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
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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
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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
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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
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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
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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
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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
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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
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2022 results
commentary
Financial
results
Segmental
analysis
Income statement
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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
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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
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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.
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• 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
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• 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.
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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
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2022 results
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Financial
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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
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SupplementaryinformationStatement of financialposition analysisSegmentalanalysisIncome statementanalysisMessage from ourChief Executive2022 resultscommentaryFinancial resultsResultspresentation
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Supplementary
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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
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Consolidated statement of financial position
at 31 December
Notes
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Segmental
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Income statement
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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
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Supplementary
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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
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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
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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
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Supplementary
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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
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Nedbank Group Annual Results 2022
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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
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Results
presentation
2022 results
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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
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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
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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.
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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.
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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).
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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.
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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
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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.
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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
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Income statement
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Supplementary
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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.
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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,
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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).
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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.
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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.
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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.
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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).
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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
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Segmental
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Supplementary
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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
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Nedbank Group Annual Results 2022
121
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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
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Segmental
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Statement of financial
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Supplementary
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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
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125
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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
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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
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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
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Segmental
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Income statement
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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
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7 Preference shares
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Supplementary
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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
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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
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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
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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
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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
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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
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Supplementary
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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
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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
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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
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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
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• 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.
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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
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163
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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%.
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• 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
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• 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.
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Regulated banking subsidiaries
Nedbank Group economic capital requirement
Economic capital adequacy
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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
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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
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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.
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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.
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2022 results
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Financial
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Segmental
analysis
Income statement
analysis
Statement of financial
position analysis
Supplementary
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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.
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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
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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.
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