deal of the Year – Africa Loans (Tanzania) (winner) The Banker Investment Banking Awards 2022 Investment Bank of the year for Africa (winner) 2022 Euromoney Awards for Excellence Africa’s Best Bank (winner) 2022 Euromoney Awards for Excellence Africa’s Best Bank For SMEs (winner) Finance Derivative Best Banking Technology Implementation South Africa (winner) 2022 Global Banking & Finance Review Excellence in Innovation Banking App – South Africa (Nedbank Avo) (winner) 2023 Global Finance Magazine Best Bank for Client-Facing Technology (winner) 2022 Finnovex Southern Africa Awards 2022 Euromoney Awards for Excellence Excellence in Mobile Banking (winner) Africa’s Best Digital Bank (winner) 2022 Finnovex Southern Africa Awards Excellence in Mobile Banking – Nedbank Money (Africa) App (winner) 2022 Digital Banker Middle East and Africa Innovation Awards Outstanding Digital Transformation (winner) 2022 The Asian Banker Financial Technology Innovation Awards Best API and Open Banking Implementation (winner) 2022 Professional Wealth Management Awards Best Private Bank for Digital Customer Service in Africa (winner) Business-impact- & expertise-related Technology- & innovation-related NEDBANK GROUP LIMITED – 2022 Annual Financial Results 1 Branch, web, app, ATM, self-service kiosk, call centre. | 2 Branch, web, app, self-service devices. 25 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 27 Notes: Notes: Digital uptake & usage continues to accelerate Strategic value unlocks Operating model changes & efficient execution are enabling lower expense growth Strategic value unlocks Digitally active main-banked clients (%) Digital transaction volumes (# m) App transaction volumes (# m) +76% +253% Cumulative target operating model benefits (Rbn) Permanent employees (#) SA outlets/branches (#) Teller activity (# m)2 (11%) (7%) (63%) % 9 4 19 % 7 5 20 % 4 6 21 % 8 6 22 8 5 19 8 6 20 7 8 21 3 0 1 22 2 2 19 7 3 20 7 5 21 7 7 22 Digital sales (% of new sales) Digital transaction values (Rbn) App transaction values (Rbn) % 2 1 19 % 8 2 20 % 2 3 21 % 3 5 22 +40% +233% 9 9 3 19 6 0 4 20 2 8 4 21 8 5 5 22 Change since 2019 1 9 19 9 3 1 20 9 3 2 21 3 0 3 22 1,0 1,5 2,5 0,2 0,7 1,1 1,8 2,0 2,0 2,0 17 18 19 20 21 22 23 target TOM 1.0 TOM 2.0 3 1 2 9 2 1 7 2 8 2 1 6 8 6 2 4 2 9 5 2 9 8 5 9 4 5 8 3 5 5 4 5 19 20 21 22 19 20 21 22 3 2 19 3 1 20 1 1 21 9 22 Branch floor space (‘000 m2)1 Saved to date Corporate real-estate floor space (‘000 m2) Saved to date Annual IT amortisation charge (% growth) 84 4 6 1 4 0 2 0 9 1 2 8 1 143 (13%) 8 2 3 3 1 3 5 6 2 8 3 2 2 2 3 2 9 1 9 e t a r n u r s t i f e n e B MT 19 20 21 22 19 20 21 22 19 20 21 22 1 Total branch floor space saved since 2014 equates to 84k sqm, 36% of the 2014 floor space & total branch floor space saved since 2018 at 24% of the 2018 branch floor space. | 2 Refers to the volume of interactions with tellers. Change since 2019 28 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 26 NEDBANK GROUP LIMITED – 2022 Annual Financial Results Notes: Notes: 14 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 15 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryMessage from ourChief ExecutiveResultspresentation Mixed outcome on market share gains as we remained prudent in a difficult economic environment (Strategic Portfolio Tilt 2.0) Strategic value unlocks Strategic value unlocks Creating positive impacts – using our financial expertise to do good Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information BA900 market share (%) Dec 19 Dec 20 Dec 21 Jun 22 Dec 22 Core corporate loans1 21,2 20,9 19,8 19,1 18,5 CPF Home loans Vehicle finance Personal loans Card 38,7 38,5 37,2 37,6 36,8 ▪ Growth opportunities – infrastructure & SDG- related financing, particularly in wholesale lending 14,4 14,4 14,2 14,0 14,1 36,4 36,5 36,3 35,9 35,4 ▪ Selective credit origination in areas where we have strong market positions – commercial property & vehicle finance 10,2 11,2 12,2 11,9 11,6 13,0 12,6 11,9 11,5 11,2 ▪ Prudent credit granting in a more difficult macroeconomic environment – personal loans, card Retail overdrafts 7,2 8,0 9,9 11,1 12,9 Retail transactional deposits 16,0 15,0 13,5 13,7 13,9 Retail non-transactional deposits 18,8 17,3 16,8 16,3 17,2 Commercial transactional deposits, excl tax & loans & wholesale Fx 12,8 12,8 12,8 12,1 12,0 ▪ Grow transactional deposits – solid household deposits turnaround ▪ H2 2022 market share gains in retail overdrafts, home loans & household transactional & non- transactional deposits as management actions start yielding results MSCI ESG rating AAA (ranked in top 5% of global banks) from AA in 2021 Level 1 BBBEE status for the past 5 years Employee ‘Best place to work’ NPS up to 22 (up 3 yoy) Ranked #1 in the JSE Satrix Inclusion & Diversity Index Mandatory Audit Firm Rotation – KPMG to replace Deloitte in 2024 1 835 first-time job opportunities for unemployed youth (YES) & >7 000 since 2019 Diversity & inclusion 81% AIC employees (2021: 80%) 62% female employees (2021: 61%) Ranked #2 ‘Best ESG’ financials company in Institutional Investor’s 2022 emerging EMEA survey PIC? Listed on A2X in 2022, offering investors choice – Nedbank regularly a top 10 traded stock 1 CIB preference shares reported in Nedbank Group, not Nedbank Limited & therefore not included in the BA900 returns as the industry does, resulting in an understatement of our core corporate loans market share (including preference shares: Dec 22: 18,9%, Jun 22: 19,7%). . NEDBANK GROUP LIMITED – 2022 Annual Financial Results 29 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 31 Notes: Notes: Creating positive impacts – R123bn of exposures at the end of 2022 that support sustainable-development financing (SDF). We set an ambition for this to be around 20% of gross loans & advances by 2025, through >R150bn in support of new SDF Strategic value unlocks Sustainable finance (multiple SDGs) Sustainable-development financing (Rbn) >R150bn 20% 14% R123bn 13% R108bn 2021 2022 2025 ambition % of gross loans & advances NEDBANK GROUP LIMITED – 2022 Annual Financial Results R21bn lending exposure to small business & their owners Banking solutions to more than 300k SMEs R27bn total renewable-energy exposures >3 500 MW added to the national electricity grid Commencing with wheeling of green power from IPPs to reduce our own operational carbon emissions Own green energy usage at 1,5% in 2022, targeting >30% by 2025 R500m funding for clean water & sanitation in 2022 R26bn support for farmers R3,5bn for new affordable home loans in 2022, equating to > 5 500 homes R952m towards the financing of affordable housing, equating to ~5 000 units R238m student loan & accommodation financing in 2022 Financing of … > 3 600 student loans over the past 5 years 43 000 student beds since 2015 R12bn in sustainable finance, up > 290% across multiple SDGs for clients in CIB Creating positive impacts – our ESG credentials & awards Nedbank’s ESG ratings Credentials & awards Booklet slide AAA Top 5% of global banks 3,9 Top 26% of global banks 17,2 Top 8% of diversified banks C Top 10% of all global banks 67 Top-tier SA bank Carbon- neutral operations Net-zero operational water use Climate Action Alliance (since 2009) (since 2018) (became a member in 2022) Zero exposure to fossil-fuel- related activities by 2045 100% of lending & investing supporting a net- zero carbon economy by 2050 2022 Global Finance The Innovators Awards Outstanding Innovation in ESG (Green Res Dev Bond) (winner) 2022 Environmental Finance Impact Awards Lender of the Year (winner) 2022 Global Banking & Finance Awards Best Corporate ESG Strategy South Africa (winner) 2022 Global Finance Sustainable Finance Awards Outstanding leadership in green bonds (winner) 2022 Top Empowerment Awards Top Empowered: Youth Employment Service YES Initiative (winner) 2022 Top Empowerment Awards Top Empowered Company: Enterprise & Supplier Development (winner) 2022 Global Finance Sustainable Finance Awards Outstanding leadership in sustainability-linked bonds (winner) 2022 Bonds, Loans & ESG Capital Markets Africa Awards Local Currency ESG & Sustainable Finance Deal of the Year (winner) Notes: Notes: 16 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 17 30 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 32 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryMessage from ourChief ExecutiveResultspresentationMessage from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Delivering value for all our stakeholders in a challenging operating environment Key environmental & strategic drivers – mixed impact on the group’s 2022 financial performance Operating environment Strategic delivery Employees Clients Shareholders Regulators Society & environment Strong earnings growth & fortress balance sheet Operating environment Strategic delivery Financial outcomes Global & local markets Currency impacts Regulation Competition SA GDP growth SA inflation SA prime interest rate Business confidence Electricity constraints Technology/ Digital Efficient execution Market share gains Cross-sell & main-banked client gains Creating positive impacts Revenues 11% Headline earnings 20% Dividend per share 38% CET1 ratio 14% NEDBANK GROUP LIMITED – 2022 Annual Financial Results 33 NEDBANK GROUP LIMITED – 2022 Annual Financial Results Positive Negative No material impact in 2022 35 Notes: Notes: ‘Strong revenue growth supported HE of R14bn, up 20%; higher ROE at 14% & strong CET1 ratio at 14%’ Financial overview Mike Davis Chief Financial Officer Key drivers of shareholder value creation – solid NAV growth, ongoing ROE improvement & strong capital generation enabling a record-high 2022 dividend NAV per share (cents) ROE & cost of equity (%) Dividend per share (cents) 14% 5 1 4 1 9 4 6 1 1 9 1 1 1 9 3 8 1 3 9 4 0 2 3 3 5 1 2 i s d n e d v d o N i 8 10 12 14 16 18 20 22 8 10 12 14 16 18 20 22 8 10 12 14 16 18 20 22 NAV growth +5% yoy ROE increasing towards COE & then > COE Dividend cover at 1,75x COE ROE Interim Final NEDBANK GROUP LIMITED – 2022 Annual Financial Results 34 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 36 Notes: Notes: 18 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 19 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryMessage from ourChief ExecutiveResultspresentation Profitability metrics continue to improve, underpinned by robust capital, liquidity & provisioning yoy 20% 19% 27% 7% 7% 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 (%) Risk-weighted assets (Rbn) (1%) 2022 14 049 2 806 2 932 14,0 863 1 040 393 89 3,37 161 119 14,0 648 2021 11 689 2 362 2 317 12,5 807 968 373 83 3,32 128 116 12,8 657 2020 5 440 1 113 717 6,2 797 954 336 161 3,25 126 113 10,9 674 2019 12 506 2 565 2 500 15,0 810 904 352 79 2,26 125 113 11,5 629 Profitability Advances & deposits Asset quality Liquidity Capital Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Headline earnings up by 20% – driven by strong revenue growth Booklet slide Key earnings drivers (pre-tax, Rm) 12% 10% 10% 13% 8% 5% 0 0 5 2 3 7 7 2 6 3 9 8 8 4 2 1 0 3 7 2 9 9 7 9 7 8 1 8 3 7 4 3 5 6 9 3 6 3 3 5 2 4 6 3 4 0 1 4 7 0 3 4 NII NIR Associate income Impairments Expenses Direct tax 19 20 21 22 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 37 Note: 2021 NIR restated to take into account net monetary loss reclassification. 2019 & 2020 impact is immaterial therefore NIR not restated. NEDBANK GROUP LIMITED – 2022 Annual Financial Results 39 Notes: Notes: Headline earnings up by 20% – driven by strong revenue growth Headline earnings (Rm) 12% 10% 10% 13% 8% 2 412 3 777 +5% (excl incentives & other staff costs) 80 847 2 786 276 17 111 11 689 HE 2021 NII NIR Associate income Impairments Expenses Direct tax 1 & other 14 049 HE 2022 1 Other includes indirect tax and minority & preference shareholders. NEDBANK GROUP LIMITED – 2022 Annual Financial Results Gross banking advances up 7% – driven by ongoing momentum in RBB & recovery in CIB CIB gross banking advances (Rbn) RBB gross banking advances (Rbn) 450 400 350 300 250 Jan 19 Jan 20 Jan 21 +7% +7% +8% +7% Jan 19 Jan 20 Jan 21 Jan 22 I B C B B R Jan 22 Average yoy growth (12M 2022 on 12M 2021) Actual yoy growth (Dec 2022 on Dec 2021) ▪ CIB: activity picked up in H2 ‒ Uptick in H2 credit demand & execution of pipeline in mining & resources, and diversified & industrials (run-rate benefit in 2023) ▪ RBB: momentum continued ‒ Strong growth in SME & commercial client segments ‒ Small market share gain in HL in H2 2022 ‒ Selective growth by leveraging our strong position in MFC (second-hand & lower-value vehicles) ‒ More cautious in unsecured lending given elevated risk in the macroeconomic environment 38 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 40 Notes: Notes: 20 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 21 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryMessage from ourChief ExecutiveResultspresentationMessage from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Booklet slide +7% 863 807 NII up by 12% ‒ NIM expansion driven by endowment income (higher interest rates) & liability mix/pricing benefits Net interest margin (bps) Q2 385 8 (5) Q3 392 (6) Q4 410 Run rate Q1 386 23 Gross banking advances up 7% Muted CPF opportunities, but growth driven by a steady recovery post Covid-19 lockdowns Strong H2 growth Pipeline conversions in mining, resources & diversified industries HL growth driven by lower attrition but slower payouts as a result of a slight decline in residential property market activity & low single-digit house price inflation Leverage MFC’s market-leading position, driven by strong alliance relationships & an optimised digital platform, while being more selective in granting credit +4% 190 197 +9% +6% 168 183 189 179 +6% 152 143 Cautious growth New competitive overdraft product introduced +3% 29 30 +3% +15% 16 17 27 23 Commercial property Term loans Home loans Instalment debtors Personal loans Credit cards Overdrafts Gross banking advances 2019 2020 2021 2022 352 2019 336 2020 373 2021 Endowment mix & rate Liability mix & pricing Asset mix & pricing Foreign loan reclassification & other 393 2022 Positively positioned in a rising rate cycle – NII sensitivity for 1% change in interest rates: R1,6bn NEDBANK GROUP LIMITED – 2022 Annual Financial Results 41 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 43 Notes: Notes: Deposits up 7% – exceeding R1 trillion for the first time; behavioural shift to longer tenure in a rising-interest-rate environment NIR up by 10% – solid commission & fees growth, good insurance income & equity performance & prior-year MVFHA loss did not recur Deposits (Rbn, % change yoy) Funding mix (% contribution)1 (0%) (11%) 12% 20% 8% 29% 6,8 5,9 NIR (Rm) +7% 20 7 12 45 (0) (12) 19,3 +0,8% 31,5 (0,8%) 1 040 2019 2021 2022 36,5 CASA Cash mgnt Call & term Fixed NCD & other Foreign currency Dec 2022 Wholesale Household Foreign funding Commercial Capital markets 968 Dec 2021 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 1 Funding mix based on BA900 returns. Nedbank Group foreign funding at 3%. 42 (7%) +18% 5 7 4 4 6 6 1 4 5 0 0 2 9 6 3 2 4 5 7 7 1 4 6 9 8 1 +25% >100% 5 1 8 0 5 6 ) 3 3 8 ( 7 8 1 8 3 8 0 0 8 Commission & fees Trading income Insurance income Equity revaluations Fair value Other¹ 2019 2020 2021 2022 1 Represents sundry income & investment income. NEDBANK GROUP LIMITED – 2022 Annual Financial Results Notes: Notes: ▪ Commission & fees – solid growth driven by ongoing recovery in client transactional activity incl card interchange revenue, cross-sell & main- banked client gains (SPT 2.0) ▪ Trading – unfavourable conditions negatively impacted debt & interest rate markets ▪ Insurance – lower claims in the life portfolio, partially offset by 3% increase in non-life claims ratio & the impact of the KZN CAT event ▪ Equity – driven by higher revaluations in CPF ▪ Fair value – 2021 fair-value losses did not recur ▪ Other – driven by Fx gains of R442m in Zimbabwe due to hyperinflationary conditions, largely offset by the reclassification of R419m net monetary loss into NIR 44 22 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 23 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryMessage from ourChief ExecutiveResultspresentationMessage from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Impairment charge up 13% – driven by higher impairments in interest-rate- sensitive products across our retail portfolios Total balance sheet ECL up 5% to R27,9bn – driven by the R7,4bn impairment charge, as well as higher levels of recoveries & write-offs Impairment charge (Rbn) +13% 0,0 0,8 6,1 13,1 6,5 7,4 2019 2020 2021 2022 6,6 CIB RBB Wealth, NAR & Centre Key impairment growth drivers in 2022: ▪ 7% growth in gross banking loans & advances ▪ higher impairments in interest-rate- sensitive products in RBB (home loans & vehicle finance) ▪ a few corporate clients migrated to stage 3 Partially offset by: ▪ overlay releases previously held for anticipated defaults. Total overlays decreased to R1,4bn (2021: R3,0bn), with zero Covid-19-related overlays remaining at the end of 2022 Overlays released via IS - R0,90bn New overlays raised via IS + R1,25bn Overlays catered for in-model - R1,95bn Total balance sheet ECL (Rbn) Write-offs (Rbn) Post-write-off recoveries (Rbn) ECL coverage (%) 1,78 3,37 9 , 7 2 6 , 6 2 2,26 6 , 8 1 8 , 6 , 1 4 , 1 08 10 12 14 16 18 20 22 08 10 12 14 16 18 20 22 08 10 12 14 16 18 20 22 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 45 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 47 Notes: Notes: Group credit loss ratio at 89 bps – CIB, RBB & NAR within their TTC target ranges & Wealth below Credit loss ratios (bps) GFC GLC 300 250 200 150 100 50 0 152 161 06 08 10 12 14 16 18 20 22 1 6 1 9 7 3 8 9 8 5 2 2 8 2 4 2 2 8 3 1 0 4 2 4 3 1 1 6 1 4 6 8 1 9 0 0 1 5 8 1 2 0 1 2 7 Group CIB RBB Wealth NAR 2019 2020 2021 2022 TTC target ranges 0 2 - Higher total ECL coverage of 3,37% (2021: 3,32%, 2019: 2,26%) – driven by a larger contribution from stage 3 loans Stage 1 loans Stage 2 loans Stage 3 loans Coverage ratio (%) 0,48 0,65 0,69 0,60 +7% yoy 5,3 6,6 6,4 7,0 37,9 38,0 31,5 34,3 (21%) yoy +31% yoy Loans & advances (Rbn) 8 7 6 Dec 19 9 1 6 Dec 20 4 3 6 Dec 21 8 7 6 Dec 22 Driven by +7% gross loans & advances growth 2 7 Dec 19 8 9 Dec 20 9 9 Dec 21 8 7 Dec 22 8 2 Dec 19 5 4 Dec 20 9 3 Dec 21 2 5 Dec 22 Driven by migrations out of stage 2 loans (into stage 1 & stage 3) & the release of overlays Driven by a few large highly collateralised CIB clients that moved from stage 2 into stage 3 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 46 NEDBANK GROUP LIMITED – 2022 Annual Financial Results Performing coverage (stage 1 & 2) improved from Dec 2021: 1,46% to Dec 22: 1,26%. 48 Notes: Notes: 24 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 25 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryMessage from ourChief ExecutiveResultspresentationAll clusters within or below their target ranges & coverage ratios well above 2019 levels Booklet slide p CIB RBB CIB excl CPF CPF CB Retail HL VAF PL Card Wealth NAR Group Credit loss ratio (bps) ECL coverage (%) 22 22 17 28 161 11 200 33 192 918 490 (20) 102 89 21 42 53 30 134 (21) 175 (9) 146 982 633 9 72 83 20 82 103 54 240 110 275 64 269 1062 897 64 185 161 TTC 15–45 19 25 45 (2) 138 120–175 50 50–70 163 160–240 14 182 639 542 18 20–40 101 85–120 79 60–100 22 1,29 1,41 1,19 4,92 1,83 5,73 1,72 5,11 21 1,35 1,56 1,14 4,83 2,05 5,54 1,64 4,82 20 1,07 1,23 0,91 5,09 2,61 5,73 2,02 5,29 19 0,61 0,75 0,44 3,87 1,68 4,48 1,47 4,09 24,08 22,75 20,04 16,83 15,95 16,81 17,57 13,18 1,33 5,19 3,37 1,56 4,85 3,32 1,42 3,94 3,25 0,74 3,34 2,26 Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Capital – CET1 ratio well above the top-end of our board-approved target range of 11% to 12%, supporting dividend declarations at 1,75x CET1 ratio (%) 1,2 0,2 2,2 Dividend payout ratio (payout ratio %, times cover) 1,84x 2,02x 1,75x 1,99x 1,68x 2,50x 1,75x Board CET1 target: 11% to 12% SARB PA minimum CET1 8,5% 12,8 Dec 21 Profits Dividends RWA 14,0 Dec 22 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 / Board-approved dividend cover policy: 1,75x to 2,25x 40% 57% 57% 57% i s d n e d v d o N i 50% 60% Interim 2019 Final 2019 Interim 2020 Final 2020 Interim 2021 Final 2021 Interim 2022 Final 2022 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 49 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 51 1 Excluding idiosyncratic buffers & including the D-SIB capital requirement of 100 bps, in line with PA Directive 5/2021 (from 8% in 2021). Notes: Notes: Expenses up 8% – or 5% excluding incentives & other staff costs, reflecting good expense management, with focus on efficiencies & benefits from digitisation RWA progression – lower overall RWA in 2022 as growth in credit RWA was offset by reductions in market & counterparty credit risk Booklet slide Expenses (Rm) ▪ Staff-related costs Risk-weighted assets (Rbn) 4% 23% >100% 3% 8% 9 4 0 3 1 6 7 3 2 1 4 5 1 7 1 0 6 1 ) 3 4 4 ( 2 6 1 9 2 3 6 4 9 4 6 2 9 2 9 1 9 9 9 Salaries & wages Incentives (STI & LTI) Other staff costs Computer processing Other ‒ ‒ Salaries & wages +4% o Average ASR increases: +4,6% (BU +5,2%) 3% decline in permanent headcount (mainly o through natural attrition - 63 retrenchments) Variable-pay incentives aligned with improved profitability metrics +23% (STI +19%, LTI +38%) ‒ Other staff costs: lower returns from employee benefit assets & more IT staff development costs expensed (not capitalised) ▪ Computer processing – benefits from transitioning to cloud services (lower depreciation charge), decline in maintenance costs & amortisation growth rate slowing as our digital transformation journey matures (22: +9%, 21: +19%) ▪ Other costs ‒ Normalisation of discretionary spend, including marketing (+17%) & travel (+22%) 2019 2020 2021 2022 ‒ Offset by savings from lower accommodation-related costs (-4%) 19 4 2 4 14 11 15 1 4 1 13 17 629 674 657 648 Dec 2019 Credit CCR Market Other RWA Dec 2020 Credit CCR Market Other RWA Dec 2021 Credit CCR Market Other RWA Dec 2022 Note: The reduction in RWA was mainly due to lower counterparty credit risk as a result of a decrease in credit valuation adjustments due to a methodology refinement & market movements & lower market risk as a result of general risk reduction across the trading portfolio, partially offset by an increase in credit risk in line with balance sheet growth. NEDBANK GROUP LIMITED – 2022 Annual Financial Results 50 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 52 Notes: Notes: 26 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 27 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryMessage from ourChief ExecutiveResultspresentation Capital allocation – surplus capital held at the Centre enabled a R5bn share repurchase programme Capital allocation (Rbn) Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information 5 , 6 3 2 , 6 3 1 , 3 3 8 , 1 3 5 , 4 3 , 4 4 6 , 1 , 7 9 , 2 1 5 , 0 2 20,5 11,8 3,3 1,1 4,3 12,9 4,2 2,5 1,4 4,8 CIB RBB Wealth NAR Centre Dec 21 Dec 22 Dec 21 Dec 22 ▪ Capital allocated to clusters was affected by optimisation initiatives, loans & advances mix changes & model enhancements ▪ In 2022, average surplus capital increased by R7,6bn, largely driven by the group’s improved profitability & lower RWA Surplus capital Property risk & other Intangibles Goodwill Share repurchase programme1 ▪ up to R5bn ▪ executed over the next 12 months ▪ subject to all legal & regulatory approvals & requirements being met The proposed share repurchase programme is expected to be accretive to DHEPS, optimise capital levels & associated returns on equity & in so doing deliver value to shareholders Average surplus capital of R11,8bn reflected in a strong CET1 ratio of 14% 1 The share repurchase programme is likely to include an odd-lot offer, being an offer by Nedbank Group to repurchase shares from shareholders holding less than 100 Nedbank Group ordinary shares. ‘Higher HE & ROE enabled by solid revenue growth & prudent risk management’ CIB overview Anél Bosman Group Managing Executive NEDBANK GROUP LIMITED – 2022 Annual Financial Results 53 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 55 Notes: Notes: Cluster financial overview – all our business clusters reported solid HE growth & higher ROEs CIB financial performance – Higher HE & ROE enabled by solid revenue growth & prudent risk management Headline earnings (Rbn, growth %) Return on equity (%) NAR +64% Wealth +18% 1.0 1,1 +13% RBB 5,1 R14,0bn +20% 6,4 +14% CIB Group ROE 14,0% % 7 7 1 , % 0 6 1 , % 1 6 2 , % 8 3 1 , CIB RBB Wealth NAR i s g n n r a e e n i l d a e H ) m R ( 7 6 1 6 19 6 3 6 3 20 5 0 6 5 21 9 9 3 6 22 Financial performance 17,7 15,3 17,7 E O R ) % ( 9,4 ▪ NII up by 10% ‒ NIM improved by 7 bps owing to increased deposit 14% margins ‒ Good advances growth of 8% ▪ NIR up by 5% ‒ Strong performance in the equity portfolios1 ‒ Commission & fees up 13% ‒ Trading income down 9% due to unfavourable debt & interest rate markets ▪ Market-leading efficiency ratio NEDBANK GROUP LIMITED – 2022 Annual Financial Results 54 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 1 Equity portfolios defined as private equity & not equity trading. 56 Notes: Notes: 28 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 29 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryMessage from ourChief ExecutiveResultspresentation Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information CIB financial performance – reduced credit risk & higher second-half banking advances growth, while maintaining optimal capital levels Commercial property finance – a high-quality, well-diversified & collateralised portfolio Credit loss ratio (bps) Coverage ratios (%) 23,7% 18,2% 3,30 2,26 42 22 0,20 0,13 19 20 21 22 Stage 1 Stage 2 Stage 3 ▪ Impairments declined by 43% ‒ In line with management expectations ‒ Including for stressed counters ▪ Coverage ratios declined marginally ‒ Reduced to 1,29% from 1,35% ‒ Adequate provisions & security in place ▪ Focus on stressed sectors Banking advances (Rbn) Allocated capital (Rbn) ‒ Property portfolio – adequate provisions +8% ▪ Banking advances up by 8% 19 20 21 22 ‒ Aviation, construction & SOEs (1%) 2019 2020 2021 2022 2019 2020 2021 2022 ‒ Strong performance in H2 2022, particularly in Investment Banking & Transactional Services ▪ Allocated capital declined by 1% ‒ 7% decline in RWA ‒ Counterparty Credit Risk (CCR) capital decreased High-quality, well-diversified & collateralised portfolio Overlays at R0m (Dec 21: R590m) Overlays incorporated in models as risk emerged & portfolio rerated CLR at 28 bps (Dec 21: 30 bps) – driven by large single-name exposures, rather than general portfolio stress Credit loss ratio (bps) & loan-to-value ratio (%) CLR 53 (2) 54 30 28 49% 48% 50% 53% 53% LTV GFC peak Dec 19 Dec 20 Dec 21 Dec 22 Portfolio LTVs remain low at 53% Adequate collateral – significantly reduces the risk of potential losses Low levels of arrears on performing book 0 to 90 days: R6m (Dec 21: R5m) LTV 56 54 49 44 40 54 49 Office vacancies below market – Nedbank 7% Market 16% % of loans 35% 27% 20% 10% 3% 3% 1% Retail Offices Industrial Residential Other Hotel Hospital NEDBANK GROUP LIMITED – 2022 Annual Financial Results 57 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 59 Notes: Notes: Credit risk – CIB high-risk exposures High-risk sectors reduced as lockdown restrictions eased Rest of CIB watchlist exposures reducing & risk ratings have stabilised CPF continues to perform well – CLR impacted by large single- name rather than portfolio stress CIB holds sovereign exposure but not in Ghana 46% (48%) 8% (11%) * 46% (41%) High-risk sectors Rest of CIB CPF CIB high-risk sectors ▪ SOEs/Municipalities Defaulted-exposures reducing, with 15% government-guaranteed ▪ Construction1 Pre-Covid-19 stressed sector with reduction in defaulted exposure since 2020 ▪ Aviation Exposure secured at 88% average LTV % of CIB exposure D7 & NPL% of sector exposure 5,0% (6,4%) 4,2% (4,5%) 2,3% (2,4%) 15,0% (16,5%) 0,8% (1,1%) 68,6% (62,0%) ▪ Hospitality No longer considered high risk CIB creating positive impacts – expanding our leadership in sustainable finance & renewable-energy financing Renewable-energy financing (drawn exposures, Rbn) Sustainable-finance facilities (exposures, Rbn) Sustainable funding raised (cumulative, Rbn) 32 30 27 25 10 15 19 20 21 22 African renewable energy Private power generation (commercial) REIPPP 11,7 15,7 9,8 7,6 2,7 22 19 20 21 22 1,2 21 Use of proceeds (bonds) Use of proceeds (loans) Green bonds IFC climate loan Sustainability-linked loans Sustainability-linked bonds Green AT1 Client-related funding Private power generation to support our clients’ energy needs Mandated on projects of just under 1 GW of new capacity Lead arranger on IPP projects: 4 RMIPPP projects 4 REIPPP round 5 2 REIPPP round 6 Innovative sustainable- finance solutions 60 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 1 Construction includes steel & cement. | (%) denotes exposure at 31 December 2021. * Hospitality included in 2021, not included in 2022 as no longer high risk. 58 NEDBANK GROUP LIMITED – 2022 Annual Financial Results Notes: Notes: 30 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 31 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryMessage from ourChief ExecutiveResultspresentationCIB creating positive impacts – tilting our portfolio away from carbon- intensive assets Our strategic growth levers Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Our journey to zero exposure to fossil- fuel-related activities by 2045 2020 2021 2024 Climate change resolutions passed with 100% votes of approval at our 53rd AGM Adopted & disclosed our market-leading Energy Policy & inaugural TCFD Report Disclose net-zero aligned glidepath for upstream fossil fuels & power generation No provision of project financing for new thermal-coal mines 2025 Reduce Nedbank’s own operations’ carbon emissions by >35% (from 2019 levels) Nedbank intends to disclose its fossil-fuel & energy generation pathways in 2024 Thermal-coal exposures (% of gross advances) 0,4 0,1 0,1 2020 2021 2022 Power generation glidepath will use scope 1 emissions & a physical intensity metric (Co2e/MWh) Generate >30% of Nedbank’s own energy needs from renewable sources Thermal-coal funding to be <0,5% of gross loans & advances No new finance for oil production Zero exposure to fossil-fuel-related activities 100% of lending & investing supporting a net-zero carbon economy NEDBANK GROUP LIMITED – 2022 Annual Financial Results Upstream fossil- fuel glidepath will include scope 1, 2 & 3 emissions & will be absolute 2030 2035 2045 2050 Notes: Carbon-accounting disclosures for upstream fossil-fuel lending Deliver client value through our sectorised approach Invest in our people Leverage a diverse, equitable & inclusive culture Accelerated growth Empower our clients through our warm digital capabilities Grow our transactional business by delivering a better client experience Continue to focus on optimisation of our portfolio Create positive impacts by enabling our clients’ ESG journeys 61 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 63 Notes: Trading income & equity revaluations – low levels of market liquidity impacted trading, while the equity portfolio has seen higher yoy unrealised gains & dividends Group trading income (Rm) Group equity revaluations (Rm) 5 252 4 559 4 475 4 166 262 650 815 Booklet slide 2019 2021 2020 Commodities & equities Debt securities Foreign exchange 2022 ▪ Commodities & equities – muted volumes coupled with non-repeatable items in 2021 ▪ Debt securities – difficult SA macro backdrop coupled with impact of SARB MPIF1, but improvement seen in H2 2022 ▪ Foreign exchange – increase in client activity resulted in 19% growth 2019 (1 038) 2020 2021 2022 Unrealised gains/losses Realised gains, dividends, etc ▪ CPF – favourable revaluations on certain assets ▪ relative to the prior year Investment Banking – lower realised gains & dividends off a high base Nedbank Corporate & Investment Banking – outlook 2023 outlook ▪ NII – grow balance sheet while maintaining NIM levels ▪ NIR ‒ Expect a recovery in debt trading & increased client-hedging activity ‒ Fees & commissions to benefit from balance sheet activity ‒ Private equity to continue focus on new investments & realising value on existing investments ▪ CLR – maintain in the TTC target range with continued focus on stressed counters to reduce stage 3 loans ▪ Banking advances growth – execution of robust pipeline ▪ Strategic execution – maintain strategic focus under challenging conditions ▪ Capital – improve returns & optimise resources ▪ Sustainable-development finance – maintain leadership position in energy finance while continuing to focus on water and infrastructure projects in order to unlock & enable growth in SA Medium- & long-term outlook ▪ ROE ≥18% & reduce cost-to-income ratio to <44% NEDBANK GROUP LIMITED – 2022 Annual Financial Results 1 South African Reserve Bank Monetary Policy Implementation Framework. 62 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 64 Notes: Notes: 32 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 33 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryMessage from ourChief ExecutiveResultspresentationMessage from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information CB, RRB & Consumer – strong franchises Commercial Banking Retail Relationship Banking Consumer Banking E O R ) % ( i s g n n r a e e n i l d a e H ) m R ( 19,0 11,4 19,8 23,8 +29% 3 8 3 1 19 3 0 8 20 8 0 4 1 2 1 8 1 21 22 32,5 26,3 24,6 36,3 +42% 9 6 9 19 5 1 8 20 7 0 9 21 2 9 2 1 22 14,4 10,1 10,2 0,9 1 6 1 20 9 8 7 2 19 (8%) 9 0 1 2 0 5 9 1 21 22 Well-positioned & distinctive value propositions incorporating unique lending solutions Highly competitive relationship banking offering for our affluent & small-business clients Differentiated & disruptive CVPs across our different client segments ▪ Market share increase of 24% in the mid- ▪ Good growth in client numbers, especially in ▪ Strong PPOP growth of 11% in 2022 corporate segment affluent segment ▪ Robust risk management containing impairments at below the TTC target range ▪ Positive momentum on digital journey, achieving critical scale on Nedbank Business Hub ▪ Maintained market share across both affluent & SME segments ▪ Robust risk management contained impairments at the lower end of the TTC target range underpinned by strong NIR growth of 8% & active cost management initiatives ▪ HE impacted by a 22% increase in impairments, mainly from the secured lending products, largely sensitive to increasing interest rates ‘Strong revenue growth & expense discipline drove HE increase of 12%’ RBB overview Ciko Thomas Group Managing Executive NEDBANK GROUP LIMITED – 2022 Annual Financial Results 65 NEDBANK GROUP LIMITED – 2022 Annual Financial Results Note: Total HE for RBB also includes ‘Other’ relating to Channel, Card Acquiring, Central & Shared Services. 67 Notes: Notes: RBB financial performance – ROE improved to above COE with strong revenue growth & good cost optimisation, partially offset by a normalisation of impairments Financial performance 17,3 E O R ) % ( 5,4 13,7 16,0 ▪ NII up by 12% ‒ Advances growth momentum continued & endowment benefit of higher interest rates ▪ NIR up by 8% 12% ‒ Strong recovery seen in client transactional activity ‒ Higher card interchange volumes & higher activity in VAS ▪ Impairments up by 28% ‒ CLR increased to 161 bps driven by once-off benefits in 2021 (R713m), higher interest rates & deteriorating macroeconomic outlook ‒ CLR within the upper half of the TTC target range ▪ Expense growth of 5% ‒ Enabled by ongoing cost optimisation & digitisation impacts offset by card-interchange-related cost growth 3 9 2 5 19 5 9 5 1 20 2 3 5 4 21 7 9 0 5 22 i s g n n r a e e n i l d a e H ) m R ( Notes: Diversified portfolio & strong franchises – CB, RRB, Consumer Booklet slide Return on equity (%) Home loans VAF Unsecured lending Transactional1 Card1 Fx & investments 8 , 9 1 8 , 3 2 6 , 4 2 3 , 6 3 2 , 0 1 1 , 0 1 5 , 2 2 5 , 4 1 3 , 7 1 5 , 5 1 ROE 12,0% including insurance (2021: 12,4%) 4 , 7 8 , 4 8 , 8 7 , 6 1 - 7 , 2 2 6 , 6 3 6 , 8 2 6 , 0 5 19 20 21 22 19 20 21 22 19 20 21 22 19 20 21 22 19 20 21 22 19 20 21 22 19 20 21 22 19 20 21 22 19 20 21 22 Commercial Banking 1 Debit and cheque interchange and related costs have historically been reported under the Card and Payments product. This has been restructured in the current period and is now reported under the Transactional product to more closely reflect the true economics of the transactional product and align with the industry. The comparative history has been restated. Product views, excluding CB product views Relationship Banking Consumer Banking NEDBANK GROUP LIMITED – 2022 Annual Financial Results 66 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 68 Notes: 34 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 35 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryMessage from ourChief ExecutiveResultspresentation Client satisfaction metrics positively differentiates Nedbank – now SA’s #1 ranked bank on NPS Nedbank is connecting individuals & businesses via marketplaces & APIs, while creating new revenue streams Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information 2015 to 2022 Net Promoter Score1 Social-media net sentiment2 80 60 40 20 0 Rank #1 N B C D A Consulta Kantar 15 16 17 18 19 20 21 22 Bank A Nedbank Bank B Bank D Bank C 80 60 40 20 0 Rank #1 Ranked #1 bank on brand sentiment: 71% (2021: 55%) #1 large universal bank in the 2022 Ask Africa Orange Index4 Nedbank digital NPS3 >70 in 2022 New ‘Imagine’ branch NPS 61 versus previous Consulta NPS at 47 Bank A Bank B Bank C Nedbank Bank D 21 22 Industry average 1 Annual Consulta survey 2015 to 2021 (no survey was done in 2022). As a result, Kantar was contracted by Nedbank to conduct an independent NPS survey in 2022 using the same methodology (it is likely that a greater response rate from face-to-face interviews drove up absolute NPS scores across all banks). | 2 Salesforce Social Studio (2021 & 2022). | 3 Internal measurement of average CX across our digital channels. | 4 Nedbank ranked #3 overall among SA banks with index score of 60,9, up from #8 in 2021. The total banking index declined to 59. NEDBANK GROUP LIMITED – 2022 Annual Financial Results 69 Notes: Nedbank’s #1 ranking in client satisfaction (NPS) & digital leadership is driving strong growth in main-banked clients & improving levels of cross- sell Retail client base breakdown (# m) 19 20 21 22 Cross-sell ratio +6% 3,14 3,02 3,05 3,24 +13% 2,59 2,29 2,05 1,78 +23% 2,01 1,63 1,18 0,83 1.94 1.86 1.71 1.78 Main-banked clients Digitally active clients Money app active users Cross-sell on active clients Registered Avo clients (# m) API activity (# of active 3rd parties) +1.9x +24% 0,1 20 0,7 21 2,0 22 7 1 20 5 4 21 6 5 22 Avo gross merchandise value (Rm)1 Value-added services revenue (Rm) +7x +25% Launched Avo B2B Marketplace in 2022 Avo Auto hosts >200 MFC- accredited dealers & lists >8 000 vehicles More than 12 000 drivers in our SA delivery fleet New partners include Apple, Dell & Uber Direct Avo launch in NAR subsidiaries in H1 2023 20 21 22 20 21 22 More than 20 000 merchants & partners, up 15% yoy 1 Excluding internal spend, 2022 vs 2021 is +5x. NEDBANK GROUP LIMITED – 2022 Annual Financial Results Notes: Client-centred strategy intact Main-banked1, # 000 71 Booklet slide h t u o y & s d K i l e v e l y r t n E l e d d M i (12%) (8%) +4% 516 456 421 436 (4%) (4%) +8% 1 425 1 365 1 309 1 412 0% +13% +6% 891 892 1 005 1 062 s t n e i l C e t a v i r P s s e n s u B i l l a m S i s e c v r e S l i a c r e m m o C i 2 g n k n a B +7% +9% +10% 89 95 104 114 (1%) +2% +3% 179 177 180 185 (1%) (1%) +1% 14,7 14,6 14,4 14,6 19 20 21 22 19 20 21 22 1 Definition of main-banked: Clients who achieved a minimum deposit or a number of quality transactions on average per month over three months. Consumer: Non- individuals, RRB: Non-residents & Embassy Banking not shown. | 2 Client groups with gross operating income contributions in excess of R500 pm. NEDBANK GROUP LIMITED – 2022 Annual Financial Results 70 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 72 Notes: Notes: 36 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 37 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryMessage from ourChief ExecutiveResultspresentation Our technology strategy, along with shifts in client transactional behaviours, is driving NIR growth & cost optimisation opportunities Booklet slide Branch teller transactions1 POS volumes (63%) Jan 21 +1% Jan 19 Jan 20 ATM withdrawals +62% Jan 22 Jan 19 Jan 20 Jan 21 Jan 22 Digital payment & transfers2 +76% Jan 19 Jan 20 Jan 21 Jan 22 Jan 19 Jan 20 Jan 21 Jan 22 FY 2019 vs FY 2022 1 Teller transactions include any cash-related transaction performed over the counter (eg deposits, withdrawals & transfers). | 2 Total volumes across all digital channels. NEDBANK GROUP LIMITED – 2022 Annual Financial Results 73 Notes: Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Credit quality – rate-sensitive products impacted by higher interest rates, while policy tightening has started to benefit unsecured lending Home loans Vehicle finance Personal loans Credit card Interest rates & inflation Interest rates & inflation Inflation & unemployment Discretionary spend & unemployment 33 (9) 146 192 2 8 9 8 1 9 3 3 6 0 9 4 Approval rates Take-up rates Approval rates Take-up rates Approval rates Take-up rates Approval rates Take-up rates 2 , 4 1 1 , 4 1 3 , 6 3 4 , 5 3 2 , 2 1 6 , 1 1 9 , 1 1 2 , 1 1 19 20 21 22 19 20 21 22 19 20 21 22 19 20 21 22 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 1 Vehicle finance share for households. 75 k s i r y e K r e v i r d s s o l t i d e r C ) s p b ( o i t a r s e t a r p u - e k a t & l a v o r p p A t e k r a m 0 0 9 A B 1 ) % ( e r a h s Notes: Project Phoenix & Project Imagine – Shifting our RBB organisational structure to be more client-centred. Delivering great client experiences, strong product sales (revenue) uplift & productivity enhancements though improvements in- branch & from our digital channels. RBB strategic progress – good progress on growth vectors More client-centred organisational structure Branch staff sales (Sales/role/day) Dedicated branch sales (Sales/banker/day) Nedbank branches (# of) Nedbank in retailers (# of) +47% +37% +43% (26%) Avo Marketplace 192% Number of Avo subscribers Value-added services Funeral insurance 25% Revenues 28% Number of clients with funeral accounts 559 427 411 15 21 22 Target 94 15 111 21 134 22 Target 2021 2022 2021 2022 2021 2022 ▪ Introduced Auto Marketplace ▪ Scaled merchants available incl Apple products ▪ Seller-issued credit facilities ▪ Digitally enabled DAILY LOTTO ▪ 1 OTT vouchers & OTT merchant fulfilment ▪ Cardless cash-out & money transfer on app ▪ Simplified insurance products for MyCover personal lines, Life & Funeral ▪ Enhanced distribution Branch square meterage (‘000 m2) ATMs, IDs & SSKs1 (#) Manufacturing CVP (28%) Branches supplemented by a growing number of convenient self-service options Solar offerings 19% Revenues 356% Number of deals approved Township economy 12 Townships touched since July 2022 200th Imagine branch opened (a further 184 conversions planned for 2023) 2021 2022 2021 2022 Servicing staff Sales staff Specialised sales staff In-market staff Branch & Boxer staff 1 Automated teller machines, Intelligent Depositors & self-service kiosks. | 2 Consumer, which includes Boxer & BDO. | All targets set in January 2023 ‒ target tor 2025. NEDBANK GROUP LIMITED – 2022 Annual Financial Results 227 182 164 15 21 22 Target 5 9 6 3 15 9 9 6 4 21 7 0 8 4 22 Target 74 2021 2022 Aug 22 Dec 22 ▪ New manufacturing CVP aimed at improving clients’ administrative efficiencies through e- commerce & digitally based self-service solutions ▪ Readvance/Further loan on home loans or ABF ▪ Less than 2 days from application receipt & approval to supplier payment ▪ Link clients to accredited service providers ▪ Kasi business workshops to ~7k entrepreneurs ▪ Supplier procurement opportunities for >40 black youth-owned service providers ▪ 140 exhibitors sponsored with Nedbank POS devices NEDBANK GROUP LIMITED – 2022 Annual Financial Results 1 Over-the-counter (OTT) vouchers can be used to play, pay and get paid online. Once a voucher has been purchased it can be redeemed only at an approved OTT voucher partner and is valid for three years from date of purchase. 76 Notes: Notes: 38 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 39 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryMessage from ourChief ExecutiveResultspresentation Nedbank Retail & Business Banking – outlook 2023 outlook ▪ NII ─ Advances growth – momentum continues ─ NIM continues to benefit from higher interest rates ▪ NIR – diversify revenue base & scale key growth vector strategies ▪ CLR ─ CLR within the top-half of our TTC target range (120 bps to 175 bps) ─ Economic risk is on the downside, putting pressure on clients ▪ Expenses – optimisation continues ▪ Execution of key strategic initiatives – Phoenix, Imagine & collection strategies Medium- & long-term outlook ▪ Ongoing focus to reduce the cost-to-income ratio to between 54% & 57% & increase ROE to between 20% & 23% Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Wealth financial performance – strong HE & ROE recovery, driven by increased revenue & net credit impairment releases Financial performance ▪ NII up 43% E O R ) % ( 24,8 15,3 26,1 21,2 18% 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 1 3 1 1 22 – NIM expansion due to higher local and international base interest rates ▪ NIR down 3% – Sale of the international Nedgroup Trust business (profit of R177m, excluded from HE) – Higher non-life claims due to the KZN floods – Negative local and international market performance – Lower claims in the Life portfolio ▪ Impairments down >100% – Client-specific overlay releases in Wealth Management (South Africa) due to better-than-expected recoveries ▪ Expense growth of 5% – Investment in people, digital and data enhancements – Sale of the international Nedgroup Trust business NEDBANK GROUP LIMITED – 2022 Annual Financial Results 77 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 79 Notes: Notes: Wealth financial performance – strong HE growth positively impacted by favourable interest rate environment, offset by challenging local & international markets & higher non-life claims Booklet slide ‘Strong HE & ROE recovery, driven by increased revenue & net credit impairment releases’ Wealth overview Iolanda Ruggiero Group Managing Executive Headline earnings per division (Rm) (6%) (8%) Insurance ▪ Higher non-life claims due to KZN floods ▪ Profits from enhanced asset & liability matching strategy in the base ▪ Lower investment returns due to challenging markets >100% ▪ Reduced death claims in the life portfolio Asset Management ▪ Negative local & international market performance 2 3 5 9 9 4 0 8 3 1 5 3 0 5 1 8 2 Insurance Asset Management Wealth Management 19 20 21 22 ▪ Net outflows Wealth Management ▪ Higher local & international interest rates ▪ Client-specific overlay releases from better-than- expected recoveries ▪ Sale of the International Trust business NEDBANK GROUP LIMITED – 2022 Annual Financial Results 78 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 80 Notes: Notes: 40 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 41 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryMessage from ourChief ExecutiveResultspresentation Insurance – resilient financial performance despite lower investment returns and an increase in non-life claims Asset Management – 7% decline in AUM driven by negative market performance & net outflows, particularly in the cash portfolio Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Non-life claims ratio (%) Long-term average +3% Dec 20 Dec 21 Dec 22 JSE All-share index & investment returns (volumes) (1%) (29%) Jun 20 Dec 20 Jun 21 Dec 21 Jun 22 Dec 22 JSE Investment returns NEDBANK GROUP LIMITED – 2022 Annual Financial Results Life claims volumes at pre-Covid-19 levels 10 product offerings available on 6 digital channels #1 at the International ActiveOps Awards – Excellence in Running Operations Assets under management (Rbn) 331 312 297 257 273 212 190 151 (7%) 424 393 375 Maintained steady growth in the Best of BreedTM range Good inflows into 12 13 14 15 16 17 18 19 20 21 22 Core & Global funds Local International the low-cost Sustainable investment model portfolios for Nedbank Private Wealth (International) Asisa stats ranking • SA – 6th largest in total AUM (7% market share) • International – 3rd largest in total AUM (12% market share) 81 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 83 Notes: Notes: Nedbank Insurance – significant progress made on product & channel diversification Branch & bank insertion points Booklet slide Branch Pre-2010 Credit Life Home- owner’s Cover MyCover Funeral MyCover Life Credit Life Home- owner’s Cover MyCover personal lines VVAPs* Accident and health Call centre MyCover Funeral MyCover Life Credit Life Home- owner’s Cover MyCover personal lines VVAPs1 Current Digital channels MyCover Funeral MyCover Life Personal Accident MyCover personal lines VVAPs* (Gap, credit shortfall, TLC) Other VVAPs1 Accident and health Banker MyCover personal lines Platform MyCover personal lines MyCover Funeral Financial adviser Risk consultants MyCover Funeral Savings & investments Home- owner’s Cover MyCover personal lines MyCover personal lines Home- owner’s Cover MyCover Life 1 Vehicle value-added products Life Non-life In development Eclipse Wealth Management – HE improved by >100% to R281m, driven mainly by an increase in NII & net credit impairment releases ) % ( M N I 50 45 40 35 30 25 20 15 10 5 0 Wealth Management average loans & advances, average deposits & NIM 1,6 1,1 1,1 1,7 0% (2%) 19 20 21 30 44 22 Avg loans & advances Loans & Advances Avg deposits Deposits Optimised SA operating model Enhanced onboarding experience for SA clients Intellidex Awards #1 in the Wealthy Family Archetype category Sale of the International Nedgroup Trust business Wealth Briefing MENA Awards Best Boutique Private Bank – Overall Client Service NEDBANK GROUP LIMITED – 2022 Annual Financial Results 82 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 84 Notes: Notes: 42 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 43 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryMessage from ourChief ExecutiveResultspresentation Nedbank Wealth – outlook 2023 outlook ▪ NII – Continued expansion of NIM due to local and international interest rate increases ▪ NIR ‒ Growth in the Nedbank Insurance MyCover portfolio ‒ Normalised life & non-life claims trends ‒ Increased cross-sell opportunities due to greater penetration within the group ‒ AUM growth through attracting netflows ▪ CLR – Expected to increase post net recoveries in 2022, however still to remain below the TTC target range ▪ Expenses ‒ Investment in strategic growth initiatives ‒ Optimisation continues through automation ▪ IFRS 17 ‒ Transition is not expected to have a material impact on reserves (Group and Insurance entities) ‒ Improvement in cost-to-income ratio (expenses related to insurance products being recognised in NIR) Medium- & long-term outlook ▪ Maintain strong ROE, ≥10% above the group’s cost of equity & reduce cost-to-income ratio to ≤67% Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information NAR financial performance – strong uplift in ROE with improved performance from SADC operations & strong earnings from ETI Financial performance E O R ) % ( 7,7 13,8 9,3 (0,8) 64% i s g n n r a e e n i l d a e H ) m R ( 7 5 4 19 ) 4 2 ( 20 4 9 5 21 5 7 9 22 ▪ SADC operations ‒ HE of R365m, up >100% & ROE of 5,9% (2021: 1,3%) ‒ NII up 15%, driven by improved margins ‒ NIR up 23%, driven by unrealised forex gains in Zimbabwe & increased transactional volumes, offset by net monetary loss ‒ Impairments up 31% & CLR up 30 bps to 102 bps, off a low base ▪ ETI associate investment1 ‒ HE of R610m, up 17% ‒ Associate income up 14% to R779m ‒ Ghanaian Sovereign debt restructure impact estimated at R175m (excluding this, associate income was up 39%) ‒ Improved performance from Ecobank Nigeria 1 Includes accounting for our share of ETI’s Q4 2021 & 9M 2022 earnings & any significant transactions or events that occurred between 1 October 2022 & 31 December 2022. NEDBANK GROUP LIMITED – 2022 Annual Financial Results 85 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 87 Notes: Notes: ‘Improved performance in SADC operations & continuing recovery from ETI driving HE growth’ NAR overview Dr Terence G Sibiya Group Managing Executive SADC operations – leveraging digital to achieve scale across the regions Migrate the NAR subsidiaries onto the group’s modernised SA technology stack Positive growth in digitally active clients up to 57%, ahead of aspirations Digital enablement, Zipit smart clients in Zimbabwe for direct payments from mobile app & loan applications via digital channels in Mozambique Payment APIs implemented in Lesotho & Eswatini as part of our API marketplace journey Insurance offerings available for clients to take up via digital channels Client & digital growth metrics Clients (# ‘000) % of digitally active clients Mobile app users (# ‘000) 4 3 3 20 1 , 7 4 20 8 5 20 7% +3,4% 29% 8 3 3 21 7 , 3 5 21 4 8 21 0 6 3 22 1 , 7 5 22 8 0 1 22 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 86 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 88 Notes: Notes: 44 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 45 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryMessage from ourChief ExecutiveResultspresentation Hyperinflation – financial impact of hyperinflation on the Nedbank Group income statement & balance sheet ETI associate investment – sustained turnaround in financial performance, offset by Ghana bonds exposure & FCTR adjustments Booklet slide Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Zimbabwe inflation & exchange rate 0,15 3.44x 3 1 7 2 1 6 8 2 2 1 3 3 9 0 1 7 0 7 8 2 6 6 6 7 0 5 5 0,04 3 8 4 4 6 6 7 4 0 9 1 4 7 7 9 3 (Rm) 4 1 1 3 1 9 4 3 3 1 3 7 6 3 1 Income statement impact gain/(loss) Balance sheet impact increase/decrease Total Non- control interests Ord share- holders Assets Equity Rebase Dec 21 equity (254) (65) (189) 189 Net monetary gain on non-monetary assets & liabilities 86 22 64 64 I/S indexing (251) (64) (187) Net monetary loss (419) (107) (311) Excl I/S indexing reported on indiv I/S lines 0,03 187 (125) (125) 64 64 Dec 21 Jan 22 Feb 22 Mar 22 Apr 22 May 22 Jun 22 Jul 22 Aug 22 Sep 22 Oct 22 Nov 22 Dec 22 HE impact Total B/S impact CPI Index ZWL:ZAR Note: The net monetary loss of R419m is reported in NIR and the total HE impact to the Group (ie excluding non-controlling interests) is R125m. Within NIR the net monetary loss is offset by Fx gains of R442m. ) m R ( e m o c n i e t a i c o s s A s r e v i r d e u l a v - g n i y r r a C ) n b R ( +14% 668 686 779 (178) 20 19 21 22 (0,1) 0,8 (1,7) Return on ETI investment1 (%) 10,7 11,0 12,4 5,6 2,3 1,3 2,1 Carrying value Dec 2021 Associate income Dividends FCTR & other Carrying value Dec 2022 Market value Dec 2022 2019 2020 2021 2022 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 89 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 91 Note: ETI accounted for 1 quarter in arrear. | Associate income includes R175m estimated impact of Ghanaian sovereign debt restructure. | 1 Return on original investment of R6,3bn (based on associate income). Notes: Notes: ETI associate investment – ongoing strong financial performance supporting our investment, while strategic progress is encouraging ETI share price (NGN) Ecobank top 3 in 14 African countries & #1 in 7 countries ROTE up to 21,0% from 17,9% in the prior year1 Ghana’s sovereign debt restructure may slow momentum of ETI’s financial performance: impact on Ecobank Ghana being closely monitored 25 20 15 10 5 0 Booklet slide 10,6 Improved performance from ENG PBT up +55% & NPL down to 8,7% (from 16,5%)1 Strong performance from three core regions with ROEs > 23%2 1 Year-on-year, based on ETI’s 9M 2022 results. 2 ROEs of UEMOA:23,6%, AWA:31,1%, CESA:24,5% & Nigeria:4,6%. NEDBANK GROUP LIMITED – 2022 Annual Financial Results 19 20 21 22 2022 Awards 2022 Euromoney Awards for Excellence Africa’s Best Bank 2022 Euromoney Awards for Excellence 2022 Euromoney Awards for Excellence Africa’s Best Bank for SMEs Africa’s Best Digital Bank Nedbank Africa Regions – outlook 2023 outlook SADC operations ▪ Transform the business & operating model ▪ Accelerate the pan-African digital growth strategy ▪ Unlock further value in Mozambique ▪ Amplify focus on quality of earnings ETI associate investment ▪ Collaborative shareholder focus to execute on value unlock agenda Medium- & long-term outlook ▪ Focus on getting SADC operations ROE consistently >COE & reduce cost-to-income ratio to <60% ▪ Target ETI ROI >20% Notes: Notes: 46 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 47 90 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 92 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryMessage from ourChief ExecutiveResultspresentation ‘Good progress towards our 2023 targets, with new medium- & long-term targets to drive shareholder value creation’ Macroeconomic forecasts Strategy Targets Conclusion Outlook Mike Brown Chief Executive Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Booklet slide Nedbank Group strategy Our purpose To use our financial expertise to do good for individuals, families, businesses & society 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 Enabled by our Managed Evolution technology strategy Supports delivery of our short-, medium- & long-term targets NEDBANK GROUP LIMITED – 2022 Annual Financial Results 93 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 95 Notes: Notes: Nedbank economic forecasts – medium-term GDP growth constrained by lack of reliable electricity supply Forecast: February 2022 Forecast: February 2023 19 20 21A 22 23 24 22A 23 24 25 SA GDP growth 0,1% (6,4%) 4,9% 1,7% 1,8% 1,0% 2,3% 0,7% 1,5% 1,6% Prime interest rate (year-end) Inflation (average CPI) Industry credit growth Rand/US$ (year-end) SA fiscal deficit % of GDP1 SA govt debt % of GDP1 10,0% 7,0% 7,25% 8,5% 9,0% 9,5% 10,5% 11,0% 10,25% 10,25% 4,1% 3,3% 4,6% 4,9% 4,2% 4,3% 6,9% 5,5% 4,8% 4,8% 5,3% 1,2% 4,4% 4,5% 4,3% 4,7% 9,2% 5,0% 5,9% 6,4% 14,0 14,6 15,9 15,9 15,6 16,3 17,0 16,8 16,7 17,3 (3,6%) (5,1%) (9,9%) (6,5%) (5,7%) (4,5%) (4,6%) (4,2%) (4,0%) (3,2%) 52% 56% 71% 67% 70% 71% 71% 72% 73% 74% Short-term (2023 full-year) financial guidance based on current economic forecasts 2022 performance 2023 guidance1 Key drivers/risks in 2023 NII growth +12% Around mid-teens ▪ Advances growth broadly similar to 2022 ▪ Ongoing NIM expansion – run-rate impact of 325 bps interest rate increases from 2022 & 50 bps increases in 2023, partially offset by asset mix changes & pricing pressures CLR 89 bps Within the top half of our 60 to 100 bps TTC range Impact of higher levels of load-shedding & interest rates Inflation high but trending down ▪ ▪ ▪ High forecast risk in a difficult environment NIR growth Expense growth +10% +8% Mid-single digits ▪ Ongoing main-banked client gains & cross-sell, as well as the expected closure of some renewable deals in H1 2023 ▪ Muted trading environment & generally a higher 2022 base to grow off in other areas (eg private equity, MVFHA) Mid-to-upper single digits ▪ Average annual salary increase of around 6% ▪ Ongoing cost optimisation focus ▪ New regulatory costs (eg Twin Peaks) & impact of higher levels of inflation & Fx (on IT costs) IFRS 17 changes Minorities & non- controlling interests (1%) Higher growth ▪ Impact from higher JIBAR rates & additional new AT1 issuances Capital (CET1 ratio) 14,0% Above TTC target range (11% to 12%) ▪ Remains above the top-end of board target range NEDBANK GROUP LIMITED – 2022 Annual Financial Results 1This guidance is not a profit forecast, has not been reviewed or reported on by the group’s joint auditors & is based on the group’s current economic forecasts. 96 At the lower end of target range (1,75x to 2,25x) ▪ Supported by strong capital ratios & capital optimisation that are subject to all legal & regulatory approvals, & requirements being met Source: Nedbank Group Economic Unit. | 1 Year ending March. Dividend 1,75x cover NEDBANK GROUP LIMITED – 2022 Annual Financial Results 94 Notes: Notes: 48 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 49 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryMessage from ourChief ExecutiveResultspresentationMessage from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information New medium- & long-term targets that support shareholder value creation Short term Medium term Targets to 2023 DHEPS > 2 565 cents (2019 levels) ROE > 15% (2019 levels) Cost-to-income ratio < 54% Net Promoter Score #1 bank (from #3 in 2019) Targets to 2025 > CPI + GDP + 5% (CAGR to end-2025) > 17% (COE + ~2%) by end-2025 < 52% by end-2025 #1 bank Long term > CPI + GDP + 5% (CAGR through the cycle) >18% (COE + ~3%) < 50% #1 bank Thank you NEDBANK GROUP LIMITED – 2022 Annual Financial Results 97 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 99 Notes: Notes: Conclusion – the group’s strong 2022 financial performance & good strategic delivery position Nedbank well for the achievement of our 2023 targets & demonstrate ongoing progress towards our medium- & long-term targets Disclaimer Strong balance sheet CET1: 14,0% LCR: 161% NSFR: 119% ECL coverage: 3,37% R5bn capital optimisation programme Tangible proof of strategic delivery ME IT build nearing completion Strong digital growth Client satisfaction up Cost optimisation Good momentum towards 2023 targets DHEPS 2 565 cents ROE > 15% Delivering on targets that create shareholder value ▪ Short term – 2023 Cost-to-income < 54% ▪ Medium term – 2025 Cross-sell, main-banked & market share growth #1 in NPS Purpose/ESG delivery Active capital management ▪ Long term – not dated 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 – 2022 Annual Financial Results 98 NEDBANK GROUP LIMITED – 2022 Annual Financial Results 100 Notes: Notes: 50 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 51 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryMessage from ourChief ExecutiveResultspresentationMessage from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information 2022 Results commentary industries run largely by state-owned monopolies, including electricity supply and distribution, logistics and transport (rail, port and road), and water supply. In addition, municipal service delivery is poor and levels of crime and corruption are unacceptably high. These are critical foundations required for business confidence, sustainable investment, higher economic growth and job creation, and more urgent action is needed. Household finances deteriorated moderately in 2022. Growth in personal disposable income slowed, hurt by the surge in inflation during the first seven months of the year. The pressure on household finances was offset partly by higher wage settlements, modest employment gains, positive savings and relatively low household debt burdens. Household debt eased to a manageable 62,8% of disposable income in Q3 2022 from a peak of 75,8% in Q2 2020. Although interest rates rose by a cumulative 350 basis points from November 2021, debt service costs edged only moderately higher to 7,5% of disposable income in the third quarter from a 14-year low of 6,8% at the end of 2021. Given relatively low debt-servicing costs, household demand for credit remained robust throughout 2022. Loans to households increased by 7,7% at the end of 2022, up from 5,4% at the end of 2021. Demand for most retail credit products improved, with the strongest growth recorded in home loans and vehicle finance. Corporate demand for credit also recovered in 2022. Loans to companies rebounded off a low base, growing by a robust 10,8%, up from 3,5% at the end of 2021. The boost came from a stronger growth in overdrafts and general loans, supported by a moderate recovery in fixed investment, which fared better than expected in 2022. The growth came primarily from pockets of activity in the renewable-energy sector and the ongoing digitisation and automation of operations. However, private companies started to cut back on capital expenditure in the second half of the year as confidence faded and domestic growth prospects diminished due to the global economic slowdown, growing fears of world recession, and the sharp escalation in the domestic electricity crisis. Encouragingly, growth in commercial mortgages improved as the drag from remote-working practices gradually eased, while instalment sales and leasing finance were supported by moderate growth in commercial-vehicle sales. The Nedbank Economic Unit’s capital expenditure project listing shows a moderation in fixed-investment activity in 2022 as strong local and domestic headwinds eroded business confidence. The value of new projects announced during the year fell to R249bn from R393bn in 2021. The private sector remained the major driver, with planned new projects rising to R194bn, accounting for 78% of the total value of new projects announced in 2022. Capital projects by government and public corporations were subdued compared to the prior year and fell by 80%. Inflation breached the 6% upper limit of the South African Reserve Bank (SARB) target range in May and peaked at 7,8% in July 2022 due to rising food and fuel prices triggered by Russia’s war on Ukraine and intermittent global supply chain bottlenecks. Inflation moderated over the second half of the year, easing to 7,2% in December 2022 on the back of sharply lower global oil prices, improved global supply chains, and a steadier rand. With inflation still well above the 4,5% midpoint of SARB’s target range, the Monetary Policy Committee (MPC) tightened monetary policy significantly, lifting the prime rate to 10,50% in December 2022, up from 7,25% in December 2021. The higher interest rates were beneficial to banks (endowment income), while credit growth and client transactional activity continued to rebound post the Covid-19 pandemic. The inflationary pressures and impact of 325 bps interest rates hikes are, however, starting to become evident in credit loss metrics in some segments and products. Capital market activity remained muted and the JSE All-share Index declined by 1%, moderating the performance in equity-linked portfolios. Against this backdrop, the South African banking sector continues to demonstrate strong levels of resilience and remains well capitalised, liquid and profitable. Banking and economic environment in 2022 Global economic conditions deteriorated throughout 2022 as Russia’s invasion of Ukraine pushed international energy, food and other commodity prices sharply higher, adding to global inflationary pressures. In advanced countries, inflation increased to around 40-year highs, forcing the US Federal Reserve and other major central banks to tighten monetary policy much more aggressively than previously expected. Persistent inflation and sharply higher interest rates eroded confidence, household incomes, company profits and global demand in most countries. As a result, global economic activity slowed noticeably during the second half of the year. The International Monetary Fund (IMF) estimates that world growth slowed to 3,4% in 2022 from 6,2% in 2021. The downturn was most pronounced in advanced countries, where the surge in the cost of living and the rapid and largely unexpected increases in interest rates weighed on consumer confidence and spending. According to the IMF, growth in advanced countries slowed to 2,7% in 2022 from 5,4% in 2021. While many emerging and developing countries initially benefited from the war-induced increase in commodity prices, slower growth in advanced countries, coupled with the loss of momentum in China due to strict Covid-19 lockdowns and the slump in the property market, resulted in falling commodity prices and weaker export demand in the second half of the year. At the same time, developing economies also battled with the erosive effects of rising inflation and tighter monetary policies. As a result, growth in emerging and developing countries moderated to 3,9% in 2022 from 6,7% in 2021. The South African economy proved relatively resilient in the face of multiple domestic and global shocks, including the war in Ukraine, destructive floods in KwaZulu-Natal in early April 2022, persistent power outages throughout the year, and the lockdowns in China over May and June 2022. Despite this challenging environment, the economy still managed to expand by 2,3% yoy over the first three quarters of the year. However, economic conditions deteriorated further over the final quarter of 2022 as the country’s electricity crisis worsened, global growth slowed, commodity prices dipped and the pressure on household income from the earlier surge in inflation and the increases in interest rates intensified. Given the disruptive shocks and the slowdown towards year-end, real gross domestic product (GDP) growth is forecast to be 2,3% for 2022, down from a more robust 4,9% in 2021. Notwithstanding some progress on structural reforms such as the 5G spectrum auction and some renewable-energy developments, delivery of reforms remains too slow, particularly in the network 2022 results commentary 52 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 53 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial resultsResultspresentationMessage from ourChief Executive2022 resultscommentaryStrategic progress Our strategy gives us a clear framework of where we want to focus as a purpose-led organisation and what we need to do to meet our short-term, medium-term and long-term targets. In 2022 we achieved diluted headline earnings per share (DHEPS) of 2 806 cents. This is already greater than the 2023 DHEPS target we set of 2 565 cents, being the DHEPS level achieved in 2019, and we are pleased to have reached the target a year earlier than we initially planned. We continue to make solid progress towards the remaining 2023 financial targets of a return on equity (ROE) greater than the 2019 level (15,0%), a cost-to-income ratio lower than 54% (2019: 56,5%) and maintaining a #1 ranking in NPS (2019: #3) by the end of 2023.  Our newly set medium-term (2025) and long-term targets, which are discussed in more detail in the outlook section, endeavour to achieve sustainable DHEPS growth, increase our ROE beyond our 2023 targets and decrease our cost-to-income ratio further. Through execution on our strategy, we seek to meet these targets and create value by growing revenue faster than expenses, while increasing levels of productivity, both strongly enabled by technology, and maintaining world-class risk and capital management metrics. We are focusing on growing our share of transactional main-banked clients and related deposits across all our businesses and ensuring we deliver market-leading client experiences that will help us attract new clients and a deeper share of wallet among existing clients. We believe a large opportunity exists to grow insurance income across the group, from the base of R2,4bn in 2022, as we focus on bringing new products to market, increase product penetration and enhance cross-sell metrics via our digital channels. To boost productivity and improve operational efficiency, we are building on and accelerating 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 will ensure that we balance risk and reward trade-offs appropriately. Our strategy is enabled by our Managed Evolution (ME) technology programme and delivered through five strategic value unlocks: delivering innovative market-leading client solutions; engaging in ongoing disruptive market activities (underpinned by digital leadership); focusing on areas that create value (known as strategic portfolio tilt); driving efficient execution (including target operating model enhancements); and creating positive impacts, including delivering on our purpose of using our financial expertise to do good, while maintaining our leadership in environmental, social and governance (ESG) matters. The group’s technology strategy and ME transformation programme is focused on building a modern, modular and digital IT stack. At the end of 2022 we reached 91% build completion and the programme is aiming for full completion by the end of 2024, with the refactoring and modernisation of our core banking systems as one of the final components. Given the significant progress over the past few years, the group’s intangible software assets on the balance sheet ended 2022 at R8,3bn, having peaked in 2021 at R8,9bn, in line with reducing levels of IT cash flow spend that peaked in 2017 at around R2,3bn and is expected to remain around the R1,6bn level going forward (2022: R1,3bn). The rationalisation, standardisation and simplification of our core banking systems have resulted in a reduction from 250 large systems down to 69 (now within our target range of 60 to 75), enabling reduced infrastructure and support and maintenance costs, less complexity, increased agility in adopting new innovations, and higher levels of systems stability at the top-end of the industry (2022: 99,3% system uptime). The benefits of ME are evident in the digital progress we have made, as well as the realisation of benefits through our target operating model and expense optimisation programmes. The following highlights the strategic progress made in 2022: • Delivering innovative, market-leading client solutions • Digital client onboarding, sales and servicing (Eclipse for retail clients and Nedbank Business Hub (NBH) 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. These provide a seamless omnichannel experience and include our apps, online banking, kiosks, contact centre and in-branch channels. The processing of product sales to individuals via Eclipse includes six of our top retail products, being transactional products, personal loans, card issuing, home loans, investments and overdrafts, as well as more than 170 services. In 2022, MyCover Funeral plans, foreign exchange and student loans were enabled on the Eclipse platform. The juristic client onboarding in Retail and Business Banking (RBB) and Corporate and Investment Banking (CIB) started with the roll-out of the NBH, leveraging our new digital tokenless security and enabling a step change in client experience for businesses. The NBH is a convenient platform for clients from which they can have a single view of their relevant digital offerings, and also transact and apply for products (transacting, lending and borrowing) or services. From a digital servicing perspective, an additional 100+ juristic services are planned to be digitised by the end of 2023. In recognition of the progress made, NBH was recently recognised at the Digital Banker Middle East and Africa (MEA) Innovation Awards 2022, winning the Outstanding Digital Transformation by a Transaction/Wholesale Bank in Covid-19 Award for outstanding digital transformation. • Apps: Nedbank Money app clients reached the key milestone of 2,0 million active clients and was up by 23%. Transaction volumes on the Money app increased by 35% (up by 253% since 2019) and transaction values increased by 27% (up by 233% since 2019). Revenue from value-added services grew by 25% (up by 129% since 2019) across prepaid data, voucher and electricity purchases, as well as LOTTO and Send-iMali. The Nedbank Private Wealth app, which offers integrated local and international banking capabilities, recorded a 9% increase in transaction volumes. 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 and great user experiences. The total number of app users at the end of 2022 for NAR exceeded 108 000, up by 29%. In support Nedbank was recognised for Excellence in Mobile Banking at the Finnovex Southern Africa Awards 2022. • Digital outcomes: Our digital initiatives helped us to increase the number of digitally active retail clients in SA by 13% to 2,6 million. This now represents 39% of total active retail clients (2021: 36% and 2019: 28%) and 68% of retail main-banked clients (2021: 64% and 2019: 49%). Retail digital transaction volumes in SA increased by 18% (by 76% since 2019) and transaction values up by 16% (up by 40% since 2019). Digitally active clients across the NAR business grew by 18% and now represents 57% of its total active client base. • Great client experiences: The outcome of our digital innovations was evident in higher levels of client satisfaction, as illustrated in Nedbank being rated the second-best large bank on the Consulta Net Promoter Score (NPS) in 2021. In 2022 Consulta did not conduct its industrywide NPS and SA-sci surveys, and we contracted Kantor, a credible and independent research company, to complete a similar, statistically valid, NPS survey among South African consumers. Pleasingly, based on this research, Nedbank ranked #1 in NPS among South African banks, reaching our 2023 target a year earlier than expected. Direct client Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information feedback across our digital channels also recorded high levels of client satisfaction, with digital NPS scores of more than 70 (similar to 2021). This highlights the higher relative client satisfaction levels associated with digital experiences. Additionally, in the 2022 Ask Africa Orange Index, Nedbank also ranked as the #1 large universal bank in SA and #3 overall. Our apps remain highly rated on the Apple and Google app stores, with lifetime store client ratings for the Nedbank Money, Nedbank Private Wealth and Nedbank Money (Africa) achieving scores of 4,1, 4,7 and 3,5 (out of five) respectively. To support great client experiences in the commercial-banking market, Nedbank Business Banking was strategically repositioned as Nedbank Commercial Banking to better represent the comprehensive range of services and products we offer to medium-, large-, and mid-corporate-sized businesses. We also rebranded our Professional Banking offering to Private Clients. Related to this, Nedbank was recognised as Best Private Bank for Digital Customer Service in Africa at the 2022 Professional Wealth Management Wealth Tech Awards. Nedbank Wealth won the coveted Archetype: Wealthy Family Award at the 2022 Intellidex Awards. • Ongoing disruptive market activities • Avo super app: Our Avo super app that enables clients to buy essential products and services online and have them delivered to their home with seamless secure payments has since its launch in app stores in June 2020, signed up more than 2,0 million users, up by 1,9 times yoy and active users are up almost five times. To enable delivery, Avo now has access to over 12 000 drivers on its delivery fleet nationwide as product orders continue to grow exponentially, with a fourfold yoy increase in gross merchandise value and a sevenfold increase when including internal Nedbank procurement via the platform. At the end of 2022, more than 20 000 businesses, up by 15%, were registered to offer their products and services on this e-commerce platform. Avo Auto, a virtual vehicle mall that was launched in 2021, now hosts over 200 MFC-accredited dealers, with more than 8 000 vehicles available on the platform. During the year we launched Avo B2B Marketplace, making it easier for business buyers and sellers to connect, anywhere, anytime, on a secure platform. Avo also continued to increase its number of partners to drive scale with our newest partnerships with Apple, Dell and Uber Direct, highlighting the increasing appeal of Avo as a destination marketplace to assist global brands and manufacturers in realising their growth aspirations. The launch of Avo in our first NAR subsidiary is being planned for Q1 2023. In recognition of the progress we have made, Nedbank won the Excellence in Innovation Banking App South Africa (Nedbank Avo) Award at the Global Banking and Finance Awards 2022. • APIs: After being the first bank in Africa to launch an API platform (API_Marketplace), we made good progress in scaling the platform and driving our open-banking strategy. The number of third parties active on API_Marketplace continued to grow and increased to 56 (2021: 45, 2020: 17). In 2022, we completed the development of our first API product that is made available outside of SA in the Common Monetary Area (CMA) countries (Namibia, Lesotho and Eswatini). At the Asian Banker Financial Technology Innovation Awards 2022, Nedbank was recognised for Best API and Open Banking Implementation. • Karri app: The Karri app, developed by Karri in partnership with Nedbank, is an integrated message-based payment, collection and reconciliation app for solving a niche problem experienced by schools. The app enables parents to make school-related payments within seconds while it also alleviates the need for parents and children to carry cash and schools from the burden of receiving and administering cash payments. The Karri app is one of the most popular apps in SA and is used by over 1 000 schools, with a database of parents and children in excess of 1,5 million. Karri has seen exponential growth in 2022, setting all-time records across all key value drivers. Active monthly users were up by 40%, payment values were up by 122% and the number of payments was up by 90%. The Karri partnership is well positioned to broaden the value to schools, parents and children across SA. • Focusing on areas that create value • We continue to focus on areas that create value, particularly through our strategic portfolio tilt 2.0 (SPT 2.0) initiative, which is a groupwide strategy focused on growing profitable market share in selected areas through integrated client-led asset/liability client value propositions (CVPs), leveraging the point of origination to increase the levels of cross-sell with a keen focus on growing the transactional-banking relationship and main-banked market share. In 2022, main-banked clients in retail grew by 6% to 3,24 million and cross-sell was 1,94 (compared with 1,86 in 2021 and 1,71 in 2019). CIB gained 25 new primary clients in the period. In NAR total clients increased by 7% to over 360 000, of which around 162 000 are main-banked clients. • Over the past 12 months, as reported in December 2022 SARB BA900 returns, we increased market share in retail overdrafts (from 9,9% to 12,9%) and household transactional deposits (from 13,5% to 13,9%) and household non-transactional (from 16,8% to 17,2%), noting a market share gain of 1% in H2 2022 –  the former by bringing a new competitive overdraft product to market and the latter as a result of our strategic focus on and actions relating to this key deposit category. Given increasing risks in the environment, we have slowed growth in some key products areas by, among others, tightening credit criteria, which resulted in market shares declining slightly in personal loans (from 12,2% to 11,6%) and vehicle finance (from 36,3% to 35,4%). The home loans market remains competitive and strategic actions to address a historic market share decline have proven to be successful, as market share remained broadly stable at 14,1%, improving by 0,1% in the second half of the year. In wholesale lending we remained selective in granting loans, resulting in a decline in term loan market share (from 16,8% to 15,6%), although we grew advances significantly stronger in H2 2022. In commercial mortgages we remained selective in origination and reduced our market share (from 37,2% to 36,8%). • Driving efficient execution • Unlocking benefits through technology: Our Target Operating Model 2.0 (TOM 2.0) programme, which was launched in 2021, 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 2022 we recorded benefits of R0,6bn, bringing the cumulative number to R1,5bn, on our way to unlocking benefits of R2,5bn by the end of 2023. During the year we expanded the scope beyond cost optimisation initiatives to also optimise our operating model across the group in areas such as risk management, data and payments, as well as commercialising and enhancing delivery on our purpose. • Branch optimisation: The digitisation of services in RBB and changing client behaviour have enabled us to reduce branch teller volumes by 63% since 2019. To date, as we optimise the shape of our infrastructure through Project Imagine (our new digitally focused outlets), branch floor space has decreased by 18 000 m2 in 2022 (cumulatively by 84 000 m2 from 2014 levels) to 164 000 m2. • Real estate optimisation: Through our strategy of consolidating and standardising our own buildings, our number of campus sites (offices) has decreased from 31 to 24 over the past four years. Since 2016 we have saved around 143 000 m2 in floor space including 27 000 m2 in 2022. 54 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 55 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial resultsResultspresentationMessage from ourChief Executive2022 resultscommentary• Our efforts in sustainability and ESG matters were externally recognised, including through Nedbank winning the Best Corporate ESG Strategy South Africa Award at the prestigious Global Banking and Finance Awards 2022 and being named a winner in Sustainability Reporting in Financials (Banking) and runner-up of Best Climate-Related Reporting in ESG Investing’s 2022 ESG Reporting Awards. We retained our top-tier ESG ratings with the following scores and rankings: MSCI – AAA (upgraded from AA and now within the top 5% of global banks); Sustainalytics – low-risk score of 17,2 (top 8% of 384 diversified banks); ISS – C rating (within the top 10% of global banks); FTSE Russell – 3,9 rating out of five (top 26% of global banks and a FTSE4Good Index constituent); and S&P Global – score of 67 out of 100 (a top-tier South African bank). Overview of 2022 results Nedbank Group delivered a strong financial performance for the 12 months to 31 December 2022 when compared to the 12 months to 31 December 2021 (prior period). Headline earnings (HE) increased by 20% to R14 049m, driven by a strong revenue growth, a slightly higher impairment charge and a well-managed expense base. HEPS and basic EPS increased by 20% to 2 886 cents and by 27% to 2 932 cents respectively, in line with the trading statement released on 3 March 2023. In the trading statement we noted that HEPS and basic EPS were expected to increase by between 17% and 22%, and 24% and 29% respectively. DHEPS increased by 19% to 2 806 cents and is above the 2 565 cents achieved in 2019 (set as a key 2023 financial target for the group in March 2021 after the Covid-19 pandemic and lockdowns). Return on equity (ROE) for the period increased to 14,0%, above the prior period of 12,5%, assisted by the group’s improved return on assets that increased from 0,98% to 1,14%. The group’s ROE remained below our estimated cost of equity (COE) of 14,9%. Net asset value (NAV) per share of 21 533 cents increased by 5%, compared with 20 493 cents in 2021, while tangible NAV of 18 937 cents increased by 7%, compared with the 17 770 in the prior period. The group’s balance sheet remained very strong, and capital and liquidity positions improved further to multi-year highs. CET1 and tier 1 capital ratios of 14,0% and 15,5% respectively increased from the 31 December 2021 levels and are well above board-approved target ranges and SARB minimum requirements. The average LCR for the fourth quarter of 161% and an NSFR of 119% were well above the 100% regulatory minimums and board-approved targets. On the back of strong earnings growth and capital and liquidity positions, the group declared a final dividend of 866 cents per share, up by 14% (December 2021: 758 cents per share), bringing the total dividend for 2022 to 1 649 cents per share, up by 38%, both at record levels for the group. The final dividend was declared at 1,75 times cover (payout ratio of 57%), at the bottom end of the group’s board-approved dividend target range of 1,75 to 2,25 times. Cluster financial performance The group’s HE increase of 20% to R14 049m was supported by strong performances across all our business clusters. All business clusters reported double-digit HE growth and higher ROEs, and with the exception of NAR, all clusters delivered ROEs above the group’s cost of equity (COE), with surplus capital held at the Centre diluting overall ROE. Over the next few years we will continue to optimise the portfolio by enhancing workstation use through flexible office constructs to support more dynamic ways of work, as well as leveraging successful work-from-home experiences. Our optimal workplace distribution mix for campus employees is expected to settle at around 50% at Nedbank premises on any given weekday, 30% hybrid and 20% working from home or remotely. In 2022, on average, 8% of campus employees worked from our offices permanently, 58% worked in a hybrid construct and 34% from home. • RBB reorganisation: In 2020 we started the implementation of Project Phoenix, which was aimed at shifting 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 phases 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, as well as the restructure of the cluster and divisional executive roles and the next tiers in line with the competencies required to deliver on the outcomes of the value chain accountabilities. In 2022 we commenced phase three, which focused on driving increased levels of process standardisation and consolidation, combined with digitisation through automation (straight-through processing or robotic process automation), leveraging the client-centred technology investments we have made, enabling 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 on ensuring efficient and effective central group functions including marketing, risk, human resources, finance and technology. In addition, we are in the process of further optimising smarter supply chain and procurement capabilities. In 2022 our total group permanent headcount declined by 937 or 3% (and 3 288 or 11% since 2019), largely through natural attrition. • Creating positive impacts • Fulfilling our purpose of using our financial expertise to do good is best demonstrated through our ongoing delivery against the United Nations (UN) Sustainable Development Goals (SDGs), our continued focus on leading in ESG matters, and our sustainable-development finance (SDF) commitments as we tilt our portfolio to areas that create positive impacts. At 31 December 2022, we had exposures of R123bn (2021: R108bn) that support SDF, representing 14% of the group’s gross loans and advances. By the end of 2025, it is our ambition to increase our SDF-related exposures to around 20% of the group’s total gross loans and advances. This will be underpinned by more than R150bn in support of new SDF that is aligned with the SDGs (from our starting base in 2021).  • Building on our history of climate and environmental leadership, including the commitment to have zero fossil fuel exposure by 2045 (which is in line with science-based targets), we are in the process of developing sectoral glidepaths, that will inform the timelines or rate of exit from the coal, oil and gas sectors in line with the ongoing changing context. These science-based glidepaths have been completed, using 2022 as the baseline and with the first interim target set for 2030. We will be utilising them internally during 2023 with public disclosure as part of our 2023 year-end reporting. In addition to the fossil fuel glide paths, we plan on disclosing our energy generation glidepath as well as the roll-out plan for disclosing further glidepaths in climate-sensitive sectors. 56 Nedbank Group Annual Results 2022 Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information HE (Rm) ROE (%) Change (%) 2022 2021 2022 2021 CIB RBB Wealth NAR Centre 14 12 18 64 6 399 5 097 1 131 975 447 5 605 4 532 962 594 (4) 17,7 16,0 26,1 13,8 15,3 13,7 21,2 9,3 Group 20 14 049 11 689 14,0 12,5 HE in CIB increased by 14% to R6,4bn, and the cluster delivered an ROE of 17,7%. HE was driven primarily by a 43% decrease in impairments as shown in its credit loss ratio (CLR) declining to 22 bps (2021: 42 bps), within the cluster through-the-cycle (TTC) target range of 15 bps to 45 bps. NII increased by 10%, supported by average interest-earning banking asset (AIEBA) growth of 7% to R362bn and a higher net interest margin (NIM). NIR increased by 5%, with strong growth achieved in the equity portfolio, coupled with a 13% increase in net commission and fees, offset by a 9% decline in trading revenue, which was impacted by unfavourable conditions in the debt and interest rate markets. Expenses increased by 9%, mainly from higher performance-linked costs, resulting in a cost-to-income ratio of 44,6%. HE in RBB increased by 12% to R5,1bn, delivering an ROE of 16,0%. The main drivers were 11% growth in revenue and expense increases that were curtailed below inflationary levels, offset by higher impairments. NII grew 12%, driven by an increase in loans and advances on the back of strong new-loan payouts of approximately R121bn and by a widening of the NIM that benefited from positive endowment (higher interest rates), and an increase in liability margins stemming from more favourable funding spreads. NIR increased by 8%, showing the ongoing improvement in client transactional activity, due to higher levels of cross-sell and strong main-banked client gains, and good growth in card interchange revenue. Expenses were very well managed, growing by 5%, enabling the cluster cost-to-income ratio to decrease to 61,0% from 64,0% in 2021. Impairments increased by 28%, driven by 7% advances growth, as well as the impacts of the more difficult macroeconomic environment and higher interest rates on rate-sensitive products. HE in Nedbank Wealth increased by 18% to R1,1bn and the cluster delivered an ROE of 26,1%. The cluster’s financial performance was driven by the benefit of higher local and international interest rates on NII and credit impairment releases as a result of better-than-expected recoveries. This was partially offset by insurance claims resulting from the floods in KwaZulu-Natal in the first half of the year, and the impact of negative equity market performance on assets-under-management (AUM) fees locally and internationally, advice fees in Wealth Management, and shareholder returns in Insurance. HE in NAR increased by 64% to R975m and its ROE increased to 13,8%. The performance shows an improved performance in the Southern African Development Community (SADC) operations, with HE up by over 100% to R365m (2021: R71m) as well as a continued strong recovery from Ecobank Transnational Incorporated (ETI) that was partially offset by providing for the estimated R175m impact on Nedbank’s associate income from the Ghanaian sovereign debt restructures that emerged in December 2022 and into 2023. ETI contributed HE of R610m (2021: R523m). The stronger performance of the SADC operations was driven mainly by increases in NII (up by 15%) and NIR (up by 23%). The performance in the Centre shows primarily the base effect of the impacts of the unrealised fair-value losses from macro fair-value hedge accounting mismatches in 2021 that did not recur, a R200m (pre-tax) central impairment release in 2022, compared with a R300m increase in 2021, and the endowment benefit from higher interest rates on the average R11,8bn surplus capital held in the centre. Financial performance Net interest income NII increased by 12% to R36 277m, in line with the group’s guidance of NII growth of low double digits, driven by 6% growth in AIEBA to R922bn and an increase in the group’s NIM. The increase in AIEBA was driven by growth of 7% in higher-yielding average RBB banking loans and advances and 7% growth in average CIB banking loans and advances. NIM increased by 20 bps to 3,93% from the 3,73% reported in 2021. This increase was driven by a positive endowment rate impact due to higher interest rates, improved liability pricing and mix changes, higher yields in NAR and positive basis risk impacts. The increase was partially offset by a negative asset mix impact due to slower growth in higher-yielding advances and stronger growth in lower-yielding advances, as well as negative asset pricing impacts from increased levels of competition. NIM was also diluted by the impact of moving the foreign currency loan portfolio, with lower-yielding assets into the banking book (previously trading book) in line with the regulatory requirements under the Fundamental Review of the Trading Book (FRTB). 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 12 months and the benefits of interest increases in 2022 will run-rate into 2023. Impairments charge on loans and advances The group’s impairment charge increased by 13% to R7 381m. The key drivers of the increase include a 7% growth in gross banking loans and advances, higher impairments in the home loans and vehicle finance portfolios in RBB and a small number of corporate clients that migrated to stage 3 loans, partially offset by overlay releases previously held for anticipated defaults. The group’s CLR increased to 89 bps (2021: 83 bps) and remained within the group’s TTC target range of 60 bps to 100 bps and in line with the full-year 2022 guidance range of between 80 bps and 100 bps. Average banking advances (%) 2022 2021 44 50 3 3 0,22 1,61 (0,20) 1,02 0,42 1,34 0,09 0,72 TTC target ranges 0,15–0,45 1,20–1,75 0,20–0,40 0,85–1,20 100 0,89 0,83 0,60–1,00 CLR (%) CIB RBB Wealth NAR Group Impairments in CIB decreased by 43% to R805m and its CLR, at 22 bps, which remained within its TTC target range of 15 bps to 45 bps, was below the 42 bps reported in 2021. These declines were driven by the curing and migration of various exposures in stage 2 and stage 3 loans and the associated overlays that were previously held for potential risk migration, now catered for in-model. The impairment charge includes appropriate provisioning for clients in the agriculture and commercial-property sectors that moved into business rescue. The commercial-property portfolio reported a CLR of 28 bps, similar to the 30 bps reported in 2021. Developments in the commercial-property office portfolio continue to be monitored closely, with the industrial and retail sectors having recovered from the Covid-19 challenges. The office sector remains a key focus, with the average vacancies in the Nedbank office portfolio well below the market average. Nedbank Group Annual Results 2022 57 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial resultsResultspresentationMessage from ourChief Executive2022 resultscommentary              In RBB impairments increased by 28% to R6 613m, showing the impacts of once-off benefits in 2021 (lower base), higher interest rates, as well as a deteriorating macroeconomic outlook. The RBB CLR, at 161 bps, was within the top-half of its TTC target range of 120 bps to 175 bps. Adjusting for benefits relating to the release of Covid-19 overlays and the curing of Directive 7/2015 accounts of R713m (as we communicated in our 2021 reporting), the RBB CLR in 2021 was 153 bps (134 bps reported) and therefore, on a normalised basis, the CLR was up by 8 bps in 2022. Secured lending (home loans and vehicle finance), with mostly variable interest rates, experienced an increase in impairments into the second half of the year as the cumulative impact of interest rate hikes took effect. From a personal-loans perspective, there was less direct exposure to interest rates due to the fixed-rate nature of the product, but clients continue to be vulnerable given inflationary pressures, although this has been somewhat offset by credit policy tightening in 2021 and 2022. Nedbank Wealth reported a CLR of -20 bps, driven by the release of client-specific overlays as a result of better-than-expected recoveries. NAR reported an increase in impairments of 31% to R220m, and its CLR at 102 bps is within the NAR TTC target range of 85 bps to 120 bps, driven by additional provisions raised on specific wholesale exposures and ECL model reviews that incorporate a higher interest rate and an inflation cycle. Nedbank has no direct exposures to Ukraine and Russia and has insignificant indirect exposure. Judgemental overlays decreased to R1,4bn (Dec 2021: R3,0bn) and now include no Covid-19-related overlays. During 2022, we raised R1,25bn in new overlays and released R0,90bn of existing overlays, both via the income statement. In addition, R1,95bn of historic overlays are now catered for in-model (no income statement impact). Ongoing overlays are held for emerging risks not yet showing in our models, including client and industry-specific overlays. The group’s central provision has declined by R200m since December 2021, with R300m remaining in place to account for forward-looking information and risks not yet showing in the data and impairment models. The group’s balance sheet expected credit loss (ECL) increased from R26,6bn (2021) to R27,9bn, showing prudent provisioning. The increase was driven by the R7,4bn impairment charge, higher post-write-off recoveries of R1,6m (2021: R1,4bn) and higher levels of write-offs at R8,6bn (2021: R8,1bn). The overall ECL coverage ratio remained high at 3,37% (of total loans and advances), driven by a higher contribution from stage 3 loans. The ratio was slightly up from December 2021 (3,32%) and much higher than the pre-Covid-19 level of 2,26% (December 2019). The group’s stage 1 coverage ratio decreased slightly to 0,60% (December 2021: 0,69%) as stage 1 loans grew 7%, broadly in line with the growth in gross banking loans and advances. The stage 1 coverage ratio remains higher than the pre-Covid-19 level of 0,48% (December 2019). Stage 2 coverage increased to 7,0% (December 2021: 6,4%), primarily as a result of migrations out of stage 2 and the release of overlays. Stage 2 coverage also remains well above the pre-Covid-19 levels of 5,3% (December 2019). The stage 3 coverage ratio reduced to 34,3% (December 2021: 38,0%) as some highly collateralised CIB clients moved from stage 2 into stage 3. Non-interest revenue and income NIR increased by 10% to R27 301m, driven by a strong insurance performance, solid commission and fees growth and equity revaluations, as well as the previously communicated base effects of unrealised fair-value losses from macro fair-value hedge accounting mismatches recorded in H1 2021 that did not recur. This strong performance was partially offset by the continued impact of unfavourable domestic market conditions on trading income and asset management income and the delay in the closure of renewable energy deals and related NIR to 2023. The growth in NIR was ahead of the guidance provided during the group’s pre-close update in Q4 2022. • Net commission and fees income increased by 7% to R18 964m, driven by an ongoing improvement in transactional activity in RBB as evidenced through increased levels of client spend, cash withdrawals and purchases of value-added services, main-banked client growth in RBB, which ended the year at 3,2m, up 6%, benefitting from strong sales and improved levels of cross-sell. Net commission and fees income in RBB increased by 8% and in CIB by 13%, the latter driven by increased levels of new and existing transactions, mainly within Investment Banking, and 25 primary clients wins. • Insurance income increased by 18% to R2 369m. The life portfolio benefited from lower death and funeral claims, with the strong performance partially offset by accounting for insurance claims (net of reinsurance) relating to the KwaZulu-Natal floods in April 2022 and the base impact of benefiting from the implementation of a revised asset-and-liability matching strategy in 2021. • Trading income decreased by 7% to R4 166m as unfavourable conditions impacted the debt and interest rate markets. • Equity revaluations of R815m (2021: R650m) were driven by higher positive revaluations, mainly within the property finance portfolio. • The unrealised fair-value losses of R833m from accounting mismatches in 2021 did not recur, with the unrealised profit of R187m in 2022 largely the result of the group’s successful macro fair-value hedge accounting methodology enhancements in the second half of 2021 and first half of 2022. • Other NIR was driven by foreign currency gains in Zimbabwe on US dollar capital as a result of hyperinflationary conditions (largely offset in the net monetary loss) as well as the reclassification of the net monetary loss on the face of the income statement. To provide comparability, the base year (2021) has been restated accordingly. Given the significant inflationary pressures in Zimbabwe, the net monetary loss increased by more than 100% to R419m (2021: R138m loss), which contributed to a HE loss of R125m (2021: R58m loss). However, as the Zimbabwean dollar depreciated against the US dollar by 517% and the rand by 478%, a R442m foreign exchange gain on Nedbank Zimbabwe’s foreign currency holdings was recognised in NIR. Expenses The increase in expenses of 8% to R36 425m shows the impacts of higher variable-pay incentives, ongoing investment in technology and digital solutions, and the normalisation of some expenses such as marketing and travel post the Covid-19 pandemic. Excluding variable-pay incentive costs and other staff costs, expenses increased by 5%, highlighting diligent cost management in an environment of rising inflation and weaker exchange rates. • Staff-related costs increased by 11% following: • salary and wages increased by 4%, including average 2022 annual salary increase of 4,6% (bargaining-unit increase of 5,2%) and a 3% reduction in employee numbers, largely through natural attrition; • a 19% increase in short-term incentives (STIs) and a 38% increase in long-term incentives (LTIs), driven by the impact of the group’s improved financial performance on variable incentives; and • other staff costs relating to lower returns from employee benefit assets and expensing more IT staff development costs (not capitalised), increased by more than 100%. 58 Nedbank Group Annual Results 2022 Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information • Computer-processing costs increased by 3% to R6 494m, showing an increase in the amortisation charge of 9% (slowing from the growth of 19% in 2021), as well as an investment in digital solutions. As our ME technology IT build reaches material completion, the growth rates in computer-processing costs and amortisation continues to slow, along with benefits from lower depreciation and computer-processing lease charges, particularly as we leverage cloud-based solutions. Given our digital fast-lane technology innovation capabilities, we have been able to deliver other smaller projects that are not capitalised and, as a result, higher levels of staff costs have been expensed through staff-related costs. • Marketing costs increased by 17% to R1 554m off a low 2021 base and show the group’s focus on increasing Nedbank’s share of voice in the market in support of revenue growth and the return of certain corporate sponsorships. Communication and travel increased by 22% as operations returned closer to business-as-usual levels after the Covid-19 pandemic, while fees and insurances costs increased by 8% as result of higher sales-related expenses, aligned with strong card-issuing revenue growth. • Other cost lines show good management of discretionary spend and the non-staff-related benefits of TOM 2.0 as seen in the 4% decline in occupation and accommodation costs. The group’s increase in expenses of 8% was lower than the increase in revenue, including associate income, of 11%, resulting in a positive JAWS ratio of 3% and the cost-to-income ratio decreasing to 56,5% (2021: 57,8%). Earnings from associates Associate income increased by 10% to R879m and includes associate income of R779m, relating to the group’s 21% shareholding in ETI for the period (up by 14% when compared with R686m in 2021). This includes accounting for our share of ETI’s Q4 2021 and 9M 2022 earnings (in line with our policy of accounting for our share of ETI’s attributable earnings a quarter in arrear) and any significant transactions or events that occurred between 1 October 2022 and 31 December 2022. During December 2022, the Government of Ghana announced its intention to restructure its local and external debt. The Ghanaian Finance Minister announced that Ghana was entering a voluntary domestic debt restructure programme for its local debt, while indicating that it will not service its external debts. This led to a default event when Ghana’s Eurobond coupon payments were not made in January 2023. Nedbank concluded its own governance review process for the 2022 full-year results and in accordance with our accounting policy, estimated our share of the impact of the Ghanaian sovereign debt restructure programme on ETI, using publicly available information, such as Ecobank Ghana’s published financial statements, and published economic data and reports on the restructuring. The impact was an estimated R175m after tax reduction in associate income. The total effect of ETI on the group’s HE was a profit of R610m (2021: R523m), including the R168m impact of funding costs. The gross return on the original ETI investment was 12,4% (2021: 11,0%). Statement of financial position Banking loans and advances Gross banking loans and advances increased by 7% to R863bn, driven by ongoing growth momentum in RBB gross loans and advances and a strong recovery in CIB banking loans and advances in H2 2022. Gross banking loans and advances growth by cluster was as follows: Rm CIB RBB Wealth NAR Centre1 Group Change (%) 2022 2021 8 7 (4) 3 382 250 429 564 29 395 22 902 (>100) (1 342) 352 487 400 301 30 729 22 325 1 112 7 862 769 806 954 1 Includes macro fair-value hedge-accounted portfolios and disclosure reallocations. CIB gross banking loans and advances increased by 8% to R382bn, supported by an increase in credit demand in the second half of the year. The recovery in CIB loans and advances growth has been driven by strong performances in the mining and resources, oil and gas, and leverage and diversified finance businesses, as well as sustainable development finance. Growth in commercial-property loans and advances remained muted at 3% as we focused on originating high-quality deals and managing risks. RBB gross loans and advances increased by 7% to R430bn, driven by strong growth in our commercial-banking and small-business segments, as well as solid growth in the secured-lending portfolios. Unsecured-lending disbursal growth remained subdued but is anticipated to improve as the macroeconomic environment improves and new digital solutions are commercialised. Commercial Banking gross loans and advances grew by 9% as client utilisation of existing facilities increased, although we noted cautious borrowing behaviour, with new-loan payouts flat around R27bn. Home loans in RBB grew by 8%, slightly ahead of market growth, while MFC (vehicle finance) loans increased by 6%, resulting in us maintaining our market-leading position. Overall new-loan payouts in RBB increased by 3% to R121bn in 2022. Deposits Deposits increased by 7% to over R1 trillion for the first time, with total funding-related liabilities increasing by 6% to R1,1 trillion and the group’s loan-to-deposit ratio decreasing to 85% (December 2021: 86%). Within our business clusters, CIB grew deposits by 1%, RBB by 8% and Wealth by 5%, NAR deposits decreased by 2% and the Centre grew by 43%. Many clients termed out short-term deposits into longer-term deposits due to the favourable interest rate environment. As a result, CASA accounts, along with cash management deposits, decreased by 5%. Individually, current accounts increased by 4%, aligned with our SPT 2.0 objectives. In contrast, call and term deposits increased by 12% and fixed deposits increased by 20%. Negotiable certificates of deposit (NCDs) increased by 44% off a low base as institutional clients had appetite in 2022 to invest in high-quality bank paper, noting the decreasing yield in treasury bills. Foreign funding, although small in relative terms for Nedbank at 7% of total funding, increased by 29% due to foreign lending requirements. Nedbank Group Annual Results 2022 59 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial resultsResultspresentationMessage from ourChief Executive2022 resultscommentary      Funding and liquidity The group achieved a quarterly average long-term funding ratio of 28,4%, which is above the industry average of around 22,3%, as a result of the proactive management of Nedbank’s long-term funding profile. The group’s December 2022 quarter average LCR of 161% (Dec 2021: 128%) exceeded the minimum regulatory requirement of 100%, with the group maintaining appropriate operational buffers to absorb seasonal, cyclical and systemic volatility. HQLA (Rm) Net cash outflows (Rm) Liquidity coverage ratio (%)2 LCR regulatory minimum (%) NSFR (%) NSFR regulatory minimum (%) 2 Average for the fourth quarter. 2022 2021 224 963 140 138 160,5 100,0 119,1 100,0 207 105 161 678 128,1 80,0 116,1 100,0 Nedbank’s proactive management of its high-quality liquid asset (HQLA) buffers, the implementation of the cash surplus monetary policy transmission mechanism and the favourable tilt in the diversified deposit mix resulted in the yoy increase in the LCR to 161%. Nedbank Group has significant sources of quick liquidity, which include HQLA of R286bn, representing 23% of total assets. Nedbank exceeded the minimum regulatory NSFR requirement of 100% with the December 2022 ratio of 119%. The structural liquidity position of the group continued to be strong as a result of the effective management of the balance sheet growth and the implementation of the cash surplus monetary policy transmission mechanism. Capital The group remains strongly capitalised, with capital ratios significantly above the minimum regulatory requirements and board-approved target ranges, shown in a CET1 ratio of 14,0% (Dec 2021: 12,8%) and a tier 1 ratio of 15,5% (Dec 2021: 14,3%). The increase in the CET1 ratio was driven by strong organic earnings generation and a marginal reduction in risk-weighted assets (RWAs). The reduction in RWA was due mainly to lower counterparty credit risk as a result of market movements and lower market risk due to a general risk reduction across the trading portfolio in market risk, partially offset by an increase in credit risk in line with the balance sheet growth. The impacts of strong earnings growth and RWA changes were partly offset by R7,8bn of dividends paid during 2022 relating to the 2021 final and 2022 interim dividends. The group continues to focus on maintaining an optimal capital structure through the use of a full range of capital instruments. The group enhanced its tier 1 ratio by issuing additional tier 1 instruments amounting to R1,5bn and redeeming R600m during the year. The total CAR was further impacted by the issuance of R1,4bn and the redemption of R2,5bn of tier 2 instruments, in line with the group’s capital plan. Basel III capital ratios (%) CET1 Tier 1 Total CAR 2022 2021 Internal target range Regulatory minimum3 14,0 15,5 18,1 12,8 14,3 17,2 11,0–12,0 > 12,0 > 14,5 8,5 10,3 12,5 (Ratios include unappropriated profits.) 3 The Pillar 2A capital requirement for all banks as per Directive 5/2021 was reinstated, with effect from 1 January 2022, to 50 bps at CET1, 75 bps at tier 1 and 100 bps for the total capital ratio. Nedbank in turn recalibrated its board approved internal targets with effect from 1 January 2022 to align with this reinstatement.  Using our financial expertise to do good We remain committed to fulfilling 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 by continuing to provide well-being solutions and interventions to all of them. • Approximately 3 800 employees in KwaZulu-Natal who were adversely impacted by the floods in April and May 2022 were supported with the provision of food, water and accommodation, where necessary. • Employee engagement levels remained high, with our 2022 Workforce Insights Pulse Survey highlighting that 74% of participating employees are proud to work at Nedbank, and our ‘Great place to work’ NPS score improved from 19 to 22, the highest level since inception of the survey. • During the year, our Agility Centre successfully redeployed 235 employees into alternative roles within Nedbank, while 63 employees have regrettably been retrenched as a result of necessary operational changes. A key focus has been on timeous reskilling and upskilling to enable employees to transition to future internal roles. Employees are also supported with ‘outskilling’ support to empower them with relevant market-related skills should outplacement or external redeployment be necessary. • We have paid our 25 924 employees’ salaries and benefits of R19,9bn and concluded annual salary increases of 5,2% for our bargaining-unit employees, with non-bargaining-unit employees receiving increases of 4,0%. The blended average employee salary increase was 4,6% in 2022. • In 2022 training spend was R939m, and employees were encouraged to use the Flow Time Wednesday afternoons for upskilling and online learning towards cultivating a learning culture within the organisation. • In 2022 our hybrid work model saw 58% of our employees working in a hybrid fashion. This promotes flexibility and allows employees to return to the workplace in an integrated and natural manner. • To ensure that Nedbank remains relevant in a transforming society we continued to focus on transformation as a key imperative. We remain strongly representative of a diverse talent complement, with 81% of total employees (2021: 80%) being black African, Coloured or Indian (ACI), ACI representation at board level increasing to 67% (2021: 62%) and at executive level at 39% (2021: 46%). Pleasingly, we continue to record improvements in ACI employee representation at senior- and middle-management levels. Female representation at board Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information • In acknowledgement of Nedbank’s leadership and progress made on ESG-related disclosures, Nedbank was recently ranked first in the Refinitiv Satrix SA Inclusion and Diversity Index, which shows the progress we have made on matters of diversity, equity and inclusion, and we remained at the top-end of various ESG ratings when compared with local and international peers. • We ensured transparent, relevant and timeous reporting; ensured market-leading disclosures to shareholders; and participated in numerous virtual investor engagements in 2022, which were accompanied by high levels of investor attendance. Foreign equity shareholding levels increased to 33,2% (December 2021: 31,4%). • On 1 April 2022 Nedbank Group ordinary shares started trading on A2X Markets (A2X) via a secondary listing. The secondary listing on A2X complements our existing listings on the Johannesburg Stock Exchange (JSE) and the Namibian Stock Exchange (NSX) by giving our investors the opportunity to source additional liquidity and save money when they transact, thereby benefiting Nedbank shareholders. Since listing, the Nedbank share has been a regular top-10-traded equity on the exchange. 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 regulatory developments in 2022 included the following: • The systemic capital risk Pillar 2A reinstatement, which reinstates 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, has been in effect from 1 January 2022 based on Directive 5/2021. • In August 2022 SARB fully migrated from a cash deficit (money market shortage) monetary policy transmission mechanism to a cash surplus (floor) system, given that the cash deficit system was proving both difficult and costly to implement on the back of a significant increase in domestic structural liquidity in the period following the onset of the Great Lockdown Crisis (GLC). The resultant effect was that the banking system switched from a managed shortage of approximately R30bn to a surplus of approximately R50bn. The switch from a cash deficit system to a cash surplus system should be net positive for the banking sector, with the most significant 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. • Basel III reforms: In September 2022, the Prudential Authority (PA) published a proposed directive with amendments to the regulations relating to banks, addressing key matters related to the Basel III post-crisis reforms; revisions to the standardised and the internal ratings-based approaches for credit risk; the new standardised approach for operational risk; refinements to the definition of the leverage ratio exposure measure and revised output floors that place a limit on the regulatory capital benefits that a bank using internal models can derive relative to the standardised approaches. The PA has endeavoured to understand the potential impact, costs and benefits of the proposed amendments to the regulations. level improved to 27% (2021: 23%), at executive level it remained at 46% and among total employees it was 62% (2021: 61%). • In 2022 we were formally recognised for our efforts towards transformation and diversity, and won two awards at the 21st Top Empowerment Awards, namely the Top Empowered Company: Youth Employment Service (YES) Initiative Award and the Top Empowered Company: Enterprise and Supplier Development Award. Clients • Delivering market-leading client experiences remains a key priority for us as we continued to build on the positive outcomes of the 2021 Consulta survey, where we achieved the #2 position among South African banks on client satisfaction metrics. In 2022, based on an independent survey conducted by Kantar (replacing Consulta that did not conduct their 2022 client satisfaction survey), Nedbank ranked #1 among the South African banks on NPS. In addition, we also improved our ranking to become the #1 bank on social-media net sentiment (average ranking over the past 12 months) up from #2 in 2021, as measured by Salesforce Social Studio. • We safeguarded more than R1 trillion in deposits at competitive rates. • We supported clients by advancing R341bn (2021: R228bn) in new loans to enable them to finance their homes, vehicles and education, as well as grow their businesses, increasingly in support of the UN SDGs. • Our clients’ access to banking products and services improved as clients continue their shift to digital channel usage. Digitally active retail users increased by 13% to 2,6 million (up by 45% since 2019). 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 53% (from 12% in 2019). During the year we also reached the milestone of having opened 200 Imagine branches, which are more digitally and sales focused. • In support of clients impacted by the floods in KwaZulu-Natal, all available platforms were used to inform clients of branch closures and the nearest operational branches in the affected areas. • In recognition of the value-add to our clients and our leadership position in key industries, segments and products, Nedbank won various awards, including the Best Retail Bank in Africa and SA and the Best SME Bank in SA at The Asian Banker Awards 2022, Best Boutique Private Bank for a fourth year running at the 2022 Wealth Briefing MENA Awards for Excellence. Nedbank Private Wealth won the award for Total Wealth Planning – High Net Worth at the Private Asset Managers Awards 2022. Shareholders • The group’s strong financial performance, operational delivery and good strategic progress supported a 21% increase in the Nedbank share price in 2022, outperforming the South African Banks Index, which increased by 12% and the JSE All Share Index, which declined by 1%. • A very strong capital and liquidity position at 31 December 2022 supported the declaration of a final dividend for 2022 of 866 cents per share, and a total dividend of 1 649 cents per share, an increase of 38% on 2021. • We successfully hosted our third virtual annual general meeting (AGM) in 2022 although votes on our remuneration implementation report and remuneration policy at 72,9% and 71,7% respectively, were below the required 75%. Given the high level of our ongoing shareholder engagements, we received no shareholder meeting requests in response to reaching out to shareholders that may have voted against remuneration and we continue to engage constructively with all shareholders on these matters. 60 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 61 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial resultsResultspresentationMessage from ourChief Executive2022 resultscommentary  • The Financial Sector Laws Amendment Bill (FSLAB) was promulgated on 28 January 2022, giving rise to the Financial Sector Laws Amendment Act 23 of 2021 (FSLAA) and established the following: • SARB as the resolution authority (RA). A key element in conducting a credible open-bank resolution strategy includes the power of statutory bail-in, where creditors and shareholders will absorb losses of the failing institution. For this purpose, SARB introduced first loss after capital (Flac) instruments, which are non-regulatory, bail-inable debt instruments that will contribute to a designated institution’s total loss-absorbing capacity (TLAC). On 19 May 2021 SARB issued a discussion paper titled ‘Proposed principles and requirements for Flac instruments’ providing guidance on the characteristics, calibration and implementation period for Flac instruments. SARB is expected to publish a draft prudential standard following industry consultation and engagement on the initial discussion paper. Depending on the outcome of the final Flac calibration methodology and Nedbank’s associated minimum Flac requirement to be determined by SARB, it is anticipated that there would be additional cost implications as the bank issues new Flac instruments and replaces maturing senior unsecured debt (SUD) instruments with Flac instruments at a marginally higher cost, given the higher loss absorption associated with Flac instruments compared to SUD. Furthermore, in line with implementing SA’s resolution framework, the first set of draft resolution standards (RA01) titled ‘Stays on early termination rights and resolution moratoria on contracts of designated institutions in resolution’ was released, for industry comment, in September 2022. The second set of draft resolution standards (RA02), for industry comment, was released shortly after, in November 2022, and pertains to the transfer of assets and liabilities of designated institutions in resolution. Nedbank, together with the industry, continues to engage and collaborate with SARB regarding the practicalities of implementing SA’s resolution framework. The next step is for the Minister of Finance to publish the FSLAA commencement schedule, which will provide further guidance on the operationalisation of the Resolution Framework.  • The Corporation for Deposit Insurance (CODI), as a separate entity within SARB has been mandated to manage a deposit insurance scheme in SA, designed to protect depositors’ funds and enhance financial stability. The Deposit Insurance Levels and Administration Bills are dependent on the promulgation of CODI’s secondary legislation that will, among other things, specify the limit of cover for CODI’s protection and the calculation of banks’ covered deposits, which is the basis for the levy and premium calculations. The group’s initial impact assessments suggest, once promulgated, an annual CODI cost of approximately R220m for a covered deposit balance of approximately R100bn. The covered balance is the amount covered by CODI for a unique depositor after applying the coverage limit which is currently proposed at R100 000.  • In February 2023, the Financial Action Task Force (FATF) placed SA on its grey list as the country is deemed to pose a high money-laundering and terrorist-financing risk given weaknesses in parts of the country’s anti- money-laundering (AML) and combating the financing of terrorism (CFT) systems. On the positive side, FAFT informed the SA government that it recognised the significant and positive progress made by the country in addressing the 67 recommended actions or deficiencies raised in the 2019 review. Eight areas of strategic deficiencies relating to the effective implementation of SA’s AML and CFT laws required further and sustained progress. In response to the grey-listing, the National Treasury noted: ‘… there are no items on the action plan that relate directly to the preventive measures in respect of the financial sector. This reflects the significant progress in the application of a risk-based approach to the supervision of banks and insurers. National Treasury therefore expects that the increased monitoring will 62 Nedbank Group Annual Results 2022 have limited impact on financial stability and costs of doing business with South Africa. This will, however, be monitored closely. Importantly, the costs of increased monitoring will be substantially lower than the long-term costs of allowing South Africa’s economy to be contaminated by the flows of proceeds of crime and corruption.’ Nedbank has adequate AML, CFT and sanctions measures in place and is well prepared to deal with any potential higher levels of due diligence from global correspondent banks and other intermediary financial institutions involved in transactions with South African entities.  • In May 2022, S&P Global (S&P) revised its outlook on Nedbank to ‘positive’ and affirmed our global and national scale ratings, including issuer ratings. The revised outlook followed S&P’s decision to revise its outlook on SA to ‘positive’ from ‘stable’ on ‘resilient external sector performance’. • We hold investments of over R181bn in government and public sector bonds as part of our HQLA requirements. • We made cash taxation payments relating to direct, indirect and employee taxes, as well as other taxation, of R11,5bn across the group (2021: R11,2bn). Society Banks play a central role in driving sustainable socioeconomic development for the benefit of all stakeholders and helping create the desired future by providing capital for investment in the real economy. We acknowledge that we, alongside our stakeholders, operate in a nested, interdependent system. This means that for our business to succeed, we need a thriving economy, a well-functioning society and a healthy environment. We also recognise that sustainability issues such as climate change, inequality, social justice and, most recently, pandemics are playing an increasingly material role in shaping this system. Our purpose guides our strategy, behaviours and actions towards the delivery of long-term system value for us and our stakeholders. Together, the SDGs (as forward-looking strategic levers) and ESG keep us on track to fulfil our purpose. We have adopted the UN SDGs as a framework for measuring delivery on our purpose and prioritised nine of the 17 SDGs where we believe we have the greatest ability to deliver meaningful impact through our core business. Our focus on SDF sees us supporting clients to deliberately deliver positive social and environmental outcomes across a wide range of sectors in support of a Just Transition. At 31 December 2022, we had exposures of R123bn (2021: R108bn) that support SDF, representing 14% of the group’s gross loans and advances. By the end of 2025, it is our ambition to increase our SDF exposures to around 20% of the group’s total gross loans and advances. This will be achieved by support for more than R150bn in new SDF that is aligned with the SDGs, by the end of 2025 (from our starting base in 2021). Key highlights for 2022 include the following: • Quality education (SDG 4): We provided R238m of combined financing towards student loans and student accommodation in 2022, supporting 934 student loans (3 670 over the past five years) and for 168 student beds (around 43 000 since 2015). Our corporate social investment (CSI) spend totalled R127m in 2022, with 64% of this allocated to skills development and education. • Clean water and sanitation (SDG 6): We provided R500m (2021: R800m) in financing towards clean-water provision relating to public sector reticulation and sanitation projects, agricultural sector and commercial and industrial businesses. In our own operations we have been a net-zero operational water user since 2018 through our support of the WWF-SA Water Balance Programme, which removes invasive alien trees in key water-scarce areas. In our operations we decreased our total water consumption by a further 7% and by 43% when compared with the average 2019 base. This decrease was driven by ongoing water restriction measures, floorspace consolidation and reduced levels of employees at our campus sites. Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information • Affordable and clean energy (SDG 7): We partnered with Hohm Energy to finance and install solar power solutions in SA for homeowners, thereby making solar-energy funding available to all, including non-Nedbank clients. These solar solutions enable households to move off Eskom’s grid, or to at least lower their dependency on the power utility during load-shedding. Nedbank is the lead arranger on four projects in the emergency round Risk Mitigation IPPPP (expected to close H1 2023). We held preferred-bidder status in round 5 for four projects (expected to close in H1 2023) and participated in round 6, where 860 MW were allocated and Nedbank was awarded preferred bidder status for 300 MW (in total Nedbank supported 22 projects, totalling 3,8 GW). A total of 3 340 MW was not allocated given Eskom transmission and distribution limitations.  In the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) we have arranged 42 transactions in renewable-energy projects to date in rounds 1 to 4, giving us exposures of R26bn. With regards to private financing, the lifting of the licensing floor limited for energy projects in the private sector (embedded generation) post the announcement of the president’s Energy Action Plan on 25 July 2022 was positive and is enabling many of our clients to reduce their carbon footprint while ensuring energy certainty. Our private power generation (commercial) businesses, as well as, small business and residences amounted to R1,2bn in 2022 and we have a strong pipeline in place for 2023. Our recently completed Nedbank Namibia head-office campus received a 6-star greenstar rating, making it in the first Nedbank building to achieve this grading and placing it the ‘world leadership’ category of green buildings. In our own operations we reduced our own high-carbon-emission electricity consumption by 10% to 101 699 MWh, excluding own generation and renewable-electricity certificates (RECs). To supplement our own PV-produced electricity towards greener and self-generated renewable energy, in November 2022 we commenced wheeling green power from independent power producers to reduce our carbon emissions in our own operations which resulted in 1,5% of own green energy usage in 2022, with an aim to increase this to more than 30% of energy consumption by the end of 2025. In 2022, Nedbank received recognition from Global Finance for ‘Outstanding leadership in green bonds’ as well as ‘Outstanding leadership in sustainability-linked bonds’. • Decent work and economic growth (SDG 8): We increased our support for small businesses and their owners, evident in loan exposures of R20,7bn (up by 6%), and provided banking solutions to more than 300 000 small-and-medium-enterprise (SME) clients. In 2022 we welcomed our third intake of more than 1 800 Youth Employment Service (YES) participants as we continue to make an impact on the South African youth and their families and communities. To date, over 7 000 previously unemployed youth have been provided the opportunity of employment through participating in Nedbank’s YES programme and many of them were permanently employed (within Nedbank and the YES programme partners) after having participated in the programme. • Reduced inequalities (SDG 10): We maintained our level 1 broad-based black economic empowerment (BBBEE) status and were acknowledged at the 21st Top Empowerment Awards as the Top Empowered Company for the YES initiative and enterprise and supplier development. To support the cash flow needs of small businesses, we ensured, as part of our commitment to the #PayIn30 Campaign, that 91% of SMEs were paid within 30 days of receiving their invoices. • Sustainable cities and communities (SDG 11): The value of affordable home loans paid out for lower-income households increased by more than 100% to R3,5bn, equating to over 5 500 homes. We also provided finance of R952m towards the development of 4 978 affordable-housing units. We provided R25bn worth of funding to date for the construction of buildings that conform to green building standards. We approved R513m in loans to support the development of 964 Edge-certified residential units for 2021 Green Residential Development Bond. • Strengthening the means of implementation and revitalising the global partnership for sustainable development (SDG 17): In 2022 Nedbank became a signatory to the UN-backed Principles for Responsible Investment (PRI). Responsible investing has been a key focus for Nedgroup Investments for some time and this will augment the work we are already doing with our partner fund managers and aligns well with growing regulatory requirements. We are committed to the following six principles: incorporation of ESG issues into investment analysis and decision-making processes; being active owners and incorporating ESG issues into our ownership policies and practices; seeking appropriate disclosure on ESG issues by the entities in which we invest; and promoting acceptance and implementation of these principles. The impact of higher levels of load-shedding The higher levels of electricity outages (load-shedding) in the second half of the year had a limited impact on Nedbank’s own operations, but have a material negative impact on many of our clients, although as a result of the electricity shortage the opportunity for clients in renewable-energy finance and private power generation have become larger. Nedbank’s own operations Generator run-time in our own operations, including offices and branches, increased by over 200% and diesel-related expenses were up just over 100% to R59m in 2022. Load-shedding had no material impact on our ATMs, branches and point-of-sale (POS) devices as we leveraged our wide coverage of sustainable back-up power solutions. While our physical points of presence remained largely unaffected, call centre and digital channels have seen an increase in utilisation. We also experienced little impact in our processing operations as our businesses have been working around load-shedding schedules and employees that work from home have been going to the office as a contingency, when needed. Impact on our clients Load-shedding has increasingly become a catalyst for renewable- and embedded-energy investments to support both SA’s Just Energy Transition and for individuals and companies to reduce their exposure to Eskom. This is creating a strong runway for bank advances growth in this sector. However, electricity outages adversely impact business and consumer confidence, and, as a result, GDP growth will be negatively impacted in 2023 and beyond. From an SME perspective, load-shedding is making it increasingly difficult to start a business. From a credit quality perspective, we have not seen a material impact on our impairments or CLR in 2022 yet. However, we are becoming concerned, as risks take time to emerge and the impacts on business intensify the longer the outages persist. In our small-business and commercial-business segments, clients in the following industries are more exposed: agriculture, manufacturing, restaurants, food services, retail (supply chain) and tourism. Some have and may incur operational losses (such as the impact of products perishing) while at the same time absorb increasing levels of operational costs (such as the use of generators). Corporate clients, in general, are more resilient given their strong balance sheets after deleveraging post Covid-19, but we keep monitoring the impact on clients that may be more impacted. Recent SARB analysis on the impact of load-shedding suggests that the economy has partially adapted to stages 1 and 2 load-shedding, which costs about R1m per working day in lost gross value added (GVA), but the costs to the economy in lost production escalate exponentially to about R408m per day at stage 4, and up to R899m per day at stage 6.  Nedbank Group Annual Results 2022 63 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial resultsResultspresentationMessage from ourChief Executive2022 resultscommentaryMessage from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information • Expense growth to be around mid-to-upper single digits, showing the impacts average salary increases in 2023 of around 6%, higher levels of profitability on variable incentives, inflationary and exchange rate pressures, and the introduction of new regulatory fees such as Twin Peaks, partially offset by ongoing cost optimisation. • Minorities and non-controlling interest growth to accelerate in 2023, showing the impacts from additional AT1 issuances and higher JIBAR rates. • CET1 capital ratio to remain above the top-end of the board-approved target range of 11% to 12%. • Dividend payments, subject to board approval, to be at the lower end of the group’s target range of 1,75 times to 2,25 times. IFRS 17: Insurance Contracts replaces IFRS 4 and is effective from 1 January 2023. The group will restate comparative information for 2022 applying the transitional provisions to IFRS 17. The implementation of IFRS 17 will likely result in a positive impact on the cost-to-income ratio, as expenses directly related to insurance products will be required recognised in NIR. The transition to IFRS17 is expected to have an immaterial impact on the group’s capital. Our medium-term targets that we set for end-2023 relating to DHEPS being above 2 565 cents (achieved in 2022), ROE above 15% and a cost-to-income ratio below 54% remain unchanged. Following good momentum and a strong 2022 financial performance we remain focused on delivering the remainder of these 2023 targets. As part of our 2023 to 2025 business planning, we have set new medium-term targets to 2025, and long-term targets to support our focus on ongoing value creation for shareholders. By the end of 2025 we aim to have grown DHEPS by more than a compound annual growth rate (CAGR) of GDP growth + CPI + 5% from the 2022 base, achieve an ROE of more than 17% (around COE plus 2%) and a cost-to-income ratio below 52%. These targets are based on the group’s macroeconomic assumptions set in February 2023 and ongoing delivery on our strategic initiatives as key enablers. To achieve these, revenue is expected to grow ahead of expenses, driven by higher levels of endowment income and solid advances growth (including participating in renewable energy and infrastructure opportunities in CIB and maintaining momentum in RBB), while NIR growth is expected to remain robust, driven by main-banked client gains and cross-sell, a more favourable trading environment and ongoing strong associate income growth from our investment in ETI. Expense optimisation remains top of mind, while IT amortisation growth is expected to slow further as our ME technology investment completes by the end of 2024. The group’s CLR is expected to remain within the TTC target range of 60 bps to 100 bps. Capital levels, including the group’s R5bn capital optimisation programme, are expected to remain strong, with dividends likely to be paid at the lower end of the group’s cover policy (1,75 times to 2,25 times), subject to board approval. In the long-term we aim to increase our ROE further to 18% or more (around COE plus 3%) and cost-to-income to below 50%. Metric 2022 Full-year performance6 2023 outlook Medium-term target (2025) Long-term target ROE 14,0% > 15% (target) > 17% (around COE + 2%) > 18% (around COE + 3%) Growth in DHEPS 19% Strong positive growth > consumer price index + GDP growth + 5% CAGR CLR 89 bps Between 80 bps and 100 bps Between 60 bps and 100 bps of average banking advances Cost-to-income ratio (including associate income) 56,5% < 54% (target) < 52% < 50% CET1 capital adequacy ratio 14,0% Above the top-end of target range Dividend cover 1,75 times At the lower end of our target range of 1,75–2,25 times 11,0–12,0% 1,75–2,25 times 6 COE is currently forecast to be just below 15% in 2023 to 2025. Shareholders are advised that all guidance is based on organic earnings and our latest macroeconomic outlook. This guidance has not been reviewed or reported on by the group’s joint auditors. Economic outlook The global economic environment is expected to deteriorate further in 2023. The slowdown in advanced countries is likely to intensify as the prior year’s surge in inflation, sharply higher interest rates, and reduced wealth effects hurt household incomes and spending, while the war in Ukraine, uncertain energy supplies, sharply higher production costs, and sluggish global growth prospects erode company profits and subdue fixed investment. Emerging and developing countries face similar challenges, with slower growth in advanced countries likely to weigh on export earnings, while higher inflation and interest rates will subdue domestic demand. However, China’s decision to abandon its strict zero-Covid policy will provide some support to global trade and commodity prices as industrial activity in China rebounds from over a year of intermittent strict lockdowns. The risk of sovereign defaults will remain high, with many developing countries with substantial exposure to foreign debt struggling to meet debt obligations given extremely limited fiscal space, a relatively strong US dollar and sharply higher US interest rates. While China’s reopening has improved the outlook for 2023, the IMF still expects global growth to slow to 2,9% in 2023. Advanced countries are forecast to grow by a weak 1,2%, while emerging and developing countries are projected to expand by 4,0%. Sub-Saharan Africa will likely remain relatively resilient, with the region’s economy forecast to expand at a similar pace to 2022 of around 3,8% in 2023. Although the world economy tries to navigate a soft landing, the risk of recession remains significant. With considerable uncertainty surrounding the outlook for world growth, inflation and interest rates, global risk appetites and markets are likely to remain volatile, highly sensitive to any signs of weaker-than-expected growth outcomes, sticky underlying inflation and therefore the threat that US interest rates could rise further or stay high for longer than most currently anticipate. In SA economic conditions deteriorated significantly in early 2023, hurt by a sharp escalation in rolling blackouts as the country’s electricity shortage escalated. Load-shedding is likely to continue at elevated levels throughout 2023, and combined with slower global demand and softer commodity prices will negatively impact domestic production and exports, resulting in a wider current account deficit in 2023. Furthermore, the rise in inflation and higher interest rates will continue to weigh on household incomes and contain consumer spending. While fixed investment will be supported by renewable-energy projects, the upside will be limited by regular power outages and weaker domestic and global growth prospects, along with easing commodity prices, slow progress with structural reforms and persistent policy uncertainties that will continue to hurt investor sentiment. We expect capital spending to slow in 2023 as gross fixed capital formation (GFCF) is forecast to grow by 1,3%, down from an estimated 4,5% in 2022. The Nedbank Group Economic Unit expects real GDP growth to slow to around 0,7% in 2023, before gaining moderate upward traction to 1,5%, 1,6% and 1,8% in 2024, 2025 and 2026 respectively. Inflation in SA is forecast to ease gradually in 2023, as international oil, food and other imported prices moderate from the highs of 2022 and global supply chains improve. Inflation is forecast to average 5,5% in 2023. Thereafter, inflation is expected to moderate to an average of around 4,8% in 2024 and 2025. Since inflation remains well above the upper limit of SARB’s inflation target range of 3% to 6%, the MPC raised the repo rate by a further 25 basis points in January 2023 and is likely to do so again in March, taking the repo and the prime lending rates to expected peaks of 7,50% and 11,0%, respectively. Monetary policy is then expected to ease in 2024 as inflation recedes towards the midpoint of the inflation target range. We forecast cumulative cuts of 75 basis points in 2024, with the prime rate stabilising at around 10,50% over the following two years. Conditions in the banking industry are likely to be challenging. Credit extension is forecast to slow to 5% by the end of 2023, contained by the rise in interest rates and the anticipated slowdown in economic growth. Concerns about job security and earnings prospects will affect household demand for credit, but manageable household debt burdens and accumulated savings should provide some buffers against tighter financial conditions and limit the downside for credit. Corporate credit growth will also slow as the impact of the low base established in 2020 and 2021 disappears. Heightened uncertainty about the country's growth prospects amid paralysing structural constraints will probably discourage new large capital projects and subdue demand for general loans. However, renewable-energy projects should provide some foundation for corporate loans. The risk of bad debts is expected to increase moderately as higher interest rates take effect. Surplus capital optimisation initiative Nedbank Group’s capital position reflects strong capital adequacy ratios – well above the board-approved target ranges and significantly above the minimum regulatory requirements – translating into a structural surplus capital position at 31 December 2022. The board has reviewed the level of this structural capital surplus as well as the expected future capital requirements of the group for, among other things, executing strategic initiatives and meeting operational requirements that include supporting strong levels of client growth. This review has culminated in the board approving a proposed share repurchase programme of up to R5bn to be executed over the next 12 months, which repurchase programme will be implemented subject to all legal and regulatory approvals being received and requirements being met. The repurchase programme is likely to include an odd-lot offer, being an offer by Nedbank Group to repurchase shares from shareholders holding less than 100 Nedbank Group ordinary shares, which will have the added benefit of reducing the group’s administrative costs associated with a large shareholder register, whilst providing a liquidity event for smaller shareholders. The proposed repurchase programme is expected to be accretive to DHEPS, optimise capital levels and associated returns on equity and in so doing deliver value to shareholders. Further announcements regarding this capital optimisation will be made in due course. Prospects Our guidance on financial performance for full-year 2023, in a global and domestic macroeconomic environment with high forecast risk and uncertainty, is currently as follows: • NII growth to be around the mid-teens, as the group’s NIM is expected to increase further from the 2022 level of 3,93%, driven by the run-rate benefits from interest rate increases (endowment) in 2022 and 50 bps expected increases in 2023. This benefit will be marginally offset by asset mix changes as lower margin businesses and products grow faster than higher margin businesses and products, and as competitive pricing pressures remain elevated. Loan growth is expected to remain at similar levels as 2022. • CLR to remain within the top half of our TTC target range of 60 bps to 100 bps (between 80 bps to 100 bps). Given the difficult and volatile external environment, our CLR guidance has more upside than downside risk. • NIR growth to be around mid-single digits, supported by solid transactional activity and strategic initiatives, including higher levels of cross-sell, main-banked client gains and new revenue streams, and the expected finalisation of the renewable-energy deals that were postponed from Q4 2022 to H1 2023. Trading conditions will remain uncertain but are expected to improve from 2022 levels, and insurance, private-equity and fair-value gains have created a high base to grow off in 2022. 64 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 65 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial resultsResultspresentationMessage from ourChief Executive2022 resultscommentary              Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Notes Board and leadership changes during the period In accordance with the group’s ongoing board continuity planning, Phumzile Langeni and Mteto Nyati were appointed as independent non-executive directors of Nedbank Group with effect from 22 March 2022 and 1 October 2022 respectively. Daniel Mminele was appointed as an independent non-executive director and Chairperson-designate with effect from 1 May 2023. He will replace the current Chairperson, Mpho Makwana, when he steps down at the AGM on 2 June 2023, as previously announced. Professor Tshilidzi Marwala resigned as an independent non-executive director of Nedbank Group with effect from 28 February 2023 to take up the role of Rector of the United Nations University, headquartered in Tokyo. In terms of executive leadership changes, Anna Isaac, then the Group Chief Compliance Officer, resigned with effect from 30 April 2022 to join a bank in the United Arab Emirates. In accordance with Nedbank Group’s executive succession plan, Daleen du Toit was appointed to the Group Executive Committee as Group Chief Compliance Officer, with effect from 1 May 2022. In 2023 Trevor Adams, Group Chief Risk Officer, and Fred Swanepoel, Group Chief Information Officer, will reach the group’s mandatory retirement age of 60. Following extensive internal and external processes, Dave Crewe-Brown has been appointed to succeed Trevor as the Group Chief Risk Officer, with effect from 1 April 2023. Trevor Adams will stay on until the end of Q1 2023 to finalise the group’s 2022 risk governance and reporting processes. Ray Naicker was appointed to succeed Fred as Chief Information Officer with effect from 1 July 2023. Fred will stay on until 30 June 2023. Both Dave and Ray have been appointed members of the Group Executive Committee with effect from 1 April and 1 July 2023 accordingly. 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 that could cause actual results to differ materially from those in the forward-looking statements include global, national and regional health; 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 866 cents per ordinary share has been declared, payable to shareholders for the six months ended 31 December 2022. 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 173,2 cents per ordinary share, resulting in a net dividend of 692,8 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-taxation 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 511 500 790. In accordance with the provisions of Strate, the electronic settlement and custody system used by the Johannesburg Stock Exchange Limited (JSE), the relevant dates for the dividend are as follows: Event Date Last day to trade (cum dividend) Tuesday, 11 April 2023 Shares commence trading (ex dividend) Record date (date shareholders recorded in books) Wednesday, 12 April 2023 Friday, 14 April 2023 Payment date Monday, 17 April 2023 Share certificates may not be dematerialised or rematerialised between Wednesday, 12 April 2023, and Friday, 14 April 2023, 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 or collection of cheques has ceased, effective from 31 December 2021. In the absence of specific mandates, the dividend will be withheld until shareholders provide their banking information. Holders of dematerialised shares will have their accounts credited at their participant or broker on Monday, 17 April 2023. 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, P Langeni, RAG Leith, L Makalima, Dr MA Matooane, MC Nkuhlu** (Chief Operating Officer), M Nyati, S Subramoney. * Lead Independent Director ** Executive 66 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 67 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial resultsResultspresentationMessage from ourChief Executive2022 resultscommentaryMessage from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information 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 (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 Financial results Financial highlights 69 Number of employees (permanent staff) Number of employees (permanent and temporary staff) Key ratios (%) ROE Return on tangible equity ROA Return on RWA Consolidated statement of comprehensive income 70 NII to average interest-earning banking assets Consolidated statement of financial position 72 Consolidated statement of changes in equity 74 Return-on-equity drivers 78 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 Change % 1 1 20 27 1 15 87 20 19 27 26 >100 10 85 5 7 21 22 (3) (3) 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 2022 2021 511,5 487,3 486,9 500,7 14 049 14 275 13 342 25 737 508,9 485,6 485,1 494,8 11 689 11 238 13 171 22 327 (226) (1 735) 2 886 2 806 2 932 2 851 1 649 783 866 1541 1,75 2 410 2 362 2 317 2 271 1 191 433 758 433 2,02 1 646 035 1 639 246 1 252 971 1 214 917 393 064 424 329 4 461 595 21 533 18 937 21 258 7,4 1,0 108,7 25 924 26 480 14,0 16,2 1,14 2,18 3,93 42,9 75,0 0,89 56,5 2,5 22,1 14,0 15,5 18,1 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 43,4 74,0 0,83 57,8 1,0 24,2 12,8 14,3 17,2 68 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 69 SupplementaryinformationStatement of financialposition analysisSegmentalanalysisIncome statementanalysisMessage from ourChief Executive2022 resultscommentaryFinancial resultsResultspresentation                                                                                                                          Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Consolidated statement of comprehensive income for the year ended 31 December Change 2021 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 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 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 (loss)/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 Note 1 3 % 25 38 12 10 12 11 13 11 8 7 >(100) 20 7 10 2 4 5 6 82 104 45 827 36 277 27 301 18 964 24 196 (5 232) 2 369 187 4 166 815 96 704 879 64 457 7 381 57 076 36 425 1 152 (245) 19 744 4 326 4 307 65 772 33 272 32 500 24 889 17 754 22 085 (4 331) 2 005 (833) 4 475 650 263 575 786 58 175 6 534 51 641 33 639 1 073 499 16 430 4 043 4 104 19 (61) 24 >(100) 15 418 (2 076) 12 387 784 (2) (1 821) 146 (1) (245) (106) (47) 1 029 (722) (5) (21) 389 36 78 2022 (restated)1 Rm Change 2021 Note % 2022 (restated)1 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 7 7 7 7 5 27 66 (100) (15) 14 275 164 106 873 24 15 418 12 227 136 106 873 13 342 14 275 226 245 (19) 2 (24) (100) (15) 18 1 27 >100 100 20 11 238 99 188 125 737 12 387 11 941 180 188 125 737 13 171 11 238 (438) (499) 61 (13) 14 049 11 689 1 During the year management elected to change the presentation of the 'Net monetary loss' line item that was previously disclosed separately on the face of the statement of comprehensive income (SOCI) and disclose it as part of non-interest revenue and income (NIR) under the ‘Net sundry income’ line item on the face of the SOCI. The change will allow the impact of the foreign exchange currency gains or losses on the US dollar nostro net cash balances that relate to Nedbank Zimbabwe, which is translated to the Zimbabwean dollar, and the 'Net monetary loss' line item, to be presented together within NIR. This change is a reclassification in terms of IAS 1: Presentation of Financial Statements (IAS 1) as it changes the presentation of the SOCI. To provide comparability, the prior-year balances have been restated accordingly. The reclassification had no impact on the group’s statement of financial position, statement of changes in equity or statement of cash flows. Total comprehensive income for the year 1 13 342 13 171 70 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 71 SupplementaryinformationStatement of financialposition analysisSegmentalanalysisIncome statementanalysisMessage from ourChief Executive2022 resultscommentaryFinancial resultsResultspresentation                                                                                                                                                                                    Consolidated statement of financial position at 31 December Notes Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Rm Assets Cash and cash equivalents Other short-term securities Derivative financial instruments Government securities Other dated securities Banking loans and advances Trading loans and advances 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 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 % 2022 2021 (restated)1,2 8 8 9 10 11 2 18 (77) 6 58 7 (8) (7) 19 (62) (26) (23) (7) 3 (5) (4) 3 2 6 5 (14) 10 13 6 (73) 45 618 70 661 9 101 44 586 60 037 39 179 158 661 149 340 1 834 1 158 835 560 781 304 46 605 28 052 147 50 431 30 011 124 25 465 25 498 244 2 496 681 26 11 064 4 107 12 649 638 3 395 889 28 10 739 4 339 13 221 1 252 971 1 214 917 487 19 208 85 233 486 18 768 80 259 104 928 99 513 51 10 219 698 115 896 9 738 59 9 319 620 109 511 36 042 12 7 1 039 622 967 929 (24) (2) (100) 9 (96) (8) (26) (11) 3 3 17 752 322 499 6 16 609 624 51 903 23 451 330 80 458 156 17 959 842 58 159 1 137 075 1 105 406 1 252 971 1 214 917 1 During 2022 the group reviewed its presentation of long-term employee benefits (LTEB) in the statement of financial position (SOFP). As a result of the review, it was noted that the LTEB qualifying insurance policies were incorrectly presented on a gross basis in the SOFP. In terms of IAS 19 qualifying insurance policies were required to be accounted for as plan assets (on a net basis) in the 2021 SOFP. As a result, the comparative LTEB assets and liabilities have been restated by R2 271m. 2 During 2022 the group identified a one-day delay in the sweep on the cash management deposit account and the debtor funding account. The delay resulted in the unswept balances being included incorrectly under cash management deposits (liability) and debtors (asset), and the affected line items were therefore overstated. The sweep eliminates the cash management deposit account and the debtor funding account. As a result, the comparative assets and liabilities have been restated by R3 866m. 72 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 73 SupplementaryinformationStatement of financialposition analysisSegmentalanalysisIncome statementanalysisMessage from ourChief Executive2022 resultscommentaryFinancial resultsResultspresentation                                                                                      Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Consolidated statement of changes in equity for the year ended 31 December Rm Rm Number of Number of ordinary ordinary shares shares Ordinary Ordinary share share capital capital Ordinary Ordinary share share premium premium Foreign Foreign currency currency translation translation reserve1 reserve1 Property Property revaluation revaluation reserve reserve Share- Share- based based payment payment reserve reserve Other non- Other non- distributable distributable reserves2 reserves2 FVOCI FVOCI reserve reserve Other Other distri- distri- butable butable reserves3 reserves3 Total equity Total equity attributable attributable to ordinary to ordinary shareholders shareholders Holders of Holders of preference preference shares shares Holders of Holders of participating participating preference preference shares shares Holders of Holders of additional additional tier 1 capital tier 1 capital instruments instruments Non- Non- controlling controlling interest interest attributable attributable to ordinary to ordinary shareholders shareholders Total Total equity equity Balance at 1 January 2021 Balance at 1 January 2021 483 892 767 483 892 767 484 484 18 583 18 583 (1 995) (1 995) 1 757 1 757 1 032 1 032 290 290 961 961 67 880 67 880 88 992 88 992 3 222 3 222 (58) (58) 7 822 7 822 466 466 100 444 100 444 Share movements in terms of long-term incentive and BEE Share movements in terms of long-term incentive and BEE scheme scheme 1 708 780 1 708 780 2 2 185 185 (132) (132) (36) (36) Additional tier 1 capital instruments issued Additional tier 1 capital instruments issued Additional tier 1 capital instruments redeemed Additional tier 1 capital instruments redeemed Preference share capital redeemed Preference share capital redeemed Preference share dividend paid Preference share dividend paid Additional tier 1 capital instruments interest paid Additional tier 1 capital instruments interest paid Dividends paid to shareholders Dividends paid to shareholders Total comprehensive income for the year Total comprehensive income for the year Profit attributable to ordinary shareholders and Profit attributable to ordinary shareholders and non-controlling interest non-controlling interest Exchange differences on translating foreign operations Exchange differences on translating foreign operations Movement in fair-value reserve Movement in fair-value reserve Property revaluations Property revaluations Remeasurements of long-term employee benefit assets Remeasurements of long-term employee benefit assets Share of OCI of investments accounted for using the equity Share of OCI of investments accounted for using the equity method method Transfer (from)/to reserves Transfer (from)/to reserves Value of employee services (net of deferred tax) Value of employee services (net of deferred tax) Transactions with non-controlling interests Transactions with non-controlling interests Other movements Other movements 499 499 28 28 – – – – (192) (192) 11 606 11 606 78 78 (2 178) (2 178) 956 956 (457) (457) (12) (12) 28 28 (24) (24) 3 3 73 73 (265) (265) 11 238 11 238 389 389 (21) (21) 451 451 35 35 (2) (2) (332) (332) 637 637 (95) (95) (3 222) (3 222) (188) (188) 188 188 188 188 (8) (8) 125 125 125 125 3 497 3 497 (2 000) (2 000) (737) (737) 737 737 737 737 19 19 – – – – 78 78 – – – – (2 178) (2 178) 11 941 11 941 11 238 11 238 956 956 73 73 28 28 389 389 (743) (743) – – 637 637 26 26 (2) (2) 19 19 3 497 3 497 (2 000) (2 000) (3 144) (3 144) (196) (196) (737) (737) (2 178) (2 178) 13 171 13 171 12 387 12 387 1 029 1 029 73 73 36 36 389 389 (743) (743) – – 637 637 – – (2) (2) 180 180 99 99 73 73 8 8 (26) (26) Balance at 31 December 2021 Balance at 31 December 2021 485 601 547 485 601 547 486 486 18 768 18 768 (1 508) (1 508) 1 764 1 764 1 205 1 205 273 273 769 769 77 756 77 756 99 513 99 513 – – 59 59 9 319 9 319 620 620 109 511 109 511 74 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 75 SupplementaryinformationStatement of financialposition analysisSegmentalanalysisIncome statementanalysisMessage from ourChief Executive2022 resultscommentaryFinancial resultsResultspresentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Consolidated statement of changes in equity (continued) for the year ended 31 December Rm Rm Number of Number of ordinary ordinary shares shares Ordinary Ordinary share share capital capital Ordinary Ordinary share share premium premium Foreign Foreign currency currency translation translation reserve1 reserve1 Property Property revaluation revaluation reserve reserve Share movements in terms of long-term incentive and BEE Share movements in terms of long-term incentive and BEE scheme scheme 1 650 168 1 650 168 1 1 440 440 Share- Share- based based payment payment reserve reserve (384) (384) Additional tier 1 capital instruments issued Additional tier 1 capital instruments issued Additional tier 1 capital instruments redeemed Additional tier 1 capital instruments redeemed Preference share dividend paid Preference share dividend paid Additional tier 1 capital instruments interest paid Additional tier 1 capital instruments interest paid Dividends paid to shareholders Dividends paid to shareholders Total comprehensive income for the year Total comprehensive income for the year Profit attributable to ordinary shareholders and Profit attributable to ordinary shareholders and non-controlling interest4 non-controlling interest4 Exchange differences on translating foreign operations Exchange differences on translating foreign operations Movement in fair-value reserve Movement in fair-value reserve Property revaluations Property revaluations Remeasurements of long-term employee benefit assets Remeasurements of long-term employee benefit assets Share of OCI of investments accounted for using the equity Share of OCI of investments accounted for using the equity method method Transfer (from)/to reserves Transfer (from)/to reserves Value of employee services (net of deferred tax) Value of employee services (net of deferred tax) Transactions with non-controlling interests Transactions with non-controlling interests Other movements Other movements Other non- Other non- distributable distributable reserves2 reserves2 FVOCI FVOCI reserve reserve Other Other distri- distri- butable butable reserves3 reserves3 Total equity Total equity attributable attributable to ordinary to ordinary shareholders shareholders Holders of Holders of preference preference shares shares Holders of Holders of participating participating preference preference shares shares Holders of Holders of additional additional tier 1 capital tier 1 capital instruments instruments Non- Non- controlling controlling interest interest attributable attributable to ordinary to ordinary shareholders shareholders (82) (82) (25) (25) – – – – – – – – 1 500 1 500 (600) (600) (873) (873) 873 873 873 873 (114) (114) 106 106 106 106 (1 391) (1 391) (97) (97) – – – – (317) (317) 14 032 14 032 (7 788) (7 788) (7 788) (7 788) 12 227 12 227 – – 11 11 (1 402) (1 402) (97) (97) (58) (58) (17) (17) 2 2 14 275 14 275 14 275 14 275 102 102 (242) (242) 11 11 102 102 (97) (97) (242) (242) (419) (419) (1) (1) (1 822) (1 822) 125 125 35 35 2 2 – – 979 979 20 20 2 2 (70) (70) 979 979 3 3 Total Total equity equity (25) (25) 1 500 1 500 (600) (600) (114) (114) (873) (873) (38) (38) (7 826) (7 826) 136 136 13 342 13 342 164 164 15 418 15 418 (13) (13) (3) (3) (9) (9) (3) (3) (20) (20) (2) (2) 99 99 (106) (106) (245) (245) (1 822) (1 822) – – 979 979 – – 2 2 Balance at 31 December 2022 Balance at 31 December 2022 487 251 715 487 251 715 487 487 19 208 19 208 (2 916) (2 916) 1 611 1 611 1 730 1 730 276 276 452 452 84 080 84 080 104 928 104 928 – – 51 51 10 219 10 219 698 698 115 896 115 896 1 Exchange differences of R11m credit (2021: R956m) in the foreign currency transaction reserve includes a credit of R190m (2021: R148m) for the conversion of our investment in ETI from USD to ZAR and a debit of R179m debit (2021: R808m credit) for the translation of the other foreign subsidiaries. The R1402m debit (2021: R457m) relates to our share of ETI's other comprehensive income on foreign exchange gains and losses. 2 Represents other non-distributable revaluation surpluses on capital items and non-distributable reserves transferred from other distributable reserves, to comply with various banking regulations. 3 Represents the accumulated profits after distributions to shareholders and appropriations of retained earnings to other non-distributable reserves. 4 The R106m 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. 76 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 77 SupplementaryinformationStatement of financialposition analysisSegmentalanalysisIncome statementanalysisMessage from ourChief Executive2022 resultscommentaryFinancial resultsResultspresentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        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 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 (2021: 365-day) basis. 2022 2021 36 277 (7 381) 27 301 56 197 (36 425) 879 20 651 (1 152) (4 307) 15 192 (1 143) 14 049 922 197 32 500 (6 534) 24 889 50 855 (33 639) 799 18 015 (1 073) (4 104) 12 838 (1 149) 11 689 870 382 1 233 772 1 195 860 99 996 95 650 93 359 88 602 Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information 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 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 2022 2021 3,93%     3,73%   less less   0,80%     0,75%   add add   2,96%     2,86%   6,09%     5,84%   less less   3,95%     3,86%   add add   0,10%     0,09%   2,24%     2,07%   multiply multiply   0,74     0,71   multiply multiply   0,92 0,91   1,52%     1,34%   multiply multiply   74,8%     72,8%   = =   1,14%     0,98%   multiply multiply   12,34     12,81   = =   14,0%     12,5%   78 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 79 SupplementaryinformationStatement of financialposition analysisSegmentalanalysisIncome statementanalysisMessage from ourChief Executive2022 resultscommentaryFinancial resultsResultspresentation                                                                      Notes Segmental analysis Our organisational structure, products and services Operational segmental reporting Nedbank Corporate and Investment Banking Nedbank Retail and Business Banking 82 84 88 92 Nedbank Wealth 106 Nedbank Africa Regions 110 Geographical segmental reporting 116 80 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 81 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveSegmentalanalysisOur organisational structure, products and services We deliver our products and services through four main business clusters. Cluster Areas of strength and differentiation Products and services Contribution to group Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Nedbank Corporate and Investment Banking A comprehensive suite of wholesale banking solutions for corporates, institutions, governments and parastatals Nedbank Retail and Business Banking Individual clients and businesses Nedbank Wealth Nedbank Africa Regions Individual (high-net-worth), business and corporate clients Retail, small and medium enterprises, and business and corporate clients across the countries we operate in • Strong, integrated client relationships with clients that leverage off our deep • sector expertise. Integrated model, delivering high levels of client service and a differentiated warm digital client experiences. • Market leader with strong expertise in commercial property, mining and resources, public sector, infrastructure, telecommunications finance, and advisory services. • Award winning renewable energy, infrastructure and sustainable finance teams with strong market presence that continue to deliver tangible positive impacts. • Leading trading franchise with excellent trading capabilities across all asset classes. • Robust employee value proposition focused on attracting, growing and retaining the best people. • Efficient franchise with a leading cost to income ratio. • Leading digital capabilities enabling clients to join and engage with the bank through multiple channels, eg the app, the online platform, the USSD system, self-service kiosks, the contact centre, ATMs and Intelligent Depositor ATMs, 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 Commercial Banking, well-positioned and distinctive value propositions incorporating unique lending solutions and digital network platforms, to facilitate commercial growth, developed for the 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, supported by retailer partnerships and a flexible workforce. • 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. Insurance • Leverages existing distribution channels and platforms to sell short-term, credit life and other insurance products to Nedbank’s 7 million 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. Wealth Management • An award-winning, integrated and holistic advice-led, high-net-worth offering for local and international clients. SADC (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, as well as competitive and locally relevant CVPs. • Recognised as the Most Innovative Retail Banking App, Best for Digital Banking Services in Lesotho 2022 and Best Digital Bank in Mozambique. • Aiming to be #1 in client service in every market in which we operate (#1 in NPS performance in Eswatini and Mozambique). Central and West Africa (ETI alliance – 21,2% shareholding) • Ecobank–Nedbank alliance the widest banking network on the African continent, covering 39 countries. • Aiming to increase deal flow 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. The group’s frontline business clusters are supported by various shared-services functions, including compliance, finance, human resources, marketing and corporate affairs, risk, technology and strategy, including sustainability.    > 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 Services offering (tailored to businesses with annual turnover of less than R30m and the business owner). • > 14 585 commercial-banking client groups catering to mid-size and large commercial entities. High-net-worth clients (South Africa) and high-net-worth clients (UK, Jersey, Isle of Man and UAE) • The cluster provides insurance, asset management and wealth management solutions to a wide spectrum of clients. > 360 900 retail and corporate 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. HE contribution 45,5% R6 399m 2021: R5 605m 2020: R3 636m 2019: R6 167m 36,3% R5 097m 2021: R4 523m 2020: R1 595m 2019: R5 293m 8,1% R1 131m 2021: R962m 2020: R662m 2019: R1 042m 6,9% R975m 2021: R594m 2020: R12m 2019: R457m ROE CIB 17,7% 2019 2020 2021 2022 RBB 16,0% 2019 2020 2021 2022 WEALTH 26,1% 2019 2020 2021 2022 NAR 13,8% 2019 2020 2021 2022 25 20 15 10 5 0 25 20 15 10 5 0 25 20 15 10 5 0 25 20 15 10 5 0 82 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 83 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveSegmentalanalysisMessage from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Operational segmental reporting for the year ended 31 December Rm Rm 2022 2022 2021 2021 2022 2022 2021 2021 2022 2022 2021 2021 2022 2022 2021 2021 2022 2022 2021 2021 2022 2022 2021 2021 Nedbank Group Nedbank Group Corporate and Corporate and Investment Banking Investment Banking Retail and Retail and Business Banking Business Banking Wealth Wealth Nedbank Nedbank Africa Regions Africa Regions Centre Centre Summary of consolidated statement of financial position (Rm) Summary of consolidated statement of financial position (Rm) Assets Assets Cash and cash equivalents Cash and cash equivalents Other short-term securities Other short-term securities Derivative financial instruments Derivative financial instruments Government and other securities Government and other securities Banking loans and advances Banking loans and advances Trading loans and advances Trading loans and advances Other assets Other assets Intergroup assets Intergroup assets Total assets Total assets Equity and liabilities Equity and liabilities Total equity1 Total equity1 45 618 45 618 70 661 70 661 9 101 9 101 160 495 160 495 835 560 835 560 46 605 46 605 84 931 84 931 – – 44 586 44 586 60 037 60 037 39 179 39 179 150 498 150 498 781 304 781 304 50 431 50 431 88 882 88 882 – – 814 814 38 245 38 245 9 019 9 019 79 524 79 524 378 037 378 037 46 605 46 605 31 983 31 983 2 122 2 122 30 058 30 058 39 151 39 151 68 887 68 887 348 191 348 191 50 431 50 431 33 504 33 504 5 629 5 629 5 137 5 137 1 723 1 723 28 511 28 511 39 39 255 255 2 526 2 526 25 477 25 477 9 9 268 268 408 430 408 430 380 985 380 985 29 025 29 025 30 273 30 273 9 281 9 281 17 669 17 669 7 992 7 992 17 040 17 040 21 081 21 081 22 433 22 433 7 048 7 048 4 787 4 787 23 23 2 095 2 095 21 714 21 714 3 442 3 442 3 748 3 748 8 075 8 075 5 050 5 050 1 1 1 773 1 773 21 243 21 243 4 285 4 285 2 420 2 420 30 404 30 404 26 726 26 726 (882) (882) 20 20 78 621 78 621 (1 646) (1 646) 19 144 19 144 (21 417) (21 417) (548) (548) 18 18 79 570 79 570 612 612 20 668 20 668 (19 460) (19 460) 1 252 971 1 252 971 1 214 917 1 214 917 584 227 584 227 572 344 572 344 441 009 441 009 411 154 411 154 80 634 80 634 80 986 80 986 42 857 42 857 42 847 42 847 104 244 104 244 107 586 107 586 Total equity attributable to ordinary shareholders Total equity attributable to ordinary shareholders 104 928 104 928 99 513 99 513 36 249 36 249 36 536 36 536 Non-controlling interest attributable to ordinary shareholders Non-controlling interest attributable to ordinary shareholders Holders of preference shares Holders of preference shares Holders of participating preference shares Holders of participating preference shares 698 698 – – 51 51 620 620 – – 59 59 Holders of additional tier 1 capital instruments Holders of additional tier 1 capital instruments 10 219 10 219 9 319 9 319 115 896 115 896 109 511 109 511 36 249 36 249 36 536 36 536 31 843 31 843 33 060 33 060 31 843 31 843 33 060 33 060 4 336 4 336 4 336 4 336 4 528 4 528 4 528 4 528 7 057 7 057 7 057 7 057 6 385 6 385 6 385 6 385 36 411 36 411 29 002 29 002 25 443 25 443 698 698 – – 51 51 10 219 10 219 19 004 19 004 620 620 59 59 9 319 9 319 Derivative financial instruments Derivative financial instruments Banking amounts owed to depositors Banking amounts owed to depositors Trading amounts owed to depositors Trading amounts owed to depositors Provisions and other liabilities Provisions and other liabilities Long-term debt instruments Long-term debt instruments Intergroup liabilities Intergroup liabilities Total equity and liabilities Total equity and liabilities 9 738 9 738 983 582 983 582 56 040 56 040 35 812 35 812 51 903 51 903 – – 36 042 36 042 882 141 882 141 85 788 85 788 43 276 43 276 58 159 58 159 9 708 9 708 385 846 385 846 56 040 56 040 2 803 2 803 – – 35 998 35 998 351 863 351 863 85 788 85 788 7 305 7 305 316 316 – – 93 581 93 581 54 538 54 538 – – 402 114 402 114 371 106 371 106 16 16 46 191 46 191 34 34 14 14 10 10 43 840 43 840 34 327 34 327 35 054 35 054 115 104 115 104 80 278 80 278 5 811 5 811 1 241 1 241 – – 5 447 5 447 1 541 1 541 19 864 19 864 23 678 23 678 – – 10 227 10 227 8 906 8 906 1 031 1 031 428 428 – – 971 971 427 427 6 303 6 303 50 234 50 234 5 875 5 875 55 875 55 875 (103 808) (103 808) (63 444) (63 444) 1 252 971 1 252 971 1 214 917 1 214 917 584 227 584 227 572 344 572 344 441 009 441 009 411 154 411 154 80 634 80 634 80 986 80 986 42 857 42 857 42 847 42 847 104 244 104 244 107 586 107 586 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. 84 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 85 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveSegmentalanalysis                                                                                                                                                                                                                                                                                                                                                                                                                                                    Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Operational segmental reporting (continued) for the period ended 48,2% 46,3% 3,3% 2,5% Advances to group R425bn 2021: R399bn 2020: R429bn 2019: R424bn Nedbank Group Nedbank Group Corporate and Corporate and Investment Banking Investment Banking R408bn 2021: R381bn 2020: R356bn 2019: R349bn Retail and Retail and Business Banking Business Banking R29bn 2021: R30bn 2020: R31bn 2019: R31bn Wealth Wealth R22bn 2021: R21bn 2020: R23bn 2019: R22bn Nedbank Nedbank Africa Regions Africa Regions Centre Centre Rm Rm 2022 2022 2021 2021 2022 2022 2021 2021 2022 2022 2021 2021 2022 2022 2021 2021 2022 2022 2021 2021 2022 2022 2021 2021 Summary of consolidated statement of comprehensive income (Rm) Summary of consolidated statement of comprehensive income (Rm) NII NII NIR NIR Share of gains of associate companies1 Share of gains of associate companies1 Total income Total income Impairments charge on financial instruments Impairments charge on financial instruments Net income Net income Total operating expenses Total operating expenses Indirect taxation Indirect taxation Profit before direct taxation Profit before direct taxation Direct taxation Direct taxation Profit after taxation Profit after taxation Profit attributable to: Profit attributable to: – Non-controlling interest – ordinary shareholders – Non-controlling interest – ordinary shareholders – Holders of preference shares – Holders of preference shares – Holders of additional tier 1 capital instruments – Holders of additional tier 1 capital instruments Headline earnings/(losses) Headline earnings/(losses) Selected ratios Selected ratios 8 755 8 755 8 241 8 241 100 100 17 096 17 096 805 805 16 291 16 291 7 628 7 628 215 215 8 448 8 448 2 049 2 049 6 399 6 399 7 966 7 966 7 881 7 881 100 100 15 947 15 947 1 418 1 418 14 529 14 529 7 011 7 011 202 202 7 316 7 316 1 711 1 711 5 605 5 605 36 277 36 277 27 301 27 301 879 879 64 457 64 457 7 381 7 381 57 076 57 076 36 425 36 425 1 152 1 152 19 499 19 499 4 307 4 307 32 500 32 500 24 889 24 889 799 799 58 188 58 188 6 534 6 534 51 654 51 654 33 639 33 639 1 073 1 073 16 942 16 942 4 104 4 104 15 192 15 192 12 838 12 838 164 164 106 106 873 873 99 99 313 313 737 737 23 203 23 203 13 849 13 849 – – 37 052 37 052 6 613 6 613 30 439 30 439 22 615 22 615 587 587 7 237 7 237 2 034 2 034 5 203 5 203 20 745 20 745 12 783 12 783 33 528 33 528 5 172 5 172 28 356 28 356 21 442 21 442 529 529 6 385 6 385 1 728 1 728 4 657 4 657 106 106 125 125 1 236 1 236 3 692 3 692 – – 4 928 4 928 (63) (63) 4 991 4 991 3 449 3 449 109 109 1 433 1 433 302 302 1 131 1 131 866 866 3 788 3 788 4 654 4 654 28 28 4 626 4 626 3 280 3 280 99 99 1 247 1 247 285 285 962 962 1 718 1 718 1 589 1 589 779 779 4 086 4 086 220 220 3 866 3 866 2 751 2 751 75 75 1 040 1 040 (95) (95) 1 135 1 135 160 160 1 448 1 448 1 293 1 293 699 699 3 440 3 440 168 168 3 272 3 272 2 535 2 535 72 72 665 665 (26) (26) 691 691 97 97 14 049 14 049 11 689 11 689 6 399 6 399 5 605 5 605 5 097 5 097 4 532 4 532 1 131 1 131 962 962 975 975 594 594 1 365 1 365 (70) (70) – – 1 295 1 295 (194) (194) 1 489 1 489 (18) (18) 166 166 1 341 1 341 17 17 1 324 1 324 4 4 – – 873 873 447 447 1 475 1 475 (856) (856) 619 619 (252) (252) 871 871 (629) (629) 171 171 1 329 1 329 406 406 923 923 2 2 188 188 737 737 (4) (4) Average interest-earning banking assets (Rm) Average interest-earning banking assets (Rm) Average risk-weighted assets (Rbn) Average risk-weighted assets (Rbn) 922 197 922 197 645 498 645 498 870 382 870 382 655 675 655 675 361 987 361 987 289 929 289 929 339 442 339 442 312 716 312 716 405 760 405 760 240 061 240 061 382 661 382 661 228 299 228 299 59 017 59 017 32 013 32 013 59 958 59 958 28 461 28 461 34 759 34 759 46 039 46 039 34 513 34 513 46 520 46 520 60 674 60 674 37 457 37 457 53 808 53 808 39 678 39 678 ROA (%) ROA (%) RORWA (%) RORWA (%) ROE (%) ROE (%) Interest margin (%)2 Interest margin (%)2 NIR to total income (%) NIR to total income (%) NIR to total operating expenses (%) NIR to total operating expenses (%) CLR – banking advances (%) CLR – banking advances (%) Cost-to-income ratio (%) Cost-to-income ratio (%) Effective taxation rate (%) Effective taxation rate (%) 1,14 1,14 2,18 2,18 14,0 14,0 3,93 3,93 42,9 42,9 75,0 75,0 0,89 0,89 56,5 56,5 22,1 22,1 0,98 0,98 1,78 1,78 12,5 12,5 3,73 3,73 43,4 43,4 74,0 74,0 0,83 0,83 57,8 57,8 24,2 24,2 Contribution to group economic profit/(loss) (Rm) Contribution to group economic profit/(loss) (Rm) Number of employees (permanent staff) Number of employees (permanent staff) (226) (226) 25 924 25 924 (1 735) (1 735) 26 861 26 861 1,10 1,10 2,21 2,21 17,7 17,7 2,42 2,42 48,5 48,5 108,0 108,0 0,22 0,22 44,6 44,6 24,3 24,3 989 989 0,98 0,98 1,79 1,79 15,3 15,3 2,35 2,35 49,7 49,7 112,4 112,4 0,42 0,42 44,0 44,0 23,4 23,4 125 125 2 347 2 347 2 360 2 360 1 On an IFRS basis Nedbank Africa Regions earned associate income of R779m (2021: R686m) as IFRS requires associate income to be presented net of our share of ETI’s goodwill impairment of R0m (2021: R13m). Our share of ETI’s goodwill impairment is excluded from HE. 2 Cluster margins include internal assets. 1,20 1,20 2,12 2,12 16,0 16,0 5,72 5,72 37,4 37,4 61,2 61,2 1,61 1,61 61,0 61,0 28,1 28,1 345 345 15 671 15 671 1,13 1,13 1,99 1,99 13,7 13,7 5,42 5,42 38,1 38,1 59,6 59,6 1,34 1,34 64,0 64,0 27,1 27,1 (428) (428) 16 304 16 304 1,41 1,41 3,53 3,53 26,1 26,1 2,09 2,09 74,9 74,9 107,0 107,0 (0,20) (0,20) 70,0 70,0 21,1 21,1 484 484 1 826 1 826 1,18 1,18 3,38 3,38 21,2 21,2 1,44 1,44 81,4 81,4 115,5 115,5 0,09 0,09 70,5 70,5 22,9 22,9 284 284 1 976 1 976 2,31 2,31 2,12 2,12 13,8 13,8 4,94 4,94 48,0 48,0 57,8 57,8 1,02 1,02 67,3 67,3 (9,1) (9,1) (79) (79) 2 191 2 191 1,41 1,41 1,28 1,28 9,3 9,3 4,20 4,20 47,2 47,2 51,0 51,0 0,72 0,72 73,7 73,7 (3,9) (3,9) (365) (365) 2 309 2 309 (1 965) (1 965) 3 889 3 889 (1 351) (1 351) 3 912 3 912 86 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 87 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveSegmentalanalysis                                                                                                                                                                                                                                                                                                                        Nedbank Corporate and Investment Banking Headline earnings (Rm) Headline earnings (Rm) Return on equity (%) Return on equity (%) 4 1 7 6 7 6 1 6 6 3 6 3 5 0 6 5 9 9 3 6 , 0 0 2 , 7 7 1 , 4 9 , 3 5 1 , 7 7 1 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 Financial performance In a difficult macroeconomic environment CIB delivered good results by focusing on our purpose and partnering with our clients in key verticals. Cluster HE increased by 14% and ROE increased to 17,7%, up from 15,3% in 2021. NII increased by 10% to R8,8bn as average banking advances grew by 7%, supported by an acceleration in the back end of 2022, and NIM expanded by 7 bps to 2,42%, driven by increased deposit margins and endowment benefits. Continued prudent risk management, the expected emergence of stage 3 exposures and positive re-rating on the remaining portfolio resulted in impairments decreasing by 43% to Financial highlights R805m and the CLR decreasing to 22 bps. This was in line with management expectations to be within the TTC target range of 15 to 45 bps, with impairment overlays raised in prior years now being incorporated in the model. The coverage ratio reflects adequate provisioning, considering security in place for stressed counters, including those in the commercial property, aviation, and agricultural sectors. The total coverage ratio decreased to 1,29% from 1,35%. Stage 3 advances increased from R9,4bn to R18,6bn, representing 5% of banking advances. The large increase in stage 3 exposures was mainly as clients filed for business rescue in the property and agricultural sectors. The majority of Directive 3 and Directive 7 restructures at the end of December 2021, excluding Property Finance were rehabilitated during 2022. Pre-Covid pandemic stressed sectors, such as construction and state-owned entities, continue Change % 14 10 (43) 5 7 9 Corporate and Investment Banking Property Finance Corporate and Investment Banking, excluding Property Finance 2022 2021 2022 2021 2022 2021 4 989 6 063 343 7 181 13 343 6 272 4 494 5 284 923 7 331 12 715 5 800 6 399 8 755 805 8 241 17 096 7 628 17,7 1,10 0,22 108,0 44,6 2,42 5 605 7 966 1 418 7 881 15 947 7 011 15,3 0,98 0,42 112,4 44,0 2,35 1 410 2 692 462 1 060 3 753 1 356 15,7 0,72 0,28 78,2 36,1 1,42 1 111 2 682 495 550 3 232 1 211 11,8 0,56 0,30 45,4 37,5 1,40 2 2 7 1 4 (1) 584 227 572 344 175 962 171 035 408 265 401 309 581 580 569 247 170 968 170 934 410 612 398 313 424 642 398 622 170 513 165 635 254 129 232 987 405 855 405 553 165 618 164 981 240 237 240 572 441 886 437 651 429 663 414 248 286 283 262 303 441 600 437 389 429 380 413 945 36 249 36 536 8 975 9 416 27 274 27 120 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) 88 Nedbank Group Annual Results 2022 Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information to be a challenge, but we have seen an absolute reduction in defaulted exposures. Besides some client-specific issues, the property sector remains largely stable, with low levels of arrears on the performing portfolio even though smaller distressed restructures have increased. NIR increased by 5% driven, by higher commission and fees income (+13%) and private equity income (+38%). This was partially offset by trading income declining by 9%. The strong commission and fees income was driven by increased activity levels in Investment Banking on new and existing transactions. Private equity income increased as a result of revaluations, mainly in Property Finance. In Markets, a strong performance in foreign exchange trading was offset by a challenging backdrop in debt securities, particularly in interest rate derivatives. This was exacerbated by lower-than-expected client hedging activity in rates as well as margin compression across asset classes due to the implementation of the SARB Monetary Policy Implementation Framework (MPIF) in mid-2022.  Total expenses increased by 9%, reflecting digital investments aimed at enhancing client experiences and stability, as well as higher employee costs aimed at ensuring that Nedbank competes for and retains the best talent. The business returns were further enhanced by our continued optimisation efforts, which resulted in capital and RWA decreasing by 1% and 7% respectively. This decrease was driven by a reduction in counterparty credit risk (CCR) due to a methodology refinement as well as a reduction in the net derivative exposure impacted by trade volumes and market movements. Looking forward While the macroeconomic growth outlook remains challenging, acceleration in client activity in the latter part of 2022 is cause for optimism on the outlook. We see significant opportunity in working with our partners to deliver the energy and infrastructure projects that South Africa needs. CIB intends to maintain a leading position in renewable-energy and will position itself as a leader in infrastructure finance through thought leadership, product development and engagement with clients and government on strategic projects. The Transactional Services business is a vital enabler for liability generation and low-capital-consuming annuity income. This is an area of specific focus for CIB and the broader Group from a juristic perspective. We will look to build on the progress made in this franchise by taking a coordinated approach to the juristic transactional client journey. In practice, this will mean re-evaluating our client solutions, how we sell and ultimately deliver to ensure a unified client experience that leverages CIB’s ‘warm digital’ service model. We will continue to invest in our people by building a proposition underpinned by our DEI journey to attract, retain and develop top talent. As a purpose-led organisation, CIB is intentional about the value it creates and the impacts it has on our employees, clients, shareholders, and society at large. We therefore believe that an inclusive, equitable and diverse culture is a socioeconomic imperative driving the transformation of our business.  Though the South African growth outlook remains challenging, especially given the ongoing electricity crisis, we remain confident of delivering growth through leadership in the energy and infrastructure space, delivering great digital client experiences in our transactional business and focus on enhancing our ROE through portfolio optimisation strategies. We intend on maintaining our CLR within the TTC target range with a continued focus on stressed counters to reduce stage 3 loans. Strategic progress Our focus remains on the execution of our vision – ’To be the corporate and investment bank that creates value by using our financial expertise to partner with clients and contribute to the building of a strong, equitable and inclusive South Africa’ – and our strategic growth levers align to this. Clients remain at the centre of our strategy. We adopted a sector approach to client management in 2019 and continue to leverage our deep sector expertise to create value for clients and the CIB franchise by originating significant transactions and delivering quality returns. Our differentiated client service model delivers a more focused approach to enhance the client experience and optimise our limited resources by focusing on current and potential client revenue and profitability. Digitisation continues to be a priority for CIB, particularly to improve client experience in service and product delivery. Our ‘warm digital’ approach aims to create simplicity in how our clients engage with us on routine tasks while ensuring human expertise and support are available when required. We continue to prioritise, design and deliver capabilities based on experience feedback gathered across all client touchpoints. CIB business leads work hand in hand with technology experts in agile structures to build out our channels and automated processes and modernise our core applications as evidenced by Nedbank CIB winning the Global Finance World’s Best Banks 2023: Best Bank for Client Facing Technology award. In parallel, we are focussed on building the skills, mindsets and structures we believe are necessary to build a digital-ready, modern front-line workforce.  A key enabler of ‘warm digital’ is our award-winning Nedbank Business Hub (NBH) platform, which brings this approach to life for our juristic clients. Over the past year we have migrated more than 96% of CIB clients, who can now access their transactional capability via the NBH. Nedbank continues to invest in and refine the Nedbank Business Hub, and in 2022 new global banking functionality was launched on the platform, enhancing the client experience for cross-border payments and foreign exchange management. Our focus has been to migrate our clients to our new digital solutions and these plans remain on track. In parallel, we will drive adoption through change management to enable our clients to benefit from the self-service capabilities provided. In the digital world security is as important, thus in parallel to migrating clients to the NBH, the Nedbank Authenticator was launched, providing clients with the choice of security via an app, or a token based on FIDO (Fast Identity Online) standards. In total, 97% of clients prefer using the new app. Optimising our existing balance sheet is key to improving the quality of our returns while we also ensure that we are deliberate in directing scarce balance sheet resources towards value-accretive client partnerships that are long-term in nature. This had a positive impact on our overall profitability as we returned to the 2019 ROE levels. Nedbank Group Annual Results 2022 89 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveSegmentalanalysis                                            Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information due to a tough trading environment driven by macroeconomic factors, margin compression from MPIF and a drop in large, structured transactions. Equities declined by 19% but this was off a high 2021 base that included the impact of significant once off revenue. Given the stabilisation of the inflationary outlook we expect better outcomes in debt securities as well as an increase in hedging activity. The Markets business is focused on building strength in areas in which we are under-indexed relative to the market such as credit trading and targeted Africa opportunities.  Transactional Services The Transactional Services business provides working capital products in conjunction with transactional solutions. This business showed strong growth, with GOI increasing by 22% due primarily to NII increasing by 34%. NII benefiting from higher deposit and short-term asset growth of 9% and 15% respectively. NIR grew by 4% with growth in domestic payments, guarantees and trade risk participation, offset by a reduction in cash withdrawal volumes. We recorded 25 new primary-banked wins including the retention and noteworthy wins of significant public sector clients. There is a strong pipeline going into 2023 underpinned by a robust sector-based strategy and refined operating model. The business is prioritising client experience through digitisation of existing and future solutions. This focus resulted in the business being awarded the Digital Banker – Middle East & Africa Innovation Award for 2022 following the launch of the NBH. We will continue to enhance and invest in further innovation on this platform for our juristic clients. The business continues to play a significant role in the industry through its thought leadership in cash and payments modernisation. Favourable Unfavourable • NIM being up 7 bps, driven by higher deposit margins • Impact of unfavourable conditions on debt and interest rate and endowment. markets and as a result trading income. • 6% growth in pre-provisioning operating profit. • Increase in stage 3 loans and advances. • Recorded 25 primary-banked client wins. • CLR being towards lower end of the TTC range. • Robust growth of 14% in FX markets. • High single-digit asset growth. Developing our fossil fuel and power generation glidepaths Building on a history of climate and environmental leadership, in 2021 we released our Energy Policy, including a commitment to have zero fossil fuel exposure by 2045. The policy recognises the need for a zero-carbon energy system by 2050 and, importantly, that an orderly exit from fossil fuel financing is necessary well before 2050. We have begun work on the fossil fuel and power generation glidepaths and will release these glidepaths next year in our 2023 reporting. We intend to pilot the glidepath internally through 2023 to fully integrate the management of the tool in our business, credit and risk processes. To guide the transition of its energy portfolio, Nedbank has chosen to adopt a combination of financed emissions targets and other financing activity commitments. This includes a combination of near-term, absolute and financed emissions intensity targets and a longer-term net-zero target. This combination of commitments provides an ambitious, but achievable pathway in transitioning our lending to net-zero.  In line with our Energy Policy, our reduction targets will initially focus on the emissions related to our lending in the upstream fossil fuel and power generation sectors. For our fossil related lending we believe that a methodology that encompasses scopes 1, 2, and 3 client emissions is most appropriate in managing the full impact of the sector in the long term. For our generation pathway, we intend to use a physical intensity metric (CO2e/MWh) encompassing scope 1 emissions of the electricity generated. Our intention is to use a benchmark scenario that aligns to achieving the goals of the Paris Agreement, keeping global warming well below 2 degrees Celsius by 2050 and to pursue efforts to limit the temperature increase to 1,5 degrees Celsius. Given our position as an African Bank, we believe our benchmark scenario should take into account our African context and the African Just Transition. We will leverage the latest available science when selecting the pathway that will form the basis of our fossil fuel and power generation glidepaths. Post the disclosure of these sector pathways, Nedbank Group plans to set targets for other segments of its portfolio, data permitting. These will be prioritised based on materiality in terms of emissions to the country and to Nedbank. Financial highlights Property Finance Investment Banking Markets Working capital and Transactional Services 2022 2021 2022 2021 2022 2021 2022 2021 Gross operating income (Rm) Average total advances (Rm) 3 753 3 232 4 472 4 270 5 035 5 299 3 836 3 146 165 618 164 981 156 087 151 916 63 426 70 658 20 724 17 998 We continue to invest in our people by building a people proposition that is underpinned by a diverse, equitable, and inclusive culture, tailored to our business strategy to enable us to attract, retain and develop top talent, considering relevant global workforce trends. This strategic workforce approach is vital to our continued success as a leading corporate and investment bank. We have made a significant investment over the past eighteen months to align remuneration practices and outcomes to the market to ensure that we continue to compete effectively for talent. Segmental performance Property Finance Property Finance provides development and term finance solutions to clients and partners with its clients through equity investment and mezzanine structures.In 2022, growth in the property sector remained slow on the back of a sluggish economy. We, however, experienced good revenue growth due to a strong performance across all pillars of our business, particularly Property Partners and the Africa business. Our focus remained on partnering with our clients, originating high-quality transactions and managing the risk across our portfolio.  Gross operating income (GOI) increased by 16%. NII was flat and negatively impacted by an increase in the suspension of interest as a result of the increase in stage 3 exposures. The growth of 93% in NIR was driven by the strong performance of the Property Partners owing to favourable revaluations on certain assets. The CLR deteriorated in the second half of the year to end at 28 bps (2021: 30 bps). The deterioration is linked to specific exposures rather than to the performance of the portfolio in general. The CLR is within the TTC target range of 15 to 35 bps and is expected to remain within the range going forward.  Our portfolio is secured by good-quality assets and is well diversified. This is underpinned by a strong client base with whom we have deep relationships. Investment Banking Investment Banking is responsible for the advisory, debt and equity capital markets, private equity, long-term debt finance, sustainable finance and syndication businesses. It has leading industry expertise in the mining and resources, energy, infrastructure, telecoms and the leveraged and diversified finance sectors. Our sector expertise, thought leadership and our purpose-driven approach in delivering solutions to our clients have received significant recognition and garnered us multiple awards in the year under review. Investment Banking delivered solid results with 5% growth in GOI. NII increased 3%, as momentum in the latter part of the year saw closing advances grow by 8%, with the Mining and Resources and Leveraged and Diversified Finance business contributing significantly. We continue to drive cross-selling initiatives off our client and related advances growth into the broader CIB product offering and this remains a key focus. NIR growth of 9% was driven by strong growth in fees and commissions, which increased 29% reflecting strong underlying client activity. NIR related to private equity and investment income had a meaningful but lower contribution off the high base in 2021. The credit loss ratio for the period was 11 bps. This performance enabled the business to deliver a continued improvement in ROE, enhanced by our portfolio optimisation initiatives.  Looking forward, the pipeline of opportunities remains robust across all sectors particularly in energy and related infrastructure. The delays in the renewable-energy programme into 2023 will result in strong growth for the energy business as the renewable-energy and commercial and industrial projects close this year. Our investment in the advisory franchise continues as we grow NIR year on year from this business. The private equity franchise will focus on new investment activity while realising certain of the existing investments for value. There will be a continued focus on sustainable finance activity where we continue to play a key role in leading, structuring and co-ordinating these transactions, for which Nedbank has been recognised globally as a leading sustainable finance provider. Markets The Markets business trades in the foreign currency, equity, commodity and interest rate markets. Trading conditions were challenging throughout the year as both local and international markets experienced significant inflationary pressure, exacerbated by the Ukraine conflict. Hawkish stances by central banks and easing of supply chains have resulted in a moderation of the inflation outlook but the low level of growth is now a significant concern with rising expectations of a global recession. The SARB MPIF, a transition from a shortage to surplus system, also significantly compressed margins across asset classes in funding products. Financial conditions are expected to remain tight for the short term. GOI decreased by 5%, driven by a decline in trading income. Despite the impact from MPIF, foreign exchange showed robust growth of 14%, driven by increased client activity. This growth was, offset by a 18% decline in debt securities after a period of continued growth over the past few years. This performance was 90 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 91 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveSegmentalanalysis    Nedbank Retail and Business Banking Headline earnings (Rm) Headline earnings (Rm) Return on equity (%) Return on equity (%) 9 7 3 5 3 9 2 5 5 9 5 1 2 3 5 4 7 9 0 5 , 9 8 1 , 3 7 1 , 4 5 , 7 3 1 , 0 6 1 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 Financial performance RBB’s financial performance has continued to improve, with HE up by 12% to R5 097m. Higher earnings growth, coupled with a slight decrease in allocated capital due to methodology changes, resulted in ROE increasing to 16,0% (2021: 13,7%), now back above the group’s cost of equity. The main driver of the HE growth was an 11% increase in revenue, with expense growth being curtailed at 5%. This was offset by a 28% increase in the impairments charge off the back of once-off releases in the prior year and a deteriorating macro environment in 2022. The growth in revenue was driven largely by NIR recovering strongly from prior-year levels as all sectors of the economy opened and by NII growth remaining strong, benefiting from an improved NIM. Higher revenue has resulted in significant growth in preprovisioning operating profit (PPOP) of 20% and the cost-to-income ratio declining to 61,0% (2021: 64,0%). In addition to the strong financial performance, RBB also showed positive traction on several key non-financial metrics, including a 13% increase in digitally active clients to 2,6 million and 6% growth in main-banked clients to 3,24 million, underpinned by a 6% growth in the economic-profit-rich middle client segments. During the year we received numerous awards such as the 2022 Global Banking and Finance Review Award for Excellence in Innovation Banking App in South Africa (for the Nedbank Avo app), and Best Corporate ESG Strategy in South Africa. At the Asian Banker Excellence in Retail Financial Services Awards 2022, we won the Best Retail Bank in Africa and South Africa Award, as well as the Best SME Bank in South Africa. At the Asian Banker Financial Technology Innovation Awards 2022, we were recognised for Best API and Open Banking Implementation. At the Africa Professional Wealth Management Wealth Tech Awards – Financial Times 2022, we were named the Best Private Bank for Digital Customer Service and lastly, we were also awarded for Outstanding Contribution in Commercial Payments Products for the SADC region at the ninth Africa Bank 4.0 Awards – BII World. These awards reflect our efforts and expertise in digital, ESG and the differentiated offerings for the segments we are serving. NII increased by 12% to R23 203m, driven by an increase in advances off the back of stronger payouts, and the widening of NIM from 5,42% to 5,72%. NIM benefited from positive endowment as interest rates increased, as well as a higher liability margins from slightly more favourable funding spreads. Average banking advances increased by 7% to R391bn driven by strong growth in our commercial banking and small business segments, as well as solid growth in secured lending. Unsecured-lending volumes have, however, slowed due to the adoption of a more cautious approach to new lending as a result of elevated risk. Overall new-loan payouts increased 3% to R121bn. As a results, our household advances market share decreased marginally to 17,3% in December 2022 (2021: 17,6%). Average deposits increased by 7% to R383bn, supported by our market share of transactional deposits, which increased to 13,9% in December 2022. This is a key focus area, which has led to our achieving the strongest percentage deposit growth among large South African banks, based on the BA900. The 28% increase in impairments by R1,4bn to R6,6bn was largely attributable to once-off benefits in 2021 (+R713m), book growth (+R400m), a deteriorating macro environment and elevated risk outcomes largely in secured products in Consumer Banking (+R857m). When normalising for the once-off items of R713m realised in 2021, the FY 2021 adjusted CLR of 153 bps (reported 134 bps) increased to 161 bps in 2022. Stage 3 loans as a percentage of total loans increased marginally from 6,67% to 6,81% as deterioration in the Consumer and RRB segments was partly offset by improvements in Commercial Banking. Total coverage remained elevated at 4,92% (2021: 4,83%), reflecting prudency in the difficult current macro conditions and outlook.  NIR increased by 8% to R13 849m, reflecting the ongoing improvement in client transactional activity, benefits of cross-sell, an increase in main-banked client gains and growth in card interchange revenue. Value-added services (VAS) grew by 25% and card acceptance volumes grew steadily in Q4 2022, reaching over R400bn in volumes for the year, which is the highest level reached to date. However, there is ongoing pressure on margins owing to higher levels of competition in the market. Expenses increased by 5% to R22 615m, driven by judicious management of discretionary spend and ongoing optimisation of operations through Project Phoenix, Project Imagine and other Target Operating Model 2.0 initiatives. Permanent headcount decreased by 633 to 15 671, achieved mostly through natural attrition as we continue to leverage our investments in digital and the Managed Evolution (ME) technology strategy. Our cost-to-income ratio remains too high, but improved to 61,0% (2021: 64,0%), driven by higher revenue and cost-savings initiatives. Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Strategic progress Clients – The number of main-banked clients increased by 6% to 3,24 million. The 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. Following a consistent upward trend in client experience over the past six years, Nedbank has reached #1 position in NPS (Net Promoter Score). Nedbank’s performance is evidence that the focus on delivering delightful client experiences is bearing fruit. Consulta could not complete its 2022 client satisfaction study following some operational challenges and as a result, Nedbank commissioned a similar NPS benchmark study through Kantar – an independent, top-rated and world-leading data, insights, and consulting company. The Kantar Banking Industry study used a methodology consistent with Consulta, with the results statistically valid at a 95% confidence level. Questions and computation of scores were consistently applied so that results would be comparable. Looking ahead, Nedbank will continue its efforts to continuously improve client experiences and maintain our #1 NPS position. In May 2022, Nedbank Business Banking was strategically repositioned as Nedbank Commercial Banking to better represent the comprehensive range of services and products we offer to medium-, large-, and mid-corporate-sized businesses. The annual 2022 study concluded by KPI Research showed a pleasing increase in market share to 24% (2021: 22%) in the category of businesses generating an annual turnover of between R750m to R2,5bn. 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 approximately 13 400 (90%) employees having gone through the first phase of training and approximately 7 900 (50%) of employees being in the embedding phase. Our gold-standard client journey management capability is well underway, built on a leading set of global technologies that allows us to understand client pain points through sentiment and operational data as we continuously implement client experience improvements to better meet client needs. Good market conduct principles are embedded and managed with oversight through our newly established Fair Client Conduct Board. As part of our CX journey, Nedbank embarked on a journey to institutionalise behavioural economics for strategic projects across the business. We partnered with one of the leading South African universities, and Nedbank employees undertook technical training in behavioural economics and designed and tested behavioural interventions to increase client satisfaction, digital sales, cross-sales, and the adoption of service excellence rituals. All behavioural interventions were rigorously tested through live experiments and delivered significant improvements on behavioural interventions that could be scaled. In 2023, the institutionalisation journey will focus on embedding behavioural economics, skills, and interventions within campaigns, digital channels, collections, and frontline interactions with clients. Through our financial wellness programmes (Consumer Financial Education and Financial Fitness) we reached over 29 million people, up from 15 million in 2021. These programmes are incorporated into various CVPs including Workplace Banking and are delivered via a combination of radio, digital, social-media and face-to-face interventions. Our financial wellness programmes incorporate behavioural economics principles that highlight the role of emotions and cognitive biases when making financial decisions. Digital innovation – The digital growth story accelerated in 2022, with digitally active clients increasing by 13% to 2,6 million to reach a major milestone of 2,0 million clients now using the Nedbank Money app (up 23%). The continued investment in digitising onboarding journeys, digital marketing capabilities, and widening the distribution of sales capabilities all culminated in strong digital sales growth of 104%, far exceeding expectations. Digital is now contributing 53% (2021: 32%) of funded consumer sales and is well above South African industry standards (Finalta Digital Benchmark Study – 2022). The ease of onboarding clients onto the Money app and opening of accounts in less than five minutes contributed to the increase in clients joining and using our app. Digital payment volumes continued to grow, up by 18%, with Money app payment volumes increasing by 34% and app volumes now exceeding those of Online Banking. The Money app, together with other self-service channels, now play the dominant role in providing clients with simple and convenient banking anytime, anywhere. Digital innovation is in our DNA and continues to be evident in the delivery of new and exciting features to market, adding value to our clients throughout 2022. Clients can now choose from a wider variety of vouchers, including for prepaid water, which seamlessly integrate into our Greenback programme. Access to our Avo super app is easier than ever and it can now be accessed through a single click from the Money app. Other new features include cardless cash-out solutions as well as the issuing of virtual cards that can be used to pay online. A combination of spend analysis, financial categorisation, budgets and a credit score dashboard help clients improve their financial health steadily. Clients are now able to book directly, through the Money app, video-call-based appointments with a branch or with our innovative Digital Advice Services Desk (DAS). Furthermore, we strive to empower our clients financially through the Money app, with which they are now able to open investment accounts, increase credit card limits and access predetermined offers made available to them seamlessly. We also introduced Enbi, the always-on assistant bot that is there for our clients, 24/7 and which integrates with our contact centre agents seamlessly to address any questions from clients. We also drive financial inclusion and offer rich and simplistic banking for our Cellphone Banking (USSD) clients. During 2022 key innovations in the Cellphone Banking channel included real-time transaction notifications, a simplified and client-friendly new navigation experience, pre-login pop-ups to assist in client education, and an enhanced predetermined short-term loan offering. The innovation pipeline promises to deliver more in 2023, and through the app clients will have the ability to apply for a credit card, allow children to access and use the app, and include enhanced features such as the ability to track card delivery. Enbi will also be expanded to handle more enquiries for clients and we will continue to focus on providing simplified products and solutions to our clients to enhance their overall client experience. Client security remained a core focus, with several new features and enhancements implemented in 2022 to further protect our clients. The introduction of facial recognition, which integrates with the Department of Home Affairs for facial comparisons and data checks, enables us to reduce friction and grow the list of 92 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 93 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveSegmentalanalysis Financial highlights for the year ended 31 December Segmental view Total Retail and Business Banking Commercial Banking Consumer Banking Relationship Banking Other1 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 5 097 4 532 1 812 1 408 1 950 2 109 23 203 20 745 4 735 3 847 15 006 14 276 1 292 3 375 907 2 585 43 87 108 37 Change % 12 12 8 5 28 6 613 5 172 98 (167) 6 249 13 849 12 783 1 917 1 844 7 941 5 144 7 353 249 150 17 45 1 686 1 568 2 305 2 018 22 615 21 442 3 984 3 864 13 772 13 287 2 994 2 728 1 865 1 563 16,0 1,20 13,7 1,13 23,8 1,06 19,8 0,90 10,2 0,78 10,1 0,88 36,3 1,21 24,6 0,97 1,61 1,34 0,11 (0,21) 2,37 2,04 0,41 0,29 61,2 59,6 48,1 47,7 57,7 55,3 56,3 57,5 61,0 64,0 59,9 67,9 60,0 61,4 59,2 65,7 5,72 5,42 2,80 2,48 6,08 6,01 3,16 2,76 7 408 430 380 985 87 866 80 363 257 919 242 390 61 433 57 312 1 212 920 7 391 022 365 656 83 862 76 912 246 802 236 192 59 118 51 625 1 240 927 8 402 114 371 106 167 651 152 930 125 165 123 017 108 977 95 023 321 136 7 383 010 359 221 162 321 148 684 120 416 121 904 100 053 88 251 220 382 (4) 31 843 33 060 7 607 7 116 19 076 20 789 3 557 3 684 1 603 1 471 Headline earnings (Rm) NII (Rm) Impairments charge on financial instruments (Rm) NIR (Rm) Operating expenses (Rm) ROE (%) ROA (%)2 CLR – banking advances (%)2 NIR to total operating expenses (%) Cost-to-income ratio (%) Interest margin (%) Total advances (Rm) 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 CLR and ROA calculations are aligned with the methodology used across the bank. 3 During 2022 the group identified a one-day delay in the sweep on the cash management deposit account and the debtor funding account. The delay resulted in the unswept balances being incorrectly reflected under cash management deposits (liability) and debtors (asset) and therefore the affected line items were overstated. In terms of IAS 32: Financial Instruments: Presentation, once the sweep has taken place in the cash management deposit account and the debtor funding account, these should not be reflected as a liability and asset respectively. As a result, the comparative assets and liabilities have been restated by R3 866m and the opening 1 January 2021 assets and liabilities have been restated by R3 390m respectively. functions offered via our digital platforms. A QR code security function was introduced on Online Banking to further mitigate threats to clients. Our API_Marketplace provides a platform for our external and internal partners to consume financial products and services in line with our open-finance strategy. In support of the open finance strategy API_Marketplace, in collaboration with product teams across the group, increased product coverage to 13 in 2022 (2021: 9) with the addition of car and building insurance, credit card data and EFT payments APIs for the CMA countries (Namibia, Lesotho and Eswatini now available pending regulatory approvals). Work is materially complete on the CMA wallet and accounts data APIs, which will go to production in H1 2023. In addition, Rapid Payments, Cash Out at Retailer and Transactional Data (for juristic) APIs are in the pipeline for delivery in H1 2023. API_Marketplace has been at the forefront of the open-finance strategy in 2022, consistently collaborating with product teams to innovate with the platform and improve revenue and client acquisition. In 2023, the business will continue to focus on identifying market relevant opportunities that will contribute to our growth.  The Nedbank Business Hub’s ongoing journey improvements have made becoming more digital easier for our Commercial Banking clients. It provides seamless access to a wide array of functions accessible through an integrated and secure platform, driving wider access to our ecosystem of products and services. To date there have been 139 996 service requests received via the hub, the bulk of which are straight-through, meaning immediate delivery to clients and ultimately a more efficient, streamlined client experience. There have also been 322 digital product applications with 83 activations by clients using the hub. Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Currently, RBB has 142 active robots servicing 63 processes. These solutions have created efficiencies by optimising business processes, resulting in a significant saving in workforce hours (estimated at 1,3 million hours) over the past four years. Robotic automation has improved client experience by reducing turnaround times, and mitigating risk. first-in-market functionality such as app-initiated withdrawals using QR codes, meaning that clients do not have to insert their cards into our ATMs when withdrawing cash. Clients can now also pay all Nedbank accounts and beneficiaries at cash-deposit-taking devices and make real-time deposits at deposit-taking ATMs. Physical distribution – Our physical footprint points to 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 2022, we closed 15 points of presence and opened 20 new in-retailer outlets and opened no new branches. This reduction has not affected our coverage of the bankable population in SA, which remains around 85%, in line with that of the industry. Since 2014 we have achieved actual floor space reduction of 83 823 m2. We have a new operating model in 210 points of presence that will be rolled out over the next three-year cycle, including an innovative mix of branches from full-service and express to easy-access smaller branches. For our newly modelled branches we have seen an uplift in NIR per square metre when we compared data for six months from before the branch was opened and after the branch had been opened. By the end of 2025, 58% of branches will be smaller than 200 m2, which is 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 our products through new partners, both in market and online through APIs, acknowledging that clients are coming to branches less and that we need to be mobile and have a presence in the community. Appointment bookings, which allow our clients to schedule time for face-to-face meetings in- branch without having to stand in long queues, has seen a lift of 212%, with over 124 000 booking being done in 2022. We plan to extend our appointment booking capability to non-Nedbank clients via our website in 2023. The transition of the frontline business to an agile operating model is underway in 61 of the 195 micro markets. The adoption of agile practices and methodologies while embedding agile values and mindsets has impacted sales performances positively across all frontline sales roles. Our continued focus on sales productivity as well as the ‘Everyone Sells’ strategy has resulted in branch sales and service productivity improving by 48%, with servicing employees now contributing 17% (2021: 4%) of overall sales. To complement our in-market and digital channels we have a contact centre available to clients 24/7 through email, chat and voice options. Clients can now call our contact centre free of charge through our 0800 number. We have seen a 5% shift in service volumes from employee-assisted channels towards self-service channels. There has been an increase of 20% on digital channels for financial servicing, 17% for non-financial servicing and a 7% increase in transactions on bank-owned devices. With self-service options expanding, we further invested in our ATM footprint by rolling out another 73 devices. During this period, cash dispensed through branches and ATMs increased by 12%. Altogether, 90,5% 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 roll-out of our new ATM front-end, which enables Significant progress has been made in enhancing functionality across self-service and online channels, providing our clients with enhanced convenience. During the past year, we simplified the password reset function for Online Banking and added great functionality, such as the ability to change card PINs in-app. Our network of 473 self-service kiosks in our branches enables clients to complete self-service actions at their own convenience, such as changing their ATM limit, maintaining their profile, issuing statements, as well as blocking and replacing personalised cards for PAYU and Savvy Plus Accounts. The long-term aim is to offer this across all accounts and clients, making the card process much faster as we continue to offer convenient options for clients. Clients can also pick up cards 24/7 by using our 160 lockers located in the self-service zone at branches or have their cards delivered to them. Our kiosks now also enable clients to open PAYU accounts seamlessly, with a card issued instantly, and we are looking to expand to other third parties. Ecosystems – Our Avo super app has signed up more than 2,0 million users since its launch in 2020, with active users up almost fivefold. Benchmark analysis revealed that the growth trajectory of Avo’s monthly active users has been much higher than that of benchmark peers after three years in the market. Over 20 000 businesses, up by 15%, have been registered to offer their products and services on this e-commerce platform. Avo now has access to over 12 000 drivers on its delivery fleet nationwide as product orders continue to grow exponentially, with a fivefold increase in gross merchandise value (GMV) and sevenfold increase when including internal procurement via the platform. Avo Auto, a virtual vehicle mall that was launched in 2021, now hosts over 200 MFC-accredited dealers, with more than 8 000 vehicles available on the platform. During the year we launched Avo B2B Marketplace, making it easier for business buyers and sellers to connect, anywhere, anytime, on a secure platform. Avo also continued to increase its number of partners to drive scale, with our newest partnerships (with Apple, Dell and Uber Direct) highlighting the increasing appeal of Avo as a destination marketplace to assist global brands and manufacturers in realising their growth aspirations. The launch of Avo in our first NAR subsidiary is planned to go live in Q1 2023. At the Global Banking and Finance Awards 2022, we won the Excellence in Innovation Banking App (Nedbank Avo) in South Africa Award. In the township economy, we continue to leverage partnerships to co-create solutions with clients. This work has been advanced through the establishment of an Insights centre of excellence aimed at tailoring solutions centred around the client’s physical and psychological contexts. Our multipronged approach, anchored by our go-to-market strategy, has impacted the township economy positively and remains pivotal in our community-based interventions with residents, informal traders and SMMEs. Through the Distribution Performance Cell, enabling us to understand community needs better, we provided relevant solutions in 12 township markets to date and prioritised roll-out into the remaining main markets in 2023. In addition, we are creating shared value through our partnership with Township Entrepreneurs Alliance (TEA) by offering Kasi 94 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 95 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveSegmentalanalysis                                          Product views, excluding commercial banking Home loans VAF Unsecured lending1,2 Transactional3 Card and payments3 Forex and investment 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 NII (Rm) 3 259 2 979 5 526 5 121 4 163 3 998 2 488 1 803 1 419 1 506 1 546 1 475 Consumer banking and other 2 347 2 215 5 350 4 977 3 911 3 862 Relationship banking 912 764 176 144 252 136 Impairments charge on financial instruments (Rm) 507 (129) 2 408 1 727 2 719 2 619 Consumer banking and other Relationship banking 427 80 (138) 2 379 1 702 2 581 2 502 9 29 25 NIR (Rm) 283 275 701 708 1 011 1 477 71 71 749 1 419 1 506 1 054 988 558 988 487 64 64 811 1 059 811 1 059 192 279 Consumer banking and other Relationship banking Operating expenses (Rm) Consumer banking and other Relationship banking 215 68 212 63 686 15 694 14 138 891 819 72 117 726 6 151 5 680 3 634 3 216 249 230 676 50 4 766 4 358 3 606 3 191 1 385 1 322 28 25 132 117 136 94 1 772 1 683 1 787 1 662 1 977 1 843 8 286 8 064 3 001 2 626 1 579 1 500 1 198 574 1 137 546 1 673 1 557 1 785 1 727 6 588 6 502 2 984 2 609 114 105 116 1 698 1 562 17 17 1 179 400 1 117 383 Headline earnings (Rm) 890 1 215 1 342 1 612 185 185 (481) 859 723 150 142 Consumer banking and other Relationship banking 655 235 1 019 1 308 1 592 283 196 34 20 (4) 218 (33) (653) (1 067) 838 586 851 8 717 6 (48) 198 (1) 143 ROE (%) CLR – banking advances (%) Cost-to-income ratio (%) Interest margin (%) Average total advances (Rm) 14,5 22,5 15,5 17,3 7,4 4,8 8,8 (16,7) 36,6 22,7 50,6 28,6 0,33 (0,09) 1,92 1,46 8,73 9,06 39,55 34,98 4,90 6,33 50,0 2,12 51,7 2,08 28,7 4,02 28,5 3,95 39,1 15,21 39,0 15,23 95,9 8,00 107,8 6,19 59,4 7,97 55,6 8,19 88,0 0,97 88,0 0,97 149 525 138 952 119 249 112 468 24 287 23 342 69 98 13 957 13 896 2 2 The table does not include NCB HE of R1 812m (Dec 2021: R1 408m) and other unallocated costs of -R420m (Dec 2021: -R272m) relating to Channel, Central and Shared Services. Therefore, the table does not cross-cast to the segmental view on page 94 1 Excludes additional insurance income in Nedbank Wealth that if included, would result in ROE of 12,0%. 2 Unsecured Lending's CLR has been restated to align with methodology for the current year. 3 Debit and cheque interchange and related costs have historically been reported under the Card and Payments product. This has been restructured in the current period and is now reported under the Transactional product to more closely reflect the true economics of the Transactional product and also align with the industry. The 2021 comparative period has been restated. Business Workshops across the country. Since May 2022, this programme has enriched more than 3 000 physical and 4 000 online township SMMEs with training, sponsored around 140 township exhibitors equipped with Nedbank POS machines, created supplier procurement opportunities for more than 40 black-youth-owned service providers, as well as crowned eight pitch challenge winners with a collective allocation of R350 000 in cash and business support in 11 township communities nationwide. This community-immersive approach has deepened our insights, which we have used to develop an informal trader CVP – to be launched soon – that drives financial inclusivity. Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information 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 reallocation of clients and products was conducted to ensure all income is accounted for in the correct segment. As a result, R6,2bn in advances was transferred from Consumer Banking to Retail Relationship Banking in August 2021, and R2,4bn of deposits were transferred in January and April 2022, with the full-year impact as follows: • R2,4bn in notice and term deposits • R3,7bn in home loans • R1,3bn in VAF • R1,2bn in personal loans • R41m in HE  Commercial Banking Commercial Banking provides relationship-based banking services to mid-sized and large commercial entities, including tailored banking and financial propositions for agricultural, franchising and manufacturing industries as well as the public sector. Commercial Banking increased HE by 29% to R1 812m at an attractive ROE of 24% through solid product volume growth, coupled with an improvement in NIM of 32 bps to 2,8%, driven mainly by the endowment benefit following the sharp increase in the interest rates. NIR grew moderately by 4% off the back of a 6,6% increase in transactional banking volumes, offset by lower non-transactional-related fees. Average advances grew by 9% as client use of existing facilities increased, although we noted cautious borrowing behaviour, with new loan payouts remaining largely flat at R27bn. Commercial Banking remains a strong generator of funding, with R91bn in net surplus funds generated, supported by an increase of 9% in average deposits, particularly from growth in transactional deposits. The CLR of 11 bps (2021: -21 bps) is below the target range of 50–70 bps and includes the release of forward-looking impairment overlays deemed as no longer required. The CLR is expected to normalize in 2023. The commercial operating environment has been, and continues to be, beleaguered by many external factors such as intensified load-shedding, increased input costs, margin pressure as well as logistical and transportation challenges. Although downside risk in the current economy persists, our balance sheet coverage ratio of 1,83% remains above pre-Covid-19 levels.  Our digital journey continues to advance and is underpinned by both ongoing delivery towards a clearly defined 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. Commercial Banking continues to roll out the Nedbank Business Hub to clients, enabling a positive change in client experience for businesses, achieving critical scale in 2022. The focus for 2023 will be primarily around adoption and continual enhancement to our cybersecurity measures to help clients manage cyber security concerns as they adopt more digital solutions for their businesses. The Nedbank Business Hub provides convenience for the electronic banking needs of our clients and is a single view of all the digital offerings we have. From here, clients will be able to transact, apply for products and services and more. Security remains a top priority and we offer advanced protection through the combination of a password, certificate and choice of two-factor authentication (mobile or token). To date, 67% of clients have an active digital resolution in place, which enables businesses to nominate authorised persons to procure banking and financial products and services. The introduction of a service model aimed at focusing on the delivery of a unique proposition to the lucrative mid-corporate segment within Commercial Banking in 2021 has according to KPI research brought about a positive increase in market share between 2021 and 2022 to 24% within the category of businesses generating annual turnover of between R750m and R2,5bn. This, together with various interventions aimed at improving existing client product cross-sell ratios culminated in an improvement in the status of single-banked clients with Nedbank from 27% in 2020 to 36% in 2022, versus a downward position in multibanked clients over the same period. The year 2022 saw the launch of a bespoke value proposition to the manufacturing industry that was successfully promoted and well received by the sector. Continued client growth across the agriculture, franchising and public sector portfolios were also evident during the year. Our sustainability proposition showed an increase in the provision of finance covering ‘renewable energy’ investments that exceeded our ambitions for the year. A pilot with a third party was also initiated with select clients towards the end of 2022, which offers the commercial market an aggregation of advisory services and geolocated suppliers for commercial clients contemplating the purchase and acquisition of solar-energy technology. So far, initial feedback received has been promising and we expect to finalise a more permanent arrangement with this service provider in early 2023, which will then be extended to the broader commercial market. Retail Relationship Banking RRB provides tailored banking services to affluent individuals and their households (salaried and self-employed), non-resident clients and embassies as well as SMEs with an annual turnover of less than R30m. The relationship banking offering is designed for clients seeking a personalised, flexible and proactive approach, and caters for more complex financial needs typically associated with the above-mentioned client segments. Despite the subdued economic environment, the business delivered HE of R1 292m, up by 42%, generating an ROE of 36,3%. This reaffirms both the resilience of the client base (despite small-business clients being under more strain than affluent clients) and the quality of this business. After rebasing for the internal transfers, the CLR increased from 36 bps to 41 bps, which is at the lower end of the target range of 40–70 bps and reflects the quality of the book and the effectiveness of the risk practices. Average advances grew by 7%, while average deposits increased by 11%, resulting in a net funding contribution to the group of R51bn. NIR grew moderately at 6,0%, which includes the impact of various industrywide and Nedbank-specific pricing concessions. NIR growth was more muted in the small-business segment, reflecting the strain this sector is under, but recovered strongly in the private-client segment. 96 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 97 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveSegmentalanalysis                                                          Private Clients: Early in 2022 we repositioned our Professional Banking offering to Private Clients, to align with market naming conventions and to reflect our aspiration to provide a true ‘private’ experience. We have noted a steady improvement of consideration and sentiment ratings on the back of this change. Main-banked client numbers increased by 10%, maintaining our affluent market share at approximately 15%. Service levels and client satisfaction continue to improve, with more clients willing to promote Nedbank off the back of continued efforts to provide a seamless experience to this demanding client base. The many enhancements being 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. Important digital features for this client base include the ability to receive and make international payments, open and manage investment accounts, apply for credit, access and manage wealth products (stockbroking, unit trusts, retirement annuities and life cover) as well as choose from a range of in-house short-term insurance solutions. Clients can also book appointments with their banker, and our financial management solutions continue to evolve, and we are seeing good usage by RRB clients. Our enhanced proposition for this segment positioned us to be recognised as the Best Private Bank for Digital Customer Service by Financial Times. Small Business Services: Nedbank remains well positioned in the small-business segment, maintaining its urban market share of 24% as a result of positive views regarding our ability to understand and serve the needs of this important sector. According to the 2022 Small Business Tracker (a Nedbank-commissioned survey that has been running for 13 years and is conducted by the 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 in a row, and the Asian Banker recognised Nedbank in 2022 as the best SME bank in South Africa at the Excellence in Retail Financial Services Awards. Our focus for small business is the provision of affordable transactional banking, innovative payment solutions and seamless lending to unlock growth for this important sector of our economy. SimplyBiz, a free business development platform powered by Nedbank and available to all entrepreneurs (whether banked with us or not), has provided over 30 000 business owners free Beyond Banking assistance in the form of advertising, coaching, relevant business support materials and strategic initiatives. This represents an 111% growth from inception, and actively supports the UN SDG 4 and SDG 9 through an expert community with resources, ongoing learning and tangible support. Despite a challenging economic outlook and an increasingly competitive market, now also heavily focused on small businesses, there are still many opportunities for us to grow in the relationship banking segments. We will continue executing our strategy to digitise as much of the day-to-day banking functionality as possible, while investing heavily in the skills, knowledge, and professionalism of our frontline employees to give impetus to our positioning of ‘Digital when you want it; human when you need it’. Besides our growth in market share, financial performance will also 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 primarily offers these clients transacting, savings, lending and insurance solutions, across physical and digital channels. Consumer Banking also serves a few non-individual client types, such as stokvels, clubs and societies. Consumer Banking represents approximately 93% of our individual clients. HE decreased by 8% to R1 950m, primarily driven by an increase in impairments, while PPOP increased by 11%, underpinned by strong NIR growth of 8% (the highest level achieved in over six years), offset by low expense growth of 4%. This reflects solid growth in client volume and activity (+R618m) and includes the effect of migrating 1,5 million client accounts between 2020 and 2021 to new, more competitive transactional products. The strong performance in PPOP resulted in the cost-to-income ratio improving to 60,0%, down from 61,4% in 2021. Impairments growth was the highest in our home loans and vehicle loans portfolios, where client interest rates are prime- linked. The increase in the prime rate during 2022 impacted some of these clients’ ability to maintain their repayments. Management is focused on actions to support our clients in these difficult times while remaining committed to strengthen collections capabilities. Balance sheet growth was solid, with average advances growing by 5%, off the back of a 6% growth in unsecured lending and vehicle finance and a 4% growth in home loans. Average deposits declined by 1%, despite a pleasing 7% growth in transactional deposits. Notice and term deposits declined by 3%, partly due to the migration to RRB. Consumer Banking delivered strong client growth with total main-banked clients growing by 6% to reach 3,24 million through dedicated focus on front-line sales productivity and continued growth in digital sales. All segments grew their main-banked clients, including the youth segment that registered growth for the first time since 2019, the middle-market segment that grew by 5,7% and the entry-level segment that grew by 7,9%. Total active clients grew 3,2% to 6,62 million and Consumer Banking’s cross-sell ratio improved to 1,89 products per client, up 5% (2021: 1,81). Furthermore, good progress has been made in personalised, AI-driven sales leads, including focused interventions for each of the segments, such as the Unlocked.Me proposition and YouthX for the youth, the township economy, micromarkets’ ‘go-to-market’ focus and the Family Banking proposition for the middle market. It was pleasing to see our youth offering being voted the third ‘coolest’ brand at the Sunday Times Generation Next Awards.  Digital sales and servicing remain a key focus area and our Money app clients grew by 375 000 (of which 345 000 was in Consumer Banking) to reach two million overall for Nedbank Retail. Within Consumer Banking, two-thirds of our main-banked clients are digitally active, and over half are using the Money app. These shares have grown by 4% and 6% respectively since 2021. Digital sales grew to 53% (2021: 32%). We enhanced our CVPs and during 2022 launched Family Banking, which enables spouses to enjoy up to R60 per month off the monthly fee of their current account, and MySmartMoney, a tool on the Money app with which clients can enjoy My Spend (a spend management tool), My Budget (a budgeting tool), My Savings (a goal-saving tool) and My Credit Score (a function to view one’s credit score and find out how to improve it). Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Looking forward We expect RBB to continue showing performance improvements amid an expected toughening macro environment defined by low economic growth, rising levels of household debt and inflation-fuelled prices of basic goods and services, persistent unemployment levels and the adverse effects of load-shedding, all expected to persist in 2023 and a highly competitive environment with new entrants and non-banks moving into financial services. Our client-centred growth strategy and execution plans focus on the five core strategic levers set out below to help us achieve our aspirations. More so, our digital and data capabilities will enable us to create new and disruptive products and solutions to address clients’ rapidly evolving needs and expectations, enabling us to expand access to new markets, and help develop new revenue-generating opportunities, to help reduce the cost-to-income ratio and improve ROE. We will continue with a heightened focus on purpose-driven and ESG-inclined CVPs. Leading client experiences – We will continue to develop winning client value propositions (CVPs), innovative products and solutions for our clients to drive competitiveness through differentiation. We will configure operations to meet changing client needs and safeguard ourselves against new entrants and disruptors. We will also continue focusing on Strategic Portfolio Tilt 2.0 (SPT 2.0), which concentrates on growing profitable market share in selected areas, while embedding a leading client experience culture and leveraging behavioural economics in how we engage and serve clients. Digital first, first in digital – We will invest in more to complete the digitisation and commercialisation of priority individual and juristic journeys through our Managed Evolution programme. We will focus particularly on the Nedbank Business Hub (NBH) migration capabilities and continue to use digital to improve client experience and scale through a low-cost operating model. Growth Vectors to the Power of N – We will unlock more value through relentless focus on growth vectors ranging across key areas, APIs, partnerships growth through our digital ecosystems such as Avo and VAS, and the township economy. These growth vectors unlock alternative revenue generation opportunities and pave the future for the bank. Efficient and agile operating model – We will continue to implement Project Phoenix, Project Imagine and other Target Operating Model 2.0 (TOM 2.0) initiatives that will yield cost savings derived from centralised important capabilities such as solution innovation, credit and pricing, and operations. We remain committed to monitor our impairments closely, with strengthened collections capabilities and targeted actions to address anti– money-laundering risks (AML). Equipping our people – We will continue our journey of attracting and retaining talent as well as prioritising, skilling and re-skilling our people in an evolving and changing operating environment. This will be supported by holistic wellness initiatives. We remain committed to drive our unique employee value proposition (EVP) and culture journey specifically on diversity, equity and inclusion (DEI).  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, PAYU (consumers and small businesses) bundled accounts such as Savvy Plus and Bundle and savings pockets. Transactional Banking was a significant contributor to NIR growth. The business continues to improve onboarding and servicing capabilities across physical and digital channels and has afforded a significant shift to self-service across all channels. As clients shifted behaviour patterns from branches to ATMs and digital channels, there has been a notable increase in the use of EFTs, with instant payment volumes growing by 45% and payments to cellphones (money transfers) growing by 59%. The purchasing and usage of digital vouchers, specifically in the entertainment space, increased by 212%. Value-added services such as airtime, electricity and LOTTO also increased, with total value-added services increasing by 25% across all products, and over 1,27 million (a 17% increase) clients buying on the platform today. Key servicing capabilities such as balance enquiries, payments and transfers, which enable clients to manage their money better, have increased by 91% and 49% respectively on the Money app.  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, which allows for convenient and seamless account activation. We are also able to FICA our clients remotely, eliminating the need to go to a branch. When opening a transactional account, our clients can take up an overdraft and credit card seamlessly, thereby eliminating unnecessary delays. We continue to migrate clients to enhanced product offerings with up-to-date features in a frictionless manner. Our client-centred innovations with MobiMoney have enabled the opening of approximately 1,5 million wallets, which have zero monthly maintenance fees, allow free deposits up to R4 000 per month, and give clients the ability to pay bills, buy airtime and electricity, and withdraw and deposit money at retailers. Clients can also buy vouchers, including retailer vouchers for Pick n Pay and Makro. 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 pay for goods at 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 and scan-to-pay options, Market Edge, GAP Access, Virtual Card, Apple Pay enablement, Samsung Pay and Money Message. 98 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 99 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveSegmentalanalysisNedbank Card and Payments experienced strong growth in card-issuing volumes of 19,6%, and card-acquiring volume growth of 24,5% as the economy normalised after Covid-19. This growth was further evidenced through increased client acquisition, limit increases for card issuing, new innovations, as well as enhanced CVPs and an improvement in the overall quality of the book with CLR reducing by 144 bps resulting in a strong ROE of 36,6%. New digital investments sales now contribute 80% of total sales and 95% of withdrawals notices. The above improvements in digital capabilities, together with competitive investment pricing strategies in select product categories, have resulted in household demand and term market share increasing 56 bps to 16,24% since December 2021. Surges in online shopping and the use of contactless payment technologies have also fuelled the popularity of recent shopping innovations, including app-based shopping, kerbside pickup and QR-code-based ordering and purchasing. There was a significant increase in the use of our digital payment methods, with growth of 61% in e-commerce volumes, over 42% growth in contactless payments and 14% growth in QR payments. Nedbank is also the first in Africa to launch the Tap on Phone app, a payments solution that enables businesses to accept payments by simply using an Android smartphone for contactless card payments. During 2022 new features on the market-leading PocketPOS offering were launched, including a till interface, stock management and pricing catalogues.  As part of our innovative journey, we launched the following new products: • The Bill Payments feature on the Money app and Online Banking, which gives our clients full control and easy management of their bill payments. Clients can make once-off payments, set rules for recurring monthly payments, track their payment history and maximise their rewards with the Greenbacks, American Express Membership Rewards® and SAA Voyager programmes. • The refreshed American Express Platinum Card CVP, which offers enhanced travel and lifestyle benefits. Global benefits such as discounted bookings at luxury hotels internationally and access to international airport lounges using the Priority Pass are still part of the offerings. Local offers have been enhanced to include the revamped local dining programme, with discounts at the top 30 restaurants in SA. Investments We continue to focus on expanding our digital investment capabilities, with a number of new features enabling clients to: • open an investment account via the Money app and Online Banking (Nedbank and new-to-Nedbank clients); • switch investments in-app and online and transfer between differing term offerings;  • redeem Greenbacks into a notice deposit with a total of 106 737 redemptions to the value of R46m since inception (December 2021: 74 823 redemptions to the value of R27m);  • give notice of withdrawal in-app without the need to have a Nedbank transactional account;  • use USSD channels for investment servicing requests, so that we cater to all markets, especially for those in entry-level banking; and • give notice on investments using the self-service kiosks in branches. Further enhancements include the implementation of the Simple Savings Account that can be opened in-branch or digitally where clients will have immediate access to their money while earning competitive interest rates. Forex The forex business is well established in client journeys and continues to enhance and deliver innovative segment CVPs, enabling clients to transact and invest across numerous foreign currencies. Forex-related NIR is up by 32%, driven mainly by economic recovery and digital enablement. Digital adoption of key forex capabilities continues to increase significantly and is now on average above 62% across key services and segments. We continue to focus on digital transformation and during the year have: • enhanced our international payments offering in-app and via Online Banking, enabling small-business clients, in addition to individual clients, to process both incoming and outgoing payments digitally in over 25 currencies; • completed the development of the Send Money across Africa service and enabled clients to send money directly from their Nedbank account to top banks in 12 other African countries; • maintained foreign currency account market share of 8% (currently third in market from fifth position three years ago); • • improved employee-assist capabilities, which will be leveraged as a foundation for future capabilities; and leveraged digital solutions to support high-volume straight-through settlement and client liquidity for qualifying rand incoming international payments, leveraging temporary SARB dispensation. Unsecured Lending Unsecured Lending provides personal loans, overdrafts and student loan products and solutions across all client segments. HE increased by 51% to R279m, delivering an ROE of 7,4% or 12,0% including insurance related earnings in Nedbank Wealth. The CLR improved by 33 bps but remained above the TTC target range owing to the difficult macroeconomic environment. Proactive credit risk management and DebiCheck operational improvements have resulted in improvements in risk outcomes. Additional credit policy adjustments made in Q2 2022, together with improving new margins, are anticipated to drive further improvements in the CLR and overall economics into 2023. Disbursal growth is expected to remain subdued in the short term but anticipated to improve as macroeconomic conditions recover and new digital solutions are commercialised. Overdrafts continue to benefit from digital enablement, resulting in book growth of 61% and overall household overdraft market share increasing from 9,9% in December 2021 to 12,9% in December 2022. The Personal Loans API solution enables both Nedbank and non-Nedbank clients to apply for personal loans or make payments in less than 10 minutes. Predetermined offers have Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information driven an increase in straight-through loans and has seen a 70% increase since December 2021. Digital personal-loan disbursals grew by 41% and now represents 46% of all personal loan disbursals, while three quarters of overdraft disbursals are being originated via a digital channel. Our free Credit Score tool on the Money app, which enables clients to monitor their credit scores and receive guidance on how to improve their credit behaviour, has now also been made available through Online Banking and nedbank.co.za. Any South African citizen, regardless of their relationship with Nedbank, can access this tool. At the end of December 2022, over 700 000 clients have registered on the tool, with a third actively engaging monthly. Home Loans Home Loans provides home ownership product solutions to the consumer, small-business and the juristic segments. Higher interest rates, rising unemployment and escalating inflation resulted in an overall decline in market application volumes, with Nedbank’s application volumes decreasing by only 7%, and new business granted increasing by 6%. First-time buyers comprise approximately half of all transactions by natural persons on the back of the launch of a first-time home-buyer CVP in H1 2022. This CVP features a 100% to 105% LTV home loan value (bond plus transfer costs) with a rate concession depending on whether the first-time home buyer is purchasing in a Green Edge development and/or is main-banked.  House price inflation for 2022 was 2,7% and is forecast to reduce to 2,3% in 2023, subject to interest rate increases and the country’s GDP growth outlook. HE declined by 27% to R890m (2021: R1 215m) delivering an ROE of 14,5% (2021: 22,5%). This decline in HE was driven by a higher CLR of 33 bps (2021: -9bps), influenced by the deteriorating macro environment and the cumulative impact of interest rate hikes. Normalising for once-off impairment releases, the 2021 CLR was 18 bps. RBB HL’s advances growth of 8,4% compares favourably to industry growth of 7,5%. New-business market share improved in H2 2022 to 14,4% (H1 2022: 12,3%), resulting in a 12 bps BA900 market share increase since July 2022. Credit risk appetite and quality of returns remain consistent through the cycle, while supporting market share growth aspirations. Solar Solutions and technology capabilities were successfully launched during H2 2022. Nedbank Home Loans remains equally committed to our business partners and clients alike, continuing to invest in digital optimisation and ease-of-doing-business initiatives across our new-business operations and sales channels, with a renewed focus on building and strengthening our relationship with our mortgage originator partners. MFC MFC provides secured-lending products to the consumer, small-business and juristic segments. The domestic new-vehicle market has shown encouraging growth despite the economic pressures, the severity of load-shedding, the prolonged Covid-19 lockdown in China and challenges with vehicle stock. MFC remains a dominant player in the vehicle finance market, with TransUnion market share at 35,2% in December 2022 and the household BA900 share at 35,4%, supported by loans and advances that grew by 6% during the year. TransUnion’s latest Vehicle Pricing Index (VPI) reflects an increase in new vehicle pricing from 3,8% in Q3 2021 to 6,8% in Q3 2022 and the used-vehicle index increased from 5,9% to 9,0% over the same period. MFC’s new-to-used vehicle finance ratio increased in 2022 to 33:67 (2021: 30:70). HE decreased to R1 342bn and ROE to 15,5% and a CLR of 192 bps, which increased from 146 bps in 2021. Adjusting for once-off impairment releases the CLR was 159 bps in 2021. The increase in the CLR was driven by the deteriorating macroenvironment and the cumulative impact of interest rate hikes. MFC has made positive strides with its client-centred solutions, while ensuring an efficient and productive business model that includes the following: • Change of ownership across all offboarding stages of the account life cycle, thereby driving client value and enhancing retention strategies. • The integration of secure automated payment solutions, enabling both businesses and clients to take up additional value-added services. • The implementation of short-term insurance in our value-added products sphere, which has demonstrated overall year-on-year growth. We continue to work with our dealer partners to gain momentum in growing their reach and efficacy, while providing a superior client experience. Loyalty and rewards The revamped Greenbacks programme now enables clients to join by virtue of having a transactional product, a loan or certain investment products, in addition to a credit card, delivering strong membership growth, with new enrolments up by 16% to 1,64 million members. Greenbacks earned were up by 18% as clients increased their card swipe and debit order volumes. Greenbacks members, on average, generated double the monthly net operating income when compared to clients who were not Greenbacks members, with a higher cross-sell ratio of 2,18 versus 1,11 for non-members. In addition to swipe earn, strategic partnerships with BP fuel and Nu Metro have delivered additional value of more than R32m to the Greenbacks base. New digital redemption volumes that enable clients to redeem their points into their MyPockets and to buy airtime, data and electricity, have increased by 11%. The Greenbacks app was consolidated into the Money app, thereby providing clients with access to additional offers that, in turn, enhanced their client experience. 100 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 101 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveSegmentalanalysisMessage from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Favourable Unfavourable Retail and Business Banking: Key business statistics • Solid revenue growth and efficiencies from cost optimisation, realised through centralised capabilities driving efficiencies (Project Phoenix). • Impairments impacted by macro deterioration and higher interest rates starting to take effect on collections and the CLR in secured products. • Repositioning of CVPs for Consumer Banking, Private Clients and Commercial Banking, including agriculture and manufacturing. • Aggressive competitor pricing impacting household deposit market share negatively. • Further recovery in ROE and improvement in the • Accelerated digital uptake (including for Avo), and continued cost-to-income ratio still being required. usage, with several awards received. • Increase in transacting main-banked clients across all segments. • Significant progress in our channel transformation programme (Project Imagine). • Growth in market share in transactional deposits Commercial 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-end Retail active clients Retail main-banked clients Retail cross-sell ratio1 Commercial Banking groups Small Business Services segment Home Loans2 MFC Personal Loans Card Issuing Investment products Distribution Number of commercial banking locations Number of retail outlets Number of ATMs Number of ATMs with cash-accepting capabilities3 Digitally active retail clients Money app clients POS devices 1 The number of needs met (products) per active client. 2 Home Loans now includes joint-bond clients. 3 Cash-accepting devices and interactive teller machines are included in the total number of ATMs. 2022 2021 442 4,83 183 95 81 49 90 44 1 951 67 1 534 57,7 41,6 94 85 6 624 3 245 1,94 14 585 305 377 584 426 1 108 1 449 59 545 4 334 1 328 2 593 2 006 106 336 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 4 261 1 278 2 289 1 631 105 thousands % % % % Rm thousands % thousands R000s months rand billions rand billions thousands thousands ratio thousands thousands thousands thousands thousands thousands thousands thousands thousands 102 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 103 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveSegmentalanalysis                                                            Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Balance sheet average advances and impairments Balance sheet actual impairments Daily gross average advances Rm Stage 1 % Stage 21 % Stage 3 % % of total advances Credit loss ratio % 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 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 Home loans VAF 151 997 141 629 125 397 118 450 Personal loans 27 562 25 812 Card Other loans 16 547 16 717 3 848 3 294 Total Retail 325 351 305 902 Commercial Banking 85 558 78 860 83,7 79,6 61,8 78,9 75,9 80,0 83,0 85,1 81,2 65,8 79,3 81,3 81,6 83,1 10,8 14,9 15,4 7,3 10,4 12,6 11,7 Total RBB 410 909 384 762 80,6 81,9 12,4 9,8 13,4 13,6 6,8 6,7 11,4 11,7 11,4 5,5 5,5 22,8 13,9 13,8 7,4 5,3 7,0 5,1 5,4 20,6 14,0 12,0 7,0 5,2 37,1 30,8 6,5 3,8 0,9 79,2 20,8 36,7 31,3 6,7 4,0 0,8 79,5 20,5 0,33 1,92 9,18 4,90 6,73 2,00 0,11 (0,09) 1,46 9,82 6,33 4,46 1,75 (0,21) Home loans 2 742 2 404 284 240 632 487 VAF Personal loans Card Other loans 6 775 6 043 1 307 1 346 2 240 1 808 6 698 6 071 2 628 2 696 650 419 914 670 89 1 086 1 003 594 52 377 120 878 600 64 231 616 582 20 1 207 518 416 28 3 1 595 1 470 1 826 1 677 2 612 2 371 3 228 2 889 4 199 3 691 4 781 4 107 1 561 1 474 1 581 1 502 440 300 441 303 Total Retail 19 493 17 633 3 264 3 318 4 372 3 837 1 450 1 172 10 407 9 306 11 857 10 478 Commercial Banking 1 641 1 683 170 234 179 328 – 1 292 1 121 1 292 1 121 6.7 100,0 100,0 1,61 1,34 Total RBB 21 134 19 316 3 434 3 552 4 551 4 165 1 450 1 172 11 699 10 427 13 149 11 599 Balance sheet impairment as a percentage of book Income statement impairments % of total Stage 1 % Stage 2 % Performing stage 3 % Non-performing stage 3 % Total stage 3 % 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 Home loans VAF Personal loans Card Other loans Total Retail Commercial Banking 1,72 5,11 24,08 15,95 16,54 5,73 1,83 1,64 4,82 22,75 16,81 12,80 5,54 2,05 0,21 1,24 5,31 5,16 2,98 1,20 0,23 0,19 1,32 6,18 4,67 1,95 1,28 0,34 3,66 11,35 3,38 11,97 9,11 23,34 28,04 20,83 10,74 18,94 17,29 64,35 62,92 44,15 22,32 42,71 23,47 24,22 59,03 58,35 78,46 31,47 55,20 17,09 20,44 72,04 77,12 70,12 75,43 74,69 69,22 67,08 29,41 29,36 12,50 30,00 82,55 78,33 81,52 77,10 10,19 10,61 23,04 19,13 54,93 57,16 46,98 46,76 1,71 3,43 27,23 26,10 27,23 26,10 Total RBB 4,92 4,83 0,99 1,08 8,53 9,11 23,04 19,13 49,38 50,67 43,85 43,43 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 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 Home loans VAF 159 330 147 005 133 288 125 083 17 277 14 407 1 930 2 272 6 835 5 243 8 765 7 515 132 511 125 250 105 464 101 647 19 736 16 839 3 252 2 996 4 059 3 768 7 311 6 764 Income statement impairments charge1 Rm Stage 1 Rm Stage 2 Rm Stage 3 Rm Interest on impaired advances Rm Post-write-off recoveries Rm 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 Home loans VAF 507 (129) 2 408 1 727 42 (82) Personal loans 2 530 2 536 (172) Card Other loans 811 1 059 259 146 Total Retail 6 515 5 339 Commercial Banking 98 (167) 78 39 (95) (63) (5) 307 389 36 13 156 453 140 (199) 464 205 274 2 566 1 745 (94) 22 (75) 14 (61) (551) 59 3 728 3 173 (858) (792) (308) (55) (613) (293) (223) (166) 1 398 1 611 56 11 218 172 (14) (42) (34) (29) (428) (388) (12) (21) 740 582 (21) 8 374 6 906 (986) (916) (1 360) (1 370) (83) (164) (207) 410 150 6 (6) (91) (21) Total RBB 6 613 5 172 (158) 657 418 (228) 8 784 7 056 (980) (922) (1 451) (1 391) 1 The income statement charge includes the charge associated with unutilised balances. Personal loans 27 813 26 687 17 202 17 563 4 273 3 625 16 472 16 040 12 990 12 714 1 198 1 087 3 931 3 273 2 982 2 662 408 218 986 117 8 713 137 10 5 352 4 786 6 338 5 499 2 167 2 102 2 284 2 239 533 383 541 393 340 057 318 255 271 926 259 669 42 892 36 176 6 293 6 128 18 946 16 282 25 239 22 410 Card Other loans Total Retail Commercial Banking 89 507 82 046 74 322 68 191 10 440 9 559 4 745 4 296 4 745 4 296 Total RBB 429 564 400 301 346 248 327 860 53 332 45 735 6 293 6 128 23 691 20 578 29 984 26 706 104 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 105 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveSegmentalanalysis                              Nedbank Wealth Headline earnings Headline earnings (Rm) (Rm) Headline earnings (Rm) Return on equity (%) Return on equity (%) 2 6 9 1 2 3 6 1 9 1 1 3 1 1 2 3 5 9 2 9 3 4 5 9 9 4 0 8 3 0 1 5 8 3 3 1 5 3 2 0 5 5 2 1 2 0 8 5 5 2 2 1 8 2 , 8 6 2 , 8 4 2 , 3 5 1 , 2 1 2 , 1 6 2 Cluster total Cluster total Insurance Insurance Asset Management Asset Management Wealth Management Wealth Management 2021 2021 2022 2022 Financial highlights for the year ended 31 December Change % 2022 2021 Headline earnings (Rm) NII (Rm) 18 43 1 131 1 236 Impairments charge (Rm) >(100) (63) NIR (Rm) Operating expenses (Rm) (3) 5 ROE (%) ROA (%) CLR – banking advances (%) NIR to total operating expenses Cost-to-income ratio (%) Interest margin (%) 3 692 3 449 26,1 1,41 (0,20) 107,0 70,0 2,09 962 866 28 3 788 3 280 21,2 1,18 0,09 115,5 70,5 1,44 Assets under management (Rm) (7) 393 064 424 329 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) 10 85 (2) (4) (2) 5 4 461 4 039 595 322 80 634 80 986 80 175 81 673 29 025 30 273 30 457 30 978 46 191 43 840 44 286 44 070 Average allocated capital (Rm) (4) 4 336 4 528 106 Nedbank Group Annual Results 2022 2018 2019 2020 2021 2022 Financial performance Nedbank Wealth has continued to show a strong financial recovery, with headline earnings (HE) up by 18% to R1 131m. ROE increased to 26,1% (2021: 21,2%), remaining well above the group’s cost of equity, with both HE and ROE above pre-Covid-19 levels. This performance was driven mainly by an increase in revenue, net credit impairment releases and well-managed expenses. A higher-interest-rate environment benefited the local and international wealth management businesses, resulting in significant growth in NII. However, the volatile local and international equity markets negatively impacted Asset Management fees, advice fees in Wealth Management, and shareholder returns in Insurance. While Nedbank Insurance benefited from lower claims in the life portfolio, this was partially offset by higher non-life claims due to the KwaZulu-Natal floods.  NII increased by 43% to R1 236m, driven by a widening of NIM from 1,44% to 2,09% due to higher SA, US, EU and UK interest rates. Total average deposits remain largely steady, with average deposit balances in Wealth Management (South Africa) growing by 7% as clients favoured on-balance-sheet investments in the rising-interest-rate environment. Wealth Management (International) deposits were flat in GBP, and down in rands given exchange rate movements. Average loans and advances decreased marginally as high-net-worth clients, both locally and internationally, opted to pay down debt early in the higher-interest-rate cycle. Impairments decreased by more than 100%, driven by client-specific overlay releases due to better-than-expected credit impairment recoveries locally, resulting in a net release of R63m. This led to a CLR of -20 bps, compared to the TTC target range of 20 to 40 bps. NIR decreased by 3% to R3 692m. In Wealth Management, as expected, revenue was lost due to the sale of the international Nedgroup Trust business and reduced advice fees, offset by higher estate fees from the local Trust business. In Nedbank Insurance the base effects of once-off profits from an enhanced asset-and-liability matching strategy in 2021, an increase in non-life claims as a result of the KwaZulu-Natal floods, and lower shareholder investment returns further negatively impacted NIR. This was partially offset by reduced life claims. In Asset Management, NIR decreased due to lower AUM balances, which were impacted by negative markets and net outflows as well as lower asset management fees. Expenses increased by 5%, below inflation levels, with underlying expense growth impacted by investment in employees, increased STI aligned with performance, and investment in digital and data. This was partially offset by the exclusion of costs previously incurred by the international Trust business that was sold in 2022. Expenses were well managed. Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Looking forward From a macroeconomic perspective, Nedbank Wealth will continue to monitor the impacts of high inflation, challenging power supply constraints in South Africa, and the ongoing war between Russia and Ukraine. Markets are expected to remain volatile, which may negatively impact investor sentiment and non-interest revenues. Nedbank Wealth remains committed to acting in the best interest of its clients by offering advice that meets their needs while delivering long-term investment performance. As a result, Nedbank Wealth is expected to grow its client base and attract positive net flows. While a higher-interest-rate environment helps boost NII, on the contrary, it encourages high-net-worth clients to repay loans sooner, impacting client lending balances. As local and international interest rates begin to peak, clients are expected to migrate to interest-bearing fixed-term deposits, which will limit the further expansion of NIM from additional interest rate increases. We expect an increase in impairments post the net recoveries reported in 2022. While the challenging macro environment may require additional IFRS 9 provisions, overall, we anticipate that CLR will remain below the TTC target range. Expenses are expected to grow marginally above inflation as the business continues to optimise its operations through automation and invest in people and key strategic growth initiatives. Nedbank Insurance is committed to creating value through market-leading client experiences by unlocking its competitive advantages, backed by people and a winning culture. Growth of the MyCover suite, enabled by enhanced digital and data capabilities, will be instrumental to clients’ receiving best value in a convenient and simple manner. The business aims to achieve growth by collaborating with the group to co-create client solutions and ensure access to the Nedbank Insurance product suite on group digital platforms.  With effect from 1 January 2023 in Nedbank Insurance IFRS 17 replaced IFRS 4, and establishes new principles for the recognition, measurement, presentation, and disclosure of insurance contracts. The standard aims to increase comparability and transparency pertaining to profitability across the entities where an insurance contract is issued and held. While the overall profit of an insurance contract remains the same under both standards, IFRS17 changes how profits are recognised over the term, and aligns the recognition of profit with the risk profile of the product. The transition to IFRS17 is not expected to have a material impact on group reserves and will positively impact the cost-to-income ratio, as expenses directly related to insurance products will be recognised in NIR. Nedgroup Investments remains committed to delivering long-term investment performance, acting in the best interest of clients, and taking further steps towards becoming one of the leaders in responsible investing. The business will continue to collaborate with the group by integrating into the various digital channels, making investing easier and more accessible for clients. In addition, Nedgroup Investments sees opportunity to grow its international offering by expanding its European distribution strategy. The recent amendments to offshore allowances will have significant implications for the asset management industry. The business is well positioned for this change due to its diverse Best of Breed fund range, asset swap capacity and proven track record, which has delivered consistently over the past decade. Wealth Management (South Africa) will focus its efforts on entrenching its market presence as an advice-led business connecting clients’ holistic wealth needs to appropriate solutions, and leveraging digital assets to create efficiencies and enhance client experiences. The business will continue to evolve its banking client value proposition to position Nedbank Private Wealth (South Africa) as a strong brand, while profitably growing its market share in a competitive environment. Growth across all offerings remains a priority and collaboration with the group will be key to increasing client penetration and providing a full spectrum of services to clients. Leveraging the group’s digital onboarding capabilities and other target-state technologies will support the business in unlocking efficiencies and enhancing the client experience.  Wealth Management (International) will continue to provide an international wealth offering for Nedbank Private Wealth (South Africa) while also delivering advice-led business growth from its operations in the UK, Isle of Man, Jersey and Dubai. Nedbank Private Wealth (International) is committed to simplifying its technology landscape by investing in solutions, including the replacement of its core wealth management platform. The business will continue to focus on the enhancement of digital client engagement, intelligent use of data, and improved automation. Strategic progress Nedbank Wealth remains committed to delivering its strategic priorities of enhancing client experiences, building data and digital capabilities, driving long-term investment performance, collaborating across the group, and investing in people and culture. Nedbank Insurance has made good progress in diversifying and digitising client solutions and distribution channels. The expanded suite of MyCover solutions continues to report good growth in sales due to channel expansion and increased awareness in the market. Nedbank Insurance has further enhanced its quoting, fulfilment, and claims functionality with 10 product offerings across six digital channels (including the aggregator Hippo), and MyCover Funeral has been incorporated into the group’s digital client-onboarding platform. Overall, the Nedgroup Investments fund range performed well on a relative basis, with good inflows into the low-cost Core and Global funds, which benefited from an increased desire by South Africans to diversify their investments. However, the business reported a 7% decline in AUM to R393bn as a result of negative local and international market performance as well as outflows predominantly in the cash portfolio. According to the Q4 2022 ASISA stats, Nedgroup Investments ranked the sixth largest in total AUM locally and third largest internationally, with a market share of 7% and 12% respectively. Nedgroup Investments continued its journey of becoming one of the leaders in responsible investing by collaborating with Nedbank Private Wealth (International) to deliver sustainable investment model portfolios. In addition, Nedbank Wealth became a signatory to the United Nations Principles for Responsible Investment (UN PRI). Wealth Management (South Africa) has made significant strides in optimising its business structure and operations. This has resulted in enhanced client experiences, which have led to revenue growth and efficiencies across the Investments, Fiduciary and Trading businesses. Collaboration with the international business has been key to strengthening the Nedbank Group Annual Results 2022 107 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveSegmentalanalysis                   integrated high-net-worth proposition, and partnering with the group has enabled increased cross-sell locally. In 2022 Nedbank Private Wealth (South Africa) launched the Connected Wealth digital marketing campaign, which has shown increased client engagement on various social-media platforms. Wealth Management (International) continues to make progress in digital innovation and adoption by enhancing mobile and online banking and introducing eKYC technology. The business has also improved the client-onboarding experience for Nedbank Private Wealth (South Africa) clients. At the 2022 City of London Wealth Management Awards, Nedbank Private Wealth (International) was recognised as the Best Private Bank in the UK for the eighth consecutive year. In addition, at the 2022 Wealth Briefing MENA Awards for Excellence, Nedbank Private Wealth (International) was awarded the Best Boutique Private Bank for a fourth consecutive year and was also recognised as the Best Private Bank – Overall Client Service. In April 2022 Nedbank Private Wealth (International) successfully concluded the sale of Nedgroup Trust Limited (Guernsey) and Nedgroup Trust Limited (Jersey) at a profit of R177m, shifting the company’s focus to core business activities. In accordance with the group’s accounting policies, the profit from the sale was excluded from HE. Segmental performance Insurance The KwaZulu-Natal floods were the largest non-life claims event reported in the history of the South African insurance industry. In the same reporting period, the industry also experienced a decline in investment returns as a result of negative market performance. Although Nedbank Insurance was not significantly impacted by the KwaZulu-Natal floods, the business experienced a 3% increase in non-life claims. Life claims decreased by 33% due to the reduced impact of Covid-19. Nedbank Insurance HE decreased by 6% to R499m due to the higher non-life claims mentioned above, lower investment returns, and the base effect of once-off profits from the enhanced asset-and-liability matching strategy in the prior year. Life embedded value (EV) increased by 10% to R4 461m, due mainly to an increase in new-business volumes and non-economic assumption updates as well as higher-than-expected investment returns. Value of new business (VNB) increased by 85% to R595m, driven primarily by non-economic assumption updates and the removal of the Covid-19 overlay. Non-life gross written premiums (GWP) increased by 3% to R1 143m, due to marginal growth in homeowners cover (HOC), offset by a reduction in the vehicle value-added products (VVAPs) book. Asset Management The asset management industry continued to experience pressure on fees and was significantly impacted by negative local and international market performance. Asset Management HE declined by 8% to R351m as a result of a reduction in NIR due to lower AUM. AUM declined by 7% to R393bn due to negative market performance and net outflows of R11bn, primarily in the low-margin cash portfolio. This was driven mainly by the reversal of the 2020 ‘Covid-19 excess’ in the cash portfolio as corporates became more confident in investing, repaying debt and resuming dividends. These outflows were partially offset by inflows into the Core and Global fund ranges. Wealth Management The wealth management industry has benefited from an increase in interest rates both locally and internationally. However, volatile and negative market performance impacted investor sentiment. In addition, the industry was affected by a decrease in brokerage fees as compared with the heightened levels experienced in 2020 and 2021. Overall, Wealth Management HE improved by more than 100% to R281m, driven mainly by an increase in NII as well as net credit impairment recoveries. This was partially offset by a decrease in NIR due to lower advice fees and the exclusion of revenue previously accounted for from the sale of the international Nedgroup Trust business in the current reporting period. Wealth Management (South Africa) benefited from credit impairment recoveries and client-specific overlay releases due to better-than-expected credit impairment recoveries locally, improved margins, an increase in estate fees and strong cost containment initiatives, offset by lower brokerage, investment, and advice fees due to negative market performance and investor sentiment. Average deposit balances showed a 7% growth as clients favoured on-balance-sheet investments in the volatile environment. However, average lending balances declined by 5% as clients opted to pay down debt in the high-interest-rate environment. Wealth Management (International) benefited from UK, US and EU base interest rate increases, resulting in higher NII and HE. Average deposit balances reported in rands were impacted by exchange rates; however, in GBP terms they were flat. Average lending balances to clients have declined by 3% (in GBP) as some clients opted to pay down balances due to the higher-interest-rate environment. In addition, the ongoing fierce competition from ring-fenced banks impacted new lending growth. In 2022 the continued negative market performance internationally resulted in a decline in AUM and AUA balances. Assets under management (Rbn) 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 3 9 3 5 9 8 9 2 2018 2019 2020 2021 2022 International Local Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information 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 2022 2021 341 045 359 404 1 008 51 011 1 105 63 820 393 064 424 329 298 460 325 318 94 604 99 011 393 064 424 329 Unit trusts Third party Private clients Total Reconciliation of movement in funds under management – by type Opening balance at 31 December 2021 Inflows Outflows Mark-to-market value adjustment Foreign currency translation differences 359 404 690 545 (692 979) (20 594) 4 669 1 105 12 (32) (10) (67) 63 820 6 608 424 329 697 165 (14 787) (707 798) (4 210) (420) (24 814) 4 182 Closing balance – 31 December 2022 341 045 1 008 51 011 393 064 Rm Reconciliation of movement in funds under management – by geography Opening balance at 31 December 2021 Inflows Outflows Mark-to-market value adjustment Foreign currency translation differences SA Rest of the world Total 325 318 677 208 99 011 19 957 424 329 697 165 (695 073) (12 725) (707 798) (8 993) (15 821) (24 814) 4 182 4 182 Closing balance – 31 December 2022 298 460 94 604 393 064 Favourable Unfavourable • Wealth cluster HE and ROE having exceeded • Higher non-life claims ratio driven by KwaZulu-Natal floods. pre-Covid-19 levels. • Challenging local and international markets impacting • Significant progress on digital initiatives. investor sentiment. • Improved life claims experience. • Decline in loans and advances. • Client-specific overlay releases locally, due to • Competitive local and international lending environment. better-than-expected recoveries. • Net AUM outflows. • Increasing local and international base interest rates. • Awards recognising Nedbank Private Wealth (South Africa and International). • Sale of the International Trust business to Suntera Global. • Approved as signatory to the UN Principles for Responsible Investment (UN PRI). 108 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 109 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveSegmentalanalysis                            Nedbank Africa Regions Headline earnings (Rm) Headline earnings (Rm) Return on equity (%) Return on equity (%) 2 0 7 7 5 4 2 1 4 9 5 5 7 9 , 3 0 1 7 7 , , 2 0 , 3 9 , 8 3 1 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 Financial performance Nedbank Africa Regions’ financial performance continued to show a good recovery in 2022, with HE increasing by 64% to R975m, delivering an ROE of 13,8% (2021: 9,3%). This performance was driven by a strong growth off a low base in our SADC operations and a continued turnaround of our ETI associate investment, partially offset by providing for the estimated impact of the Ghanaian sovereign debt restructure programme that was initiated in December 2022. Excluding the impact of the Ghanaian debt restructures, ROE would have been 16,3%. Our SADC operations generated HE of R365m, up by more than 100% from R71m in 2021. Its ROE of 5,9% increased from the 1,3% reported in the prior year but remains below the cost of equity. The growth was driven mainly by a 19% increase in revenue to R3 541m.  NII in the cluster increased by 19% to R1 718m, driven by improved margins across the regions and a higher NIM of 4,94% (2021: 4,20%), as a result of increases in interest rates. This growth was despite a 5% decrease in average total advances to R21bn on the back of lower-than-expected economic activity across the regions and lower demand from clients as interest rates increased. NIR increased by 23% to R1 589m, driven by higher forex gains in Zimbabwe and an overall uplift in transaction volumes across the regions. Our NIR levels have now surpassed our 2019 pre-Covid-19 levels by 30%. The impairment charge increased by 31% to R220m, driven mainly by additional provisions raised on specific wholesale exposures and ECL model reviews that incorporate a higher interest rate and inflation cycle. This was offset by releases in Namibia and a rate adjustment in the Lesotho model. As a result, the NAR CLR increased to 102 bps from 72 bps, but remains within the cluster TTC target range of 85 bps to 120 bps. Expenses increased by 9% to R2 751m, driven mainly by growth in employee costs from higher employee incentives. Headcount decreased by 5% to 2 191 as we continued to transform the business and focus on rightsizing and automating manual processes. The cluster’s cost-to-income ratio decreased from 73,7% in 2021 to 67,3%, with the cost-to-income ratio of the SADC operations also showing an improvement to 77,7% (2021: 84,9%). Associate income for the period of R779m, relating to the group’s 21% shareholding in ETI, has been recognised, up by 14%. During December 2022, the government of Ghana announced its intention to restructure its local and external debt. The Ghanaian Finance Minister announced that Ghana was entering a voluntary domestic debt restructure programme for its local debt, while indicating that it will not service external debts. This led to a default event when Ghana’s Eurobond coupon payments were not made in January 2023. Nedbank concluded its own governance review process for the 2022 full-year results, and in accordance with our accounting policy, estimated our share of the impact of the restructuring using publicly available information such as Ecobank Ghana’s published financial statements and published economic data and reports. The impact was an estimated R175m associate loss. The total effect of ETI on the group’s HE was a profit of R610m (2021: R523m), including the R168m impact of funding costs. Looking forward Economic growth in sub-Saharan Africa has experienced the impacts of the Russia–Ukraine war and most recently tighter global financial conditions and rising inflation. This has put the supply chains under pressure and caused rising food and energy prices, which are impacting the region’s ability to grow. Public debt is now at very high levels that have not been experienced in recent times. According to the IMF, the region’s economic growth is expected to be 3,7% in 2023, down from the previous projection of 4,0%. This poses a risk to business performance and will put pressure on achieving our desired aspirations. In the countries we operate in, we continue to monitor sporadic unrest in Eswatini and its impact on the economy, and monitor the northern parts of Mozambique affected by insurgents, though efforts are in place through the deployment of SADC forces to try and stabilise the area and address security concerns. Responsive management actions are in place to deal with the impacts on business resulting from the hyperinflationary and uncertain macroeconomic environment in Zimbabwe. The foundation to grow the business is in place and we expect business performance improvements to continue in 2023. Our SADC operations are expected to continue to deliver on achieving scale across the various markets we operate in. Our ETI associate investment is expected to continue on an earnings recovery path and our focus, as a shareholder, remains to support the business in solving the challenges that face Ecobank Nigeria and Ecobank Ghana. Our key focus areas for 2023 are the following: • Continuing the transformation of our business for quicker-to-market deployments, greater efficiency, and consistent client experiences across the regions by leveraging an enterprise ecosystem. • Driving and accelerating the digitisation and automation of the business as we deliver on our pan-African digital growth strategy. Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information 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 2022 2021 2022 2021 2022 2021 975 1 718 220 1 589 2 751 779 13,8 2,31 12,4 1,02 57,8 67,3 4,94 42 857 39 542 21 714 21 415 34 327 33 768 7 057 594 1 448 168 1 293 2 535 686 9,3 1,41 11,0 0,72 51,0 73,7 4,20 42 847 39 235 21 243 22 469 35 054 34 413 6 385 365 1 952 220 1 589 2 751 5,9 1,03 1,02 57,7 77,7 6,49 41 571 37 382 21 714 21 415 34 327 33 768 6 153 71 1 693 168 1 293 2 535 1,3 0,20 0,72 51,0 84,9 5,68 40 575 37 070 21 243 22 469 35 054 34 413 5 614 610 (234) 523 (245) 779 67,5 8,93 12,4 686 67,8 7,62 11,0 1 286 2 160 2 272 2 165 904 771 Change % 64 19 31 23 9 14 1 2 (5) (2) (2) 11 1 Associate income on an IFRS basis is R779m (Dec 2021: R686m) as IFRS requires associate income to be presented net of our share of ETI’s goodwill impairment of R0m (Dec 2021: R13m). Our share of ETI’s goodwill impairment is excluded from HE. 2 December 2022 ROE on subsidiary in-country statutory capital is 15,7% with Namibia 9,8% (2021: 7,6%); Eswatini 17,7% (2021: 14,0%); Lesotho 6,9% (2021: 5,3%); Zimbabwe 76,9% (2021: 26,9%); Nedbank Mozambique 11,7% (2021: 5,4%). • Unlocking further value in Mozambique, leveraging local expertise and enterprise capabilities. • Amplifying the focus on improving the quality of earnings continually, to grow sustainably. • Unlocking value, with the other shareholders in our ETI associate investment by increasing deal flow and providing support to resolve challenges faced by Ecobank Nigeria and Ecobank Ghana. Nedbank is committed to long-term and profitable growth in our NAR business and seeks to leverage these growth opportunities. 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 ROE to levels consistently above COE. Strategic progress Our strategy on the continent remains to own, manage and control banking operations in SADC and East Africa, and to give our clients access to a banking network in West and Central Africa through our strategic investment in the pan-African banking group ETI, which has subsidiaries in 33 African countries. 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 they arise. We are making good progress to transform our business as we scale up our SADC operations and ensure we have the right skills and capabilities to gain our fair share of banking revenue pools across the markets we operate in. Our key focus areas remain to build an ecosystem that leverages more of the group’s capabilities, deliver on our digital growth strategy, continue to unlock value in Mozambique as a key market for the business, and increase the value of our investment in ETI. In addition to building out our technology infrastructure, we have identified opportunities to respond to market and client needs quicker, unlock greater efficiencies, and provide consistent client experiences across the regions. In 2022 we finalised our modified approach to converging into the enterprise systems, 110 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 111 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveSegmentalanalysis                                                                          thus moving away from a big-bang implementation approach to one that is incremental and smooths out the introduction of complexity. This will enable NAR to better leverage the group’s enterprise capabilities. Our digital growth strategy is key in ensuring that we deliver on our aspirations to lead in digital. We are progressing well, with 57% of our clients being digitally active at the end of 2022 (2021: 54%). The Nedbank Money App (Africa) continued to be the channel of choice, with over 90% of digitally active clients using the app as the preferred channel and the number of app users increasing by 29% to 108 202. Value-added services (including airtime and electricity) purchases increased by 17% and SendMoney volumes increased by 25%. As we look to deliver on our digital aspirations, we have put in place the foundational building blocks to launch the Avo SuperShop across our regions in Q1 2023, starting with Namibia and then other countries shortly thereafter. New innovations and improvements across our digital channels include the following: • We have enabled clients to apply for various insurance products and fixed deposits via the Nedbank Money App (Africa) and Nedbank Online Banking. • We have enabled business clients to perform bulk SendMoney payments to clients with mobile numbers, including paying workers who do not have a bank account or are seasonal workers. • In Mozambique we have enabled current clients to apply for loans via the digital channels, improved the new MyUey App so clients can make QR payments, and enabled business clients to apply for bank-guarantee documents via Nedbank Online. • In Zimbabwe we have enabled Zipit Smart Clients to pay merchants directly from their account through our mobile banking platform and have enabled clients to perform self- service functions in branch via tablets. • We have implemented the Payments API as part of our API-Marketplace journey in Namibia, Eswatini and Lesotho. • We launched the MobiMoney wallet in Lesotho and Namibia as part of our financial inclusion efforts. • We rolled out Avaya, a new call centre solution, in Eswatini, Lesotho and Zimbabwe. • We implemented MS Teams, as part of the MS Office ProPlus roll-out, in Namibia, Eswatini, Lesotho and Zimbabwe to improve collaboration and efficiencies. Mozambique remains a key focus market and good progress has been made in leveraging the group’s capabilities through collaboration efforts with business clusters such as Corporate and Investment Banking, as we increase our focus on multinational corporates operating in that market. We will continue to focus on these efforts as we look to unlock further value. The Nedbank brand has been well received in the market, as evidenced by Nedbank being rated #1 in NPS and brand sentiment in Mozambique. Our bold aspiration is to be rated #1 in client experiences across the markets in which we operate. As a result of brand building and client experience enhancements across our various channels, as well as social-media and other marketing activities over the past year, Nedbank’s brand sentiment has improved in almost all markets (Eswatini, Lesotho, Namibia and Zimbabwe), with Nedbank leading in brand sentiment in Lesotho and Mozambique and ranked as a top-three brand in Namibia and Zimbabwe. From a client experience perspective, Nedbank Eswatini and Mozambique ranked #1 in NPS in their respective markets, with Nedbank Eswatini showing the greatest improvement from #4 in 2021. In recognition of the progress we have made, in 2022 we received the following awards: Excellence in Mobile Banking in the Finnovex Southern Africa Awards 2022; Most Innovative Retail Banking App in Lesotho 2022 in the Global Banking & Finance Awards 2022; Best Bank for Digital Banking Services in Lesotho 2022 in the Global Banking & Finance Awards 2022; Most Innovative Bank in Digital Banking in Africa for 2022 (Nedbank Mozambique) by The Banker magazine; Best Digital Bank in Mozambique for 2022 in the Global Banking & Finance Awards 2022; Best Digital Corporate/Institutional Bank in Mozambique for 2022 by Global Finance magazine; Most Innovative Digital Bank in Mozambique for 2022 by International Finance magazine; and the Corporate Social Responsibility Initiative of the Year Award at the Eswatini Customer Service Excellence Awards 2022. With regard to ETI, our focus remains to increase the value of our investment and improve our return on the original cost of investment to above 20% (2022: 12,4%). We are working through our representation on the ETI board to ensure an appropriate focus on capital, liquidity and growth to unlock value, including addressing the challenges in Ecobank Nigeria and Ecobank Ghana. Through increased collaboration efforts, we continue to work on increasing business flows across the two businesses. Branches Branches ATMs ATMs 8 9 3 0 1 4 8 0 8 9 7 0 2 2 8 1 2 3 9 1 2 9 1 7 9 1 2018 2019 20201 2021 2022 2018 2019 20201 2021 2022 1 Malawi disposed of in H12020 (11). 1 Malawi disposed of in H12020 (22). Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Segmental performance SADC operations Our SADC operations generated an HE of R365m, an increase of more than 100%, from R71m in 2021. The business achieved these results despite the hyperinflationary environment and monetary policy uncertainty in Zimbabwe, new regulatory directives in Lesotho putting pressure on earnings, security issues in the northern parts of Mozambique and concerns about ongoing unrest in Eswatini. The main driver of performance was improved revenue (NIR and NII) growth, largely in Zimbabwe, Mozambique and Namibia. NII for the SADC operations increased by 15% to R1 952m and the NIM improved from 5,68% to 6,49%, mainly as a result of higher interest rates. NIR in SADC increased by 23% to R1 589m, from R1 293m in 2021. The increase in NIR was driven mainly by higher unrealised forex gains in Zimbabwe and increased transaction volumes in Mozambique. If one excludes Zimbabwe, NIR was up by 14%. The net monetary loss of R419m, resulting from a further depreciation of the Zimbabwean dollar, was significantly higher than the prior year (2021: R138m). In 2022 management elected to change the presentation of the 'Net monetary loss' line item, which was previously disclosed separately in the statement of comprehensive income (SOCI), and disclose it as part of non-interest revenue and income under the ‘Net sundry income’ line item in the SOCI. To provide comparability, the prior-year balances have been restated accordingly. The reclassification had no impact on the group’s statement of financial position, statement of changes in equity and statement of cash flows. Our impairment charge increased by 31% to R220m, driven by additional provisions raised on specific wholesale exposures and ECL model reviews that incorporate a higher interest rate and inflation cycle. The SADC CLR increased to 102 bps and is within the cluster TTC target range of 85 bps and 120 bps. Clients – The overall number of clients grew by 7% to 360 962 (2021: 337 860). Most of the client growth has come from Lesotho (up by 11%), Mozambique (up by 13%) and Namibia (up by 9%). Growth in Lesotho was driven by improvements in the personal loans CVP, growth in Mozambique was on the back of the rebranding to Nedbank and off a low base, while growth in Namibia was driven by the roll-out of a new digital acquisition channel leveraging third-party verification capabilities and the introduction of an enhanced PAYU CVP. 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. In 2022 we reduced our branches by 1% to 79, while increasing our ATMs by 3% to 197. We continue to invest in growing our digital channels as we aim to become a more digital business. Our revenue from card-acquiring increased by 7% to R188m in 2022, with strong performances from Namibia, Lesotho, Eswatini and Mozambique. ETI associate investment ETI’s financial recovery continued in 2022, with associate income from our investment up by 14% yoy to R779m, generating a 17% increase in HE to R610m (2021: R523m). This includes accounting for our share of ETI’s Q4 2021 and 9M 2022 earnings (in line with our policy of accounting for our share of ETI’s attributable earnings a quarter in arrear) and significant transactions or events that occurred between 1 October 2022 to 31 December 2022, by providing for the estimated impact of Ghanaian sovereign debt restructures that emerged in December 2022. The investment ROI increased to 12,4% from 11,0% in the prior year. ETI’s 9M 2022 performance (ETI results are reported in Nedbank results a quarter in arrear) which saw attributable earnings increase by 7% to US$196m, was driven by the following: • Strong revenue growth, NIR and NII, and continued benefits of diversification. • Stringent cost containment measures in a high inflationary environment and proactive credit loss management. • Improved performance of the Nigerian business, although suboptimal, Ecobank Nigeria delivered profit before tax of US$28m, a 55% increase yoy or 76% in constant currency.  The continued turnaround in performance has meant that ETI resumed payment of dividends – the last time dividends were paid was in 2016. ETI’s ROTE was up to 21,0% from 17,9% the prior year and total CAR was 14,4% (as of 30 June 2022). Some of the awards received by ETI for 2022 include the following: Africa’s Best Bank at the Euromoney Awards for Excellence; Africa Best Bank for SMEs and Africa’s Best Digital Bank at the African Banker Awards 2022; Outstanding Leadership in Sustainability Bonds in Africa at the Global Finance – Sustainable Finance 2022 Awards; Best Savings Account and Best SME Bank at the Digital Banker – Innovation Awards 2022; and Africa Best Employer Brand Award at the Africa Best Employer Brand Awards 2022. Ecobank’s strengths include local knowledge and experience, clients, technology, digital platforms and geographic footprint. ETI is ranked in the top three banks across 14 African countries, #1 in seven countries, #2 in three countries and #3 in four countries. Its focus is on growing the business and it wants to remain at the forefront of trade, payments, remittances and financial inclusion by continually leveraging technology and appropriate partnerships. ETI has the ability to transact in 33 markets facilitating trade and money transfer services. Its key partners include MTN, Airtel and PalmPay and it is working with them to drive financial inclusion across the network. To improve its operational and financial performance, it has restructured its businesses in Nigeria and the central eastern and southern Africa (CESA) regions, implementing a suite of efficiency initiatives, including closing physical branches and reducing headcount. It has also focused on the quality of the legacy credit portfolio and on improving the health of its credit portfolio, specifically in Nigeria. ETI is focused on continuing to deliver returns above the cost of equity, improving business performance by regions, and entrenching their leadership positions in the West African Monetary and Economic Union and Anglophone West Africa, which is reflected in the strong financial performance across both regions. CESA’s ROE has improved following restructuring exercises and the region’s performance is expected to continue to improve, notwithstanding the impact of hyperinflation in Zimbabwe and South Sudan. Given Ghana’s sovereign default, the impact this will have on ETI will be monitored closely through the debt restructuring process. 112 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 113 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveSegmentalanalysisMessage from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Notes Favourable Unfavourable • Strong liquidity and capital positions across subsidiaries. • Impact of hyperinflation on Zimbabwe. • Strong growth in digitally active clients and digital • Low ROE in SADC operations, though this is improving. channel usage. • Significant growth in revenue. • Improved cost-to-income ratios. • Good cross-sell metrics. • Decrease in assets. • Low growth in main-banked clients. • Improvement in Ecobank Nigeria (ENG) key balance sheet metrics, but financial performance remains suboptimal. • Market leader in brand sentiment score in Lesotho • Adverse impact on ETI of Ghana sovereign debt restructures. and Mozambique. • Leading Net Promoter Score performance in Eswatini and Mozambique. • Increased contribution from our SADC operations to overall NAR HE. • Significant improvement in associate income from ETI. • Strong returns from ETI’s West and Central African regions. • Dividends amounting to R139m received from our investment in ETI. 114 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 115 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveSegmentalanalysisGeographical segmental reporting for the year ended 31 December Rm Rm Summary of consolidated statement of financial position Summary of consolidated statement of financial position Assets Assets Cash and cash equivalents Cash and cash equivalents Other short-term securities Other short-term securities Derivative financial instruments Derivative financial instruments Government and other securities Government and other securities Loans and advances Loans and advances Other assets Other assets Intergroup assets Intergroup assets Total assets Total assets Equity and liabilities Equity and liabilities Total equity Total equity Derivative financial instruments Derivative financial instruments Amounts owed to depositors Amounts owed to depositors Provisions and other liabilities Provisions and other liabilities Long-term debt instruments Long-term debt instruments Intergroup liabilities Intergroup liabilities Total equity and liabilities Total equity and liabilities Summary of consolidated statement of comprehensive income Summary of consolidated statement of comprehensive income NII NII NIR NIR Share of income of associate companies Share of income of associate companies Total income Total income Impairments charge on financial instruments Impairments charge on financial instruments Net income Net income Total operating expenses Total operating expenses Indirect taxation Indirect taxation Profit before direct taxation Profit before direct taxation Direct taxation Direct taxation Profit after taxation Profit after taxation Profit attributable to non-controlling interest Profit attributable to non-controlling interest Headline earnings Headline earnings 1 1 Includes all group eliminations. Includes all group eliminations. Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Nedbank Group Nedbank Group 2022 2022 2021 2021 South Africa1 South Africa1 Nedbank Africa Regions2 Nedbank Africa Regions2 Rest of the world Rest of the world 2022 2022 2021 2021 2022 2022 2021 2021 2022 2022 2021 2021 45 618 45 618 70 661 70 661 9 101 9 101 160 495 160 495 882 165 882 165 84 931 84 931 – – 44 586   44 586   60 037   60 037   39 179   39 179   150 498   150 498   831 735   831 735   88 882   88 882   –   –   37 261 37 261 43 043 43 043 8 989 8 989 158 400 158 400 811 010 811 010 75 641 75 641 (3 748) (3 748) 34 563 34 563 34 459 34 459 39 099 39 099 148 722 148 722 767 051 767 051 78 580 78 580 (2 420) (2 420) 7 048 7 048 4 787 4 787 23 23 2 095 2 095 21 714 21 714 3 442 3 442 3 748 3 748 8 075 8 075 5 050 5 050 1 1 1 773 1 773 21 243 21 243 4 285 4 285 2 420 2 420 1 309 1 309 22 831 22 831 89 89 – – 49 441 49 441 5 848 5 848 1 948 1 948 20 528 20 528 79 79 3 3 43 441 43 441 6 017 6 017 1 252 971 1 252 971 1 214 917   1 214 917   1 130 596 1 130 596 1 100 054 1 100 054 42 857 42 857 42 847 42 847 79 518 79 518 72 016 72 016 115 896 115 896 9 738 9 738 1 039 622 1 039 622 35 812 35 812 51 903 51 903 – – 109 511   109 511   36 042   36 042   967 929   967 929   43 276   43 276   58 159   58 159   –   –   94 303 94 303 9 677 9 677 89 896 89 896 35 956 35 956 7 057 7 057 14 14 6 385 6 385 14 536 14 536 13 230 13 230 10 10 47 47 940 691 940 691 874 893 874 893 34 327 34 327 35 054 35 054 64 604 64 604 33 910 33 910 51 475 51 475 540 540 41 070 41 070 57 732 57 732 507 507 1 031 1 031 428 428 971 971 427 427 871 871 (540) (540) (507) (507) 76 76 57 982 57 982 1 235 1 235 1 252 971 1 252 971 1 214 917   1 214 917   1 130 596 1 130 596 1 100 054 1 100 054 42 857 42 857 42 847 42 847 79 518 79 518 72 016 72 016 36 277 36 277 27 301 27 301 879 879 64 457 64 457 7 381 7 381 57 076 57 076 36 425 36 425 1 152 1 152 19 499 19 499 4 307 4 307 15 192 15 192 1 143 1 143 32 500   32 500   24 889   24 889   799 799 58 188   58 188   6 534   6 534   51 654   51 654   33 639   33 639   1 073   1 073   16 942   16 942   4 104   4 104   12 838   12 838   1 149   1 149   33 488 33 488 24 506 24 506 100 100 58 094 58 094 7 120 7 120 50 974 50 974 32 639 32 639 1 058 1 058 17 277 17 277 4 261 4 261 13 016 13 016 983 983 30 296 30 296 22 289 22 289 100 100 52 685 52 685 5 810 5 810 46 875 46 875 30 146 30 146 979 979 15 750 15 750 4 100 4 100 11 650 11 650 1 052 1 052 14 049 14 049 11 689   11 689   12 033 12 033 10 598 10 598 1 718 1 718 1 589 1 589 779 779 4 086 4 086 220 220 3 866 3 866 2 751 2 751 75 75 1 040 1 040 (95) (95) 1 135 1 135 160 160 975 975 1 448 1 448 1 293 1 293 699 699 3 440 3 440 168 168 3 272 3 272 2 535 2 535 72 72 665 665 (26) (26) 691 691 97 97 594 594 1 071 1 071 1 206 1 206 2 277 2 277 41 41 2 236 2 236 1 035 1 035 19 19 1 182 1 182 141 141 1 041 1 041 756 756 1 307 1 307 2 063 2 063 556 556 1 507 1 507 958 958 22 22 527 527 30 30 497 497 1 041 1 041 497 497 2 The Nedbank Africa Regions geographical segmental income statement and balance sheet consist of the SADC banking subsidiaries and the investment in ETI. 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 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 R50,6bn (December 2021: R45,5bn). revenues. For example, CIB has a credit exposure to clients resident in the Africa regions of R50,6bn (December 2021: R45,5bn). 116 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 117 SupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveSegmentalanalysis                                                                                                                                                                                                        Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information 1 Net margin analysis Net interest income (Rm) Net interest income (Rm) Interest margin trends versus prime rate (%) Net interest margin (Rm) 10,09 10,14 7,85 8,60 7,03 9 1 8 8 2 7 6 1 0 3 1 8 0 0 3 0 0 5 2 3 7 7 2 6 3 5 6 3 , 2 5 3 , 6 3 3 , 3 7 3 , 3 9 3 , 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 Nedbank Group NIM Average prime rate 2022 2021 Nedbank Group Bps Rm Bps Rm Income statement analysis Net margin analysis Impairments Non-interest revenue and income 119 122 128 Closing average interest-earning banking assets (year-to-date average) 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 Foreign loan classification Balance sheet management and other 922 197 870 382 373 32 500 336 30 081 23 24 (1) (5) (1) (4) 8 5 6 (1) 3 3 (7) 1 1 935 2 128 2 220 (92) (496) (120) (376) 726 464 511 (47) 262 (44) 306 (621) 105 (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 Expenses 130 Closing NIM/NII for the period 393 36 277 Headline earnings reconciliation Taxation charge Preference shares 132 132 133 118 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 119 SupplementaryinformationStatement of financialposition analysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveIncome statementanalysis                Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Net interest margin (Bps) 24 (1) (1) (4) 6 2 (7) 1 2022 2021 Average balance Margin statement interest Average balance Margin statement interest Average banking statement of financial position and related interest 373 393 Home loans (including properties in possession) 2021 Endowment rate impact Endowment mix impact Asset pricing Asset mix Liability pricing Liability mix Foreign loan classification Balance sheet management and other 2022 Favourable Version 05 - 21 February 2023 Unfavourable • Positive endowment rate impact due to higher interest rates, • Negative endowment mix impact due to slower growth following interest rate hikes of 325 bps. • Liability mix benefits as a result of stronger growth in higher-margin deposits relative to wholesale funding, as well as positive deposit pricing impact in commercial deposits. • Higher yields in Nedbank Africa Regions and basis risk impacts. of endowment balances relative to the growth of interest-earning assets. • Negative asset mix impact due to slower growth in higher-yielding advances and stronger growth in lower-yielding advances as well as asset pricing pressure in certain retail and commercial advances portfolios. • The dilutive impact of moving the foreign currency loan portfolio, with lower- yielding assets, into the banking book (previously the trading book), in line with the regulatory requirements of the Fundamental Review of the Trading Book (FRTB). NII sensitivity • At December 2022 the NII sensitivity of the group’s banking book for a 1% parallel increase in interest rates, measured over 12 months, was 1,51% 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 583m 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 30,0% instantaneous increase in interest rates. Rm Assets Received % Assets Received Average prime rate Assets 8,60 Listed corporate bonds 23 412 1 634 6,98 22 236 1 287 % 7,03 5,79 6,51 6,67 9,09 12,52 7,39 5,82 19,43 7,43 8,92 2,60 7,56 3,69 0,37 4,77 5,23 6,78 3,66 182 925 190 240 141 994 16 950 23 467 217 559 29 929 826 476 (26 450) 81 524 40 647 922 197 205 191 14 711 15 210 14 581 2 267 2 156 17 042 5 684 8,04 8,00 10,27 13,37 9,19 7,83 18,99 173 839 187 550 134 137 17 072 21 316 195 198 28 454 11 314 12 516 12 199 2 138 1 576 11 357 5 528 73 285 8,87 779 802 57 915 7 338 1 481 82 104 9,00 3,64 8,90 (25 214) 76 635 39 159 870 382 188 668 6 837 1 020 65 772 1 127 388 82 104 7,28 1 059 050 65 772 6,21 Liabilities Paid % Liabilities Paid % 542 794 145 637 108 849 130 881 53 738 27 940 1 045 6 677 6 047 4 118 5,15 0,72 6,13 4,62 7,66 513 248 140 660 91 839 104 440 58 278 18 957 523 4 378 5 465 3 949 (2 174) 107 795 39 868 5 285 103 619 41 681 Commercial mortgages Instalment debtors Credit card balances Overdrafts Term loans and other1 Personal loans Gross banking loans and advances Impairment of loans and advances Government and other securities Short-term funds and securities Interest-earning banking assets Other2 Total assets Equity and liabilities Deposit and loan accounts Current and savings accounts Negotiable certificates of deposit Other interest-bearing liabilities Long-term debt instruments Revaluation of FVTPL-designated liabilities Ordinary and minority shareholders' equity Interest-bearing banking liabilities 981 899 45 827 4,67 908 465 33 272 • The group’s NII sensitivity exhibits very little convexity and will therefore also result in a decrease in pretax NII of approximately Other3 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 0,10% (-R80m) of ordinary shareholders’ equity, which is below the board’s approved risk limit of 1,25%. Total shareholders’ equity and liabilities 1 127 388 45 827 4,06 1 059 050 33 272 3,14 Interest margin on average interest-earning banking assets 922 197 36 277 3,93 870 382 32 500 3,73 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. 120 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 121 SupplementaryinformationStatement of financialposition analysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveIncome statementanalysis                                                                                2 Impairments Nedbank Group impairments charge Nedbank Group impairments charge (Rm) (Rm) Nedbank Group credit loss ratio trends Group credit loss ratio trends (%) (Rm) 8 8 6 3 9 2 1 6 7 2 1 3 1 4 3 5 6 1 8 3 7 1,00 0,60 3 5 0 , 9 7 0 , 1 6 1 , 3 8 0 , 9 8 0 , 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 CLR TTC upper range TTC lower range Nedbank Group income statement impairment charge and credit loss ratio Nedbank Group income statement impairment charge and credit loss ratio Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Favourable Unfavourable • Decrease in the CIB CLR ratio of 22 bps (YE 2021: 42 bps) • Deterioration of CLR to 89 bps (YE 2021: 85 bps), and this ratio being at the lower end of the through-the-cycle (TTC) target range of 15–45 bps. Impairments are down by 43% to R805m (YE 2021: R1 418m), despite an increase in the stage 3 loans and advances (LAA) that remain appropriately provisioned. • Commercial Banking having operated below its CLR target range despite the challenging macroeconomic environment and impact of load-shedding. • Card having performed well, with impairments having decreased by more than 20% and at the bottom of the TTC CLR, while policy tightening in the Personal Loans portfolio has started to benefit the CLR. • Continued resilient performance despite the macroeconomic environment and impact of loadshedding. but remained within the group's TTC target range of 60 bps to 100 bps, and in line with the full-year TTC target 2022 guidance range of between 80 bps and 100 bps. • Increase in the group’s impairment charge of 13% to R7 381m (YE 2021: R6 534m), driven by growth in interest-rate-sensitive products in Retail and a few corporate clients having filed for business rescue. 2022 2022 Corporate and Investment Banking (CIB) Corporate and Investment Banking (CIB) CIB, excluding Property Finance CIB, excluding Property Finance Property Finance Property Finance Retail and Business Banking (RBB) Retail and Business Banking (RBB) Commercial Banking Commercial Banking Retail Retail Wealth Wealth Nedbank Africa Regions Nedbank Africa Regions Centre Centre Nedbank Group Nedbank Group Stage 1 Stage 1 Stage 2 Stage 2 Stage 3 Stage 3 Non-LAA and Non-LAA and FVOCI FVOCI Off- Off- balance-sheet balance-sheet Impairment charge, Impairment charge, net of recoveries net of recoveries Mix of average Mix of average banking advances banking advances CLR CLR Target CLR range Target CLR range Rm Rm (67) (67) (3) (3) (64) (64) (161) (161) (63) (63) (98) (98) (1) (1) 60 60 (169) (169) Rm Rm Rm Rm (1 093) (1 093) (251) (251) (842) (842) 433 433 (149) (149) 582 582 (9) (9) (3) (3) (197) (197) (869) (869) 2 241   2 241   873   873   1 368   1 368   6 351   6 351   324   324   6 027   6 027   (53)   (53)   164   164   8 703   8 703   Rm Rm (224) (224) (224) (224) – – (11) (11) 3 3 (232) (232) Rm Rm (52) (52) (52) (52) (10) (10) (14) (14) 4 4 10 10 (52) (52) Rm Rm 805 805 343 343 462 462 6 613 6 613 98 98 6 515 6 515 (63) (63) 220 220 (194) (194) 7 381 7 381 % % 43,9 43,9 23,7 23,7 20,2 20,2 49,7 49,7 10,4 10,4 39,3 39,3 3,7 3,7 2,7 2,7 % % 0,22 0,22 0,17 0,17 0,28 0,28 1,61 1,61 0,11 0,11 2,00 2,00 (0,20) (0,20) 1,02 1,02 % % 0,15–0,45 0,15–0,45 0,20–0,50 0,20–0,50 0,15–0,35 0,15–0,35 1,20–1,75 1,20–1,75 0,50–0,70 0,50–0,70 1,60–2,40 1,60–2,40 0,20–0,40 0,20–0,40 0,85–1,20 0,85–1,20 100,0 100,0 0,89 0,89 0,60–1,00 0,60–1,00 122 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 123 SupplementaryinformationStatement of financialposition analysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveIncome statementanalysis                                                                Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Stage 1 Stage 1 Stage 2 Stage 2 Stage 3 Stage 3 Non-LAA and Non-LAA and FVOCI FVOCI Off- Off- balance-sheet balance-sheet Impairment charge, Impairment charge, net of recoveries net of recoveries Mix of average Mix of average banking advances banking advances CLR CLR Target CLR range Target CLR range 2021 2021 Corporate and Investment Banking (CIB) Corporate and Investment Banking (CIB) CIB, excluding Property Finance CIB, excluding Property Finance Property Finance Property Finance Retail and Business Banking (RBB) Retail and Business Banking (RBB) Commercial Banking Commercial Banking Retail  Retail  Wealth Wealth Nedbank Africa Regions Nedbank Africa Regions Centre Centre Nedbank Group Nedbank Group Rm Rm (291) (291) (129) (129) (162) (162) 669 669 (75) (75) 744 744 (18) (18) 16 16 376 376 Rm Rm 453 453 150 150 303 303 (207) (207) (187) (187) (20) (20) (3) (3) (7) (7) (249) (249) (13) (13) Rm Rm 1 178   1 178   824   824   354   354   4 763   4 763   141   141   4 622   4 622   49   49   170   170   6 160   6 160   Rm Rm 290 290 290 290 – – (2) (2) (3) (3) 285 285 Rm Rm (212) (212) (212) (212) (53) (53) (46) (46) (7) (7) (9) (9) (274) (274) Nedbank Group impairment drivers (Rm) Nedbank Group credit loss ratio per cluster (%) 2 543 (517) 222 (545) (856) 6 534 7 381 1,06 0,51 0,13 0,04 1,38 1,01 0,25 0,18 Rm Rm 1 418 1 418 923 923 495 495 5 172 5 172 (167) (167) 5 339 5 339 28 28 168 168 (252) (252) 6 534 6 534 2,40 1,85 0,82 0,64 % % 43,6 43,6 22,3 22,3 21,3 21,3 49,1 49,1 10,1 10,1 39,0 39,0 4,0 4,0 3,0 3,0 0,3 0,3 % % 0,42 0,42 0,53 0,53 0,30 0,30 1,34 1,34 (0,21) (0,21) 1,75 1,75 0,09 0,09 0,72 0,72 % % 0,15–0,45 0,15–0,45 0,20–0,50 0,20–0,50 0,15–0,35 0,15–0,35 1,30–1,80 1,30–1,80 0,50–0,70 0,50–0,70 1,60–2,40 1,60–2,40 0,20–0,40 0,20–0,40 0,85–1,20 0,85–1,20 100,0 100,0 0,83 0,83 0,60–1,00 0,60–1,00 1,34 0,72 0,42 0,09 1,61 1,02 0,22 (0,20) 2022 2021 Stage 1 Stage 2 Stage 3 FVOCI and non-LAA Off- balance-sheet 2022 2018 2019 2020 2021 CIB RBB Wealth Africa Regions 124 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 125 SupplementaryinformationStatement of financialposition analysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveIncome statementanalysis                                                            Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Impairments charge of financial instruments 2022 Corporate and Investment Banking Retail and Business Banking Nedbank Group Nedbank Africa Regions Wealth Centre 2021 Corporate and Investment Banking Retail and Business Banking Nedbank Group Nedbank Africa Regions Wealth Centre 1 105 500 Balance at the beginning of the year 26 077 4 638 19 257 Balance at the beginning of the year 26 581 5 114 19 406 Stage 1 ECL allowance Stage 2 ECL allowance Stage 3 ECL allowance 4 573 6 543 15 465 681 1 692 2 741 3 600 4 194 11 612 Statement of comprehensive income charge net of recoveries 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 7 381 (169) (869) 8 703 (52) (8) (224) 805 6 613 (161) 433 6 351 (10) (67) (1 093) 2 241 (52) (224) 1 587 1 195 (8 757) (138) 8 36 79 198 (1 216) (228) 36 1 451 980 (7 393) 158 ECL allowance – closing balance 27 893 4 788 21 215 Stage 1 Stage 2 Stage 3 4 261 5 554 18 078 517 538 3 733 3 487 4 564 13 164 Split by measurement category 27 893 4 788 21 215 Loans and advances Loans and advances in FVOCI Off-balance-sheet allowance 27 209 347 337 4 213 347 228 21 134 81 456 44 39 373 (63) (1) (9) (53) (20) (3) 370 42 29 299 370 370 248 118 739 220 60 (3) 164 10 (11) 500 (194) (197) 3 57 17 (128) (66) 11 1 (3) 215 120 881 1 216 1 188 28 303 1 304 304 (6 069) (1 131) (4 804) (23) (109) (2) Stage 1 ECL allowance Stage 2 ECL allowance Stage 3 ECL allowance Statement of comprehensive income charge net of recoveries 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 Stage 1 Stage 2 Stage 3 4 237 6 772 15 068 6 534 376 (13) 6 160 (274) (5) 290 935 1 306 2 397 1 418 (291) 453 1 178 (212) 290 3 015 4 504 11 738 5 172 669 (207) 4 763 (53) (6 030) (942) (5 023) 1 425 1 062 (8 139) (19) 5 (364) 26 581 4 573 6 543 15 465 4 152 (691) (43) (364) 5 114 681 1 692 2 741 1 391 922 (7 380) 44 19 406 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 90 434 46 56 332 28 (18) (3) 49 (6) (5) (1) 456 44 39 373 456 456 983 241 158 584 168 16 (7) 170 (9) (2) (46) 30 (12) (63) (3) 2 765 748 17 (252) (249) (3) (13) (16) 3 1 105 500 248 118 739 1 105 1 082 23 500 500 500 1 216 304 ECL allowance – closing balance 126 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 127 SupplementaryinformationStatement of financialposition analysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveIncome statementanalysis                                                                                                                                                                                                                                                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 (%) 6 7 9 5 2 7 9 9 5 2 0 4 1 4 2 9 8 8 4 2 1 0 3 7 2 , 1 2 8 , 8 0 8 , 0 6 7 , 0 4 7 , 0 5 7 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 Nedbank Group Nedbank Group Corporate and Corporate and Investment Banking Investment Banking Change Change % % 2022 2022 2021 2021 2022 2022 18 964 18 964 17 754 17 754 3 057 3 057 Rm Rm Net commission and fees income Net commission and fees income Administration fees Administration fees Card fees Card fees Cash-handling fees Cash-handling fees Exchange commission Exchange commission Guarantees income Guarantees income Insurance commission Insurance commission Other commission Other commission Other fees Other fees Service charges Service charges Insurance income Insurance income Fair-value adjustments Fair-value adjustments Fair-value adjustments Fair-value adjustments Hedge-accounted portfolios Hedge-accounted portfolios Trading income Trading income Commodities Commodities Debt securities Debt securities Equities Equities Foreign exchange Foreign exchange Equity revaluation gains/(losses) Equity revaluation gains/(losses) Realised gains, dividends, interest and other income Realised gains, dividends, interest and other income Unrealised gains/(losses)1 Unrealised gains/(losses)1 Investment income Investment income Sundry income/(expenses)2 Sundry income/(expenses)2 Total non-interest revenue and income Total non-interest revenue and income 7 7 7 7 12 12 6 6 13 13 6 6 (41) (41) (10) (10) 53 53 18 18 >100 >100 96 96 >100 >100 (7) (7) (96) (96) (16) (16) (19) (19) 19 19 25 25 (47) (47) >100 >100 (63) (63) 22 22 10 10 2021 2021 2 710 2 710 50 50 21 21 193 193 192 192 195 195 1 250 1 250 753 753 56 56 (83) (83) (94) (94) 11 11 1 403 1 403 3 646 3 646 1 027 1 027 648 648 267 267 442 442 3 958 3 958 2 041 2 041 4 322 4 322 2 005 2 005 (833) (833) (128) (128) (705) (705) 54 54 29 29 179 179 214 214 217 217 1 420 1 420 890 890 54 54 58 58 35 35 23 23 4 475 4 475 3 898 3 898 4 295 4 295 26 26 2 267 2 267 842 842 1 340 1 340 650 650 727 727 (77) (77) 263 263 575 575 1 1 1 897 1 897 679 679 1 321 1 321 921 921 463 463 458 458 86 86 221 221 26 26 2 267 2 267 842 842 1 160 1 160 666 666 786 786 (120) (120) 87 87 206 206 1 502 1 502 4 100 4 100 1 084 1 084 734 734 283 283 262 262 3 551 3 551 3 114 3 114 4 334 4 334 2 369 2 369 187 187 (5) (5) 192 192 4 166 4 166 1 1 1 897 1 897 679 679 1 589 1 589 815 815 384 384 431 431 96 96 704 704 Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Favourable Unfavourable • Solid commission and fees growth from higher • Impact on trading income by global, political and client transactional activity, as well as benefits of cross-sell, main-banked client gains and growth in card interchange revenue. • Insurance benefits from lower death and funeral claims. macroeconomic events, particularly in debt securities. • Non-repeat of insurance asset–liability matching execution in the prior-period base and KwaZulu-Natal floods impacting insurance income. • Higher equity revaluations. • Non-occurrence of fair-value losses in the base. Retail and Retail and Business Banking Business Banking 2022 2022 2021 2021 12 955 12 955 11 965 11 965 487 487 3 934 3 934 875 875 283 283 33 33 256 256 2 079 2 079 1 057 1 057 3 951 3 951 617 617 15 15 15 15 148 148 148 148 (27) (27) (27) (27) 17 17 124 124 505 505 3 511 3 511 802 802 242 242 41 41 243 243 2 623 2 623 98 98 3 900 3 900 487 487 25 25 25 25 109 109 109 109 43 43 43 43 16 16 138 138 Wealth Wealth Nedbank Africa Regions Nedbank Africa Regions Centre Centre 2022 2022 2 057 2 057 798 798 1 1 108 108 (162) (162) 1 257 1 257 55 55 1 702 1 702 – – – – – – 2021 2021 2 210 2 210 766 766 1 1 110 110 194 194 (178) (178) 1 264 1 264 53 53 1 474 1 474 – – – – – – (19) (19) (48) (48) 161 161 (57) (57) 2022 2022 2021 2021 2022 2022 2021 2021 968 968 148 148 136 136 29 29 123 123 33 33 6 6 200 200 19 19 274 274 53 53 8 8 8 8 120 120 120 120 – – 953 953 68 68 111 111 31 31 129 129 31 31 5 5 250 250 15 15 313 313 65 65 (14) (14) (14) (14) 71 71 71 71 – – 440 440 1 589 1 589 218 218 1 293 1 293 (73) (73) 15 15 1 1 6 6 14 14 (109) (109) (3) (3) 106 106 (48) (48) 154 154 – – (79) (79) (79) (79) 12 12 (33) (33) (70) (70) (84) (84) 14 14 3 3 (25) (25) 13 13 (89) (89) (21) (21) (761) (761) (20) (20) (741) (741) – – (59) (59) (59) (59) (1) (1) 70 70 (856) (856) 1 Unrealised losses relate to equity investments in associates and joint ventures, which are estimated and converted to realised or dividends once earned. 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, forex gains and losses and the R419m 2 Sundry income comprises mainly security dealings, rental income, fair-value movements on non-trading investments, forex gains and losses and the R419m net monetary loss (2021: R138m). net monetary loss (2021: R138m). 128 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 129 27 301 27 301 24 889 24 889 8 241 8 241 7 881 7 881 13 849 13 849 12 783 12 783 3 692 3 692 3 788 3 788 SupplementaryinformationStatement of financialposition analysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveIncome statementanalysis                                                                                                                                                                                                                                                                                                                                                                                                    Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information 4 Expenses Total operating expenses (Rm) Cost-to-income ratio Cost-to-income ratio (%) (%) 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) 2 3 6 1 3 9 7 1 2 3 2 7 7 1 3 9 3 6 3 3 5 2 4 6 3 , 2 7 5 , 5 6 5 , 1 8 5 , 8 7 5 , 5 6 5 7 2 , 3 1 , 0 1 , ) 7 2 , ( 5 2 , 1 6 8 6 2 7 8 8 0 3 3 1 2 9 2 1 7 2 8 2 1 6 8 6 2 4 2 9 5 2 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 Nedbank Group Nedbank Group Corporate and Corporate and Investment Banking Investment Banking Retail and Retail and Business Banking Business Banking Wealth Wealth Nedbank Africa Regions Nedbank Africa Regions Centre Centre 2022 2022 2021 2021 2022 2022 19 940 19 940 18 018 18 018 3 585 3 585 2021 2021 3 172 3 172 2022 2022 8 287 8 287 2021 2021 7 963 7 963 2022 2022 1 801 1 801 2021 2021 1 719 1 719 2022 2022 1 210 1 210 2021 2021 1 113 1 113 2022 2022 2021 2021 5 057 5 057 4 051 4 051 16 017 16 017 3 761 3 761 2 900 2 900 861 861 162 162 15 412 15 412 3 049 3 049 2 427 2 427 622 622 (443) (443) 6 494 6 494 6 329 6 329 432 432 481 481 1 884 1 884 2 625 2 625 403 403 414 414 342 342 425 425 3 433 3 433 2 384 2 384 Rm Rm Staff costs Staff costs Salaries and wages Salaries and wages Total incentives Total incentives Short-term incentives Short-term incentives Long-term incentives Long-term incentives Other staff costs Other staff costs Computer processing Computer processing Depreciation of computer equipment Depreciation of computer equipment Depreciation of right-of-use assets: computer Depreciation of right-of-use assets: computer equipment equipment Amortisation of intangible assets Amortisation of intangible assets Operating lease charges for computer processing Operating lease charges for computer processing Other computer processing expenses Other computer processing expenses Fees and insurances Fees and insurances Occupation and accommodation1,2 Occupation and accommodation1,2 Marketing and public relations Marketing and public relations Communication and travel Communication and travel Other operating expenses3 Other operating expenses3 Activity-justified transfer pricing Activity-justified transfer pricing Change Change % % 11 11 4 4 23 23 19 19 38 38 >100 >100 3 3 (7) (7) (1) (1) 9 9 (15) (15) 2 2 8 8 (4) (4) 17 17 22 22 11 11 671 671 718 718 82 82 1 864 1 864 169 169 3 708 3 708 4 420 4 420 2 089 2 089 1 554 1 554 874 874 1 054 1 054 – – 83 83 1 705 1 705 198 198 3 625 3 625 4 109 4 109 2 185 2 185 1 332 1 332 718 718 948 948 – – 534 534 203 203 67 67 309 309 71 71 2 427 2 427 7 628 7 628 574 574 212 212 58 58 260 260 108 108 2 146 2 146 7 011 7 011 Total operating expenses Total operating expenses 8 8 36 425 36 425 33 639 33 639 Analysis of total IT-related function spend Analysis of total IT-related function spend included in total expenses included in total expenses Change Change % % 2022 2022 2021 2021 IT-staff-related costs within Group Technology IT-staff-related costs within Group Technology 28 28 2 976 2 976 2 326 2 326 Depreciation and amortisation of computer Depreciation and amortisation of computer equipment, software and intangibles equipment, software and intangibles Other IT costs (including licensing, development, Other IT costs (including licensing, development, maintenance and processing charges)4 maintenance and processing charges)4 Total IT-related functional spend Total IT-related functional spend 4 4 2 2 9 9 2 617 2 617 2 506 2 506 3 944 3 944 9 537 9 537 3 881 3 881 8 713 8 713 1 1 2 2 3 3 4 4 Includes the depreciation of right-of-use assets of R827m (December 2021: R863m). Includes the depreciation of right-of-use assets of R827m (December 2021: R863m). Includes a building depreciation charge of R386m (December 2021: R385m). Includes a building depreciation charge of R386m (December 2021: R385m). Includes a furniture depreciation charge of R335m (December 2021: R332m), consumables and sundry expenses. Includes a furniture depreciation charge of R335m (December 2021: R332m), consumables and sundry expenses. Includes consulting and professional fees (that are included in fees and insurance), communication and travel expenses, and other IT-related spend (included Includes consulting and professional fees (that are included in fees and insurance), communication and travel expenses, and other IT-related spend (included in computer processing). in computer processing). 2 885 2 885 1 682 1 682 748 748 379 379 578 578 6 172 6 172 2 563 2 563 1 844 1 844 698 698 328 328 540 540 4 881 4 881 208 208 118 118 74 74 39 39 41 41 765 765 230 230 153 153 48 48 23 23 37 37 656 656 347 347 198 198 73 73 102 102 75 75 404 404 291 291 192 192 56 56 83 83 61 61 314 314 446 446 (112) (112) 592 592 45 45 289 289 451 451 (216) (216) 472 472 24 24 202 202 (9 768) (9 768) (7 997) (7 997) 22 615 22 615 21 442 21 442 3 449 3 449 3 280 3 280 2 751 2 751 2 535 2 535 (18) (18) (629) (629) Favourable Unfavourable • Decrease in employee numbers of 3% yoy, largely through • Increase in incentive costs as a result of the group's improved natural attrition. financial performance. • Lower accommodation costs. • Increase in the amortisation charge of 9%, albeit slowing. • Cost savings delivered by optimisation initiatives, including • Increase in marketing and travel costs as business returns cumulative run rate savings from TOM 2.0 of R1,5bn. to normal. • Higher other staff costs due to lower returns from employee benefit assets. • Increase in other staff costs due to less work on IT projects that are capitalised, given new Ways of Work and demand for highly skilled resources increasing costs. 130 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 131 SupplementaryinformationStatement of financialposition analysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveIncome statementanalysis                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 5 Headline earnings reconciliation 7 Preference shares Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Profit attributable to preference shareholders 2021 Number of shares Cents per share Amount Rm 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 shares1 Nedbank (MFC) – participating preference shares2 2022 Nedbank (MFC) – participating preference shares2 1 The group repurchased all of the non-redeemable, non-cumulative, non-participating preference shares in issue on 21 December 2021. 2 Share in economic profit calculated semi-annually. 106 103 209 (21) 188 125 313 106 106 Rm Profit attributable to ordinary shareholders Impairment charge on non-financial instruments and other gains and losses IAS 16 – (profit)/loss on disposal of property and equipment IAS 36 – impairment of goodwill IAS 36 – impairment of intangible assets IFRS 10 – profit on sale of subsidiaries/associates IFRS 16 – (reversal of impairment)/impairment of right-of-use assets Share of losses of associate companies IAS 36 share of associate impairment of goodwill 2022 2021 Change % 27 Gross Net of taxation 14 275 Gross Net of taxation 11 238 >(100) (245) (226) (155) – 93 (181) (2) (111) – 67 (181) (1) 499 41 306 153 (11) 10 13 438 26 306 110 (11) 7 13 Headline earnings 20 14 049 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 Share of profits of associate companies Capital items Effects of profits taxed in different jurisdictions Additional tier 1 capital instruments Assessed losses not subject to deferred tax and special allowances Non-deductible expenses1 Prior-year adjustments Tax rate change2 Total taxation on income as percentage of profit before taxation Effective tax rate, excluding associate headline earnings 2022 2021 4 307 4 104 28,0 28,0 (1,0) (1,3) (0,7) (1,5) (1,3) (0,2) 0,7 (0,7) 0,1 22,1 23,1 (1,3) (1,3) (0,1) (0,6) (1,2) (0,3) 0,6 0,4 24,2 25,4 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 reclassified and renamed to provide our users with additional information. 'Foreign income and section 9D attribution' (2021: -0,5%) has been combined with 'NAR non-taxable amounts' (2021: -0,5%) and has been renamed 'Effects of profits taxed in different jurisdictions'. 'Exempt income and special allowances' (2021:-0,4%) has been combined with 'Revenue losses not recognised' (2021: 0,1%) and has been renamed 'Assessed losses not subject to deferred tax and special allowances'. 'Net monetary loss' (2021: 0,4%), previously included in 'Non-deductible expenses' (2021: 1,0%), has been reallocated to 'Effects of profits taxed in different jurisdictions'. To provide comparability, the prior-year balances have been restated accordingly. 1 Non-deductible expenses includes the impact of share-based payments and other non-deductible expenses. 2 The corporate tax rate was reduced from 28% to 27% during 2022 and is applicable from the 2023 year of assessment for South African companies in the group. Current tax balances are therefore reflected at the 28% rate and deferred tax balances at the 27% rate, resulting in a decrease in deferred tax assets of R2m, this being related to the remeasurement at 31 December 2022. 132 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 133 SupplementaryinformationStatement of financialposition analysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveIncome statementanalysis                                                                                              Notes 134 Nedbank Group Annual Results 2022 Statement of financial position analysis Loans and advances Investment securities Investments in associate companies Intangible assets Amounts owed to depositors 136 154 155 156 158 Liquidity risk and funding 160 Equity analysis Capital management 163 164 Nedbank Group Annual Results 2022 135 SupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveStatement of financialposition analysis8 Loans and advances 8 Loans and advances Loans and advances segmental breakdown Loans and advances segmental breakdown Nedbank Group Nedbank Group Corporate and Corporate and Investment Banking Investment Banking Retail and Retail and Business Banking Business Banking Wealth Wealth Nedbank Africa Regions Nedbank Africa Regions Centre1 Centre1 Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information 2022 2022 2021 2021 2022 2022 2021 2021 2022 2022 2021 2021 2022 2022 2021 2021 2022 2022 Rm Rm Home loans Home loans Commercial mortgages Commercial mortgages Properties in possession Properties in possession Credit cards Credit cards Overdrafts Overdrafts Personal loans Personal loans Term and other loans Term and other loans Overnight loans Overnight loans Foreign client lending Foreign client lending Instalment debtors Instalment debtors Preference shares and debentures Preference shares and debentures Factoring accounts Factoring accounts Listed corporate bonds Listed corporate bonds Fair-value hedge-accounted portfolios Fair-value hedge-accounted portfolios Trade, other bills and bankers' acceptances Trade, other bills and bankers' acceptances Gross banking loans and advances Gross banking loans and advances Impairment of advances Impairment of advances Net banking loans and advances Net banking loans and advances Trading loans and advances Trading loans and advances Loans and advances Loans and advances Change Change % % 6 6 4 4 1 1 3 3 15 15 3 3 5 5 31 31 >100 >100 6 6 (6) (6) 19 19 8 8 >(100) >(100) (100) (100) 7 7 (6) (6) 7 7 (8) (8) 6 6 189 370 189 370 196 619 196 619 189 189 16 816 16 816 26 613 26 613 30 166 30 166 178 840 178 840 189 576 189 576 187 187 16 297 16 297 23 042 23 042 29 175 29 175 20 20 19 19 157 626 157 626 152 413 152 413 3 987 3 987 3 733 3 733 176 877 176 877 168 584 168 584 153 203 153 203 146 040 146 040 12 393 12 393 18 764 18 764 9 479 9 479 5 793 5 793 151 582 151 582 142 559 142 559 11 503 11 503 8 572 8 572 25 027 25 027 (1 722) (1 722) – – 12 204 12 204 7 188 7 188 23 279 23 279 750 750 1 1 11 041 11 041 17 192 17 192 2 940 2 940 11 214 11 214 8 341 8 341 3 799 3 799 2 880 2 880 11 977 11 977 25 027 25 027 23 279 23 279 – – 6 6 862 769 862 769 806 954 806 954 382 250 382 250 352 487 352 487 (27 209) (27 209) (25 650) (25 650) (4 213) (4 213) (4 296) (4 296) 835 560 835 560 781 304 781 304 378 037 378 037 46 605 46 605 50 431 50 431 46 605 46 605 348 191 348 191 50 431 50 431 166 247 166 247 28 628 28 628 52 52 16 667 16 667 19 259 19 259 28 469 28 469 13 288 13 288 1 126 1 126 255 255 154 272 154 272 26 782 26 782 68 68 16 154 16 154 16 048 16 048 27 277 27 277 13 278 13 278 878 878 330 330 147 013 147 013 138 013 138 013 16 16 8 544 8 544 16 16 7 185 7 185 15 756 15 756 8 112 8 112 14 14 149 149 10 10 5 039 5 039 42 42 273 273 17 257 17 257 8 424 8 424 13 13 151 151 4 641 4 641 32 32 211 211 7 347 7 347 2 164 2 164 123 123 149 149 3 218 3 218 1 687 1 687 5 058 5 058 226 226 1 317 1 317 1 585 1 585 28 28 429 564 429 564 (21 134) (21 134) 400 301 400 301 (19 316) (19 316) 29 395 29 395 (370) (370) 30 729 30 729 (456) (456) 22 902 22 902 (1 188) (1 188) 22 325 22 325 (1 082) (1 082) (1 342) (1 342) (304) (304) 408 430 408 430 380 985 380 985 29 025 29 025 30 273 30 273 21 714 21 714 21 243 21 243 (1 646) (1 646) 2021 2021 7 292 7 292 1 855 1 855 106 106 143 143 3 110 3 110 1 898 1 898 4 364 4 364 260 260 1 664 1 664 1 629 1 629 3 3 1 1 2022 2022 2021 2021 89 89 102 102 289 289 261 261 2 2 5 5 (1 722) (1 722) 744 744 1 112 1 112 (500) (500) 612 612 612 612 – – 882 165 882 165 831 735 831 735 424 642 424 642 398 622 398 622 408 430 408 430 380 985 380 985 29 025 29 025 30 273 30 273 21 714 21 714 21 243 21 243 (1 646) (1 646) Banking loans and advances to banks Banking loans and advances to banks >100 >100 32 355 32 355 11 173 11 173 28 888 28 888 8 337 8 337 – – – – 1 706 1 706 1 088 1 088 1 761 1 761 1 748 1 748 – – 1 Centre includes the group’s centrally managed macro fair-value hedge accounting adjustment and a central impairment provision. 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 (2019–2022) (%) Commercial mortgage loans (2019–2022) (%) Credit cards (2019–2022) (%) Personal loans (2019–2022) (%) , 2 4 1 , 1 4 1 , 5 9 1 , 6 9 1 , 2 5 3 , 8 4 3 , 5 3 2 , 8 3 2 6 7 , 7 7 , , 2 7 3 , 8 6 3 0 7 , 0 7 , , 6 6 1 , 1 8 1 , 3 6 1 , 1 6 1 , 9 2 2 , 0 2 2 Core corporate loans (2019–2022) (%) Instalment sales and leases (2019–2022) (%) Nedbank FirstRand Standard Bank Absa Other Nedbank FirstRand Standard Bank Absa Other , 9 1 1 , 2 1 1 , 4 5 2 , 5 5 2 , 5 5 2 , 4 4 2 , 4 5 2 , 7 5 2 , 8 1 1 , 2 3 1 , 2 2 1 , 6 1 1 , 3 1 2 , 2 0 2 , 4 7 1 , 6 6 1 , 2 0 1 , 4 0 1 , 9 8 3 , 2 1 4 Nedbank FirstRand Standard Bank Absa Other Nedbank FirstRand Standard Bank Absa Other 136 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 137 , 8 9 1 , 5 8 1 , 7 0 2 , 3 1 2 , 5 0 2 , 9 0 2 , 9 2 2 , 4 3 2 , 1 6 1 , 9 5 1 , 1 9 2 , 5 8 2 , 1 4 2 , 6 4 2 , 0 0 2 , 8 9 1 , 6 2 2 , 7 2 2 , 2 4 4 4 , Nedbank FirstRand Standard Bank Absa Other Nedbank FirstRand Standard Bank Absa Other SupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveStatement of financialposition analysis                                                                                                                                                                                                                                                                                                Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Summary of loans and advances and coverage ratios Stage 1 and stage 2 coverage (%) Stage 3 advances and coverage ratio (Rm) (%) Nedbank Group coverage (%) 6,61 6,44 7,00 5,30 37,90 37,97 31,55 34,29 0,48 0,65 0,69 0,60 4 9 5 7 2 3 4 2 5 4 5 3 3 9 3 5 7 6 1 5 6 2 2 , 5 2 3 , 2 3 3 , 7 3 3 , Stage 3 advances as a percentage of gross banking loans and advances (Rm) 8,35 5,89 3,51 4 5 9 6 4 6,67 5,06 3,08 7 1 8 0 4 6,98 6,14 5,21 5 6 9 2 5 5,82 3,46 1,15 2 4 0 8 2 2019 2020 2021 2022 2019 2020 2021 2022 2019 2020 2021 2022 2019 2020 2021 2022 Stage 1 coverage Stage 2 coverage Stage 3 coverage Stage 3 LAA at amortised cost RBB Total Nedbank Group CIB Total Stage 3 LAA GLAA, ECL and coverage ratios, by cluster, by stage GLAA, ECL and coverage ratios, by cluster, by stage Stage 1 Stage 1 Stage 2 Stage 2 Stage 3 Stage 3 Total Total GLAA GLAA ECL ECL Coverage Coverage GLAA GLAA ECL ECL Coverage Coverage GLAA GLAA ECL ECL Coverage Coverage GLAA GLAA ECL ECL Coverage Coverage GLAA excluding GLAA excluding trading book trading book Stage 3 Stage 3 GLAA as a % GLAA as a % of GLAA excluding of GLAA excluding trading book trading book 2022 2022 Rm Rm Corporate and Investment Banking (CIB) Corporate and Investment Banking (CIB) 288 066 288 066 CIB, excluding Property Finance CIB, excluding Property Finance Property Finance Property Finance 136 572 136 572 151 494 151 494 Rm Rm 379 379 294 294 85 85 % % Rm Rm 0,13% 0,13% 19 794 19 794 0,22% 0,22% 0,06% 0,06% 12 849 12 849 6 945 6 945 Rm Rm 447 447 376 376 71 71 Retail and Business Banking (RBB) Retail and Business Banking (RBB) 346 248 346 248 3 434 3 434 0,99% 0,99% 53 332 53 332 4 551 4 551 Commercial Banking Commercial Banking Retail Retail Wealth Wealth Nedbank Africa Regions Nedbank Africa Regions Centre Centre Gross loans and advances/ECL held at amortised Gross loans and advances/ECL held at amortised cost cost 74 322 74 322 271 926 271 926 24 871 24 871 19 708 19 708 (1 065) (1 065) 170 170 3 264 3 264 42 42 197 197 0,23% 0,23% 1,20% 1,20% 0,17% 0,17% 1,00% 1,00% 10 440 10 440 42 892 42 892 1 842 1 842 1 272 1 272 1 440 1 440 179 179 4 372 4 372 29 29 110 110 303 303 % % 2,26   2,26   2,93   2,93   1,02   1,02   8,53   8,53   1,77   1,77   10,19   10,19   1,57   1,57   8,65   8,65   Rm Rm Rm Rm % % Rm Rm Rm Rm 18 631 18 631 7 054 7 054 11 577 11 577 3 387 3 387 1 529 1 529 1 858 1 858 18,18 18,18 326 491 326 491 22,68 22,68 16,05 16,05 156 475 156 475 170 016 170 016 4 213 4 213 2 199 2 199 2 014 2 014 29 984 29 984 13 149 13 149 43,85 43,85 429 564 429 564 21 134 21 134 4 745 4 745 25 239 25 239 1 133 1 133 1 922 1 922 5 5 1 292 1 292 11 857 11 857 299 299 881 881 1 1 27,23 27,23 46,98 46,98 26,39 26,39 45,84 45,84 89 507 89 507 340 057 340 057 27 846 27 846 22 902 22 902 380 380 1 641 1 641 19 493 19 493 370 370 1 188 1 188 304 304 % % 1,29 1,29 1,41 1,41 1,19 1,19 4,92 4,92 1,83 1,83 5,73 5,73 1,33 1,33 5,19 5,19 Rm Rm 382 250 382 250 209 723 209 723 172 527 172 527 429 564 429 564 89 507 89 507 340 057 340 057 29 395 29 395 22 902 22 902 (1 342) (1 342) % % 5,21 5,21 3,98 3,98 6,71 6,71 6,98 6,98 5,30 5,30 7,42 7,42 3,85 3,85 8,39 8,39 677 828 677 828 4 052 4 052 0,60% 0,60% 77 680 77 680 5 440 5 440 7,00   7,00   51 675 51 675 17 717 17 717 34,29 34,29 807 183 807 183 27 209 27 209 3,37 3,37 862 769 862 769 6,14 6,14 GLAA/ECL for assets held at FVOCI GLAA/ECL for assets held at FVOCI Trading GLAA held at FVTPL Trading GLAA held at FVTPL Banking book GLAA held at FVTPL Banking book GLAA held at FVTPL GLAA for fair-value hedge-accounted portfolios GLAA for fair-value hedge-accounted portfolios 40 533 40 533 46 605 46 605 14 484 14 484 (1 722) (1 722) 64 64 1 001 1 001 32 32 1 290 1 290 251 251 145 145 82 82 110 110 42 824 42 824 46 605 46 605 14 484 14 484 (1 722) (1 722) 347 347 337 337 46 605 46 605 777 728 777 728 4 261 4 261 78 681 78 681 5 554 5 554 52 965 52 965 18 078 18 078 909 374 909 374 27 893 27 893 909 374 909 374 Off-balance-sheet ECL Off-balance-sheet ECL Total GLAA/ECL Total GLAA/ECL 138 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 139 SupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveStatement of financialposition analysis                                                                                                                                                                                                             Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Stage 1 Stage 1 Stage 2 Stage 2 Stage 3 Stage 3 Total Total GLAA GLAA ECL ECL Coverage Coverage GLAA GLAA ECL ECL Coverage Coverage GLAA GLAA ECL ECL Coverage Coverage GLAA GLAA ECL ECL Coverage Coverage Stage 3 Stage 3 GLAA as a % GLAA as a % of total GLAA of total GLAA excluding excluding trading trading book book GLAA, excluding GLAA, excluding trading book trading book 2021 2021 Corporate and Investment Banking (CIB) Corporate and Investment Banking (CIB) CIB, excluding Property Finance CIB, excluding Property Finance Property Finance Property Finance Rm Rm 260 775 260 775 116 082 116 082 144 693 144 693 Rm Rm 529 529 382 382 147 147 % % Rm Rm Rm Rm % % 0,20 0,20 0,33 0,33 0,10 0,10 49 193 49 193 1 543 1 543 31 747 31 747 17 446 17 446 631 631 912 912 Retail and Business Banking (RBB) Retail and Business Banking (RBB) 327 860 327 860 3 552 3 552 1,08 1,08 45 735 45 735 4 165 4 165 Commercial Banking Commercial Banking Retail Retail Wealth Wealth Nedbank Africa Regions Nedbank Africa Regions Centre Centre Gross loans and advances/ECL held at amortised Gross loans and advances/ECL held at amortised cost cost 68 191 68 191 259 669 259 669 25 453 25 453 19 118 19 118 302 302 234 234 3 318 3 318 44 44 230 230 0,34 0,34 1,28 1,28 0,17 0,17 1,20 1,20 9 559 9 559 36 176 36 176 2 538 2 538 1 248 1 248 62 62 328 328 3 837 3 837 39 39 112 112 500 500 3,14   3,14   1,99   1,99   5,23   5,23   9,11   9,11   3,43   3,43   10,61   10,61   1,54   1,54   8,97   8,97   Rm Rm 9 384 9 384 6 520 6 520 2 864 2 864 Rm Rm 2 224 2 224 1 396 1 396 828 828 % % Rm Rm Rm Rm 23,70 23,70 319 352 319 352 21,41 21,41 28,91 28,91 154 349 154 349 165 003 165 003 4 296 4 296 2 409 2 409 1 887 1 887 26 706 26 706 11 599 11 599 43,43 43,43 400 301 400 301 19 316 19 316 4 296 4 296 22 410 22 410 1 282 1 282 1 959 1 959 4 4 1 121 1 121 10 478 10 478 373 373 740 740 26,09 26,09 46,76 46,76 29,10 29,10 37,77 37,77 82 046 82 046 318 255 318 255 29 273 29 273 22 325 22 325 368 368 1 683 1 683 17 633 17 633 456 456 1 082 1 082 500 500 % % 1,35 1,35 1,56 1,56 1,14 1,14 4,83 4,83 2,05 2,05 5,54 5,54 1,56 1,56 4,85 4,85 Rm Rm 352 487 352 487 184 965 184 965 167 522 167 522 400 301 400 301 82 046 82 046 318 255 318 255 30 729 30 729 22 325 22 325 1 112 1 112 % % 3,08 3,08 4,33 4,33 1,71 1,71 6,67 6,67 5,24 5,24 7,04 7,04 4,17 4,17 8,77 8,77 5,06 5,06 633 508 633 508 4 355 4 355 0,69 0,69 98 776 98 776 6 359 6 359 6,44   6,44   39 335 39 335 14 936 14 936 37,97 37,97 771 619 771 619 25 650 25 650 3,32 3,32 806 954 806 954 GLAA/ECL for assets held at FVOCI GLAA/ECL for assets held at FVOCI Trading GLAA held at FVTPL Trading GLAA held at FVTPL Banking book GLAA held at FVTPL Banking book GLAA held at FVTPL GLAA for fair-value hedge-accounted portfolios GLAA for fair-value hedge-accounted portfolios 21 279 21 279 50 431 50 431 9 131 9 131 750 750 60 60 2 694 2 694 48 48 1 481 1 481 427 427 158 158 136 136 102 102 25 454 25 454 50 431 50 431 9 131 9 131 750 750 535 535 396 396 50 431 50 431 Off-balance-sheet ECL Off-balance-sheet ECL Total GLAA/ECL Total GLAA/ECL 715 099 715 099 4 573 4 573 101 470 101 470 6 543 6 543 40 816 40 816 15 465 15 465 857 385 857 385 26 581 26 581 857 385 857 385 Favourable Unfavourable • Increase in banking LAA of 7% to R862 769m (YE 2021: • Increase in the stage 3 LAA of 31,4% to R51 675m (YE 2021: R39 335m), driven by the macroeconomic environment impacting affordability in Retail, a few corporate clients having filed for business rescue, and the sovereign default of Ghana. R806 954m), driven by ongoing growth momentum in RBB LAA and a strong recovery in CIB LAA in H2 2022. • Increase in the group coverage ratio to 3,37% (YE 2021: 3,32%), reflective of the increase in stage 3 LAA and appropriate level of ECL raised against the portfolio. • Reduction in group overlays to R1 413m (2021: R3 019m). R895m of overlays released via the income statement, R1 224m of overlays raised via the income statement, while R1 955m was catered for in-model. • Improvement in the group performing coverage ratio from 1,46% to 1,26% driven by growth of 7% and improvement in stage 2 LAA. 140 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 141 SupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveStatement of financialposition analysis                                                                                                                                                                Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Stage 1 Stage 1 Stage 2 Stage 2 Stage 3 Stage 3 Total Total GLAA, ECL and coverage, by product GLAA, ECL and coverage, by product 2022 2022 Residential mortgages Residential mortgages Commercial mortgages Commercial mortgages Instalment debtors Instalment debtors Credit cards and overdrafts Credit cards and overdrafts Term loans Term loans Other client loans Other client loans Other including credit and zero balances Other including credit and zero balances GLAA GLAA Rm Rm 158 725 158 725 168 438 168 438 121 720 121 720 25 369 25 369 121 044 121 044 74 499 74 499 8 033 8 033 GLAA/ECL held at amortised cost GLAA/ECL held at amortised cost 677 828 677 828 4 052 4 052 2021 2021 Residential mortgages Residential mortgages Commercial mortgages Commercial mortgages Instalment debtors Instalment debtors Credit cards and overdrafts Credit cards and overdrafts Term loans Term loans Other client loans Other client loans Other including credit and zero balances Other including credit and zero balances GLAA GLAA Rm Rm 151 227 151 227 161 636 161 636 117 158 117 158 21 890 21 890 103 688 103 688 69 617 69 617 8 292 8 292 ECL ECL Coverage Coverage GLAA GLAA ECL ECL Coverage Coverage Rm Rm 336 336 140 140 1 348 1 348 910 910 1 180 1 180 186 186 (48) (48) % % 0,21 0,21 0,08 0,08 1,11 1,11 3,59 3,59 0,97 0,97 0,25 0,25 n/a n/a 0,60 0,60 Rm Rm 18 404 18 404 11 376 11 376 22 096 22 096 5 804 5 804 16 433 16 433 3 534 3 534 33 33 Rm Rm 655 655 151 151 2 264 2 264 597 597 1 371 1 371 412 412 (10) (10) 77 680 77 680 5 440 5 440 % % 3,56   3,56   1,33   1,33   10,25   10,25   10,29   10,29   8,34   8,34   11,66   11,66   n/a   n/a   7,00   7,00   Stage 1 Stage 1 Stage 2 Stage 2 ECL ECL Coverage Coverage GLAA GLAA ECL ECL Coverage Coverage Rm Rm 287 287 217 217 1 392 1 392 815 815 1 395 1 395 294 294 (45) (45) % % 0,19 0,19 0,13 0,13 1,19 1,19 3,72 3,72 1,35 1,35 0,42 0,42 Rm Rm 16 260 16 260 20 360 20 360 18 125 18 125 5 360 5 360 22 092 22 092 16 565 16 565 14 14 Rm Rm 530 530 979 979 1 841 1 841 884 884 1 376 1 376 760 760 (11) (11) % % 3,26   3,26   4,81   4,81   10,16   10,16   16,49   16,49   6,23   6,23   4,59   4,59   6,44   6,44   GLAA/ECL held at amortised cost GLAA/ECL held at amortised cost 633 508 633 508 4 355 4 355 0,69 0,69 98 776 98 776 6 359 6 359 GLAA GLAA Rm Rm 10 760 10 760 14 024 14 024 7 766 7 766 4 373 4 373 11 850 11 850 2 867 2 867 35 35 51 675 51 675 GLAA GLAA Rm Rm 9 887 9 887 4 825 4 825 7 275 7 275 3 964 3 964 11 161 11 161 2 187 2 187 36 36 ECL ECL Rm Rm 2 417 2 417 2 360 2 360 3 395 3 395 2 760 2 760 6 256 6 256 530 530 (1) (1) 17 717 17 717 Stage 3 Stage 3 ECL ECL Rm Rm 2 340 2 340 1 119 1 119 3 106 3 106 2 460 2 460 5 260 5 260 651 651 Coverage Coverage % % 22,46 22,46 16,83 16,83 43,72 43,72 63,11 63,11 52,79 52,79 18,49 18,49 n/a n/a 34,29 34,29 Coverage Coverage % % 23,67 23,67 23,19 23,19 42,69 42,69 62,06 62,06 47,13 47,13 29,77 29,77 39 335 39 335 14 936 14 936 37,97 37,97 GLAA GLAA Rm Rm 187 889 187 889 193 838 193 838 151 582 151 582 35 546 35 546 149 327 149 327 80 900 80 900 8 101 8 101 807 183 807 183 GLAA GLAA Rm Rm 177 374 177 374 186 821 186 821 142 558 142 558 31 214 31 214 136 941 136 941 88 369 88 369 8 342 8 342 771 619 771 619 ECL ECL Rm Rm 3 408 3 408 2 651 2 651 7 007 7 007 4 267 4 267 8 807 8 807 1 128 1 128 (59) (59) 27 209 27 209 Total Total ECL ECL Rm Rm 3 157 3 157 2 315 2 315 6 339 6 339 4 159 4 159 8 031 8 031 1 705 1 705 (56) (56) 25 650 25 650 Coverage Coverage % % 1,81 1,81 1,37 1,37 4,62 4,62 12,00 12,00 5,90 5,90 1,39 1,39 n/a n/a 3,37 3,37 Coverage Coverage % % 1,78 1,78 1,24 1,24 4,45 4,45 13,32 13,32 5,86 5,86 1,93 1,93 3,32 3,32 142 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 143 SupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveStatement of financialposition analysis                                                Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Economic scenarios Climate-related disclosures Scenario Probability weighting (%) Total ECL allowance Difference to weighted scenarios Percentage difference to weighted scenarios (%) 2022 Economic measures GDP Base case 50 27 817 (76) (0,28) Prime HPI GDP Mild stress 21 28 122 229 0,82 Prime Positive outcome 21 27 630 (263) (0,94) Prime HPI GDP High stress 8 28 446 553 1,98 Prime HPI GDP Weighted scenarios 100 27 893   1 Forecast at 31 December 2022. Scenario Probability weighting (%) Total ECL allowance Difference to weighted scenarios HPI 2021 Percentages difference to weighted scenarios (%) Economic measures GDP Base case 50 26 491 (90) (0,33) Prime HPI GDP Mild stress 21 26 857 276 1,04 Prime Positive outcome 21 26 263 (319) (1,20) Prime HPI GDP High stress 8 27 259 678 2,55 Prime HPI HPI GDP Weighted scenarios 100 26 581   1 Forecast at 31 December 2021. 144 Nedbank Group Annual Results 2022 Economic forecast1 (%) 2023 2024 2025 1,25 11,00 2,50 (0,14) 11,75 2,06 1,91 10,00 3,29 (1,17) 12,75 1,63 1,76 10,50 3,02 0,37 12,00 2,37 2,33 9,75 3,87 (0,48) 12,75 1,72 1,66 10,50 3,57 1,02 12,25 2,69 2,25 9,75 4,74 0,77 12,75 1,81 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 Rm % of GLAA 2022 2021 Change 2022 2021 Thermal coal1 Limit2 Drawn exposure Upstream oil3 Limit2 Drawn exposure Upstream gas3 Limit2 Drawn exposure 2 324 1 002 2 817 1 221 (493) (219) 19 592 11 081 13 559 9 110 6 033 1 971 1 698 1 380 468 424 1 230 956 Non-renewable-power-generation exposure Limit2 Drawn exposure 9 964 5 375 10 741 6 557 (777) (1 182) Renewable Energy Independent Power Producer Procurement Programme Limit2 Drawn exposure Private power generation – CIB Limit2 Drawn exposure Private power generation – RBB Limit Drawn exposure Private power generation – NAR Limit Drawn exposure African renewable-energy projects Limit2 Drawn exposure Total renewable energy Limit2 Drawn exposure 34 910 25 941 35 347 28 741 1 575 735 233 232 41 41 402 304 513 417 – – – – 614 438 (437) (2 800) 1 062 318 233 232 41 41 (212) (134) 37 160 27 253 36 474 29 596 686 (2 343) 1 Excludes derivative products and environmental guarantees. 2 Limits include all committed facilities approved to clients, in respective portfolios, aligned with the Nedbank Energy Policy. 3 Includes all limits and exposures, including all products and derivatives, aligned with the Nedbank Energy Policy. 0,3 0,1 2,2 1,2 0,2 0,2 1,1 0,6 3,8 2,9 0,1 0,1 0,0 0,0 0,0 0,0 0,0 0,0 4,0 2,9 0,3 0,1 1,6 1,1 0,1 0,0 1,3 0,8 4,1 3,4 0,1 0,0 0,0 0,0 0,0 0,0 0,1 0,1 4,3 3,5 Nedbank Group Annual Results 2022 145 SupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveStatement of financialposition analysis                                                                                                                                                                                                                                                                                                                                                                            Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Gross advances and ECL movement Gross advances and ECL movement Reconciliation of loss allowance relating to financial assets measured at amortised cost and FVOCI because changes in the associated Reconciliation of loss allowance relating to financial assets measured at amortised cost and FVOCI because changes in the associated ECL are recognised in impairment charges. The reconciliation excludes loans measured at FVTPL and fair-value hedge-accounted ECL are 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. portfolios because changes in fair values are recognised in NIR. Stage 1 Stage 1 Stage 2 Stage 2 Stage 3 Stage 3 Total Total Loans and advances (Rm) Loans and advances (Rm) Net balance at 31 December 2021 Net balance at 31 December 2021 New loans and advances originated New loans and advances originated Loans and advances written off Loans and advances written off GLAA GLAA ECL ECL 625 216 625 216 340 508 340 508 4 513 4 513 3 721 3 721 Amortised Amortised cost cost 620 703 620 703 336 787 336 787 – – Repayments net of readvances, capitalised interest, fees and ECL remeasurements1 Repayments net of readvances, capitalised interest, fees and ECL remeasurements1 (265 736) (265 736) 2 549 2 549 (268 285) (268 285) 45 918 45 918 (55 720) (55 720) (18 787) (18 787) (1 604) (1 604) 843 843 (3 294) (3 294) (4 262) (4 262) 127 127 45 075 45 075 (52 426) (52 426) (14 525) (14 525) (1 731) (1 731) GLAA GLAA ECL ECL Amortised Amortised cost cost GLAA GLAA ECL ECL Amortised Amortised cost cost GLAA GLAA ECL ECL Amortised Amortised cost cost 98 762 98 762 6 495 6 495 92 267 92 267 39 299 39 299 15 038 15 038 24 261 24 261 763 277 763 277 26 046 26 046 737 231 737 231 (17 934) (17 934) (44 159) (44 159) 60 458 60 458 (19 508) (19 508) 28 28 (729) (729) (731) (731) 3 875 3 875 (3 433) (3 433) 45 45 – – – – (17 205) (17 205) (43 428) (43 428) 56 583 56 583 (16 075) (16 075) (17) (17) (8 757) (8 757) (11 393) (11 393) (1 759) (1 759) (4 738) (4 738) 38 295 38 295 693 693 (8 757) (8 757) 3 830 3 830 (112) (112) (581) (581) 7 695 7 695 714 714 – – – – 340 508 340 508 3 721 3 721 336 787 336 787 (8 757) (8 757) (8 757) (8 757) – – (15 223) (15 223) (295 063) (295 063) 5 650 5 650 (300 713) (300 713) (1 647) (1 647) (4 157) (4 157) 30 600 30 600 – – – – – – – – – – – – – – – – – – (21) (21) (883) (883) 886 886 (1 769) (1 769) 669 795 669 795 4 197 4 197 665 598 665 598 77 647 77 647 5 522 5 522 72 125 72 125 51 640 51 640 17 827 17 827 33 813 33 813 799 082 799 082 27 546 27 546 771 536 771 536 8 033 8 033 8 033 8 033 33 33 33 33 35 35 35 35 8 101 8 101 – – 8 101 8 101 677 828 677 828 4 197 4 197 673 631 673 631 77 680 77 680 5 522 5 522 72 158 72 158 51 675 51 675 17 827 17 827 33 848 33 848 807 183 807 183 27 546 27 546 779 637 779 637 40 533 40 533 46 605 46 605 14 484 14 484 (1 722) (1 722) 64 64 40 469 40 469 46 605 46 605 14 484 14 484 (1 722) (1 722) 1 001 1 001 32 32 969 969 1 290 1 290 251 251 1 039 1 039 – – – – – – – – – – – – 42 824 42 824 46 605 46 605 14 484 14 484 (1 722) (1 722) 347 347 – – – – – – 42 477 42 477 46 605 46 605 14 484 14 484 (1 722) (1 722) 777 728 777 728 4 261 4 261 773 467 773 467 78 681 78 681 5 554 5 554 73 127 73 127 52 965 52 965 18 078 18 078 34 887 34 887 909 374 909 374 27 893 27 893 881 481 881 481 (64) (64) (145) (145) 64 64 145 145 (32) (32) (82) (82) 32 32 82 82 (251) (251) (110) (110) 251 251 110 110 (347) (347) (337) (337) 347 347 337 337 Transfers to stage 1 Transfers to stage 1 Transfers to stage 2 Transfers to stage 2 Transfers to stage 3 Transfers to stage 3 Foreign exchange and other movements Foreign exchange and other movements Net balances Net balances Total credit and zero balances Total credit and zero balances Balance at 31 December 2022 Balance at 31 December 2022 GLAA for assets held at FVOCI GLAA for assets held at FVOCI Trading book GLAA held at FVTPL Trading book GLAA held at FVTPL Banking book GLAA held at FVTPL Banking book GLAA held at FVTPL GLAA for fair-value hedge-accounted portfolios GLAA for fair-value hedge-accounted portfolios Total GLAA/ECL Total GLAA/ECL ECL on loans at FVOCI ECL on loans at FVOCI Off-balance-sheet ECL Off-balance-sheet ECL Loans and advances at 31 December 2022 Loans and advances at 31 December 2022 777 728 777 728 4 052 4 052 773 676 773 676 78 681 78 681 5 440 5 440 73 241 73 241 52 965 52 965 17 717 17 717 35 248 35 248 909 374 909 374 27 209 27 209 882 165 882 165 146 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 147 SupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveStatement of financialposition analysis                                                                                                                                                                                                                                Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Stage 1 Stage 1 Stage 2 Stage 2 Stage 3 Stage 3 Total Total ECL ECL 474 474 896 896 (682) (682) 333 333 (364) (364) (285) (285) (4) (4) Amortised Amortised cost cost 115 608 115 608 149 025 149 025 – – (130 891) (130 891) 24 226 24 226 (16 450) (16 450) (4 761) (4 761) (553) (553) GLAA GLAA 31 747 31 747 (9 709) (9 709) (24 496) (24 496) 17 107 17 107 (1 855) (1 855) 55 55 ECL ECL 732 732 (232) (232) (304) (304) 451 451 (215) (215) 3 3 Amortised Amortised cost cost GLAA GLAA ECL ECL Amortised Amortised cost cost GLAA GLAA ECL ECL Amortised Amortised cost cost 31 015 31 015 6 520 6 520 – – – – (9 477) (9 477) (24 192) (24 192) 16 656 16 656 (1 640) (1 640) 52 52 – – (863) (863) (5 812) (5 812) (63) (63) (293) (293) 6 901 6 901 664 664 1 486 1 486 – – (863) (863) (32) (32) (29) (29) (87) (87) 500 500 649 649 5 034 5 034 154 349 154 349 2 692 2 692 151 657 151 657 – – – – 149 921 149 921 (863) (863) (5 780) (5 780) (147 094) (147 094) 896 896 (863) (863) (946) (946) 149 025 149 025 – – (146 148) (146 148) (34) (34) (206) (206) 6 401 6 401 15 15 – – – – – – – – – – – – – – – – – – 162 162 648 648 (486) (486) 24 559 24 559 (16 814) (16 814) (5 046) (5 046) (557) (557) 136 572 136 572 368 368 136 204 136 204 12 849 12 849 435 435 12 414 12 414 7 054 7 054 1 624 1 624 5 430 5 430 156 475 156 475 2 427 2 427 154 048 154 048 – – 136 572 136 572 368 368 136 204 136 204 40 533 40 533 46 605 46 605 10 424 10 424 64 64 40 469 40 469 46 605 46 605 10 424 10 424 12 849 12 849 1 001 1 001 435 435 32 32 – – 12 414 12 414 969 969 – – – – – – – – – – – – 7 054 7 054 1 290 1 290 1 624 1 624 5 430 5 430 156 475 156 475 2 427 2 427 154 048 154 048 251 251 1 039 1 039 – – – – 42 824 42 824 46 605 46 605 10 424 10 424 347 347 – – – – 42 477 42 477 46 605 46 605 10 424 10 424 234 134 234 134 432 432 233 702 233 702 13 850 13 850 467 467 13 383 13 383 8 344 8 344 1 875 1 875 6 469 6 469 256 328 256 328 2 774 2 774 253 554 253 554 (64) (64) (74) (74) 64 64 74 74 (32) (32) (59) (59) 32 32 59 59 (251) (251) (95) (95) 251 251 95 95 (347) (347) (228) (228) 347 347 228 228 – – CIB, excluding Property Finance (Rm) CIB, excluding Property Finance (Rm) Net balance at 31 December 2021 Net balance at 31 December 2021 New loans and advances originated New loans and advances originated Loans and advances written off Loans and advances written off GLAA GLAA 116 082 116 082 149 921 149 921 Repayments net of readvances, capitalised interest, fees and ECL remeasurements Repayments net of readvances, capitalised interest, fees and ECL remeasurements (131 573) (131 573) Transfers to stage 1 Transfers to stage 1 Transfers to stage 2 Transfers to stage 2 Transfers to stage 3 Transfers to stage 3 Foreign exchange and other movements Foreign exchange and other movements Net balances Net balances Total credit and zero balances Total credit and zero balances Balance at 31 December 2022 Balance at 31 December 2022 GLAA for assets held at FVOCI GLAA for assets held at FVOCI Trading book GLAA held at FVTPL Trading book GLAA held at FVTPL Banking book GLAA held at FVTPL Banking book GLAA held at FVTPL Total GLAA/ECL Total GLAA/ECL ECL on loans at FVOCI ECL on loans at FVOCI Off-balance-sheet ECL Off-balance-sheet ECL Loans and advances at 31 December 2022 Loans and advances at 31 December 2022 234 134 234 134 294 294 233 840 233 840 13 850 13 850 376 376 13 474 13 474 8 344 8 344 1 529 1 529 6 815 6 815 256 328 256 328 2 199 2 199 254 129 254 129 Stage 1 Stage 1 Stage 2 Stage 2 Stage 3 Stage 3 Total Total Property Finance (Rm) Property Finance (Rm) Net balance at 31 December 2021 Net balance at 31 December 2021 New loans and advances originated New loans and advances originated Loans and advances written off Loans and advances written off Repayments net of readvances, capitalised interest, fees and ECL remeasurements Repayments net of readvances, capitalised interest, fees and ECL remeasurements Transfers to stage 1 Transfers to stage 1 Transfers to stage 2 Transfers to stage 2 Transfers to stage 3 Transfers to stage 3 Foreign exchange and other movements Foreign exchange and other movements Balance at 31 December 2022 Balance at 31 December 2022 Banking book GLAA held at FVTPL Banking book GLAA held at FVTPL GLAA GLAA 144 693 144 693 78 610 78 610 (71 527) (71 527) 5 331 5 331 (4 643) (4 643) (967) (967) (3) (3) ECL ECL 147 147 100 100 (310) (310) 160 160 (8) (8) (4) (4) Amortised Amortised cost cost 144 546 144 546 78 510 78 510 – – (71 217) (71 217) 5 171 5 171 (4 635) (4 635) (963) (963) (3) (3) 151 494 151 494 85 85 151 409 151 409 2 511 2 511 2 511 2 511 Loans and advances at 31 December 2022 Loans and advances at 31 December 2022 154 005 154 005 85 85 153 920 153 920 GLAA GLAA 17 446 17 446 (1 589) (1 589) (5 176) (5 176) 5 418 5 418 (9 154) (9 154) 6 945 6 945 6 945 6 945 ECL ECL 912 912 (237) (237) (155) (155) 28 28 (477) (477) 71 71 71 71 Amortised Amortised cost cost GLAA GLAA 16 534 16 534 2 864 2 864 – – – – (1 352) (1 352) (5 021) (5 021) 5 390 5 390 (8 677) (8 677) – – (353) (353) (125) (125) (155) (155) (775) (775) 10 121 10 121 ECL ECL 828 828 (353) (353) 927 927 (5) (5) (20) (20) 481 481 Amortised Amortised cost cost GLAA GLAA ECL ECL Amortised Amortised cost cost 2 036 2 036 165 003 165 003 1 887 1 887 – – – – 78 610 78 610 (353) (353) (1 052) (1 052) (73 241) (73 241) (150) (150) (755) (755) 9 640 9 640 – – – – – – – – (3) (3) 100 100 (353) (353) 380 380 – – – – – – – – 163 116 163 116 78 510 78 510 – – (73 621) (73 621) – – – – – – (3) (3) 6 874 6 874 11 577 11 577 1 858 1 858 9 719 9 719 170 016 170 016 2 014 2 014 168 002 168 002 – – – – 2 511 2 511 – – 2 511 2 511 6 874 6 874 11 577 11 577 1 858 1 858 9 719 9 719 172 527 172 527 2 014 2 014 170 513 170 513 148 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 149 SupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveStatement of financialposition analysis                                                                                                                                                                                                                                                                                                                                        Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Stage 1 Stage 1 Stage 2 Stage 2 Stage 3 Stage 3 Total Total Commercial Banking (Rm) Commercial Banking (Rm) Net balance at 31 December 2021 Net balance at 31 December 2021 New loans and advances originated New loans and advances originated Loans and advances written off Loans and advances written off Repayments net of readvances, capitalised interest, fees and ECL remeasurements Repayments net of readvances, capitalised interest, fees and ECL remeasurements Transfers to stage 1 Transfers to stage 1 Transfers to stage 2 Transfers to stage 2 Transfers to stage 3 Transfers to stage 3 GLAA GLAA 68 191 68 191 26 533 26 533 – – (16 314) (16 314) 4 135 4 135 (6 357) (6 357) (1 866) (1 866) ECL ECL 238 238 235 235 – – (241) (241) 149 149 (47) (47) (159) (159) Amortised Amortised cost cost 67 953 67 953 26 298 26 298 – – (16 073) (16 073) 3 986 3 986 (6 310) (6 310) (1 707) (1 707) GLAA GLAA 9 559 9 559 (1 355) (1 355) (3 773) (3 773) 6 912 6 912 (903) (903) ECL ECL 347 347 (232) (232) (98) (98) 207 207 (42) (42) Amortised Amortised cost cost GLAA GLAA ECL ECL Amortised Amortised cost cost GLAA GLAA ECL ECL Amortised Amortised cost cost 9 212 9 212 4 296 4 296 1 133 1 133 3 163 3 163 – – – – (1 123) (1 123) (3 675) (3 675) 6 705 6 705 (861) (861) (247) (247) (1 156) (1 156) (362) (362) (555) (555) 2 769 2 769 (247) (247) 430 430 (51) (51) (160) (160) 201 201 82 046 82 046 26 533 26 533 (247) (247) – – – – (1 586) (1 586) (18 825) (18 825) (311) (311) (395) (395) 2 568 2 568 – – – – – – 1 718 1 718 235 235 (247) (247) (43) (43) – – – – – – 80 328 80 328 26 298 26 298 – – (18 782) (18 782) – – – – – – Balance at 31 December 2022 Balance at 31 December 2022 74 322 74 322 175 175 74 147 74 147 10 440 10 440 182 182 10 258 10 258 4 745 4 745 1 306 1 306 3 439 3 439 89 507 89 507 1 663 1 663 87 844 87 844 Off-balance-sheet impairment allowance Off-balance-sheet impairment allowance (5) (5) 5 5 (3) (3) 3 3 (14) (14) 14 14 – – (22) (22) 22 22 Loans and advances at 31 December 2022 Loans and advances at 31 December 2022 74 322 74 322 170 170 74 152 74 152 10 440 10 440 179 179 10 261 10 261 4 745 4 745 1 292 1 292 3 453 3 453 89 507 89 507 1 641 1 641 87 866 87 866 Stage 1 Stage 1 Stage 2 Stage 2 Stage 3 Stage 3 Total Total Retail — Mortgage loans (Rm) Retail — Mortgage loans (Rm) Net balance at 31 December 2021 Net balance at 31 December 2021 New loans and advances originated New loans and advances originated Loans and advances written off Loans and advances written off Repayments net of readvances, capitalised interest, fees and ECL remeasurements  Repayments net of readvances, capitalised interest, fees and ECL remeasurements  Transfers to stage 1 Transfers to stage 1 Transfers to stage 2 Transfers to stage 2 Transfers to stage 3 Transfers to stage 3 Net balances Net balances GLAA GLAA 124 882 124 882 8 605 8 605 4 926 4 926 4 101 4 101 (7 361) (7 361) (2 073) (2 073) ECL ECL 241 241 32 32 511 511 11 11 (243) (243) (268) (268) Amortised Amortised cost cost 124 641 124 641 8 573 8 573 – – 4 415 4 415 4 090 4 090 (7 118) (7 118) (1 805) (1 805) GLAA GLAA 14 403 14 403 (12) (12) (3 600) (3 600) 8 738 8 738 (2 257) (2 257) ECL ECL 488 488 210 210 (9) (9) 309 309 (366) (366) Amortised Amortised cost cost GLAA GLAA ECL ECL Amortised Amortised cost cost GLAA GLAA ECL ECL Amortised Amortised cost cost 13 915 13 915 7 504 7 504 1 677 1 677 5 827 5 827 146 789 146 789 2 406 2 406 144 383 144 383 – – – – (222) (222) (3 591) (3 591) 8 429 8 429 (1 891) (1 891) (305) (305) (893) (893) (501) (501) (1 377) (1 377) 4 330 4 330 (305) (305) (112) (112) (2) (2) (66) (66) 634 634 – – – – (781) (781) (499) (499) (1 311) (1 311) 3 696 3 696 8 605 8 605 (305) (305) 4 021 4 021 – – – – – – 32 32 (305) (305) 609 609 – – – – – – 8 573 8 573 – – 3 412 3 412 – – – – – – 133 080 133 080 284 284 132 796 132 796 17 272 17 272 632 632 16 640 16 640 8 758 8 758 1 826 1 826 6 932 6 932 159 110 159 110 2 742 2 742 156 368 156 368 Total credit and zero balances/Off-balance-sheet impairment allowance Total credit and zero balances/Off-balance-sheet impairment allowance 208 208 208 208 5 5 5 5 7 7 7 7 220 220 – – 220 220 Loans and advances at 31 December 2022 Loans and advances at 31 December 2022 133 288 133 288 284 284 133 004 133 004 17 277 17 277 632 632 16 645 16 645 8 765 8 765 1 826 1 826 6 939 6 939 159 330 159 330 2 742 2 742 156 588 156 588 Retail — Instalment debtors (Rm) Retail — Instalment debtors (Rm) Net balance at 31 December 2021 Net balance at 31 December 2021 New loans and advances originated New loans and advances originated Loans and advances written off Loans and advances written off Repayments net of readvances, capitalised interest, fees and ECL remeasurements Repayments net of readvances, capitalised interest, fees and ECL remeasurements Transfers to stage 1 Transfers to stage 1 Transfers to stage 2 Transfers to stage 2 Transfers to stage 3 Transfers to stage 3 Stage 1 Stage 1 Stage 2 Stage 2 Stage 3 Stage 3 Total Total GLAA GLAA ECL ECL Amortised Amortised cost cost GLAA GLAA ECL ECL Amortised Amortised cost cost GLAA GLAA ECL ECL Amortised Amortised cost cost GLAA GLAA ECL ECL Amortised Amortised cost cost 101 647 101 647 48 658 48 658 (32 593) (32 593) 5 401 5 401 (13 080) (13 080) (4 569) (4 569) 1 346 1 346 736 736 1 413 1 413 107 107 (1 419) (1 419) (876) (876) 100 301 100 301 47 922 47 922 – – (34 006) (34 006) 5 294 5 294 (11 661) (11 661) (3 693) (3 693) 16 839 16 839 1 808 1 808 15 031 15 031 6 764 6 764 2 889 2 889 3 875 3 875 125 250 125 250 6 043 6 043 119 207 119 207 (3 361) (3 361) (5 095) (5 095) 14 444 14 444 (3 091) (3 091) (201) (201) (99) (99) 1 577 1 577 (845) (845) – – – – (3 160) (3 160) (4 996) (4 996) 12 867 12 867 (2 246) (2 246) (2 264) (2 264) (3 179) (3 179) (306) (306) (1 364) (1 364) 7 660 7 660 (2 264) (2 264) 1 048 1 048 (8) (8) (158) (158) 1 721 1 721 – – – – 48 658 48 658 (2 264) (2 264) (4 227) (4 227) (39 133) (39 133) 736 736 47 922 47 922 (2 264) (2 264) 2 260 2 260 – – (41 393) (41 393) (298) (298) (1 206) (1 206) 5 939 5 939 – – – – – – – – – – – – – – – – – – Loans and advances at 31 December 2022 Loans and advances at 31 December 2022 105 464 105 464 1 307 1 307 104 157 104 157 19 736 19 736 2 240 2 240 17 496 17 496 7 311 7 311 3 228 3 228 4 083 4 083 132 511 132 511 6 775 6 775 125 736 125 736 150 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 151 SupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveStatement of financialposition analysis                                                                                                                                                                                                                                                                    Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Stage 1 Stage 1 Stage 2 Stage 2 Stage 3 Stage 3 Total Total GLAA GLAA ECL ECL Amortised Amortised cost cost GLAA GLAA ECL ECL Amortised Amortised cost cost GLAA GLAA ECL ECL Amortised Amortised cost cost GLAA GLAA ECL ECL Amortised Amortised cost cost Retail — Card, term and other (Rm) Retail — Card, term and other (Rm) Net balance at 31 December 2021 Net balance at 31 December 2021 New loans and advances originated New loans and advances originated Loans and advances written off Loans and advances written off Repayments net of readvances, capitalised interest, fees and ECL remeasurements  Repayments net of readvances, capitalised interest, fees and ECL remeasurements  Transfers to stage 1 Transfers to stage 1 Transfers to stage 2 Transfers to stage 2 Transfers to stage 3 Transfers to stage 3 Net balances Net balances 24 850 24 850 16 592 16 592 (9 177) (9 177) 689 689 (3 965) (3 965) (3 639) (3 639) 1 775 1 775 1 576 1 576 1 874 1 874 62 62 (1 139) (1 139) (2 427) (2 427) – – 15 016 15 016 – – (11 051) (11 051) 627 627 (2 826) (2 826) (1 212) (1 212) 4 920 4 920 1 551 1 551 3 369 3 369 8 106 8 106 5 913 5 913 2 193 2 193 (690) (690) (585) (585) 4 253 4 253 (2 047) (2 047) 174 174 (52) (52) 1 240 1 240 (1 403) (1 403) – – – – (864) (864) (533) (533) 3 013 3 013 (644) (644) (4 577) (4 577) 1 749 1 749 (10) (10) (101) (101) 3 830 3 830 6 804 6 804 (4 577) (4 577) 311 311 (104) (104) (288) (288) 5 686 5 686 9 134 9 134 29 29 – – – – (1 438) (1 438) (94) (94) (187) (187) 1 856 1 856 37 876 37 876 16 592 16 592 (4 577) (4 577) (9 556) (9 556) – – – – – – 9 239 9 239 1 576 1 576 (4 577) (4 577) 3 797 3 797 – – – – – – 28 637 28 637 15 016 15 016 – – (13 353) (13 353) – – – – – – 25 350 25 350 1 721 1 721 554 554 5 851 5 851 1 510 1 510 4 341 4 341 2 330 2 330 40 335 40 335 10 035 10 035 30 300 30 300 Total credit and zero balances/Off-balance-sheet impairment allowance Total credit and zero balances/Off-balance-sheet impairment allowance 7 824 7 824 (48) (48) 7 872 7 872 28 28 (10) (10) 38 38 (1) (1) 30 30 7 881 7 881 (59) (59) 7 940 7 940 Loans and advances at 31 December 2022 Loans and advances at 31 December 2022 33 174 33 174 1 673 1 673 8 426 8 426 5 879 5 879 1 500 1 500 4 379 4 379 9 163 9 163 6 803 6 803 2 360 2 360 48 216 48 216 9 976 9 976 38 240 38 240 Wealth (Rm) Wealth (Rm) Net balance at 31 December 2021 Net balance at 31 December 2021 New loans and advances originated New loans and advances originated Loans and advances written off Loans and advances written off Repayments net of readvances, capitalised interest, fees and ECL remeasurements Repayments net of readvances, capitalised interest, fees and ECL remeasurements Transfers to stage 1 Transfers to stage 1 Transfers to stage 2 Transfers to stage 2 Transfers to stage 3 Transfers to stage 3 Foreign exchange and other movements Foreign exchange and other movements Net balances Net balances Banking book GLAA held at FVTPL Banking book GLAA held at FVTPL Loans and advances at 31 December 2022 Loans and advances at 31 December 2022 Nedbank Africa Regions (Rm) Nedbank Africa Regions (Rm) Net balance at 31 December 2021 Net balance at 31 December 2021 New loans and advances originated New loans and advances originated Loans and advances written off Loans and advances written off GLAA GLAA 25 453 25 453 5 522 5 522 (5 382) (5 382) 1 344 1 344 (1 298) (1 298) (224) (224) (544) (544) 24 871 24 871 1 549 1 549 26 420 26 420 GLAA GLAA 19 118 19 118 6 020 6 020 Repayments net of readvances, capitalised interest, fees and ECL remeasurements Repayments net of readvances, capitalised interest, fees and ECL remeasurements (4 105) (4 105) Transfers to stage 1 Transfers to stage 1 Transfers to stage 2 Transfers to stage 2 Transfers to stage 3 Transfers to stage 3 Foreign exchange and other movements Foreign exchange and other movements Net balances Net balances Off-balance-sheet ECL Off-balance-sheet ECL Loans and advances at 31 December 2022 Loans and advances at 31 December 2022 152 Nedbank Group Annual Results 2022 344 344 (795) (795) (405) (405) (469) (469) 19 708 19 708 19 708 19 708 Stage 1 Stage 1 Stage 2 Stage 2 Stage 3 Stage 3 Total Total ECL ECL 44 44 12 12 7 7 2 2 (16) (16) (11) (11) 4 4 42 42 Amortised Amortised cost cost 25 409 25 409 5 510 5 510 – – (5 389) (5 389) 1 342 1 342 (1 282) (1 282) (213) (213) (548) (548) 24 829 24 829 1 549 1 549 GLAA GLAA 2 538 2 538 (725) (725) (1 176) (1 176) 1 356 1 356 (131) (131) (20) (20) 1 842 1 842 ECL ECL 39 39 (1) (1) (2) (2) 17 17 (26) (26) 2 2 29 29 Amortised Amortised cost cost GLAA GLAA 2 499 2 499 1 282 1 282 – – – – (724) (724) (1 174) (1 174) 1 339 1 339 (105) (105) – – (20) (20) (253) (253) (168) (168) (58) (58) 355 355 (5) (5) ECL ECL 373 373 (20) (20) (90) (90) (1) (1) 37 37 Amortised Amortised cost cost 909 909 – – – – (163) (163) (168) (168) (57) (57) 318 318 (5) (5) GLAA GLAA 29 273 29 273 5 522 5 522 (20) (20) (6 360) (6 360) – – – – – – (569) (569) ECL ECL 456 456 12 12 (20) (20) (84) (84) – – – – – – 6 6 Amortised Amortised cost cost 28 817 28 817 5 510 5 510 – – (6 276) (6 276) – – – – – – (575) (575) 1 835 1 835 1 133 1 133 299 299 834 834 27 846 27 846 370 370 27 476 27 476 – – – – 1 549 1 549 – – 1 549 1 549 42 42 26 378 26 378 1 842 1 842 29 29 1 835 1 835 1 133 1 133 299 299 834 834 29 395 29 395 370 370 29 025 29 025 Stage 1 Stage 1 Stage 2 Stage 2 Stage 3 Stage 3 Total Total ECL ECL 248 248 134 134 (11) (11) 9 9 (60) (60) (232) (232) 127 127 215 215 (18) (18) 197 197 Amortised Amortised cost cost 18 870 18 870 5 886 5 886 – – (4 094) (4 094) 335 335 (735) (735) (173) (173) (596) (596) 19 493 19 493 18 18 19 511 19 511 GLAA GLAA 1 248 1 248 (494) (494) (242) (242) 825 825 (69) (69) 4 4 1 272 1 272 1 272 1 272 ECL ECL 118 118 (26) (26) (2) (2) 48 48 (59) (59) 41 41 120 120 (10) (10) 110 110 Amortised Amortised cost cost GLAA GLAA 1 130 1 130 1 959 1 959 – – – – (468) (468) (240) (240) 777 777 (10) (10) (37) (37) (128) (128) (285) (285) (102) (102) (30) (30) 474 474 34 34 1 152 1 152 1 922 1 922 10 10 1 162 1 162 1 922 1 922 ECL ECL 739 739 (128) (128) (91) (91) (7) (7) 12 12 291 291 65 65 881 881 – – 881 881 Amortised Amortised cost cost GLAA GLAA ECL ECL Amortised Amortised cost cost 1 220 1 220 – – – – 22 325 22 325 6 020 6 020 (128) (128) (194) (194) (4 884) (4 884) (95) (95) (42) (42) 183 183 (31) (31) – – – – – – 1 105 1 105 134 134 (128) (128) (128) (128) – – – – – – 21 220 21 220 5 886 5 886 – – (4 756) (4 756) – – – – – – (431) (431) 233 233 (664) (664) 1 041 1 041 22 902 22 902 1 216 1 216 21 686 21 686 – – – – (28) (28) 28 28 1 041 1 041 22 902 22 902 1 188 1 188 21 714 21 714 Nedbank Group Annual Results 2022 153 SupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveStatement of financialposition analysis                                                                                                                                                                                                                                                                                                            9 Investment securities 10 Investments in associate companies Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information 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 requirement1 2022 2021 6 612 1 598 1 176 1 592 2 246 347 2 930 526 163 2 241 6 287 1 799 1 020 1 228 2 240 23 3 349 550 163 2 636 9 889 9 659 11 851 3 725 11 638 4 201 15 576 15 839 25 465 25 498 2022 2021 12 385 13 054 9 889 2 496 1,0 7,4 9 659 3 395 1,1 5,3 Rm Rm Rm % % 1 During the year, it was identified that the percentage of group minimum economic-capital requirement was previously incorrectly disclosed as 4,8% at 31 December 2021. The ratio is now disclosed correctly as 5,3% at 31 December 2021. • Equity risk in the banking book is assumed primarily 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 increased by R224m yoy, due largely to the realisation of one asset and significant upside valuations in the overall investment portfolio. • The value of the portfolio that is equity-accounted decreased by R899m to R2 496m (December 2021: R3 395m). This was due to a R986m decrease in the ETI carrying value owing to foreign currency translation losses and as a consequence of the Ghana sovereign default. The ETI board continues to make good progress on the key strategic focus areas. • 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. Equity-accounted earnings Rm Carrying amount Rm Net exposure to/(from) associates1 Rm Name of company and nature of business 2022 2021 2022 2021 2022 2021 Associates Listed ETI2 Unlisted Equity investments: Tracker Technology Holdings Proprietary Limited Other equity investments Other strategic investments 779 686 1 286 2 272 782 81 50 14 36 51 33 16 530 238 442 480 237 406 1 615 437 67 1 246 271 35 1 633 Total 879 786 2 496 3 395 2 901 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 2022 was 21,2% (31 December 2021: 21,2%). Accounting recognition of ETI Rm Opening carrying value Share of associate gains1,3 Share of other comprehensive losses2,3 Foreign currency translation4 Dividends Closing carrying value pre-impairment provision Impairment provision Closing carrying value 2022 2021 4 022 779 (1 822) 190 (133) 3 036 (1 750) 3 930 686 (742) 148 4 022 (1 750) 1 286 2 272 1 Applicable period: 1 October 2021 (audited) – 30 September 2022 (audited). 2 Applicable period: 1 October 2021 (audited) – 30 September 2022 (audited). 3 Applicable average exchange rate: 1 January 2022 – 31 December 2022. 4 Applicable period: 1 January 2022 – 31 December 2022, 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 R15,90 on 31 December 2021 to R16,98 on 31 December 2022. Our associate income includes our share of ETI’s earnings from 1 October 2021 to 30 September 2022, in line with our policy of accounting for our share of ETI’s attributable earnings a quarter in arrear, and any significant transactions or events that occurred between 1 October 2022 and 31 December 2022. During December 2022, the government of Ghana announced its intention to restructure its local and external debt. The Ghanaian Finance Minister announced that Ghana was entering a voluntary domestic-debt restructure programme for its local debt, while indicating that it will not service its external debts. This led to a default event when Ghana’s Eurobond coupon payments were not made in January 2023. Nedbank concluded its own governance review process for the 2022 full-year results and, in accordance with our accounting policy, estimated our share of the impact of the Ghanaian sovereign-debt restructure programme on ETI, using publicly available information, such as Ecobank Ghana’s published financial statements, and published economic data and reports on the restructuring. The impact was an estimated R175m after-tax associate loss. The market value of the group’s investment in ETI, based on its quoted share price, was R2,1bn on 31 December 2022 and R2,5bn on 2 March 2023. 154 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 155 SupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveStatement of financialposition analysis                                              Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information 11 Intangible assets Notes Rm Computer software and capitalised development costs Goodwill Client relationships, contractual rights and other 2022 2021 8 316 4 292 41 8 901 4 295 25 12 649 13 221 Computer software and capitalised development costs – carrying amount Amortisation periods 2022 2021 2–10 years 6 958 Rm Computer software Core product and client systems Support systems Digital systems Payment systems 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 7 763 1 928 2 244 2 790 801 1 138 390 327 296 125 1 882 1 903 2 567 606 1 358 574 422 243 119 8 316 8 901 7 763 101 1 018 (4) (1 864) (56) 7 352 272 1 928 15 (1 705) (99) 6 958 7 763 1 138 1 279 (1 018) (4) (37) 1 629 1 495 (1 928) (4) (54) 1 358 1 138 156 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 157 SupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveStatement of financialposition analysis                                                            Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information 12 Amounts owed to depositors Segmental breakdown Segmental breakdown Rm Rm Current accounts Current accounts Savings accounts Savings accounts Other deposits and loan accounts Other deposits and loan accounts Call and term deposits Call and term deposits Fixed deposits Fixed deposits Cash management deposits Cash management deposits Other deposits Other deposits Foreign currency liabilities Foreign currency liabilities Negotiable certificates of deposit Negotiable certificates of deposit Change Change % % 4 4 (9) (9) 5 5 12 12 20 20 (11) (11) (8) (8) 29 29 44 44 Macro fair-value hedge accounting adjustment Macro fair-value hedge accounting adjustment Deposits received under repurchase agreements Deposits received under repurchase agreements >(100) >(100) (12) (12) Nedbank Group Nedbank Group Corporate and Corporate and Investment Banking Investment Banking Retail and Retail and Business Banking Business Banking Wealth Wealth Nedbank Africa Regions Nedbank Africa Regions Centre Centre 2022 2022 2021 2021 2022 2022 2021 2021 2022 2022 2021 2021 2022 2022 2021 2021 2022 2022 2021 2021 2022 2022 2021 2021 110 590 110 590 42 095 42 095 106 751 106 751 46 343 46 343 8 672 8 672 6 170 6 170 726 686 726 686 694 209 694 209 399 552 399 552 400 175 400 175 409 270 409 270 363 857 363 857 162 380 162 380 137 404 137 404 72 277 72 277 99 734 99 734 60 238 60 238 111 768 111 768 145 405 145 405 158 346 158 346 15 586 15 586 87 459 87 459 134 127 134 127 14 361 14 361 102 170 102 170 146 240 146 240 29 180 29 180 118 892 118 892 (1 367) (1 367) 13 546 13 546 20 116 20 116 15 880 15 880 22 688 22 688 82 429 82 429 83 83 15 426 15 426 13 546 13 546 15 426 15 426 88 662 88 662 13 796 13 796 87 005 87 005 13 404 13 404 290 669 290 669 263 956 263 956 2 275 2 275 27 422 27 422 16 473 16 473 2 256 2 256 32 066 32 066 9 471 9 471 223 350 223 350 49 835 49 835 9 459 9 459 8 025 8 025 8 987 8 987 206 433 206 433 13 968 13 968 7 652 7 652 42 237 42 237 7 421 7 421 7 865 7 865 6 741 6 741 1 124 1 124 262 262 1 119 1 119 21 21 651 651 382 382 786 786 47 47 10 758 10 758 877 877 18 819 18 819 9 567 9 567 5 732 5 732 2 385 2 385 1 135 1 135 56 56 3 817 3 817 11 224 11 224 873 873 19 182 19 182 12 364 12 364 2 989 2 989 1 702 1 702 2 127 2 127 20 20 3 755 3 755 223 223 96 96 1 173 1 173 1 425 1 425 5 5 169 169 999 999 4 4 93 93 1 328 1 328 115 075 115 075 (1 367) (1 367) 78 674 78 674 83 83 Total amounts owed to depositors Total amounts owed to depositors 7 7 1 039 622 1 039 622 967 929 967 929 441 886 441 886 437 651 437 651 402 114 402 114 371 106 371 106 46 191 46 191 43 840 43 840 34 327 34 327 35 054 35 054 115 104 115 104 80 278 80 278 Comprises: Comprises: – Banking amounts owed to depositors – Banking amounts owed to depositors – Trading amounts owed to depositors – Trading amounts owed to depositors 11 11 (35) (35) 983 582 983 582 56 040 56 040 882 141 882 141 85 788 85 788 385 846 385 846 56 040 56 040 351 863 351 863 85 788 85 788 402 114 402 114 371 106 371 106 46 191 46 191 43 840 43 840 34 327 34 327 35 054 35 054 115 104 115 104 80 278 80 278 Total amounts owed to depositors Total amounts owed to depositors 7 7 1 039 622 1 039 622 967 929 967 929 441 886 441 886 437 651 437 651 402 114 402 114 371 106 371 106 46 191 46 191 43 840 43 840 34 327 34 327 35 054 35 054 115 104 115 104 80 278 80 278 Market share according to BA900 Household deposits1 (2019–2022) (%) Non-financial corporate deposits2 (2019–2022) (%) Wholesale deposits3 (2019–2022) (%) Foreign currency liabilities4 (2019–2022) (%) , 5 4 1 , 0 5 1 , 2 2 2 , 3 2 2 , 5 8 1 , 5 8 1 , 1 2 2 , 4 1 2 , 7 2 2 , 8 2 2 , 1 7 1 , 4 7 1 , 7 6 2 , 1 8 2 , 6 4 2 , 0 4 2 , 4 8 1 , 9 6 1 , 2 3 1 , 6 3 1 , 3 0 2 , 9 8 1 , 2 4 1 , 2 4 1 , 0 5 2 , 7 4 2 , 4 2 2 , 6 4 2 , 1 8 1 , 6 7 1 , 0 2 1 , 9 3 1 , 3 7 1 , 1 8 1 , 9 8 2 , 1 3 2 , 2 4 1 , 7 5 1 , 6 7 2 , 2 9 2 Nedbank FirstRand Standard Bank Absa Other Nedbank FirstRand Standard Bank Absa Other 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. 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. 158 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 159 SupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveStatement of financialposition analysis                                                                                                                                                                                                                                                                                            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 2022 2021 285 688 264 224 224 963 207 105 60 725 57 119 22,8 28,4 34 561 2 697 51 903 11,4 2,8 84,9 160,5 100,0 119,1 100,0 21,7 26,6 39 193 3 829 58 159 8,5 2,3 85,9 128,1 80,0 116,1 100,0 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 a consolidation 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 consolidated HQLA number in the case of all non-South African banking entities. Group consolidation is performed based on Directive 1/2022 requirements. The above values reflect the simple average of daily observations over the quarter ending 31 December 2022 for Nedbank and simple average of the month-end values at 31 October 2022, 30 November 2022 and 31 December 2022 for all non-South African banking entities. For the prior periods the group ratio represents an aggregation of the relevant individual (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. 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 of a 100%, with the group maintaining appropriate operational liquidity buffers designed to absorb seasonal, cyclical and systemic volatility. On 29 October 2021, the PA issued Directive 8/2021 specifying a phased in approach to reinstate the minimum LCR regulatory requirement from 80% to 90%, with effect from 1 January 2022 and subsequently phased-in to 100%, with effect from 1 April 2022. On 11 February 2022, the PA issued Directive 1/2022 requiring the LCR to be disclosed at a consolidated level with all intergroup transactions between the banking entities to be eliminated. • The consolidated Group LCR, calculated using the simple average of daily observations over the quarter ending 31 December 2022 for Nedbank limited, and the simple average of the month-end values at 31 October 2022, 30 November 2022 and 31 December 2022 for all non-South African banking entities, was 160,5%. • Nedbank's portfolio of LCR-compliant HQLA (comprising mainly government bonds and treasury bills) increased to a quarterly average of R225,0bn, up from December 2021, when the portfolio amounted to R207,1bn. • Nedbank's proactive management of its HQLA liquidity buffers, the implementation of the cash surplus monetary policy transmission mechanism and favourable tilt in the diversified deposit mix resulted in a yoy increase in the LCR to 160,5% (Dec 2021: 128,1%). • 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 R285,7bn at December 2022 and representing 22,8,% of total assets. Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Nedbank Group LCR exceeds minimum regulatory requirements 160,5 125,0 125,7 128,1 109,4 , 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 , 0 5 2 2 , 1 0 4 1 2018 2019 2020 2021 2022 HQLA (Rbn) Net cash outflows (Rbn) LCR (%) Total sources of quick liquidity (Rbn) Other sources of quick liquidity contribution (%) , 3 3 1 2 , 6 0 5 , 7 2 6 1 , 7 7 2 2 , 7 9 4 , 0 8 7 1 , 4 4 5 2 , 5 7 4 , 9 6 0 2 , 2 4 6 2 , 1 7 5 , 1 7 0 2 8,1% 6,3% 8,6% , 7 5 8 2 , 7 0 6 , 0 5 2 2 R60,7bn 1,3 21,7 29,6 8,2 2021 39,2 Corporate bonds and listed equities 2018 2019 2020 2021 2022 Unencumbered trading securities Total HQLA Other sources of quick liquidity Price-sensitive overnight loans Other banks’ paper and unutilised bank credit lines Other assets – Nedbank exceeded the minimum regulatory NSFR requirement of 100%, with a December 2022 ratio of 119,1% (Dec 2021: 116,1%). The structural liquidity position of the group continues to be strong as a result of effective management of balance sheet growth and the implementation of the cash surplus monetary policy transmission mechanism. 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) 114,0 113,0 112,8 116,1 119,1 , 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 , 7 6 0 8 , 6 7 7 6 2018 2019 2020 2021 2022 Available stable funding (Rbn) Required stable funding (Rbn) NSFR (%) 160 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 161 SupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveStatement of financialposition analysis            • A strong funding profile was maintained in 2022, with Nedbank recording a three-month average long-term funding ratio of 28,4% 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 22,3%. – Nedbank opportunistically issued long- term debt via its alternative funding book at a lower cost than senior unsecured debt in 2022, while R4,7bn matured during the year. – Nedbank issued tier 1 capital instruments of R1,5bn during 2022 while it redeemed R0,6bn and issued tier 2 capital instruments of R1,4bn and redeemed R2,5bn during 2022, in line with the group’s capital plan. • While foreign currency funding reliance remains small, at 2,8% 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 2022 Internal Liquidity Adequacy Assessment Process (ILAAP) and Internal Capital Adequacy Assessment Process (ICAAP) reports were approved by the board and submitted to the PA, in accordance with the annual business-as-usual process. In addition, the group's Recovery Plan (RP), which sets out in detail Nedbank’s approach to dealing with a capital, liquidity and/or business continuity crisis, was approved by the board on 28 October 2022 and incorporates the Nedbank African Regions, Nedbank London Branch and Nedbank Private Wealth (International) RPs. Nedbank Group funding and liquidity profile, underpinned by strong liquidity risk metrics 89,2 26,5 91,2 30,2 88,4 25,4 85,6 26,6 84,9 28,4 0 4 , , 2 4 5 , 6 8 7 , 1 3 , 3 9 4 0 0 , , 1 8 1 ) , 6 1 ( , 7 1 7 ) , 3 6 ( 2018 2019 2020 2021 2022 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 Zimbabwe dollar to rand1 US dollar to Zimbabwe dollar1 Average Closing Change % 2022 2021 Change % (4) 3 4 1 20,17 16,36 21,11 15,86 426,47 408,99 26,02 25,88 n/a n/a n/a n/a (5) 7 8 5 (80) >100 2022 2021 20,43 16,98 21,48 15,90 460,82 424,83 27,14 0,03 669,25 25,86 0,15 108,41 1 In terms of hyperinflation accounting, the inflation-indexed income statement is translated at the year-end closing spot exchange rate. Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information 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 % 2 2022 2021 109 511 12 227 14 275 (1 391) (179) 190 (1 402) (317) 102 (419) (242) (1) (97) 100 444 11 941 11 238 499 808 148 (457) (192) 73 (265) 389 (21) 28 Transactions with ordinary shareholders <(100) (6 814) (1 418) 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 (7 788) (2 178) 979 (5) 70 900 2 637 123 (2 951) 1 497 (2) >100 (40) >100 6 115 896 109 511 1 Exchange differences on translating foreign operations as shown in the statement of comprehensive income of R2m loss (December 2021: R1 029m). 2 Share of other comprehensive income of investments accounted for using the equity method as shown in the statement of comprehensive income of R1 821m (December 2021: R722m). 3 The group repurchased all 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 % >(100) 2022 2021 (1 508) (1 408) (1 212) 63 (259) (1 995) 487 (309) 198 598 Balance at the end of the year (93) (2 916) (1 508) 162 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 163 SupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveStatement of financialposition analysis                                                  Capital management Regulatory capital adequacy and leverage Capital ratios (including unappropriated profit) (%) 14,8 2,3 0,8 11,7 Dec 2018 15,0 2,2 1,3 11,5 Dec 2019 1,1 14,9 2,8 1,2 10,9 Dec 2020 17,2 2,9 1,5 1,5 1,4 18,1 2,6 1,5 12,8 14,0 Dec 2021 Dec 2022 CET1 AT1 Tier 2 Total 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 2022 2021 % % % Rm times % % % % times % % % Rm % % % > 14,5 > 12,0 11,0–12,0 1,75–2,25 <20 > 14,5 > 12,0 11,0–12,0 18,1 15,5 14,0 34 221 1,75 14,9 16,4 13,8 12,2 14,8 18,2 15,0 13,1 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 25 079 23 993 16,7 13,6 11,6 16,7 13,1 11,3 12,5 10,25 8,5 <25 12,5 10,25 8,5 1 The Pillar 2A capital requirement was reinstated, with effect from 1 January 2022, to 50 bps at CET1; 75 bps at tier 1 and 100 bps for the total ratio, and the internal targets were recalibrated with effect from 1 January 2022 to align to the reinstatement. 2 The surplus tier 1 capital is the difference between qualifying total tier 1 capital and the total tier 1 capital requirement at the PA minimum of 10,25%. Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information • Nedbank Group improved its capital adequacy position, with ratios significantly above the minimum regulatory requirements and the group's internal targets. • 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. The group has improved its capital base through the increase in its CET1 capital and reserves and a reduction in its tier 2 capital and reserves. • 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. • The Pillar 2A capital requirement was reinstated effective 1 January 2022. The Pillar 2A capital requirement was reinstated back to 50 bps at CET1, 75 bps at tier 1 and 100 bps for the total ratio, and our internal targets were recalibrated with effect from 1 January 2022 to align to the reinstatement. Nedbank Group overview of risk-weighted assets Risk-weighted assets (%) (Rbn) 56 587 42 71 31 35 55 55 629 45 74 22 41 674 41 74 41 42 54 657 46 75 27 36 52 648 38 80 23 37 407 446 476 474 470 Dec 2018 Dec 2019 Dec 2020 Dec 2021 Dec 2022 Credit Equity Market Operational Other Total RWA density Credit risk2 Counterparty credit risk Credit valuation adjustment Equity risk Market risk Operational risk Amounts below the thresholds for deduction Other assets Total 2022 RWA MRC1 2021 RWA 449 982 56 248 438 959 14 450 5 858 37 119 23 037 79 853 16 910 20 998 1 806 732 4 640 2 880 9 982 2 114 2 625 15 932 18 797 35 601 26 815 74 879 19 203 26 360 648 207 81 027 656 546 1 Total minimum required capital (MRC) is measured at 12,5% and excludes bank-specific Pillar 2b add-on. 2 Including the securitisation exposures in the banking book. 164 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 165 SupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveStatement of financialposition analysis                                                                                                          Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information • The group's total RWA/total assets density improved to 51,6% at December 2022 from 53,8% at December 2021 , driven by a decrease of 1,3% in total RWA and stronger levels of profitability. • The decrease in total RWA is attributable mainly to the following: • Credit risk RWA increased mainly due to increases in RBB and Wealth, offset by decreases in CIB and NAR. Rm 2022 2021 2022 2021 Nedbank Group Nedbank Limited • Credit valuation adjustment decreased primarily driven by a methodology refinement and a reduction of net derivative exposures Including unappropriated profits as a result of lower trade volumes and market movements. • Market risk RWA decreased mainly as a result of a general risk reduction across the trading portfolio on the back of heightened financial market volatility as well as the effect on local markets of the implementation of the Monetary Policy Implementation Framework (MPIF) and the movement to a cash surplus model. • Operational risk RWA increased due to the review of the group's operational risk scenarios and the update of internal loss data used, including the AMA floor which is driven by movements in GOI. • Other risk RWA decreased, mainly due to changes in the accounting treatment of non-qualifying pension fund assets and factoring debtors, and by a reduction in sundry debtors in line with balance sheet movements. • Threshold RWA decreased as a result of lower carrying values of investment in financial entities and a reduction in deferred tax assets. Nedbank Limited overview of risk-weighted assets Credit risk2 Counterparty credit risk Credit valuation adjustment Equity risk Market risk Operational risk Amounts below the thresholds for deduction Other assets Total 2022 RWA MRC1 2021 RWA 376 775 47 097 361 760 9 960 5 798 21 389 21 727 64 576 7 109 15 481 1 245 725 2 674 2 716 8 072 889 1 935 12 856 18 283 19 742 26 081 62 360 7 596 19 821 Total tier 1 capital CET1 Share capital and premium Reserves Minority interest: Ordinary shareholders Deductions Additional tier 1 capital Perpetual subordinated debt instruments Tier 2 capital Subordinated debt instruments Excess of eligible provisions over downturn expected losses General allowance for credit impairment Regulatory adjustments 100 662 90 443 19 695 85 233 670 (15 155) 10 219 10 219 16 757 15 431 966 360 – 93 664 84 345 19 254 80 259 623 (15 791) 9 319 9 319 19 425 16 554 2 496 385 (10) 78 668 68 449 20 111 60 160 – 74 200 64 881 20 111 57 322 (11 822) (12 552) 10 219 10 219 16 387 15 431 954 2 – 9 319 9 319 18 913 16 554 2 357 2 Total capital 117 419 113 089 95 055 93 113 Excluding unappropriated profits CET1 capital Tier 1 capital Total capital 79 297 89 516 106 272 78 811 88 130 107 555 60 633 70 852 87 240 59 948 69 267 88 179 522 815 65 353 528 499 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. 1 Total MRC is measured at 12,5% and excludes the bank-specific Pillar 2b add-on. 2 Including the securitisation exposures in the banking book. Summary of regulatory qualifying capital and reserves1 Capital adequacy (Rbn) 94,2 13,8 7,9 100,4 18,6 8,3 1,1 117,4 16,8 10,2 113,1 19,4 9,3 1,5 72,5 73,5 84,3 90,4 Dec 2019 Dec 2020 Dec 2021 Dec 2022 87,0 13,4 4,9 68,6 Dec 2018 CET1 capital AT1 capital Tier 2 capital Total capital • The group's tier 1 capital position was enhanced by the issuance of additional tier 1 instruments amounting to R1,5bn, offset by redemptions of R600m. • The group's total capital was impacted by the redemption of tier 2 capital instruments of R2,5bn, offset by an issuance of R1,4bn, in line with the group's capital plan. 166 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 167 SupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveStatement of financialposition analysis                          Regulated banking subsidiaries Nedbank Group economic capital requirement Economic capital adequacy Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information 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. 2022 2021 Total capital requirement (host country) % 12,0 10,0 8,0 8,0 12,0 13,0 RWA Rm 4 406 13 195 5 268 1 831 1 954 9 415 Total capital ratio % 21,4 16,1 18,0 34,2 33,9 18,0 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 Nedbank Africa Regions Nedbank Mozambique Nedbank Namibia Nedbank Eswatini Nedbank Lesotho Nedbank Zimbabwe1 Isle of Man Nedbank Private Wealth 1 The Reserve Bank of Zimbabwe confirmed on 9 February 2022 that Nedbank Zimbabwe met the minimum capital requirement of US$ 30m equivalent, following a rights issue of US$ 8m. Credit risk Market risk Business risk Operational risk Insurance risk Other assets risk Model Risk1 Minimum economic capital requirement Add: Stress-tested capital buffer 2 Total economic capital requirement AFR Tier A capital Tier B capital Total surplus AFR AFR: Total economic capital requirement (%) 2022 2021 Rm Mix % Rm Mix % 47 266 8 836 3 568 4 612 277 1 184 1 701 67 444 4 873 72 317 123 264 97 614 25 650 51 739 170 70 13 5 7 <0 2 3 100 100 79 21 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 1 With effect from January 2022, Nedbank implemented model risk as a stand-alone risk type. 2 Stress-tested capital buffer is set at 10% of credit risk, market risk, business risk, operational risk, insurance risk and other assets risk less the portion recognised  separately as model risk.  • Nedbank Group’s minimum economic capital requirement decreased by R4,3bn during the year, driven primarily by the following: • Business risk decrease of R4,4bn driven by the enhancement of the business risk model. The changes implemented in the enhanced model include using internal data versus external data to generate a suitable distribution and using earnings versus revenue to quantify the size of business risk • The refinement of the Inter-Risk Diversification (IRD) model resulted in a decrease of operational risk (R814m) , insurance risk (R215m) and other assets risk (R2,8bn); partially offset by an increase of R2,8bn in market risk. • The introduction of model risk in January 2022 into the economic capital risk universe, resulted in an increase of the R1,7bn. • Nedbank Group’s AFR increased of R5,5bn in 2022, mainly as a result of the following: • A R5,7bn increase in tier A capital, driven by growth in organic earnings over the period. • A R176m decrease in tier B capital, driven by the issuance of R1,5bn additional tier 1 and R1,4bn of tier 2 capital instruments, which was offset by the redemption of R600m of additional tier 1 and R2,5bn of tier 2 capital instruments, in line with the group’s capital plan. 168 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 169 SupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveStatement of financialposition analysis                                                    Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Earnings per share and weighted-average shares Earnings per share 2022 Earnings for the year Basic Diluted basic Headline Diluted headline 14 275 14 275 14 049 14 049 Weighted-average number of ordinary shares 486 867 063 500 654 864 486 867 063 500 654 864 Earnings per share (cents) 2021 Earnings for the year 2 932 2 851 2 886 2 806 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) 2 317 2 271 2 410 2 362 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 having taken the dilutive impact of potential ordinary shares to be issued into account. Number of weighted-average dilutive potential ordinary shares (000) 2022 2021 Weighted- average dilutive shares Weighted- average dilutive shares Potential shares1 Traditional schemes 21 338 12 228 Nedbank Group Restricted-share Scheme (2005) Nedbank Group Matched-share Scheme Total BEE schemes BEE schemes – SA Community BEE schemes – Namibia Total 10 376 1 853 1 559 1 559 1 559 18 042 3 296 1 593 1 559 1 559 33 8 210   6 729   1 481   1 559   1 559   1 559   22 931 13 788 9 769   1 Potential shares are the total number of shares arising from historic grants, schemes or awards available for distribution. Supplementary information 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 171 172 174 174 175 176 178 180 181 182 183 186 IBC 170 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 171 Statement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveSupplementaryinformation                                        Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Nedbank Group (2005) Restricted- and Matched-share Schemes Restricted shares1 Details of instruments granted and not exercised at 31 December 2022 and the resulting dilutive effect: Instrument expiry date 20 March 2023 21 March 2023 26 March 2024 27 March 2024 20 August 2024 21 August 2024 18 March 2025 19 March 2025 19 August 2025 20 August 2025 Restricted shares not exercised at 31 December 2022 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 Number of shares 2 726 863 1 934 038 4 377 646 3 339 455 82 902 72 898 2 652 491 1 650 788 P P P P 68 990 P 40 838 16 946 909 667 623 17 614 532 2 101 033 (1 673 256) 18 042 309 10 375 679 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. Nedbank Group employee incentive schemes for the year ended 31 December Nedbank Group employee incentive schemes 2022 2021 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 Time-based – restricted shares Time-based (CBSS1) No performance conditions (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 2023 1 April 2024 1 April 2025 Matched shares outstanding not exercised at 31 December 2022 Shares exercised and forfeited during the year Shares not expected to vest Total potential shares Weighted-average dilutive shares applicable for the year 16 946 909 16 193 982 3 238 649 3 296 042 20 185 558 19 490 024 9 908 892 9 291 564 7 038 017 6 902 418 2 096 140 2 118 190 1 142 509 1 177 852 20 185 558 19 490 024 19 490 024 14 357 241 5 567 475 9 349 301 (21 569) (16 011) (3 801 327) (3 253 593) (1 049 045) (946 914) 20 185 558 19 490 024 Number of shares 1 557 192 732 561 948 896 3 238 649 902 829 (845 425) 3 296 054 1 852 674 – 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 2022 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. 172 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 173 Statement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveSupplementaryinformation                      Long-term debt instruments Additional tier 1 capital instruments Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information The group has issued additional tier 1 capital instruments as follows: Instrument code Subordinated Callable notes (rand-denominated) NGLT1A NGLT1B NGT103 NGT104 NGT105 NGT106 NGT107 NGT108 NGT1G – Green AT1 NGT109 NGT110 NGT111 NGT112 Instrument terms 2022 2021 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 3-month JIBAR + 3,79% per annum 3-month JIBAR + 3,40% per annum 600 750 671 1 829 1 000 500 472 1 537 910 700 350 750 671 1 829 1 000 500 472 1 537 910 700 350 1 000 500 Total non-controlling interest attributable to additional tier 1 capital instruments 10 219 9 319 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, Nedbank Group Limited or Nedbank Limited, from the applicable call date and following a regulatory or tax event. The payment of interest is at the discretion of the issuer and interest payments are non-cumulative. 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 a separate category of equity. Instrument code Subordinated debt Callable notes (rand-denominated)1 Callable notes and long-term debentures (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) 2022 2021 16 041 17 059 13 594 14 620 428 2 018 1 240 31 864 61 2 697 426 2 013 1 856 35 364 51 3 829 Total long-term debt instruments in issue 51 903 58 159 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 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 Standard & Poor’s Moody’s Investors Service Nedbank Limited Sovereign rating SA Nedbank Limited Sovereign rating SA Dec 2022 Dec 2022 Oct 2022 Oct 2022 Positive Positive Stable Stable BB- B BB- B Ba2 Ba2 Not prime Not prime Ba2 Not prime Ba2 N/A zaAA zaA-1+ zaAAA zaA-1+ Aa1/NP P-1.za 174 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 175 Statement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveSupplementaryinformation                                                                        Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information 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 2022 % holding 2021 % holding 341 881 741 66,84 68,64 305 574 913 9 708 873 26 597 955 169 619 049 73 550 269 41 708 381 24 532 727 16 730 834 13 096 838 59,74 1,90 5,20 33,16 14,38 8,15 4,80 3,27 2,56 62,61 2,59 3,44 31,36 15,56 5,51 4,21 2,93 3,15 511 500 790 100,00 100,00 24 249 075 487 251 715 Shareholders’ analysis Register date: 30 December 2022 Authorised share capital: 600 000 000 shares Issued share capital: 511 500 790 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) GIC Asset Management Proprietary Limited (international) Coronation Fund Managers (SA) BlackRock Incorporated (international) Ninety One (SA) The Vanguard Group Incorporated (international) Lazard Asset Management (international) Old Mutual Life Assurance Company (SA) Limited and associates (includes funds managed on behalf of other beneficial owners) Sanlam Investment Management Proprietary Limited (SA) Major beneficial shareholders2 Government Employees Pension Fund (SA) Allan Gray Balanced Fund (ZA) GIC Private Limited 1 Source: JP Morgan Cazenove. 2 Source: Vaco Ownership. Number of shares 2022 % holding 2021 % holding 24 249 075 6 587 031 6 454 677 132 354 17 614 532 47 512 69 311 364 50 093 634 28 678 455 23 578 426 20 503 951 20 020 940 16 774 314 14 868 780 13 174 952 12 425 793 75 162 022 35 658 073 28 798 333 4,74 1,29 1,26 0,03 3,44 0,01 13,55 9,79 5,61 4,61 4,01 3,91 3,28 2,91 2,58 2,43 14,69 6,97 5,63 4,58 1,28 1,25 0,03 3,29 0,01 13,69 10,63 2,97 7,00 4,55 2,91 3,09 3,23 5,17 3,08 15,00 7,48 2,89 Index classified shareholding Index classified shareholding (%) (December, %) Foreign shareholding Foreign shareholding (%) (December, %) , 8 9 1 , 3 1 2 , 1 1 2 , 5 6 2 , 5 6 2 , 3 9 2 , 2 6 2 , 1 4 2 , 4 1 3 , 2 3 3 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 176 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 177 Statement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveSupplementaryinformation                          Basel III balance sheet credit exposure by business cluster and asset class Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Change Change (%) (%) Risk Risk weighting1 weighting1 Downturn Downturn expected loss expected loss (dEL)2 (dEL)2 Nedbank Nedbank Group Group 2021 2021 Downturn Downturn expected expected loss (dEL)2 loss (dEL)2 BEEL3 BEEL3 Nedbank Nedbank CIB CIB Property Property Finance Finance Nedbank Nedbank Retail and Retail and Business Business Banking Banking Nedbank Nedbank Wealth Wealth Nedbank Nedbank Africa Africa Regions Regions Centre Centre Nedbank Nedbank Group Group 2022 2022 407 217 407 217 172 533 172 533 428 344 428 344 22 150 22 150 – – 81 234 81 234 938 945 938 945 Specialised lending – HVCRE4 Specialised lending – HVCRE4 5 097 5 097 5 097 5 097 183 822 183 822 55 834 55 834 20 060 20 060 59 59 41 41 Specialised lending – IPRE5 Specialised lending – IPRE5 108 649 108 649 108 513 108 513 1 512 1 512 5 177 5 177 Specialised lending – project finance Specialised lending – project finance 43 016 43 016 5 062 5 062 8 881 8 881 8 521 8 521 5 031 5 031 38 734 38 734 13 13 21 21 370 370 3 089 3 089 40 869 40 869 1 736 1 736 20 20 1 793 1 793 42 42 1 1 158 640 158 640 17 252 17 252 155 053 155 053 156 156 3 601 3 601 9 507 9 507 60 60 146 146 32 930 32 930 1 667 1 667 172 172 19 19 203 960 203 960 81 215 81 215 5 138 5 138 115 338 115 338 43 016 43 016 47 667 47 667 8 901 8 901 10 314 10 314 86 444 86 444 42 336 42 336 168 160 168 160 17 312 17 312 155 199 155 199 34 618 34 618 370 370 172 172 Rm Rm AIRB Approach AIRB Approach Corporate Corporate SME – corporate SME – corporate Public sector entities Public sector entities Local governments and municipalities Local governments and municipalities Sovereign Sovereign Banks Banks Retail mortgage Retail mortgage Retail revolving credit Retail revolving credit Retail – other Retail – other SME – retail SME – retail Securities firms Securities firms Securitisation exposure Securitisation exposure TSA6 TSA6 Corporate Corporate SME – corporate SME – corporate Public sector entities Public sector entities Local government and municipalities Local government and municipalities Sovereign Sovereign Banks Banks Retail mortgage Retail mortgage Retail revolving credit Retail revolving credit Retail – other Retail – other SME – retail SME – retail PiPs PiPs Non-regulated entities Non-regulated entities 17 502 17 502 168 168 35 006 35 006 32 254 32 254 – – 67 428 67 428 168 168 1 514 1 514 9 712 9 712 17 475 17 475 5 589 5 589 464 464 252 252 14 14 52 52 75 75 4 062 4 062 441 441 44 44 6 226 6 226 8 751 8 751 7 223 7 223 256 256 2 723 2 723 2 528 2 528 123 123 4 062 4 062 1 682 1 682 441 441 44 44 15 938 15 938 26 226 26 226 12 812 12 812 256 256 3 187 3 187 2 780 2 780 189 189 17 577 17 577 Total Basel III balance sheet exposure7 Total Basel III balance sheet exposure7 424 719 424 719 172 533 172 533 428 639 428 639 57 170 57 170 32 377 32 377 81 234 81 234 1 024 139 1 024 139 100,00 100,00 dEL (AIRB Approach) dEL (AIRB Approach) Expected loss performing book Expected loss performing book BEEL on defaulted advances BEEL on defaulted advances IFRS impairment on AIRB loans and IFRS impairment on AIRB loans and advances advances Excess of downturn expected loss over Excess of downturn expected loss over eligible provisions8 eligible provisions8 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 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). Approach (TSA). 2 dEL is in relation to performing loans and advances. 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. 3 Best estimate of expected loss (BEEL) is in relation to defaulted loans and advances. 4 High-volatility commercial real estate. 4 High-volatility commercial real estate. 5 5 Income-producing real estate. 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. 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. 7 Balance sheet credit exposure includes on-balance-sheet, repurchase and resale agreements and derivative exposure. 8 Excess impairments compared to downturn expected loss for IRB exposures total R966m at 31 December 2022. However, in line with the Bank’s Act Regulations the 8 Excess impairments compared to downturn expected loss for IRB exposures total R966m at 31 December 2022. 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 576m at 31 December 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 576m at 31 December 2022 (2021: R2 587m). 2022 (2021: R2 587m). Mix Mix (%) (%) 91,68 91,68 19,92 19,92 0,50 0,50 11,26 11,26 4,20 4,20 4,65 4,65 0,87 0,87 1,01 1,01 8,44 8,44 4,13 4,13 16,42 16,42 1,69 1,69 15,15 15,15 3,38 3,38 0,04 0,04 0,02 0,02 6,58 6,58 0,40 0,40 0,16 0,16 0,04 0,04 0,00 0,00 1,56 1,56 2,56 2,56 1,25 1,25 0,02 0,02 0,31 0,31 0,27 0,27 0,02 0,02 1,72 1,72 6,19 6,19 10,74 10,74 0,11 0,11 2,14 2,14 (5,62) (5,62) 5,07 5,07 (35,25) (35,25) (6.01) (6.01) 1,10 1,10 36,86 36,86 8,32 8,32 4,63 4,63 5,35 5,35 0,57 0,57 38,37 38,37 40,64 40,64 94,03 94,03 29,39 29,39 50,64 50,64 54,84 54,84 43,05 43,05 47,00 47,00 12,02 12,02 43,83 43,83 27,46 27,46 65,29 65,29 50,23 50,23 41,72 41,72 44,47 44,47 (46,69) (46,69) 143,15 143,15 (8,85) (8,85) 51,59 51,59 151,79 151,79 40,42 40,42 91,50 91,50 78,23 78,23 74,35 74,35 17,56 17,56 38,82 38,82 40,73 40,73 65,45 65,45 86,79 86,79 (31,42) (31,42) 59,80 59,80 80,53 80,53 103,93 103,93 (15,16) (15,16) 0,78 0,78 (9,24) (9,24) (18,73) (18,73) (18,51) (18,51) (22,30) (22,30) 1,25 1,25 6,51 6,51 4,63 4,63 BEEL3 BEEL3 14 000 14 000 750 750 167 167 693 693 132 132 536 536 324 324 26 26 1 933 1 933 1 587 1 587 6 946 6 946 906 906 8 490 8 490 1 601 1 601 52 52 233 233 148 148 243 243 20 20 21 21 21 21 63 63 786 786 823 823 3 967 3 967 512 512 8 499 8 499 16 681 16 681 888 184 888 184 940 940 44 44 197 197 160 160 331 331 29 29 44 44 19 19 98 98 955 955 949 949 4 177 4 177 556 556 2 132 2 132 257 257 515 515 135 135 733 733 243 243 39 39 20 20 2 023 2 023 1 765 1 765 7 938 7 938 881 881 184 184 184 184 5 132 5 132 112 926 112 926 45 578 45 578 45 366 45 366 13 746 13 746 10 973 10 973 85 502 85 502 30 933 30 933 155 242 155 242 16 545 16 545 147 311 147 311 34 423 34 423 323 323 73 971 73 971 5 923 5 923 1 053 1 053 244 244 22 22 18 786 18 786 26 023 26 023 14 116 14 116 315 315 3 911 3 911 3 578 3 578 187 187 16 503 16 503 8 499 8 499 16 681 16 681 978 845 978 845 8 490 8 490 14 000 14 000 25 180 25 180 8 498 8 498 16 681 16 681 (26 146) (26 146) (966) (966) 22 489 22 489 8 490 8 490 14 000 14 000 (24 985) (24 985) (2 496) (2 496) 178 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 179 Statement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveSupplementaryinformation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    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 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 Change % 26 40 11 12 27 11 16 11 8 7 Impairments charge on non-financial instruments and other losses >(100) (50) Profit before direct taxation Total direct taxation Direct taxation Taxation on impairments charge on non-financial instruments and other losses 19 9 14 681 3 378 3 362 16 Profit for the year 22 11 303 9 248 78 612 45 224 33 388 21 050 62 452 32 348 30 104 18 801 16 144 14 838 20 229 (4 085) (47) 171 3 403 776 103 500 100 54 538 7 154 47 384 31 751 1 002 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) 2022 2021 Rm Change % 2022 Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information 2021 560 222 9 9 322 (2) Other comprehensive (loss)/income (OCI) net of taxation >(100) (496) 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 (110) 132 (160) (359) 1 Total comprehensive income for the year 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 10 22 22 10 10 23 >100 10 807 9 808 11 300 3 11 303 10 804 3 10 807 11 194 34 50 (16) 9 246 2 9 248 9 806 2 9 808 9 121 (143) (205) 62 Headline earnings attributable to ordinary and preference shareholders 20 11 160 9 264 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 2022 2021 13,9 1,00 3,93 0,90 58,2 12,2 0,86 3,77 0,81 59,8 180 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 181 Statement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveSupplementaryinformation                                                                      Nedbank Limited consolidated statement of financial position at 31 December Definitions Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Change % 2022 2021 (restated)1,2 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. Rm Assets Cash and cash equivalents Other short-term securities Derivative financial instruments Government securities Other dated securities Banking loans and advances Trading loans and advances 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 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 debt instruments Total liabilities Total equity and liabilities 8 26 (78) 6 59 7 (8) 17 40 6 (70) 9 (38) 4 (6) (5) 4 7 5 (14) 10 23 6 (74) 7 (7) (12) 56 (11) 3 4 36 950 42 043 8 522 34 056 33 425 38 840 156 325 147 297 1 820 1 144 840 269 786 841 46 605 6 770 59 7 252 38 1 031 354 9 467 3 982 9 594 50 431 5 798 42 6 867 127 944 573 9 140 4 216 10 142 1 171 081 1 129 883 28 20 073 64 842 28 20 073 60 694 84 943 80 795 51 10 219 16 95 229 9 182 59 9 319 13 90 186 35 623 1 003 663 933 870 12 939 13 939 228 187 260 120 49 653 55 885 1 075 852 1 039 697 1 171 081 1 129 883 1 During 2022 the group reviewed its presentation of long-term employee benefits (LTEB) in the statement of financial position (SOFP). As a result of the review, it was noted that the LTEB qualifying insurance policies were incorrectly presented on a gross basis in the SOFP. In terms of IAS 19 qualifying insurance policies were required to be accounted for as plan assets (on a net basis) in the 2021 SOFP. As a result, the comparative assets and liabilities have been restated by R2 271m. 2 During 2022 the group identified a one-day delay in the sweep on the cash management deposit account and the debtor funding account. The delay resulted in the unswept balances being included incorrectly under cash management deposits (liability) and debtors (asset), and the affected line items were therefore overstated. The sweep eliminates the cash management deposit account and the debtor funding account. As a result, the comparative assets and liabilities have been restated by R3 866m and the opening 1 January 2021 assets and liabilities restated by R3 390m respectively. 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.  Black persons A generic term that refers to South African citizens who are African, Coloured or Indian. 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) The 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 the Nedbank 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%, with effect 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. 182 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 183 Statement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveSupplementaryinformation                Message from our Chief Executive Results presentation 2022 results commentary Financial results Segmental analysis Income statement analysis Statement of financial position analysis Supplementary information Directive 7/2015 A directive from the PA that provides clarity on how banks should identify restructured credit exposures and how Non-interest revenue and income (NIR) to total income (%) Non-interest revenue and income as a percentage of total income, these exposures should be treated for purposes of the definition of default. Dividend cover (times) Headline earnings per share divided by dividend per share. excluding the impairments charge on loans and advances and share of gains or losses of associate companies. Number of shares listed (number) Number of ordinary shares in issue, as listed on the JSE. Economic profit (EP) (Rm) Headline earnings less the cost of equity (total equity attributable to equity holders of the parent, less Off-balance-sheet exposure Undrawn loan commitments, guarantees and similar arrangements that expose the group to credit risk. 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. Expected credit losses Difference between all contractual cash flows that are due to the bank in terms of the contract and all the cash flows that the bank expects to receive (ie all cash shortfalls), discounted at the original effective interest rate related to default events on financial instruments that are possible within 12 months after the reporting date (stage 1) or that result from all possible default events over the life of the financial instrument (stage 2 and 3). Forward-looking economic expectations The impact of forecast macroeconomic conditions in determining a 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. High-quality liquid assets (HQLA) Assets that can be converted easily and immediately into cash at little or no loss of value. 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. Loss-given default The estimated amount of credit losses when a borrower defaults on a loan. 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. 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 having defaulted due to regulatory requirements, ie Directive 7/2015 or the curing definition. 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 having applied 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. 184 Nedbank Group Annual Results 2022 Nedbank Group Annual Results 2022 185 Statement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveSupplementaryinformationAbbreviations and acronyms Company details 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 CASA current account savings account 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 CX client experience 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 FX foreign exchange 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 M&A mergers and acquisitions 186 Nedbank Group Annual Results 2022 MFC Motor Finance Corporation (vehicle finance division of Nedbank) MRC minimum required capital MZN Mozambican metical N/A not applicable Nafex 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 REIPPPP Renewable Energy Independent Power Producer Procurement Programme 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 South African Customer Satisfaction Index SADC Southern African Development Community SAICA South African Institute of Chartered Accountants S&P Standard & Poor’s 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 UN United Nations 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 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, One Exchange Square, Gwen Lane, Sandown, Sandton, 2196 (from 13 March 2023) 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: A2X share code: NBK NED 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 Company Secretary: Sponsors in SA: J Katzin Merrill Lynch SA Proprietary Limited t/a BofA Securities 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, or profits, or consequential loss or damage. Statement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2022 resultscommentaryResultspresentationMessage from ourChief ExecutiveSupplementaryinformation  nedbankgroup.co.za 

Continue reading text version or see original annual report in PDF format above