Annual results
for the year ended 31 December 2023
see money differently
Message from our
Chief Executive
127
Statement of financial position
analysis
128
146
147
148
150
152
155
156
Loans and advances
Investment securities
Investments in associate companies
Intangible assets
Amounts owed to depositors
Liquidity risk and funding
Equity analysis
Capital management
162
Supplementary
information
163
164
166
166
167
168
170
172
173
174
175
178
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
2023 results
commentary
66
Financial
results
67
68
70
72
76
Financial highlights
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Return-on-equity drivers
79
Segmental
analysis
80
82
86
90
102
106
110
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
112
Income statement
analysis
113
116
122
124
126
126
Net margin analysis
Impairments
Non-interest revenue and income
Expenses
Headline earnings reconciliation
Taxation charge
All 2023 targets met – a strong foundation from which we shift focus
to deliver on our medium-term targets
In 2023 the operating environment for South
African banks was more challenging than
initially forecast. In addition to a weaker
global economy, domestic economic
activity was impacted by record levels
of load-shedding (electricity shortages),
logistical constraints, higher-than-expected
levels of inflation and, as a
result, higher-than-expected increases in
interest rates. Collectively, these conditions
have put increasing pressure on consumers’
finances and led to reductions in business
confidence and investment in most sectors
other than energy. Progress, albeit slow,
is being made in the partnership between
government and business to help address
the key issues of energy security, transport
and logistics, and crime and corruption that
are collectively resulting in very low levels of
economic growth in South Africa (SA) and a
weakening fiscal position.
Despite this difficult and volatile
operating environment, Nedbank
Group produced a strong financial
performance in 2023. Headline earnings
(HE) grew by 11% to R15,7bn, underpinned by
strong revenue and associate income growth
of 12% and prudent expense management
that enabled preprovisioning operating profit
(PPOP) growth of 15%. This growth was
partially offset by a 30% increase in the
impairment charge, which is a decrease
from the 57% increase reported in H1 2023.
As a result, the group’s credit loss ratio
(CLR) improved from 121 bps (H1 2023) to
109 bps for the full year. The diversification
benefit across our portfolio of businesses
was evident in very strong growth in HE from
Nedbank Africa Regions, albeit off a low
base, alongside solid performances in both
HE and return on equity (ROE) from Nedbank
Corporate and Investment Banking, Nedbank
Retail and Business Banking and Nedbank
Wealth. The group’s balance sheet metrics all
remained strong, enabling the declaration of
a final dividend of 1 022 cents per share, up
by 18%, at a payout ratio of 57%. The R5bn
capital optimisation initiative announced in
March 2023 was completed successfully,
through a share repurchase programme and
odd-lot offer executed at attractive levels,
enhancing both ROE and earnings growth on
a per-share basis.
A highlight of the year was achieving all
the group’s post-Covid-19 targets for
2023 announced in March 2021. Two of
these targets were already achieved in
2022 – being exceeding the 2019 diluted
headline earnings per share (DHEPS)
of 2 565 cents and ranking #1 on Net
Promoter Score (NPS). In 2023 we further
increased DHEPS to 3 199 cents, up by 14%
yoy, and we maintained our #1 NPS ranking
among South African banks. Pleasingly,
at the end of 2023, we also met the
remaining 2 targets, by reporting an ROE of
15,1% ahead of the target level of 15,0% and
a cost-to-income ratio of 53,9%, which is
lower than our target of 54,0%.
These targets were achieved as a result of
ongoing progress on delivery of our strategy,
with a focus on growth, productivity, as well
as risk and capital management. Growth
trends across average interest-earning
banking assets (AIEBA) (+7%), net interest
income (NII) (+14%), non-interest revenue
(NIR) (+6%) and associate income (+64%)
remained robust. Levels of productivity
improved, evident in our cost-to-income
ratio declining to 53,9% from 55,8% in
2022. Capital and liquidity ratios remained
strong, with a common-equity-tier 1 (CET1)
ratio of 13,5%, an average fourth-quarter
liquidity coverage ratio (LCR) of 135% and
a net stable funding ratio (NSFR) of 117%,
all well above board targets and regulatory
minimums. The group’s total expected
credit loss (ECL) coverage increased to
an annual high of 3,62% (Dec 2022: 3,37%)
and we remain conservatively provided in a
difficult macroeconomic environment.
Our world-class technology platform,
delivered through our Managed Evolution
(ME) programme, which has reached
95% completion, supported continued
double-digit growth in all digital-related
metrics; client satisfaction scores
remaining at the top-end of the South
African banking peer group; higher levels
of cross-sell; main-banked client gains
across all segments; market share gains
in key product categories; and improved
efficiencies. We continued to create positive
impacts through R145bn of exposures
that support sustainable development
finance (SDF) aligned with the United
Nations (UN) Sustainable Development
Goals (SDGs); maintained high levels of
employee satisfaction; supported clients
during difficult times; retained our top-tier
rankings on environmental, social and
governance (ESG) scores; and maintained
our level 1 broad-based black economic
empowerment (BBBEE) status under the
Amended Financial Sector Code (FSC) for
the sixth year in a row.
Looking forward, although geopolitical
uncertainties increase forecast risk,
we currently expect the economic
environment in SA to remain challenging
but improve off a low 2023 base.
The Nedbank Group Economic Unit
forecasts SA’s gross domestic
product (GDP) to increase by 1% in
2024 and inflation to continue to decline.
The forecast is for the South African prime
lending rate to decline by a cumulative
75 bps in the second half of 2024 to end
the year at 11,0% and private sector credit
growth to be muted at around 5%.
While we were pleased to have achieved all
our 2023 targets while operating in a more
difficult economic environment, we aspire
to deliver ongoing improvements in ROE
to increase shareholder value. Our strong
financial performance in 2023, together
with the progress made in executing on
our strategy and underlying momentum
in the business, gives us confidence in
delivering on our medium-term targets*
and, in particular, our aim to increase our
ROE to 17% by 2025 and above 18% in the
long term.
As I reach the final stretch of my 14 years
as Chief Executive of Nedbank Group, I look
back with pride on our achievements and
the challenges we have overcome together.
When I retire at the annual general meeting
in May 2024 and hand over to Jason Quinn,
I know I leave behind a better Nedbank
than what I was entrusted with, and that
Jason and the Nedbank team will inherit
strong foundations from which to build an
even better future for all our stakeholders.
Thank you to all the Nedbankers who
have been part of this journey and to our
more than 7,3 million retail and wholesale
clients for choosing to bank with Nedbank.
We also appreciate the ongoing support of
the investment community, regulators, and
our other stakeholders. As Nedbank, we
continue to play a constructive and positive
role in society as we fulfil our purpose of
using our financial expertise to do good for
the benefit of all our stakeholders.
Mike Brown
Chief Executive
Headline earnings
CLR
11%
109 bps
ROE
15,1%
CET1 RATIO
13,5%
2023
15 650
2022
14 061
2021
11 689
2020
5 440
2019
12 506
2023
109
2022
89
2021
83
2020
161
2019
79
2023
15,1
2022
14,1
2021
12,5
2020
6,2
2019
15,0
2023
13,5
2022
14,0
2021
12,8
2020
10,9
2019
11,5
* These targets are not profit forecasts and the group’s joint auditors have not reviewed or reported on them.
1
Nedbank Group Annual Results 2023Message from ourChief ExecutiveSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentation 2023
Annual Results
For the year ended 31 December 2023
5 March 2024
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
Agenda
Overview
Operating environment
Strategic progress
Financial overview
Cluster overview
Mike Brown
Chief Executive
Outlook & guidance
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
2
1
2
Notes:Notes:Nedbank Group Annual Results 2023 Overview
All 2023 targets met: DHEPS | Cost-to-income | ROE | NPS
Strong foundations in place for delivery of medium- & long-term targets with a focus on continued ROE improvement
Environment
Strategy
Operations
Financial
Volatile & difficult
operating environment
Strategic delivery
showing results
Good operational
performance
▪ Weak 2023 SA GDP
growth at ~0,5%
▪ Record electricity
shortages, improved in H2
▪ 125 bps yoy interest rate
increases, flat in H2
▪
Inflation high, but trending
down
▪ Volatile markets –
geopolitical & social risks
▪ Strong digital growth
▪ PPOP
+15%
▪
JAWS
+4%
▪ Cost-to-income 53,9%
▪ #1 in NPS
▪ Market share gains in HL,
term-loans & retail
deposits
▪ R2,2bn TOM 2.0 benefits
▪ ESG leadership in
general & renewable
energy in particular
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
Strong revenue growth &
prudent expense management,
partially offset by higher
impairments
▪ Headline earnings +11%
▪ DHEPS
+14%
▪ Revenue
+12%
▪
Impairments +30%
H1: +57% yoy | H2: +8% yoy
▪ ROE
15,1%
▪ CET1
13,5%
▪ NAV per share +8%
▪ ECL coverage 3,62%
▪ Full-year DPS
+15%
3
Operating environment – volatile & difficult environment
Remains weak,
no material
investment
outside of
energy
Business confidence index1
100
75
50
25
0
Confidence
Lack of confidence
SA Government bond yields (%)
14
12
10
8
Volatile year,
but Q4
improvement
250
0
-250
-500
-750
-1000
Foreign bond & equity sales3 (Rbn)
Risk off
environ-
ment & SA-
specific
risks
Bonds
Equities
19
20
21
22
23
19
20
21
22
23
19
20
21
22
23
Eskom EAF 2 (%)
95
85
75
65
55
45
Annual
average
Record levels
of load-
shedding in H1,
improvement
in H2
Rand vs US$
25
20
15
10
Rand weaker
vs 2022
SA GDP growth (Rtn)
6%
4%
2%
0%
-2%
-4%
-6%
-8%
GDP growth less
than population
growth
17
18
19
20
21
22
23
Jan-19 Jan-20 Jan-21 Jan-22 Jan-23
19 20 21 22 23
14 15 16 17 18 19 20 21 22 23
1 SA Bureau of Economic Research. | 2 Eskom electricity availability factor. | 3 Cumulative sales from 2019. | F: Forecast.
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
4
3
Notes:Notes:Nedbank Group Annual Results 2023ResultspresentationSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryMessage from ourChief Executive
Operating environment – structural challenges to economic growth around
energy supply, logistics & crime being addressed through Government-
Business partnership
Energy/Electricity1
Logistics/Transport2
Crime/Corruption6
30
20
10
0
▪
▪
▪
TWh electricity
shed
H1
H2
25
20
15
10
5
Million tons of goods
transported by rail
50
45
40
35
30
Corruption perception
index score
41
19
20
21
22
23
13
15
17
19
21
23
13
15
17
19
21
23
Estimated GDP loss3 of
Estimated GDP loss4 of
1% to 3%
up to 5%
Private sector investments5 – more than 6 GW
registered & under construction over the past 2
years
REIPPP – mixed progress
Loadshedding possible to reduce7 to largely
level 1 & 2 in the medium-term
▪ National Logistics Crisis Committee
established
▪
Freight Logistics Roadmap published
▪ Preferred operator for Durban port
announced
▪
Progress in clearing port backlogs
▪
▪
FATF greylisting – some progress made,
with key challenges in investigation &
prosecution capability
Limited success with state-capture-
related prosecutions
Business & Government working together through the B4SA platform to accelerate progress on these issues
to increase levels of economic growth
1 Source: Eskom se Push & Nedbank GEU. | 2Source: Statistics SA. | 3Source: SARB (June 2023). | 4Source: SA National Treasury (November 2023). | 5Source: NERSA registrations.
| 6Source: Transparency International. Best in class: Denmark with a 90 score; worst: Somalia with a score of 11. | 7NECOM.
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
5
Operating environment – large renewable energy opportunity to reduce impact
of load-shedding & ensure a Just Transition
Renewable energy market potential up to 20301
(GW)
NECOM estimates to reduce load-shedding4
(targeted additional power to be added to the grid, GW)
Additional info
Private
power
generation
12,4 GW
4,7 GW
-
Government
procurement
projects
4,0 GW
9,6 GW
1,2 GW
17,1 GW
14,8 GW
Solar
Wind
BESS
Total
Financing
Nedbank CIB
estimates by 2030
> R650bn2
JET IP estimates
by 2027
R475bn3
Renewable investments to be supported by:
• Grid expansion accelerated through build-own-operate-
and-transfer models
• More energy storage capacity than currently in pipeline
• Gas-to-power for peaking purposes
12
10
8
6
4
2
0
2 GW
new wind
power
>5,5 GW
new solar
PV power
>1,5 GW
other
>1 GW
improved
Eskom
performance
Q1
24
Q2
24
Q3
24
Q4
24
Q1
25
Q2
25
Q3
25
Q4
25
1 Based on assessment of Eskom Renewable Energy Grid Survey projects likelihood of reaching closure by 2030. BESS = Battery energy storage system. | 2Source: Nedbank CIB
energy team estimates of new cumulative financing opportunities for the total SA market by 2030. | 3Source: SA Just Energy Transition Investment Plan. | 4Source: NECOM.
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
6
4
Notes:Notes:Nedbank Group Annual Results 2023 Operating environment – consumers have been under increasing pressure
Prime interest rate
(year-end, %)
20
15
10
5
0
Steep increase
of +4,75% (since
2021), but flat in
H2 2023
Inflation
(annual average, %)
15
10
5
0
Trending
down, including
food & fuel
Household savings rate
(annual, % of PDI)
2
1
0
-1
-2
-3
-4
HH savings reduced
to support debt
service costs
05 07 09 11
13 15 17 19 21 23
05 07 09 11
13 15 17 19 21 23
05 07 09 11 13 15 17 19 21 23
Personal disposable income
(quarterly, Rtn)
No growth
since 2021
Household debt service costs
(quarterly, % of PDI)
15
~35% more
expensive to
finance a home
since 2020
3
2
1
10
5
05 07 09 11 13 15 17 19 21 23
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
0
05 07 09 11 13 15 17 19 21 23
Slowdown in
H2 2023
across all retail
products
Household credit growth
(annual, % yoy)
30
25
20
15
10
5
0
05 07 09 11 13 15 17 19 21 23
Nedbank Group strategy
Our purpose
To use our financial expertise to do good for individuals, families, businesses & society
Strategic value drivers
Growth
Productivity
Risk and
Capital Management
Strategic value unlocks
Digital
leadership
(DX)
Market-leading
client experiences
(CX)
Focusing on areas
that create value
(SPT)
Efficient
execution
(TOM)
Creating
positive impacts
(Purpose delivery)
World-class technology platform
Our employees & differentiated corporate culture (EX)
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
7
8
5
Notes:Notes:Nedbank Group Annual Results 2023ResultspresentationSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryMessage from ourChief Executive Growth – strong revenue & client growth
Nedbank revenue1 & average interest-earning
banking asset growth (%)
15%
10%
5%
0%
-5%
-10%
19
20
21
22
23
NII
NIR
NIR growth excl restatements
AIEBA
1 2022 NIR restated for IFRS 17 & card-processing costs. F= forecast.
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
Strategic value drivers
Growth
Productivity
Risk & capital
management
Strong client-driven growth
▪ New CIB primary client wins: 20
▪ Retail main-banked clients: +9% to 3,5m
▪ NAR clients: +4% to 349k
▪ App volumes: +18% yoy & > 300% since 2019
▪ Retail cross-sell ratio: up to 1,96 (2019: 1,71)
Impact of financial markets
▪ AUM: +14% to R448bn
▪ Markets revenue: +7%
Active interest rate risk management – positioning an
appropriately sized residual endowment position as an
offset against anticipated changes in impairments over the
cycle. R1,4bn (pre-tax) sensitivity for every 1% change.
(Average prime: 21: 7,0%, 22: 8,8%, 23: 11,4%, 24F: 11,5%)
9
Productivity – structural cost optimisation initiatives support a reduction
in the group’s cost-to-income ratio
Strategic value drivers
Growth
Productivity
Risk & capital
management
Nedbank cost-to-income ratio 1
(%)
,
5
6
5
19
,
1
8
5
20
,
8
7
5
21
,
8
5
5
22
,
9
3
5
23
4
5
<
2
5
<
0
5
<
23
target
MT
target
LT
target
Structural cost optimisation benefits
▪ Managed Evolution IT build 95% complete, having
delivered a world-class IT platform & leading client
experience outcomes, enabling TOM 2.0 savings
of R2,2bn to date
▪
Intangible software assets peaked at R9bn in
2020 with 2023 at R7,9bn & IT cash flow spend
peaked in 2017 at R2,3bn with 2023 at R1,3bn
▪ Significantly increased levels of digital usage,
eg digital volumes +12% yoy (with lower
acquisition & operating costs)
▪ Headcount down by 2% yoy & down by 13% since
2019, largely through natural attrition
▪ Flexible work practices & real estate optimisation
(branch & CRE) enabling ongoing cost savings
PPOP growth +15% to R30bn
1 2022 restated for net monetary loss reclassification, card-processing costs & IFRS 17. Prior years have not been restated.
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
10
6
Notes:Notes:Nedbank Group Annual Results 2023
Risk & capital management – a fortress balance sheet remains in place
after the R5bn capital optimisation initiative
Strategic value drivers
Growth
Productivity
Risk & capital
management
Capital
Liquidity
Credit
CET1 ratio (%)
R12bn average surplus
capital & CET1 well-above
top end of board range
LCR (%)
CLR (bps)
,
5
1
1
,
9
0
1
,
8
2
1
,
0
4
1
,
5
3
1
Dec
19
Dec
20
Dec
21
Dec
22
Dec
23
5
2
1
Q4
19
6
2
1
Q4
20
8
2
1
Q4
21
1
6
1
Q4
22
5
3
1
Q4
23
9
7
19
1
6
1
20
3
8
21
9
8
22
9
0
1
23
Dividends (cents/share)
NSFR (%)
Total ECL coverage (%)
s
d
n
e
d
v
d
i
i
o
N
20
5
1
4
1
19
1
9
1
1
21
9
4
6
1
22
3
9
8
1
23
3
1
1
Dec
19
3
1
1
Dec
20
6
1
1
Dec
21
9
1
1
Dec
22
7
1
1
Dec
23
6
2
2
,
19
5
2
3
,
20
2
3
3
,
21
7
3
3
,
22
2
6
3
,
23
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
11
Strategic
overview
‘Our world-class
technology platform
& good strategic
execution are
delivering results’
Mfundo Nkuhlu
Chief Operating Officer
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
12
7
Notes:Notes:Nedbank Group Annual Results 2023ResultspresentationSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryMessage from ourChief Executive
Nedbank Group strategy
Our purpose
To use our financial expertise to do good for individuals, families, businesses & society
Strategic value drivers
Growth
Productivity
Risk and
Capital Management
Strategic value unlocks
Digital
leadership
(DX)
Market-leading
client experiences
(CX)
Focusing on areas
that create value
(SPT)
Efficient
execution
(TOM)
Creating
positive impacts
(Purpose delivery)
World-class technology platform
Our employees & differentiated corporate culture (EX)
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
13
A world-class technology platform for ongoing competitive advantage –
Managed Evolution (ME) IT build 95% complete – on time, on scope, on budget
Core
banking
systems
88%
complete
Product
lifecycle
management
Pricing
& billing
Product
catalogues
Core product systems
Deposit products
Transactional
Investment
Lending products
# of products1
Transactional
~60%
From
To
Investment
~80%
From
To
Lending
Our focus beyond ME
▪ Product rationalisation & migration –
2,1 million MiGoals Accounts opened to
date (including 1,4 million migrations)
▪ Product digitisation – 8/10 client
journeys completed with home loans &
VAF digital onboarding & sales to be
completed in H2 2024
▪ Converging for scale – leverage ME
digital IT stack in NAR & mobile app
convergence with target completion by
end 2026
▪ Payment modernisation
▪ Process automation
▪ AI & Data – 300 Microsoft Copilot
licences in use & > 50 use cases being
considered
▪ Cloud computing & storage2 – almost
double usage over the next 3 years
Foundational
components
99%
complete
Enterprise
content &
master data
management
Client
systems
Enterprise
security
Enterprise
data
Modular
architecture
Not yet
defined
To
From
1 Current estimated product rationalisation. Target state lending products & juristic deposit product definitions remain work in progress. | 2 2022: ~24% & 2023: ~45%.
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
Project initiated
In progress
Completed
14
8
Notes:Notes:Nedbank Group Annual Results 2023 Managed Evolution IT build programme – cash flow spend peaked in 2017 &
intangible software assets peaked in 2020 at R9bn, while increasing benefits are
being realised according to plan
Additional info
IT software development spend
(Rbn annual cash flow)
Intangible software assets on the
balance sheet (Rbn)
Investment vs benefit realisation to
date (%)
2,3
9,0 8,9
8,3
8,3
7,9
2023: 68% of the full 2025
run-rate benefits achieved
~ 1,6
1,3
7,3
6,0
4,6
3,5
3,1
14 15 16 17 18 19 20 21 22 23 24 25 26
14 15 16 17 18 19 20 21 22 23
14 15 16 17 18 19 20 21 22 23 24 25
Illustrative only
Spend
Benefits
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
15
Benefits from our world-class technology platform & enhanced digital
innovation
Strategic value unlocks
Benefits for our clients
Benefits for Nedbank
Digital
onboarding
Seamless FICA-compliant
onboarding of individual
& juristic clients
Digital servicing
> 200
Individual services
on Eclipse & Money
App
> 400
Juristic services on
Nedbank Business
Hub
Revenue growth
Retail
VAS
cross-sell
revenue
1,96
197%
(2019: 1,71)
(vs 2019)
Beyond Banking
Avo clients
2,5m
(up by 26% yoy)
APIs
64
(up by 14% yoy)
Digital product sales
Operational efficiencies
% of new sales
55%
(2019: 12%)
Floor space
33%
Headcount
13%
(since 2019)
Great client experiences
NPS
#1 bank
(2019: #3)
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
Target operating
model benefits
Nedbank brand value
up by 15% to
R4,2bn
(cumulative 1.0 & 2.0 to date)
R17bn
(rank from #9
to #8 in SA)
16
9
Notes:Notes:Nedbank Group Annual Results 2023ResultspresentationSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryMessage from ourChief Executive
Digital uptake & usage continues to grow strongly – independent
benchmarking ranks Nedbank’s digital capabilities highly
Digital transaction volumes
(# m)
App transaction volumes
(# m)
Capability
Servicing features offered (%)
Strategic value unlocks
Additional info
+12%
+98%
+18%
+315%
8
5
19
8
6
20
7
8
21
3
0
1
22
6
1
1
23
2
2
19
7
3
20
7
5
21
7
7
22
0
9
23
19
20
21
22
23
Digital transaction values
(Rbn)
App transaction values
(Rbn)
Digital sales contribution
(%)
+10%
+19%
+54%
+298%
9
9
3
19
6
0
4
20
2
8
4
21
8
5
5
22
4
1
6
23
1
9
19
9
3
1
20
9
3
2
21
3
0
3
22
2
6
3
23
19
20
21
22
23
‘Nedbank
consistently above
market on capability
& features offered to
its customers in
mobile’
‘Digital sales
penetration grew
strongly from 2019
with Nedbank
extending its
advantage over local
peers’
Change since 2019
2022 vs 2023
Nedbank SA average Mobile leaders average
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
Source: 2023 Finalta Survey (McKinsey & Company).
17
Our world-class technology platform is also enabling us to unlock
new revenue streams
Registered Avo clients
(# m)
API activity (# of active
3rd parties)
+26%
2,5
2,0
+14%
0,7
0,1
20
21
22
23
20
21
22
23
Avo gross merchandise
value1 (Rm)
Value-added services
revenue (Rm)
+120%
+29%
Avo Auto
Hosts > 800 MFC-
accredited dealers
and lists ~25 000
vehicles
Avo B2B
+R100m Avo B2B
stock financing
applications
assessed,
majority being
Non-Nedbank
businesses
Strategic value unlocks
Additional info
Avo Solar
Launched in Aug
‘23 with over 100
residential
installations, 70%
being financed by
Nedbank
Avo Home
One of the top
marketplaces for
best value on
Apple products
Avo launched in
NAR with Apple
as the top
merchant
20
22
1 GMV growth excluding internal spend +149% yoy
23
21
20
21
22
23
Driving acquisition, cross-sell & retention
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
18
10
Notes:Notes:Nedbank Group Annual Results 2023 Operating model changes & efficient execution – supporting a lower
cost-to-income ratio
Strategic value unlocks
Cumulative target operating model
benefits (Rbn)
Permanent employees
(#)
Annual IT amortisation
charge (% growth)
▪ TOM 2.0 target of R2,5bn to be achieved in
2024 (initially 2023) given:
o delayed or reconsidered some initiatives
impacting revenues
o a delay in some cost initiatives
▪ TOM 2.1 opportunities across data, Gen AI,
payments & process optimisation. Benefits to
be disclosed during H1 2024 results
(13%)
3
1
2
9
2
1
7
2
8
2
1
6
8
6
2
4
2
9
5
2
7
7
4
5
2
2
2
3
2
9
1
9
)
1
(
19
20
21
22
23
19
20
21
22
23
Branch floor space
(‘000 m2)1
Corporate real estate floor
space (‘000 m2)
TBC
111
Saved
to date
178
Saved
to date
1,0
1,5
2,2
2,5
1,1
19
1,8
20
2,0
21
2,0
22
2,0
23
2,0
MT
target
TOM 1.0
TOM 2.0
TOM 2.1
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
4
0
2
19
0
9
1
2
8
1
4
6
1
7
3
1
20
21
22
23
8
2
3
3
1
3
19
20
5
6
2
21
8
3
2
3
0
2
22
23
1 Total branch floor space saved since 2014 equates to 111k sqm, 48% of the 2014 floor space.
Change since 2019
19
Traction in gaining profitable market share in key areas, while remaining
selective in a difficult environment (Strategic Portfolio Tilt 2.0)
Strategic value unlocks
BA900 market share
(%)
Dec
22
Dec
23
Yoy
change
Total core loans
17,9
17,9
Wholesale term loans
15,5
16,4
Home loans
14,1
14,4
Commercial property
36,8
36,0
Vehicle finance
35,4
35,5
Personal loans
11,9
11,0
Retail deposits
16,0
16,4
Commercial deposits
17,6
17,1
►
▲
▲
▼
▲
▼
▪ Yoy market share gains in term loans, retail home
loans, retail overdrafts & key deposits categories as
management actions start yielding results
▪ Unlocking growth opportunities – infrastructure &
SDG-related financing, particularly in wholesale term
lending
▪ Selective credit origination in areas where we have
strong market positions – commercial property &
vehicle finance
▪ Prudent credit granting in a more difficult
macroeconomic environment – unsecured lending
▪ Deposits – retail deposits growth above industry
levels & market share gains in notice deposits
Total core loans include retail & corporate loans, excluding loans to SA, foreign currency loans, resale agreements & preference shares. | Retail deposits, a common lens used in the industry, is the sum of BA900 lines
26, 27, 28 & 35. Nedbank’s household deposit (line 27) decreased to 14,6% (December 2022: 14,8%), while Nedbank’s household non-transactional deposit (line 27) increased to 17,3% (December 2022: 17,1%).
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
20
11
Notes:Notes:Nedbank Group Annual Results 2023ResultspresentationSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryMessage from ourChief Executive
Creating positive impacts – R145bn of exposures at the end of December
2023 that support sustainable development financing (SDF)
Strategic value unlocks
Sustainable development finance1,2
(Rbn)
>R150bn
20%
16%
145
13%
108
14%
123
2021
2022
2023
% of gross loans & advances
loan support by 2025
2025
ambition
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
R15bn sustainable finance across multiple SDGs for CIB clients (R27bn
limits)
R28bn support for farmers & the agriculture sector
R3bn for affordable home loans, supporting >5 000 home purchases
R22bn lending exposure to small businesses & their owners
R30bn total renewable energy exposures (R46bn limits), supporting new
generation capacity of almost 4GW
R1,2bn financing for clean water & sanitation
>11 000 student loans & >43 000 student beds financed since 2015
1 By the end of 2025, it is our ambition to have increased our SDF exposures to around 20% of the group’s total
gross loans & advances, achieved by support for more than R150bn in new SDF that is aligned with the SDGs (from
our 2021 base). 2 R15bn for the financing of buildings that include green interventions such as green energy, water
& waste efficiencies has not yet been included as we consider its eligibility.
21
Creating positive impacts – building on our leadership in renewable energy
Strategic value unlocks
Renewable energy financing
( drawn exposures, limits, Rbn)
Renewable energy financing opportunities
to date
Additional info
Limits: +22% yoy
36
37
46
32
30
30
27
25
10
15
19
20
21
22
23
REIPPPP
Private power generation
Rooftop solar
Nedbank supported 3,5 GW
in REIPPPP rounds 1 to 4
Additional 0,5 GW
supported in 2023
(projects closed)
(out of a total 6,3 GW added)
RBB renewable finance
▪ Strong growth in Commercial Banking & Retail.
MFC solar finance in place with HL solar CVP &
Avo Solar launched in H2 2023
>R2bn
CIB mandated on 1,9 GW
of new commercial private generation
(from < 1 GW at 31 Dec 2022)
▪ 3 projects closed in 2023 (168 MW)
▪
15 projects anticipated to close in 2024 (1,9 GW)
CIB mandated 0,8 GW of Government projects1
▪ 6 projects closed in 2023 (0,3 GW)
▪ 5 projects expected to close in 2024 (0,5 GW)
R16bn
R7bn
Nedbank’s pipelines beyond 2024 support
a further >2,5 GW
of new renewable energy
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
1 0,3GW closed in 2023, 0,5GW in the pipeline & 0,4GW terminated (Out of the 1,15GW that was in the pipeline at
the end of H1 2023).
22
12
Notes:Notes:Nedbank Group Annual Results 2023 Creating positive impacts – ESG highlights
Strategic value unlocks
Nedbank ESG ratings
Commitments & achievements
AAA
60
Top 5%
of global
banks
Top 9%
of all global
banks
17,1
Top 10%
of diversified
banks
C
Top 10%
of all global
banks
3,9
Top 26%
of global
banks
2030 financed
emission targets
for thermal-coal, oil
& gas, and power
generation (1st SA
bank)
Net-zero
operational water
use (since 2018)
Zero exposure
to fossil-fuel-
related activities by
2045
82% AIC
representation
(from 78% in
2019)
Level 1
BBBEE status
for the past 6 years
Cash taxation
payments1 of
R13,2bn
up by 15% yoy
2 835
unemployed youth
(YES) recruited
(almost 10 000 since
2019)
Employee
experience (EX)
NPS 2nd highest
since inception
(employee survey)
World-class
reporting
#1 integrated report
(EY & CGISA Top 40)
#1 tax report (PWC)
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
23
1 Tax payments relating to direct, indirect & employee taxes, as well as other taxation.
Creating positive impacts – progress on our journey to net zero
2020
2021
2024
Our journey to net zero
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
Thermal-coal glidepaths
(ktCO2e financed)
Power generation
(47%)
Zero
Adopted a cap
aligning to NZE
target of
188 gCO2e/kWh
2025
Reduce Nedbank’s own operations’ carbon
emissions by >40% (from 2019 levels)
22
30
45
Generate >30% of Nedbank’s own energy
needs from renewable sources
Own operational GHG
emissions (ktCO2e)
2030
Thermal-coal funding to be <0,5% of gross
loans & advances
139
2035
No new finance for oil production
2045
Zero exposure to fossil-fuel-related activities
119 112 103
(40%)
88
2050
100% of lending & investing supporting a
net-zero carbon economy
19 20 21 22 23
25
Own operational renewable
energy sourced (% of total
electricity)
%
5
1
,
22
%
5
6
,
23
%
0
3
>
25
target
Strategic value unlocks
Additional info
Oil & gas glidepaths
(ktCO2e financed)
(26%)
Zero
22
30
45
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
24
13
Notes:Notes:Nedbank Group Annual Results 2023ResultspresentationSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryMessage from ourChief Executive
External recognition received in 2023 – across business excellence, digital
innovation & purpose/ESG-related
Strategic value unlocks
2023 Global Banking
and Finance Awards
Best Investment Bank
in South Africa
(winner)
2023 African Banker
Awards
Debt Deal of the Year
(winner)
2023 African Banker
Awards
Sovereign Bond Deal
of the Year
(winner)
2023 Top
Companies
Survey Awards
Top Banking
Institution in
Zimbabwe
(winner)
2023 Global Finance
Magazine Awards
Best Sub-custodian
Banks Namibia
(winner)
2023 Global
Business & Finance
Magazine Awards
Best Financial
Institution in South
Africa
(winner)
2023 Qorus
Reinvention Awards
SME Bank of the Year
(winner)
2023 ActiveOps
Awards
Excellence in
Operations
(winner)
2023 The Asian
Banker Excellence in
Retail Financial
Services
Best SME Bank in
South Africa
(winner)
2023 Intellidex Top
Private Banks and
Wealth Managers
Awards
Top Private Bank
(winner)
2023 ActiveOps
ActiveOpsTeam of
the Year Award -
EMEIA region
(winner)
2023 Raging Bull
Best SA Multi-Asset
Medium Equity Fund
(winner)
2023 Private Asset
Managers Awards
Total Wealth Planning
– High Net Worth
(winner)
2023 Finnovex
Awards Southern
Africa
Excellence in Mobile
Banking
(winner)
2023 Global Finance
Magazine
Awards
Top Innovations in
Finance in Mozambique
(winner)
2023 Finance
Derivative Magazine
Awards
Best Retail Banking
Technology
Implementation South
Africa
(winner)
2023 Euromoney
Awards
Best Digital Bank
In Africa
(winner)
2023 Global Finance
Magazine Awards
Best Bank for client
facing technology
(winner)
2023 Global Banking
& Finance Awards
Excellence in
Innovation – Banking
App (Nedbank Avo)
South Africa
(winner)
2023 Global Finance
Magazine Awards
Outstanding
Leadership in
Sustainable Bonds
(winner)
Additional info
2023 Banks and
Banking
Survey Awards
Corporate Governance,
Social Responsibility &
Sustainability in
Zimbabwe
(winner)
2023 Global
Banking & Finance
Awards
Best Corporate
Sustainability Strategy
South Africa
(winner)
2023 Environmental
Finance Awards
Sustainability-linked
Loan of the
Year (Africa)
(winner)
2023 African
Banker Awards
Sustainable Bank of
the Year
(winner)
Business-impact- & expertise-related
Technology- & innovation-related
Purpose- & ESG-related
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
25
Financial
overview
‘Headline earnings
up by 11%, driven by
strong revenue growth,
partially offset by higher
impairments. DHEPS up
by 14%, benefiting from
the R5bn capital
optimisation initiative’
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
Mike Davis
Chief Financial Officer
26
14
Notes:Notes:Nedbank Group Annual Results 2023 Key drivers – the impact of a difficult operating environment in 2023 was offset
by good strategic delivery
Operating environment
Strategic delivery
Financial outcomes
SA GDP
growth
SA
inflation
SA prime
interest rate
Business
confidence
Electricity
constraints
Global
conflicts
Technology/
Digital
Global & local
markets
Efficient
execution
Currency
impacts
Regulation
Competition
Market share
gains
Cross-sell &
main-banked
client gains
Creating
positive
impacts
Revenues
+12%
ROE
15,1%
Headline
Diluted
earnings
HEPS
+11%
+14%
Dividends
per share
+15%
CET1
ratio
13,5%
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
Positive
Negative
No material impact in 2023
27
Shareholder value creation – ROE improvement to above COE & dividends declared at the
top of our payout ratio, while maintaining good NAV growth, even after the R5bn capital
optimisation initiative
ROE & cost of equity (%)
Dividend per share (cents)
NAV per share (cents)
2
2
0
1
1
7
8
3
3
5
1
2
2
9
1
3
2
i
s
d
n
e
d
v
d
o
N
i
09
11
13
15
17
19
21
23
09
11
13
15
17
19
21
23
09
11
13
15
17
19
21
23
ROE
COE
Interim
Final
ROE above COE
Dividend at 57% payout ratio
NAV/share +8% yoy
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
28
15
Notes:Notes:Nedbank Group Annual Results 2023ResultspresentationSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryMessage from ourChief Executive
Profitability metrics improved yoy, underpinned by robust capital, liquidity &
provisioning
Profitability
Advances
& deposits
Asset quality
yoy
+11%
+15%
+30%
+14%
+10%
+3%
+5%
Headline earnings (Rbn)
Preprovisioning operating profit (Rbn)
Total comprehensive income (Rbn)
DHEPS (cents)
Basic EPS (cents)
ROE (%)
Gross banking advances (Rbn)
Deposits (Rbn)
NIM (%)
Credit loss ratio (bps)
Total coverage (%)
Liquidity
Liquidity coverage ratio (%)
Capital
NSFR (%)
CET1 (%)
Risk-weighted assets (Rbn)
+7%
2023
2022
2021
2020
2019
15,7
29,7
17,3
14,1
25,8
13,4
3 199
2 809
2 362
1 113
2 565
3 239
2 934
15,1
885
14,1
863
1 088
1 040
421
109
3,62
135
117
13,5
695
393
89
3,37
161
119
14,0
648
12,5
6,2
15,0
373
83
3,32
336
161
352
79
3,25
2,26
12,8
10,9
11,5
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
29
Headline earnings up by 11% – driven by strong revenue growth & prudent
expense management, partially offset by higher impairments
Headline earnings (Rm)
+14%
+6%
+64%
+30%
+8%
+11%
1 538
565
5 193
2 730
753
2 224
19 133
14 061
HE
2022
NII
NIR
Associate
income
Impairments
Expenses
Direct tax
& other
1Other’ includes indirect tax and minority & preference shareholders.
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
15 650
HE
2023
30
16
Notes:Notes:Nedbank Group Annual Results 2023 Average gross banking advances up by 7% – solid growth in RBB & CIB
RBB average banking advances
(Rbn)
CIB average banking advances
(Rbn)
▪ RBB
500
450
400
350
300
250
+7%
+8%
1
1
4
9
3
4
4
6
3
1
9
3
19
20
21
22
23
19
20
21
22
23
‒ Solid growth in our relationship
businesses
‒ Gradual HL market share gains, but
slowing demand
‒ Selective growth by leveraging our
strong position in MFC
‒ More cautious in unsecured lending
given elevated risk
▪ CIB
‒ Term lending businesses grew 4%
‒ Growth across multiple sectors,
with continued momentum into
2024
‒ Moderate growth in commercial
property, supported by increased
corporate activity
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
31
Actual gross banking advances up by 3%
Moderate CPF
growth in pockets &
from corporate
activity
Term loans growth
from selective
sectors, but
corporates remain
cautious
Good HL growth
from market
share gains, albeit
slight decline in
residential
property market
activity
Leveraging MFC’s
market-leading
position, strong alliance
relationships & an
optimised digital
platform, but more
selective credit granting
+2%
+2%
+6%
+9%
Additional info
+3%
7
9
1
0
0
2
7
7
1
0
8
1
9
8
1
0
0
2
2
5
1
4
6
1
Remain deliberately cautious in
unsecured lending
(3%)
0
3
9
2
+1%
7
1
7
1
(1%)
7
2
6
2
Commercial
property
Term loans
& other
Home
loans
Instalment
debtors
Personal
loans
Credit
cards
Overdrafts
2019
2020
2021
2022
2023
3
6
8
5
8
8
Gross banking
advances
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
32
17
Notes:Notes:Nedbank Group Annual Results 2023ResultspresentationSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryMessage from ourChief Executive Deposits up by 5% – with improving loan-to-deposit ratio to 82% (2022: 85%)
Deposits (Rbn)
Clients shifting to longer tenure
in a higher-interest-rate
environment with an expectation
that rates have now peaked
+6%
(2%)
(20%)
+5%
+7%
+21%
(1%)
1
9
1
8
5
1
7
2
1
9
1
1
3
5
1
0
5
1
0
0
1
9
7
9
0
4
5
3
4
2
7
6
7
9
2
9
2
CASA
Cash
management
Call
& term
Fixed
deposits
NCDs
Other
deposits
FX
liabilities
2019
2020
2021
2022
2023
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
33
NII up by 14% ‒ driven by AIEBA growth of 7% & NIM expansion of 28 bps,
primarily from endowment (higher interest rates)
Net interest margin* (bps)
(16)
(2)
8
38
(5) Mix +1
(7) Pricing (3)
(4) Stage 3 .
interest reversal
352
19
336
20
373
21
393
22
Endowment
mix & rate
Asset
mix &
pricing
Liability
mix &
pricing
BSM
& other**
421
23
*Surplus cash in the SARB quota account, on which Nedbank earns repo, reclassified as AIEBA (R8,2bn reclassified, impacting NIM negatively by -3 bps).
**Balance sheet management & other includes positive HQLA rate & mix impact, positive basis risk impact & higher yields in NAR.
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
34
18
Notes:Notes:Nedbank Group Annual Results 2023
Endowment income – active interest rate risk management, positioning an appropriately
sized residual endowment position as an offset against anticipated changes in impairments
over time
Change in endowment income
vs impairments (Rbn)
Directional drivers
H1
23
H2
23
H1
24
H2
24
Average SA
interest rates
11,1% 11,75% 11,75% 11,3%
11,4%
11,5%
Endowment
(yoy change)
CLR
(yoy change)
▲ ▲ ▲ ▼
▲ ▼ ▼ ▼
2025
10,6%
▼
▼
121 96
bps bps
CLR within
60 to 100 bps range
10 bps CLR
=
R0,9bn pre-tax
10 bps NIM
=
R1,0bn pre tax
>90% TTC hedge effectiveness
Covid
period
Hedge
resumed
07 09
11
13
15
17
19
21
23
Yoy endowment income Δ
Yoy impairment Δ
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
35
NII sensitivity for 1% change in interest rates: R1,4bn
NIR up by 6% – supported by solid growth in commission & fees, as well as FX
devaluation. Excluding restatements, NIR growth was up by 9%
Non-interest revenue & income1 (Rm)
+5%
8
8
4
8
1
6
4
3
9
1
+3%
6
6
1
4
9
9
2
4
(16%)
(7%)3
5
1
7
1
6
4
4
1
Commission
& fees
Trading
income
Insurance
income
2022
2023
(6%)
+88%
4
5
8
1
7
8
9
Other
2
5
1
8
4
6
7
Equity
investment
income
▪ Commission & fees – solid growth driven by
cross-sell, main-banked client gains & value-
added services
▪ Trading – positive outcomes in debt securities
& commodities
▪
Insurance – impacted by lower traditional
bancassurance volumes, new business strain &
non-repeat of reserve releases, offset by
improved non-life claims experience & positive
shareholder returns
▪ Equity investment income – closely matched a
high 2022 base
▪ Other – benefit from FX devaluation of ZWL &
ZAR vs US$ given hard currency US$ exposure
in Zimbabwe, partially offset by a higher net
monetary loss
1 2022 restatements relate to net monetary loss from the face of the IS to NIR, card-selling costs & IFRS 17. Prior years not restated. | 2 Represents fair-value
adjustments, sundry income & investment income. | 3 Excluding reclassifications, insurance declined by 7%.
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
36
19
Notes:Notes:Nedbank Group Annual Results 2023ResultspresentationSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryMessage from ourChief Executive
Income statement restatements – net monetary loss, card-related costs &
IFRS 17 (immaterial impact on headline earnings)
Summary of restatements/
reclassification impact
(Rm)
Non-interest revenue
2023
2022
growth %
As reported
Restated
27 709
26 171
6%
Reclassification on a like-for-like basis
Net monetary loss
RBB Visa/Mastercard costs
IFRS 17
1 059
634
758
419
477
653
NIR (excl all reclassifications)
30 160
27 720
9%
Summary of
restatements/reclassification impact
(Rm)
2023
2022
growth %
As reported
Restated
Expenses
38 059
35 329
8%
Reclassifications on a like-for-like basis
RBB Visa/Mastercard costs
IFRS 17
634
713
477
619
Expenses (excl all reclassifications)
39 406
36 425
8%
Note: IFRS requires that costs directly attributable to revenue generation are included on the revenue line (ie NIR).
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
Additional info
▪ Net monetary loss: reclassified from the face
of the income statement to NIR (similar to
what we reported in FY 2022)
▪
IFRS 17 (New standard effective FY 2023):
Expenses of R713m (2022: R619m) &
associated indirect tax of R45m (2022: R50m)
related to the insurance products have been
reclassified from expenses to NIR of R758m
(2022: R653m)
▪ RBB Visa & Mastercard costs (New item in
2023): 2023: R634m & 2022: R477m have
become material and therefore reclassified
from expenses to NIR in accordance with IFRS
15 & to align with industry
▪ Commission & fees: +4,6% growth reported
(excluding reclassification: +5,4%)
▪
Insurance income: 16% decline reported
(excluding reclassification: 7% decline)
37
Impairment charge up by 30% – primarily driven by the macroeconomic pressures on
consumers, but pleasingly H2 2023 materially down on H1 2023 as a result of
management intervention
Impairment charge (Rbn)
13,1
+30%
5,4
7,4
6,5
6,1
H2
3,6
3,2
4,0
9,6
4,3
H1
2,5
7,7
3,3
3,4
5,3
2019
2020
2021
2022
2023
▪ RBB impairments +29% yoy
– Consumer pressure from steep increases in SA prime
rate, high levels of inflation & load-shedding, albeit
easing in H2 2023. H1 2023 impairments up by 60% vs
H2 2023 up by 3%
– Management interventions delivering benefits,
including better collections & loan origination, with
impairments down in H2 2023 across all RBB products/
segments
▪ CIB impairments +17% yoy – higher H2 2023 reflecting
the conclusion of material stage 3 loans
▪ Good outcomes in Wealth & NAR
▪ Central provision reduced to R150m (2022: R300m) &
total overlays reduced to R1,1bn (2022: R1,4bn) as risks
were incorporated in IFRS models
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
38
20
Notes:Notes:Nedbank Group Annual Results 2023 Group credit loss ratio at 109 bps – increase from 89 bps in 2022, but down
from the 121 bps reported in H1 2023
Credit loss ratios (bps)
GFC
152
GLC
161
250
200
150
100
50
0
H2 2023 CLR
reduction across
all RBB products &
segments
H1: 121
H2: 96
109
89
Material
conclusion of
historic NPLs
2
3
4
2
2
2
6
1
1
6
1
6
2
2
4
6
1
4
9
1
1
2
2
1
3
2
0
1
3
1
1
7
8
0
0
1
)
0
2
(
7
9
11
13 15 17
19 21 23
CIB
RBB
Wealth
NAR
2022
H1 23
H2 23
2023
Cluster TTC target ranges
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
39
Clusters within or below their TTC target ranges, with the exception of RBB,
but CLRs improving from H1 2023 across all segments/products
Additional info
Credit loss ratio (bps)
ECL coverage (%)
23
24
6
47
H2
23
32
3
H1
23
16
9
66
26
22
22
17
28
21
42
53
30
20
82
103
54
19
25
45
(2)
TTC
23
22
21
20
19
15–45
1,14
1,29
1,35
1,07
0,61
1,56
1,41
1,56
1,23
0,75
0,81
1,19
1,14
0,91
0,44
CIB
CIB excl CPF
CPF
RBB
194
164
226
161
134
240
138 120–175
5,35 4,92 4,83 5,09 3,87
CB
Retail
HL
VAF
PL
Card
67
227
80
61
191
62
75
11
266
200
98
33
(21)
175
(9)
110
50
50–70
2,28
1,83
2,05
2,61
1,68
275
163
160–240
6,13
5,73
5,54
5,73
4,48
64
14
2,29
1,72
1,64
2,02
1,47
183
163
203
192
146
269
182
5,16
5,11
4,82
5,29
4,09
1025
943
1106
918
982
1062
639
27,1
24,1
22,8
20,0
16,8
566
341
794
490
633
897
542
16,3
15,9
16,8
17,6
13,2
Wealth
NAR
Group
12
100
109
21
87
96
3
113
121
(20)
102
89
9
72
83
64
18
20–40
1,29
1,33
1,56
1,42 0,74
185
101
85–120
5,71
5,19 4,85 3,94 3,34
161
79
60–100
3,62 3,37
3,32 3,25 2,26
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
40
21
Notes:Notes:Nedbank Group Annual Results 2023ResultspresentationSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryMessage from ourChief Executive GLAA stage movements & coverage – overall coverage at multi-year highs given
an increase in stage 3 loans, although set to reduce in coming reporting periods
GLAA (Rbn)
Coverage (%)
2019
2022
2023
2,26
3,37
3,62
▪ Stage 1 loans
‒ Coverage well above pre-Covid levels
37,9
34,3
34,2
▪ Stage 2 loans
818
58
Total:
778
28
72
762
45
98
772
39
99
807
52
78
77
5,3
7,0
6,8
Performing coverage (stage 1 &2)
0,94
1,26
1,28
678
619
634
678
682
0,48
0,60
0,66
2019
2020
2021
2022
2023
Stage 1
Stage 2
Stage 3
‒ Levels more stable, with coverage still
well above pre-Covid levels
▪ Stage 3 loans
‒ Expected stage 3 loan decline in
2024, resulting in NPL ratio below
2,5%
‒ RBB stage 3 loans: VAF & Card
peaked, PL to reduce in 2024 & HL to
remain elevated
‒ Coverage reflects Nedbank’s highly
collateralised book
1 Total balance sheet ECL includes FVOCI & off-balance sheet ECL, whereas ECL coverage excludes FVOCI & off-balance sheet ECL.
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
41
Expenses up by 8% – reflecting good expense management
Expenses (Rm)
+8%
+9%
+8%
+7%
1
6
7
3
5
9
0
4
8
0
8
5
1
5
4
0
7
1
6
7
3
6
0
0
9
6
Salaries, wages &
other employee
costs
Incentives
(STI & LTI)
Computer
processing
2022
2023
4
8
3
9
9
1
0
0
1
Other
▪ Employee-related costs
‒ Salaries & wages: higher annual average salary
increases (+6,3%), additional costs to retain talent,
partially offset by 2% yoy decline in permanent
headcount
‒ Variable-pay incentives aligned with profitability
metrics & vesting probabilities (STI +5%, LTI +23%)
▪ Computer processing – driven by FX devaluation &
higher digital volumes, partially offset by a decline in
amortisation of intangible assets
▪ Other costs
‒ Discretionary spend at more normalised levels, incl
marketing (+3%) & travel (+7%)
‒ Accommodation +8% driven by higher generator
running-costs relating to load-shedding (up >100%
to R107m)
‒ Fees & insurances +15% from card-issuing &
acceptance costs, linked to strong revenue growth
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
42
22
Notes:Notes:Nedbank Group Annual Results 2023
Capital – CET1 ratio at 13,5% remains very strong, positioning us well for growth &
sustainable dividend payments, while protecting against unexpected downside risk
CET1 ratio (%)
(1,2)
2,3
(0,9)
(0,7)
Board CET1
target
SARB PA
minimum
CET 1
11% to 12%
8,5%
14,0
Dec
22
Capital
generation
Dividends
RWA
Capital
optimisation
13,5
Dec
23
Completed R5bn capital optimisation initiative,
with the following outcomes (full-year basis):
▪ CET1 reduction:
▪ ROE accretion:
0,7%
~0,5%
▪ HEPS growth accretion:
~4%
Maintain CET1 ratio above our 11%-12% target
range – considered appropriate in a difficult &
volatile environment
Retain capital for growth – infrastructure
opportunities & SPT 2.0 growth objectives
Complementary bolt-on M&A, should they arise
Pay dividends at top-end of payout ratio, subject to
board approval
Further capital optimisation, if appropriate
Possible Basel III PCN counter-cyclical buffer in
2026
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
43
Average equity drivers – strong growth in earnings, partially offset by R5bn
capital optimisation, dividends paid at the top end of payout ratio
Equity movements (Rbn)
Additional info
7,0
(5,2)
(3,4)
0,1
▪ Average HE of R7,0bn – R15,7bn
actual throughout FY 2023, with H2
> H1
▪ Average dividends paid of R5,2bn –
R4,4bn (accrued in March 2023) &
R4,2bn (accrued in August 2023)
▪ Average capital optimisation of
R3,4bn –R5bn capital optimisation
initiative executed, mostly in the
April to June 2023 period
▪ Average FCTR, OCI & other
reserves of R0,1bn – R0,6bn actual
impacts from FX etc
103,5
Headline
earnings
Dividends R5bn capital
optimisation
initiative
FCTR & OCI
Average
2023 equity
105,0
Opening
equity
(1 Jan 2023)
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
Average
44
23
Notes:Notes:Nedbank Group Annual Results 2023ResultspresentationSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryMessage from ourChief Executive RWA progression – RWA growth in 2023 driven by credit RWA aligned to
overall loan growth & credit risk migration
Risk-weighted assets (Rbn)
Additional info
11
(15)
(4)
(1)
28
12
(1)
8
657
Dec
2021
Credit
CCR
1
Market
648
Dec
2022
Other
RWA
Credit
1
CCR
Market
695
Dec
2023
Other
RWA
1 Counterparty credit risk.
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
45
Capital management – strong capital position maintained in an uncertain
macroeconomic environment
Additional info
Average capital allocation (Rbn)
,
5
6
3
,
2
6
3
,
0
6
3
,
1
3
3
,
8
1
3
,
7
4
3
5
4
,
,
3
4
5
4
,
,
4
6
,
1
7
5
7
,
,
9
2
1
,
5
0
2
,
8
0
2
CIB
RBB
Wealth
NAR
Centre
21
22
23
At 31 December 2023 the average surplus capital position increased by
R0,5bn to R12,3bn, driven largely by strong organic capital generation
offsetting the R5bn capital optimisation initiative.
20,5
20,8
12,9
11,8
12,3
4,2
2,5
1,4
4,8
21
3,3
1,1
4,3
22
3,2
1,0
4,3
23
Goodwill
Intangibles
Allocated capital
Surplus capital
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
46
24
Notes:Notes:Nedbank Group Annual Results 2023 Cluster financial overview – all business clusters reported positive HE growth
& all ROEs were above the group’s COE
Headline earnings
(Rbn, growth %)
Return on equity
(%)
NAR
+94%
1,9
Wealth
+6%
1,2
+6%
6,8
CIB
Group
R15,7bn
+11%
5,6
RBB
+9%
Group ROE
15,1%
COE
14,8%
%
9
8
1
,
%
0
6
1
,
%
8
6
2
,
%
2
5
2
,
CIB
RBB
Wealth
NAR
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
47
CIB
overview
‘Good revenue
growth & capital
optimisation leading
to higher returns’
Anél Bosman
Group Managing Executive
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
48
25
Notes:Notes:Nedbank Group Annual Results 2023ResultspresentationSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryMessage from ourChief Executive CIB financial performance – CIB achieved a solid set of results in a difficult
operating environment, with HE growing at 6% & ROE increasing to 18,9%
Financial performance
17,7
17,7
18,9
15,3
9,4
+6%
▪ NII up by 7%
‒ Average interest-earning banking assets +7%
‒ NIM maintained at 2,42% – endowment benefit, offset by lower
margins, improved risk ratings & suspended interest on stage 3
assets
▪ NIR up by 5%
‒ Commission & fees up by 3% as deal closure & transactional activity
levels increased
‒ Equity investment income 1 matched a high 2022 base
‒ Markets NIR by 7%
▪ CLR below mid point of the TTC target range of 15-45 bps
7
6
1
6
19
6
3
6
3
20
5
0
6
5
21
9
9
3
6
22
9
9
7
6
23
– CLR at 24 bps includes adequate provisioning for stressed counters;
single-name exposures in business rescue
▪ Expense growth of 7%
– Expenses controlled, increasing by7% due to inflationary pressures &
market-driven employee costs
E
O
R
)
%
(
i
s
g
n
n
r
a
e
e
n
i
l
d
a
e
H
)
m
R
(
1 Equity portfolios defined as private equity & not equity trading.
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
Banking advances – strong performance in H2 2022 leading to higher average
advances in 2023
Actual & average banking advances (Rbn)
+8%
▪ Average banking advances up by 8%
− Solid growth across multiple sectors, with
continued momentum into 2024
2022
2023
Property Finance
Markets & Other
Average advances
Investment Banking
Transactional Services
Average growth
Total allocated capital (Rbn)
▪ Actual banking advances flat
− Term lending businesses grew by 4%
− Liquidity management impacts banking advances
− Short-term transactional facility repayments
(1%)
▪ Total allocated capital down by 1%
− Continued focus on capital efficiency &
optimisation of returns
2022
2023
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
49
50
26
Notes:Notes:Nedbank Group Annual Results 2023
CLR below the mid-point of the CIB TTC target range
Credit loss ratio (bps)
82
42
25
22
24
▪ 24 bps CLR includes adequate provisioning for stressed
counters, below the expected mid-point of our TTC target
range
▪ Material conclusion of stage 3 loans in business rescue
(commercial property, aviation & agriculture)
19
20
21
22
23
– Expected stage 3 loan decline in 2024 resulting in NPL
Stage 3 loans (Rbn) & coverage ratio (%)
ratio below 2,5%
24,6%
14,9%
23,7% 18,2% 16,4%
▪ Focus on stressed sectors/counters
11,6
10,5
7,1
6,5
▪ Stage 2 exposures continue to reduce with increased
coverage ratio
▪ African deals – well structured & secured
19
20
CIB excl PF
21
22
23
Property Finance
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
51
Commercial property finance – a high-quality, well-diversified & highly
collateralised portfolio
High-quality,
well-diversified
& highly
collateralised
portfolio
Portfolio LTVs
remain low at
< 52%
Adequate collateral –
significantly reduces
the risk of potential
losses
CLR at 47 bps
(Dec 22: 28 bps)
driven by large
single-name
exposure rather
than general
portfolio stress
Large stage 3
exposure in
business rescue
largely resolved
Low levels of
arrears on
performing book
0 to 90 days: R8m
(Dec 22: R6m)
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
Credit loss ratio (bps) & loan-to-value ratio (%)
CLR
(2)
54
30
28
47
48,0%
50,5%
53,4% 52,6% 52,0%
LTV
Dec 19 Dec 20 Dec 21 Dec 22 Dec 23
LTV
52
55
50
40
53
35%
% of
loans
25%
21%
11%
8%
Retail
Offices
Industrial Residential
Other
52
27
Notes:Notes:Nedbank Group Annual Results 2023ResultspresentationSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryMessage from ourChief Executive Commercial Property Finance – sector trends
Additional info
Office vacancies 1
Sector trends
Listed sector
▪ Office vacancies maintain downward
▪
trajectory:
‒ Q2 2022: 16,7% (peak)
‒ Q4 2022: 16,1%
‒ Q4 2023: 15,2%
Valuations appear to have
stabilised:
‒ Valuations in the listed sector
up by ~1%
‒ Property Finance valuations up
by ~2% across the portfolio
▪
Continue to see negative rental reversions
to protect vacancies
▪
Trading of assets:
Retail vacancies1
▪ Retail vacancies have largely remained flat:
‒ Improved sentiment &
confidence returning to the
sector
‒ Assets trading at book values
▪
▪
▪
▪
Listed property sector the best-
performing asset class in 2023:
up by 10,7%
Average LTV for the listed sector at
36%: well below typical covenant
level of 50%
Average listed sector ICR at 2,9x:
well above typical covenant level of
2x
Sustainability remains a key theme
for the sector – particularly for
listed funds
‒ Q1 2021: 7,1% (peak)
‒ Q4 2022: 5,0%
‒ Q3 2023: 5,1%
▪
Increase in corporate action –
reflects more positive sentiment &
opportunities being seen in the
sector. This is expected to continue
in 2024.
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
1 SAPOA reports
53
Creating positive impacts – expanding our leadership in renewable energy
through pipeline conversion
Renewable energy exposures
(Rbn)
Strong activity in Q4 2023 will
support book growth in 2024
Good pipeline of deals anticipated to close
in 2024
Limits: +22% yoy
32
30
37
27
45
29
25
3 C&I projects closed in 2023
▪
▪ R3,7bn in facility limits
168 MW
1,9GW
Pipeline/Mandates on C&I projects
▪
▪ R16bn in facility limits
▪
15 projects anticipated to close in 2024
6 government projects closed in
2023
▪ 330 MW
▪ R8,2bn in facility limits
Pipeline/Mandates on government projects
▪ 0,5GW
▪ R7bn in facility limits
▪ 5 projects anticipated to close in 2024
Book growth of R18bn expected for 2024
Progress on
government projects
RMIPPPP
REIPPPP R5
REIPPPP R6
Awarded
4 (0,5GW)
4 (0,3GW)
2 (0,3GW)
Closed
in 2023
2 (0,15GW)
2 (0,15GW)
Closing
in 2024
1 (0,15GW)
-
Terminated
1 (0,2GW)
2 (0,15GW)
-
2 (0,3GW)
-
23
19
22
Private power generation
20
21
Government programmes
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
54
10
15
28
Notes:Notes:Nedbank Group Annual Results 2023 Creating positive impacts – using glidepaths to shift the financing of our
energy mix
Reduction to achieve
net zero by 2050
Science-based
scenarios
Attribution factors
for share of GHG
emissions/attributed
emissions of the
financed clients
Adopted IEA Net Zero (NZE) 2050 pathway as a basis for our first
targeted commitment date of 2030 (31 December 2029)
Upstream fossil fuel
emissions
Power generation
emissions
Thermal coal
47%
reduction
Oil & gas
26%
reduction
Adopted a cap aligning
to NZE target of
188 gCO2e/kWh
▪ Utilisation of Scope 1, 2 & 3 CO2e
▪ Utilisation of Scope 1 CO2e
emissions
emissions
▪ Absolute measurement metric &
▪ An intensity metric of CO2e/kWh
target
▪ Use of limits instead of drawn
amounts in the attribution factor
▪ Zero exposure to fossil fuels by
2045
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
Note: Carbon dioxide equivalent or CO2e is the number of metric tons of CO2 emissions with the same global
warming potential as one metric ton of another greenhouse gas.
55
Creating positive impacts – supporting clients to achieve environmental &
socioeconomic objectives
Sustainable finance (exposures, Rbn)
Sustainable fundraising in issue ( Rbn)
Additional info
Additional info
Growing our exposures
by refining our solutions –
supporting our clients to
achieve their strategic
objectives
35% increase in facilities
36% increase in utilisation
3
1
21
Limits: + 35% yoy
20
11
27
15
10
15
17
23
2021
22
Use of proceeds (bonds)
Use of proceeds (loans)
Sustainability-linked loans
Sustainability-linked bonds
2023
2022
loans
Green Loans
-linked loans
Sustainability Linked Loans
Climate Loans
loans
bonds
Green Bonds
Positive impacts created for our
clients through funding green
technologies & embedding KPIs*
focused on emissions reductions,
renewable energy & water
efficiency
Market recognition & thought leadership
2023 Global
Finance
Magazine
Awards
Outstanding
Leadership in
Sustainable Bonds
(winner)
2023 Bonds,
Loans and ESG
Capital Markets
Africa Awards
ESG Loan Deal of
the Year
(winner)
2023 African
Banker Awards
Sustainable Bank
of the Year
(winner)
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
*Measured through key performance indicators on sustainability-linked facilities extended to clients.
2023
Environmental
Finance Awards
Sustainability-
linked Loan of the
Year (Africa)
(winner)
56
29
Notes:Notes:Nedbank Group Annual Results 2023ResultspresentationSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryMessage from ourChief Executive Digital – delivering capabilities to be the go-to transactional bank for SA
businesses
Completed TOM 2.0 organisational restructure
▪ Focus on digital, channel, client delivery & payments
▪ Embedding digital culture & leadership
▪
Innovation for efficiency & optimisation
▪ Delivering our Transactional Services & other capabilities to market
Empowering clients through our warm digital capabilities
▪ Driving channel and client experience excellence
▪ Digital adoption through feature-rich Nedbank Business Hub platform
▪ Leverage client data insights & experience to inform design
83% client satisfaction survey score
>95% of clients migrated onto FX &
international payments channel
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
57
Our strategic growth levers to drive franchise value
Additional info
Accelerate growth mindset across our business
Deliver client value through our sectorised approach
Actively manage the balance sheet to enhance returns
Grow our Transactional Services business
Empower our clients through our warm digital capabilities
Increase investment in our people
Create positive impacts by embedding purpose in everything we do
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
58
30
Notes:Notes:Nedbank Group Annual Results 2023 Nedbank Corporate & Investment Banking – outlook
2024 outlook
▪ NII
– Banking advances – momentum built in H2 2023 continues into 2024
▪ NIR
‒ Diverse revenue stream through transactional banking, trading & advisory
‒ Commission & fees to benefit from balance sheet activity & liquidity instruments
‒ Continued momentum in trading activities
‒ Targeted opportunities in Africa
▪ CLR – below mid point of the TTC target range
▪ Strategic execution – maintain focus under challenging conditions
▪ Capital – improve returns & optimise resources further
Medium- & long-term outlook
▪ Reduce cost-to-income ratio to <44% & maintain ROE >19%
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
59
RBB
overview
‘Headline earnings
up by 9% after a
good recovery in H2
2023’
Ciko Thomas
Group Managing Executive
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
60
31
Notes:Notes:Nedbank Group Annual Results 2023ResultspresentationSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryMessage from ourChief Executive RBB financial performance – HE growth improved from a decline of 8% in H1 2023
to an increase of 24% in H2 2023, following lower impairments
Financial performance
17,3
E
O
R
)
%
(
5,4
16,0
16,0
13,7
▪ NII up by 14%
‒ Average advances growth momentum continued at +7%
‒ Endowment benefit from higher interest rates
+9%
▪ NIR up by 7%
i
s
g
n
n
r
a
e
e
n
i
l
d
a
e
H
)
m
R
(
3
9
2
5
19
5
9
5
1
20
2
3
5
4
21
7
9
0
5
22
6
6
5
5
23
‒ Driven by main-banked client gains & improved cross-
sell
‒ Higher card interchange volumes (+12%) & higher
activity in value-added services (+27%)
▪
Impairments up by 29%
‒ CLR improved from 226 bps in H1 to 164 bps in H2 due
to improved origination & collections
‒ CLR within TTC target range in H2 2023
▪ Expense growth of 7%
‒ Ongoing cost optimisation & digitisation benefits
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
61
RBB financial performance – strong HE growth & attractive ROEs in NCB &
RRB. Consumer Banking impacted by higher H1 2023 impairments, which
improved in H2 2023 along with a lower cost-to-income ratio
Additional info
Headline earnings per division (Rm)
)
%
(
E
O
R
4
0 2
2
9
1
1
1
3
6 3
2
6
2
3
6 4
5 3
2
Nedbank Commercial Banking
4
1
1
0
1
0
1
8
▪ Strong revenue growth of 17% driven by good advances & strong
deposit growth, positive endowment & moderate NIR growth
▪ CLR at 67 bps (2022: 11 bps) at the top end of the TTC target range
+15%
+30%
(16%)
Retail Relationship Banking
▪ Strong revenue growth of 20% driven by good advances & strong
deposit growth, positive endowment & well-managed expense base
▪ CLR up to 79 bps (2022: 41 bps), slightly above the TTC target range
Consumer Banking
▪
>9% growth in main-banked clients & transactional NIR, supported by
being #1 in client experience among the big 5 retail banks
▪ Digital & sales productivity enabling efficiencies, with the cost-to-
income ratio declining to 58,5% (2022: 59,5%)
▪
Improved credit outcomes in H2 23 with CLR down to 217 bps (H2 22:
250 bps) while FY 23 CLR up to 262 bps (2022: 237 bps)
2
1
8
1
7
8
0
2
2
9
2
1
3
7
6
1
0
5
9
1
6
4
6
1
Commercial
Banking
Relationship
Banking
Consumer
Banking
19
20
21
22
23
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
62
32
Notes:Notes:Nedbank Group Annual Results 2023
Nedbank Commercial Banking & Retail Relationship Banking – strong
growing & differentiated franchises, delivering great client experiences &
leveraging digital
Nedbank Commercial Banking
Retail Relationship Banking
Well-positioned & distinctive value propositions
incorporating unique lending solutions
Loyal established client base and a CVP focused on growing
young professionals and start ups
▪ Market share increase to 23% owing to high CX
• Client satisfaction at all-time high; improving cross-sell &
attributes
entrenchment metrics
▪ Positive momentum on digital journey, achieving critical
• High levels of digital adoption (98% digitally enabled)
scale on Nedbank Business Hub
driving a lower cost-to income ratio
▪ Leveraging well-positioned industry CVPs resulting in
competitive market share positions in manufacturing
(26%), retail services sectors (28%) & growing brand
presence in agriculture – secondary production (27%)
▪ Promotion of NCB sustainability proposition leveraging
increased financing activity levels across key
sustainability development goals
▪ Public sector activity focus – Impressive gains in
transactional banking and financing across the sector
▪ The NCB Leveraged Finance Team acknowledged as
one of the most innovative & forward-thinking teams
• Best value and most accessible Private Clients proposition
in market; market share in mid-teens
• Small business offering strengthened with easy-to-access
credit solutions, 6-month free banking; market share in early
twenties (urban)
• Market-leading ‘beyond’ offering with 47k SimplyBiz users
providing coaching, tools and other business support
• Opportunity to further grow client base in franchising,
more focused merchant acquisition as well as leveraging our
expansion of relationship services into underrepresented
markets
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
63
Consumer Banking – our digital transformation is enabling enhanced CVPs, strong
growth & outcomes in digital metrics & market-leading client experiences
Improved CVPs
✓Digital onboarding &
servicing
✓MiGoals – R99 account
incl GB
✓Greenbacks 2.0 –
relaunch in Q1 2024
✓#2 ranking in mobile
banking (SITEisfaction ®)
✓386 Imagine branches
(71% converted)
%
2
1
%
8
2
%
2
3
%
3
5
%
5
5
Digital sales
(% of total sales)
+11%
2,9
2,6
2,3
2,1
1,8
#2
k
n
a
b
d
e
N
SITEisfaction® scores1
(Best SA digital bank)
Big 5 retail banks
New digital entrant
NPS – client satisfaction
(ranking out of top SA 5 banks)
#1
#1
#2
+16%
2,3
2,0
#3
#3
1,6
1,2
0,8
19 20 21 22 23
19 20 21 22 23
Retail digitally active
clients
Retail active Money
app users
Consulta
Kantar
19
20
21
22
23
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
1 2023 SITEisfaction® Report (Human8).
64
33
Notes:Notes:Nedbank Group Annual Results 2023ResultspresentationSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryMessage from ourChief Executive Consumer banking – strong main-banked client gains & higher cross-sell, driving
NIR growth, but deposits market share lagging
Main-banked clients
(million & growth %)
Cross-sell ratio (number of
products/clients)
Household deposits
(BA900 market share, Dec %)
Growth
+1%
+9%
+6%
(1%)
(4%)
3,14
3,02 3,05
3,24
3,53
1,78
1,71
1,94 1,96
1,86
16,9
15,7
14,5 14,8 14,6
Stabilised
historic
decline; focus
now on growth
19 20 21 22 23
19 20 21 22 23
Consumer transactional NIR
(Rbn & growth %)
4% 7% 4% 5% 9%
3,9 4,2 4,4 4,6 5,0
Correlation
with main-
banked client
growth in 2023
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
19 20 21 22 23
65
Main-banked growth is evident across most segments
Main-banked clients1, # 000
Additional info
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%
+4%
516
456
421
436
452
(4%)
(4%)
+8%
+14%
1 425 1 365 1 309 1 412 1 609
0%
+13%
+6%
+5%
891
892
1 005 1 062 1 120
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
l
i
a
c
r
e
m
m
o
C
i
s
e
c
v
r
e
S
i
2
g
n
k
n
a
B
+7%
89
95
+9% +10% +9%
104
114
123
(1%)
+2%
+3%
+2%
179
177
180
185
189
(1%)
(1%)
+1%
(0%)
14,7
14,6
14,4
14,6
14,5
19
20
21
22
23
19
20
21
22
23
1 Definition of main-banked: Clients who achieved a minimum deposit or a number of quality transactions on average per month over 3 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 – 2023 Annual Financial Results
66
34
Notes:Notes:Nedbank Group Annual Results 2023
Consumer Banking – unlocking productivity gains through Project Imagine,
supporting a lower cost-to-income ratio
2022 Finalta survey1
(yoy change)
Branch staff sales
(Sales/role/day)
Branch floor space
(sqr metres)
Saved 2014
to date
Sales per 1k
active clients
Branch sales per
branch FTE
Branches per
active 10k clients
Branch FTE per
10k active clients
30%
27%
5%
13%
1 Global survey conducted by McKinsey –
2022 v 2021.
+24%
+47%
111
Retail Consumer cost-to-income
ratio (%)
4
0
2
0
9
1
2
8
1
4
6
1
7
3
1
60,3 62,0 61,4
19 20 21
22
23
Teller activity
(# million)
59,5 58,5
21
22
23
(71%)
Servicing staff
Sales staff
3
2
3
1
1
1
9 7
19 20 21
22
23
19
20
21
22
23
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
67
Our technology strategy, along with shifts in client transactional behaviours,
is driving NIR growth & cost optimisation opportunities
Branch teller transactions1
POS volumes
(71%)
(20%)
+97%
Additional info
+9%
19
20
21
22
23
19
20
21
22
23
ATM withdrawals
+3%
Digital payment & transfers2
+12%
+4%
+98%
19
20
21
22
23
19
20
21
22
23
2019 vs 2023
2022 vs 2023
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 – 2023 Annual Financial Results
68
35
Notes:Notes:Nedbank Group Annual Results 2023ResultspresentationSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryMessage from ourChief Executive
RBB impairments – focus on collections, loan origination & credit policy
tightening, leading to an ongoing improvement in CLRs & material
slowdown in NPL formation
RBB stage 3 loans (hoh growth, Rbn)
RBB CLR (%)
Business & product level CLRs
(%)
Drivers of improving trends
226
CLR
152
170
164
NPLs
0
1
,
2
2
,
0
6
,
0
2
,
H1 22
H2 22
H1 23
H2 23
HL
VAF
PL
Card
NCB
H1 22
H2 22
H1 23
H2 23
▪ A more stable macroeconomic
environment in H2 2023
▪ Credit policy tightening, particularly in
Unsecured Lending
▪ Assisting our clients via tailored
rehabilitation & support
▪ Payment strategies & DebiCheck
mandate increases, particularly on
MFC & Card
▪ Enhanced collections strategies
▪ Client-specific interventions
supporting clients in Commercial
Banking
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
69
RBB credit quality – impacted by higher interest rates, higher inflation &
lower levels of disposable income, but improved in H2
Additional info
Home loans
Vehicle finance
Personal loans
Credit card
▪
Interest rates & inflation
▪ More recent vintages initially
most impacted; elevated
trends across all vintages
▪
Entry-level & higher-end
(lesser extent) clients
impacted
▪
▪
▪
Interest rates & inflation
Strain across most vintages &
segments
Impact not as severe as on
home loans on a relative basis
▪
▪
▪
Inflation & unemployment
▪ Discretionary spend &
Strain across most vintages &
segments. Improvement in H2
Clients with other variable-rate
exposures experiencing bigger
relative strain vs expectations
unemployment
▪
▪
Strain across most vintages &
segments. Improvement in H2
Clients with other variable-rate
exposures experiencing bigger
relative strain vs expectations
3
3
0
8
2
9
1
3
8
1
8
1
9
5
2
0
1
0
9
4
6
6
5
Approval rates Take-up rates
Approval rates Take-up rates
Approval rates Take-up rates
Approval rates Take-up rates
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
70
19
20
21
22
23
k
s
i
r
y
e
K
s
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
36
Notes:Notes:Nedbank Group Annual Results 2023
Client income & expenditure – consumer disposable income under pressure
Additional info
Average client income & expenditure
2021
2022
2023
Income
Loan repayments
Essential expenditure
Discretionary expenditure
(3%)
10%
9%
15%
6% 5%
(2%)
3% 6%
17%
6%
(10%)
5% 4%
(29%)
27%
(9%)
(4%)
(3%)
(1%)
8% 3%
1%
(4%)
Income
Home Loans
Vehicle
finance
Personal
loans
Groceries
Education
Healthcare
Fuel
Home
improvement
Fast
food
Clothing
Alcohol
Sample comprises Nedbank main-banked clients that have received income or transacted during the period reported (~1,5m clients). The yoy comparison is Jul-Dec for 2023, 2022 and 2021.
Income growth reflects the average effect of some clients receiving increases above inflation, some clients below inflation as their employers could not afford higher increases & some clients
that may have lost or seen a reduction in their income.
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
71
RBB strategic progress – good progress on growth vectors
Avo
Value-added services
Solar offerings
Funeral insurance
Township economy
▪ Avo
Marketplace
▪ Avo Auto
▪ Avo Home
▪ Avo B2B
▪ Avo Solar
Value-added services
revenue (Rm)
+29%
20
21
22
23
Registered Avo clients
(# m)
+26%
0,7
2,0
2,5
20
21
22
23
▪ 101 deals approved &
> R400m deals financed
for commercial clients
▪ > 450 households
financed with MFC solar
# MFC deals approved
>100%
22
23
Clients with funeral
policies (#)
+22%
20
21
22
23
Specialised Main Markets Team
formed led by GM: Main Market
Transactional
Investments
>45%
>90%
VAS
>450%
Funeral
Insurance
(Funeral policies)
>55%
PayShap
28% share of
market transactions
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
72
37
Notes:Notes:Nedbank Group Annual Results 2023ResultspresentationSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryMessage from ourChief Executive Nedbank Retail & Business Banking – outlook
2024 outlook
▪ NII
─ Advances & deposits growth – momentum continues
─ NIM is expected to decline as a result of ongoing product mix changes & margin squeeze in
client spreads
▪ 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
▪ Strategic execution – Phoenix, Imagine & collection strategies
Medium- & long-term outlook
▪ Ongoing focus to reduce the cost-to-income ratio to <57% & increase ROE to between 20% & 23%
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
73
Wealth
overview
‘Resilient HE & ROE,
driven by higher
interest rates &
positive market
movements’
Iolanda Ruggiero
Group Managing Executive
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
74
38
Notes:Notes:Nedbank Group Annual Results 2023 Wealth financial performance – resilient HE & ROE, driven by higher local &
international interest rates & growth in AUM
E
O
R
)
%
(
i
s
g
n
n
r
a
e
e
n
i
l
d
a
e
H
)
m
R
(
Financial performance
24,8
15,3
21,2
26,3
26,8
▪ NII up by 42%
– NIM expansion due to higher local & international interest rates
– Significant growth in average deposit balances in WMSA
+6%
▪ NIR down by 4%
– Lower traditional bancassurance volumes
– New business strain from new MyCover solutions
– Lower advice & investment fees
– Increase in shareholder returns in Insurance
– Growth in AUM fees
Impairments up by > 100%
▪
2
4
0
1
19
2
6
6
20
2
6
9
21
0
4
1
1
22
0
1
2
1
23
– Lower client-specific overlay releases than in prior year & an
increase in credit impairment charges in WMSA
▪ Expense growth of 10%
– Investment in people, brand awareness, data & digital initiatives
– Higher inflation rates internationally & exchange rate impacts
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
75
Wealth financial performance – resilient HE growth positively impacted by
higher interest rates & market performance locally & internationally, offset by
lower NIR in Insurance
Additional info
Headline earnings per division (Rm)
(5%)
Insurance
▪
Increased sales in MyCover suite
▪ Higher shareholder returns
▪ Lower traditional bancassurance volumes
+10%
▪ New business strain from new MyCover solutions
+22%
Asset Management
▪ Positive local & international market performance
▪ Significant growth in inflows & positive FX impact
Wealth Management
8
0
5
2
8
4
1
5
3
6
8
3
1
8
2
2
4
3
▪ Higher local & international interest rates
▪ Significant growth in average deposit balances in
Insurance
Asset
Management
Wealth
Management
19
20
21
22
23
WMSA
▪ Lower client-specific overlay releases in WMSA
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
76
39
Notes:Notes:Nedbank Group Annual Results 2023ResultspresentationSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryMessage from ourChief Executive
Insurance – lower traditional bancassurance volumes and new business strain,
offset by positive shareholder returns
Total group insurance
income (Rbn)
IFRS 17 implemented with 2022
restated results
MyCover Funeral
16%
1,7
(16%)
1,4
Stable non-life
claims ratio
(improved HOC &
unfavourable
MyCover Personal
Lines)
41%
growth in GWP
from the MyCover
suite
Negative reserve
impact in 2023 vs
reserve releases
in 2022
Credit Life
volumes
negatively
impacted by more
prudent credit
granting
22
23
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
MyCover Personal Lines
MyCover Life
Gross premium earned
2022
2023
487%
Gross premium earned
2022
2023
25%
Gross premium earned
2022
2023
77
Insurance – large growth opportunity driven by channel & product expansion
as well as digital enhancements
Gross written premium (Rm)
0
0
17
# of digital products
7
# of digital channels
>50%
>17
>7
Digital growth
Digitally active clients
Digital policies
>100%
+58%
+240%
+16%
Life Non-life
Life Non-life
Life Non-life
2019
2023
Medium term
(MT)
19
20
21
22
23
MT
Launched the
Insurance widget &
Offers for you
on Money app, driving
increased traffic & sales
Redesigned the
insurance flow entry
screen for enhanced
client accessibility,
resulting in improved
user experience
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
78
40
Notes:Notes:Nedbank Group Annual Results 2023 Insurance – significant progress made on product and channel diversification
Additional info
Pre-2010
Branch
Credit
Life
Home-
owner’s
cover
Current
Branch | Bank insertion points
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
VVAPs
Banker
MyCover
Personal
Lines
Digital channels
Dotcoza
Platform
MyCover
MyCover
Funeral
Funeral
MyCover
Life
Personal
Accident
MyCover
Personal
Lines
VVAPs
MyCover
Funeral
MyCover
Vehicle
Life
Non-life
Eclipse
In development
Delivered from 2021
Financial advisor
Risk consultants
MyCover
Funeral
Savings &
investments
Home-
owner's
cover
MyCover
Personal
lines
MyCover
Funeral
MyCover
Life
MyCover
Personal
lines
Home-
owner's
cover
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
79
Asset Management – good growth in NIR, driven by 14% increase in AUM
Assets under management (Rbn)
375
331
312
297
273
257
212
190
151
+14%
448
393
424
20 years
of
Best of
Breed™
Asisa stats ranking
• SA – 6th largest in
total AUM (7%
market share)
• International –
3rd largest in total
AUM (9% market
share)
Outstanding
industry
recognition
Good inflows
into
cash & low-cost
core range
12 13 14 15 16 17 18 19 20 21 22 23
Local
International
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
80
41
Notes:Notes:Nedbank Group Annual Results 2023ResultspresentationSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryMessage from ourChief Executive )
(
%
M
N
I
Wealth Management – HE growth of 22%, driven mainly by an increase in NII,
offset by increased impairment charges locally
Wealth Management average advances,
average deposits & NIM
1,6
1,1
1,1
2,1
+11%
49
1,7
44
31
+0%
31
20%
increase
in average
deposit book in
WMSA
Group
collaboration
driving increase in
advice
penetration
Replacement of
international
wealth
management
platform on track
19
20
21
22
23
Avg advances
Loans & Advances
Deposits
Avg deposits
Top Private Bank in SA
(Intellidex)
Best Private Bank – Africa
(Global Private Banking Innovation
awards)
WealthBriefing MENA
Awards
Best Boutique Private
Bank and Best Private
Bank – Overall Client
Service
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
81
Nedbank Wealth – outlook
2024 outlook
▪ NII – NIM expected to decrease as international interest rates forecast to decline
▪ NIR
‒ Growth in Nedbank Insurance MyCover suite
‒ Increase in high-net-worth market share
‒ Higher AUM through attracting net inflows
▪ CLR – To remain within the lower end of the TTC target range
▪ Expenses
‒ Continued investment in strategic growth initiatives & key enablers (people & brand)
Medium- & long-term outlook
▪ Reduce cost-to-income ratio to < 65% & maintain strong ROE > 10% above the group’s COE
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
82
42
Notes:Notes:Nedbank Group Annual Results 2023
NAR
overview
‘Improved SADC
performance &
continued ETI
turnaround’
Dr Terence G Sibiya
Group Managing Executive
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
83
NAR financial performance – improved performance from our SADC operations
& continued turnaround from ETI
Financial performance
E
O
R
)
%
(
7,7
9,3
25,2
13,8
1
(0,8)
▪ SADC operations – HE of R662m, up by 80%
‒ NII up by 25%, driven by improved margins
‒ NIR up by 17%, driven by FX gains & increased revenue from
digital channels
‒ Expenses up by 7% as a result of proactive cost management
‒ Impairments up by 15% & CLR of 100 bps remains within the
+94%
cluster TTC target range of 85 bps to 120 bps
‒ ROE of 9,9% (2022: 5,9%)
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
7
7
9
22
1
9
8
1
23
▪ ETI associate investment – HE of R1,2bn; up by >100%
‒ Associate income up by 77% to R1 380m, including the
reversal of the R175m Ghana sovereign bond provision raised
by Nedbank in 2022
‒ Dividends declared in the last 2 cycles
‒ ROI of 22,0% (2022: 12,4%)
‒ Ecobank Nigeria remains a focus to improve performance
1 ROE of 22,9% excluding the R175m reversal of the Ghana sovereign bond provision (equivalent HE of R1 716m). HE up by 76% on a similar basis.
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
84
43
Notes:Notes:Nedbank Group Annual Results 2023ResultspresentationSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryMessage from ourChief Executive
SADC progress – good momentum underpinned by a strong foundation
Client & digital progress
Key subsidiary developments
Additional info
Net Promoter Score
# 1
bank in 2 countries
Avo SuperShop in
Namibia
a first in the market
with potential to expand
to other regions
Digitally active clients
(%)
64
54
57
47
Commenced
technology
convergence
enabling a consistent
Nedbank experience
across the regions
20
21
22
23
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
▪ Higher reserve requirements
impact in Mozambique
▪ Ongoing changes in inflation
measurement method in
Zimbabwe
▪ Pricing directive continuing
to impact revenue-earning
potential in Lesotho
▪ Competition commission
enquiry on banks in Namibia
Zimbabwe advances
(US$m loan book)
67,5
4,7
20
2,1
21
18,3
22
23
% contribution
to SADC
% of total
clients
% of total
revenue
% of total
assets
Namibia
Mozambique
Zimbabwe
Eswatini
Lesotho
32,7
12,3
20,7
18,7
15,6
31,3
21,4
25,3
13,4
8,6
48,4
18,8
6,7
18,0
8,1
85
ETI associate investment – positive momentum in financial performance & release of
the R175m Ghana sovereign bond provision that Nedbank recognised in 2022
Associate income1
(Rm)
ETI carrying value vs market value
(Rbn)
668
686
779
(0,1)
1 380
1,4
(1,3)
-178
19
20
21
22
23
Return on ETI investment2
(%)
10,7
11,0
12,4
5,6
22,0
19,2%
excl
R175m
reversal
1,3
1,3
2,2
1,5
19
20
21
22
23
Note: ETI accounted for a quarter in arrear. | 1Associate income includes the reversal of the R175m estimated impact of the Ghana sovereign domestic bond provision accounted
for in the prior financial year. | 2Return on original investment of R6,3bn (based on associate income). For 2020, ROI was calculated using IFRS associate income, which excludes
goodwill impairment by ETI. | Market value at February 2024 reflects the impact of naira devaluation since December 2023.
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
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44
Notes:Notes:Nedbank Group Annual Results 2023 ETI associate investment – resilient financial performance supported by
encouraging progress on the value unlock agenda
Ecobank top 3 in
15 African
countries
& #1 in 6 countries
ROTE up to 25,6%
from 21,0% in the
prior year1
Growth,
Transformation
and Returns (GTR)
strategy completed,
with true client
orientation at the
core
Total CAR of
13,9%3 showing
resilience, despite
macro environment
shocks
1 Based on ETI’s 9M results.
2 ROEs of UEMOA: 28,8%, AWA: 28,5%, CESA: 34,4% & Nigeria: 5,5%.
3 At 30 September 2023.
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
ETI share price (NGN)
Continued benefits
of a diversified
business model
with 3 of the core
regions achieving
ROEs >28%2
20
15
10
5
0
Additional info
20,94
Sept 2023
price-to-
book ratio:
0,3x
19
20
21
22
23
ETI share price performance
(% change end 2020 to end 2023)
Naira (NGN)
Rand (ZAR)
US dollar (U$S)
+248%
+92%
+52%
4 Increase in ETI share price +97% to NGN20,9 at December 2023 yoy,
offset by the naira devaluation of ~44% against the US dollar.
87
Nedbank Africa Regions – outlook
2024 outlook
SADC operations
▪ Execute on our technology convergence journey
▪ Transform the business & operating model to leverage group centres of excellence
▪ Continue our pan-African digital growth strategy
▪ Unlock further value in Mozambique
ETI associate investment
▪ Collaborative shareholder focus to execute on value unlock agenda
Medium- & long-term outlook
▪ Reduce SADC operations cost-to-income ratio to < 60% & increase ROE consistently >COE
▪ Target ETI ROI consistently >20% & price-to-book of ~1x
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
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45
Notes:Notes:Nedbank Group Annual Results 2023ResultspresentationSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryMessage from ourChief Executive Economic forecasts
Short-term guidance &
medium-/long-term targets
CE succession
Conclusion
Outlook
Mike Brown
Chief Executive
89
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
Operating environment – forecasts highlight an improvement in key
macroeconomic indicators at a time when geopolitical risk has increased
Actual
Forecast: Feb 2023
Forecast: Feb 2024
19
20
21
22
23
24
25
23
24
25
26
SA GDP growth
0,1% (6,4%) 4,7% 1,9%
0,7%
1,5%
1,6%
0,5% 1,0% 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% 10,5%
11,0% 10,25% 10,25%
11,75% 11,0% 10,5% 10,5%
4,1% 3,3% 4,6% 6,9%
5,5% 4,8% 4,8%
5,9% 5,0% 4,6% 4,5%
5,3% 1,2% 4,4% 9,2%
5,0% 5,9% 6,4%
4,7% 5,2% 5,7% 6,2%
14,0
14,6
15,9
17,0
16,8
16,7
17,3
18,3
18,2
18,3
18,4
(3,6%)
(5,1%)
(9,9%)
(4,6%)
(4,2%)
(4,0%)
(3,2%)
(4,9%)
(4,8%)
(4,4%)
(4,2%)
52% 56% 70% 69%
72%
73%
74%
75%
76%
77%
77%
Source: Nedbank Group Economic Unit. | 1 Year ending March.
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
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46
Notes:Notes:Nedbank Group Annual Results 2023 Short-term guidance (2024) – progress towards our medium-term targets in a
macroeconomic environment that remains difficult & volatile
2023
performance
2024
guidance1
Key drivers/risks in 2024
NII
growth
+14%
Above mid-single
digits
▪ Advances growth from renewables & SPT 2.0 gains, with H1 growth
slow, before picking up in H2
▪ NIM peaked in 2023, but endowment benefit remains elevated given
average interest rates
CLR
109 bps
Back within the top half of
the 60 bps to 100 bps TTC
range
▪ Ongoing reduction in RBB’s CLR & resolution of material risk relating
to CIB NPLs completed in 2023
Seasonality likely resulting in H1 CLR > H2 CLR
▪
NIR
growth
Expense
growth
Associate
income
Capital
(CET1 ratio)
Dividend
+6%
+8%
+64%
13,5%
57%
payout
Above mid-single
digits
▪ Main-banked client gains, cross-sell & deal closures
▪
Trading & insurance income off a lower 2023 base (outcomes market-
dependent), but high base in fair-value & Zimbabwe FX gains
Mid-to-upper
single digits
Slightly lower
than 2023
Above TTC target range
(11% to 12%)
Top end of
payout ratio
▪ Average annual salary increases of around 6%
▪ Ongoing cost optimisation focus – TOM 2.0 & 2.1
▪ DIS (~R230m), Twin Peaks run rate, YES ramp up
▪ Ongoing associate income growth, but base impact from Nedbank’s
R175m Ghana sovereign bond provision reversal in 2023
▪
Remains above the top end of board target range
▪ Dividend cover range 1,75x to 2,25x or payout ratio of 57% to 44%
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 economic forecasts at the time.
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
91
Our medium- & long-term targets support shareholder value creation
Diluted headline
earnings per share
ROE
Cost-to-income
ratio
Net Promoter
Score
Short
term
Medium
term
Long
term
By end 2023
> 2 565 cents
(2019 levels)
3 199cents
15%
(2019 levels)
15,1%
< 54%
53,9%
#1 bank
(from #3 in 2019)
#1 bank
By end 2025
> CPI + GDP + 5%
(CAGR to end-2025)
17%
(around COE + 2%)
< 52%
#1 bank
Not dated
> CPI + GDP + 5%
(CAGR through the cycle)
> 18%
(around COE + 3%)
< 50%
#1 bank
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
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47
Notes:Notes:Nedbank Group Annual Results 2023ResultspresentationSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryMessage from ourChief Executive Medium-term targets – path towards ROE of 17%
Solid NII
growth
CLR within
target range
Strong NIR
Column9
& associate
income
growth
Manage
expense
growth for
+ Jaws
Capital
17%
target
Additional info
15,1%
Advances growth
Impairments
▪ RBB growth by
▪ CLR back to
within the top
half of our 60
bps to 100 bps
TTC target range
delivering on SPT 2.0
targets
▪ CIB growth from
unlocking large
infrastructure
opportunities
No material NIM
contraction
▪ Prime rate remains
≥ 10,5%
▪ Ave prime: 23: 11,4%,
24F: 11,5%, 25F: 10,6%)
2023
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
NIR & associate
income
▪ Main-banked client
gains & higher
cross-sell
▪ Leveraging balance
sheet for NIR growth
▪ Continued
momentum in
trading activities
▪ Unlock large
insurance growth
opportunity
▪ Double-digit ETI-
related growth
Expenses
▪ Ongoing cost
optimisation
▪ Delivering on TOM
2.0 target (R2,5bn
by H1 2024)
▪ New TOM 2.1
opportunities
▪ Progress towards
C:I target: <52%
Capital
▪ Pay dividends
at the top end
of payout
ratios of 57%
▪ Run-rate
benefits of
R5bn capital
optimisation
initiative &
further capital
optimisation if
appropriate
Medium-term targets – path towards ROE of 17%
2025
93
Additional info
CIB
RBB
Wealth
NAR
ROE at >19% (2023: 18,9%)
Cost-to-income ratio reduces
to < 44% (2023: 45,2%)
ROE increases to between 20%
& 23% (2023: 16,0%)
ROE maintained >25%
(2023: 26,8%)
SADC ROE increases to > COE
(2023: 9,9%)
Cost-to-income ratio reduces
to < 57% (2023: 58,1%)
Cost-to-income ratio reduces
to < 65% (2023: 66,6%)
SADC cost-to-income ratio
reduces to < 60% (2023: 68,3%)
▪ Using deep sector expertise
to unlock further balance
sheet growth, particularly
SDF & renewable energy
▪ CLR below the mid-point of
the CIB TTC target range
▪ Leverage balance sheet for
NIR growth
▪ SPT 2.0 targets – grow
advances ahead of market,
except for PL & maintain
VAF. Grow deposit market
share
▪ CLR towards the mid-point
of the RBB TTC target range
▪ Main-banked client gains to
>4 million
▪ Ongoing focus on capital
▪ Cross-sell increase to >2,0
efficiency & ROE
optimisation
▪ Continued cost optimisation,
driven by TOM 2.0 initiatives
▪
Insurance – grow MyCover
suite
▪ Asset Management – expand
international distribution
& offering
▪ WMSA – increase high-net-
ETI ROI consistently above
>20% (2023: 22,0%)
▪ Leverage group IT
technology & centres of
excellence
▪ Digital growth strategy
increasing NIR from digital
channels
worth market share
▪ Growth opportunities in
▪ WMI – bolster wealth
Mozambique
offering through new core
platform
▪ Continue focus on value
unlock agenda in ETI
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
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48
Notes:Notes:Nedbank Group Annual Results 2023
Chief Executive succession – a seamless, well-managed process
Announced
appointment of
Daniel Mminele
as Chairperson-
designate
Daniel Mminele
joined board
2023 AGM
as Chairperson-
designate
Daniel Mminele
became Chairperson
Announced CE
succession process
started
Announced
appointment of
Jason Quinn
as CE-designate
2024 AGM
Jason Quinn joins the
board as CE
Mike Brown retires
from the board
Jason Quinn
joins Nedbank as
CE-designate
Mike Brown retained as Senior
advisor for 3 months to
facilitate seamless handover
22 May 24
15 Feb 23
1 May 23
2 Jun 23
11 Nov 23
31 May 24
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
95
Conclusion – slightly improving macroeconomic environment, strong foundations &
underlying business momentum position Nedbank well to deliver on 2025 targets & create
shareholder value
Macroeconomic
environment improving
Strong
Momentum
foundations in place
in the business
Medium- & long-term
targets aligned to
shareholder value creation
▪ Key SA economic
▪ Experienced board &
▪ Attractive lending
▪ Achieved all our 2023
indicators are forecast to
improve in 2024
▪
Initiatives around energy
supply to reduce load-
shedding to levels 1 or 2
by 2025
▪ But geopolitical &
sociopolitical risks remain
(eg global conflict,
international & local
elections)
leadership team
pipelines
▪ Strategy that is unlocking
▪ Digital growth trends
growth & enhancing
productivity
▪ Track record of delivery
▪ World-class technology
platform & leading digital
capabilities
▪ Fortress balance sheet &
excess levels of capital
▪ Great people & culture
▪ Purpose-driven bank –
leading in sustainability &
ESG matters
continuing
▪ Main-banked client gains
& higher levels of cross-
sell
▪ Market share gains in key
product areas
▪ Ongoing cost optimisation
▪
Impairments trending
down (CLR peaked in H1
2023, RBB management
actions & ~R11bn of stage
3 reductions in CIB
expected in 2024)
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
targets in a more difficult
environment
DHEPS
Cost-to-income
ROE
NPS
▪ But we aspire to increase
our ROE further to
improve our price-to-book
ratio from 0,9x
DHEPS growth: CAGR GDP
+ CPI + 5%
Cost-to-income: <52%
ROE: >17%
NPS: #1 bank
96
49
Notes:Notes:Nedbank Group Annual Results 2023ResultspresentationSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryMessage from ourChief Executive Thank
you
NEDBANK GROUP LIMITED – 2023 Annual Financial Results
Celebrating 135 years of
making a difference
97
Disclaimer
Nedbank Group has acted in good faith and has made every reasonable effort to ensure the accuracy and
completeness of the information contained in this document, including all information that may be defined as
'forward-looking statements' within the meaning of United States securities legislation.
Forward-looking statements may be identified by words such as ‘believe’, '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 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 – 2023 Annual Financial Results
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50
Notes:Notes:Nedbank Group Annual Results 2023 51
NotesNedbank Group Annual Results 2023ResultspresentationSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryMessage from ourChief Executive 2023 results
commentary
52
Nedbank Group Annual Results 2023 2023 results commentary
Economic and banking environment
in 2023
The world economy fared better than most expected in 2023,
although the International Monetary Fund (IMF) forecasts global
growth in 2023 to have slowed to 3,1% (2022: 3,5%). A robust US
economy and China’s modest recovery off the previous year’s low
base provided some counter to the deeper economic downturns
in Europe, the UK, and most other advanced countries, as the
lingering effects of the earlier surge in inflation and much tighter
monetary policies weighed on confidence and eroded demand.
Global inflation receded in 2023 driven by the reversal in energy
and food prices from the highs of 2022, the ongoing normalisation
in global supply chains, slightly softer labour market conditions,
and weaker consumer demand in many countries in response to
restrictive monetary policies. The onset of disinflation brought
some relief to households towards the end of last year, lifting real
incomes, purchasing power and confidence, thereby preventing a
sharper slowdown in the world economy. The US and most other
major central banks raised their respective policy rates to restrictive
territory and continued to reduce their sizeable balance sheets.
Around Q3 2023, major central banks signalled a pause in their
rate-hiking cycles as underlying price pressures started to subside
more convincingly. Even so, the most aggressive monetary policy
tightening in advanced countries in over 4 decades resulted in
significant adjustments to global investor portfolios, sustaining the
US dollar near its 2022 highs, weighing down commodity prices and
reducing appetite for higher-risk emerging market assets.
Sub-Saharan Africa experienced a loss of economic momentum,
with GDP growth slowing to 3,3% in 2023 (2022: 4,0%). Falling
commodity prices, caused by softer global demand and a firm US
dollar, weighed on the region’s export earnings. At the same time,
high inflation and interest rates subdued domestic demand in most
countries. In addition, the fiscal position of many governments
across the region weakened significantly as tax revenue dwindled
while borrowing costs surged, leaving little to no policy space to
stimulate growth. Several low-income African countries with high
levels of dollar-denominated debt struggled to access capital
markets and grappled with surging borrowing costs as a buoyant US
dollar compounded the impact of higher global interest rates. As a
result, more countries slipped into default, turning to the IMF for
financial assistance.
SA’s economy remained weak throughout 2023 in the face of
crippling power outages and worsening transport bottlenecks.
The inefficiencies at 2 of the country’s critical state-owned
enterprises – Eskom and Transnet – increased sharply, reducing
production, driving up operating costs and squeezing profits
across all industries. Eskom managed to maintain an electricity
availability factor of only 54,8% throughout 2023 and, as a
result, the frequency and intensity of load-shedding more than
doubled from 2022, with Eskom shedding 24 408 GWh in 2023.
Unreliable rail and port services added more pressure to the private
sector, undermining trade, disrupting supply chains, and eroding the
country’s international competitiveness. The drag from these crippling
challenges was further amplified by softer global demand, lower
international commodity prices and weak domestic demand amid
sticky inflation and sharply higher interest rates. By the third quarter,
real GDP contracted by 0,2% qoq compared with modest growth
of 0,5% and 0,4% over the second and first quarters. The Nedbank
Group Economic Unit now forecasts GDP growth of only 0,5% for the
year, down from 1,9% in 2022. Given the unfavourable environment,
industry credit growth slowed to 4,7% yoy by the end of 2023
(2022: 9,2%).
Fixed investment activity held up better than expected in 2023,
with activity dominated by the private sector’s drive to secure
alternative energy and transport options, supported by the ongoing
rollout of projects under the official independent power producers’
renewable energy programme. However, by the third quarter of
last year, private sector outlays stalled, suggesting that the difficult
operating environment was starting to deter other capital expenditure,
and convincing more companies to postpone non-energy-related
investment plans. Consequently, corporate credit demand softened
off the previous year’s higher base and company loan growth
moderated to 5,0% in December 2023, down from 10,7% in
December 2022.
The strain on household finances increased throughout the year.
Real personal disposable income declined by 1,2% yoy over the first
3 quarters of 2023. Elevated inflation largely offset the impact of
further job creation and higher wage increases. At the same time,
higher interest rates pushed debt service costs up to 8,9% qoq of
personal disposable income, up from 8% qoq at the end of 2022,
significantly reducing the funds available for discretionary spending.
Households also depleted the savings they built up during the
pandemic years, leaving little to no buffers to shield against more
difficult financial conditions. As a result, households cut back on
spending and borrowing, with household consumption expenditure
growing by only 0,7% qoq over the first 3 quarters of 2023, down from
a relatively strong 2,5% in 2022. As consumers reduced spending and
commercial banks tightened lending standards amid rising defaults,
household loans and advances growth slowed significantly to 4,3%
yoy in December 2023 from 7,7% in December 2022. Mortgages
and personal loans weakened, while vehicle finance and demand for
transactional credit remained relatively firm.
Inflation receded from 7,2% yoy at the end of 2022 to 5,1% by the end
of 2023, averaging 5,9% over the year. The downward pressure came
mainly from falling fuel prices as global oil prices declined, offsetting
the impact of a weaker rand. As the year progressed, waning domestic
demand helped keep core inflation steady at around 4,5%. However,
food prices remained high and volatile, reflecting the surge in local
production costs caused by load-shedding and transport bottlenecks.
Animal diseases and extreme weather events also strained local food
producers and placed upward pressure on prices. Encouragingly,
food inflation started to decline more convincingly towards the
end of 2023. As inflationary pressures eased, the Monetary Policy
Committee (MPC) left the repo rate unchanged at 8,25% from May
onwards after hiking by 125 basis points in the first half of the year.
Financial markets were volatile throughout 2023, reflecting swings
in global risk sentiment. At the beginning of the year the brief turmoil
in parts of the US and Swiss banking sectors, uncertainties over the
outlook for US interest rates, and speculation over the likely severity
of the unfolding global economic downturn weighed on sentiment.
However, global risk appetites improved later in the year as global
inflation subsided and global economic activity proved to be relatively
resilient, fuelling expectations of more accommodative monetary
policies and a soft landing for the world economy in 2024. Investor
sentiment towards SA remained muted, hurt by the country’s poor
economic growth prospects, worsening fiscal metrics in the face
of deepening structural constraints, the greylisting by the Financial
Action Task Force, and persistent concerns about SA’s geopolitical
stance against the backdrop of the conflicts in Ukraine and the Middle
East. Investors priced in lower growth and higher risk, resulting in
significant capital outflows and persistent rand weakness.
53
Nedbank Group Annual Results 20232023 resultscommentarySupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial resultsResultspresentationMessage from ourChief Executive 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-, medium- and long-term targets.
accounts onto new products (where appropriate), converging
for scale – across all segments, all channels and all geographies
(including harmonisation of Nedbank Africa Regions (NAR) IT
systems), optimising processes end to end, and leveraging data and
generative artificial intelligence (AI) for commercial advantage.
At the start of 2021 Nedbank was one of the first South African
banks post the disruptions of Covid-19 to set new medium-term
targets, including financial targets for diluted headline earnings per
share (DHEPS), return on equity (ROE) and cost-to-income ratio,
as well as a non-financial target, being Net Promoter Score (NPS).
This was done in an environment of uncertainty, but importantly
to inform our shareholders of the value creation potential of
post-Covid-19 recovery given the fact that analyst consensus
forecasts for ROE in 2023 was around 13% and above 56% for the
cost-to-income ratio at the time. In 2022 we reported DHEPS of
2 809 cents, greater than the 2023 DHEPS target of 2 565 cents,
being the DHEPS level achieved in 2019. We also achieved a
#1 ranking in the Kantar NPS survey, and both these targets were
achieved a year earlier than we initially planned, and both were
achieved again in 2023. At the end of 2023 we met the remaining
2 targets, being reporting an ROE of 15,1%, above the 2019 level
of 15,0% and a cost-to-income ratio of 53,9%, below our target of
54,0%, and well below the 56,5% reported in 2019.
Achieving these targets is an important milestone, but we aspire
to improve our profitability metrics further as we now focus on our
medium- and long-term targets, including higher ROEs (17% in the
medium term and 18% in the long term) and lower cost-to-income
ratios (52% in the medium term and below 50% in the long term).
This requires diligent execution of our strategy by growing
revenues faster than expenses and increasing levels of productivity
– both strongly enabled by our world-class technology platform
– and maintaining strong risk and capital management metrics.
We are focusing on gaining profitable market share in key
lending categories, increasing our share of transactional
main-banked clients and related deposits, and ensuring delivery
of market-leading client experiences that will help us attract new
clients and deepen our share of wallet among existing clients.
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 digital 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, which is enabled by a world-class technology
platform and our employees as our most important asset, is
delivered through 5 strategic value unlocks: digital leadership and
digital experiences (DX); market-leading client experiences (CX);
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 ESG matters.
Our technology strategy and managed evolution transformation
programme have enabled us to build a world-class modern,
modular, and digital information technology (IT) stack. At the end
of December 2023 we reached 95% 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
and the digitisation of the 2 remaining client onboarding and
servicing journeys, with home loans and vehicle finance being
the key remaining deliverables. 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 group’s intangible software assets
on the balance sheet ended December 2023 at R7,9bn, down from
R8,3bn at the end of 2022 and having peaked in 2020 at R9,0bn.
This decline is aligned to lower levels of IT cash flow spend, which
peaked at around R2,3bn in 2017, and are expected to remain
around the R1,6bn level going forward (2023: R1,3bn). As we close
out the ME programme, our focus shifts to leveraging our new
technology stack to simplify our product range, making banking
easier and more affordable for our clients by migrating existing
The following are some highlights of the strategic progress we have
made in 2023:
• Digital leadership
• Simplified sets of products off our new core banking
platform: 3 new MiGoals transactional products for our retail
consumer banking clients were launched in May 2023 and
are the first transactional products released off our new core
banking systems. The launch of these MiGoals products is part
of the optimisation process of our transactional product range
from 46 (36 current accounts and 10 savings products) to 18.
MiGoals will be followed by the release of similar transactional
products for Private Clients, high-net-worth clients, and
businesses, including a relaunch of an optimised set of
investment and lending products. Since the launch, 2,1 million
MiGoals accounts were opened on our new core banking
platform, of which 1,4 million were account migrations and
0,7 million were new sales.
• Apps: Active Nedbank Money app clients reached 2,3 million in
2023, up by 16% yoy. Transaction volumes on the Money
app increased by 18% yoy (up by 315% since 2019) and
transaction values increased by 19% (up by 298% since
2019). Revenue from value-added services grew by 29% yoy
(up by 197% since 2019) across prepaid data, voucher, and
electricity purchases, as well as LOTTO and the sending of
money to cellphones. The Nedbank Private Wealth app, which
offers integrated local and international banking capabilities,
continued to be enhanced regularly to deliver a leading client
experience. Nedbank Insurance further improved its digital
offering by launching the Insurance widget and ‘Offers for you’,
increasing activity and sales on the Money app. The Nedbank
Money App (Africa), offering convenience, a wide range
of functionality and great user experiences for our NAR
clients, reported a 24% yoy increase in app users.
• Digital outcomes: Our digital initiatives helped us increase
the number of digitally active retail clients in SA by 11%
yoy to 2,9 million, representing 69% of retail main-banked
clients (2022: 68% and 2019: 49%). Retail digital transaction
volumes in SA increased by 12% (and by 98% since 2019) and
transaction values were up by 10% (up by 54% since 2019).
Digitally active clients across the NAR business increased from
57% to 64% of its total active client base. Nedbank Insurance
has extended its quoting, fulfilment, and claims functionality
on digital channels to 17 product offerings (2022: 10) and
7 channels. In recognition of our market-leading digital
positioning, Nedbank was recently recognised as the Best
Digital Bank in Africa in 2023 at the Euromoney Awards and as
the Best Bank for Client-facing Technology at the 2023 Global
Banking & Finance Awards.
• Avo super app: Since its launch in 2020, the Avo super app
(SuperShop) has signed up 2,5 million customers (up by
26% yoy), with over 23 000 businesses registered to offer
their products and services on this e-commerce platform.
Avo continues to grow exponentially, with a more than 100%
yoy increase in gross merchandise value (GMV) as all 3 Avo
ecosystems gain momentum. Avo Auto, a virtual vehicle
mall launched in 2021, now hosts over 880 MFC-accredited
dealers (up more than 100%) with close to 25 000 vehicles
on the platform (up more than 100%) and has grown GMV
3,5 times yoy. Avo B2B launched to market in 2022 and offers
a stock financing or working capital solution to businesses
through a secure facility and is well on its way to contributing
to significant GMV growth in 2023. Avo Home continues
to increase its number of partners to drive scale, with GMV
growth of 23% yoy. Avo Solar launched in August 2023, with
over 100 residential installations, of which 70% is being
financed by Nedbank. The Avo SuperShop launch in Namibia
54
Nedbank Group Annual Results 2023 in August 2023 is showing good progress with 15 merchants, of
which Apple is the top merchant. This is expected to continue
to improve as more merchants are added to the platform.
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 & Finance Awards 2023.
• Data and generative AI: We have invested significantly in
our data capabilities, leveraging big data and AI through
strong analytics teams. While it is early in the AI journey,
the progress we have made on our technology journey is
foundational for seamless integration and fast adoption of AI
capabilities. We have already delivered numerous AI solutions
that have generated benefits by using machine learning
and data science techniques to make intelligent decisions
based on data, including next-best-action strategies to drive
higher levels of cross-sell. Going forward we will accelerate
our AI capabilities with a further 53 data and AI analytics
use cases being explored. In partnership with Microsoft, the
M365 Copilot early access program was launched with the
allocation of 300 licences. Early adopters participating in the
access programme from across the bank are identifying and
validating high-value use cases in support of its organisational
readiness and the adoption of generative AI. A number of use
cases have already been implemented, resulting in productivity
gains and quality improvements to business correspondence,
research, and the maintenance and application of policies.
These pilot users have noticed an average time saving of
42 minutes a day, with the top time-saving activities relating
to creating and summarising documents, emails and chats.
Copilot Web, formerly known as Bing Chat Enterprise, was
launched in October 2023, providing personal and company
data protection, and extending generative AI capabilities to all
Nedbank employees.
• Payments: The modernisation of our payments domain is
progressing well. Our participation in industry modernisation
initiatives and our own payments efforts are enabling Nedbank
to create a fully interoperable enterprise payment service
hub that will optimise the cost to serve, increase innovation
cadence, respond to open-finance opportunities, and unlock
competitive advantages by enabling contextual and embedded
payments. We participated in the industry rapid payments
programme, PayShap, which is a low-cost, immediate,
interoperable digital payments solution that was successfully
launched in March 2023. To date there has been steady growth
in its use with 2,3 million consumers registered and 11 million
payments processed, worth over R7bn across all participating
banks. Nedbank clients contributed approximately 28% to
the overall volumes. Since the launch we remain the bank that
offers clients the widest range of options of transactional
channels, with more than 200 000 ShapIDs having been
registered, culminating in over 3 million transactions.
• Market-leading client experiences
• Great client experiences: The success of our digital
innovations was evident in higher levels of client satisfaction,
as illustrated in Nedbank being rated #1 in NPS among South
African banks in 2022 and 2023 (Kantar survey). In 2023 we
also experienced a continuation of high sentiment rankings,
with Nedbank ranked as the #1 bank on social-media brand
sentiment as measured by Brandwatch.
• Competitive brand: Nedbank was ranked the #8 most
valuable brand among South African companies, up from
the #9 position in the prior year, with the group’s brand value
having increased by 15% to R17,3bn.
• External recognition: In recognition of the value-add to our
clients and our leadership position in key industries, segments
and products, we have won various awards in 2023, including
the Best Investment Bank in South Africa Award and Best
Retail Bank South Africa Award at the 2023 Global Banking &
Finance Awards, Best Private Bank Africa Award at the Global
Private Banking Awards 2023, and Top Private Bank of the Year
Award at the (Krutham) Intellidex Top Private Banks and Wealth
Managers Awards 2023.
• Focusing on areas that create value
• Main-banked client gains and cross-sell: 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
and 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 2023 main-banked
clients in retail grew by 9% to 3,53 million and cross-sell
increased to 1,96 (compared with 1,94 in 2022 and 1,71 in
2019). Importantly, the correlation between main-banked
client growth and transactional NIR growth in the Retail and
Business Banking (RBB) consumer segment was strong.
Corporate and Investment Banking (CIB) gained 20 new
primary clients in the period. In NAR total clients increased
by 4% to over 349 000, of which around 147 000 are
main-banked clients. The opportunity to cross-sell insurance
products across the group is significant, with steady progress
achieved through collaboration between Nedbank Insurance
and RBB. The MyCover suite showed good growth, with gross
earned premiums up 16% in MyCover Funeral, 25% in MyCover
Life and more than 487% in MyCover personal lines, albeit off
a low base.
• BA900 market share: As reported in the December
2023 SARB BA900 returns, we increased market share yoy in
home loans (from 14,1% to 14,4%), retail overdrafts (from 12,9%
to 15,1%) and commercial term loans (from 15,5% to 16,4%).
Total retail deposits increased (from 16,0% to 16,4%) supported
by retail transactional deposits (from 15,1% to 15,3%) and
retail- non-transactional deposits (from 18,1% to 18,7%).
Commercial transactional deposits, excluding tax and loans,
increased from 11,8% to 12,2%. In areas where we have strong
market share positions, we have been more selective in credit
origination in the current economic environment, including
for vehicle finance (from 35,4% to 35,5%) and commercial
mortgages (from 36,8% to 36,0%). Given increasing risks
in the environment, we have deliberately slowed growth in
some product areas and, as a result, we reported market share
declines in personal loans (from 11,9% to 11,0%) and credit card
(from 11,0% to 10,0%).
• Driving efficient execution
• TOM 2.0: 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. At the end of 2023 the cumulative cost
benefits realised have increased to R2,2bn, slightly below
our target of R2,5bn following decisions to reconsider the
timing of the implementation of some initiatives that are
linked to revenue uplift and a delay in some cost initiatives.
Our R2,5bn target remains in place and is expected to be met
in H1 2024. The implementation of Project Phoenix 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’ is materially complete, including the consolidation of
middle and back offices within the cluster, thereby unlocking
efficiencies. In addition, the digitisation of services in RBB
and changing client behaviours have enabled us to reduce
branch teller volumes by 71% 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 27 000 m2 in 2023 (cumulatively
by 111 000 m2 from 2014 levels) to 137 000 m2. Through our
strategy of consolidating and standardising our own buildings,
the number of campus sites (offices) has decreased from 31 to
23 over the past 4 years. Since 2016 we have saved more than
178 000 m2 in floor space, including around 35 000 m2 in
55
Nedbank Group Annual Results 20232023 resultscommentarySupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial resultsResultspresentationMessage from ourChief Executive 2023. We have also focused on ensuring efficient and effective
central group functions, including marketing, risk, human
resources, finance, and technology. Savings in technology
include efficiencies in network costs, a reduction of printing
costs, the implementation of agile methodologies, and new
ways of work (nWoW), with overall reductions in headcount,
rigorous licence and service vendor management as well as the
implementation of our cloud migration plans, with reductions in
on-premise costs. At the end of December 2023 our total group
permanent headcount declined by 456 or 2% yoy (and 3 745 or
13% since 2019) to 25 477, largely through natural attrition.
• TOM 2.1: Our ongoing focus on extracting value from our
technology investments and our world-class technology
platform has resulted in the launch of TOM 2.1, which builds
on our TOM 2.0 initiatives. TOM 2.1 will focus on extracting
additional benefits from maturing our data and analytics
capabilities, modernising key processes and payments, as
well as implementing generative AI strategies. We are in the
process of estimating associated revenue and cost benefits
to be extracted over the medium term, and more detail will be
communicated as part of our H1 2024 results.
• Creating positive impacts
• Sustainable development finance: Fulfilling our purpose of
using our financial expertise to do good is best demonstrated
through our ongoing delivery against the UN 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 2023 we had exposures of R145bn (December
2022: R123bn) that support SDF, representing 16% of the
group’s gross loans and advances (2022: 14%). By the end of
2025, it is our ambition to have increased our SDF exposures
to around 20% of the group’s total gross loans and advances,
achieved through the support of more than R150bn in new SDF
that is aligned with the SDGs (from our starting base in 2021).
• 2030 glidepaths: Building on our history of climate and
environmental leadership, including the commitment to have
zero fossil fuel exposure by 2045 (in line with science-based
targets), we have finalised our first sectoral glidepaths that
inform our exit over time from the thermal coal, oil, and gas
sectors in support of our net-zero 2050 commitment. Nedbank
will use the widely adopted International Energy Agency (IEA)
Net Zero Emissions by 2050 scenario (NZE) as a basis for our
first targeted commitment to 2030 (31 December 2029) for our
fossil fuel and power generation pathways. This science-based
pathway aligns with the goals of the Paris Agreement, keeping
global warming well below 2 °C by 2050 and to pursue efforts
to limit the temperature increase to 1,5 °C. This will result in
targeted reductions from 2022 to 2030 of 47% for thermal coal
and 26% for oil and gas. As a result of our significant renewable
energy power generation book, the current carbon intensity
of the energy book is already below the 2030 NZE target of
188gCo2e/kWh, and we have therefore adopted the 2030 IEA
target as a cap, with a cap beyond 2030 to be assessed closer
to the time.
• ESG ratings: 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 17,1 (top 10% of 339 diversified banks); S&P
Global – score of 60 out of 100 (top 9% of global banks); ISS
– C rating (within the top 10% of global banks); FTSE Russell –
3,9 rating out of 5 (top 26% of global banks and a FTSE4Good
Index constituent).
• Our efforts in sustainability and ESG matters were
recognised externally, including through our winning the
Best Corporate Sustainability Strategy South Africa Award at
the prestigious Global Banking & Finance Awards 2023, the
Sustainability-linked Loan of the Year (Africa) Award at the
Environmental Finance Awards 2023, and the Sustainable
Bank of the Year Award at the African Banker Awards 2023.
Overview of 2023 results
Nedbank Group delivered a strong financial performance for
the 12 months to 31 December 2023 when compared with
the 12 months to 31 December 2022 (prior period). Headline
earnings (HE) increased by 11% to R15 650m, enabled by a strong
operational performance as preprovisioning operating profit
(PPOP) increased by 15%, underpinned by 12% revenue growth,
including associate income and prudent expense management,
partially offset by a 30% higher impairment charge.
Headline earnings per share (HEPS) increased by 15% to
3 312 cents and diluted HEPS (DHEPS) increased by 14% to
3 199 cents respectively, ahead of the HE growth of 11%, driven
by the benefits of the R5bn capital optimisation initiative
executed via an odd-lot offer as well as a share purchase
programme that were materially completed in H1 2023, with the
resultant cancellation of 23,4m shares. Basic earnings per share
(EPS) increased by 10% to 3 239 cents.
Return on equity (ROE) for the period increased to 15,1%, above
the prior period of 14,1% and the group’s estimated cost of equity
(COE) of 14,8%. This improvement was assisted by an increase in
return on assets from 1,14% to 1,21% and slightly higher gearing
post the finalisation of the R5bn capital optimisation initiative.
Net asset value (NAV) per share of 23 192 cents increased by
8% compared with 21 533 cents in 2022, while tangible NAV of
20 614 cents increased by 9% compared with the 18 937 cents in
the prior period.
The group’s balance sheet remained very strong.
CET1 and tier 1 capital ratios of 13,5% and 15,0% were well above
board-approved target ranges and SARB minimum requirements.
The average liquidity coverage ratio (LCR) for the fourth quarter
of 135% and a net stable funding ratio (NSFR) of 117%, were
well above the 100% regulatory minimums and board-approved
targets. Following solid earnings growth and strong capital
and liquidity positions, the group declared a final dividend
of 1 022 cents per share, up by 18% (December 2022: 866 cents
per share), bringing the total dividend for 2023 to 1 893 cents per
share, up by 15% (2022: 1 649 cents). The dividend was declared
at a 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 11% to R15 650m was driven by very
strong HE growth in the NAR cluster, as well as solid performances
across CIB, RBB and Nedbank Wealth. The group and all the
clusters delivered ROEs above the group’s COE.
HE
(Rm)
ROE
(%)
Change
(%)
2023
2022
2023
2022
CIB
RBB
Wealth
NAR
Centre
Group
6
9
6
94
(59)
6 799
5 566
1 210
1 891
184
6 399
5 097
1 140
977
448
18,9
16,0
26,8
25,2
17,7
16,0
26,3
13,8
11
15 650
14 061
15,1
14,1
56
Nedbank Group Annual Results 2023
HE in CIB increased by 6% to R6,8bn, and the cluster delivered
an ROE of 18,9%. HE growth was solid despite a 17% increase
in impairments. NII increased by 7%, supported by average
banking loans and advances growth of 8% to R391bn, while NIR
increased by 5%, supported by an increase in net commission
and fees, growth in trading revenue and fair value gains, partially
offset by a decline in equity investment income off a high
2022 base. The cluster CLR at 24 bps (2022: 22 bps) was below
the midpoint of its through-the-cycle (TTC) target range of
15 bps to 45 bps and includes additional impairments in respect
of a few counters that reached the finals stages of business
rescue. Expenses increased by 7%, driven mainly by higher costs
associated with the retention and attraction of talent, resulting in a
cost-to-income ratio of 45,2%.
HE in RBB increased by 9% to R5,6bn, with HE in
H2 2024 increasing by 24% compared with the decline of 8%
reported in H1 2023, delivering an ROE of 16,0%. Very strong
PPOP growth of 17% was driven by revenue growth of 11% and
expense growth that was well managed. Impairments increased
by 29%, primarily as a result of the impact of the more difficult
macroeconomic environment, elevated risk outcomes, and a
weaker collections performance in H1 2023. While the RBB CLR
increased to 194 bps yoy, above the cluster’s TTC target range
of 120 bps to 175 bps, it declined to 164 bps in H2 2023 from
the 226 bps reported in H1 2023 as we improved our risk and
collections strategies. NII grew by 14%, driven by a 7% increase in
average banking loans and advances and a widening of NIM that
benefited from positive endowment (higher interest rates). NIR, on
a restated basis, increased by 7%, underpinned by higher levels
of cross-sell and strong main-banked client gains, as well as good
growth in card interchange and value-added services revenue.
Expenses were very well managed, increasing by 7%, enabling the
cluster cost-to-income ratio to decrease to 58,1% from 60,5%
in 2022.
Nedbank Wealth’s HE increased by 6% to R1,2bn, maintaining
a high ROE of 26,8%. The cluster’s financial performance was
driven primarily by the benefit of higher local and international
interest rates on NII (positive endowment), and growth in
assets-under-management (AUM) fees locally and internationally,
partially offset by a decline in traditional bancassurance volumes
and new business strain in insurance. HE growth slowed from the
41% reported in H1 2023, primarily as a result of the base impacts
of SA and international interest rates increasing in H2 2022 and
H1 2023 while remaining steady in H2 2023; the base impact of the
KwaZulu-Natal floods on insurance income in H1 2022; and higher
shareholder returns in H1 2023 relative to H2 2023.
HE in NAR increased by 94% to R1,9bn and its ROE improved to
25,2%. The performance of the Southern African Development
Community (SADC) operations improved strongly as HE was up
80% to R662m (2022: R367m) and ROE increased to 9,9% but
remains below our target. Our associate investment, Ecobank
Transnational Incorporated (ETI), continued its ongoing
recovery with a higher HE contribution to Nedbank and growth of
more than 100% to R1 229m (2022: R610m), benefiting from
operational performance improvements and the reversal of the
R175m provision that Nedbank raised in 2022 for the estimated
impact on associate income from ETI from the Ghana sovereign
domestic debt restructure. The stronger performance of the SADC
operations was driven mainly by increases in NII (up by 25%) and
NIR (up by 17%), as well as benefitting from foreign exchange gains
on US dollar capital in Zimbabwe, partially offset by an increased
net monetary loss.
The performance in the Centre reflects primarily the endowment
benefit from higher interest rates on the average R12bn surplus
capital held in the Centre, fair value gains relating to the group’s
hedge-accounted portfolios of R280m, and a R150m reduction
in the group’s central provision as these risks emerged in the
underlying impairment models.
Financial performance
Net interest income
NII increased by 14% to R41 470m, supported by 7% growth in
average interest earning banking assets (AIEBA) to R986bn and
an increase in the group’s NIM. The increase in AIEBA was driven
by 8% growth in average CIB banking loans and advances and 7%
growth in average RBB banking loans and advances.
NIM increased by 28 bps to 4,21% from the 3,93% reported in
2022. This increase was driven primarily by a positive endowment
impact of 38 bps due to higher interest rates, positive basis risk
impacts (+3 bps) and NAR (+3 bps). The increase was partially
offset by a negative asset mix impact (-5 bps) due to slower
growth in high-yielding assets such as unsecured loans and
faster growth in lower-yielding assets such as term loans, home
loans and vehicle finance, as well as negative liability (-3 bps) and
asset pricing (-7 bps) impacts largely due to increased levels of
competition and due to stage 3 loan interest reversals (-4 bps).
Nedbank’s interest rate sensitivity is around R1,4bn NII (pre-tax)
for each 100 bps change in interest rates over 12 months. At this
point in the cycle, the accounting impact of higher interest
rates on endowment income continues to exceed the change in
impairments, in line with management’s hedging objectives.
Impairments charge on loans and
advances
The group’s impairment charge increased by 30% to
R9 605m, largely as a result of the impact of a more difficult
macroeconomic environment on consumers. The group’s
CLR of 109 bps (2022: 89 bps) improved from the 121 bps
reported at H1 2023, but remained above the group’s TTC
target range of 60 bps to 100 bps, in line with the guidance
provided. The yoy increase in CLR reflects the impacts of
higher-than-expected interest rates, higher levels of inflation
(mainly in food and energy), and higher levels of load-shedding, all
of which had an adverse impact on our clients, particularly in the
consumer segment in RBB.
Average
banking
advances
(%)
44
50
3
3
100
CLR (%)
CIB
RBB
Wealth
NAR
Group
2023
2022
TTC target
ranges
0,24
1,94
0,12
1,00
1,09
0,22
0,15–0,45
1,61
1,20–1,75
(0,20) 0,20–0,40
1,02
0,85–1,20
0,89
0,60–1,00
Impairments in CIB increased by 17% to R939m and its CLR, at
24 bps, incorporated additional provisioning for stage 3 counters
in the second half of the year. The CIB CLR ended the year within
the bottom half of its TTC target range of 15 bps to 45 bps, slightly
up from the 22 bps reported in 2022. The commercial-property
portfolio reported a CLR of 47 bps, outside its TTC target range,
due to impairments raised on stage 3 counters as business rescue
processes were concluded.
In RBB impairments increased by 29% to R8 520m, driven by the
negative economic impacts mentioned earlier that resulted
in increased client migration into stages 2 and 3, as well as
the impact of updating our macroeconomic assumptions and
annual model regrounds. The RBB CLR, at 194 bps, was above
its TTC target range of 120 bps to 175 bps but below the 226 bps
reported in H1 2023 as a result of focussed management
interventions in respect of collections and origination. These
benefits are expected to continue into 2024. Higher impairments
in the secured-lending portfolios (home loans and vehicle
finance, with mostly variable interest rates) primarily reflect the
57
Nedbank Group Annual Results 20232023 resultscommentarySupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial resultsResultspresentationMessage from ourChief Executive • Trading income increased by 3% to R4 299m, reflecting good
performances in debt securities and commodities, partially
offset by a deterioration in the performance of equities and the
impact of the introduction of the SARB’s new Monetary Policy
Implementation Framework (MPIF), which reduced financing
margins across certain asset classes.
• Equity investment income declined by 6% to R764m (2022:
R815m), returning to more normalised levels as compared
with a high 2022 base, driven by revaluations, realisations,
dividends, and operational revenues with limited disposals.
• Fair-value adjustments of R577m (2022: R187m) include R260m,
mainly from fair value gains on structured loans within the
CIB banking book and gains of R280m relating to the group’s
hedge-accounted portfolios (Centre).
• Foreign currency gains in Zimbabwe on US dollar capital as a
result of currency devaluation were partially offset by a higher
net monetary loss, resulting in a net gain in NIR of R501m.
In 2023 NIR has been restated to reflect the reclassification of
the net monetary loss (2022: R419m loss) on the face of the
income statement to NIR, as was done as part of the group’s
2022 annual results announcement.
Expenses
The increase in expenses of 8% to R38 059m reflects the impacts
of higher salary-related costs, higher fees linked to revenue growth
and ongoing investment in technology and digital solutions.
• Employee-related costs increased by 8% to R21 040m following:
• an 8% increase in salaries, wages, and other staff
costs, reflecting the impacts of an average 2023 annual salary
increase of 6,3% (bargaining-unit increase of 7,3%) and higher
costs to attract and retain key talent, partially offset by a 2%
reduction in permanent employee numbers, largely through
natural attrition; and
• a 5% increase in short-term incentives (STIs), aligned to the
group’s financial performance, and a 23% increase in long-term
incentives (LTIs), driven by higher anticipated vesting outcomes
from meeting corporate performance targets.
• Computer-processing costs increased by 8% to R6 900m,
reflecting the impact of continuous investment in digital and
cloud solutions, an increase in payments infrastructure such
as ATMs and intelligent depositors, increased IT volumes, and
the impact of the rand’s devaluation related to foreign currency
IT contracts. As our ME technology IT build reaches material
completion, the growth rate in the related amortisation charge
continues to slow, along with benefits from lower depreciation as
we increasingly leverage cloud-based solutions.
• Marketing costs increased by 3% to R1 585m and
communication and travel costs increased by 7% after having
normalised post-Covid-19. Fees and insurance-related costs
increased by 15%, largely as a result of increases in card-issuing
and acceptance costs.
• While the group continues to benefit from its real estate
optimisation initiatives, the 8% increase in occupation and
accommodation costs reflects the impact of more than 100%
growth in generator-related costs to R107m (2022: R44m) due
to increased use during load-shedding.
The group’s increase in expenses of 8% was lower than the 12%
increase in revenue, including associate income, resulting in a
positive JAWS ratio of 4% and the cost-to-income ratio decreasing
to 53,9% (2022: 55,8%).
impact of higher interest rates on clients’ ability to repay their
debt. The increase in impairments in Personal Loans (mostly
a fixed-rate product) and Card was driven mainly by the
impact of higher levels of food and transport price inflation
on disposable income, despite our credit policy tightening
in Personal Loans since 2021. The increase in impairments
in Commercial Banking was largely the result of the impacts
of load-shedding and higher input costs, primarily on certain
sectors in the agriculture portfolio. Pleasingly, CLRs across all
RBB products and segments improved from the levels reported
in H1 2023.
Nedbank Wealth reported a CLR of 12 bps, below its TTC target
range of 20 bps to 40 bps, benefitting from the release of local
client-specific overlays as a result of better-than-expected
recoveries, while NAR reported a CLR of 100 bps, within its TTC
target range of 85 bps to 120 bps.
Total overlays decreased slightly to R1,1bn (December
2022: R1,4bn), including a R150m reduction in the group’s
central provision (2022: R300m) as the risks have now been
accounted for in our International Financial Reporting Standards
(IFRS) impairment models. The remaining R150m in the central
provision relates to potential risks that have emerged but are not
yet showing in the data and resultant IFRS impairment models.
The group’s balance sheet expected credit loss (ECL) increased
by 9% to R30,4bn (December 2022: R27,9bn), reflecting prudent
provisioning in the current economic environment. The increase
was driven by the R9,6bn impairment charge, which includes
post-write-off recoveries of R1,4bn (2022: R1,6bn) and higher
write-offs at R10,2bn (2022: R8,8bn). The overall ECL coverage
ratio increased to 3,62% (December 2022: 3,37%) as a result of
the increase in stage 3 loans with higher coverage. The group’s
stage 1 coverage ratio increased slightly to 0,66% (December
2022: 0,60%) and remained higher than the pre-Covid-19 level
of 0,48% (December 2019). The stage 2 coverage ratio declined
slightly to 6,8% (December 2022: 7,0%) and remained well above
the pre-Covid-19 levels of 5,3% (December 2019). The stage
3 coverage ratio remained steady at 34,2% (December 2022:
34,3%) as RBB loans, with higher coverage, migrated from
stage 2 to stage 3 (RBB stage 3 loans up by 20%) and stage
3 loans in CIB, with lower coverage, declined by 3% as some
counters cured.
Non-interest revenue and income
NIR increased by 6% to R27 709m, slightly above the group’s
guidance of around mid-single digits. The increase was
underpinned by solid growth in commission and fees, the
benefits of fair-value gains, and foreign currency gains in
Zimbabwe on US dollar capital. Trading revenue growth remained
muted, while overall NIR growth was impacted by lower
insurance income and equity investment income. NIR includes
restatements relating to IFRS 17, card-processing costs and the
reclassification of net monetary loss in 2022 into NIR as reported
in H1 2023. Excluding these restatements, NIR grew by 9% on a
like-for-like basis.
• Net commission and fees income increased by 5% to
R19 346m, supported by strong growth across RBB and
NAR. RBB recorded increased levels of purchases of
value-added services, main-banked client growth of 9%,
improved levels of cross-sell, as well as growth in card
acceptance and interchange volumes. This growth was
partially offset by a slowdown in client activity following the
difficult macroeconomic environment.
• Insurance income declined by 16% to R1 446m, impacted
by a slowdown in traditional bancassurance volumes,
the non-repeat of reserve releases in the prior year, and
new business strain relating to new insurance solutions.
The 2022 financials have been restated to account for
IFRS 17 as expenses (R619m) and associated indirect tax
(R51m) related to insurance products are now recognised
in NIR.
58
Nedbank Group Annual Results 2023 (%)
2023
2022
NSFR regulatory minimum (%)
Earnings from associates
Associate income increased by 64% to R1 443m and includes
associate income of R1 380m relating to the group’s 21%
shareholding in Ecobank Transnational Incorporated (ETI) for
the period (up by 77% compared with R779m in 2022). This
includes accounting for our share of ETI’s Q4 2022 and 9-month
2023 earnings (in line with our policy of accounting for our share
of ETI’s attributable earnings a quarter in arrear) and the reversal
of the R175m estimate provided for by Nedbank for our share of
the impact of the Ghanaian sovereign domestic debt restructure
programme on associate income in our 2022 results. The total
effect of ETI on the group’s HE was a profit of R1 229m (2022:
R610m). The gross return on the original ETI investment increased
to 22,0% (2022: 12,4%) or 19,2%, excluding the R175m reversal.
Statement of financial position
Banking loans and advances
Gross banking loans and advances increased by 3% to
R885bn. Actual banking loans and advances growth was lower
than the 7% growth in average banking loans and advances,
primarily as a result of the benefit of strong growth in CIB in
H2 2022 (benefiting average growth in 2023), while actual growth
in H2 2023 was impacted by higher levels of client repayments and
reduced placements with foreign correspondent banks in CIB.
Gross banking loans and advances growth by cluster was
as follows:
Change
Rm
CIB
RBB
Wealth
NAR
Centre1
Group
(0)
6
1
(3)
380 455
453 498
29 059
22 176
> 89
(141)
382 250
429 564
29 395
22 902
(1 342)
3
885 047
862 769
1
Includes macro fair-value hedge-accounted portfolios and
disclosure reallocations.
CIB gross banking loans and advances decreased slightly to
R380bn as the growth in the leverage and diversified lending
businesses, coupled with growth in the energy sector, was offset
by a decrease in foreign client lending owing to lower overnight
interbank placements. Commercial-property loans and advances
grew by 3%, indicative of a level of confidence returning to
the sector and an improvement in sentiment. Average banking
advances grew by 8%.
RBB gross loans and advances increased by 6% to R453bn, driven
by solid growth in secured lending. Home Loans grew by 7%, MFC
(vehicle finance) grew by 8%, Commercial Banking grew by 3%,
and Credit Card grew by 1%. Unsecured-lending disbursal growth
remained subdued as we deliberately remain cautious in the
current environment, with Personal Loans declining by 4%. Overall
new-loan payouts decreased slightly to R118bn (2022: R121bn),
mainly due to the slowdown in unsecured lending and slowing
demand in home loans.
Deposits
Deposits increased by 5% to R1 088bn and the group’s
loan-to-deposit ratio decreased to 82% (December 2022: 85%).
Within our business clusters, CIB deposits remained flat, RBB grew
by 8%, Wealth by 4% and NAR by 7%, with the Centre growing
by 8%.
Many clients termed out short-term cash into longer-term
deposits due to the favourable interest rate environment. As a
result, savings accounts, short-dated foreign currency liabilities as
well as cash management deposits decreased by 13%, 0,5% and
20% respectively. In contrast, call and term deposits increased by
6%, fixed deposits by 5% and other deposits by 21%. Negotiable
certificates of deposit (NCDs) increased by 7% as our need for
wholesale funding remains muted. Foreign funding, although small
in relative terms for Nedbank at 3% of total funding, was flat.
Funding and liquidity
The group achieved a quarterly average long-term funding ratio
of 28,4%, which is above the industry average of around 23,2%
as a result of the proactive management of Nedbank’s long-term
funding profile.
The group’s December 2023 quarter average LCR of 135%
(December 2022: 161%) exceeded the minimum regulatory
requirement of 100%, with the group maintaining appropriate
operational buffers to absorb seasonal, cyclical, and systemic
volatility. Liquidity metrics remained strong, with no implications
evident from the adverse global banking and other developments.
HQLA (Rm)
Net cash outflows (Rm)
Liquidity coverage ratio (%)2
LCR regulatory minimum (%)
NSFR (%)
2023
2022
238 182
177 000
134,6
100,0
117,3
224 963
140 138
160,5
100,0
119,1
100,0
2 Average for the quarter.
Nedbank’s proactive management of its high-quality liquid
asset (HQLA) buffers resulted in the bank operating well within
its risk tolerance levels. The group has significant sources of
quick liquidity (R285bn), including HQLA, representing 22% of
total assets.
Nedbank exceeded the minimum regulatory NSFR requirement
of 100% with the December 2023 ratio of 117%. The structural
liquidity position of the group continued to be strong as a result of
the effective management of balance sheet growth.
Capital
The group remains strongly capitalised. Capital ratios are well
above the minimum regulatory requirements and board-approved
target ranges, with a CET1 ratio of 13,5% (Dec 2022: 14,0%) and
a tier 1 ratio of 15,0% (Dec 2022: 15,5%). The movement in the
CET1 ratio reflects the impact of the R5bn capital optimisation
initiative, the payment of the 2022 final dividend and 2023 interim
dividend, and a 7,3% increase in risk-weighted assets
(RWA). The RWA increase was mainly due to movements in credit
risk, market risk and operational risk.
Group capital
adequacy
ratios (%)
CET1
Tier 1
Total CAR
2023
2022
13,5
15,0
16,9
14,0
15,5
18,1
Internal
target
range
11,0–12,0
> 12,0
> 14,5
Regulatory
minimum
8,5
10,3
12,5
Note: Ratios include unappropriated profits.
59
Nedbank Group Annual Results 20232023 resultscommentarySupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial resultsResultspresentationMessage from ourChief Executive
Clients
• We retained our #1 rank in NPS among the large South African
banks (Kantar survey) and ranked #1 in social-media net
sentiment (Brandwatch).
• We safeguarded R1,1tn in deposits at competitive rates.
• We supported clients by advancing R332bn (2022: R341bn) in
new loans to enable them to finance their homes, vehicles, and
education and 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 channels, evident in digitally
active retail users increasing by 11% to 2,9 million (up by 61%
since 2019). During the year we also increased the number of
Imagine branches, which are more digitally and sales-focused, to
386 (71% of total branches from 39% in 2022).
• To support our clients during challenging times, we offered
tailored payment plans to help address their temporary financial
distress and gradually normalise their payment obligations over
time. For clients who have temporarily fallen behind on their
loans, while being mindful of all regulatory requirements, we
strive to help them keep their homes or vehicles by providing
restructures that reduce their monthly debt payments, assisting
them in getting back on track. We also encouraged clients to
consolidate their existing debt, thereby lowering their monthly
debt repayments, or assisted in selling their property or vehicle at
the best possible price to help settle their loan. During 2023 we
rehabilitated 936 000 clients, assisted 53 600 clients to keep
their vehicles and homes, and a further 15 500 clients to sell
their assets on the open market through our Assisted Sales
programmes.
• The launch of the MiGoals Premium and MiGoals Plus Accounts
in 2023, with their more competitive pricing and value to clients,
resulted in Nedbank ranking very well in the Solidarity 2024 Bank
Charges Report. Nedbank was recognised as best priced in the
higher middle-class income segment and second best in the
middle-class income segment. In the low-income segment,
Nedbank ranked third among the big 5 retail banks. Nedbank was
commended for the progress made on competitiveness as well
as the transparency and simplicity of fees.
• 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 Investment Bank in
South Africa Award at the 2023 Global Banking & Finance
Review Awards, Best Retail Bank in South Africa Award at the
2023 Global Banking & Finance Awards, Best Private Bank Africa
Award at the Global Private Banking Awards 2023, and Top
Private Bank of the Year Award at the Intellidex Top Private Banks
and Wealth Managers Awards 2023.
Shareholders
• Following a strong share price performance in 2021 and 2022,
when the Nedbank share price increased by 35% and 21%
respectively, the increase was more moderate in 2023 at 2%,
below the SA Banks Index that increased by 11%. Including
dividends, total shareholder return was 10% in 2023.
• All financial drivers of shareholder value creation improved.
DHEPS increased by 14%, ROE improved to 15,1%, above the
group’s cost of equity, and NAV per share increased by 8%. Strong
capital and liquidity positions at 31 December 2023 supported
the declaration of a final dividend of 1 022 cents per share for
2023, and a total dividend of 1 893 cents per share, increases of
18% and 15% respectively.
The group continues to focus on maintaining an optimal capital
structure using a full range of capital instruments. The group's total
tier 1 capital position was impacted by the issuance of additional
tier 1 instruments of R1bn, partly offset by redemptions of R750m.
The group's total capital was further impacted by the issuance of
tier 2 capital instruments of R2,1bn and redemptions amounting
to R4,5bn, in line with the group's capital plan.
Using our financial expertise to
do good
We remain committed to fulfilling our purpose of using our
financial expertise to do good and 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
• Employee satisfaction levels remained high, as evident in
our 2023 ‘great place to work’ NPS score of 20 (2022: 22),
the second highest since inception of our employee Pulse
survey conducted annually to track employee satisfaction and
engagement.
• We maintained our focus on the physical and mental well-being
of our employees by continuing to provide well-being solutions
and interventions. In light of a more difficult economic
environment, we increased our support to employees through
various financial education awareness programmes and
financial support initiatives. The continuation of FLOW time
on Wednesday afternoons, where employees are encouraged
to focus on their development or focussed work, is a further
commitment towards supporting a balanced lifestyle and
improved well-being.
• We paid our 25 477 permanent and temporary employees’
salaries and benefits of R21,1bn and concluded annual salary
increases of 7,3% for our bargaining-unit employees, with
non-bargaining-unit employees receiving increases of 5% to 6%.
• Skills development spend in 2023 increased to R1 169m (2022:
939m).
• Our hybrid work model saw 67% of employees working in some
hybrid fashion. This promotes flexibility and enables employees
to return to the workplace in an integrated and natural manner.
• Our employee attrition rate improved to 9,2% in 2023 (2022:
10,6%), with regrettable voluntary attrition declining to 3,8%
(2022: 5,0%). During the year, our Agility Centre successfully
redeployed 421 employees into alternative roles within Nedbank,
while 75 employees have regrettably been retrenched due
to necessary operational changes. A key focus has been
on timeous reskilling and upskilling to enable employees to
transition to future internal or external roles.
• We continued to focus on diversity, equity, and inclusion (DEI)
as a key imperative to ensure that we remain relevant in a
transforming society. The group remains strongly representative
of a diverse talent complement, with 82% of total employees
being black African, Coloured, or Indian (ACI), increasing from
81% in 2022, while we continue to record improvements in
ACI employee representation, and African representation in
particular, at senior- and middle-management levels. Total
female employee representation remained around 62%.
• Nedbank has been recognised at the 2023 ESG Africa
Conference, not only for being the biggest contributor to the
Youth Employment Services (YES) Programme among South
African banks, but also for the purpose-driven social impact
that it has realised through the Nedbank YES Programme over
the years, where we have now given close to 10 000 youth a
first-time work experience. In addition, we won the UN Women’s
Empowerment Principles (UNWEP) Gender Responsive
Marketplace Award at the 2023 UNWEP Gender Mainstream
Awards and were placed second for listed companies on both
the Economic Empowerment and the Women in the Community
Awards.
60
Nedbank Group Annual Results 2023 • We successfully executed a R5bn capital optimisation initiative,
which is beneficial to ROE and per share metrics.
• We hosted our 56th AGM and all resolutions were passed,
although votes in support of our remuneration implementation
report at 74,8% were slightly below the required 75%. From
engagement with shareholders, we understand that some of
the votes against the group’s remuneration implementation
report were because of a vote against the remuneration policy
of the prior year by the same shareholders. Pleasingly, our
remuneration policy received 90,4% votes of support in 2023.
• We ensured world-class transparent, relevant, and timeous
reporting as evidenced in various reporting awards and ongoing
positive shareholder feedback. In 2023 Nedbank’s activities
related to investor relations were rated #2 among all JSE
companies in the Krutham (Intellidex) Top Investor Relations
2023 survey for the second year in a row. We also ranked
#1 company for best market communications, #1 company for
best integrated report, #2 company for best disclosure of ESG
metrics, and #7 company for most accessible management.
• We remained at the top end of various ESG ratings when
compared with local and international peers.
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 2023 included the following:
• Basel III reforms: During H2 2023 the Prudential Authority (PA)
published the second draft of the proposed directives 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. With
implementation starting mid-2025, the impact on the capital
holdings of the group is currently estimated to emerge through
2026 to 2027, with the phase-in of the capital floor
requirements. We are working through the various committees
and subcommittees to optimise not only the capital holdings, but
also the product offerings to absorb the impact of these Basel
III reforms. Nedbank is well positioned to absorb these changes
through current capital buffers.
• In November 2023 the PA issued a Proposed Directive
pertaining to the implementation of a positive cycle-neutral
countercyclical capital buffer (PCN CCyB). The PA proposed
increasing the CCyB rate from 0% to 1%, effective from
1 January 2026, which will increase the regulatory minimum
capital requirement and consequently will impact the group’s
surplus capital position, if implemented.
• The Financial Sector Laws Amendment Bill (FSLAB) was
promulgated in January 2022, giving rise to the Financial
Sector Laws Amendment Act (FLSAA), 23 of 2021, establishing
the following:
• SARB as the resolution authority (RA). In March 2023, the
Minister of Finance published the FSLAA commencement
schedule, which stipulated that the Resolution Framework
became effective in June 2023.
• The Corporation for Deposit Insurance (CODI) was established
as a legal entity in terms of the Financial Sector Regulation Act
(FSR Act), 9 of 2017. Banks automatically became members of
CODI, and it is noted that CODI will become fully operational
only from 1 April 2024. The group’s initial impact assessments
suggest, once secondary legislation has been promulgated, an
annual CODI cost of approximately R240m for a covered
deposit balance of approximately R120bn and a liquidity
tier of approximately R3,6bn. The covered deposit balance is
the amount covered by CODI for a qualifying depositor and a
qualifying deposit product, which is currently proposed at a
maximum of R100 000.
• In 2023 S&P Global (S&P) and Moody’s affirmed their ratings of
Nedbank. S&P revised their outlook from ‘positive’ to ‘stable’,
similar to Moody’s, following S&P’s decision to revise its outlook
on the SA sovereign from ‘positive’ to ‘stable’.
• We hold investments of over R184bn in government and public
sector bonds as part of our HQLA requirements. All government
bonds held in the Trading Book are held at fair value and all
government bonds held in the Banking Book for LCR purposes
are hedged, with interest rate swaps through Nedbank’s Macro
Fair-value Hedge Accounting solution. From an LCR perspective
all HQLA are measured at their fair value.
• We made cash taxation payments relating to direct, indirect and
employee taxes as well as other taxation of R13,2bn across the
group, up by almost 15% yoy.
Society
Banks play a central role in driving sustainable socioeconomic
development for the benefit of all stakeholders and helping create
a better future by providing capital for investment in the real
economy. Our purpose, of using our financial expertise to do good,
guides our strategy, behaviour, and actions towards the delivery of
long-term system value for us and our stakeholders.
We have adopted the UN SDGs as a framework for measuring
delivery on our purpose and prioritised 9 SDGs where we
believe we have the greatest ability to deliver meaningful impact
through our core business, thereby creating positive social
and environmental outcomes. Key highlights for 2023 include
the following:
• Quality education (SDG 4): We provided financing towards
student loans and student accommodation, supporting
1 099 student loans (over 11 000 since 2015) and 967 student
beds (almost 44 000 since 2015).
• Clean water and sanitation (SDG 6): We are committed to
supporting this vital sector. However, given the reliance on public
sector readiness, investing continues to be a challenge. We have
exposure of R1,2bn towards clean-water provision relating to
public sector reticulation and sanitation projects, the 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 World Wide Fund for
Nature South Africa Water Balance Programme, which removes
invasive alien trees in key water source areas.
• Affordable and clean energy (SDG 7): On the back of
our leadership position in the first 4 rounds of the South
African Renewable Energy Independent Power Producers
Procurement Programme (REIPPPP), where we supported
3,5 GW of renewable energy, we closed 6 additional deals
across the emergency round Risk Mitigation IPPPP and the
REIPPPP in H2 2023, which will contribute a further 0,3 GW
to the grid. There are another 5 projects that we expect to
close in 2024, supporting a further 0,5 GW in additional
capacity. We also maintain a strong pipeline in private power
generation, wherein we are mandated on 1,9 GW of new
projects. We anticipate closing most of these deals in 2024 and
for clients to start drawing down on some of their facilities
during the year. Growth in solar financing, off a low base, was
strong in RBB, supported by solutions for Commercial
Banking clients, as well as MFC solar finance, home loans solar
readvance, and Avo Solar that launched in the second half of
2023. At 31 December 2023 the group’s total renewable energy
exposures across REIPPPP and private power generation in
CIB, RBB and NAR was around R30bn, with client facilities
(limits) increasing by 22% to R45bn. In our own operations, to
61
Nedbank Group Annual Results 20232023 resultscommentarySupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial resultsResultspresentationMessage from ourChief Executive supplement our own solar-photovoltaic-produced electricity
towards greener and self-generated renewable energy, we
commenced wheeling green power from IPPs to reduce
our own carbon emissions and aim to increase this from
around 6,5% in 2023 (2022: 1%) to more than 30% of energy
consumption by the end of 2025.
• Decent work and economic growth (SDG 8): We increased
our support for small businesses and their owners, evident
in loan exposures of R22bn, and provided banking solutions
to more than 300 000 small-and-medium-enterprise (SME)
clients. In 2023 we welcomed our fourth intake of 2 835 YES
participants as we continue to make an impact on South
African youth and their families and communities. With this
intake included, close to 10 000 previously unemployed youth
have been afforded the opportunity of employment through
participating in Nedbank’s YES programme. To date, 1 140 of
them have been permanently employed within Nedbank and our
YES programme partners.
• Industry, innovation and infrastructure (SDG 9): Infrastructure
remains a key priority for Nedbank as we seek to unlock
bottlenecks for growth in SA and across the continent. We have
exposures of R15bn to infrastructure related projects spanning
roads, rail, ports and telecommunications infrastructure.
• Reduced inequalities (SDG 10): We maintained our level
1 BBBEE status and were acknowledged at the 22nd Top
Empowerment Awards by being awarded the Legends of
Empowerment Award. Within the township economy we
continue to innovate and leverage partnerships to co-create
solutions with clients. In 2023 we continued with hosting
Kasi Business Workshops across the country, creating
shared value through our partnership with the Township
Entrepreneurs Alliance (TEA). We have impacted more
than 48 000 township SMMEs, sponsored more than
165 township exhibitors with Nedbank point-of-sale devices
and created supplier procurement opportunities for more than
180 black-youth-owned service providers. Significant work was
done to launch a CVP for informal traders, customised to their
unique needs and behaviours in 2024.
• Sustainable cities and communities (SDG 11): The value
of affordable home loans paid out for lower-income
households was R3bn, equating to over 5 000 home
purchases in 2023. To date, we provided R25bn worth of
funding for the construction of buildings that conform to
green building standards and buildings with green aspects.
We also continuously pursue green star ratings for our own
premises, and at the end of 2023, 85% of our space was Green
Star-rated.
• CEO pledge: In July 2023 CEOs from more than
130 of SA’s leading corporations, including Nedbank, signed
a pledge underpinning their collective belief in SA and their
determination to assist in realising its potential. Businesses
are committed to working with government to play its part in
helping address the economic challenges facing the country,
with the aim of achieving higher levels of sustainable and
inclusive economic growth.
Economic outlook
Global growth is widely expected to remain relatively subdued but
resilient in 2024. The softer trend will probably intensify in the first
half of 2024 as higher interest rates continue to weigh on demand
in advanced and emerging economies. However, the world economy
is expected to recover in the second half, supported by much lower
inflation and falling interest rates, which should lift real incomes and
boost confidence. The IMF expects steady global growth of 3,1% in
2024. Advanced economies are forecast to expand by 1,5%, while
emerging and developing economies are expected to grow at the
same pace as last year of around 4,1%. The IMF sees sub-Saharan
Africa’s economy picking up some pace, growing by 3,8% in 2024.
Global disinflation will likely deepen, creating space for monetary
policy easing by the US and other major central banks later this year.
As a result, global financial conditions should improve as the year
progresses, potentially driving a recovery in global risk sentiment
and capital inflows to emerging markets. Although encouraging,
downside risks remain significant given high public debt burdens in
advanced and developing countries, the ongoing war in Ukraine, the
escalating conflict in the Middle East and the threat of heightened
political instability as 63 countries head to the polls in 2024.
SA’s economy will remain constrained by electricity shortages and
deteriorating rail and port services. Load-shedding is expected to
decline in 2024 as Eskom eases unplanned outages and private
power generation increases. In contrast, transport bottlenecks
are expected to persist and intensify, while public service delivery
will likely remain relatively poor. These structural constraints
will continue to weigh on producers and exporters, undermining
production, inflating operating costs, and squeezing profitability.
Given the difficult operating environment and the uncertainties
surrounding the outcome of SA’s general elections, business
confidence will remain weak, and fixed investment activity is forecast
to slow, with private firms likely to delay or postpone expansionary
projects other than in energy until the business cycle turns positive
and the political and policy outlooks become clearer. Furthermore,
high interest rates will continue to weigh on household confidence,
eroding discretionary income and constraining spending, particularly
in H1 2024. On the upside, consumer spending should recover as
inflation reduces and interest rates start to decline in H2 2024.
The Nedbank Group Economic Unit expects real GDP growth of 1,0%
in 2024, which is moderately higher than 2022.
Average inflation for South Africa is forecast to ease further, ending
2023 at 5,9% and averaging 5,0% in 2024, before receding to the
SARB’s preferred target of 4,5% in 2025. However, upside risks
remain, consisting of the threat posed by the conflict in the Middle
East to global oil supplies and prices, a vulnerable rand sensitive to
changes in US interest rate expectations, further aggressive hikes in
electricity tariffs and cost implications of persistent load-shedding
and logistical constraints. The SARB MPC is, therefore, likely to
remain cautious. The Nedbank Group Economic Unit expects
monetary policy easing to begin in July 2024 and interest rates to
reduce by a cumulative 75 bps, taking the prime lending rate down to
11,00% by the end of 2024.
Conditions in the banking industry are likely to remain challenging.
Credit extension is forecast to gradually pick up to 5,2% by year-end,
supported by the anticipated decline in domestic interest rates and
the recovery in the global economy. However, risks to the outlook
for credit growth are tilted to the downside. Households are likely
to be highly sensitive to the timing of anticipated interest rate cuts.
If inflation proves sticky and interest rates stay higher for longer,
household demand for credit will weaken more than anticipated.
Equally, fragile business confidence and the country’s poor economic
growth prospects will continue to weigh on corporate credit demand,
discouraging large new capital projects and subduing demand
for general loans. Encouragingly, the downside will be limited by
continued growth in renewable energy projects, which should
provide some foundation for corporate loan growth. The risk of bad
debt is expected to remain elevated for as long as interest rates stay
at current levels.
62
Nedbank Group Annual Results 2023 Prospects
Our current guidance on financial performance for the full year
2024, in a difficult macroeconomic environment with high forecast
risk and uncertainty, is as follows:
• NII growth of above mid-single digits. The group’s NIM is
expected to reduce slightly from the 2023 level of 4,21%, while
average banking loans and advances growth is likely to see
stronger growth in H2 2024 when compared with H1 2024,
as lower interest rates and inflation start benefiting retail
credit growth and as wholesale clients start drawing down on
renewable energy deals.
• CLR for the full year moving back into the group’s TTC target
range of 60 bps to 100 bps, with the likelihood of being above
100 bps in the first half of the year given seasonality impacts.
While upside risks remain given macroeconomic challenges,
progress in consumer collections in RBB remains steady
and risks around several stage 3 loans in CIB have been resolved
in 2023.
• NIR growth being above mid-single digits, supported by
higher levels of cross-sell, main-banked client gains and new
revenue streams in RBB, ongoing dealflow in CIB and insurance
improving off a low 2023 base. Trading and equity investment
income is expected to improve but remain exposed to macro
risks. Fair-value gains and foreign exchange gains in Zimbabwe
create high base effects.
• Expense growth being around the mid-to-upper single digits
as we continue to focus on managing costs in a more difficult
environment while absorbing new regulatory costs such as
deposit insurance.
• Associate income likely to continue showing good underlying
growth from ETI, although the base effect of Nedbank’s R175m
Ghana sovereign bond provision release in 2023 will create
headwinds to growth in 2024.
• CET1 capital ratio remaining well above the top end of the
board-approved target range of 11% to 12%.
• Dividend payments, subject to board approval, being at the top
end of our payout ratio of 57% (ie bottom end of the group’s
target range of 1,75 times to 2,25 times).
Our medium-term targets to 2025, and long-term (undated) targets support our focus on ongoing value creation for shareholders and
remain in place. They have, however, become more difficult to achieve in the macroeconomic environment that has deteriorated when
compared to assumptions when targets were set in February 2022. 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 and achieved an ROE of more than 17,0% (around
COE plus 2%). Our cost-to-income ratio target of below 52,0% is now likely to be achieved a year later in 2026.
In the long term we aim to increase our ROE further to 18,0% or more (around COE plus 3%) and decrease our cost-to-income ratio to
below 50,0%.
Metric
2023
Full-year
Medium-term
performance6
2024 outlook
target
Long-term
target
ROE
15,1%
Increase
17,0% (around COE + 2%) by 2025
> 18,0% (around COE + 3%)
Growth in DHEPS
14%
Solid growth, driven
by lower impairments
> consumer price index
+ GDP growth + 5% CAGR
CLR
109 bps
Within the top half
Between 60 bps and 100 bps
(80 bps to 100 bps) of the
group’s TTC target range
of average gross banking advances
Cost-to-income ratio
(including associate
income)
53,9%
Increase slightly
< 52,0% by 2026
< 50,0%
CET1 capital
adequacy ratio
13,5%
Above the top end of the
target range
Dividend cover
1,75 times
At the bottom end of our
target range of 1,75–
2,25 times
6 COE is currently forecast to be 15,0% in 2024 to 2026.
11,0%–12,0%
1,75–2,25 times
Shareholders are advised that all guidance is based on organic earnings and our latest macroeconomic outlook. The group’s joint auditors
have not reviewed or reported on this guidance.
63
Nedbank Group Annual Results 20232023 resultscommentarySupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial resultsResultspresentationMessage from ourChief Executive
Final dividend declaration
Notice is hereby given that a final dividend of 1 022 cents per
ordinary share has been declared, payable to shareholders for the
year ended 31 December 2023. 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 204,4 cents per ordinary share, resulting
in a net dividend of 817,6 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
was 488 105 724.
In line with the provisions of Strate, the electronic settlement and
custody system used by the JSE Limited, the relevant dates for the
dividend are as follows:
2024
Last day to trade (cum dividend)
Tuesday, 9 April
Shares commence trading (ex
dividend)
Record date (date shareholders
recorded in shareholders’
register)
Wednesday, 10 April
Friday, 12 April
Payment date
Monday, 15 April
Share certificates may not be dematerialised or rematerialised
between Wednesday, 10 April 2024, and Friday, 12 April 2024, both
days included.
Where applicable, dividends in respect of certificated shares
will be transferred electronically to shareholders’ bank accounts
on the payment date. 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,
15 April 2024.
For and on behalf of the board
Daniel Mminele
Chairperson
Mike Brown
Chief Executive
Directors
AD Mminele (Chairperson), MWT Brown** (Chief Executive),
HR Brody*, BA Dames, MH Davis** (Chief Financial Officer),
NP Dongwana, EM Kruger, P Langeni, RAG Leith, L Makalima,
MC Nkuhlu** (Chief Operating Officer), TM Nombembe,
S Subramoney.
* Lead Independent Director ** Executive
Board and executive leadership
changes during the period
Daniel Mminele was appointed as an independent non-executive
director and Chairperson-designate with effect from 1 May 2023,
and assumed the role of Independent Chairperson following
Mpho Makwana’s retirement from the Nedbank Group Board at
the AGM on 2 June 2023. Dr Mantsika Matooane also retired as
an independent non-executive director at the AGM on 2 June
2023, having reached her 9-year tenure. Brian Dames was due
to retire from the Nedbank Group Board on 2 June 2023, and the
board resolved to extend his tenure given the continued search
for additional directors with climate risk expertise. Having served
on the board for more than 9 years, Brian Dames became a
non-independent non-executive director on 2 June 2023. Terence
Nombembe was appointed as an independent non-executive
director with effect from 1 January 2024. Professor Tshilidzi
Marwala and Mteto Nyati resigned as independent non-executive
directors on 28 February and 9 October 2023, respectively.
In terms of executive leadership changes, Trevor Adams,
former Group Chief Risk Officer, and Fred Swanepoel,
former Group Chief Information Officer, reached the group’s
mandatory retirement age of 60 during H1 2023. In line with
Nedbank Group’s executive succession plan, Dave Crewe-Brown
was appointed to succeed Trevor and Ray Naicker was appointed
to succeed Fred. Both have accordingly been appointed members
of the Group Executive Committee with effect from 1 April and
1 July 2023, respectively.
Following the successful completion of the group’s Chairperson
succession process and the subsequent appointment of
Daniel Mminele as the Chairperson, the Nedbank Group Board
commenced a process to choose a successor to Mike Brown,
who joined Nedbank Group 30 years ago and has been the
Chief Executive (CE) since 2010 and an executive director since
2004. In line with Nedbank Group’s executive succession plan and
after a thorough process overseen by the Nedbank Group Board,
Jason Quinn was appointed as CE-designate of Nedbank Group
and Nedbank with effect from 22 May 2024, subject to regulatory
approval, which was subsequently granted in February 2024. After
joining Nedbank on 22 May 2024, he will assume the role of CE on
Mike Brown’s planned retirement from the boards at the close of
the Nedbank Group AGM, currently scheduled for 31 May 2024.
Mike will remain at Nedbank as a senior adviser for a period of
three months after he steps off the boards to ensure a seamless
handover to Jason.
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 group’s joint
auditors have not reviewed or reported on the financial information
on which all forward-looking statements are based.
The group, in the ordinary course of business, enters into
transactions that expose it to taxation, legal and business risks.
The group does not expect the ultimate resolution of any of these
other matters to have a material adverse effect on the group’s
consolidated financial position.
64
Nedbank Group Annual Results 2023
65
NotesNedbank Group Annual Results 20232023 resultscommentarySupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial resultsResultspresentationMessage from ourChief Executive Financial results
Financial highlights
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Return-on-equity drivers
67
68
70
72
76
66
Nedbank Group Annual Results 2023 Financial highlights
for the year ended 31 December
Statistics
Number of shares listed
Number of shares in issue, excluding shares held by group entities
Weighted-average number of shares
Diluted weighted-average number of shares
Headline earnings
Profit attributable to ordinary shareholders
Total comprehensive income
Preprovisioning operating profit
Economic profit/(loss)
Headline earnings per share
Diluted headline earnings per share
Basic earnings per share
Diluted basic earnings per share
Ordinary dividends declared per share
Interim
Final
Ordinary dividends paid per share
Dividend cover
Total assets administered by the group
Total assets
Assets under management
Net life insurance contractual service margin
Nedbank Wealth life insurance value of new business
Net asset value per share
Tangible net asset value per share
Closing share price
Price/earnings ratio
Price-to-book ratio
Market capitalisation
Number of employees (permanent)
Number of employees (permanent and temporary)
Key ratios (%)
ROE
Return on tangible equity
ROA
Return on RWA
NII to average interest-earning banking assets
NIR to total income
NIR to total operating expenses
CLR – banking advances
Cost-to-income ratio
Total income growth less expense growth rate (JAWS ratio)
Effective taxation rate
Group capital adequacy ratios (including unappropriated profits):
– CET1
– Tier 1
– Total
m
m
m
m
Rm
Rm
Rm
Rm
Rm
cents
cents
cents
cents
cents
cents
times
Rm
Rm
Rm
Rm
Rm
cents
cents
cents
historical
historical
Rbn
Change
%
2023
2022
(5)
(2)
11
7
30
15
>100
15
14
10
10
15
11
18
13
7
(37)
8
9
2
(3)
(2)
(2)
488,1
464,6
472,5
489,2
15 650
15 305
17 338
29 739
970
3 312
3 199
3 239
3 128
1 893
871
1 022
1 737
1,75
511,5
487,3
486,9
500,7
14 061
14 287
13 354
25 753
(222)
2 888
2 809
2 934
2 854
1 649
783
866
1 541
1,75
1 759 875
1 645 968
1 311 408
1 252 904
448 467
393 064
1 071
372
23 192
20 614
21 623
6,5
0,9
105,5
25 477
25 984
15,1
17,2
1,21
2,31
4,21
40,1
72,8
1,09
53,9
3,8
20,5
13,5
15,0
16,9
997
595
21 533
18 937
21 258
7,4
1,0
108,7
25 924
26 480
14,1
16,2
1,14
2,18
3,93
41,9
74,1
0,89
55,8
3,8
22,1
14,0
15,5
18,1
67
Nedbank Group Annual Results 2023Financial resultsSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysis2023 resultscommentaryResultspresentationMessage from ourChief Executive
Consolidated statement of comprehensive income
for the year ended 31 December
Rm
Interest and similar income
Interest expense and similar charges
Net interest income
Non-interest revenue and income
Net commission and fees income
Commission and fees revenue
Commission and fees expense
Net insurance income
Fair-value adjustments
Net trading income
Equity investment income
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 income/(losses) (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
Cash flow hedge losses
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
Change
%
2023
2022
42
65
14
6
65
12
30
9
8
2
>100
8
2
1
3
9
2
4
5
6
116 915
75 445
41 470
27 709
19 346
25 296
(5 950)
1 446
577
4 299
764
142
1 135
1 449
70 628
9 605
61 023
38 059
1 129
403
21 432
4 432
4 484
82 104
45 827
36 277
26 171
18 488
24 197
(5 709)
1 715
187
4 166
815
96
704
879
63 327
7 381
55 946
35 329
1 102
(245)
19 760
4 330
4 311
(52)
19
10
>100
17 000
338
15 430
(2 076)
1 492
(1 556)
242
(190)
75
191
53
31
(2)
(1 821)
146
(1)
(245)
(106)
(47)
Total comprehensive income for the year
30
17 338
13 354
68
Nedbank Group Annual Results 2023
Rm
Profit attributable to:
– Ordinary shareholders
– Holders of participating preference shares
– Holders of additional tier 1 capital instruments
– Non-controlling interest – ordinary shareholders
Profit for the year
Total comprehensive income attributable to:
– Ordinary shareholders
– Holders of participating preference shares
– Holders of additional tier 1 capital instruments
– Non-controlling interest – ordinary shareholders
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
Less: Share of associate (ETI) impairments charge on non-financial instruments
and other gains and losses
Note
Change
%
2023
2022
7
57
47
48
10
28
57
47
73
30
7
>(100)
14 287
106
873
164
15 430
12 239
106
873
136
13 354
14 287
226
245
(19)
15 305
166
1 286
243
17 000
15 651
166
1 286
235
17 338
15 305
(351)
(403)
52
6
Headline earnings
5
11
15 650
14 061
69
Nedbank Group Annual Results 2023Financial resultsSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysis2023 resultscommentaryResultspresentationMessage from ourChief Executive
Consolidated statement of financial position
at 31 December
Note
Change
%
2023
2022
7
7
8
9
10
11
14
24
52
5
95
2
(22)
28
6
>100
7
>100
35
>100
(1)
18
(5)
52 082
87 769
13 812
45 618
70 661
9 101
167 138
158 661
3 579
1 834
855 445
835 560
36 174
35 575
156
378
27 287
493
2 489
921
371
10 913
4 849
11 977
46 605
27 827
147
156
25 465
244
2 496
683
26
11 064
4 107
12 649
5
1 311 408
1 252 904
(5)
(25)
9
3
>100
2
27
3
45
5
36
(3)
(5)
>100
4
20
(8)
5
5
465
14 332
92 952
487
19 208
85 281
107 749
104 976
106
10 469
887
119 211
14 141
51
10 219
698
115 944
9 738
1 087 645
1 039 622
22 715
16 722
313
507
43
17 512
1 544
47 777
322
533
6
16 832
1 282
51 903
1 192 197
1 136 960
1 311 408
1 252 904
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
Insurance contract 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
Deferred taxation liabilities
Long-term employee benefit liabilities
Investment contract liabilities
Insurance contract liabilities
Long-term debt instruments
Total liabilities
Total equity and liabilities
70
Nedbank Group Annual Results 2023
71
NotesNedbank Group Annual Results 2023Financial resultsSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysis2023 resultscommentaryResultspresentationMessage from ourChief Executive Consolidated statement of changes in equity
for the year ended 31 December
Rm
Number of
ordinary
shares
Ordinary
share
capital
Ordinary
share
premium
Foreign
currency
translation
reserve1
Property
revaluation
reserve
Share-based
payment
reserve
Other non-
distributable
reserves2
FVOCI
reserve
Other
distri-
butable
reserves3
Total equity
attributable
to ordinary
shareholders
Holders of
participating
preference
shares
Holders of
additional
tier 1 capital
instruments
Balance at 1 January 2022
485 601 547
486
18 768
(1 508)
1 764
1 205
273
769
77 792
99 549
59
9 319
620
109 547
Share movements in terms of long-term incentive and BEE
scheme
1 650 168
1
440
(384)
(82)
(25)
Additional tier 1 capital instruments issued
Additional tier 1 capital instruments redeemed
Preference share dividend paid
Additional tier 1 capital instruments interest paid
Dividends paid to shareholders
Total comprehensive (losses)/income for the year
Profit attributable to ordinary shareholders and
non-controlling interest4
Exchange differences on translating foreign operations
Movement in fair-value reserve
Property revaluations
Remeasurements of long-term employee benefit assets
Share of OCI of investments accounted for using the equity
method
Transfer (from)/to reserves
Value of employee services (net of deferred tax)
Transactions with non-controlling interests
Other movements
(1 391)
(97)
–
–
(317)
14 044
11
(1 402)
(17)
(97)
(58)
2
1 500
(600)
(873)
873
873
(114)
106
106
–
–
–
–
11
102
(97)
(242)
–
979
20
2
(7 788)
(7 788)
12 239
14 287
14 287
102
(419)
(1)
(1 822)
(242)
125
35
2
(70)
979
3
Non-
controlling
interest
attributable
to ordinary
shareholders
Total equity
(25)
1 500
(600)
(114)
(873)
(7 826)
13 354
15 430
(2)
99
(106)
(245)
(1 822)
979
–
–
2
(38)
136
164
(13)
(3)
(9)
(3)
(20)
Balance at 31 December 2022
487 251 715
487
19 208
(2 916)
1 611
1 730
276
452
84 128
104 976
51
10 219
698
115 944
72
Nedbank Group Annual Results 2023
Number of
ordinary
shares
Ordinary
share
capital
Ordinary
share
premium
Foreign
currency
translation
reserve1
Property
revaluation
reserve
Share-based
payment
reserve
Other non-
distributable
reserves2
FVOCI
reserve
Other
distri-
butable
reserves3
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
Balance at 1 January 2022
485 601 547
486
18 768
(1 508)
1 764
1 205
273
769
77 792
99 549
59
9 319
620
109 547
1 650 168
1
440
(384)
(82)
(25)
(1 391)
(97)
–
–
(317)
14 044
(7 788)
–
–
–
–
(7 788)
12 239
11
(1 402)
(17)
(97)
(58)
2
14 287
14 287
102
(242)
11
102
(97)
(242)
(419)
(1)
(1 822)
125
35
2
–
979
20
2
(70)
979
3
1 500
(600)
(873)
873
873
(114)
106
106
(25)
1 500
(600)
(114)
(873)
(7 826)
13 354
15 430
(2)
99
(106)
(245)
(1 822)
–
979
–
2
(38)
136
164
(13)
(3)
(9)
(3)
(20)
Balance at 31 December 2022
487 251 715
487
19 208
(2 916)
1 611
1 730
276
452
84 128
104 976
51
10 219
698
115 944
Rm
scheme
Share movements in terms of long-term incentive and BEE
Additional tier 1 capital instruments issued
Additional tier 1 capital instruments redeemed
Preference share dividend paid
Additional tier 1 capital instruments interest paid
Dividends paid to shareholders
Total comprehensive (losses)/income for the year
Profit attributable to ordinary shareholders and
non-controlling interest4
Exchange differences on translating foreign operations
Movement in fair-value reserve
Property revaluations
Remeasurements of long-term employee benefit assets
Share of OCI of investments accounted for using the equity
method
Transfer (from)/to reserves
Value of employee services (net of deferred tax)
Transactions with non-controlling interests
Other movements
73
Nedbank Group Annual Results 2023Financial resultsSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysis2023 resultscommentaryResultspresentationMessage from ourChief Executive
Consolidated statement of changes in equity (continued)
Rm
Share movements in terms of long-term incentive and BEE
scheme
Share buyback
Additional tier 1 capital instruments issued
Additional tier 1 capital instruments redeemed
Preference share dividend paid
Additional tier 1 capital instruments interest paid
Dividends paid to shareholders
Total comprehensive (losses)/income for the year
Profit attributable to ordinary shareholders and
non-controlling interest4
Number of
ordinary
shares
Ordinary
share
capital
Ordinary
share
premium
Foreign
currency
translation
reserve1
Property
revaluation
reserve
Share-based
payment
reserve
Other non-
distributable
reserves2
FVOCI
reserve
Other
distri-
butable
reserves3
Total equity
attributable
to ordinary
shareholders
Holders of
participating
preference
shares
Holders of
additional
tier 1 capital
instruments
709 349
(23 395 066)
1
(23)
145
(5 021)
(411)
(154)
(419)
(5 044)
(63)
27
–
–
303
15 384
Exchange differences on translating foreign operations
1 515
Cash flow hedge losses
Movement in fair-value reserve
Property revaluations
Remeasurements of long-term employee benefit assets
Share of OCI of investments accounted for using the equity
method
Transfer (from)/to reserves
Value of employee services (net of deferred tax)
(1 578)
27
(54)
Balance at 31 December 2023
464 565 998
465
14 332
(2 979)
1 584
337
742
90 614
107 749
106
10 469
887
119 211
1 Exchange differences of R1 515m credit (2022: R11m) in the foreign currency transaction reserve include a credit of R168m (2022: R190m) for the conversion of our
investment in ETI from USD to ZAR and a credit of R1 347m (2022: R179m) for the translation of the other foreign subsidiaries. The R1 578m debit (2022: R1 402m)
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 R166m gains (2022: R106m) 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.
Non-
controlling
interest
attributable
to ordinary
shareholders
Total equity
(419)
(5 044)
1 000
(750)
(111)
(1 286)
(190)
273
53
191
(1 481)
–
1 154
(23)
1 492
(8)
26
(3)
1 000
(750)
(1 286)
(111)
166
166
(8 569)
(8 569)
15 651
(46)
(8 615)
1 286
235
17 338
15 305
15 305
1 286
243
17 000
–
–
–
–
1 515
(190)
281
27
194
(1 481)
–
1 154
281
22
(13)
(190)
194
75
(175)
61
181
1 154
2 654
74
Nedbank Group Annual Results 2023
Number of
ordinary
shares
Ordinary
share
capital
Ordinary
share
premium
Foreign
currency
translation
reserve1
Property
revaluation
reserve
Share-based
payment
reserve
Other non-
distributable
reserves2
FVOCI
reserve
Other
distri-
butable
reserves3
Total equity
attributable
to ordinary
shareholders
Holders of
participating
preference
shares
Holders of
additional
tier 1 capital
instruments
709 349
(23 395 066)
1
(23)
145
(5 021)
(411)
(154)
(419)
(5 044)
(63)
27
–
–
303
15 384
(8 569)
–
–
–
–
(8 569)
15 651
Share movements in terms of long-term incentive and BEE
Rm
scheme
Share buyback
Additional tier 1 capital instruments issued
Additional tier 1 capital instruments redeemed
Preference share dividend paid
Additional tier 1 capital instruments interest paid
Dividends paid to shareholders
Total comprehensive (losses)/income for the year
Profit attributable to ordinary shareholders and
non-controlling interest4
Cash flow hedge losses
Movement in fair-value reserve
Property revaluations
Remeasurements of long-term employee benefit assets
Share of OCI of investments accounted for using the equity
method
Transfer (from)/to reserves
Value of employee services (net of deferred tax)
Exchange differences on translating foreign operations
1 515
Balance at 31 December 2023
464 565 998
465
14 332
(2 979)
1 584
(1 578)
27
(54)
181
1 154
2 654
15 305
15 305
281
22
(13)
(190)
194
75
(175)
61
1 515
(190)
281
27
194
(1 481)
–
1 154
(111)
166
166
Non-
controlling
interest
attributable
to ordinary
shareholders
Total equity
(419)
(5 044)
1 000
(750)
(111)
(1 286)
1 000
(750)
(1 286)
(46)
(8 615)
1 286
235
17 338
1 286
243
17 000
(23)
1 492
(8)
26
(3)
(190)
273
53
191
(1 481)
–
1 154
337
742
90 614
107 749
106
10 469
887
119 211
75
Nedbank Group Annual Results 2023Financial resultsSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysis2023 resultscommentaryResultspresentationMessage from ourChief Executive
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
Note: Averages calculated on a 365-day basis.
2023
2022
41 470
(9 605)
27 709
59 574
(38 059)
1 443
22 958
(1 129)
(4 484)
17 345
(1 695)
15 650
986 060
36 277
(7 381)
26 171
55 067
(35 329)
879
20 617
(1 102)
(4 311)
15 204
(1 143)
14 061
922 197
1 297 206
1 233 772
103 501
99 996
76
Nedbank Group Annual Results 2023 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
2023
2022
4,21%
3,93%
less
less
0,97%
0,80%
add
add
2,81%
2,84%
6,05%
5,97%
less
less
3,86%
3,83%
add
add
0,15%
0,10%
2,34%
2,24%
multiply
multiply
0,76
0,74
multiply
multiply
0,90
0,92
1,59%
1,52%
multiply
multiply
76,0%
74,7%
=
=
1,21%
1,14%
multiply
multiply
12,5
=
12,3
=
15,1%
14,1%
77
Nedbank Group Annual Results 2023Financial resultsSupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysis2023 resultscommentaryResultspresentationMessage from ourChief Executive
78
NotesNedbank Group Annual Results 2023 Segmental
analysis
Our organisational structure, products and services 80
Operational segmental reporting
Nedbank Corporate and Investment Banking
Nedbank Retail and Business Banking
Nedbank Wealth
Nedbank Africa Regions
Geographical segmental reporting
82
86
90
102
106
110
79
Nedbank Group Annual Results 2023 Our organisational structure, products and services
We deliver our products and services through 4 main business clusters.
Cluster
Areas of strength and differentiation
Nedbank Corporate and
Investment Banking
• Market leader with strong expertise in commercial-property, corporate
advances and renewable-energy financing.
• Market-leading South African trading franchise with excellent trading
capabilities across all asset classes.
• Leading expertise across various sectors such as mining, telecoms
and infrastructure.
A comprehensive suite of
wholesale banking solutions
for corporates, institutions,
governments and parastatals
Nedbank Retail and
Business Banking
Individual clients
and businesses
Individual, business and
corporate clients
Nedbank
Wealth
Nedbank
Africa Regions
Retail, small and medium
enterprises as well as business
and corporate clients across the
countries where we operate
• Leading digital capabilities enabling clients to join and engage with the
bank through multiple channels.
• #1 bank in client satisfaction metrics.
• Differentiated and disruptive client value propositions (CVPs) across
different client segments.
• Highly competitive relationship banking offering for our affluent and
small-business clients.
• Well-positioned and distinctive CVPs in Commercial Banking.
• Digitally enabled and reimagined distribution network.
Insurance
• Leveraging existing distribution channels and platforms to sell insurance
solutions to Nedbank clients.
Asset Management
• Top fund managers are contracted through the 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 integrated and holistic advice-led and high-net-worth offering for
local and international clients.
SADC (own, manage and control banks)
• Presence and positioned for growth in 5 SADC countries with ongoing
technology investments to enhance CVPs and achieve scale.
Central and West Africa (ETI alliance – 21,2% shareholding)
• Access to the largest banking network in Africa through our ETI
strategic alliance.
The group’s frontline business clusters are supported by various shared-services functions related to compliance, finance,
human resources, marketing and corporate affairs, risk, technology and strategy, including sustainability.
80
Nedbank Group Annual Results 2023 Products and services
Contribution to group
HE contribution
ROE
> 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
products and services.
Approximately 3,5 million main-banked retail clients
and 7 million active retail clients
• Offering a 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.
• > 300 000 business clients are served through
our Small Business Services offering (tailored to
businesses with an annual turnover of less than
R30m and the business owner).
• > 14 521 commercial-banking client groups catering
to mid-size and large commercial entities.
Entry-level to high-net-worth clients (SA)
and high-net-worth clients (UK, Jersey, Isle
of Man & UAE)
• Providing insurance, asset management
and wealth management solutions to a wide
spectrum of clients.
> 349 000 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.
43,4%
R6 799m
2022: R6 399m
2021: R5 605m
2020: R3 636m
35,6%
R5 566m
2022: R5 097m
2021: R4 523m
2020: R1 595m
7,7%
R1 210m
2022: R1 140m
2021: R962m
2020: R662m
12,1%
R1 891m
2022: R977m
2021: R594m
2020: R12m
18,9%
2020
2021
2022
2023
16,0%
2020
2021
2022
2023
26,8%
2020
2021
2022
2023
25,2%
2020
2021
2022
2023
81
Nedbank Group Annual Results 2023SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive Operational segmental reporting
for the year ended 31 December
Banking advances
contribution to
the group
44,1%
R377bn
2022: R378bn
2021: R348bn
2020: R358bn
Rm
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Nedbank Group
Corporate and
Investment Banking
Retail and
Business Banking
Wealth
Nedbank
Africa Regions
Centre
Summary of consolidated statement of financial position (Rm)
Assets
Cash and cash equivalents
Other short-term securities
Derivative financial instruments
Government and other securities
Banking loans and advances
Trading loans and advances
Other assets
Intergroup assets
Total assets
Equity and liabilities
Total equity1
52 082
87 769
13 812
45 618
70 661
9 101
170 717
160 495
1 513
54 628
13 777
81 417
814
38 245
9 019
79 524
855 445
835 560
376 882
378 037
429 244
408 430
28 711
29 025
36 174
95 409
–
46 605
84 864
–
36 174
38 789
46 605
31 983
10 320
33 210
9 281
17 669
22 478
21 018
895
29 295
17
213
1 723
28 511
39
255
10 583
4 831
4
1 979
20 909
3 663
3 937
5 331
5 629
33 760
30 404
1 311 408
1 252 904
603 180
584 227
478 105
441 009
81 609
80 571
45 906
42 853
102 608
104 244
119 211
115 944
35 957
36 249
Total equity attributable to ordinary shareholders
107 749
104 976
35 957
36 249
Non-controlling interest attributable to ordinary shareholders
Holders of participating preference shares
Holders of additional tier 1 capital instruments
887
106
698
51
10 469
10 219
Derivative financial instruments
Banking amounts owed to depositors
Trading amounts owed to depositors
Provisions and other liabilities
Long-term debt instruments
Intergroup liabilities
Total equity and liabilities
14 141
9 738
14 100
9 708
10
14
1 029 746
983 582
383 601
385 846
436 283
402 114
36 846
34 327
124 804
115 104
57 899
42 634
47 777
–
56 040
35 697
51 903
57 899
5 831
56 040
2 803
–
105 792
93 581
1 311 408
1 252 904
603 180
584 227
478 105
441 009
81 609
80 571
45 906
42 853
102 608
104 244
1 Total equity includes non-controlling interests in the Centre. Total equity of the client-facing clusters is based on average allocated capital while the group’s equity is
based on actual equity. The difference between average allocated capital and actual equity resides in the Centre. Includes the variance between average allocated
capital, which is computed using the average-equity month-end balances and actual equity.
7 048
4 787
23
2 095
21 714
3 438
3 748
7 023
7 023
(985)
14
87 108
(301)
20 159
(37 147)
(882)
20
78 621
(1 646)
19 144
(21 417)
36 552
36 411
25 090
25 443
887
106
698
51
10 469
10 219
34 690
34 690
31 843
31 843
4 520
4 520
4 418
4 418
7 492
7 492
31
48 212
16
46 191
21 125
19 719
7 721
10 227
5 891
1 241
5 811
1 241
1 129
429
1 061
428
8 658
46 107
6 303
50 234
(113 513)
(103 808)
82
Nedbank Group Annual Results 2023
Nedbank Group
Corporate and
Investment Banking
170 717
160 495
52 082
87 769
13 812
36 174
95 409
–
45 618
70 661
9 101
46 605
84 864
–
1 513
54 628
13 777
81 417
36 174
38 789
814
38 245
9 019
79 524
46 605
31 983
50,2%
3,4%
2,5%
R429bn
2022: R408bn
2021: R381bn
2020: R356bn
Retail and
Business Banking
R29bn
2022: R29bn
2021: R30bn
2020: R31bn
Wealth
R21bn
2022: R22bn
2021: R21bn
2020: R23bn
Nedbank
Africa Regions
Centre
Summary of consolidated statement of financial position (Rm)
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
855 445
835 560
376 882
378 037
429 244
408 430
28 711
29 025
10 320
33 210
9 281
17 669
22 478
21 018
5 331
5 629
895
29 295
17
213
1 723
28 511
39
255
10 583
4 831
4
1 979
20 909
3 663
3 937
7 048
4 787
23
2 095
21 714
3 438
3 748
33 760
30 404
(985)
14
87 108
(301)
20 159
(37 147)
(882)
20
78 621
(1 646)
19 144
(21 417)
1 311 408
1 252 904
603 180
584 227
478 105
441 009
81 609
80 571
45 906
42 853
102 608
104 244
Total equity attributable to ordinary shareholders
107 749
104 976
35 957
36 249
Non-controlling interest attributable to ordinary shareholders
Holders of participating preference shares
Holders of additional tier 1 capital instruments
887
106
698
51
10 469
10 219
119 211
115 944
35 957
36 249
34 690
34 690
31 843
31 843
4 520
4 520
4 418
4 418
7 492
7 492
7 023
7 023
36 552
36 411
25 090
25 443
887
106
698
51
10 469
10 219
1 029 746
983 582
383 601
385 846
436 283
402 114
5 891
1 241
5 811
1 241
14 141
9 738
14 100
9 708
57 899
42 634
47 777
–
56 040
35 697
51 903
57 899
5 831
56 040
2 803
–
105 792
93 581
31
48 212
16
46 191
21 125
19 719
7 721
10 227
10
14
36 846
34 327
124 804
115 104
1 129
429
1 061
428
8 658
46 107
6 303
50 234
(113 513)
(103 808)
1 311 408
1 252 904
603 180
584 227
478 105
441 009
81 609
80 571
45 906
42 853
102 608
104 244
Rm
Assets
Cash and cash equivalents
Other short-term securities
Derivative financial instruments
Government and other securities
Banking loans and advances
Trading loans and advances
Other assets
Intergroup assets
Total assets
Equity and liabilities
Total equity1
Derivative financial instruments
Banking amounts owed to depositors
Trading amounts owed to depositors
Provisions and other liabilities
Long-term debt instruments
Intergroup liabilities
Total equity and liabilities
83
Nedbank Group Annual Results 2023SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
Operational segmental reporting (continued)
for the year ended 31 December
Rm
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Nedbank Group
Corporate and
Investment Banking
Retail and
Business Banking
Wealth
Nedbank
Africa Regions
Centre
Summary of consolidated statement of comprehensive income (Rm)
NII
NIR
Share of gains of associate companies1
Total income
Impairments charge on financial instruments
Net income
Total operating expenses
Indirect taxation
Profit before direct taxation
Direct taxation
Profit after taxation
Profit attributable to:
– Non-controlling interest – ordinary shareholders
– Holders of participating preference shares
– Holders of additional tier 1 capital instruments
Headline earnings
Selected ratios
9 386
8 678
63
18 127
939
17 188
8 196
259
8 733
1 934
6 799
8 755
8 241
100
17 096
805
16 291
7 628
215
8 448
2 049
6 399
41 470
27 709
1 443
70 622
9 605
61 017
38 059
1 129
21 829
4 484
36 277
26 171
879
63 327
7 381
55 946
35 329
1 102
19 515
4 311
17 345
15 204
243
166
1 286
164
106
873
15 650
14 061
6 799
6 399
5 566
5 097
1 210
1 140
1 891
977
Average interest-earning banking assets (Rm)
Average risk-weighted assets (Rbn)
986 060
922 197
678 142
645 499
387 929
295 120
361 987
289 929
445 309
257 017
405 760
240 061
61 359
34 603
59 017
32 013
36 318
49 896
34 759
46 039
55 145
41 506
60 674
37 457
ROA (%)
RORWA (%)
ROE (%)
Interest margin (%)2
NIR to total income (%)
NIR to total operating expenses (%)
CLR – banking advances (%)
Cost-to-income ratio (%)
Effective taxation rate (%)
Contribution to group economic profit/(loss) (Rm)
1,21
2,31
15,1
4,21
40,1
72,8
1,09
53,9
20,5
970
1,14
2,18
14,1
3,93
41,9
74,1
0,89
55,8
22,1
(222)
Number of employees (permanent)
25 477
25 924
1,11
2,30
18,9
2,42
48.0
105,9
0,24
45,2
22,1
1 477
2 272
1,10
2,21
17,7
2,42
48,5
108,0
0,22
44,6
24,3
989
2 347
1 On an IFRS basis Nedbank Africa Regions earned associate income of R1 386m (2022: R779m) as IFRS requires associate income to be presented net of our share
of ETI’s impairment charge on non-financial instruments and other gains and losses of R6m (2022: R0m). Our share of ETI’s impairment charge on non-financial
instruments and other gains and losses is excluded from HE.
2 Cluster margins include internal assets.
84
1 696
(56)
1 640
(144)
1 784
146
3
1 635
160
1 475
1 286
184
1 366
(70)
1 296
(194)
1 490
(18)
166
1 342
17
1 325
4
873
448
166
106
238
160
5
26 413
14 306
40 719
8 520
32 199
23 678
747
7 774
2 042
5 732
1,20
2,17
16,0
5,93
35,1
60,4
1,94
58,1
26,3
432
23 203
13 372
36 575
6 613
29 962
22 138
587
7 237
2 034
5 203
1,20
2,12
16,0
5,72
36,6
60,4
1,61
60,5
28,1
345
1 749
2 924
4 673
37
4 636
3 111
64
1 461
251
1 210
1,46
3,50
26,8
2,85
62,6
94,0
0,12
66,6
17,2
541
1 233
3 047
4 280
(63)
4 343
2 838
59
1 446
306
1 140
1,43
3,53
26,3
2,09
71,2
107,4
(0,20)
66,3
21,2
493
1 826
2 226
1 857
1 380
5 463
253
5 210
2 928
56
2 226
97
2 129
4,16
3,79
25,2
6,13
45,5
63,4
1,00
53,6
4,4
783
2 157
1 720
1 581
779
4 080
220
3 860
2 743
75
1 042
(95)
1 137
2,31
2,12
13,8
4,94
47,9
57,6
1,02
67,2
(9,1)
(76)
2 191
15 157
15 671
1 835
(2 263)
4 056
(1 973)
3 889
Nedbank Group Annual Results 2023
Summary of consolidated statement of comprehensive income (Rm)
Rm
NII
NIR
Share of gains of associate companies1
Total income
Impairments charge on financial instruments
Net income
Total operating expenses
Indirect taxation
Profit before direct taxation
Direct taxation
Profit after taxation
Profit attributable to:
– Non-controlling interest – ordinary shareholders
– Holders of participating preference shares
– Holders of additional tier 1 capital instruments
Headline earnings
Selected ratios
ROA (%)
RORWA (%)
ROE (%)
Interest margin (%)2
NIR to total income (%)
NIR to total operating expenses (%)
CLR – banking advances (%)
Cost-to-income ratio (%)
Effective taxation rate (%)
Contribution to group economic profit/(loss) (Rm)
17 345
15 204
41 470
27 709
1 443
70 622
9 605
61 017
38 059
1 129
21 829
4 484
243
166
1 286
1,21
2,31
15,1
4,21
40,1
72,8
1,09
53,9
20,5
970
36 277
26 171
879
63 327
7 381
55 946
35 329
1 102
19 515
4 311
164
106
873
1,14
2,18
14,1
3,93
41,9
74,1
0,89
55,8
22,1
(222)
9 386
8 678
63
18 127
939
17 188
8 196
259
8 733
1 934
6 799
1,11
2,30
18,9
2,42
48.0
105,9
0,24
45,2
22,1
1 477
2 272
8 755
8 241
100
17 096
805
16 291
7 628
215
8 448
2 049
6 399
1,10
2,21
17,7
2,42
48,5
108,0
0,22
44,6
24,3
989
2 347
Nedbank Group
Corporate and
Investment Banking
Retail and
Business Banking
Wealth
Nedbank
Africa Regions
Centre
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
26 413
14 306
40 719
8 520
32 199
23 678
747
7 774
2 042
5 732
23 203
13 372
36 575
6 613
29 962
22 138
587
7 237
2 034
5 203
166
106
1 749
2 924
4 673
37
4 636
3 111
64
1 461
251
1 210
1 233
3 047
4 280
(63)
4 343
2 838
59
1 446
306
1 140
2 226
1 857
1 380
5 463
253
5 210
2 928
56
2 226
97
2 129
1 720
1 581
779
4 080
220
3 860
2 743
75
1 042
(95)
1 137
1 696
(56)
1 640
(144)
1 784
146
3
1 635
160
1 475
238
160
5
15 650
14 061
6 799
6 399
5 566
5 097
1 210
1 140
1 891
977
1 286
184
1 366
(70)
1 296
(194)
1 490
(18)
166
1 342
17
1 325
4
873
448
Average interest-earning banking assets (Rm)
Average risk-weighted assets (Rbn)
986 060
922 197
678 142
645 499
387 929
295 120
361 987
289 929
445 309
257 017
405 760
240 061
61 359
34 603
59 017
32 013
36 318
49 896
34 759
46 039
55 145
41 506
60 674
37 457
Number of employees (permanent)
25 477
25 924
15 157
15 671
1 835
1,20
2,17
16,0
5,93
35,1
60,4
1,94
58,1
26,3
432
1,20
2,12
16,0
5,72
36,6
60,4
1,61
60,5
28,1
345
1,46
3,50
26,8
2,85
62,6
94,0
0,12
66,6
17,2
541
1,43
3,53
26,3
2,09
71,2
107,4
(0,20)
66,3
21,2
493
1 826
4,16
3,79
25,2
6,13
45,5
63,4
1,00
53,6
4,4
783
2 157
2,31
2,12
13,8
4,94
47,9
57,6
1,02
67,2
(9,1)
(76)
2 191
(2 263)
4 056
(1 973)
3 889
85
Nedbank Group Annual Results 2023SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
Nedbank Corporate and
Investment Banking
Headline earnings
(Rm)
Return on equity
(%)
7
6
1
6
6
3
6
3
5
0
6
5
9
9
3
6
9
9
7
6
,
7
7
1
,
4
9
,
3
5
1
,
7
7
1
,
9
8
1
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
Financial performance
CIB achieved good results against a challenging local and
global operating environment characterised by high inflation,
low economic growth and geopolitical tension. This shows
the strength of our strategic plan to build robustness through
changing and complex business environments. By focusing on
delivering purposeful solutions to our clients in key sectors, CIB
delivered headline earnings (HE) growth of 6% at a significantly
improved ROE of 18,9%, up from 17,7% in 2022.
NII increased by 7% to R9,4bn, driven by average banking
advances growth of 8% to R391bn and average deposit growth
Financial highlights
of 5% to R451bn. The net interest margin remained stable at
2,42% (2022: 2,42%) as endowment benefit was offset by lower
margins, improved risk ratings and suspended interest on stage
3 assets.
The credit loss ratio rose marginally to 24bps but remained
below the midpoint of the TTC target range of 15bps to
45bps, despite a 17% increase in impairments to R939m.
The commercial-property portfolio reported a CLR of 47 bps,
impacted by a single-name client, with low levels of arrears on
the rest of the portfolio. The total coverage ratio decreased to
Corporate and
Investment Banking
Property Finance
Corporate and
Investment Banking,
excluding Property
Finance
Change
%
2023
2022
2023
2022
2023
2022
6
7
17
5
6
7
3
5
(3)
6
5
(1)
5 643
6 591
134
7 602
14 256
6 732
4 989
6 063
343
7 181
13 343
6 272
6 799
9 386
939
8 678
18 127
8 196
18,9
1,11
0,24
105,9
45,2
2,42
6 399
8 755
805
8 241
17 096
7 628
17,7
1,10
0,22
108,0
44,6
2,42
1 156
2 795
805
1 076
3 871
1 464
13,0
0,66
0,47
73,5
37,8
1,64
1 410
2 692
462
1 060
3 753
1 356
15,7
0,82
0,28
78,2
36,1
1,63
603 180
584 227
182 371
175 962
420 809
408 265
610 718
581 580
176 434
170 968
434 284
410 612
413 056
424 642
176 474
170 513
236 582
254 129
431 398
405 855
170 890
165 618
260 508
240 237
441 500
441 886
450 640
429 663
155
204
286
283
441 345
441 600
450 436
429 380
35 957
36 249
8 893
8 975
27 064
27 274
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)
86
Nedbank Group Annual Results 2023
All of this is underpinned by our digital strategy that
enables growth and efficiencies across our business,
increases productivity, enhances the client experience, builds
differentiated and digitally enabled products and services,
and fosters a culture of innovation to deliver market-leading
capabilities and client solutions.
Strategic progress
Our client-centred strategy has enabled us to grow and maintain
a robust client and asset portfolio in an increasingly complex
operating context. We continued to showcase our deep sector
expertise and alignment in our product areas.
We have completed the business reorganisation changes
under Target Operating Model 2.0 (TOM 2.0), which delivers
our transactional, digital and client services capabilities to the
market and embeds our sector-focused approach within TS.
Innovation continues throughout our business, ensuring we
deliver a warm digital experience and equipping our employees
and clients with the right digital and data capabilities to provide
differentiated journeys. Key highlights of our digital strategy
include the launch of Voice of the Client to capture client
sentiment, and more than 95% of global clients were migrated
from our previous system onto the Nedbank Business Hub
(NBH). Survey results show that multibanked clients feel the NBH
experience surpasses competitors on critical metrics, including
true channel convergence.
Further benefits from our digital initiatives include our
data-driven approach to origination, client management and
enhanced client profitability that supports primary client wins
and increases large transactions. Our Markets business was
also bolstered by the significant investments in technology
capabilities and increased sales presence.
We embed purpose in everything we do as we contribute
towards growing a sustainable and inclusive economy.
In 2023 we published our fossil fuels and power generation
glidepath methodology, which is already being advanced through
the closure of multiple renewable energy deals. Partnering with
our Property Finance clients to promote a sustainable property
sector, we launched a new value-added service, EDGE, to assist
property clients with greening and certification of their buildings.
The Property Finance business continued to advance access to
affordable social housing and student accommodation, with total
disbursements of R1,2bn for developing new units.
As a people-led business we continually strive to attract and
retain diverse talent. Continued investment in our bespoke
leadership and management programmes remains a priority
to equip our best talent with the tools they need to execute
our strategy.
1,14% (Dec 2023) from 1,29% (Dec 2022) due to the restructure
and write-off of a single significant exposure in Property Finance
(PF) and some stage 3 exposures in Investment Banking (IB) and
Transactional Services (TS) migrating to the performing book.
Stage 2 exposures continue to decrease, and stage 1 exposures
remain stable.
NIR grew by 5% to R8,7bn. Trading income grew 3% with
solid performances in the debt securities and commodities
markets and weaker performance in foreign exchange due to
reduced client flows. This resulted, alongside fair value gains
on structured deals, in total NIR growth of 7% in the Markets
business. Commission and fees increased by 3%, with a strong
performance in our trade finance business benefiting from
our investment in capabilities as a key growth driver in Africa.
Deal closure in our lending businesses towards the end of
2023 generated fee growth from a high 2022 base. Equity
investment income and dividends decreased by 5%, coming off a
high 2022 base.
Expenses have been controlled and increased by 7%, despite
inflationary cost pressures and our firm commitment to attract
and retain top talent. Employee-related costs account for 70% of
CIB's operational cost base. The cost-to-income ratio increased
to 45,2% from 44,6%, which we believe to be transitory.
The medium-term target of below 44% remains.
Our deliberate and disciplined approach to business selection and
focus on capital efficiency helped improve our ROE to 18,9%. This
focus has been embedded across our organisation to maximise
value against the changing regulatory capital backdrop.
Looking forward
Positive advances growth is anticipated in most of our
businesses, particularly in renewable energy. A robust energy
and related infrastructure pipeline is likely to see the asset
growth momentum gained in H2 2023 continuing this year.
We continue to focus on entrenching our market leadership in
this sector by looking across the value chain and following our
clients to new geographies to help deliver on their ambitions.
Deep relationships with our clients in the property
sector will ensure we maintain a good quality and
well-diversified portfolio.
Our trading business should benefit from continued focus on
refreshing our FX franchise through driving digital adoption,
optimising technological capabilities and improving data-led
acquisition. The rates business will continue to benefit from
hedging in the energy sector, and there is likely to be continued
benefit from our investment in talent as new products in the
credit space and targeted African strategies are executed.
With a slower growth South African economy, we continue
to accelerate the delivery of targeted opportunities across
the African continent where our expertise, capabilities and
resources align.
The new TS operating model solidifies our sector-focused
approach and positions the business for growth and added
revenue diversification through increased NIR. An enhanced
understanding of our clients will enable us to deliver purposeful
solutions and differentiated service excellence. Emphasis will
be placed on streamlined product groupings, sectorised sales
and service models, and reducing manual handoffs.
87
Nedbank Group Annual Results 2023SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive Financial highlights
Property Finance
Investment Banking
Markets
Working capital and
Transactional Services
2023
2022
2023
2022
2023
2022
2023
2022
Gross operating
income (Rm)
Average total
advances (Rm)
3 871
3 753
4 929
4 472
5 368
5 035
3 959
3 836
170 890
165 618
167 170
156 087
69 913
63 426
23 425
20 724
Segmental performance
Property Finance (PF)
PF provides development and term finance solutions to
clients and partners with them through equity investment
and mezzanine structures. Some positive trends in the sector
emerged during H2, including the stabilising of property values.
Increased trading of properties and corporate action indicate
some improvement in sentiment and a level of confidence
returning to the sector. We noticed an increase in business
activity related to lending opportunities over the last quarter
of 2023, and we expect this to continue should interest rates
reduce in line with expectations.
In H2 a significant focus was placed on resolving a high-risk
counter in business rescue. The process of transferring these
assets to the new purchasers has started. We continue to
focus on partnering with our clients, originating high-quality
transactions, and managing the risk across our portfolio.
GOI increased by 3%. An increase in suspended interest
impacted NII due to the year-on-year increase in stage
3 exposures and higher interest rates. NIR increased by 2%,
supported by a 23% increase in commission and fee income
following deal closures in the latter part of the year. This was
partly offset by lower equity investment income coming off a
high 2022 base.
The CLR increased to 47 bps (Dec 2022: 28 bps) due to a
specific stage 3 exposure. Due to this exposure, the CLR was
expected to exceed the top of the TTC target range of 15 bps
to 35bps by year-end. However, despite the high-interest-rate
environment, particularly the rapid rise in rates experienced in
H1, our impairment experience across the rest of the portfolio
has been lower than expected, indicating the resilience of our
client base.
Good-quality, well-diversified assets secure our portfolio,
underpinned by a solid client base with whom we have
deep relationships.
Investment Banking (IB)
IB 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 mining and resources, energy, infrastructure,
telecoms, transport, freight and logistics, as well as the travel
and leisure sectors. Our sector expertise, thought leadership,
and purpose-driven approach to delivering solutions to our
clients received ongoing recognition. We won multiple awards
in the period under review: 2023 Bonds, Loans & ESG Capital
Markets Africa Awards: 2023 Sovereign Bond Deal of the Year
and 2023 Syndicated Loan Deal of the Year, 2023 Global Finance
Sustainable Finance Awards: 2023 Outstanding Leadership in
Sustainable Bonds, 2023 African Banker Awards:2023 Debt
Deal of the Year, and 2023 ANSARADA DealMakers Awards: first
place in the Sponsor Mergers & Acquisitions category by deal
flow as well as second place in the Investment Advisers Mergers
& Acquisition category by deal flow.
IB GOI increased by 10%. NII increased by 13%, as average
banking advances grew by 7%, with a strong performance in
our Leverage and Diversified Finance, Infrastructure, Water and
Telecoms, and Mining businesses. Impairments decreased by
7% and the CLR for the period was 9 bps. NIR increased by 8%,
driven by fair value adjustments and investment income with
commission and fees maintained at prior-year levels, which is
reasonable in the economic environment, reflecting improved
underlying client activity. The portfolio optimisation initiatives
within our target sectors and client base remain a key focus.
The pipeline of opportunities remains robust across all
sectors, particularly in energy and related infrastructure.
In Q4 2023 the energy team closed transactions in renewable
energy programmes and private power commercial and
industrial projects. The pipeline remains strong into the first half
of 2024, with further projects expected to close. We continue
to invest in the advisory business, focusing on growing our NIR
contribution and cross-selling into the broader CIB franchise
with a solid pipeline of opportunities into 2024. The private
equity franchise will focus on new investment activity while
realising certain existing investments for value. There will be a
continued focus on sustainable finance where we play a crucial
role in leading, structuring and coordinating 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.
The Markets business grew operating income by 7% year
on year despite continuing challenging trading conditions,
with particularly strong client revenues across corporate
and institutional structured deals. This growth was driven
by good outcomes in Debt Securities trading (up by 6%) and
Commodities trading, which increased by more than 100% off a
low base. The rates business benefited from good client flow in
the second half and an incredibly strong performance in credit
trading – a growth focus over 2023.
This was offset by weaker FX trading income, down 2%, due
to a waning trade impulse and the continuing impact of margin
compression from MPIF. The equities trading business mounted
a strong comeback, particularly in the non-linear derivatives
business in the second half of the year, to finish down by 5% year
on year.
88
Nedbank Group Annual Results 2023
are largely dominated by renewable energy, which has kept
our CO2e intensity well below the 2030 IEA NZE target of
188 gCo2e/kWh. As a result, we will adopt this target as a cap for
power generation.
The scenarios adopted consider the latest available science,
our African context, and the African Just Transition. We will
regularly review the latest science to ensure that our pathways
remain aligned, and targets beyond 2030 will be considered and
communicated closer to 2030.
After disclosing these sector pathways, the group plans to set
targets for other segments of its portfolio, if data permits. These
plans will be prioritised based on materiality regarding emissions
to the country and Nedbank.
Focus will remain on continued digitisation, building a diverse
revenue base by strengthening areas in which we are
under-indexed and investing in targeted opportunities in Africa.
Transactional Services (TS)
The TS business provides working capital products in
conjunction with transactional solutions.
GOI increased by 3% as NII increased by 6%, benefiting from
higher deposits and short-term asset growth of 5% and
13% respectively.
Impairments benefited from releases as distressed debt
cured. NIR decreases slightly by 2%, with growth in domestic
payments, guarantees and trade risk participation offset by
lower cash withdrawal volumes. The business grew confirmation
commissions strongly by participating in primary market
transactions in Africa, which enabled us to be more of a market
maker and increase returns. We worked with large exporters to
increase our participation in essential commodity transactions.
This was largely possible due to the reorganisation of the
business to focus on cross-border trade activity. The investment
in our trade finance team is increasing our ability to participate
in larger and more complex transactions. We recorded 20 new
primary-banked wins, including 2 noteworthy successes in the
public sector domain.
A sector-based strategy and refined operating model underpin
a strong pipeline for 2024 and beyond. We have undergone
a significant internal realignment that will result in fewer
touchpoints for clients, faster service delivery and enhanced
processes. This will contribute to our goal of being the go-to
transactional bank for all juristic clients. The business prioritises
client experience by continually improving and investing in the
innovation of our digital channels and plays a significant role in
the South African banking landscape through thought leadership
in various industry bodies.
Developing our fossil fuel and
power generation glidepaths
In 2021, building on a history of climate and environmental
leadership, we released our Energy Policy, including a
commitment to zero fossil fuel exposure by 2045. The policy
recognises the need for a zero-carbon energy system by
2050 and that an orderly exit from fossil fuel financing is
necessary well before then.
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-fuel-related lending, a methodology encompassing Scopes
1, 2, and 3 client emissions is most appropriate for managing the
full impact of the industry in the long term. For our generation
pathway, we will use a physical intensity metric (CO2e/MWh)
encompassing Scope 1 emissions of generated electricity.
Nedbank will use the widely adopted IEA Net Zero Emissions
by 2050 scenario (NZE) as a basis for our first targeted
commitment date of 31 December 2029 for our fossil fuel
and power generation pathways. This science-based pathway
aligns with the goals of the Paris Agreement, keeping global
warming well below 2 °C by 2050 and pursuing efforts to limit
the temperature increase to 1,5 °C. This will result in targeted
reductions from 2022 to 2030: thermal coal 47% and oil and
gas 26%. Nedbank’s power generation financing activities
89
Nedbank Group Annual Results 2023SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive Nedbank Retail and Business Banking
Headline earnings
(Rm)
Return on equity
(%)
3
9
2
5
5
9
5
1
2
3
5
4
7
9
0
5
6
6
5
5
,
3
7
1
,
4
5
,
7
3
1
,
0
6
1
,
0
6
1
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
Financial performance
RBB’s financial performance has shown a strong recovery in
the second half of 2023, with headline earnings (HE) up by 9%
to R5 566. HE in H2 2023 increased by 24% compared to the
decline of 8% reported in H1 2023.
Higher earnings, partially offset by an increase in capital, resulted
in ROE remaining flat at 16,0%, above the group’s cost of equity.
Revenue growth of 11% and expense growth that was well
managed at 7%, were partially offset by a 29% increase in
impairments. Impairment growth slowed down in H2 2023,
increasing by only 3% compared with the increase of 60%
reported in H1 2023. Higher revenue resulted in PPOP growth
of 17% and the cost-to-income ratio improving to 58,1%
(2022: 60,5%).
In addition to the strong revenue growth, RBB made good
progress on several key non-financial metrics, including an 11%
increase in digitally active clients to 2,9 million and a 9% growth
in main-banked clients to 3,53 million.
NII increased by 14% to R26 413m, driven by advances
growth following strong payouts and a widening of NIM from
5,72% to 5,93%. NIM benefited from positive endowment
as interest rates increased, partially offset by higher
funding costs, lower liability margins, and net lower asset
margins, mainly comprising changes in asset mix, suspended
interest, and lower client margins in Unsecured Lending.
Average banking advances increased by 7% to R439bn, driven
by good growth in our relationship businesses and solid growth
in secured lending. Unsecured lending volumes have slowed due
to the deliberate adoption of a more cautious approach to new
lending as a result of elevated risk. Overall new-loan payouts
have decreased to R118bn (2022: R121bn), mainly due to the
slowdown in unsecured lending and the slowing demand in home
loans. Household advances market share increased to 17,5% in
December 2023 from 17,3% in December 2022.
Average deposits increased by 10% to R421bn. Our market
share in transactional deposits of 13,6% at the end of
December 2023 remains a core focus area. We have seen a
slight decrease in household deposits, with market share at
14,6% in December 2023 from 14,8% in December 2022.
The 29% growth in impairments to R8,5bn (2022: R6,6bn) was
mainly driven by an unfavourable book performance due to the
deteriorating macro environment, elevated risk outcomes, and
increased provisions for parameter regrounds and net macro
updates. While the CLR increased to 194 bps (2022: 161 bps)
and is above the upper end of the TTC target range of 175bps,
the CLR trend improved from 226 bps in H1 2023 to 164 bps
in H2 2023, as we improved our risk and collections strategies
and operational efficiencies through the creation of a Debt
Management and Recoveries (CDR) business unit.
As noted during our H1 2023 results, management reviewed
the presentation of certain card-processing-related expenses
against industry practice. These expenses were directly
attributable to income and recognised in NIR and were restated
to ensure that they are presented as part of NIR to align with
the Nedbank Group accounting policy. Consequently, there
was a reallocation of R477m for full year ended 31 December
2022 from operating expenses to NIR. This restatement is a
reallocation between line items and had no impact on profits for
the period or HE for the cluster or group.
NIR, on a restated basis, increased by 7% to R14 306m and by
8% before the restatement of card-processing fees, reflecting
the benefits of cross-sell, the increase in main-banked
clients, the 8% growth in card-issuing volumes and the 14%
increase in card-acquiring volumes. Value-added services (VAS)
volumes grew by 27% and revenues by 29%.
Expenses increased by 7% to R23 657m (pre-restatement
of card-processing fees by 7,5%), supported by judicious
management of discretionary spend and ongoing optimisation of
operations through Project Phoenix, Project Imagine and other
Target Operating Model 2.0 (TOM 2.0) initiatives. Permanent
headcount decreased by 514 to 15 157, achieved mostly through
natural attrition as we continue to leverage our investments in
digital and the Managed Evolution (ME) technology strategy.
90
Nedbank Group Annual Results 2023
Strategic progress
Clients – The 9% increase in main-banked clients to
3,53 million, coupled with an increase in the digital adoption
of products and services, impacted NIR growth positively.
We continue to scale several key growth vector products to
expand our value propositions and support sustainable NIR
growth by diversifying the revenue base.
Nedbank continued to lead in client experience (CX) and retained
our #1 NPS (Net Promoter Score) ranking among South African
banks. This is a position we wish to retain through great client
service, underpinned by human interactions, digital touchpoints,
and fair client principles.
Pleasingly, our efforts are being recognised in the market by
external and independent reviews across various categories
through numerous awards and accolades. In 2023 the business
was recognised as the Best Bank for Transaction Banking
Services for 2023 in the Middle East and Africa Innovation
Awards by the Digital Banker; Best Retail Bank in South Africa
by the Global Banking & Finance Awards 2023; Best SME Bank
in South Africa in the Middle East and Africa Awards 2023 from
The Asian Banker; SME Bank of the Year in the Qorus Reinvention
Awards 2023; Most Popular Bank of the Rising Sun Readers’
Choice Awards 2023; and Best Financial Institution in South
Africa awarded by the Global Business & Finance Magazine 2023.
We continue to strive for ‘first in digital; digital first’ and in that
vein, have been awarded Excellence in Innovation for our Avo
super app by the Global Banking & Finance Awards 2023 and
Best Digital Bank in Africa as awarded by the Euromoney Awards
for Excellence 2023. We were also awarded Best Corporate
Sustainability Strategy South Africa 2023 by the Global Banking
& Finance Awards 2023; Best Corporate Social Responsibility
Initiative in South Africa by Global Business & Finance Magazine
as well as Excellence in Operations and Executive of the Year at
the ActiveOps Awards 2023.
We continued to bolster our behavioural economics (BE)
capability within RBB through a skills development strategy
developed with a top-tier South African university. This strategy
includes 3 tailored programmes designed to empower business
areas to deliver rigorously tested, behaviourally informed and
impactful solutions. So far over 1 300 employees have been
trained on these programmes, with a special focus on frontline
employees who engage with clients daily.
Through our financial wellness programmes (Consumer Financial
Education and Financial Fitness) we reached close to 11,5 million
consumers through a combination of radio, television, virtual and
face-to-face interventions. We continue to explore social media
as a channel to drive financial education through platforms like
MoneyEdge, X Spaces (formerly Twitter Spaces), TikTok and
WhatsApp. In H2 we added partners MoyaApp and Digify to
drive demand-based learning as we follow client behaviour and
preferences to help them manage their money better.
Digital innovation – Digitally active clients increased by 11% to
2,9 million, of which 2,3 million clients are now using the Nedbank
Money app (up by 16% yoy). Digital platform sales grew by 16%
yoy, driven by a significant focus on digital marketing and sales
funnel capabilities, offset by pressure on lending products
following credit tightening. Funded current accounts grew
by 20%, investments by 28% and credit cards by 78% yoy.
Total payment and Money app volumes grew by 12% and 18%
respectively yoy.
Nedbank’s chatbot, Enbi, is assisting clients at scale, with over
10 million interactions recorded to date, 78% of all engagements
are managed through this chat function, freeing up the capacity
of agents to support clients with more complex queries. Enbi is
now also available on our website, nedbank.co.za, and assists
clients in real time within the digital onboarding flows. The Money
app and other self-service channels play the primary role
in providing clients with simple and convenient banking,
anytime, anywhere.
Our digital innovation journey continues to improve through
enhanced onboarding capabilities as a new credit card or a
MiGoals transactional account can be opened in less than
5 minutes via our digital channels. We have successfully opened
more than 240 000 new MiGoals Accounts on our digital
platforms since its launch in May 2023. The rapid-payments
solution, PayShap, was a key enabler for real-time payments, and
we were the only bank to enable this across all digital channels
and completed more than 200 000 outgoing transactions
successfully. Further innovative features included ‘application
save and resume’ and card tracker functions, enabling clients to
track the status of card delivery via the app. In addition, children
can now use the Money app to do their daily banking and clients
can change limits up to R250 000.
In 2024 we will focus on a significant shift in how we meet the
needs of our clients digitally. We will introduce new products
and features such as the capability to manage and receive POS
devices via the app, servicing stokvel accounts and its members
seamlessly, a new JustInvest product, improved document
and market-leading insurance claim features and providing
foreign nationals access to the Money app. In parallel, we will
fundamentally redesign and improve the client experience on the
Money app.
The Nedbank Business Hub (NBH) continues to evolve for our
Commercial Banking clients by providing seamless access to
an array of day-to-day banking functions through an integrated
and secure platform, driving wider access to our ecosystem
of products (including lending) and services. In 2023 over
82 000 service requests were received via NBH, the bulk of
which were straight-through requests, meaning immediate
delivery to clients, and 28 000 of these requests were actioned
via the self-service channel.
Nedbank’s API_Marketplace expanded operations to Namibia,
Lesotho and Eswatini, aligning with Nedbank’s NAR ambitions
with accounts, payments and wallets now available in these
countries. PayShap (rapid payments) and Send-iMali APIs, among
others, were added to the product offering. Overall, the product
offering increased by 14% yoy from 2023. At a platform level, the
key focus remains on developer experience and third-party and
platform support.
Client security remained a core focus area, and we implemented
several new features and enhancements (pinpoint biometrics and
QR code access) on our Online Banking platform during 2023.
Facial recognition will be launched shortly as well as making all
these capabilities available on our app.
We have invested significantly in our data capabilities,
leveraging big data and AI through a strong analytics team.
The commercialisation of data delivers beyond-banking and
cutting-edge capability, including actionable insights that drive
and unlock value for both Nedbank as a business as well as our
individual and corporate juristic clients. The Adam AI engine
has generated R250m in additional benefits by using machine
learning and data science techniques to make intelligent
decisions based on data.
91
Nedbank Group Annual Results 2023SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive Integrated physical distribution – In response to shifts in client
behaviour and preferences, 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.
We have a new operating model in 386 points of presence, which
we will roll out to the balance of our footprint over the next 2 years,
including an innovative mix of branches – from full-service and
express to easy-access smaller branches. By the end of 2025,
57% of branches will be smaller than 200 m2, which is a significant
shift from our current branch mix.
Our continued focus on sales productivity and the sales strategy
has resulted in branch sales and service productivity improving by
24%, with servicing employees now contributing 22% (2022: 17%)
of overall sales. We have seen a 21% decrease yoy in selected
simple services provided at branches and through the contact
centre as clients shift towards self-service via our digital channels.
There has been an increase of 8% in the use of digital channels
for financial servicing transactions and 17% for non-financial
servicing transactions.
We have rightsized our ATM footprint by 135 devices, with the
cash dispensed through ATMs increasing by 3%. Altogether 92%
of client cash deposits at branches are now being processed
through cash-accepting ATM devices.
Our network of 573 self-service kiosks in our branches enables
clients to complete self-service actions at their convenience,
such as changing their ATM limit, maintaining their profile,
issuing statements, as well as blocking and replacing cards for
Pay-as-you-use (PAYU) and Savvy Plus Accounts. Clients can
also collect cards 24/7 by using our 222 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.
Growth vectors – In our value-added services portfolio, the
addition of new products and services, such as bill payments
and more digital vouchers, has resulted in volumes growing by
27% and revenue by 29% yoy for more than 1,44 million clients.
The expansion of the redemption network and enhanced
digitisation of services on our money transfer solution resulted in
volume growth of 80% yoy, with more than 16% of redemptions
being completed at our partners monthly. Various innovations are
planned for 2024 to expand our offerings.
Avo SuperShop has been in the market for 3 and a half years
and has signed up over 2,5 million clients (up by 26% yoy) and
continues to grow exponentially, with a further 120% increase
yoy in total gross merchandise value (GMV) across all 3 Avo
ecosystems. Avo Home reflected GMV growth of 23% yoy and
was recently highlighted as one of the top 3 marketplaces for
best value in Apple devices. We further introduced Avo Solar
for consumers in Q3, with over 100 residential installations
completed with 70% of their financing being fulfilled through
the MFC Solar Financing solution, attracting new-to-bank clients
and driving cross-sell. Avo Auto, a virtual vehicle mall that was
launched in 2021, now hosts over 880 MFC-accredited dealers (up
4 x yoy), with close to 25 000 vehicles available on the platform
and growing GMV 3,5 x yoy. Avo B2B launched to market in
2022, offering a stock-financing or working capital solution to
businesses through a secure facility, and introduced the trade of
solar goods to suppliers or installers in 2023, which contributed to
the yoy GMV lift.
Insurance remains a significant growth opportunity for both
RBB and Nedbank Insurance to build a sustainable business
partnership together for the benefit of Nedbank’s clients.
We offer a broad range of life and non-life insurance products
and focus on continually exploring new solutions to meet the
changing needs of our clients.
Within the Township economy, we continue to innovate and
leverage partnerships to co-create solutions with clients. We will
soon launch a CVP for informal traders, customised to their
unique needs and behaviours. In 2023 we continued hosting
Kasi business workshops across the country, creating shared
value through our partnership with the Township Entrepreneurs
Alliance (TEA). We have impacted more than 48 000 township
SMMEs, sponsored close to 170 township exhibitors equipped
with Nedbank POS machines, created supplier procurement
opportunities for more than 180 black-youth-owned service
providers, and crowned 11 pitch challenge winners across
11 township communities nationwide with a collective allocation
of R550 000 in cash and business support.
We remain pleased with the strategic partnership and alliances
capability that we are building as a strategic unlock for scale
and to give value back to clients. 2023 saw a continuation of the
expansion of our Greenbacks 2.0 headline partners to unlock
additional merchant discount deals that provide best-in-market
deals for Nedbank clients, with a strategic focus on fuel, travel,
movies, and data discounts. For Avo, we signed up 108 new
partners and co-created a CVP to broaden our Amex-accepting
merchants. Our collaboration partnerships team continued to
identify and engage potential strategic partners who have access
to large markets in support of scaling RBB strategic client value
propositions and solutions.
Looking forward
The first 6 months of the year were marked by a
difficult macroeconomic environment marred by slow
GDP growth, high inflation, continued high interest rates,
load-shedding and a worsened credit lending outlook.
These challenges led to increased financial strain on our
clients, resulting in elevated impairments. However, during
H2, through dedicated focus and improved collections
and recovery capabilities, we managed to claw back
significantly in impairments, leading to HE growth of 9%.
Going into 2024, we remain acutely aware of some of the
macro challenges that clients will continue to face, and
we will tighten our collections and recoveries capabilities
further, while at the same time, maintaining our strategies
to originate quality business. Key challenges will be
balancing our growth ambitions with acceptable risk
tolerance, managing our operational costs judiciously, and
managing our impairment levels while providing our clients
with appropriate assistance through this difficult period.
Our 5 core strategy pillars remain relevant, focused on a
client-centred growth strategy by creating leading client
experiences anchored by disruptive CVPs and purpose-led
objectives. We remain steadfast in driving our ‘first in
digital; digital first’ strategy by continuing to deliver
digital capabilities that enable us to develop innovative
products and solutions and enhance digital experiences
for our clients. Our strategic execution in delivering our
growth vectors is aimed at yielding results and remains
a focus for unlocking growth and gearing up for future
competitiveness. We will continue focusing rigorously
92
Nedbank Group Annual Results 2023 on our operating model agility to enhance our operational
effectiveness, manage credit losses, and develop world-class
capabilities like the commercialisation of data, behavioural
economics, innovative risk management, strategic
partnerships, and digital capabilities. All these will help
reduce our cost-to-income ratio and improve our ROE to the
required target range.
Leading client experiences – We will continue developing
and commercialising our new CVPs, innovative products
and solutions for our clients. To defend against competitors
and disruptors, we will continue adapting our operations
to deliver leading client experiences to match heightened
client expectations. We will focus on Strategic Portfolio Tilt
2.0 (SPT 2.0), which concentrates on growing profitable
market share in selected areas through world-class sales
effectiveness and productivity while maintaining a culture
of providing an unrivalled client experience, aided by
behavioural economics principles to deliver personalised
experiences and seamless interactions.
First in digital; digital first – We will drive the
commercialisation of new and landed capabilities and the
cadence of innovation deployments and leverage enterprise
capabilities on our digitisation journey to being Africa’s
#1 digital service provider by completing priority individual
and juristic journeys through our Managed Evolution
programme. We will continue focusing on a full migration
to NBH for our commercial and corporate businesses,
expanding our beyond-banking capabilities across other
verticals and elevating our mobile-first priorities through
integrated and synchronised channel experiences to provide
leading digital experiences for our clients.
Banking and Beyond growth vectors – We continue
to derisk our plans and gear ourselves for future
competitiveness through the commercialisation of growth
vectors, including scaling the Avo super app, accelerating
VAS through new commercial models and channels,
accelerating growth and penetration of our insurance
offerings, and driving our go-to-market micro markets
strategy for the township economy. We intend to start
increasing the percentage contribution of growth vectors to
our total revenue.
Efficient and agile operating model – We will continue
driving cost efficiencies through the execution of business
transformation objectives through Project Phoenix,
Project Imagine, Processes Automation and other TOM
2.0 initiatives that will yield cost savings derived from
centralised capabilities such as solution innovation, credit
and pricing, and operations.
Putting purpose into practice – Our purpose strategic pillars
will accelerate our focus on green finance, development
finance, inclusive distribution, financial inclusivity for
individuals as well as businesses and financial wellness.
We are encouraged by the significant progress we see within
Commercial Banking initiatives to strategically increase
investment in green industries and the accelerated take-up
of solar solutions within Consumer Banking. We will also
be expanding funding of projects that create or improve
physical, social, or economic assets for sustainable growth.
We intend to accelerate purpose-driven initiatives to give us
a competitive edge.
We will continue focusing on enhancing and improving
employee wellness capabilities to assist our employees
amid the challenging economic climate. We will place
added focus on attracting and retaining talent, reducing the
loss of critical skills, and improving transformation targets
at management levels. We will drive the upskilling and
reskilling of our employees to meet the needs of our clients
and business operations in an ever-changing environment.
We will continue our culture journey shift by driving diversity,
inclusivity, and equity goals to ensure a diverse and inclusive
workplace to make Nedbank the best place to work at.
Nedbank Retail and Business
Banking segmental review
Commercial Banking
Commercial Banking (NCB) provides relationship-based banking
services to mid-sized and large commercial entities, including
tailored banking and financial propositions for agricultural,
retail services sector and manufacturing industries and the
public sector.
NCB increased HE by 15% to R2,1bn at an attractive ROE
of 26% through solid product volume growth, coupled with
an improvement in NIM of 30 bps to 3,1%, driven mainly by
endowment. NIR growth improved by 6% with transactional
banking volumes increasing by 4%.
Average deposits grew strongly by 10% yoy, driven mainly by
growth in non-transactional deposits. The business remains a
strong generator of funding for the group, increasing the net
surplus funds generated to R100bn. Average advances grew by
6% yoy, supported by new-loan payouts of R27bn.
The CLR of 67 bps (2022: 11 bps) was at the top end of the
TTC target range of 50 bps to 70 bps and includes various
client inflows into non-performing loans, particularly the
horticulture subsector of the agricultural portfolio, which is
evidence of the macroeconomic strain taken by this sector
of the economy. New ECL models were implemented in the
latter part of the year, increasing the ECL by R243m (27 bps).
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 ECL coverage ratio of 2,28%
is prudent.
NCB increased their overall market share from 22% to 23%
according to an annual study concluded by KPI Research.
NCB has migrated all domestic and global electronic banking
clients onto its newly developed electronic NBH banking
platform with the focus for 2024 being on adoption and the
phased rolling out of new capabilities. NBH enables a positive
change in client (and employee) experience for businesses
by providing convenience for the day-to-day banking needs
of our clients and a single view of our digital offerings. Clients
can seamlessly transact, apply for products (including lending)
and services, maintain profiles and more. Security remains
a top priority and we offer advanced protection through the
combination of a password certificate and choice of 2-factor
authentication (mobile or token). To date, approximately 53% of
service volumes now take place via self-service.
93
Nedbank Group Annual Results 2023SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive Financial highlights
for the year ended 31 December
Segmental view
Total Retail and
Business Banking
Commercial
Banking
Consumer
Banking
Relationship
Banking
Other1
Change
%
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
9
14
5 566
5 097
26 413
23 203
2 087
5 762
1 812
1 646
1 950
4 735
16 304
15 006
1 673
4 278
1 292
3 375
160
69
43
87
7
7
29
8 520
6 613
613
98
14 306
13 372
2 024
1 917
7 349
8 205
6 249
7 658
514
249
44
1 774
1 686
2 303
17
2 111
23 678
22 138
4 205
3 984
14 338
13 489
3 164
2 994
1 971
1 671
16,0
1,20
16,0
1,20
25,9
1,11
23,8
1,06
7,7
0,61
10,2
0,78
42,6
1,40
36,3
1,21
1,94
1,61
0,67
0,11
2,62
2,37
0,79
0,41
60,4
60,4
48,1
48,1
57,2
56,8
56,1
56,3
58,1
60,5
54,0
59,9
58,5
59,5
52,3
59,2
5,93
5,72
3,10
2,80
6,24
6,08
3,59
3,16
5 429 244 408 430
90 150
87 866 271 514 257 919
66 328
61 433
1 252
1 212
6 415 361 391 022
89 034
83 862 261 272 246 802
63 678
59 118
1 377
1 240
8 436 283 402 114 178 438 167 651 134 909 125 165 122 507 108 977
429
321
10 421 416 383 010 178 783
162 321 128 566 120 416 113 727 100 053
340
220
9 34 690
31 843
8 057
7 607
21 399
19 076
3 924
3 557
1 310
1 603
Headline
earnings (Rm)
NII (Rm)
Impairments
charge on
financial
instruments
(Rm)
NIR (Rm)2
Operating
expenses (Rm)2
ROE (%)
ROA (%)
CLR – banking
advances (%)
NIR to total
operating
expenses (%)2
Cost-to-income
ratio (%)2
Interest margin
(%)
Total advances
(Rm)
Average total
advances (Rm)
Total deposits
(Rm)
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 During 2023 management reviewed the presentation of certain card-processing fees and found that these expenses have now become material. These are directly
attributable to income recognised in NIR. As a result, these expenses have been restated to ensure that they are presented as part of NIR in the SOCI to align with
the Nedbank Group accounting policy. Consequently, there was a reallocation of R477m for 31 December 2022, from operating expenses to NIR in the SOCI. This
restatement is a reallocation between line items and had no impact on profit for the period or HEs for the group. As a result, the comparative NIR and expenses and
impacted ratios have been restated.
The Leveraged Finance Team had a particularly good year,
with record payout numbers of R7,6bn and total asset-related
fees of R48m. Specific transactions finalised in the secondary
agriculture and manufacturing industries are recognised as
milestone transactions for the mid-corporate market.
The manufacturing portfolio has seen an improvement in
financial performance with top-line gross operating income up
18% yoy, driven by stronger NII, coupled with pleasing growth in
client numbers. NCB’s market share within the industry stands
at 26% confirmed by KPI Research. The portfolio is being
closely monitored to gauge the ongoing impact of logistical and
load-shedding disruptions, with defaulted advances remaining
within the targeted range.
The agricultural sector experienced significant financial
challenges that played out, particularly in export horticulture,
which was significantly impacted by logistical and energy
challenges, as well as reducing international prices due
to prevailing global economic challenges. This impacted
the profitability of this subsector where rising financial
distress became evident in early 2023, leading to an
increase in impairments. It is, however, expected that most
impacted businesses can recover over the next seasons
(12 to 24 months). Apart from horticulture, the risk profile of
the primary agricultural book is in good shape and has seen
an improvement over the past 4 years, with gross operating
income up by a pleasing 20% yoy.
94
Nedbank Group Annual Results 2023
The retail services sector, like all businesses in South Africa,
has been impacted by load-shedding disruptions. However, the
sector has shown signs of resilience and in some cases recovery
to pre-Covid levels. During the year we have seen positive
results from new-client acquisition gains due to the continued
implementation of a differentiated transformation funding
solution with major oil companies. NCB’s market share stands
at 28% within the sector according to a KPI Research study.
The portfolio has shown satisfactory financial performance,
underpinned mainly by NII, despite a subdued macro, while NIR
continues to remain under pressure due to aggressive competitor
offerings covering cash solutions and related pricing.
In the public sector, NCB won 18 tenders in 2023, of which
the bulk represents funding for water and energy in support
of sustainable development goals. Approximately R1bn has
been disbursed to various municipalities across the country
for much-needed infrastructure improvements. This portfolio
continues to attract favourable investments and maintains a
healthy net funding position of R19bn. A total of 6 municipalities
have also awarded NCB their full transactional banking, and NCB
defended market share in 5 of these municipalities.
NCB's climate resilience initiatives continue
demonstrating encouraging positive traction. During
2023 we extended over R800m in finance associated
with the UN Sustainable Development Goals, covering
clean water and sanitation (SDG6), affordable and clean
renewable energy (SDG7), as well as responsible consumption
and production (SDG12).
Retail Relationship Banking
RRB provides tailored banking services to affluent individuals and
their households (salaried and self-employed clients), as well as
SMEs with an annual turnover of less than R30m. We also cater for
non-resident and embassy clients through a unit with specialised
exchange control knowledge. 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.
Benefiting from the higher interest rate environment and the
strong relationship banking foundations built over many years,
RRB’s HE grew by 30% yoy to R1,7bn, delivering an ROE of 42,6%.
The CLR increased from 41 bps to 79 bps, which exceeded the
upper end of the 40 bps to 70 bps TTC target range as recurring
rate hikes, extended power outages and steady increases in
costs placed significant strain on the otherwise robust affluent
and small-business sector. Average advances grew by 8%, while
average deposits increased by 14%, resulting in an improvement
in the net funding contribution to the group to R59bn. NIR grew
moderately at 5,2% with the affluent base performing strongly
to compensate for the more muted growth coming from
small businesses.
Affluent clients: The private-banking CVP, based on the promise
of ‘Digital when you want it, human when you need it’, continues to
resonate with the market as demonstrated by the 8% increase in
main-banked client gains. Clients have embraced our feature-rich
Online Banking and Money app channels, and digital use and
satisfaction scores are at an all-time high. This, in turn, frees
up bankers to focus on the relationship aspects of their role,
including assisting with more complicated credit applications and
promoting the broader set of wealth solutions, namely Nedgroup
Investments, Nedbank Online Share Trading and our wealth
advisory services.
Small Business Services: Our focus for small businesses is
the provision of affordable transactional banking, innovative
payment solutions and seamless lending to unlock growth for
this important sector of our economy. Our beyond-banking
offering, SimplyBiz, remains a differentiator through which
we have provided over 47 000 business owners free
beyond-banking assistance in the form of advertising, coaching,
access to relevant business support materials and other
strategic initiatives. Our initial efforts to offer pre-approved
finance and digital and data-driven lending applications have
received great interest and uptake.
Despite a challenging economic outlook and an increasingly
competitive market, there are still many opportunities for RRB
to grow. The launch of an enhanced loyalty programme for
individuals, expansion of our automated lending options for
smaller businesses, and a streamlined, modernised POS offering
are expected to fuel growth and aid client retention in 2024.
The quality of bankers we attract and develop from within also
remains a key success factor along this journey.
Consumer Banking
Consumer Banking predominantly serves individuals earning
less than R750 000 per year in 3 subsegments – middle
market, entry-level banking and youth. Consumer Banking also
serves a few non-individual client types, such as stokvels, clubs
and societies.
HE declined by 16% yoy to R1 646m, driven primarily by an
increase in impairments as interest rate hikes and high inflation
placed strain on consumers. Consumer CLR increased to
262 bps (2022: 237 bps), driven by higher impairments of R1,1bn
yoy. Home loans and personal loans were the largest contributors
to the yoy increase, with R0,6bn and R0,4bn respectively.
Consumer Banking’s performance improved materially in
H2 2023, with HE growth of 22% yoy following the challenging
62% yoy decline in HE in H1 2023. The improvement in
H2 2023 growth was enabled by specific initiatives across
origination and collections, resulting in the CLR returning to a
pleasing 217 bps, within the target range for Consumer Banking,
from 308 bps in H1.
PPOP grew by a solid 7%, underpinned by NIR growth of 7% and
strong NII growth of 9%, partially offset by expense growth of
6%. The performance in PPOP resulted in the cost-to-income
ratio improving to 58,5% (2022: 59,5%).
NII growth was underpinned by average loans and advances
growth of 7% after growth of 8% in home loans; 7% in vehicle
finance, and 3% in unsecured lending. Average deposits grew by
7% yoy, with a 10% growth in the notice and term deposits book,
offset by a 2,4% decline in current and savings account balances
as clients took advantage of high interest rates to improve
returns.
NIR growth was pleasing at 7% yoy, supported by 9% growth in
transactional NIR. This was underpinned by a 9% yoy increase in
main-banked clients to over 3,21 million in Consumer Banking,
with total active clients growing by 5% yoy to 6,5 million.
The cross-sell ratio improved to 1,90 products per client
(December 2022: 1,89), which reflects the continued success of
AI-enabled Next Best Action strategies.
We bolstered our CVP with the launch the MiGoals product
range in May 2023. MiGoals has simplified our consumer current
account range from 6 to 3 products - MiGoals (R5 per month);
MiGoals Plus (R99 per month); and MiGoals Premium (R240 per
month). The MiGoals range introduces pricing simplicity with
only round numbers used for transaction pricing and categorised
95
Nedbank Group Annual Results 2023SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive transaction price points. MiGoals products offer highly
competitive value, and our analysis suggests that the MiGoals
Premium Account is the best value premium account in South
Africa. Market reception has been favourable, and the monthly
sales of MiGoals Plus have been approaching triple-digit growth
compared to its predecessor, the Savvy Plus Account.
Expense growth was well managed at 6% growth yoy. This
was underpinned by strong digital adoption, with Money app
users growing to 2,1 million from 1,8 million a year earlier.
The digitisation of the business is enabling cost optimisation
through a reduced headcount and floorspace in the branch
network, as well as enabling headcount efficiencies in operations
as processes become increasingly automated and standardised
across products.
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 our existing products and newly
launched transactional suite of products, namely MiGoals.
Transactional Banking continued to be a significant contributor
to NIR during the year, enabled by the MiGoals product set and
solutions that meet the needs of our clients at all life stages.
VAS volumes increased by 27% across all products, including
bill payments and digital vouchers, with over 1,45 million clients
buying products via the platform.
As we continue our digital journey, all our transactional
products are now enabled for straight-through processing on
the Money app and Online Banking, which enables convenient
and seamless account activation. We can also 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, which eliminates unnecessary delays.
We continue migrating clients to enhanced product offerings
with up-to-date features in a frictionless manner.
Card and Payments
Card and Payments provides card-issuing (individual and
commercial), card-acceptance, and payment products and
solutions across all client segments, extending beyond RBB into
Nedbank Private Wealth, CIB and NAR. It is also responsible for
the American Express® network in South Africa, offering global
solutions for individuals and global companies. These offerings
include key innovations such as tap- and scan-to-pay options,
GAP access, dynamic currency conversion, BTA Powerlink,
virtual cards, Apple Pay, Samsung Pay, Google Pay and
Money Message.
The card and payments industry continues to be a dynamic and
rapidly evolving sector, marked by technological advancements
and shifting client preferences. There is an increased emphasis
on digital transactions and a landscape influenced by regulatory
changes, cybersecurity concerns and heightened competition.
Against this backdrop, Nedbank continues to invest in emerging
payment methods and improve the overall client payment
experience.
Nedbank Card and Payments experienced strong growth in
card-issuing volumes of 8% and card-acquiring volumes of 14%.
The card-issuing growth was driven by our continued focus on
user-centric services, digitisation, and innovation. Contactless
payments are now prevalent, and we have seen strong adoption
of virtual card and device-based digital wallets (Apple Pay,
Samsung Pay and Google Pay) at >500% and 164% respectively.
Card acceptance growth has been driven by increased merchant
acquisition, improved retention rates and strong partnerships,
and we continue to build a strong inclusive payments ecosystem
in South Africa.
Nedbank was part of the first cohort of banks that launched
PayShap in South Africa in March 2023. PayShap is a real-time,
interbank payment offering aimed at addressing the high use
of cash in South Africa while playing a key role in modernising
the national payment system of South Africa. Since its launch,
there has been steady growth in use, with 2,3 million consumers
registered and 11 million payments worth over R7bn being
processed across all the participating banks. Nedbank clients
contributed approximately 28% to the overall volume. There are
ongoing efforts to make PayShap more usable with additional
features planned for 2024.
Investments
The expansion of our digital investment capabilities since
2018 has resulted in 82% of all new investment accounts being
opened digitally and 97% of all withdrawal notices given via digital
channels, reducing our reliance on physical infrastructure and
making positive contributions to our cost-to-income ratio.
As a result of the expansion of our digital capabilities, competitive
pricing strategies and significant marketing presence,
we have seen strong yoy growth of 15% in the Nedbank
household demand and term deposit book.
We have enhanced our fraud prevention capabilities by
introducing an account verification service to help ensure
that funds paid from investments are to our clients’ accounts,
regardless of the bank that the client uses.
Forex
The Forex business continues to enhance and deliver innovative
segment CVPs and optimised client-centred journeys by enabling
clients to transact and invest across multiple foreign currencies in
different countries.
Forex-related NIR is up by 14%, driven mainly by increased
volumes of incoming and outgoing payments. The weaker rand
has also had a positive impact on incoming payments and foreign
banknote revaluations. Digital adoption of key forex capabilities
continues to increase significantly, with digital payments showing
the most significant uplift in adoption. Digital outgoing and
incoming payments contribute 73% and 57% respectively across
all segments.
Unsecured Lending
Unsecured Lending provides personal loans, overdrafts, and
student loans and solutions across all client segments.
A headline loss of R125m was reported due to the CLR increasing
to 968 bps, which remains above the upper end of our TTC
target range of 650 bps to 850 bps. The increase in the CLR
is due to the ongoing deterioration in the macro and elevated
consumer stress, despite credit policy tightening. The credit
policy and system changes made throughout 2023 have resulted
in a deliberate reduction in disbursals and market share levels
to improve the quality of new business within acceptable levels.
Disbursal growth is expected to remain subdued in the short
term but is anticipated to improve as macroeconomic conditions
recover and new digital solutions are commercialised.
96
Nedbank Group Annual Results 2023 Product views, excluding commercial banking
Home loans
VAF
Unsecured
lending
Transactional1
Card and
payments1
Forex and
investment
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
NII (Rm)
3 587
3 259
6 128
5 526
4 215
4 163
3 676
2 488
1 391
1 419
1 551
1 546
Consumer banking
and other
2 605
2 347
5 937
5 350
3 940
3 911
1 422
Relationship banking
982
912
190
176
275
252
2 255
1 390
1 419
1 011
1 477
975
576
988
558
Impairments charge on
financial instruments
(Rm)
Consumer banking
and other
Relationship banking
NIR (Rm)
Consumer banking
and other
Relationship banking
Operating expenses
(Rm)
Consumer banking
and other
Relationship banking
1 312
507
2 442
2 408
3 087
2 719
106
71
71
961
961
811
811
1 008
304
304
230
74
427
80
283
215
68
2 357
2 379
2 962
2 581
106
85
709
694
14
29
701
686
15
125
876
799
77
138
891
6 423
5 966
3 665
3 342
288
249
819
72
4 975
1 448
4 581
1 385
3 637
3 314
28
28
156
132
132
117
1 838
1 772
1 872
1 787
2 113
1 977
8 739
8 101
2 983
2 709
1 618
1 579
1 286
552
1 198
574
1 765
1 673
1 929
1 785
6 804
6 403
2 969
2 692
1 247
107
114
184
192
1 936
1 698
15
17
370
1 179
400
Headline earnings (Rm)
498
890
1 631
1 342
(125)
279
759
185
806
859
126
150
Consumer banking
and other
Relationship banking
362
136
655
235
1 623
1 308
(153)
283
(494)
7
34
28
(4)
1 253
(653)
838
797
10
851
8
(114)
240
(48)
198
ROE (%)
CLR – banking
advances (%)
Cost-to-income ratio
(%)
Interest margin (%)2
Average total
advances (Rm)
7,1
14,5
17,2
15,5
(2,9)
7,4
33,9
8,8
34,2
36,6
42,8
50,6
0,80
0,33
1,83
1,92
9,68
8,73
28,53
39,55
5,66
4,90
47,2
2,19
50,0
2,12
27,4
4,17
28,7
4,02
41,5
15,10
39,1
15,21
86,5
5,43
95,8
3,85
59,0
7,78
56,9
7,97
87,9
0,87
88,0
0,97
161 404
149 525 126 379
119 249
23 956
24 287
186
69
14 279
13 957
(1)
2
The table does not include CB HE of R2 087m (Dec 2022: R1 812m) and other unallocated costs of -R216m (Dec 2022: -R419m) relating to Channel, Clients and Shared
Services. Therefore, the table does not cross-cast.
1 During 2023 management reviewed the presentation of certain card-processing fees and found that these expenses have now become material. These are directly
attributable to income recognised in NIR. As a result, these expenses have been restated to ensure that they are presented as part of NIR in the SOCI to align with
the Nedbank Group accounting policy. Consequently, there was a reallocation of R477m for 31 December 2022, from operating expenses to NIR in the SOCI. This
restatement is a reallocation between line items and had no impact on profit for the period or HE for the group. As a result, the comparative NIR and expenses and
impacted ratios have been restated.
2 Transactional's 2022 interest margin has been restated to reflect a more accurate position.
97
Nedbank Group Annual Results 2023SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
Predetermined offers have driven an increase in straight-through
processed loans and have performed well in a challenging
macroeconomic environment, with over 196 000 credit
agreements concluded across personal loans and overdraft
products in 2023. At the end of December 2023, 58% of all
personal-loan disbursals and 70% of overdraft disbursals
were being originated via a digital channel. Personal-loan API
sales volumes have increased by 14% in 2023.
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 over 1,2 million
subscribers with around 30% returning every month. We have
also added a new functionality that enables clients to see how
their score has changed, the reason for the change, and any
judgments that they may have at the bureau. All South African
citizens, regardless of their relationship with Nedbank, can use
this tool without impacting their score.
Home Loans
Nedbank Home Loans enables residential home ownership
solutions across all client segments.
Our solar financing solution, leveraged off the MFC platform,
launched in August 2022 and has delivered over R88m of
disbursals to date.
As a result of higher debt servicing costs, reduced affordability,
and tighter lending standards, residential property market
volumes declined by 29% in 2023, now slightly below
prepandemic levels. Given the lower demand, house price index
growth (according to Lightstone) remained subdued at 2,5% yoy,
a contraction of 0,2% in 2023.
HE declined by 44% to R498m (2022: R890m) at an ROE of 7,1%
(2022: 14,5%). The decline in HE was driven by an increase in the
CLR to 80 bps (2022: 33 bps), influenced by the deteriorating
macroeconomic environment and the cumulative impact of
interest rate hikes. Despite the decline in new business, average
advances grew by 8% yoy, driven by a slowdown in the paydown
rate of the book. New-business market share improved to 14,3%
(2022: 13.1%), resulting in a 30 bps gain in BA900 market share.
PPOP grew by 15% to R2 008m (2022: R1 751m).
As we move forward, our focus remains on amplifying sales
growth through a series of forward-thinking initiatives:
MFC
MFC facilitates smooth, frictionless vehicle finance to our
consumer and juristic client segments.
MFC grew vehicle and asset finance volumes by 6% in 2023,
despite a 0,4% decline in domestic passenger vehicle unit
sales via dealerships across the market. MFC’s new-to-used
vehicle finance ratio increased in 2023 to 36:64 (2022: 33:67).
MFC remains a leading financier in the vehicle finance market,
with a new-business and total book market share of 28%
(Experian Rand Value, Dec 2023) and 35,5% (BA900, Dec
2023) respectively.
HE increased by 22% to R1 631m at an ROE of 17,2% with
the CLR improving to 183 bps (2022: 192 bps). PPOP grew
by 10%, driven by advances growth of 6% and increased
endowment income. The efficiency ratio has been maintained
at 27%.
MFC remained focused on supporting their dealer partners
and customers with new solutions such as step payment plans,
payment holidays and finance for first-time buyers to assist
customer demand in a tough macro environment.
Loyalty and rewards
The revamped Greenbacks programme continued to deliver
strong membership growth, with new enrolments up by 15%
yoy to 1,9 million members. Greenbacks membership has grown
by 21% CAGR since 2019.
From an engagement perspective, Greenbacks earned were
up by 8% yoy to R316m (46% CAGR since its launch in 2019)
as clients increased their card swipe and debit order volumes.
Greenbacks redeemed increased 10% yoy to R296m (41% CAGR
since its launch in 2019).
The new digital redemption mechanisms launched, which
enable clients to do more with their Greenbacks, yielded good
engagement, as can be evidenced below:
• Greenbacks into MyPockets savings tools were up 40% yoy.
• Greenbacks to buy airtime, data and electricity increased by
24% yoy.
• Greenbacks redeemed into investment products increased by
34% yoy.
• We are strengthening our partnerships, focusing on mutual
benefits that enhance long-term sustainability in a dynamic
market landscape.
In addition to the earning of Greenbacks on swipes, strategic
partnerships with bp and Nu Metro delivered additional value of
more than R81,2m to the Greenbacks base since its inception.
• By introducing flexible home loan repayment plans, we aim to
enhance cash flow for our clients at the crucial early stages of
their homeownership journey.
• We are enabling clients to incorporate renewable energy
financing solutions into their new and existing home loans,
underscoring our commitment to sustainable homeownership.
• Our investment in leading-edge digital front-end systems is
set to redefine the client onboarding experience, simplifying,
and enhancing the entire home loan application process.
The Avo SuperShop also launched the Greenbacks Exclusive
store on the Avo platform, and delivered R2,1m of additional
value to clients, through the additional 10% discount on products
such as tech and appliances, exclusive to Greenbacks members.
From a financial standpoint, Greenbacks members, on average,
generated double the monthly net operating income compared
with clients who are not Greenbacks members, with a higher
cross-sell ratio of 2,2 versus 1,2 for non-members.
The current Greenbacks programme is undergoing further
changes and enhancements to create additional value for
clients and improve the competitiveness of the programme.
The enhanced programme will be launched in Q1 2024.
98
Nedbank Group Annual Results 2023 Retail and Business Banking: Key business statistics
2023
2022
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
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 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.
428
4,80
153
93
82
49
42
2 057
64
1 266
54.9
39,1
111
89
6 963
3 529
1,96
14 521
305
378
590
404
1 102
1 492
547
4 199
1 350
2 879
2 329
110
442
4,83
183
95
81
49
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
545
4 334
1 328
2 593
2 006
106
thousands
%
%
%
Rm
thousands
%
thousands
R000s
months
rand billions
rand billions
thousands
thousands
ratio
thousands
thousands
thousands
thousands
thousands
thousands
thousands
thousands
thousands
99
Nedbank Group Annual Results 2023SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
Balance sheet average advances and impairments
Daily gross
average
advances
Rm
Stage 1
%
Stage 21
%
Stage 3
%
% of
total advances
Credit loss ratio
%
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Home loans
VAF
Personal loans
Card
Other loans
164 743
151 997
133 516
125 397
27 874
27 562
16 982
16 547
4 509
3 848
Total Retail
347 624
325 351
Commercial Banking
90 971
85 558
79,8
82,4
56,6
77,1
71,2
78,9
82,9
83,7
79,6
61,8
78,9
75,9
80,0
83,0
12,5
12,0
17,2
8,5
9,9
12,4
9,9
Total RBB
438 595 410 909
79,7
80,6
11,9
10,8
14,9
15,4
7,3
10,4
12,6
11,7
12,4
7,7
5,6
26,2
14,4
19,0
8,7
7,2
8,4
5,5
5,5
22,8
13,9
13,8
7,4
5,3
7,0
37,6
31,5
5,9
3,7
1,0
79,7
20,3
37,1
30,8
6,5
3,8
0,9
79,2
20,8
0,80
1,83
10,25
5,66
7,47
2,27
0,67
0,33
1,92
9,18
4,90
6,73
2,00
0,11
100,0
100,0
1,94
1,61
Balance sheet impairment as a percentage of book
%
of total
Stage 1
%
Stage 2
%
Performing
stage 3
%
Non-performing
stage 3
%
Total stage 3
%
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Home loans
VAF
2,29
5,16
1,72
5,11
Personal loans
27,09
24,08
Card
Other loans
Total Retail
Commercial Banking
16,32
21,28
6,13
2,28
15,95
16,54
5,73
1,83
0,24
1,39
6,36
4,52
4,23
1,27
0,35
0,21
1,24
5,31
5,16
3,22
11,28
21,01
42,84
2,98
30,05
1,20
0,23
9,62
2,52
3,66
11,35
23,47
31,47
29,41
15,10
11,97
23,81
23,34
22,06
20,83
20,86
18,94
67,06
59,03
78,37
62,19
17,95
20,00
17,09
12,50
64,35
78,46
72,04
82,55
54,93
27,23
47,55
75,84
63,76
80,61
45,31
24,17
44,15
75,43
69,22
81,52
46,98
27,23
66,11
81,36
51,42
24,17
10,19
24,97
23,04
1,71
Total RBB
5,35
4,92
1,08
0,99
8,42
8,53
24,97
23,04
45,54
49,38
41,62
43,85
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
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Home loans
VAF
Personal loans
Card
Other loans
Total Retail
170 540 159 330 136 091
133 288
21 345
17 277
2 629
1 930
10 475
6 835
13 104
8 765
143 044
132 511
117 837
105 464
17 190
19 736
3 385
3 252
4 632
4 059
8 017
26 681
27 813
15 102
17 202
4 584
4 273
1 095
986
5 900
5 352
6 995
16 662
16 472
12 840
12 990
1 424
4 319
3 931
3 073
2 982
426
1 198
408
117
10
117
8
2 281
2 167
2 398
810
533
820
7 311
6 338
2 284
541
361 246 340 057 284 943
271 926
44 969
42 892
7 236
6 293
24 098
18 946
31 334
25 239
Commercial Banking
92 252
89 507
76 494
74 322
9 125
10 440
6 633
4 745
6 633
4 745
Total RBB
453 498 429 564 361 437
346 248
54 094
53 332
7 236
6 293
30 731
23 691
37 967
29 984
100
Nedbank Group Annual Results 2023
Balance sheet actual impairments
Total
impairments
Rm
Stage 1
Rm
Stage 2
Rm
Performing
stage 3
impairments
Rm
Non-performing
stage 3
impairments
Rm
Total stage 3
impairments
Rm
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Home loans
VAF
Personal loans
Card
Other loans
Total Retail
3 898
7 387
7 228
2 720
919
2 742
6 775
6 698
2 628
650
320
284
687
1 636
1 307
1 939
960
581
130
914
670
89
963
610
128
632
2 240
1 003
377
120
397
706
681
21
2
231
616
582
20
1
2 494
3 106
4 624
1 508
659
1 595
2 612
4 199
1 561
440
2 891
3 812
5 305
1 529
661
1 826
3 228
4 781
1 581
441
22 152
19 493
3 627
3 264
4 327
4 372
1 807
1 450
12 391
10 407
14 198
11 857
Commercial Banking
2 102
1 641
269
170
230
179
1 603
1 292
1 603
1 292
Total RBB
24 254
21 134
3 896
3 434
4 557
4 551
1 807
1 450
13 994
11 699
15 801
13 149
Income statement impairments
Income
statement
impairments
charge1
Rm
Stage 1
Rm
Stage 2
Rm
Stage 3
Rm
Interest on
impaired
advances
Rm
Post-write-off
recoveries
Rm
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Home loans
VAF
Personal loans
Card
Other loans
1 312
2 442
2 857
961
335
507
2 408
2 530
811
259
Total Retail
7 907
6 515
Commercial Banking
613
98
37
324
45
(91)
52
367
103
42
(82)
(172)
78
39
(95)
(63)
Total RBB
8 520
6 613
470
(158)
88
(309)
17
231
4
31
51
82
156
453
140
1 445
2 767
3 976
(223)
1 282
56
401
464
2 566
3 728
1 398
218
(191)
(11)
(914)
5
(87)
(94)
22
(858)
(14)
(42)
(67)
(329)
(267)
(466)
(35)
(61)
(551)
(308)
(428)
(12)
582
(164)
9 871
8 374
(1 198)
(986)
(1 164)
(1 360)
535
410
4
6
(80)
(91)
418
10 406
8 784
(1 194)
(980)
(1 244)
(1 451)
1 The income statement charge includes the charge associated with unutilised balances.
101
Nedbank Group Annual Results 2023SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
Nedbank Wealth
Headline earnings
(Rm)
Return on equity
(%)
0
4
1
3
1
1
1
1
0
4
1
1
0
1
1
3
2
1
1
1
0
1
2
1
Cluster
Cluster
total
total
Cluster
total
8
9
0
9
5
4
8
0
5
2
9
8
9
4
4
2
8
4
1
5
1
5
3
3
1
5
3
6
1
8
5
3
3
6
8
3
1
8
1
8
2
2
1
8
2
2
4
1
8
3
2
2
4
3
Insurance
Insurance
Insurance
Asset
Asset
Asset
Management
Management
Management
Wealth
Wealth
Wealth
Management
Management
Management
2022
2022
2022
2023
2023
2023
Financial highlights
for the year ended 31 December
Headline earnings (Rm)
NII (Rm)
Impairments charge (Rm)
NIR (Rm)
Operating expenses (Rm)
ROE (%)
ROA (%)
CLR – banking advances (%)
NIR to total operating expenses
Cost-to-income ratio (%)
Interest margin (%)
Change
%
2023
2022
6
42
>100
(4)
10
1 210
1 749
37
2 924
3 111
26,8
1,46
0,12
94,0
66,6
2,85
1 140
1 233
(63)
3 047
2 838
26,3
1,43
(0,20)
107,4
66,3
2,09
Assets under management (Rm)
14 448 467 393 064
Net life insurance contractual
service margin (Rm)
Life insurance value of new
business (Rm)
Total assets (Rm)
Average total assets (Rm)
Total advances (Rm)
Average total advances (Rm)
Total deposits (Rm)
Average total deposits (Rm)
Average allocated capital (Rm)
9
1 019
(37)
372
936
595
1
3
(1)
4
10
2
81 609
80 571
82 779
80 175
28 711
29 025
30 551
30 457
48 212
46 191
48 641
44 286
4 520
4 418
,
8
4
2
,
3
5
1
,
2
1
2
,
3
6
2
,
8
6
2
2019
2020
2021
2022
2023
Financial performance
Nedbank Wealth delivered a resilient financial performance
in 2023, with HE up 6% to R1 210m and an increase in ROE
to 26,8%, well above the group’s cost of equity. The local and
international wealth management businesses benefited from a
higher-interest-rate environment, delivering strong NII growth.
Growth in Asset Management can be attributed to higher AUM
fees as a result of positive market performance and net inflows.
Insurance, however, experienced a challenging year, negatively
impacted by lower traditional bancassurance volumes, new
business strain and non-repeat of reserve releases.
HE growth slowed from the 41% reported in H1 2023, primarily
as a result of the base impacts of SA and international interest
rates increasing in H2 2022 and H1 2023 while remaining steady
in H2 2023; the base impact of the KwaZulu-Natal floods on
insurance income in H1 2022; and higher shareholder returns in
H1 2023 relative to H2 2023.
NII increased by 42% to R1 749m due to higher SA, US, UK and
EU interest rates, which led to a widening of NIM from 2,09%
to 2,85%. Total average deposits grew by 10%, with average
deposit balances in Wealth Management (South Africa) up by
20% as clients favoured on-balance-sheet investments in the
rising-interest-rate environment. Deposits in Wealth Management
(International) decreased by 15% in GBP due to Nedbank Private
Wealth (International)’s deliberate exit from the corporate
e-gaming sector, but remained positive in ZAR given exchange
rate movements. Average loans and advances declined locally
and internationally, as high-net-worth clients opted to pay down
debt in the higher-interest-rate environment, however due to
favourable exchange rates in ZAR terms, balances remained
largely steady compared to the prior year.
The CLR deteriorated to 12 bps (2022: -20 bps), driven primarily by
an increase in credit impairments and lower client-specific overlay
releases in the Wealth Management (South Africa) business, but
remains below the cluster TTC target range of 20 bps to 40 bps.
NIR decreased by 4% to R2 924m, driven by lower traditional
bancassurance volumes as RBB adopted a more cautious
approach to unsecured lending as a result of elevated risk, new
business strain from new MyCover solutions, and lower advice
and investment fees in Wealth Management (South Africa), as
clients displayed preference for on-balance-sheet deposits in
a high-interest-rate-environment. This was partially offset by
increased shareholder returns in Insurance and higher AUM fees
owing to strong growth in AUM balances in Asset Management.
Expenses increased by 10% due to ongoing investment in
people, brand awareness, data and digital initiatives, the adverse
impact of exchange rates and higher inflation internationally.
The cost-to-income ratio remained steady at 66,6%
(2022: 66,3%).
102
Nedbank Group Annual Results 2023
Looking forward
Local and international geopolitical risks, the ever-changing
regulatory environment, high inflation, and the scarcity of
power supply in SA are presenting a threat to the operating
environment. Local markets are expected to remain volatile
in 2024, with investors continuing to be hesitant to invest
in equities and showing a preference for on-balance-sheet
investments and cash. In line with forecast decreases in local
and international interest rates, NIM is expected to decline.
From a credit impairment perspective, we do not anticipate
that the CLR will exceed the TTC target range. We expect
expenses to grow marginally above inflation as we continue
to invest in key initiatives and, assuming that revenue is
not adversely impacted by negative market performance
or high non-life insurance claims from weather-related
events, Nedbank Wealth expects the cost-to-income ratio to
remain steady.
Nedbank Insurance will continue to prioritise growth efforts
with Retail and Business Banking, with focus on growing the
MyCover suite of solutions. Use of data and digital remains a
key growth enabler and Nedbank Insurance will continue to
enhance its digital proposition, leveraging new technologies
and improved access to client data to deliver enhanced client
experiences. The business remains committed to increasing
penetration of its MyCover suite through brand awareness,
an improved omnichannel offering, data-driven targeted
campaigns, and collaboration across the group.
Nedgroup Investments remains committed to delivering
long-term investment performance, acting in the best
interest of clients, and taking further steps in its journey of
becoming a leader in responsible investing. The business
will continue to leverage its competitive advantage of
being part of the group by integrating with the Money app
to access the Nedbank client base and other online digital
channels, making investing easier and more accessible for
clients. In addition, Nedgroup Investments will continue to
focus on growing its international offering by expanding its
European distribution capability and launching additional
boutique franchises aimed at the non-SA market.
Wealth Management (South Africa) will continue to entrench
its market presence as an advice-led business that connects
clients’ holistic wealth needs in line with its Connected
Wealth™ value proposition. Key focus areas will be growing
the high-net-worth client base, increasing penetration
across the group through collaboration, and leveraging the
market-leading Nedbank Private Wealth (International)
offering. Technology, data and digital have been identified
as high-priority enablers to optimise processes, create
efficiencies and enhance client experiences. Implementation
of the remaining initiatives in Nedbank’s Managed Evolution
journey will assist in achieving this.
Wealth Management (International) will continue to execute
on its strategy to provide an international wealth offering for
Nedbank Private Wealth (SA) clients, while also delivering
advice-led international business growth from its operations
in the Isle of Man, UK, Jersey, and Dubai to high-net-worth
clients outside South Africa. The business will focus
on implementation of its new core wealth management
platform to enhance client experience, enable intelligent
use of data, and improve automation. Wealth Management
(International) will look to enhance the business through
potential acquisitions aimed at increasing its high-net-worth
proposition and adding scale to its advice-led capabilities.
Strategic progress
In 2023 Nedbank Wealth continued to make good progress
on strategic priorities through enhancing client experiences,
building data and digital capabilities, driving long-term
performance for clients, collaborating within the cluster and
across the group, and investing in people and culture.
Nedbank Insurance remained focused on growing penetration
of the Nedbank client base, through various channels, with
its MyCover suite of solutions achieving 41% growth in gross
premiums earned. MyCover Funeral benefited from increased
sales of the fixed package offerings, improved digital positioning,
and enhanced collaboration efforts with Retail and Business
Banking. MyCover Personal Lines reported substantial growth
off a low base, with a 487% increase in gross premiums earned,
due to an expansion of the omnichannel offering, which now
includes risk consultants, branches and bank insertion points,
call centres, digital, financial advisers and platform channels.
MyCover Life sales grew by 25% and is forecast to improve
further in 2024 with the recent addition of the Life risk
consultant channel. Digital remained a key focus area for the
business, with digital quoting, fulfilment and claims functionality
enabled on 17 products (2022:10) and 7 channels, and the launch
of the Insurance widget and ‘Offers for you’ increasing activity
and sales on the Nedbank Money app. At the 2023 International
ActiveOps Awards, the Nedbank Insurance non-life claims team
won Team of the Year in the EMEIA region across all industries.
In 2023 Nedgroup Investments celebrated 20 years of its Best
of BreedTM fund range. The business has grown unitised assets
from R10bn to over R400bn over the past 2 decades, remains
the third largest offshore manager for the sixth year in a row, and
is the sixth largest SA manager according to Q4 2023 ASISA
stats. Overall, the Nedgroup Investments fund range performed
well relative to peers, reporting a 14% increase in AUM, on
the back of improved market performance and strong net
inflows, particularly in the Cash and low-cost Core ranges. In line
with the business’s strategy to grow its European client base,
Nedgroup Investments introduced an in-house multi-boutique
model. The first Fixed Income boutique and fund was launched
in January 2024 with positive market response. Nedbank Wealth
is a member of the UNPRI, with the latest assessment report
indicating alignment with other signatories on the majority of
the pillars of assessment. In 2023, 3 Best of BreedTM funds
transitioned from Article 6 to Article 8 in accordance with the
EU’s Sustainable Finance Disclosure Regulation (SFDR), which
recognises that these funds actively promote ESG principles.
At the 2023 Raging Bull Awards, Nedgroup Investments won
Best SA Multi-Asset Medium Equity Fund on both a stand-alone
and risk-adjusted basis. In addition, the business won the Lipper
award in the Mixed Assets USD Flexible Global category (UK) and
the CityWire SA award for Best Mixed Assets Balanced (ZAR)
and Mixed Assets (USD).
Wealth Management (South Africa) has made good progress
in optimising its business structure and operations to enhance
client experience. As part of the group-led Target Operating
Model 2.0 initiative, there has been good collaboration with
Retail and Business Banking to increase the penetration of
financial planning and advice into the Nedbank client base.
In line with the group’s Strategic Portfolio Tilt 2.0 initiative,
Nedbank Private Wealth (South Africa) has focused on growing
banking market share in the high-net-worth segment. Initiatives
implemented to enhance client centricity and leverage digital
resulted in a significant increase in average deposits of 20%,
with good net client growth. This includes regular enhancements
to the Nedbank Private Wealth app to deliver a secure and
103
Nedbank Group Annual Results 2023SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive enhanced client experience that continues to be highly rated by
our clients and has resulted in consistently high digital adoption
rates. Nedbank Private Wealth (South Africa) was recognised
as Top Private Bank at the 2023 Intellidex awards, and Best
Private Bank (Africa) at the 2023 Global Private Banking
Innovation Awards.
Wealth Management (International) has made good progress
in transforming, simplifying, and building its high-net-worth
proposition, through digital innovation and adoption, the decision
to exit corporate e-gaming, bolstering its advice-led capabilities,
and leveraging its collaborative efforts with the South African
business. Increased engagements with high-net-worth clients
(> £1m) resulted in AUA and AUM balances remaining stable
in an environment where clients are showing preference for
on-balance-sheet products. The project to replace the business’s
core wealth management platform is still in early phases and is
on track to be delivered in 2025. At the 2023 WealthBriefing
MENA Awards Nedbank Private Wealth (International) won
Best Boutique Private Bank and Best Private Bank – Overall
Client Service.
Segmental performance
Insurance
The insurance industry remained resilient in 2023 despite
the turbulent economic environment owing to volatile market
conditions and additional strain on already financially burdened
clients. The non-life insurance industry benefited from improved
weather conditions and a resultant decrease in claims in
comparison to the impact of the KZN floods in 2022. The change
in reporting standards for insurers to IFRS 17 became effective
on 1 January 2023, compliance to which has become a key focus
area for insurers, including Nedbank Insurance.
Nedbank Insurance’s HE declined by 5% to R482m, driven largely
by lower traditional bancassurance volumes, particularly in credit
life, new business strain and non-repeat of reserve releases.
This was offset by an improved non-life claims experience due
to the base effect of the KZN floods in 2022, higher investment
returns owing to positive market performance in the second
half of the year, and a 41% increase in gross premiums earned in
the MyCover suite.
As reported in the interim results, the transition to IFRS 17 has
been successful and as of December 2023, financial statements
have been prepared in accordance with these requirements.
We have undertaken the necessary steps to restate the
comparative period to align with the IFRS 17 framework.
The transition did not have a material impact on the group’s
reserves, and reclassification of operating expenses to NIR
has resulted in a 3% improvement in Nedbank Wealth’s
cost-to-income ratio.
The contractual service margin (CSM) represents unrecognised
shareholders’ future profit on long-term products. The CSM
increased by 9% to R1 019m (2022: R936m), due primarily to a
higher CSM from new business related to the MyCover suite as
well as a positive impact from basis changes. The value of new
business (VNB) declined by 37% to R372m owing to a reduction
in total new business volumes from the traditional bancassurance
book, a change in product mix, and the adverse impact of
non-economic assumption changes, which had a positive impact
on the prior year compared with an adverse impact in the current
year. Non-life GWP increased by 15% due to the growth in new
solutions, offset by a reduction in vehicle value-added products
(VVAPs) premiums.
Assets under management
(Rbn)
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
8
4
4
5
1
1
3
3
3
2019
2020
2021
2022
2023
Local
International
Asset Management
The asset management industry continued to experience
pressure on fees and net flows, with challenging macro
conditions impacting clients’ ability to invest. Notwithstanding
this, Nedgroup Investments has grown HE by 10% to R386m,
driven by strong growth in AUM of 14% resulting in an increase
in NIR, with the business achieving R448bn in client assets.
The high-interest-rate environment resulted in risk-free assets
offering reasonable returns, reflected in both global and local
flows. Nedgroup Investments benefited from exchange rate
movements and positive net flows of R10bn, particularly in the
lower-risk Cash and the low-cost Core range, as well as solid
market performance locally and internationally.
Wealth Management
The wealth management industry has benefited from an
increase in interest rates both locally and internationally.
The negative effect of this higher-interest-rate environment is
increased credit impairments, high inflation, and clients’ opting
for on-balance-sheet investments and repaying debt faster.
Overall, Wealth Management’s HE improved by 22% to R342m,
driven mainly by higher NII, partially offset by an increase
in credit impairments and a decrease in NIR due to lower
advice fees.
Wealth Management (South Africa) benefited from an increase in
NII due to higher local interest rates, driving a higher endowment
impact and significant growth in average deposit balances, due
largely to client migration to on-balance-sheet investments.
Credit impairments increased due to lower client-specific overlay
releases, and higher portfolio provisioning, as clients exhibited
strain from the higher-interest-rate environment. This was
partially offset by a marginal decline in average lending balances
due to earlier repayments. NIR declined due to lower fees earned
on trading, advice, and asset management activities, offset by
strong growth in estates revenue.
Wealth Management (International) benefited from increases
in UK, US and EU interest rates, resulting in improved
NII and HE, notwithstanding a decrease in client lending
balances, with some clients opting to pay down debt in the
higher-interest-rate environment. Deposit balances have
decreased and, despite challenging investment market
conditions, AUM has remained in line with expectations, with
AUA levels higher in comparison to the prior year. NIR declined
due to lower FX income from reduced trading activity in a
difficult macroeconomic environment.
104
Nedbank Group Annual Results 2023 Assets under management
Rm
Fair value of funds under management – by type
Unit trusts
Third parties
Private clients
Fair value of funds under management – by geography
SA
Rest of the world
Rm
2023
2022
392 468
341 045
1 163
54 836
1 008
51 011
448 467
393 064
333 067
298 460
115 400
94 604
448 467
393 064
Unit trusts
Third party
Private
clients
Total
Reconciliation of movement in funds under management – by type
Opening balance at 31 December 2022
Inflows
Outflows
Mark-to-market value adjustment
Foreign currency translation differences
341 045
746 577
(734 714)
30 707
8 853
1 008
10
(16)
11
150
51 011
6 247
393 064
752 834
(8 217)
(742 947)
4 590
1 205
35 308
10 208
Closing balance – 31 December 2023
392 468
1 163
54 836
448 467
Rm
Reconciliation of movement in funds under management – by geography
Opening balance at 31 December 2022
Inflows
Outflows
Mark-to-market value adjustment
Foreign currency translation differences
SA
Rest of
the world
Total
298 460
741 862
94 604
10 972
393 064
752 834
(727 526)
(15 421)
(742 947)
20 271
15 037
10 208
35 308
10 208
Closing balance – 31 December 2023
333 067
115 400
448 467
105
Nedbank Group Annual Results 2023SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
Nedbank Africa Regions
Headline earnings
(Rm)
Return on equity
(%)
7
5
4
2
1
4
9
5
7
7
9
1
9
8
1
,
7
7
,
2
0
,
3
9
,
8
3
1
,
2
5
2
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
Financial performance
Nedbank Africa Regions (NAR) produced a strong financial
performance with HE increasing by 94% to R1 891m, generating an
ROE of 25,2% (2022: 13,8%), now above the group’s cost of equity
(COE). This growth was driven by improved performances in the
Southern African Development Community (SADC) operations and
our ETI associate investment, including the release of the R175m
Ghana sovereign bond provision that Nedbank raised in 2022.
Our SADC operations delivered HE of R662m, up by 80% off a low
base (2022: R367m). This resulted in an improved ROE of 9,9%
(2022: 5,9%), which remains lower than the group’s COE and our
desired target of greater than 18%. The improved performance was
largely driven by a 21% increase in revenue to R4 290m, due to the
higher-interest-rate environments and unrealised forex gains on US
dollar capital in Zimbabwe, partially offset by net monetary losses.
NII in the cluster increased by 29% to R2 226m largely driven
by a widening NIM to 6,13% (2022: 4,94%). This was offset
by a decrease in average total loans and advances of 2% to
R21bn, given muted demand and economic activity, particularly in
the common monetary area (CMA) countries.
NIR for the cluster increased by 17% to R1 857m, driven mainly
by higher unrealised forex gains in Zimbabwe partially offset by a
higher net monetary loss and an increase in revenue from digital
and channels.
The impairment charge increased by 15% to R253m, offset
by an improvement in arrears management in Lesotho,
better-than-expected recoveries and releases in Stage 1 and
Stage 2 ECL in Namibia. This included an ECL overlay of R24m in
Mozambique attributable to the bank’s sovereign bond exposure.
As a result, the CLR was 100 bps (2022: 102 bps), within the cluster
TTC target range of 85 bps to 120 bps.
Expenses increased by 7% to R2 928m, impacted by proactive
management actions taken to manage costs such as a decrease in
headcount of 2%, through natural attrition and our continued focus
to transform and right-size the business by automating manual
processes and leveraging the group’s capabilities. The cluster’s
cost-to-income ratio declined to 53,6% from 67,2% in 2022.
Associate income, relating to the group’s 21% shareholding
in ETI, increased by 77% to R1 380m (2022: R779m). This
includes accounting for our share of ETI’s Q4 2022 and 9M
2023 earnings (in line with our policy of accounting for our share
of ETI’s attributable earnings a quarter in arrear), as well as the
reversal of the R175m provision that Nedbank raised in 2022 for
the estimated impact on associate income from ETI from the
Ghana sovereign domestic debt restructure. The continued
strong performance from ETI was driven largely by increased net
revenues in Francophone West Africa (UEMOA) and Central, East
and Southern Africa (CESA).
Looking forward
The macroeconomic environment in sub-Saharan
Africa continues to remain challenging, albeit improving.
Forecasts suggest lower average inflation, a continuation of
higher interest rates although improving in the second half
of 2024, resulting in limited availability of affordable capital
to most sovereigns. The IMF forecasts that the region is
projected to grow by an estimated 3,8% in 2024, up from
3,3% in 2023. We continue to monitor the impact of higher
interest rates on our clients and the markets we operate in,
as well as the progress of the liquefied-natural-gas (LNG)
projects in Mozambique and the hyperinflationary and
general macroeconomic environment in Zimbabwe.
The work we have done to leverage the group’s enterprise
capabilities is expected to continue to yield benefits for
our SADC operations, driving business growth. ETI is
expected to continue on a recovery path, and our focus as a
shareholder remains on supporting the business in resolving
the challenges that face Ecobank Nigeria and other subscale
markets.
Our key focus areas for 2024 include the following:
• Executing on our board-approved technology convergence
journey, convergence into Managed Evolution and
unlocking our ability to leverage group capabilities.
• Continuing the transformation of our business,
complementing the technology convergence, and having in
place a fit-for-purpose operating model that leverages the
group’s capabilities.
• Continuing the digitisation and automation of the business
as we deliver on our digital growth strategy.
• Continuing to unlock further value in Mozambique,
leveraging local expertise and enterprise capabilities.
• Leveraging our brand sentiment market positions and
client experience scores to accelerate growth in revenue
market share.
• Unlocking value with the other shareholders in our ETI
associate investment by increasing deal flows.
We are committed to long-term and profitable growth and
are dedicated to seizing growth opportunities that are fit
for the NAR business. Our ambition is to give our clients
access to the best financial services network in Africa and
we will deploy capital to optimise returns for the group.
In the medium to long term, we expect the NAR business to
continue to grow its overall contribution to group earnings
and generate an ROE consistently above COE.
106
Nedbank Group Annual Results 2023
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
Change
%
2023
2022
2023
2022
2023
2022
94
29
15
17
7
77
7
5
(4)
(2)
7
8
7
1 891
2 226
253
1 857
2 928
1 380
25,2
4,16
22,0
1,00
63,4
53,6
6,13
45 906
41 347
20 909
21 012
36 846
36 331
7 492
977
1 720
220
1 581
2 743
779
13,8
2,31
12,4
1,02
57,6
67,2
4,94
42 853
39 542
21 714
21 415
34 327
33 768
7 023
662
2 433
253
1 857
2 928
9,9
1,71
1,00
63,4
68,3
7,78
44 658
39 747
20 909
21 012
36 846
36 331
6 713
367
1 954
220
1 581
2 743
5,9
1,03
1,02
57,6
77,6
6,49
41 567
37 382
21 714
21 415
34 327
33 768
6 119
1 229
(207)
610
(234)
1 380
157,7
18,45
22,0
779
67,5
8,93
12,4
1 248
1 600
1 286
2 160
779
904
1 Associate income on an IFRS basis is R1 386m (2022: R779m) as IFRS requires associate income to be presented net of our share of ETI’s impairment charge on
non-financial instruments and other gains of R6m (2022: R0m). Our share of ETI’s impairment charge on non-financial instruments and other gains and losses is
excluded from HE.
2 ROE on subsidiary in-country statutory capital is 18,5% (2022: 15,7%).
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 in which we operate, while exploring opportunities to
expand in large, fast-growing markets on the continent when
they arise. Our investment in ETI presents great potential as
we continue to unlock further value and look to generate and
maintain a return on the original cost of the investment of above
20% (2023: 22,0%).
Our focus across the SADC operations is to transform the
business and converge our technology infrastructure, enabling
closer alignment to the enterprise, continue to deliver our digital
growth strategy and unlock further value in Mozambique as a key
market for growth.
The journey to converge into Managed Evolution, an important
component in integrating the business into the enterprise
ecosystem, is under way and progressing well. This will enable
the business to seamlessly leverage group capabilities, unlocking
greater efficiencies and providing a more consistent brand
experience to clients across the regions. In 2024 the focus will
be on implementing the foundational elements, and we expect
that 3 of the markets we operate in, will start to experience the
benefits of leveraging the enterprise technology infrastructure
in 2025.
Our aspiration to lead in digital is delivered through our digital
growth strategy and although a deliberate decision was made to
slow down capital investments in technology solutions because
of our converging into the group's technology infrastructure,
64% of our client base is digitally active (2022: 57%). This has
been achieved through efforts and focus on enhancements of
existing solutions and implementation of solutions that make
us highly competitive. The Avo SuperShop launch in Namibia
in August 2023 was well received by the market, a first in the
market, and we continue to enhance the value proposition.
This is expected to continue to improve as more merchants are
loaded on the platform. Our digital growth strategy focus will
remain on limited enhancements and the implementation of new
solutions, outside of our convergence journey, that are necessary
to remain competitive.
107
Nedbank Group Annual Results 2023SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
Innovations and improvements launched in 2023 include
the following:
• Nedbank MobiMoney, an electronic wallet-based account,
in Eswatini as part of our efforts for financial inclusion.
MobiMoney is also available in Namibia and Lesotho.
• In Namibia, a bespoke solar offering where we can re-advance
or offer a further loan on a home loan or asset-based finance
for solar purchases and installations.
• An expanded Avo proposition, offering shopping and
value-added-services with selected local service providers,
merchants and partners, who are onboarded onto the
platform.
• An improved online banking experience for our corporates in
Eswatini, Lesotho and Namibia, which includes new features
and functionalities enhancing convenience for clients.
• An enhanced Nedbank Marketplace API, enabling clients using
our wallet API to transact using our vast ecosystem, accounts
API for authorised transactional information and those using
the payment API to use alternative payment mechanisms for
card payments.
• An expanded robotics process automation programme
where we have automated 11 additional processes, freeing up
capacity of our employees to focus on their core functions.
• Launched a group card acquiring solution in Zimbabwe,
including Amex Card acquiring to bolster our POS
merchant offering.
• An added Gold cheque card offering in Eswatini and
Lesotho to support our middle and affluent CVPs in the
respective markets.
• Intelligent depositor ATMs in Eswatini and Lesotho
respectively, to improve availability of cash deposits to
improve client experience and liquidity for the bank.
• The only floating rate fixed-term deposit account available
in the market in Eswatini, allowing clients to benefit from
changes in interest rate, especially during the increasing
interest rate cycle.
Our bold aspiration is to be rated number 1 in client experiences
across the markets in which we operate. In 2023 Nedbank
was the market leader in client experience (NPS) in Eswatini
and Mozambique and the leader in brand sentiment in Lesotho
and Zimbabwe.
In recognition of the progress we have made, Nedbank in
2023 received the following awards: Excellence in Mobile
Banking at the Finnovex Awards Southern Africa 2023; Best
Digital Bank Mozambique 2023 by Global Banking & Finance
Awards; Top Innovations in Finance Award in Mozambique
for 2023 in the User Experience category by Global Finance
magazine; Top Banking Institution Award at the Top Companies
Survey Awards 2023 in Zimbabwe, Corporate Governance, Social
Responsibility and Sustainability Award at the Banks and Banking
Survey Awards 2023 in Zimbabwe; Outstanding ESG/CSI
Award for Inclusive Development of SDGs at the 7th Zimbabwe
National ESG and Responsible Business Achievement Awards
2023, Governance, Compliance and Risk Team of the Year in
Zimbabwe at the Women in Governance, Risk and Compliance
Awards 2023, Best Sub-Custodian Bank 2023 of Namibia at the
Global Finance Awards and Nedbank Namibia was recognised as
one of the most exciting, innovative, and promising businesses
from around the world by the Next 100 Global Awards 2023 for
Corporate Banking.
Regarding ETI, we are working through our representation on the
ETI board with fellow shareholders and management to ensure
an appropriate focus on capital, liquidity, and growth to unlock
value, including addressing the challenges in Ecobank Nigeria.
Through ongoing collaboration efforts, we continue to work on
increasing business flows between ETI and Nedbank.
Segmental performance
SADC operations
Our SADC operations delivered HE of R662m up by 80% (2022:
R367m) and an ROE of 9,9% (2022: 5,9%). This was a result of
strong growth in revenue, up 21% to R4 290m, largely driven by
an expansion in NIM and unrealised forex gains in Zimbabwe.
This strong growth in revenue was achieved despite increased
reserve requirements in Mozambique and muted economic
growth across the regions.
NII increased by 25% to R2 433m, mainly driven by higher
interest rates with NIM widening to 7,78% (2022: 6,49%), loans
and advances growth across most of the regions, and significant
growth in the US$ loan book in Zimbabwe, despite a marginal 2%
decrease in average total loans and advances to R21bn (2022:
R21,4bn). NIR for the SADC operations increased by 17% to
R1 857m, driven largely by unrealised forex gains in Zimbabwe
and an increase in revenue from digital and channels. If we
excluded Zimbabwe, NIR was up by 8%. The unrealised forex
gains of R1 560m were offset by the net monetary loss of
R1 059m (2022: R419m). Our impairment charge increased
by 15% to R253m, offset mainly by an improvement in arrears
management in Lesotho, better-than-expected recoveries and
releases in Stage 1 and Stage 2 ECL. The SADC CLR improved
to 100 bps from 102 bps and was within the cluster TTC target
range of 85 bps and 120 bps.
Clients – The overall number of clients increased by 4% to
349 254 (2022: 337 287), despite the bulk dormant account
closures in Zimbabwe. Our MobiMoney electronic wallet offering,
which forms part of efforts towards addressing financial
inclusion, continued to be the most significant client growth
driver in Eswatini, Lesotho and Namibia, together with continued
enhancements to our current offerings to increase our client
base, particularly main-banked clients.
Distribution – Our focus remains on transforming the business
for overall efficiency while driving growth to achieve scale.
In line with this, our distribution strategy remains to ensure
an efficient, optimally staffed, fit-for-purpose distribution.
Our physical points of presence remained the same at 79 and
ATMs increased by 1% to 199 (2022: 197).
Digital – As we continue to focus on enabling digital offerings
to deliver on our aspirations to lead in digital, our digitally
active clients increased to 64% (2022: 57%) of the total client
base. The Money App (Africa) remains clients' digital channel
of choice with 94% of digitally active clients preferring to use
the app. The number of app users is up by 20% to 116 498.
The number of users of MobiMoney wallets has increased
by more than 100% to 42 017 wallets opened in 2023 (2022:
5 756). Value-added services (including airtime and electricity)
purchases increased by 25% yoy and SendMoney volumes have
increased by 8% yoy.
108
Nedbank Group Annual Results 2023 Nedbank Africa Regions: Key business statistics
Client
Number of clients1
Main-banked clients2
Cross-sell ratio2
Digital
Digitally active clients
Mobile app users3
MobiMoney wallets
Distribution
Number of branches4
Number of ATMs
Number of cash-accepting ATMs
POS devices5
%
ratio
%
2023
2022
349 247
337 287
42
1,37
45
1,45
64
116 498
42 017
57
97 303
5 756
79
199
1
79
197
1
8 276
9 213
Notes:
1 Restated, taking into account the closure of dormant accounts as a result of seasonal tobacco merchants in Zimbabwe.
2 The December 2023 percentage/ratio includes MobiMoney Accounts (ie electronic wallets). If MobiMoney wallets were excluded, main-banked clients would be
45% of the base and the cross-sell ratio 1,4 for December 2023.
3 Money App (Africa) used in 3 countries (Lesotho, Namibia and Eswatini). The other 2 countries (Zimbabwe and Mozambique) use different versions.
4 The total number includes agencies (4 agencies across the regions).
5 Reduced number of devices in Mozambique after regulatory changes removing monthly rentals.
ETI associate investment
ETI’s strong performance continued in 2023, with associate
income from our investment up by 77% yoy to R1 380m,
generating over a 100% increase in HE to R1 229m. This includes
accounting for our share of ETI’s Q4 2022 and 9M 2023 earnings
(in line with our policy of accounting for our share of ETI’s
attributable earnings a quarter in arrear) as well as the reversal
of the R175m estimated provision that Nedbank raised in 2022,
as the final Ghana sovereign domestic debt restructure impact
on ETI was materially less than expected. Excluding the impact
of Nedbank’s R175m reversal, associate income was up 26%
yoy, generating a HE of R1 054m.
ETI’s 9M 2023 performance saw attributable earnings increase
by 14% to US$224m, driven by:
• resilience and continued benefits of a diversified
business model;
• strong revenue growth of 12% (34% in constant currency); and
•
increased efficiencies, which led to an improved
cost-to-income ratio yoy, despite the high inflationary
environment as well as the investments made into business
growth, distribution, and technology.
The continued turnaround in ETI’s performance has generated
a ROTE of 25,6% up from 21% in the prior year. Total CAR
was 13,9% (as at 30 September 2023). The ETI share price
was NGN16 (as at end of period 30 September 2023), up
42% yoy in Naira. These gains were offset by an approximate
44% devaluation of the Naira against the US dollar. The ETI
share price rose a further 31% in Q4 2023, ending the year at
NGN20,90. Following the strong performance, our investment
in ETI generated a return on the original cost of investment of
22% (2022: 12,4%), or 19,2% excluding the reversal of the
R175m. The market value of our investment in ETI rose to R2,2bn
in 2023, notwithstanding the depreciation of the Naira and Cedi.
ETI’s 3 core regions continued to show strong performance, with
all 3 of the regions achieving ROEs above 28%, UEMOA (28,8%),
Anglophone West Africa (AWA) (28,5%) and CESA (34,4%).
Nigeria continues to be sub-optimal with an ROE of 5,5%,
albeit improved from 4,6%.
Ecobank’s strengths include local knowledge and experience,
clients, technology, digital platforms, and a geographic footprint.
ETI is ranked in the top 3 banks across 15 African countries,
number 1 in 6 countries, number 2 in 2 countries and number
3 in 7 countries. Its focus is on growth and remaining at the
forefront of trade, payments, remittances and financial inclusion
by continuously leveraging technology and appropriate
partnerships. ETI can 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.
ETI has now completed its growth, transformation and
returns strategy, which has true client orientation at its
core. ETI is focusing on improving performance in subscale
markets, accelerating growth of the consumer and commercial
banking business, entrenching the leadership positions in
markets where they are a top 3 bank and continuing to provide
support to the Nigerian team to turn around and grow that
business.
109
Nedbank Group Annual Results 2023SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
Geographical segmental reporting
for the year ended 31 December
Rm
Summary of consolidated statement of financial position
Assets
Cash and cash equivalents
Other short-term securities
Derivative financial instruments
Government and other securities
Loans and advances
Other assets
Intergroup assets
Total assets
Equity and liabilities
Total equity
Derivative financial instruments
Amounts owed to depositors
Provisions and other liabilities
Long-term debt instruments
Intergroup liabilities
Total equity and liabilities
Summary of consolidated statement of comprehensive income
NII
NIR
Share of income of associate companies
Total income
Impairments charge on financial instruments
Net income
Total operating expenses
Indirect taxation
Profit before direct taxation
Direct taxation
Profit after taxation
Profit attributable to non-controlling interest
Headline earnings
1
Includes all group eliminations.
Nedbank Group
2023
2022
South Africa1
Nedbank Africa Regions2
Rest of the world
2023
2022
2023
2022
2023
2022
52 082
87 769
13 812
170 717
891 619
95 409
–
45 618
70 661
9 101
160 495
882 165
84 864
–
40 747
59 853
13 756
168 738
819 673
85 773
(3 937)
37 261
43 043
8 989
158 400
811 010
75 578
(3 748)
10 583
4 831
4
1 979
20 909
3 663
3 937
1 311 408
1 252 904
1 184 603
1 130 533
45 906
42 853
80 899
79 518
119 211
14 141
1 087 645
42 634
47 777
–
115 944
9 738
1 039 622
35 697
51 903
–
1 311 408
1 252 904
1 184 603
1 130 533
45 906
42 853
80 899
79 518
41 470
27 709
1 443
70 622
9 605
61 017
38 059
1 129
21 829
4 484
17 345
1 695
36 277
26 171
879
63 327
7 381
55 946
35 329
1 102
19 515
4 311
15 204
1 143
15 650
14 061
12 598
12 043
1 161
1 041
752
23 085
52
51 037
5 973
1 309
22 831
89
49 441
5 848
16 568
14 536
52
66 445
1 069
47
64 604
871
(3 235)
(540)
1 467
1 217
2 684
(11)
2 695
1 277
29
1 389
228
1 161
1 071
1 206
2 277
41
2 236
1 035
19
1 182
141
1 041
7 048
4 787
23
2 095
21 714
3 438
3 748
7 023
14
1 061
428
1 720
1 581
779
4 080
220
3 860
2 743
75
1 042
(95)
1 137
160
977
984 354
940 691
36 846
34 327
95 151
14 079
40 436
47 348
3 235
37 777
24 635
63
62 475
9 363
53 112
33 854
1 044
18 214
4 159
14 055
1 457
94 385
9 677
33 765
51 475
540
33 486
23 384
100
56 970
7 120
49 850
31 551
1 008
17 291
4 265
13 026
983
7 492
10
1 129
429
2 226
1 857
1 380
5 463
253
5 210
2 928
56
2 226
97
2 129
238
1 891
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 exclude transactions concluded with clients resident in the rest of Africa by other group entities within CIB and transactional-banking revenues.
For example, CIB has a credit exposure to clients resident in the Africa regions of R55,9bn (2022: R50,6bn).
110
Nedbank Group Annual Results 2023
Summary of consolidated statement of financial position
Rm
Assets
Cash and cash equivalents
Other short-term securities
Derivative financial instruments
Government and other securities
Loans and advances
Other assets
Intergroup assets
Total assets
Equity and liabilities
Total equity
Derivative financial instruments
Amounts owed to depositors
Provisions and other liabilities
Long-term debt instruments
Intergroup liabilities
Total equity and liabilities
Summary of consolidated statement of comprehensive income
NII
NIR
Share of income of associate companies
Total income
Impairments charge on financial instruments
Net income
Total operating expenses
Indirect taxation
Profit before direct taxation
Direct taxation
Profit after taxation
Headline earnings
1
Includes all group eliminations.
Profit attributable to non-controlling interest
1 087 645
1 039 622
52 082
87 769
13 812
170 717
891 619
95 409
–
119 211
14 141
42 634
47 777
–
41 470
27 709
1 443
70 622
9 605
61 017
38 059
1 129
21 829
4 484
17 345
1 695
45 618
70 661
9 101
160 495
882 165
84 864
–
115 944
9 738
35 697
51 903
–
36 277
26 171
879
63 327
7 381
55 946
35 329
1 102
19 515
4 311
15 204
1 143
Nedbank Group
2023
2022
South Africa1
Nedbank Africa Regions2
Rest of the world
2023
2022
2023
2022
2023
2022
40 747
59 853
13 756
168 738
819 673
85 773
(3 937)
37 261
43 043
8 989
158 400
811 010
75 578
(3 748)
10 583
4 831
4
1 979
20 909
3 663
3 937
7 048
4 787
23
2 095
21 714
3 438
3 748
752
23 085
52
51 037
5 973
1 309
22 831
89
49 441
5 848
1 311 408
1 252 904
1 184 603
1 130 533
45 906
42 853
80 899
79 518
95 151
14 079
94 385
9 677
7 492
10
7 023
14
984 354
940 691
36 846
34 327
40 436
47 348
3 235
33 765
51 475
540
1 129
429
1 061
428
16 568
14 536
52
66 445
1 069
47
64 604
871
(3 235)
(540)
1 311 408
1 252 904
1 184 603
1 130 533
45 906
42 853
80 899
79 518
37 777
24 635
63
62 475
9 363
53 112
33 854
1 044
18 214
4 159
14 055
1 457
33 486
23 384
100
56 970
7 120
49 850
31 551
1 008
17 291
4 265
13 026
983
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 exclude transactions concluded with clients resident in the rest of Africa by other group entities within CIB and transactional-banking revenues.
For example, CIB has a credit exposure to clients resident in the Africa regions of R55,9bn (2022: R50,6bn).
15 650
14 061
12 598
12 043
2 226
1 857
1 380
5 463
253
5 210
2 928
56
2 226
97
2 129
238
1 891
1 720
1 581
779
4 080
220
3 860
2 743
75
1 042
(95)
1 137
160
977
1 467
1 217
2 684
(11)
2 695
1 277
29
1 389
228
1 161
1 071
1 206
2 277
41
2 236
1 035
19
1 182
141
1 041
1 161
1 041
111
Nedbank Group Annual Results 2023SegmentalanalysisSupplementaryinformationStatement of financialposition analysisIncome statementanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
Income
statement
analysis
Net margin analysis
Impairments
Non-interest revenue and income
Expenses
Headline earnings reconciliation
Taxation charge
112
113
116
122
124
126
126
Nedbank Group Annual Results 2023 1 Net margin analysis
Net interest income
(Rm)
Interest margin trends versus prime rate
(%)
10,14
7,85
7,03
8,60
11,41
7
6
1
0
3
1
8
0
0
3
0
0
5
2
3
7
7
2
6
3
0
7
4
1
4
2
5
3
,
6
3
3
,
3
7
3
,
3
9
3
,
1
2
4
,
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
Nedbank Group NIM
Average prime rate
Nedbank Group
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
Stage 3 interest reversals
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
2023
Bps
2022
Rm
Bps
Rm
986 060
922 197
393
36 277
373
32 500
38
40
(2)
(16)
(7)
(4)
(5)
(2)
(6)
(6)
4
3
1
8
2 512
3 746
3 954
(208)
(1 587)
(642)
(423)
(522)
(185)
(557)
(581)
24
372
245
127
707
23
24
(1)
(5)
1
(2)
(4)
8
5
6
(1)
3
3
(7)
1
1 935
2 128
2 220
(92)
(496)
90
(210)
(376)
726
464
511
(47)
262
(44)
306
(621)
105
Closing NIM/NII for the period
421
41 470
393
36 277
113
Nedbank Group Annual Results 2023Income statementanalysisSupplementaryinformationStatement of financialposition analysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
Net interest margin
(Bps)
40
(2)
393
(7)
(4)
(5)
(3)
1
8
421
2022
Endowment
rate impact
Endowment
mix impact
Asset
pricing
Stage 3
interest
reversals
Asset
mix
Liability
pricing
Liability
mix
Balance sheet
management
and other
2023
Key drivers
• Positive endowment rate impact due to interest rate increases in H2 2022 and H1 2023, partly offset by a negative endowment
mix impact due largely to slower growth of CASA deposits relative to the growth in interest-earning assets.
• Negative asset pricing due to higher levels of competition for good quality assets.
• Higher yields in Nedbank Africa Regions.
• Higher stage 3 interest reversals.
• Negative asset mix as a result of slower growth in higher-yielding assets such as unsecured loans and faster growth in
lower-yielding assets such as term loans, home loans and vehicle finance.
• Negative liability pricing due to squeeze in deposits spreads.
NII sensitivity analysis
• At 31 December 2023, the NII sensitivity of the group’s banking book for a 1% parallel decrease in interest rates, measured over
12 months, was 1,34% of total group ordinary shareholders’ equity, which is below the board’s approved risk limit of 2,25%.
• This exposes the group to a decrease in NII of approximately R1 449m before tax should interest rates decrease 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 decrease in interest rates and Nedbank Zimbabwe is measured at a 30% instantaneous decrease
in interest rates.
• The group’s NII sensitivity exhibits very little convexity and will therefore also result in an increase in pre-tax NII of approximately
similar amounts should interest rates increase 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) sensitivity for a 1% decrease in interest rates remains at a low level of 0,76%
(R601m) of ordinary shareholders’ equity, which is below the board’s approved risk limit of 1,25%.
114
Nedbank Group Annual Results 2023
Average banking statement of financial position and related interest
2023
2022
Average
balance
Margin statement interest
Average
balance
Margin statement interest
Assets
Received
%
Assets
Received
11,41
%
8,60
Rm
Average prime rate
Assets
Listed corporate bonds
23 913
2 293
9,59
23 412
1 634
6,98
Home loans (including properties in
possession)
Commercial mortgages
Instalment debtors
Credit card balances
Overdrafts
Term loans and other1
Personal loans
195 041
196 662
152 218
17 372
25 387
239 245
30 342
20 789
20 748
19 087
2 692
2 916
31 198
5 780
10,66
10,55
12,54
15,50
11,49
13,04
19,05
182 925
190 240
141 994
16 950
23 467
217 559
29 929
14 711
15 210
14 581
2 267
2 156
17 042
5 684
Gross banking loans and advances
880 180
105 503
11,99
826 476
73 285
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
(29 914)
84 720
51 074
986 060
229 091
7 835
3 577
116 915
9,25
7,00
11,86
(26 450)
81 524
40 647
922 197
205 191
7 338
1 481
82 104
1 215 151
116 915
9,62
1 127 388
82 104
7,28
Liabilities
Paid
%
Liabilities
Paid
%
597 983
142 800
124 842
153 744
49 854
46 134
2 507
10 624
11 289
4 891
7,71
1,76
8,51
7,34
9,81
542 794
145 637
108 849
130 881
53 738
27 940
1 045
6 677
6 047
4 118
8,04
8,00
10,27
13,37
9,19
7,83
18,99
8,87
9,00
3,64
8,90
5,15
0,72
6,13
4,62
7,66
4,67
Interest-bearing banking liabilities
1 069 223
75 445
7,06
981 899
45 827
Revaluation of FVTPL-designated
liabilities
Ordinary and minority shareholders'
equity
Other3
(2 887)
111 452
37 363
(2 174)
107 795
39 868
Total shareholders’ equity and liabilities
1 215 151
75 445
6,21
1 127 388
45 827
4,06
Interest margin on average
interest-earning banking assets
986 060
41 470
4,21
922 197
36 277
3,93
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.
115
Nedbank Group Annual Results 2023Income statementanalysisSupplementaryinformationStatement of financialposition analysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
2 Impairments
Nedbank Group impairments charge
(Rm)
Nedbank Group credit loss ratio trends
(%)
1,00
0,60
9
2
1
6
7
2
1
3
1
4
3
5
6
1
8
3
7
5
0
6
9
9
7
0
,
1
6
1
,
3
8
0
,
9
8
0
,
9
0
1
,
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
CLR
TTC lower range
TTC upper range
Nedbank Group income statement impairment charge and credit loss ratio
Stage 1
Stage 2
Stage 3
FVOCI
balance-sheet
net of recoveries
banking advances
CLR
Target CLR range
Non-LAA and
Off-
Impairment charge,
Mix of average
2023
Corporate and Investment Banking (CIB)
CIB, excluding Property Finance
Property Finance
Retail and Business Banking (RBB)
Commercial Banking
Retail
Wealth
Nedbank Africa Regions
Centre1
Nedbank Group
1 The Centre impairment of R144m includes the R150m central provision release.
Rm
(20)
(49)
29
457
100
357
(5)
12
444
Rm
(30)
(11)
(19)
82
51
31
2
(36)
(141)
(123)
Rm
566
(229)
795
7 973
464
7 509
40
257
8 836
Rm
507
507
–
29
(3)
533
Rm
(84)
(84)
8
(2)
10
(9)
Rm
939
134
805
8 520
613
7 907
37
253
(144)
%
44,3
24,7
19,6
49,7
10,3
39,4
3,5
2,5
%
0,24
0,06
0,47
1,94
0,67
2,27
0,12
1,00
%
0,15–0,45
0,20–0,50
0,15–0,35
1,20–1,75
0,50–0,70
1,60–2,40
0,20–0,40
0,85–1,20
(85)
9 605
100,0
1,09
0,60–1,00
116
Nedbank Group Annual Results 2023
Nedbank Group impairment drivers
(Rm)
613
7 381
765
9 605
(33)
746
133
2022
Stage 1
Stage 2
Stage 3
Non-LAA
and FVOCI
Off-
balance-sheet
2023
Nedbank Group income statement impairment charge and credit loss ratio
2023
Corporate and Investment Banking (CIB)
CIB, excluding Property Finance
Property Finance
Retail and Business Banking (RBB)
Commercial Banking
Retail
Wealth
Centre1
Nedbank Group
Nedbank Africa Regions
1 The Centre impairment of R144m includes the R150m central provision release.
Rm
(20)
(49)
29
457
100
357
(5)
12
444
Rm
(30)
(11)
(19)
82
51
31
2
(36)
(141)
(123)
Rm
566
(229)
795
7 973
464
7 509
40
257
8 836
Stage 1
Stage 2
Stage 3
Non-LAA and
FVOCI
Off-
balance-sheet
Impairment charge,
net of recoveries
Mix of average
banking advances
CLR
Target CLR range
Rm
507
507
–
29
(3)
533
Rm
(84)
(84)
8
(2)
10
(9)
Rm
939
134
805
8 520
613
7 907
37
253
(144)
%
44,3
24,7
19,6
49,7
10,3
39,4
3,5
2,5
%
0,24
0,06
0,47
1,94
0,67
2,27
0,12
1,00
%
0,15–0,45
0,20–0,50
0,15–0,35
1,20–1,75
0,50–0,70
1,60–2,40
0,20–0,40
0,85–1,20
(85)
9 605
100,0
1,09
0,60–1,00
117
Nedbank Group Annual Results 2023Income statementanalysisSupplementaryinformationStatement of financialposition analysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
2022
Corporate and Investment Banking (CIB)
CIB, excluding Property Finance
Property Finance
Retail and Business Banking (RBB)
Commercial Banking
Retail
Wealth
Nedbank Africa Regions
Centre
Nedbank Group
Nedbank Group credit loss ratio per cluster
(%)
Stage 1
Stage 2
Stage 3
FVOCI
balance-sheet
net of recoveries
banking advances
CLR
Target CLR range
Non-LAA and
Off-
Impairment charge,
Mix of average
Rm
(67)
(3)
(64)
(161)
(63)
(98)
(1)
60
(169)
Rm
Rm
(1 093)
(251)
(842)
433
(149)
582
(9)
(3)
(197)
(869)
2 241
873
1 368
6 351
324
6 027
(53)
164
8 703
Rm
(224)
(224)
–
(11)
3
(232)
Rm
(52)
(52)
(10)
(14)
4
10
(52)
Rm
805
343
462
6 613
98
6 515
(63)
220
(194)
7 381
%
43,9
23,7
20,2
49,7
10,4
39,3
3,7
2,7
%
0,22
0,17
0,28
1,61
0,11
2,00
(0,20)
1,02
%
0,15–0,45
0,20–0,50
0,15–0,35
1,20–1,75
0,50–0,70
1,60–2,40
0,20–0,40
0,85–1,20
100,0
0,89
0,60–1,00
1,38
1,01
0,25
0,18
2019
2,40
1,85
0,82
0,64
2020
1,34
0,72
0,42
0,09
2021
1,61
1,02
0,22
(0,20)
2022
CIB
RBB
Wealth
Africa Regions
1,94
1,0
0,24
0,12
2023
118
Nedbank Group Annual Results 2023
2022
Corporate and Investment Banking (CIB)
CIB, excluding Property Finance
Property Finance
Retail and Business Banking (RBB)
Commercial Banking
Retail
Wealth
Centre
Nedbank Group
Nedbank Africa Regions
Stage 1
Stage 2
Stage 3
Rm
Rm
Rm
(67)
(3)
(64)
(161)
(63)
(98)
(1)
60
(169)
(1 093)
(251)
(842)
433
(149)
582
(9)
(3)
(197)
(869)
2 241
873
1 368
6 351
324
6 027
(53)
164
8 703
Non-LAA and
FVOCI
Off-
balance-sheet
Impairment charge,
net of recoveries
Mix of average
banking advances
CLR
Target CLR range
Rm
(224)
(224)
–
(11)
3
(232)
Rm
(52)
(52)
(10)
(14)
4
10
(52)
Rm
805
343
462
6 613
98
6 515
(63)
220
(194)
7 381
%
43,9
23,7
20,2
49,7
10,4
39,3
3,7
2,7
%
0,22
0,17
0,28
1,61
0,11
2,00
(0,20)
1,02
%
0,15–0,45
0,20–0,50
0,15–0,35
1,20–1,75
0,50–0,70
1,60–2,40
0,20–0,40
0,85–1,20
100,0
0,89
0,60–1,00
Key drivers
• Yoy increase in CLR, reflecting the adverse impact of higher-than-expected interest rates, higher levels of inflation (mainly in food
and energy), and higher levels of load-shedding on our clients, particularly in the consumer segment in RBB.
• Increased impairments in CIB with a CLR, at 24 bps, incorporating additional provisioning for stage 3 counters in the second half
of the year.
• Increased impairments in RBB, driven by negative economic impacts that resulted in increased client migration into stages 2 and
3, as well as the impact of updating our macroeconomic assumptions and annual model regrounds. The RBB CLR, at 194 bps, was
above the TTC target range of 120 bps to 175 bps but below the 226 bps reported in H1 2023 as a result of focused management
interventions in respect of collections and origination and an H2 2023 RBB CLR of 164 bps.
• A reduction of R150m in the group’s central provision, with risks now being accounted for in our underlying International Financial
Reporting Standards (IFRS) impairment models.
119
Nedbank Group Annual Results 2023Income statementanalysisSupplementaryinformationStatement of financialposition analysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
Impairments charge of financial instruments
2023
Corporate
and
Investment
Banking
Retail and
Business
Banking
Nedbank
Group
Balance at the beginning of the year
27 893
4 788
21 215
Stage 1 ECL allowance
Stage 2 ECL allowance
Stage 3 ECL allowance
4 261
5 554
18 078
517
538
3 733
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
9 605
444
(123)
8 836
(85)
26
507
939
(20)
(30)
566
(84)
507
3 487
4 564
13 164
8 520
457
82
7 973
8
Wealth
370
42
29
299
37
(5)
2
40
Nedbank
Africa
Regions
Centre
1 216
304
215
120
881
253
12
(36)
257
(9)
29
303
1
(144)
(141)
(3)
(7 112)
(1 477)
(5 391)
(59)
(185)
–
(62)
3
348
40
31
277
348
348
42
28
(150)
(76)
(29)
1 284
188
72
1 024
1 284
1 267
17
(3)
3
160
163
(3)
160
160
Adjusted for:
Recoveries
Interest in suspense
Amounts written off
1 444
1 630
158
408
1 244
1 194
(10 215)
(1 700)
(8 303)
Foreign exchange and other transfers
Non-loans and advances
FVOCI loans
379
(26)
(324)
(19)
474
(324)
ECL allowance – closing balance
30 386
4 250
24 344
Stage 1
Stage 2
Stage 3
4 674
5 337
20 375
484
500
3 266
3 962
4 571
15 811
Split by measurement category
30 386
4 250
24 344
Loans and advances
29 602
3 573
24 254
Loans and advances in FVOCI
Off-balance-sheet allowance
530
254
530
147
90
120
Nedbank Group Annual Results 2023
Corporate
and
Investment
Banking
Retail and
Business
Banking
Nedbank
Africa
Regions
Wealth
Centre
2022
Balance at the beginning of the year
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
Nedbank
Group
26 581
4 573
6 543
15 465
7 381
(169)
(869)
8 703
(52)
(8)
(224)
19 406
3 600
4 194
11 612
6 613
(161)
433
6 351
(10)
5 114
681
1 692
2 741
805
(67)
(1 093)
2 241
(52)
(224)
456
44
39
373
(63)
(1)
(9)
(53)
(6 069)
(1 131)
(4 804)
(23)
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
(20)
(3)
370
42
29
299
370
370
1 105
500
248
118
739
220
60
(3)
164
10
(11)
(109)
57
17
(128)
(66)
11
500
(194)
(197)
3
(2)
1
(3)
1 216
304
215
120
881
1 216
1 188
28
303
1
304
304
121
Nedbank Group Annual Results 2023Income statementanalysisSupplementaryinformationStatement of financialposition analysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
3 Non-interest revenue and income
Non-interest revenue
(Rm)
Non-interest revenue to total operating expenses
(%)
7
9
9
5
2
0
4
1
4
2
9
8
8
4
2
1
7
1
6
2
9
0
7
7
2
,
8
0
8
,
0
6
7
,
0
4
7
,
1
4
7
,
8
2
7
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
Nedbank Group
Corporate and
Investment Banking
Wealth
Nedbank Africa Regions
Centre
Rm
Net commission and fees income
Administration fees
Card fees
Cash-handling fees
Exchange commission
Guarantees income
Insurance commission
Other commission
Other fees
Service charges
Insurance income
Fair-value adjustments
Fair-value adjustments
Hedge-accounted portfolios
Trading income
Commodities
Debt securities
Equities
Foreign exchange
Equity investment income/(losses)
Realised gains, dividends, interest and other income
Unrealised (losses)/gains1
Investment income
Sundry income/(expenses)2
Total non-interest revenue and income
Change
%
5
4
2
6
16
(13)
5
5
1
8
(16)
>100
>100
46
3
>100
6
(5)
(1)
(6)
>100
>(100)
48
61
6
2023
2022
19 346
18 488
1 556
3 711
1 151
851
247
276
3 738
3 135
4 681
1 446
577
297
280
4 299
75
2 013
642
1 569
764
856
(92)
142
1 135
1 502
3 623
1 084
734
283
262
3 552
3 114
4 334
1 715
187
(5)
192
4 166
1
1 897
679
1 589
815
384
431
96
704
2023
3 144
57
24
191
257
178
1 425
957
55
260
260
2022
3 057
54
29
179
214
217
1 420
890
54
58
35
23
4 032
3 898
–
128
120
75
2 013
646
1 298
853
926
(73)
107
282
1
1 897
679
1 321
921
463
458
86
221
27 709
26 171
8 678
8 241
14 306
13 372
2 924
3 047
Retail and
Business Banking
2023
2022
13 258
12 478
495
3 540
923
306
35
260
2 334
1 100
4 265
580
–
143
143
(16)
(16)
17
324
487
3 457
875
283
33
256
2 079
1 057
3 951
617
15
15
148
148
(27)
(27)
17
124
2023
2 070
912
1
96
7
(209)
1 204
59
820
–
(3)
(3)
10
27
2022
2 058
798
1
108
(161)
1 257
55
1 056
–
–
–
(19)
(48)
2023
2022
2023
2022
(98)
(73)
972
77
146
36
189
34
9
168
11
302
44
49
49
968
148
136
29
123
33
6
200
19
274
45
8
8
128
–
120
–
664
1 857
440
1 581
15
1
3
20
(137)
2
268
(12)
280
(4)
(4)
(70)
(70)
8
(162)
(56)
15
1
6
14
(109)
(3)
106
(48)
154
–
(79)
(79)
12
(33)
(70)
1 Unrealised losses relate to equity investments in associates and joint ventures, which are estimated and converted to realised or dividends once they have
been earned.
2 Sundry income comprises mainly security dealings, rental income, fair-value movements on non-trading investments, forex gains and losses partially offset
by the R1 059m net monetary loss (2022: R419m).
122
Nedbank Group Annual Results 2023
Key drivers
• Solid commission and fees growth, driven by the purchase of value-added services, main-banked client growth and improved
levels of cross-sell.
• Impact on insurance income of a slowdown in traditional bancassurance volumes due mainly to the deliberate slowing in personal
loans in the current risk environment, the non-repeat of reserve releases in the prior year, and new business strain relating to new
insurance solutions.
• Fair-value adjustments, mainly from fair-value gains on structured loans within the CIB banking book and gains relating to the
group’s hedge-accounted portfolios (Centre).
• Positive trading outcomes reflecting good performances in debt securities and commodities, partially offset by a deterioration
in the performance of equities and the impact of the introduction of the SARB’s new Monetary Policy Implementation
Framework (MPIF).
• Foreign currency gains in Zimbabwe on US dollar capital as a result of currency devaluation, partially offset by a higher net
monetary loss, resulting in a net gain.
Wealth
Nedbank Africa Regions
Centre
Rm
Net commission and fees income
Change
%
2023
2022
19 346
18 488
Nedbank Group
Corporate and
Investment Banking
Retail and
Business Banking
2023
2022
13 258
12 478
495
3 540
923
306
35
260
2 334
1 100
4 265
580
–
143
143
(16)
(16)
17
324
487
3 457
875
283
33
256
2 079
1 057
3 951
617
15
15
148
148
(27)
(27)
17
124
Administration fees
Card fees
Cash-handling fees
Exchange commission
Guarantees income
Insurance commission
Other commission
Other fees
Service charges
Insurance income
Fair-value adjustments
Fair-value adjustments
Hedge-accounted portfolios
Trading income
Commodities
Debt securities
Equities
Foreign exchange
Equity investment income/(losses)
Realised gains, dividends, interest and other income
Unrealised (losses)/gains1
Investment income
Sundry income/(expenses)2
5
4
2
6
5
5
1
8
16
(13)
(16)
>100
>100
46
3
>100
6
(5)
(1)
(6)
>100
>(100)
48
61
6
1 556
3 711
1 151
851
247
276
3 738
3 135
4 681
1 446
577
297
280
4 299
75
2 013
642
1 569
764
856
(92)
142
1 135
1 502
3 623
1 084
734
283
262
3 552
3 114
4 334
1 715
187
(5)
192
4 166
1
1 897
679
1 589
815
384
431
96
704
2023
3 144
57
24
191
257
178
1 425
957
55
260
260
75
2 013
646
1 298
853
926
(73)
107
282
2022
3 057
54
29
179
214
217
1 420
890
54
58
35
23
1
1 897
679
1 321
921
463
458
86
221
4 032
3 898
2023
2 070
912
1
96
7
(209)
1 204
59
820
–
–
(3)
(3)
10
27
2022
2 058
798
1
108
(161)
1 257
55
1 056
–
–
–
(19)
(48)
Total non-interest revenue and income
27 709
26 171
8 678
8 241
14 306
13 372
2 924
3 047
1 Unrealised losses relate to equity investments in associates and joint ventures, which are estimated and converted to realised or dividends once they have
2 Sundry income comprises mainly security dealings, rental income, fair-value movements on non-trading investments, forex gains and losses partially offset
been earned.
by the R1 059m net monetary loss (2022: R419m).
2023
2022
2023
2022
972
77
146
36
189
34
9
168
11
302
44
49
49
968
148
136
29
123
33
6
200
19
274
45
8
8
128
120
128
–
120
–
664
1 857
440
1 581
(98)
(73)
15
1
3
20
(137)
2
268
(12)
280
(4)
(4)
(70)
(70)
8
(162)
(56)
15
1
6
14
(109)
(3)
106
(48)
154
–
(79)
(79)
12
(33)
(70)
123
Nedbank Group Annual Results 2023Income statementanalysisSupplementaryinformationStatement of financialposition analysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
4 Expenses
Total operating expenses
(Rm)
Cost-to-income ratio
(%)
9
7
1
2
3
2
7
7
1
3
9
3
6
3
3
9
2
3
5
3
9
5
0
8
3
,
5
6
5
,
1
8
5
,
8
7
5
,
8
5
5
,
9
3
5
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
Rm
Staff costs
Salaries and wages
Total incentives
Short-term incentives
Long-term incentives
Other staff costs
Computer processing
Depreciation of computer equipment
Depreciation of right-of-use assets: computer
equipment
Amortisation of intangible assets
Operating lease charges for computer processing
Other computer processing expenses
Fees and insurances
Occupation and accommodation1,2
Marketing and public relations
Communication and travel
Other operating expenses3
Activity-justified transfer pricing
8
12
21
(1)
25
11
15
8
3
7
(16)
749
99
1 850
212
3 990
4 336
2 247
1 585
920
931
–
671
82
1 864
169
3 590
3 778
2 089
1 546
863
1 108
–
Total operating expenses
8
38 059
35 329
Analysis of total IT-related function spend
included in total expenses
Change
%
IT-staff-related costs within Group Technology
Depreciation and amortisation of computer
equipment, software and intangibles
Other IT costs (including licensing, development,
maintenance and processing charges)4
Total IT-related functional spend
15
3
12
10
2023
3 421
2022
2 976
2 698
2 617
4 270
10 389
3 826
9 419
1
2
3
4
Includes the depreciation of right-of-use assets of R786m (2022: R827m).
Includes a building depreciation charge of R398m (2022: R386m).
Includes a furniture depreciation charge of R337m (2022: R335m), consumables and sundry expenses.
Includes consulting and professional fees (included in fees and insurance), communication and travel expenses, and other IT-related spend (included in
computer processing).
124
Nedbank Group
Corporate and
Investment Banking
Retail and
Business Banking
Wealth
Nedbank Africa Regions
Centre
2023
2022
21 140
19 569
2023
3 932
2022
3 585
2023
8 572
2022
8 287
2023
1 671
2022
1 434
2023
1 320
2022
1 206
2023
5 645
2022
5 057
17 474
4 095
3 040
1 055
16 017
3 761
2 900
861
Change
%
8
9
9
5
23
<(100)
(429)
(209)
6 900
6 376
445
432
2 053
1 866
247
303
322
342
3 833
3 433
523
200
72
328
85
2 611
8 196
534
203
67
309
71
2 427
7 628
2 810
1 639
749
420
564
6 871
2 426
1 682
748
379
578
6 172
99
107
92
41
34
820
29
118
66
28
95
765
371
186
68
75
90
496
343
198
73
102
75
404
533
115
604
56
158
446
(112)
592
45
289
(10 798)
(9 768)
23 678
22 138
3 111
2 838
2 928
2 743
146
(18)
Nedbank Group Annual Results 2023
Rm
Staff costs
Salaries and wages
Total incentives
Short-term incentives
Long-term incentives
Other staff costs
Computer processing
Depreciation of computer equipment
Depreciation of right-of-use assets: computer
equipment
Amortisation of intangible assets
Operating lease charges for computer processing
Other computer processing expenses
Fees and insurances
Occupation and accommodation1,2
Marketing and public relations
Communication and travel
Other operating expenses3
Activity-justified transfer pricing
<(100)
(429)
(209)
8
9
9
5
23
8
12
21
(1)
25
11
15
8
3
7
8
(16)
17 474
4 095
3 040
1 055
749
99
1 850
212
3 990
4 336
2 247
1 585
920
931
–
16 017
3 761
2 900
861
671
82
1 864
169
3 590
3 778
2 089
1 546
863
1 108
–
523
200
72
328
85
2 611
8 196
534
203
67
309
71
2 427
7 628
Total income growth rate less expenses growth rate
(JAWS ratio)
(%)
Total employees
(Permanent)
3
1
,
0
1
,
8
3
,
8
3
,
)
,
7
2
(
3
1
2
9
2
1
7
2
8
2
1
6
8
6
2
4
2
9
5
2
7
7
4
5
2
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
Nedbank Group
Corporate and
Investment Banking
Retail and
Business Banking
Wealth
Nedbank Africa Regions
Centre
Change
%
2023
2022
21 140
19 569
2023
3 932
2022
3 585
2023
8 572
2022
8 287
2023
1 671
2022
1 434
2023
1 320
2022
1 206
2023
5 645
2022
5 057
6 900
6 376
445
432
2 053
1 866
247
303
322
342
3 833
3 433
Total operating expenses
38 059
35 329
23 678
22 138
3 111
2 838
2 928
2 743
146
(18)
2 810
1 639
749
420
564
6 871
2 426
1 682
748
379
578
6 172
99
107
92
41
34
820
29
118
66
28
95
765
371
186
68
75
90
496
343
198
73
102
75
404
533
115
604
56
158
446
(112)
592
45
289
(10 798)
(9 768)
Key drivers
• Average annual salary increases of 6,3% and higher costs to attract and retain key talent.
• 2% reduction in permanent employee numbers, largely through natural attrition.
• Alignment of incentive costs with the group’s financial performance and higher anticipated vesting outcomes from meeting the
group's corporate performance targets.
• Continuous investment in digital and cloud solutions, an increase in payments infrastructure such as ATMs and Intelligent
Depositors, increased IT volumes, and the impact of the devaluation of the rand related to foreign currency IT contracts.
• Decrease in the growth in amortisation charge as our ME technology journey nears completion.
• Increase in cost savings from our TOM 2.0 optimisation programme to R2,2bn.
• Fees and insurance-related cost increases, largely as a result of increases in card issuing and acceptance costs.
125
Nedbank Group Annual Results 2023Income statementanalysisSupplementaryinformationStatement of financialposition analysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
5 Headline earnings reconciliation
Change
%
7
>100
Rm
Profit attributable to ordinary shareholders
Impairment charge on non-financial instruments
and other gains and losses
IAS 16 – loss/(profit) on disposal of property and
equipment
IAS 36 – impairment of goodwill
IAS 36 – impairment of intangible assets
IAS 36 – impairment of property and equipment
IAS 40 – profit on revaluation of investment
properties
IFRS 10 – profit on sale of subsidiaries/associates
IFRS 16 – impairment/(reversal of impairment) of
right-of-use assets
Share of associate (ETI) impairments charge on
non-financial instruments and other (gains)/losses
2023
2022
Gross
403
66
298
85
34
Net of
taxation
15 305
351
42
298
62
29
(81)
(81)
1
(6)
1
(6)
Gross
(245)
(155)
Net of
taxation
14 287
(226)
(111)
93
67
(181)
(2)
(181)
(1)
Headline earnings
11
15 650
14 061
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 jurisdictions1
Additional tier 1 capital instruments
Assessed losses not subject to deferred tax and special allowances
Non-deductible expenses2
Prior-year adjustments3
Tax rate change4
Total taxation on income as a percentage of profit before taxation
Effective tax rate, excluding associate headline earnings
2023
4 484
2022
4 311
27,0
28,0
(1,3)
(1,8)
0,1
(1,1)
(1,6)
(0,2)
0,5
(1,1)
20,5
22,0
(1,0)
(1,3)
(0,7)
(1,5)
(1,3)
(0,2)
0,7
(0,7)
0,1
22,1
23,1
1 This consists mainly of the effects of the lower tax charge in Nedbank Zimbabwe, Nedbank Namibia, Nedbank Private Wealth Isle of Man and Nedgroup
Investments Isle of Man.
2 Non-deductible expenses include the impact of share-based payments and other non-deductible expenses.
3 Prior-year adjustments include reduced assessments from SARS related to prior years.
4 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.
126
Nedbank Group Annual Results 2023
Statement of
financial position
analysis
Loans and advances
Investment securities
Investments in associate companies
Intangible assets
Amounts owed to depositors
Liquidity risk and funding
Equity analysis
Capital management
128
146
147
148
150
152
155
156
127
Nedbank Group Annual Results 2023 7 Loans and advances
Loans and advances segmental breakdown
Rm
Home loans
Commercial mortgages
Properties in possession
Credit cards
Overdrafts
Personal loans
Term and other loans
Overnight loans
Foreign client lending
Instalment debtors
Preference shares and debentures
Factoring accounts
Listed corporate bonds
Fair-value hedge-accounted portfolios
Trade, other bills and bankers' acceptances
Gross banking loans and advances
Impairment of advances
Net banking loans and advances
Trading loans and advances
Nedbank Group
Corporate and
Investment Banking
Retail and
Business Banking
Wealth
Nedbank Africa Regions
Centre1
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
200 089
199 601
207
17 003
26 228
29 235
189 370
196 619
189
16 816
26 613
30 166
22
20
160 095
157 626
3 009
3 987
179 969
176 877
155 710
153 203
11 483
8 782
12 393
18 764
164 477
151 582
12 749
7 641
28 054
(471)
–
11 503
8 572
25 027
(1 722)
–
10 121
7 707
3 275
12 462
11 041
17 192
2 940
11 214
28 054
25 027
885 047
862 769
380 455
382 250
(29 602)
(27 209)
(3 573)
(4 213)
453 498
429 564
(24 254)
(21 134)
29 059
(348)
29 395
(370)
22 176
(1 267)
22 902
(1 188)
855 445
835 560
376 882
378 037
429 244
408 430
28 711
29 025
20 909
21 714
15 943
7 727
14
150
2
4 891
15 756
8 112
14
149
10
5 039
176 855
29 461
64
16 855
19 992
27 484
14 295
1 127
450
7 631
166 247
28 628
52
16 667
19 259
28 469
13 288
1 126
255
16
8 544
159 284
147 013
45
287
42
273
2023
7 269
2 246
129
148
3 077
1 749
4 815
235
625
1 873
2022
7 347
2 164
123
149
3 218
1 687
5 058
226
1 317
1 585
10
28
72
89
258
289
2
(471)
(1 722)
(141)
(160)
(301)
(1 342)
(304)
(1 646)
Change
%
6
2
10
1
(1)
(3)
2
(7)
(53)
9
11
(11)
12
73
3
9
2
(22)
36 174
46 605
36 174
46 605
Loans and advances
1
891 619
882 165
413 056
424 642
429 244
408 430
28 711
29 025
20 909
21 714
(301)
(1 646)
Banking loans and advances to banks
(45)
10 701
19 392
7 769
15 925
2 220
1 706
712
1 761
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 (2019–2023)
(%)
Commercial mortgage loans (2019–2023)
(%)
,
1
4
1
,
4
4
1
,
6
9
1
,
9
9
1
,
8
4
3
,
1
4
3
,
8
3
2
,
7
3
2
,
7
7
9
7
,
,
8
6
3
,
0
6
3
0
7
,
5
7
,
,
1
8
1
,
9
6
1
,
1
6
1
,
9
6
1
,
0
2
2
,
7
2
2
Nedbank
FirstRand
Standard Bank
Absa
Other
Nedbank
FirstRand
Standard Bank
Absa
Other
128
Nedbank Group Annual Results 2023
7 Loans and advances
Loans and advances segmental breakdown
Rm
Home loans
Commercial mortgages
Properties in possession
Credit cards
Overdrafts
Personal loans
Term and other loans
Overnight loans
Foreign client lending
Instalment debtors
Preference shares and debentures
Factoring accounts
Listed corporate bonds
Fair-value hedge-accounted portfolios
Trade, other bills and bankers' acceptances
Gross banking loans and advances
Impairment of advances
Net banking loans and advances
Trading loans and advances
Change
%
6
2
10
1
(1)
(3)
2
(7)
(53)
9
11
(11)
12
73
3
9
2
1
179 969
176 877
155 710
153 203
200 089
199 601
207
17 003
26 228
29 235
11 483
8 782
12 749
7 641
28 054
(471)
–
189 370
196 619
189
16 816
26 613
30 166
12 393
18 764
11 503
8 572
25 027
(1 722)
–
164 477
151 582
22
20
160 095
157 626
3 009
3 987
10 121
7 707
3 275
12 462
11 041
17 192
2 940
11 214
28 054
25 027
Nedbank Group
Corporate and
Investment Banking
Retail and
Business Banking
Wealth
Nedbank Africa Regions
Centre1
2023
2022
2023
2022
2023
2022
2023
2022
176 855
29 461
64
16 855
19 992
27 484
14 295
1 127
450
166 247
28 628
52
16 667
19 259
28 469
13 288
1 126
255
15 943
7 727
14
150
2
4 891
15 756
8 112
14
149
10
5 039
159 284
147 013
7 631
16
8 544
45
287
42
273
2023
7 269
2 246
129
148
3 077
1 749
4 815
235
625
1 873
2022
7 347
2 164
123
149
3 218
1 687
5 058
226
1 317
1 585
10
28
885 047
862 769
380 455
382 250
(29 602)
(27 209)
(3 573)
(4 213)
453 498
429 564
(24 254)
(21 134)
29 059
(348)
29 395
(370)
22 176
(1 267)
22 902
(1 188)
855 445
835 560
376 882
378 037
429 244
408 430
28 711
29 025
20 909
21 714
(22)
36 174
46 605
36 174
46 605
2023
2022
72
89
258
289
2
(471)
(1 722)
(141)
(160)
(301)
(1 342)
(304)
(1 646)
Loans and advances
891 619
882 165
413 056
424 642
429 244
408 430
28 711
29 025
20 909
21 714
(301)
(1 646)
Banking loans and advances to banks
(45)
10 701
19 392
7 769
15 925
2 220
1 706
712
1 761
1 Centre includes the group’s centrally managed macro fair-value hedge accounting adjustment and a central impairment provision.
Credit cards (2019–2023)
(%)
Personal loans (2019–2023)
(%)
,
4
0
1
,
2
1
1
,
5
5
2
,
2
6
2
,
4
4
2
,
8
2
2
,
7
5
2
,
5
5
2
,
2
3
1
,
1
5
1
,
9
1
1
,
0
1
1
,
6
0
2
,
3
1
2
,
7
4
1
,
5
8
1
,
6
0
1
,
8
0
1
,
2
2
4
,
4
8
3
Nedbank
FirstRand
Standard Bank
Absa
Other
Nedbank
FirstRand
Standard Bank
Absa
Other
Core corporate loans (2019–2023)
(%)
Instalment sales and leases (2019–2023)
(%)
,
4
8
1
,
2
8
1
,
2
1
2
,
8
2
2
,
1
1
2
,
5
0
2
,
3
3
2
,
5
2
2
,
0
6
1
,
0
6
1
,
5
8
2
,
1
8
2
,
6
4
2
,
4
5
2
,
8
9
1
,
9
8
1
,
7
2
2
,
9
2
2
,
4
4
,
7
4
Nedbank
FirstRand
Standard Bank
Absa
Other
Nedbank
FirstRand
Standard Bank
Absa
Other
129
Nedbank Group Annual Results 2023Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
Summary of loans and advances and coverage ratios
Stage 1 and stage 2 coverage
(%)
Stage 3 advances and coverage ratio
(%)
(Rm)
6,61
6,44
7,00
6,80
31,55
34,29
34,17
37,90
37,97
5,30
0,48
0,65
0,69
0,60
0,66
4
9
5
7
2
3
4
2
5
4
5
3
3
9
3
5
7
6
1
5
1
8
1
8
5
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
Stage 1 coverage
Stage 1 coverage
Stage 2 coverage
Stage 2 coverage
Stage 3 LAA (amortised cost)
Stage 3 Coverage
GLAA, ECL and coverage ratios, by cluster, by stage
Stage 1
Stage 2
Stage 3
Total
GLAA
ECL
Coverage
GLAA
ECL
Coverage
GLAA
ECL
Coverage
GLAA
ECL
Coverage
trading book
trading book
2023
Rm
Corporate and Investment Banking (CIB)
280 664
CIB, excluding Property Finance
Property Finance
120 170
160 494
Rm
367
253
114
%
Rm
0,13
17 084
0,21
0,07
10 140
6 944
Rm
421
368
53
Retail and Business Banking (RBB)
361 437
3 896
1,08
54 094
4 557
Commercial Banking
Retail
Wealth
Nedbank Africa Regions
Centre1
Gross loans and advances/ECL held at amortised
cost
76 494
284 943
22 804
19 561
(2 002)
269
3 627
40
179
0,35
1,27
0,18
0,92
9 125
44 969
2 778
794
2 332
230
4 327
31
70
163
%
2,46
3,63
0,76
8,42
2,52
9,62
1,12
8,82
682 464
4 482
0,66
77 082
5 242
6,80
58 181
19 878
34,17
817 727
29 602
3,62
885 047
6,73
GLAA/ECL for assets held at FVOCI
Trading GLAA held at FVTPL
Banking book GLAA held at FVTPL
GLAA for fair-value hedge-accounted portfolios
53 884
36 174
10 699
(471)
58
1 793
64
1 415
408
134
31
89
782 750
4 674
78 875
5 337
59 596
20 375
921 221
30 386
921 221
Off-balance-sheet ECL
Total GLAA/ECL
1 The total ECL for Centre of R160m includes the central provision.
130
GLAA excluding
of GLAA excluding
Stage 3
GLAA as a %
37 967
15 801
41,62
453 498
24 254
Rm
16 968
6 499
10 469
6 633
31 334
1 425
1 821
Rm
2 785
1 519
1 266
1 603
14 198
277
1 018
(3)
%
Rm
16,41
314 716
23,37
12,09
136 809
177 907
24,17
45,31
19,44
55,90
92 252
361 246
27 007
22 176
330
57 092
36 174
10 699
(471)
Rm
3 573
2 140
1 433
2 102
22 152
348
1 267
160
530
254
%
1,14
1,56
0,81
5,35
2,28
6,13
1,29
5,71
Rm
380 455
202 548
177 907
453 498
92 252
361 246
29 059
22 176
(141)
36 174
%
4,83
3,91
5,88
8,37
7,19
8,67
4,90
8,21
Nedbank Group Annual Results 2023
Nedbank Group coverage
(%)
Stage 3 advances as a percentage of gross
banking loans and advances
(Rm)
8,35
5,89
6,67
5,06
6,98
6,14
8,37
6,73
3,51
3,08
5,21
4,83
4
5
9
6
4
7
1
8
0
4
5
6
9
2
5
6
9
5
9
5
5,82
3,46
1,15
2
4
0
8
2
6
2
2
,
5
2
3
,
2
3
3
,
7
3
3
,
2
6
3
,
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
RBB
Total Nedbank Group
CIB
Total Stage 3 LAA
GLAA, ECL and coverage ratios, by cluster, by stage
Stage 1
Stage 2
Stage 3
Total
GLAA
ECL
Coverage
GLAA
ECL
Coverage
GLAA
ECL
Coverage
GLAA
ECL
Coverage
GLAA excluding
trading book
Stage 3
GLAA as a %
of GLAA excluding
trading book
2023
Rm
%
Rm
Corporate and Investment Banking (CIB)
280 664
0,13
17 084
Rm
16 968
6 499
10 469
Rm
2 785
1 519
1 266
%
Rm
16,41
314 716
23,37
12,09
136 809
177 907
Rm
3 573
2 140
1 433
Retail and Business Banking (RBB)
361 437
3 896
1,08
54 094
4 557
37 967
15 801
41,62
453 498
24 254
6 633
31 334
1 425
1 821
1 603
14 198
277
1 018
(3)
24,17
45,31
19,44
55,90
92 252
361 246
27 007
22 176
330
2 102
22 152
348
1 267
160
%
1,14
1,56
0,81
5,35
2,28
6,13
1,29
5,71
Rm
380 455
202 548
177 907
453 498
92 252
361 246
29 059
22 176
(141)
%
4,83
3,91
5,88
8,37
7,19
8,67
4,90
8,21
682 464
4 482
0,66
77 082
5 242
6,80
58 181
19 878
34,17
817 727
29 602
3,62
885 047
6,73
58
1 793
64
1 415
408
134
31
89
57 092
36 174
10 699
(471)
530
254
36 174
782 750
4 674
78 875
5 337
59 596
20 375
921 221
30 386
921 221
Rm
367
253
114
269
3 627
40
179
Rm
421
368
53
230
4 327
31
70
163
%
2,46
3,63
0,76
8,42
2,52
9,62
1,12
8,82
0,21
0,07
10 140
6 944
0,35
1,27
0,18
0,92
9 125
44 969
2 778
794
2 332
CIB, excluding Property Finance
Property Finance
Commercial Banking
Nedbank Africa Regions
Retail
Wealth
Centre1
cost
Gross loans and advances/ECL held at amortised
GLAA/ECL for assets held at FVOCI
Trading GLAA held at FVTPL
Banking book GLAA held at FVTPL
GLAA for fair-value hedge-accounted portfolios
Off-balance-sheet ECL
Total GLAA/ECL
1 The total ECL for Centre of R160m includes the central provision.
120 170
160 494
76 494
284 943
22 804
19 561
(2 002)
53 884
36 174
10 699
(471)
131
Nedbank Group Annual Results 2023Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
Stage 3
GLAA as a %
of total GLAA
excluding
trading
book
GLAA, excluding
trading book
%
1,29
1,41
1,19
4,92
1,83
5,73
1,33
5,19
Rm
382 250
209 723
172 527
429 564
89 507
340 057
29 395
22 902
(1 342)
46 605
%
5,21
3,98
6,71
6,98
5,30
7,42
3,85
8,39
6,14
29 984
13 149
43,85
429 564
21 134
Rm
18 631
7 054
11 577
4 745
25 239
1 133
1 922
5
Rm
3 387
1 529
1 858
1 292
11 857
299
881
1
%
Rm
18,18
326 491
22,68
16,05
156 475
170 016
27,23
46,98
26,39
45,84
89 507
340 057
27 846
22 902
380
42 824
46 605
14 484
(1 722)
Rm
4 213
2 199
2 014
1 641
19 493
370
1 188
304
347
337
Stage 1
Stage 2
Stage 3
Total
GLAA
ECL
Coverage
GLAA
ECL
Coverage
GLAA
ECL
Coverage
GLAA
ECL
Coverage
2022
Rm
Corporate and Investment Banking (CIB)
288 066
CIB, excluding Property Finance
Property Finance
136 572
151 494
Rm
379
294
85
%
Rm
0,13%
19 794
0,22%
0,06%
12 849
6 945
Retail and Business Banking (RBB)
346 248
3 434
0,99%
53 332
Commercial Banking
Retail
Wealth
Nedbank Africa Regions
Centre
Gross loans and advances/ECL held at amortised
cost
74 322
271 926
24 871
19 708
(1 065)
170
3 264
42
197
0,23%
1,20%
0,17%
1,00%
10 440
42 892
1 842
1 272
1 440
Rm
447
376
71
4 551
179
4 372
29
110
303
%
2,26
2,93
1,02
8,53
1,77
10,19
1,57
8,65
677 828
4 052
0,60%
77 680
5 440
7,00
51 675
17 717
34,29
807 183
27 209
3,37
862 769
GLAA/ECL for assets held at FVOCI
Trading GLAA held at FVTPL
Banking book GLAA held at FVTPL
GLAA for fair-value hedge-accounted portfolios
40 533
46 605
14 484
(1 722)
64
1 001
32
1 290
251
Off-balance-sheet ECL
Total GLAA/ECL
145
82
110
777 728
4 261
78 681
5 554
52 965
18 078
909 374
27 893
909 374
132
Nedbank Group Annual Results 2023
Stage 1
Stage 2
Stage 3
Total
GLAA
ECL
Coverage
GLAA
ECL
Coverage
GLAA
ECL
Coverage
GLAA
ECL
Coverage
Stage 3
GLAA as a %
of total GLAA
excluding
trading
book
GLAA, excluding
trading book
2022
Rm
%
Rm
Corporate and Investment Banking (CIB)
288 066
0,13%
19 794
Rm
18 631
7 054
11 577
Rm
3 387
1 529
1 858
%
Rm
18,18
326 491
22,68
16,05
156 475
170 016
Rm
4 213
2 199
2 014
Retail and Business Banking (RBB)
346 248
3 434
0,99%
53 332
29 984
13 149
43,85
429 564
21 134
4 745
25 239
1 133
1 922
5
1 292
11 857
299
881
1
27,23
46,98
26,39
45,84
89 507
340 057
27 846
22 902
380
1 641
19 493
370
1 188
304
%
1,29
1,41
1,19
4,92
1,83
5,73
1,33
5,19
Rm
382 250
209 723
172 527
429 564
89 507
340 057
29 395
22 902
(1 342)
677 828
4 052
0,60%
77 680
5 440
7,00
51 675
17 717
34,29
807 183
27 209
3,37
862 769
64
1 001
32
1 290
251
145
82
110
42 824
46 605
14 484
(1 722)
347
337
46 605
777 728
4 261
78 681
5 554
52 965
18 078
909 374
27 893
909 374
Rm
379
294
85
170
3 264
42
197
0,22%
0,06%
12 849
6 945
0,23%
1,20%
0,17%
1,00%
10 440
42 892
1 842
1 272
1 440
Rm
447
376
71
4 551
179
4 372
29
110
303
%
2,26
2,93
1,02
8,53
1,77
10,19
1,57
8,65
CIB, excluding Property Finance
Property Finance
Commercial Banking
Nedbank Africa Regions
Retail
Wealth
Centre
cost
Gross loans and advances/ECL held at amortised
GLAA/ECL for assets held at FVOCI
Trading GLAA held at FVTPL
Banking book GLAA held at FVTPL
GLAA for fair-value hedge-accounted portfolios
Off-balance-sheet ECL
Total GLAA/ECL
136 572
151 494
74 322
271 926
24 871
19 708
(1 065)
40 533
46 605
14 484
(1 722)
%
5,21
3,98
6,71
6,98
5,30
7,42
3,85
8,39
6,14
Key drivers
• Slight decrease of CIB gross banking loans and advances as the growth in the leverage and diversified lending businesses,
coupled with growth in the energy sector, was offset by a decrease in foreign client lending owing to lower overnight interbank
placements.
• Increased commercial-property loans and advances, indicative of confidence returning to the sector and an improvement in
sentiment.
• Increased RBB gross loans and advances, driven by solid growth in secured lending, while deliberate caution is maintained in
unsecured lending in the current economic environment.
• Increased group balance sheet expected credit loss (ECL), reflecting prudent provisioning in the current economic environment.
• Increase in overall ECL coverage ratio to 3,62% as a result of the increase in stage 3 loans with higher coverage.
• Slight increase in the stage 1 coverage ratio to 0,66%, still higher than the pre-Covid-19 level of 0,48%.
• Slight decrease in the stage 2 coverage ratio to 6,80%, still well above the pre-Covid-19 levels of 5,30%.
• Stable stage 3 coverage ratio at 34,17% as RBB loans, with higher coverage, migrated from stage 2 to stage 3, and stage 3 loans in
CIB, with lower coverage , declined as some counters cured or have been written off.
133
Nedbank Group Annual Results 2023Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
Stage 1
Stage 2
Stage 3
Total
ECL
Coverage
GLAA
ECL
Coverage
Coverage
Stage 1
Stage 2
Stage 3
Total
ECL
Coverage
GLAA
ECL
Coverage
Coverage
Coverage
GLAA
Rm
15 114
14 242
8 575
5 092
13 066
2 055
37
58 181
GLAA
Rm
10 760
14 024
7 766
4 373
11 850
2 867
35
51 675
19 878
34,17
ECL
Rm
3 580
2 078
4 015
2 890
6 786
530
(1)
ECL
Rm
2 417
2 360
3 395
2 760
6 256
530
(1)
17 717
Coverage
%
23,69
14,59
46,82
56,76
51,94
25,79
%
22,46
16,83
43,72
63,11
52,79
18,49
34,29
GLAA
Rm
198 443
199 452
164 476
35 339
143 499
68 289
8 229
817 727
GLAA
Rm
187 889
193 838
151 582
35 546
149 327
80 900
8 101
807 183
ECL
Rm
4 694
2 434
7 658
4 638
9 221
1 024
(67)
29 602
ECL
Rm
3 408
2 651
7 007
4 267
8 807
1 128
(59)
27 209
%
2,37
1,22
4,66
13,12
6,43
1,50
3,62
%
1,81
1,37
4,62
12,00
5,90
1,39
3,37
%
3,11
1,36
9,76
17,35
8,64
13,62
6,80
%
3,56
1,33
10,25
10,29
8,34
11,66
7,00
GLAA, ECL and coverage, by product
2023
Residential mortgages
Commercial mortgages
Instalment debtors
Credit cards and overdrafts
Term loans
Other client loans
Other including credit and zero balances
GLAA
Rm
159 354
173 806
135 904
25 370
115 751
64 142
8 137
Rm
368
201
1 692
902
1 167
209
(57)
%
0,23
0,12
1,24
3,56
1,01
0,33
Rm
23 975
11 404
19 997
4 877
14 682
2 092
55
Rm
746
155
1 951
846
1 268
285
(9)
GLAA/ECL held at amortised cost
682 464
4 482
0,66
77 082
5 242
2022
Residential mortgages
Commercial mortgages
Instalment debtors
Credit cards and overdrafts
Term loans
Other client loans
Other including credit and zero balances
GLAA
Rm
158 725
168 438
121 720
25 369
121 044
74 499
8 033
Rm
336
140
1 348
910
1 180
186
(48)
%
0,21
0,08
1,11
3,59
0,97
0,25
Rm
18 404
11 376
22 096
5 804
16 433
3 534
33
Rm
655
151
2 264
597
1 371
412
(10)
GLAA/ECL held at amortised cost
677 828
4 052
0,60
77 680
5 440
134
Nedbank Group Annual Results 2023
GLAA/ECL held at amortised cost
682 464
4 482
0,66
77 082
5 242
GLAA, ECL and coverage, by product
2023
Residential mortgages
Commercial mortgages
Instalment debtors
Credit cards and overdrafts
Term loans
Other client loans
Other including credit and zero balances
2022
Residential mortgages
Commercial mortgages
Instalment debtors
Credit cards and overdrafts
Term loans
Other client loans
Other including credit and zero balances
GLAA
Rm
159 354
173 806
135 904
25 370
115 751
64 142
8 137
GLAA
Rm
158 725
168 438
121 720
25 369
121 044
74 499
8 033
ECL
Coverage
GLAA
ECL
Coverage
Rm
368
201
1 692
902
1 167
209
(57)
Rm
336
140
1 348
910
1 180
186
(48)
%
0,23
0,12
1,24
3,56
1,01
0,33
%
0,21
0,08
1,11
3,59
0,97
0,25
Rm
23 975
11 404
19 997
4 877
14 682
2 092
55
Rm
18 404
11 376
22 096
5 804
16 433
3 534
33
Rm
746
155
1 951
846
1 268
285
(9)
Rm
655
151
2 264
597
1 371
412
(10)
Stage 1
Stage 2
ECL
Coverage
GLAA
ECL
Coverage
%
3,11
1,36
9,76
17,35
8,64
13,62
6,80
%
3,56
1,33
10,25
10,29
8,34
11,66
7,00
GLAA/ECL held at amortised cost
677 828
4 052
0,60
77 680
5 440
Stage 1
Stage 2
Stage 3
Total
GLAA
Rm
15 114
14 242
8 575
5 092
13 066
2 055
37
58 181
GLAA
Rm
10 760
14 024
7 766
4 373
11 850
2 867
35
51 675
ECL
Rm
3 580
2 078
4 015
2 890
6 786
530
(1)
Coverage
%
23,69
14,59
46,82
56,76
51,94
25,79
19 878
34,17
Stage 3
ECL
Rm
2 417
2 360
3 395
2 760
6 256
530
(1)
17 717
Coverage
%
22,46
16,83
43,72
63,11
52,79
18,49
34,29
GLAA
Rm
198 443
199 452
164 476
35 339
143 499
68 289
8 229
817 727
GLAA
Rm
187 889
193 838
151 582
35 546
149 327
80 900
8 101
807 183
ECL
Rm
4 694
2 434
7 658
4 638
9 221
1 024
(67)
29 602
Total
ECL
Rm
3 408
2 651
7 007
4 267
8 807
1 128
(59)
27 209
Coverage
%
2,37
1,22
4,66
13,12
6,43
1,50
3,62
Coverage
%
1,81
1,37
4,62
12,00
5,90
1,39
3,37
135
Nedbank Group Annual Results 2023Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
Economic scenarios
Scenario
Probability
weighting
(%)
Total ECL
allowance
Difference
to weighted
scenarios
Percentage
difference
to weighted
scenarios
(%)
2023
Economic
measures
GDP
Base case
50
30 330
(56)
(0,2) Prime
Mild stress
21
30 611
225
0,7
Prime
HPI
GDP
Positive outcome
21
30 100
(286)
(0,9) Prime
HPI
GDP
High stress
8
30 898
512
1,7
Prime
HPI
GDP
Weighted
scenarios
100
30 386
1 Forecast at 31 December 2023.
HPI
2022
Economic forecast1 (%)
2024
2025
2026
1,1
10,8
3,2
0,1
11,5
2,4
2,1
10,5
4,0
(0,8)
12,3
1,8
1,6
10,3
3,5
1,3
10,8
2,6
1,9
10,0
4,6
1,0
11,5
1,8
1,4
10,3
4,2
1,1
10,5
3,3
1,9
9,8
5,4
0,8
11,0
2,4
Scenario
Probability
weighting
(%)
Total ECL
allowance
Difference
to weighted
scenarios
Percentages
difference
to weighted
scenarios
(%)
Economic
measures
GDP
Base case
50
27 817
(76)
(0,3) Prime
Mild stress
21
28 122
229
0,8
Prime
HPI
GDP
HPI
GDP
Positive outcome
21
27 630
(263)
(0,9) Prime
High stress
8
28 446
553
2,0
Prime
HPI
HPI
GDP
Economic forecast1 (%)
2023
2024
2025
1,3
11,0
2,5
(0,1)
11,8
2,1
1,9
10,0
3,3
(1,2)
12,8
1,6
1,8
10,5
3,0
0,4
12,0
2,4
2,3
9,8
3,9
(0,5)
12,8
1,7
1,7
10,5
3,6
1,0
12,3
2,7
2,3
9,8
4,7
0,8
12,8
1,8
Weighted
scenarios
100
27 893
1 Forecast at 31 December 2022.
136
Nedbank Group Annual Results 2023
Climate-related disclosures
Rm
% of GLAA
2023
2022
Change
2023
2022
Thermal coal1
Limit2
Drawn exposure
Upstream oil3
Limit2
Drawn exposure
Upstream gas3
Limit2
Drawn exposure
2 296
1 233
2 324
1 002
(28)
231
18 902
12 479
19 592
11 081
(690)
1 398
4 632
1 525
1 698
1 380
2 934
145
Non-renewable-power-generation exposure
Limit2
Drawn exposure
8 093
4 049
9 964
5 375
(1 871)
(1 326)
Renewable Energy Independent Power Producer
Procurement Programme
Limit2
Drawn exposure
Private power generation – CIB
Limit2
Drawn exposure
Private power generation – RBB
Limit2
Drawn exposure
Private power generation – NAR
Limit2
Drawn exposure
African renewable energy projects
Limit2
Drawn exposure
Total renewable energy
Limit2
Drawn exposure
41 155
26 844
3 371
2 107
561
561
94
56
376
285
34 910
25 941
1 575
735
220
220
91
68
402
304
6 245
903
1 796
1 372
341
341
3
(12)
(26)
(19)
45 557
29 853
37 198
27 268
8 359
2 585
1 Excludes derivative products and environmental guarantees.
2 Limits include all currently 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
2,1
1,4
0,5
0,2
0,9
0,5
4,7
3,0
0,4
0,2
0,1
0,1
0,0
0,0
0,0
0,0
5,1
3,4
0,3
0,1
2,3
1,3
0,2
0,2
1,2
0,6
4,0
3,0
0,2
0,1
0,0
0,0
0,0
0,0
0,0
0,0
4,3
3,2
137
Nedbank Group Annual Results 2023Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
Gross advances and ECL movement
Reconciliation of loss allowance relating to 'financial assets measured at amortised cost' and FVOCI because of changes in the
associated ECL 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.
Loans and advances (Rm)
Net balance at 31 December 2022
New loans and advances originated
Loans and advances written off
Repayments net of readvances, capitalised interest, fees and ECL remeasurements1
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Foreign exchange and other movements
Net balances
Total credit and zero balances
Balance at 31 December 2023
GLAA for assets held at FVOCI
Trading book GLAA held at FVTPL
Banking book GLAA held at FVTPL
GLAA for fair-value hedge-accounted portfolios
Total GLAA/ECL
ECL on loans at FVOCI
Off-balance-sheet ECL
Stage 1
Stage 2
Stage 3
Total
GLAA
ECL
Amortised
cost
GLAA
ECL
GLAA
ECL
cost
GLAA
ECL
Amortised
Amortised
cost
669 795
331 612
(281 155)
29 812
(51 326)
(20 953)
(3 458)
4 197
3 542
5 182
651
(3 222)
(5 791)
57
665 598
328 070
–
(286 337)
29 161
(48 104)
(15 162)
(3 515)
77 647
5 522
72 125
51 640
17 827
33 813
799 082
27 546
771 536
(16 696)
(27 436)
56 625
(13 576)
463
671
(452)
3 635
(4 104)
(10 215)
(10 478)
(2 376)
(5 299)
(10 215)
2 823
(199)
(413)
9 895
249
(9 472)
34 529
331 612
3 542
328 070
(10 215)
(10 215)
(13 301)
(308 329)
8 676
(317 005)
(2 177)
(4 886)
24 634
–
–
–
–
–
–
–
1
462
343
94
(2 652)
307
(2 959)
674 327
4 616
669 711
77 027
5 273
71 754
58 144
19 967
38 177
809 498
29 856
779 642
8 137
8 137
55
55
37
37
8 229
8 229
682 464
4 616
677 848
77 082
5 273
71 809
58 181
19 967
38 214
817 727
29 856
787 871
53 884
36 174
10 699
(471)
58
53 826
36 174
10 699
(471)
1 793
64
1 729
1 415
408
1 007
530
57 092
36 174
10 699
(471)
56 562
36 174
10 699
(471)
782 750
4 674
778 076
78 875
5 337
73 538
59 596
20 375
39 221
921 221
30 386
890 835
(58)
(134)
58
134
(64)
(31)
(408)
(89)
408
89
–
–
(530)
(254)
530
254
–
–
–
–
–
–
–
–
–
–
–
–
Amortised
cost
–
–
(17 367)
(26 984)
52 990
–
–
–
64
31
Loans and advances at 31 December 2023
782 750
4 482
778 268
78 875
5 242
73 633
59 596
19 878
39 718
921 221
29 602
891 619
138
Nedbank Group Annual Results 2023
Reconciliation of loss allowance relating to 'financial assets measured at amortised cost' and FVOCI because of changes in the
associated 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.
Repayments net of readvances, capitalised interest, fees and ECL remeasurements1
Loans and advances (Rm)
Net balance at 31 December 2022
New loans and advances originated
Loans and advances written off
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Net balances
Foreign exchange and other movements
Total credit and zero balances
Balance at 31 December 2023
GLAA for assets held at FVOCI
Trading book GLAA held at FVTPL
Banking book GLAA held at FVTPL
GLAA for fair-value hedge-accounted portfolios
Total GLAA/ECL
ECL on loans at FVOCI
Off-balance-sheet ECL
669 795
331 612
(281 155)
29 812
(51 326)
(20 953)
(3 458)
53 884
36 174
10 699
(471)
4 197
3 542
5 182
651
(3 222)
(5 791)
57
665 598
328 070
–
(286 337)
29 161
(48 104)
(15 162)
(3 515)
53 826
36 174
10 699
(471)
(58)
(134)
58
134
Stage 1
Stage 2
Stage 3
Total
GLAA
ECL
Amortised
cost
GLAA
ECL
Amortised
cost
GLAA
ECL
Amortised
cost
GLAA
ECL
Amortised
cost
77 647
5 522
72 125
51 640
17 827
33 813
799 082
27 546
771 536
–
–
(17 367)
(26 984)
52 990
(10 215)
(10 478)
(2 376)
(5 299)
(9 472)
34 529
671
(452)
3 635
(4 104)
1
462
343
(10 215)
2 823
(199)
(413)
9 895
249
–
–
331 612
3 542
328 070
(10 215)
(10 215)
–
(13 301)
(308 329)
8 676
(317 005)
(2 177)
(4 886)
24 634
–
–
–
–
–
–
–
–
–
94
(2 652)
307
(2 959)
(16 696)
(27 436)
56 625
(13 576)
463
674 327
4 616
669 711
77 027
5 273
71 754
58 144
19 967
38 177
809 498
29 856
779 642
8 137
8 137
55
55
37
37
8 229
–
8 229
682 464
4 616
677 848
77 082
5 273
71 809
58 181
19 967
38 214
817 727
29 856
787 871
58
1 793
64
1 729
1 415
408
1 007
–
–
–
–
–
–
57 092
36 174
10 699
(471)
530
–
–
–
56 562
36 174
10 699
(471)
782 750
4 674
778 076
78 875
5 337
73 538
59 596
20 375
39 221
921 221
30 386
890 835
(64)
(31)
64
31
(408)
(89)
408
89
–
–
(530)
(254)
530
254
Loans and advances at 31 December 2023
782 750
4 482
778 268
78 875
5 242
73 633
59 596
19 878
39 718
921 221
29 602
891 619
139
Nedbank Group Annual Results 2023Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
5 188
(7 781)
(5 066)
(3 762)
120 170
120 170
53 884
36 174
8 647
CIB, excluding Property Finance (Rm)
Net balance at 31 December 2022
New loans and advances originated
Loans and advances written off
GLAA
136 572
138 862
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
(143 843)
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Foreign exchange and other movements
Net balances
Total credit and zero balances
Balance at 31 December 2023
GLAA for assets held at FVOCI
Trading book GLAA held at FVTPL
Banking book GLAA held at FVTPL
Total GLAA/ECL
ECL on loans at FVOCI
Off-balance-sheet ECL
Stage 1
Stage 2
Stage 3
Total
ECL
368
1 013
(630)
234
(230)
(455)
12
312
312
58
Amortised
cost
136 204
137 849
–
(143 213)
4 954
(7 551)
(4 611)
(3 774)
119 858
–
119 858
53 826
36 174
8 647
GLAA
12 849
(6 281)
(4 734)
8 942
(789)
153
10 140
10 140
1 793
GLAA
6 945
(1 352)
(4 296)
6 409
(762)
ECL
435
(72)
(126)
260
(120)
6
383
383
64
ECL
71
(15)
8
4
(15)
–
–
–
–
–
–
–
–
–
Amortised
cost
GLAA
ECL
cost
GLAA
ECL
Amortised
12 414
7 054
1 624
5 430
156 475
Amortised
cost
154 048
137 849
–
–
138 862
(132)
2 427
1 013
(132)
(4 428)
(154 897)
(1 047)
(153 850)
(6 209)
(4 608)
8 682
(669)
147
(132)
(4 773)
(454)
(1 161)
5 855
110
(132)
(345)
(108)
(30)
575
8
(346)
(1 131)
5 280
102
(3 499)
26
(3 525)
9 757
6 499
1 592
4 907
136 809
2 287
134 522
9 757
1 729
6 499
1 415
1 592
4 907
136 809
2 287
134 522
408
1 007
530
57 092
36 174
8 647
56 562
36 174
8 647
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Amortised
cost
GLAA
ECL
cost
GLAA
ECL
Amortised
Amortised
cost
6 874
11 577
1 858
9 719
170 016
2 014
168 002
(1 568)
(1 568)
(1 568)
(1 568)
(1 064)
(56 615)
958
(57 573)
66 074
29
66 045
(1 360)
(4 281)
6 405
(747)
(100)
(273)
(4)
837
964
(3)
15
(270)
(4)
822
Loans and advances at 31 December 2023
218 875
253
218 622
11 933
368
11 565
7 914
1 519
6 395
238 722
2 140
236 582
Stage 1
Stage 2
Stage 3
Total
Property Finance (Rm)
Net balance at 31 December 2022
New loans and advances originated
Loans and advances written off
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Foreign exchange and other movements
Balance at 31 December 2023
Banking book GLAA held at FVTPL
GLAA
151 494
66 074
(55 163)
4 569
(6 405)
(75)
ECL
85
29
(14)
18
(4)
Amortised
cost
151 409
66 045
(55 149)
4 551
(6 401)
(75)
–
160 494
114
160 380
6 944
53
6 891
10 469
1 266
9 203
177 907
1 433
176 474
–
Loans and advances at 31 December 2023
160 494
114
160 380
6 944
53
6 891
10 469
1 266
9 203
177 907
1 433
176 474
140
218 875
370
218 505
11 933
447
11 486
7 914
2 000
5 914
238 722
2 817
235 905
(58)
(59)
58
59
(64)
(15)
64
15
(408)
(73)
408
73
(530)
(147)
530
147
Nedbank Group Annual Results 2023
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
(143 843)
CIB, excluding Property Finance (Rm)
Net balance at 31 December 2022
New loans and advances originated
Loans and advances written off
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Net balances
Foreign exchange and other movements
Total credit and zero balances
Balance at 31 December 2023
GLAA for assets held at FVOCI
Trading book GLAA held at FVTPL
Banking book GLAA held at FVTPL
Total GLAA/ECL
ECL on loans at FVOCI
Off-balance-sheet ECL
Property Finance (Rm)
Net balance at 31 December 2022
New loans and advances originated
Loans and advances written off
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Foreign exchange and other movements
Balance at 31 December 2023
Banking book GLAA held at FVTPL
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
GLAA
136 572
138 862
5 188
(7 781)
(5 066)
(3 762)
120 170
120 170
53 884
36 174
8 647
GLAA
151 494
66 074
(55 163)
4 569
(6 405)
(75)
ECL
368
1 013
(630)
234
(230)
(455)
12
312
312
58
Amortised
cost
136 204
137 849
–
(143 213)
4 954
(7 551)
(4 611)
(3 774)
119 858
–
119 858
53 826
36 174
8 647
(58)
(59)
58
59
ECL
85
29
(14)
18
(4)
Amortised
cost
151 409
66 045
(55 149)
4 551
(6 401)
(75)
–
–
Stage 1
Stage 2
Stage 3
Total
GLAA
12 849
(6 281)
(4 734)
8 942
(789)
153
10 140
10 140
1 793
ECL
435
(72)
(126)
260
(120)
6
383
383
64
Amortised
cost
GLAA
ECL
Amortised
cost
GLAA
ECL
Amortised
cost
12 414
7 054
1 624
5 430
156 475
–
–
(6 209)
(4 608)
8 682
(669)
147
(132)
(4 773)
(454)
(1 161)
5 855
110
(132)
(345)
(108)
(30)
575
8
–
–
138 862
(132)
2 427
1 013
(132)
154 048
137 849
–
(4 428)
(154 897)
(1 047)
(153 850)
(346)
(1 131)
5 280
102
–
–
–
–
–
–
–
–
–
(3 499)
26
(3 525)
9 757
6 499
1 592
4 907
136 809
2 287
134 522
–
9 757
1 729
–
–
–
–
–
–
6 499
1 415
1 592
4 907
136 809
2 287
134 522
408
1 007
–
–
57 092
36 174
8 647
530
–
–
56 562
36 174
8 647
Loans and advances at 31 December 2023
218 875
253
218 622
11 933
368
11 565
7 914
1 519
6 395
238 722
2 140
236 582
218 875
370
218 505
11 933
447
11 486
7 914
2 000
5 914
238 722
2 817
235 905
(64)
(15)
64
15
(408)
(73)
408
73
–
–
(530)
(147)
530
147
Stage 1
Stage 2
Stage 3
Total
Loans and advances at 31 December 2023
160 494
114
160 380
6 944
53
6 891
10 469
1 266
9 203
177 907
1 433
176 474
160 494
114
160 380
6 944
53
6 891
10 469
1 266
9 203
177 907
1 433
176 474
–
–
–
–
–
GLAA
6 945
(1 352)
(4 296)
6 409
(762)
ECL
71
8
(15)
4
(15)
Amortised
cost
GLAA
ECL
Amortised
cost
GLAA
ECL
Amortised
cost
6 874
11 577
1 858
9 719
170 016
2 014
168 002
–
–
(1 360)
(4 281)
6 405
(747)
–
(1 568)
(1 568)
(100)
(273)
(4)
837
964
(3)
15
–
–
66 074
29
66 045
(1 568)
(1 568)
–
(1 064)
(56 615)
958
(57 573)
(270)
(4)
822
–
–
–
–
–
–
–
–
–
–
–
–
–
141
Nedbank Group Annual Results 2023Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
Stage 1
Stage 2
Stage 3
Total
Commercial Banking (Rm)
Net balance at 31 December 2022
New loans and advances originated
Loans and advances written off
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
GLAA
74 322
26 907
(20 073)
4 276
(6 450)
(2 488)
ECL
175
262
(70)
120
(54)
(155)
Amortised
cost
74 147
26 645
–
(20 003)
4 156
(6 396)
(2 333)
Amortised
cost
GLAA
ECL
cost
GLAA
ECL
Amortised
10 258
4 745
1 306
3 439
89 507
26 907
(243)
–
–
(2 079)
(23 919)
(24 361)
Amortised
cost
87 844
26 645
1 663
262
(243)
442
–
–
–
(243)
(1 566)
(439)
(415)
4 551
(243)
513
(66)
(78)
180
(373)
(337)
4 371
Balance at 31 December 2023
76 494
278
76 216
9 125
234
8 891
6 633
1 612
5 021
92 252
2 124
90 128
Off-balance-sheet impairment allowance
(9)
9
(4)
4
(9)
9
(22)
22
Loans and advances at 31 December 2023
76 494
269
76 225
9 125
230
8 895
6 633
1 603
5 030
92 252
2 102
90 150
Stage 1
Stage 2
Stage 3
Total
Retail — Mortgage loans (Rm)
Net balance at 31 December 2022
New loans and advances originated
Loans and advances written off
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Net balances
GLAA
133 080
23 502
(10 100)
5 582
(12 354)
(3 792)
ECL
284
166
908
15
(412)
(641)
Amortised
cost
132 796
23 336
–
(11 008)
5 567
(11 942)
(3 151)
Amortised
cost
GLAA
ECL
cost
GLAA
ECL
Amortised
Amortised
cost
16 640
8 758
1 826
6 932
159 110
2 742
156 368
–
–
23 502
(338)
166
(338)
23 336
(11 918)
1 328
(13 246)
(338)
(935)
(505)
(1 524)
7 641
(338)
96
(2)
(54)
1 363
(1 031)
(503)
(1 470)
6 278
135 918
320
135 598
21 341
687
20 654
13 097
2 891
10 206
170 356
3 898
166 458
Total credit and zero balances/Off-balance-sheet impairment allowance
173
173
4
4
7
7
184
184
Loans and advances at 31 December 2023
136 091
320
135 771
21 345
687
20 658
13 104
2 891
10 213
170 540
3 898
166 642
Stage 1
Stage 2
Stage 3
Total
GLAA
10 440
(2 280)
(3 837)
6 865
(2 063)
GLAA
17 272
(883)
(5 077)
13 878
(3 849)
ECL
182
(1)
(54)
132
(25)
ECL
632
324
(13)
466
(722)
–
–
(2 279)
(3 783)
6 733
(2 038)
–
–
(1 207)
(5 064)
13 412
(3 127)
Retail — Instalment debtors (Rm)
Net balance at 31 December 2022
New loans and advances originated
Loans and advances written off
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
GLAA
105 464
52 252
(32 730)
8 494
(10 872)
(4 771)
ECL
1 307
911
1 732
199
(1 167)
(1 346)
Amortised
cost
104 157
51 341
–
(34 462)
8 295
(9 705)
(3 425)
Loans and advances at 31 December 2023
117 837
1 636
116 201
17 190
1 939
15 251
8 017
4 205
143 044
7 387
135 657
GLAA
ECL
GLAA
ECL
cost
GLAA
ECL
Amortised
19 736
2 240
17 496
7 311
3 228
4 083
132 511
52 252
(2 611)
–
–
Amortised
cost
6 775
125 736
911
51 341
(2 611)
2 312
(3 622)
(39 108)
(41 420)
Amortised
cost
–
–
(3 336)
(7 884)
11 223
(2 248)
(3 385)
(8 070)
12 565
(3 656)
(49)
(186)
1 342
(1 408)
(2 611)
(2 993)
(424)
(1 693)
8 427
(2 611)
629
(13)
(175)
2 754
3 812
(411)
(1 518)
5 673
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
142
Nedbank Group Annual Results 2023
Stage 1
Stage 2
Stage 3
Total
–
–
89 507
26 907
(243)
10 258
4 745
1 306
3 439
(2 079)
(23 919)
(373)
(337)
4 371
–
–
–
Amortised
cost
GLAA
ECL
Amortised
cost
GLAA
ECL
Amortised
cost
1 663
262
(243)
442
–
–
–
87 844
26 645
–
(24 361)
–
–
–
GLAA
10 440
(2 280)
(3 837)
6 865
(2 063)
ECL
182
(1)
(54)
132
(25)
–
–
(2 279)
(3 783)
6 733
(2 038)
(243)
(1 566)
(439)
(415)
4 551
(243)
513
(66)
(78)
180
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
Commercial Banking (Rm)
Net balance at 31 December 2022
New loans and advances originated
Loans and advances written off
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Retail — Mortgage loans (Rm)
Net balance at 31 December 2022
New loans and advances originated
Loans and advances written off
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Net balances
Retail — Instalment debtors (Rm)
Net balance at 31 December 2022
New loans and advances originated
Loans and advances written off
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
GLAA
74 322
26 907
(20 073)
4 276
(6 450)
(2 488)
GLAA
133 080
23 502
(10 100)
5 582
(12 354)
(3 792)
GLAA
105 464
52 252
(32 730)
8 494
(10 872)
(4 771)
ECL
175
262
(70)
120
(54)
(155)
Amortised
cost
74 147
26 645
–
(20 003)
4 156
(6 396)
(2 333)
ECL
284
166
908
15
(412)
(641)
Amortised
cost
132 796
23 336
–
(11 008)
5 567
(11 942)
(3 151)
ECL
1 307
911
1 732
199
(1 167)
(1 346)
Amortised
cost
104 157
51 341
–
(34 462)
8 295
(9 705)
(3 425)
Balance at 31 December 2023
76 494
278
76 216
9 125
234
8 891
6 633
1 612
5 021
92 252
2 124
90 128
Off-balance-sheet impairment allowance
(9)
9
(4)
4
(9)
9
–
(22)
22
Loans and advances at 31 December 2023
76 494
269
76 225
9 125
230
8 895
6 633
1 603
5 030
92 252
2 102
90 150
Stage 1
Stage 2
Stage 3
Total
GLAA
17 272
(883)
(5 077)
13 878
(3 849)
ECL
632
324
(13)
466
(722)
Amortised
cost
GLAA
ECL
Amortised
cost
GLAA
ECL
Amortised
cost
16 640
8 758
1 826
6 932
159 110
2 742
156 368
–
–
(1 207)
(5 064)
13 412
(3 127)
(338)
(935)
(505)
(1 524)
7 641
(338)
96
(2)
(54)
1 363
–
–
23 502
(338)
166
(338)
23 336
–
(1 031)
(503)
(1 470)
6 278
(11 918)
1 328
(13 246)
–
–
–
–
–
–
–
–
–
Total credit and zero balances/Off-balance-sheet impairment allowance
173
173
4
4
7
7
184
–
184
Loans and advances at 31 December 2023
136 091
320
135 771
21 345
687
20 658
13 104
2 891
10 213
170 540
3 898
166 642
135 918
320
135 598
21 341
687
20 654
13 097
2 891
10 206
170 356
3 898
166 458
Stage 1
Stage 2
Stage 3
Total
GLAA
ECL
Amortised
cost
GLAA
ECL
Amortised
cost
GLAA
ECL
Amortised
cost
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
(3 385)
(8 070)
12 565
(3 656)
(49)
(186)
1 342
(1 408)
–
–
(3 336)
(7 884)
11 223
(2 248)
(2 611)
(2 993)
(424)
(1 693)
8 427
Loans and advances at 31 December 2023
117 837
1 636
116 201
17 190
1 939
15 251
8 017
(2 611)
629
(13)
(175)
2 754
3 812
6 775
125 736
911
51 341
(2 611)
2 312
–
(41 420)
–
–
–
–
–
–
(3 622)
(39 108)
(411)
(1 518)
5 673
–
–
–
19 736
2 240
17 496
7 311
3 228
4 083
132 511
52 252
(2 611)
–
–
4 205
143 044
7 387
135 657
143
Nedbank Group Annual Results 2023Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
Stage 1
Stage 2
Stage 3
Total
Retail — Card, term and other (Rm)
Net balance at 31 December 2021
New loans and advances originated
Loans and advances written off
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Net balances
GLAA
25 350
12 851
(7 213)
782
(4 309)
(4 259)
ECL
1 721
979
3 302
62
(1 292)
(3 044)
Amortised
cost
23 629
11 872
–
(10 515)
720
(3 017)
(1 215)
ECL
Amortised
cost
GLAA
ECL
cost
GLAA
ECL
Amortised
Amortised
cost
1 510
4 341
9 134
6 804
2 330
–
–
(1 931)
(643)
3 404
(488)
(5 111)
211
(84)
(458)
6 492
638
(55)
1 363
(1 745)
40 335
12 851
(5 111)
(8 295)
10 035
979
(5 111)
5 032
30 300
11 872
(13 327)
–
–
(881)
(77)
(387)
1 703
–
–
–
23 202
1 728
21 474
6 394
1 711
4 683
10 184
2 688
39 780
10 935
28 845
Total credit and zero balances/Off-balance-sheet impairment allowance
7 813
(57)
7 870
40
(10)
50
29
(1)
30
7 882
(68)
7 950
Loans and advances at 31 December 2022
31 015
1 671
29 344
6 434
1 701
4 733
10 213
7 495
2 718
47 662
10 867
36 795
Stage 1
Stage 2
Stage 3
Total
GLAA
5 851
(1 293)
(698)
4 767
(2 233)
GLAA
1 842
(306)
(388)
1 707
(112)
35
2 778
GLAA
1 272
(915)
(337)
591
(112)
284
783
11
794
(5 111)
1 092
(7)
(71)
4 789
7 496
ECL
299
(62)
(35)
(1)
63
13
ECL
881
(150)
(81)
(1)
(6)
153
228
(6)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5
–
Amortised
cost
834
–
–
76
(113)
(23)
382
(8)
GLAA
27 846
6 094
(62)
(8 056)
–
–
–
1 185
ECL
370
64
(62)
(29)
Amortised
cost
27 476
6 030
(8 027)
1 180
Amortised
cost
21 686
4 986
(5 370)
cost
GLAA
ECL
1 041
22 902
5 102
(150)
–
–
–
1 216
116
(150)
(173)
–
–
–
(281)
(5 543)
(301)
275
(576)
166
(17)
183
(83)
(15)
127
–
–
8
6
2 709
1 425
277
1 148
27 007
348
26 659
–
2 052
2 052
Amortised
Amortised
ECL
29
(7)
(1)
20
(7)
(3)
31
ECL
120
(29)
(3)
47
(61)
(2)
72
(2)
70
Amortised
cost
GLAA
1 813
1 133
(62)
41
(113)
(24)
445
5
GLAA
1 922
(150)
(362)
(84)
(21)
280
236
(299)
(387)
1 687
(105)
–
–
–
–
cost
1 152
–
–
(886)
(334)
544
(51)
286
711
13
724
ECL
42
64
13
1
(19)
(56)
(5)
40
Amortised
cost
24 829
6 030
–
(7 804)
500
(1 664)
(277)
1 150
22 764
2 052
40
24 816
2 778
31
2 709
1 425
277
1 148
29 059
348
28 711
Stage 1
Stage 2
Stage 3
Total
ECL
215
116
(63)
4
(41)
(92)
49
Amortised
cost
19 493
4 986
–
(4 203)
417
(529)
(76)
(870)
19 406
188
19 218
155
(9)
164
1 821
1 024
797
22 010
1 284
20 726
421
(570)
(168)
(821)
Wealth (Rm)
Net balance at 31 December 2022
New loans and advances originated
Loans and advances written off
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Foreign exchange and other movements
Net balances
Banking book GLAA held at FVTPL
Loans and advances at 31 December 2023
Nedbank Africa Regions (Rm)
Net balance at 31 December 2022
New loans and advances originated
Loans and advances written off
GLAA
24 871
6 094
(7 791)
501
(1 683)
(333)
1 145
22 804
2 052
24 856
GLAA
19 708
5 102
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
(4 266)
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Foreign exchange and other movements
Net balances
Off-balance-sheet ECL
Loans and advances at 31 December 2023
19 561
179
19 382
1 821
1 018
803
22 176
1 267
20 909
144
Nedbank Group Annual Results 2023
Stage 1
Stage 2
Stage 3
Total
GLAA
5 851
(1 293)
(698)
4 767
(2 233)
ECL
Amortised
cost
GLAA
ECL
Amortised
cost
GLAA
ECL
Amortised
cost
1 510
4 341
9 134
6 804
2 330
–
–
(1 931)
(643)
3 404
(488)
(5 111)
211
(84)
(458)
6 492
638
(55)
1 363
(1 745)
(5 111)
1 092
(7)
(71)
4 789
7 496
–
–
(881)
(77)
(387)
1 703
40 335
12 851
(5 111)
(8 295)
10 035
979
(5 111)
5 032
30 300
11 872
–
(13 327)
–
–
–
–
–
–
–
–
–
23 202
1 728
21 474
6 394
1 711
4 683
10 184
2 688
39 780
10 935
28 845
Total credit and zero balances/Off-balance-sheet impairment allowance
7 813
(57)
7 870
40
(10)
50
29
(1)
30
7 882
(68)
7 950
Loans and advances at 31 December 2022
31 015
1 671
29 344
6 434
1 701
4 733
10 213
7 495
2 718
47 662
10 867
36 795
Stage 1
Stage 2
Stage 3
Total
GLAA
1 842
(306)
(388)
1 707
(112)
35
2 778
ECL
29
(7)
(1)
20
(7)
(3)
31
Amortised
cost
GLAA
1 813
1 133
–
–
(299)
(387)
1 687
(105)
–
(62)
41
(113)
(24)
445
5
ECL
299
(62)
(35)
(1)
63
13
Amortised
cost
834
–
–
76
(113)
(23)
382
(8)
GLAA
27 846
6 094
(62)
(8 056)
–
–
–
1 185
ECL
370
64
(62)
(29)
–
–
–
5
Amortised
cost
27 476
6 030
–
(8 027)
–
–
–
1 180
2 709
1 425
277
1 148
27 007
348
26 659
–
–
2 052
–
2 052
40
24 816
2 778
31
2 709
1 425
277
1 148
29 059
348
28 711
Stage 1
Stage 2
Stage 3
Total
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
Retail — Card, term and other (Rm)
Net balance at 31 December 2021
New loans and advances originated
Loans and advances written off
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Net balances
Wealth (Rm)
Net balance at 31 December 2022
New loans and advances originated
Loans and advances written off
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Net balances
Foreign exchange and other movements
Banking book GLAA held at FVTPL
Loans and advances at 31 December 2023
Nedbank Africa Regions (Rm)
Net balance at 31 December 2022
New loans and advances originated
Loans and advances written off
Transfers to stage 1
Transfers to stage 2
Transfers to stage 3
Net balances
Off-balance-sheet ECL
Foreign exchange and other movements
GLAA
25 350
12 851
(7 213)
782
(4 309)
(4 259)
GLAA
24 871
6 094
(7 791)
501
(1 683)
(333)
1 145
22 804
2 052
24 856
GLAA
19 708
5 102
421
(570)
(168)
(821)
ECL
1 721
979
3 302
62
(1 292)
(3 044)
Amortised
cost
23 629
11 872
–
(10 515)
720
(3 017)
(1 215)
ECL
42
64
13
1
(19)
(56)
(5)
40
ECL
215
116
(63)
4
(41)
(92)
49
Amortised
cost
24 829
6 030
–
(7 804)
500
(1 664)
(277)
1 150
22 764
2 052
Amortised
cost
19 493
4 986
–
(4 203)
417
(529)
(76)
(870)
Repayments net of readvances, capitalised interest, fees and ECL remeasurements
(4 266)
Loans and advances at 31 December 2023
19 561
179
19 382
19 406
188
19 218
155
(9)
164
GLAA
1 272
(915)
(337)
591
(112)
284
783
11
794
ECL
120
(29)
(3)
47
(61)
(2)
72
(2)
70
–
–
(886)
(334)
544
(51)
286
711
13
724
Amortised
cost
GLAA
1 152
1 922
ECL
881
(150)
(81)
(1)
(6)
153
228
Amortised
cost
GLAA
ECL
Amortised
cost
1 041
22 902
–
–
5 102
(150)
(281)
(5 543)
(83)
(15)
127
8
–
–
–
1 216
116
(150)
(173)
–
–
–
21 686
4 986
–
(5 370)
–
–
–
(301)
275
(576)
(150)
(362)
(84)
(21)
280
236
1 821
1 024
797
22 010
1 284
20 726
(6)
6
166
(17)
183
1 821
1 018
803
22 176
1 267
20 909
145
Nedbank Group Annual Results 2023Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
8 Investment securities
Rm
Equity investments
Associates – Property Partners
Associates – Investment Banking
Unlisted investments – Property Partners
Unlisted investments – Investment Banking
Listed investments
Unlisted investments
Taquanta Asset Managers portfolio
Strate Limited
Other
Total listed and unlisted investments
Listed policyholder investments at market value
Unlisted policyholder investments at directors’ valuation
Total policyholder investments
Total investment securities
Equity risk in the banking book
Total equity portfolio
Accounted for at fair value
Equity-accounted, including investment in ETI
Percentage of total assets
Percentage of group minimum economic-capital requirement
2023
7 290
1 914
1 118
1 585
2 673
28
3 238
586
163
2 489
10 556
13 648
3 083
2022
6 612
1 598
1 176
1 592
2 246
347
2 930
526
163
2 241
9 889
11 851
3 725
16 731
15 576
27 287
25 465
2023
2022
13 045
12 385
10 556
2 489
1,0
6,8
9 889
2 496
1,0
7,4
Rm
Rm
Rm
%
%
• Equity risk in the banking book is assumed primarily in CIB, which actively makes private equity investments with clearly
defined strategies.
• Additional investments are undertaken in liquid funds for investment purposes and for operational requirements.
• The equity portfolio that is held at fair value increased by R667m year on year, due largely to positive revaluations and
new investments.
• The ETI investment is accounted for under the equity method of accounting and is therefore not carried at fair value.
• The board sets the overall risk appetite and strategy of the group for equity risk, and business develops portfolio objectives and
investment strategies for its investment activities. These address the types of investment, expected business returns, desired
holding periods, diversification parameters and other elements of sound investment management oversight.
146
Nedbank Group Annual Results 2023
9 Investments in associate companies
Equity-accounted earnings
Rm
Carrying amount
Rm
Net exposure to/(from)
associates1
Rm
Name of company and nature of
business
2023
2022
2023
2022
2023
2022
Associates
Listed
ETI2
Unlisted
Equity investments: Tracker
Technology Holdings Proprietary
Limited
Other equity investments
Other strategic investments
1 386
779
1 248
1 286
(249)
782
35
(1)
29
50
14
36
565
205
471
530
238
442
929
492
106
1 615
437
67
2 901
Total
1 449
879
2 489
2 496
1 278
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 2023 remains unchanged at 21,2%.
Accounting recognition of ETI
Rm
Opening carrying value
Share of associate gains
Share of other comprehensive losses
Foreign currency translation
Dividends
Closing carrying value pre-impairment provision
Impairment provision
Closing carrying value
2023
2022
3 036
1 386
(1 481)
168
(111)
2 998
(1 750)
4 022
779
(1 822)
190
(133)
3 036
(1 750)
1 248
1 286
The associate income includes our share of ETI's earnings from 1 October 2022 to 30 September 2023, in line with our policy of
accounting for our share of ETI's attributable earnings a quarter in arrear, adjusted for any significant transactions or events that
occurred between 1 October 2023 and 31 December 2023.
The market value of the group’s investment in ETI, based on its quoted share price, was R2,2bn on 31 December 2023 and R1,5bn
on 29 February 2024.
147
Nedbank Group Annual Results 2023Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
10 Intangible assets
Rm
Computer software and capitalised development costs
Goodwill
Client relationships, contractual rights and other
Computer software and capitalised development costs –
carrying amount
Rm
Computer software
Core product and client systems
Support systems
Digital systems
Payment systems
Amortisation
periods
2–10 years
Development costs not yet commissioned
none
Core product and client systems
Support systems
Digital systems
Payment systems
Computer software
Opening balance
Additions
Commissioned during year
Foreign exchange and other moves
Amortisation charge for the year
Impairments
Closing balance
Development costs not yet commissioned
Opening balance
Additions
Foreign exchange and other moves
Commissioned during the year
Impairments
Closing balance
148
2023
7 944
4 011
22
2022
8 316
4 292
41
11 977
12 649
2023
2022
6 578
1 916
1 970
2 092
600
1 366
690
248
319
109
6 958
1 882
1 903
2 567
606
1 358
574
422
243
119
7 944
8 316
6 958
320
1 221
8
(1 850)
(79)
7 763
101
1 018
(4)
(1 864)
(56)
6 578
6 958
1 358
1 237
(2)
(1 221)
(6)
1 138
1 279
(4)
(1 018)
(37)
1 366
1 358
Nedbank Group Annual Results 2023
149
NotesNedbank Group Annual Results 2023Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive 11 Amounts owed to depositors
Segmental breakdown
Rm
Current accounts
Savings accounts
Other deposits and loan accounts
Call and term deposits
Fixed deposits
Cash management deposits
Other deposits
Foreign currency liabilities
Negotiable certificates of deposit
Macro fair-value hedge accounting adjustment
Deposits received under repurchase agreements
Total amounts owed to depositors
Comprises:
– Banking amounts owed to depositors
– Trading amounts owed to depositors
Total amounts owed to depositors
Change
%
2
(13)
6
6
5
(20)
22
(1)
7
100
1
5
5
3
5
Nedbank Group
Corporate and
Investment Banking
Retail and
Business Banking
Wealth
Nedbank Africa Regions
Centre
2023
2022
2023
113 231
36 466
110 590
42 095
9 402
2022
8 672
768 158
726 686
399 550
399 552
435 331
409 270
155 884
162 380
75 890
79 479
72 277
99 734
12 392
67 885
177 458
145 405
163 389
15 586
87 459
134 127
29 032
127 142
(3)
13 619
29 180
118 892
(1 367)
13 546
19 428
20 116
13 120
13 546
2023
2022
2023
2022
2023
2022
2023
89 206
14 123
88 662
13 796
323 465
290 669
248 022
56 475
9 354
9 614
9 489
223 350
49 835
9 459
8 025
8 987
2 287
21 440
24 462
1 738
234
1 124
23
2 275
27 422
16 473
1 124
262
1 119
21
21 366
13 968
10 050
12 150
903
19 764
5 285
1 827
2 602
92
3 438
499
10 758
877
18 819
9 567
5 732
2 385
1 135
56
3 817
2022
223
1 173
5
169
999
186
917
9
179
729
123 704
115 075
(3)
(1 367)
1 087 645
1 039 622
441 500
441 886
436 283
402 114
48 212
46 191
36 846
34 327
124 804
115 104
1 029 746
983 582
383 601
385 846
436 283
402 114
48 212
46 191
36 846
34 327
124 804
115 104
57 899
56 040
57 899
56 040
1 087 645
1 039 622
441 500
441 886
436 283
402 114
48 212
46 191
36 846
34 327
124 804
115 104
Market share according to BA900
Household deposits1 (2019–2023)
(%)
Non-financial corporate deposits2 (2019–2023)
(%)
,
8
4
1
,
6
4
1
,
4
2
2
,
7
2
2
,
0
9
1
,
8
8
1
,
2
1
2
,
0
1
2
,
6
2
2
,
8
2
2
,
5
7
1
,
3
6
1
,
9
7
2
,
9
8
2
,
7
3
2
,
5
4
2
,
1
7
1
,
5
6
1
,
9
3
1
,
8
3
1
Nedbank
FirstRand
Standard Bank
Absa
Other
Nedbank
FirstRand
Standard Bank
Absa
Other
1
2
Includes households according to the BA900 return.
Includes private non-financial corporate sector deposits, unincorporated businesses, as well as non-profit organisations and charities according to the
BA900 return.
150
Nedbank Group Annual Results 2023
Other deposits and loan accounts
768 158
726 686
399 550
399 552
Segmental breakdown
Rm
Current accounts
Savings accounts
Call and term deposits
Fixed deposits
Cash management deposits
Other deposits
Foreign currency liabilities
Negotiable certificates of deposit
Macro fair-value hedge accounting adjustment
Deposits received under repurchase agreements
Comprises:
– Banking amounts owed to depositors
– Trading amounts owed to depositors
Change
%
(20)
22
(1)
7
100
2
6
6
5
1
5
5
3
5
113 231
36 466
110 590
42 095
(13)
9 402
2022
8 672
435 331
409 270
155 884
162 380
75 890
79 479
72 277
99 734
12 392
67 885
177 458
145 405
163 389
15 586
87 459
134 127
29 032
127 142
(3)
13 619
29 180
118 892
(1 367)
13 546
19 428
20 116
13 120
13 546
Nedbank Group
Corporate and
Investment Banking
Retail and
Business Banking
Wealth
Nedbank Africa Regions
Centre
2023
2022
2023
2023
2022
2023
2022
2023
2022
2023
89 206
14 123
88 662
13 796
323 465
290 669
2 287
21 440
24 462
2 275
27 422
16 473
12 150
903
19 764
248 022
56 475
9 354
9 614
9 489
223 350
49 835
9 459
8 025
8 987
21 366
13 968
10 050
1 738
234
1 124
23
1 124
262
1 119
21
5 285
1 827
2 602
92
3 438
499
10 758
877
18 819
9 567
5 732
2 385
1 135
56
3 817
2022
223
1 173
5
169
999
186
917
9
179
729
123 704
115 075
(3)
(1 367)
Total amounts owed to depositors
1 087 645
1 039 622
441 500
441 886
436 283
402 114
48 212
46 191
36 846
34 327
124 804
115 104
Total amounts owed to depositors
1 087 645
1 039 622
441 500
441 886
436 283
402 114
48 212
46 191
36 846
34 327
124 804
115 104
1 029 746
983 582
383 601
385 846
436 283
402 114
48 212
46 191
36 846
34 327
124 804
115 104
57 899
56 040
57 899
56 040
Wholesale deposits3 (2019–2023)
(%)
Foreign currency liabilities4 (2019–2023)
(%)
,
9
8
1
,
9
9
1
,
3
4
1
,
3
5
1
,
7
4
2
,
7
4
2
,
6
4
2
,
8
4
2
,
5
7
1
,
3
5
1
,
9
3
1
,
2
2
1
,
1
8
1
,
5
7
1
,
1
3
2
,
6
5
2
,
7
5
1
,
2
8
1
,
2
9
2
,
3
6
2
Nedbank
FirstRand
Standard Bank
Absa
Other
Nedbank
FirstRand
Standard Bank
Absa
Other
3
4
Includes insurers, pension funds, private financial corporate-sector deposits, collateralised borrowings and repurchase deposits according to the
BA900 return.
Includes foreign currency deposits and foreign currency funding according to the BA900 return.
151
Nedbank Group Annual Results 2023Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
Liquidity risk and funding
Summary of Nedbank Group liquidity risk and funding profile
Total sources of quick liquidity
Total HQLA1
Other sources of quick liquidity
Total sources of quick liquidity (as a percentage of total assets)
Long-term funding ratio (3-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
LCR2
Minimum regulatory LCR requirement
NSFR3
Minimum regulatory NSFR requirement
2023
2022
285 251
285 688
238 182
47 069
224 963
60 725
21,8
28,4
32 815
2 702
47 777
11,7
2,7
82,0
134,6
100,0
117,3
100,0
22,8
28,4
34 561
2 697
51 903
11,4
2,8
84,9
160,5
100,0
119,1
100,0
Rm
Rm
Rm
%
%
Rm
Rm
Rm
%
%
%
%
%
%
%
1 Total HQLA includes government securities fair-valued in the trading portfolio or fair-valued for interest-rate risk purposes in the macro fair-value
hedge-accounting solution.
2 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. The above values reflect the simple average
of daily observations over the quarter ending 31 December 2023 for Nedbank and simple average of the month-end values at 31 October 2023, 30 November
2023 and 31 December 2023 for all non-South African banking entities.
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 well below 100% and a low reliance on interbank
and foreign currency funding.
• The group's LCR exceeded the minimum regulatory requirement of 100%, with the group maintaining appropriate operational
liquidity buffers designed to absorb seasonal, cyclical and systemic volatility.
• The consolidated group LCR of 134,6% was calculated using the simple average of daily observations over the quarter ending
31 December 2023 for Nedbank Limited and the simple average of the month-end values at 31 October 2023, 30 November
2023 and 31 December 2023 for all non-South African banking entities.
• Nedbank's portfolio of LCR-compliant HQLA measured at fair value (comprising mainly government bonds and treasury bills)
increased to a quarterly average of R238,2bn, up from December 2022, when the portfolio amounted to R225,0bn.
• The decrease in the LCR to 134,6% (Dec 2022: 160,5%) was primarily attributable to an increase in net cash outflows. The net cash
outflows increased in line with the bank's balance sheet growth, which was effectively managed through the increase in HQLA
liquidity buffers.
• 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 identifies other sources of quick liquidity that 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 R285,3bn at December 2023 and representing 21,8% of
total assets.
152
Nedbank Group Annual Results 2023
Nedbank Group LCR exceeds minimum regulatory requirements
125,0
125,7
128,1
160,5
134,6
,
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
,
2
8
3
2
,
0
7
7
1
2019
2020
2021
2022
2023
HQLA (Rbn)
HQLA (Rbn)
LCR (%)
Net cash outflows (Rbn)
LCR (%)
Total sources of quick liquidity
(Rbn)
Other sources of quick liquidity contribution
(%)
R47,1bn
,
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
,
7
5
8
2
,
7
0
6
,
0
5
2
2
2019
2020
2021
2022
Total HQLA
Other sources of quick liquidity
(0,1)%
(22,4)%
5,9%
,
3
5
8
2
,
1
7
4
,
2
8
3
2
2023
11,2
15,4
6,2
67,2
Corporate bonds and listed equities
Unencumbered trading securities
Price-sensitive overnight loans
Other assets
Nedbank exceeded the minimum regulatory NSFR requirement of 100%, with a December 2023 ratio of 117,3% (Dec 2022: 119,1%).
The structural liquidity position of the group remained strong. Nedbank’s primary focus is the optimisation of the balance sheet
within the Board risk appetite and Regulatory compliance.
Nedbank Group NSFR exceeds minimum regulatory requirements
113,0
112,8
116,1
119,1
117,3
,
7
9
0
7
,
3
8
2
6
,
7
9
4
7
,
5
4
6
6
,
1
7
6
7
,
5
1
6
6
,
7
6
0
8
,
6
7
7
6
,
5
3
3
8
,
6
0
1
7
2019
2020
Available stable funding (Rbn)
Available stable funding (Rbn)
NSFR (%)
2021
2022
2023
Required stable funding (Rbn)
NSFR (%)
Required stable funding (Rbn)
153
Nedbank Group Annual Results 2023Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
• A strong funding profile was maintained in 2023, 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 23,2%.
• Nedbank opportunistically issued R2,8bn of long-term debt via its alternative funding book at a lower cost than senior unsecured
debt in 2023, while R4,6bn matured during the year.
• Nedbank issued tier 1 capital instruments of R1,0bn during 2023, while it redeemed R750m. The bank also issued tier 2 capital
instruments of R2,1bn, while R4,5bn was redeemed in line with the group’s capital plan.
• While foreign currency funding reliance remains small, at 2,7% of total deposits, Nedbank continues to focus on growing this
funding source in support of funding base diversification, and to meet funding requirements for foreign advances growth.
Nedbank Group funding and liquidity profile, underpinned by strong liquidity risk metrics
84,9
28,4
82,0
28,4
91,2
30,2
88,4
25,4
85,6
26,6
,
1
8
1
,
6
8
7
,
1
3
,
3
9
4
–
,
7
1
7
,
0
8
4
2019
2020
2021
2022
2023
)
,
6
1
(
)
,
3
6
(
)
1
4
,
(
Loan-to-deposit
ratio (%)
Annual growth in deposits (Rbn)
Three-month average
long-term funding ratio
(%)
Annual growth in capital market issuance, excluding additional tier 1 capital (Rbn)
Annual growth in
deposits (Rbn)
Annual growth in capital market issuance,
excluding additional tier 1 capital (Rbn)
Loan-to-deposit ratio (%)
Three-month average long-term funding ratio (%)
The group's 2023 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 27 October 2023 and incorporates the Nedbank African Regions, Nedbank
London Branch and Nedbank Private Wealth International RPs.
Exchange rates
UK pound to rand
US dollar to rand
US dollar to naira
Rand to naira
US dollar to Zimbabwe dollar1
Zimbabwe dollar to rand1
Average
Closing
Change
%
2023
2022
Change
%
2023
2022
14
13
49
32
22,94
18,45
636,59
34,36
n/a
n/a
20,17
16,36
426,47
26,02
n/a
n/a
15
9
98
81
23,54
18,53
911,68
49,21
>100
6114,27
(88)
0,003
20,43
16,98
460,82
27,14
669,25
0,025
1
In terms of hyperinflation accounting, the inflation-indexed income statement is translated at the year-end closing spot exchange rate.
154
Nedbank Group Annual Results 2023
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
Cash flow hedge losses
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
%
2023
2022
115 944
109 547
28
15 651
12 239
15 305
(63)
1 347
168
14 287
(1 391)
(179)
190
(1 578)
(1 402)
303
281
22
(190)
194
75
27
(317)
102
(419)
(242)
(1)
(97)
Transactions with ordinary shareholders
(89)
(12 878)
(6 814)
Dividends paid
Equity-settled share-based payments
Value of employee services (net of deferred tax)3
Share buyback
Other transactions3
Transaction with non-controlling shareholders
Additional tier 1 capital instruments
Other movements
Balance at the end of the year
(8 569)
(7 788)
1 154
(419)
(5 044)
244
250
979
(25)
20
70
900
2
>100
(72)
(100)
3
119 211
115 944
1 Exchange differences on translating foreign operations as shown in the statement of comprehensive income of R1 492m gain (2022: R2m loss).
2 Share of other comprehensive income of investments accounted for using the equity method as shown in the statement of comprehensive income of R1 556m
(2022: R1 821m).
3 Share movements in terms of long-term incentive and BEE schemes were previously included in 'Other transactions'. Comparatives have been adjusted to disclose
these movements separately in the current year.
Movements in group foreign currency translation reserve
Balance at the beginning of the year
Foreign currency translation reserve (FCTR)
ETI
Nedbank Mozambique
Nedbank Private Wealth Limited
Nedbank London branch
Other subsidiaries
Change
%
96
2023
(2 916)
(63)
2022
(1 508)
(1 408)
(1 410)
(1 212)
120
368
650
209
63
(55)
(114)
(90)
Balance at the end of the year
(2)
(2 979)
(2 916)
155
Nedbank Group Annual Results 2023Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
Capital management
Regulatory capital adequacy and leverage
Capital ratios (including unappropriated profit)
(%)
Nedbank Group
Nedbank Limited
15,0
2,2
1,3
11,5
14,9
2,8
1,2
10,9
17,2
2,9
1,5
12,8
18,1
2,6
1,5
16,9
1,9
1,5
14,0
13,5
15,5
2,7
1,6
11,2
15,3
3,3
1,6
10,4
17,6
3,6
1,7
12,3
18,2
3,1
2,0
13,1
16,3
2,4
1,9
12,0
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
CET1
AT1
Tier 2
Total
CET1
AT1
Tier 2
Total
Nedbank Group
Including unappropriated profits
CET1
Total tier 1
Total CAR
Surplus tier 1 capital1
Dividend cover
Cost of equity
Excluding unappropriated profits
CET1
Total tier 1
Total CAR
Leverage
Nedbank Limited
Including unappropriated profits
CET1
Total tier 1
Total CAR
Surplus tier 1 capital
Excluding unappropriated profits
CET1
Total tier 1
Total CAR
PA minimum Internal targets
2023
2022
%
%
%
Rm
times
%
%
%
%
times
%
%
%
Rm
%
%
%
11,0–12,0
> 12,0
> 14,5
1,75–2,25
<20
11,0–12,0
> 12,0
> 14,5
13,5
15,0
16,9
32 828
1,75
14,8
11,8
13,3
15,3
15,1
12,0
13,9
16,3
14,0
15,5
18,1
34 221
1,75
14,9
12,2
13,8
16,4
14,8
13,1
15,0
18,2
20 287
25 079
11,0
12,9
15,3
11,6
13,6
16,7
8,5
10,25
12,5
<25
8,5
10,25
12,5
1 The surplus tier 1 capital is the difference between the qualifying total tier 1 capital and the total tier 1 capital requirement at the PA minimum of 10,25%.
156
Nedbank Group Annual Results 2023
• Nedbank Group maintained a strong capital adequacy position, with ratios well above the minimum regulatory requirements and
board-approved 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.
• During 2023 the Group completed a capital optimisation initiative of R5,0bn which included a share repurchase of 23,4 million shares.
The capital optimisation initiative included an odd lot offer of 2,7 million shares valued at R638m. The repurchased shares were
cancelled and delisted, resulting in a 70bps reduction in CET1 capital ratios and a full year ROE accretion of approximately 50bps.
• 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 Prudential Authority issued a Proposed Directive in November 2023 pertaining to the implementation of a positive cycle-neutral
countercyclical capital buffer (PCN CCyb). The PA proposes an increase in the countercyclical buffer rate from 0% to 1%, effective
from 1 January 2026. The proposed PCN CCyb will increase the regulatory minimum capital requirement and consequently will
impact the surplus capital position, if implemented.
Overview of risk-weighted assets
Nedbank Group
(Rbn)
55
55
674
41
74
41
42
629
45
74
22
41
446
Nedbank Limited
49
49
510
26
63
21
26
551
22
62
39
26
47
528
27
62
26
20
45
523
23
65
22
21
54
657
46
75
27
36
52
648
38
80
23
37
53
695
39
87
31
40
476
474
470
498
374
402
393
393
46
559
24
70
29
20
416
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
Credit
Equity
Market
Operational
Other
Total
RWA density (%)
Nedbank Group
Credit risk2
Counterparty credit risk
Credit valuation adjustment
Equity risk
Market risk
Operational risk
Amounts below the thresholds for deduction
Other assets
Total
2023
RWA
MRC1
2022
RWA
478 194
59 774
449 982
13 441
6 104
40 407
30 862
86 834
17 124
22 274
1 680
763
5 051
3 858
10 854
2 141
2 784
14 450
5 858
37 119
23 037
79 853
16 910
20 998
695 240
86 905
648 207
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.
157
Nedbank Group Annual Results 2023Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
• The group's total RWA/total assets density was 53,0% at December 2023 (51,6% at December 2022), driven by an increase of
7,3% in total RWA versus growth in total assets of 4,7%.
• The increase in total RWA is attributable mainly to the following:
• The increase in Credit risk RWA is driven mostly by growth in banking book advances in RBB, and increased risk weights in RBB
and CIB.
• Equity risk RWA increased as a result of movements in equity exposures.
• Market risk RWA increased due to continued market volatility which was driven by interest rate hikes, the depreciation of the
rand, and higher growth in the credit trading and rates businesses.
• Operational risk RWA increased due to the review of the group's operational risk scenarios and the update of the internal loss
data used, including the AMA floor, which is driven by movements in GOI.
• The other asset RWA increase was mainly due to business-as-usual movements.
Nedbank Limited
Credit risk2
Counterparty credit risk
Credit valuation adjustment
Equity risk
Market risk
Operational risk
Amounts below the thresholds for deduction
Other assets
Total
2023
RWA
MRC1
2022
RWA
400 059
50 007
376 775
9 583
6 060
20 230
29 079
69 920
8 399
15 424
1 198
758
2 529
3 635
8 740
1 050
1 928
9 960
5 798
21 389
21 727
64 576
7 109
15 481
558 754
69 845
522 815
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 reserves
Nedbank Group
(Rbn)
Nedbank Limited
94,2
13,8
7,9
100,4
18,6
8,3
72,5
73,5
113,1
19,4
9,3
84,3
117,4
16,8
10,2
117,8
13,7
10,5
79,3
13,8
8,4
84,2
18,0
8,9
93,1
18,9
9,3
95,1
16,4
10,2
91,0
13,5
10,5
90,4
93,6
57,0
57,3
64,9
68,4
67,1
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
CET 1
AT1
Tier 2
Total
CET 1 capital
AT1 capital
Tier 2 capital
Total capital
158
Nedbank Group Annual Results 2023
Rm
2023
2022
2023
2022
Nedbank Group
Nedbank Limited
Including unappropriated profits
Total tier 1 capital
CET1
Share capital and premium
Reserves
Minority interest: Ordinary shareholders
Deductions
Additional tier 1 capital
Perpetual subordinated debt instruments
Tier 2 capital
Subordinated debt instruments
Excess of eligible provisions over downturn
expected losses
General allowance for credit impairment
104 090
100 662
93 621
90 443
14 797
92 952
809
(14 937)
10 469
10 469
13 691
12 998
438
255
19 695
85 233
670
(15 155)
10 219
10 219
16 757
15 431
966
360
77 559
67 090
20 111
58 719
78 668
68 449
20 111
60 160
(11 739)
(11 822)
10 469
10 469
13 464
12 998
462
4
10 219
10 219
16 387
15 431
954
2
Total capital
117 781
117 419
91 023
95 055
Excluding unappropriated profits
CET1 capital
Tier 1 capital
Total capital
82 024
92 493
106 185
79 297
89 516
106 272
61 578
72 047
85 511
60 633
70 852
87 240
For comprehensive 'composition of capital' and 'capital instruments main features' disclosure please refer to
https://www.nedbank.co.za/content/nedbank/desktop/gt/en/investor-relations/information-hub/capital-and-risk-management-reports.html.
• The group's CET 1 capital was impacted by the capital optimisation initiative of R5bn, final 2022 and interim 2023 dividends of
R8.6bn, partly offset by organic earnings.
• The group's total tier 1 capital position was further impacted by the issuance of additional tier 1 instruments of R1bn, partly offset by
redemptions of R750m.
• The group's total capital was further impacted by the issuance of tier 2 capital instruments of R2,1bn and redemptions amounting to
R4,5bn, in line with the group's capital plan.
• These form part of the group's capital management strategy to optimise the group's capital structure.
159
Nedbank Group Annual Results 2023Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
Regulated banking subsidiaries
Nedbank Group banking subsidiaries are well capitalised for the environments in which they operate, with CARs well in excess of
respective host regulators’ minimum requirements.
2023
2022
Total capital
requirement
(host country)
%
12,0
14,0
8,0
8,0
12,0
13,0
RWA
Rm
5 369
12 339
5 488
2 484
3 532
9 719
Total
capital
ratio
%
22,3
18,1
18,3
26,9
28,4
26,2
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
Nedbank Africa Regions
Nedbank Mozambique
Nedbank Namibia
Nedbank Eswatini
Nedbank Lesotho1
Nedbank Zimbabwe2
Isle of Man
Nedbank Private Wealth3
1 The decrease was mainly due to an increase in credit risk RWA, which is driven by higher placements with financial entities (at a higher risk weighted factor).
2 The decrease was due to an increase in credit risk RWA, which was driven by higher customer loans and the depreciation of the local currency.
3 The increase was due to additional earnings generated in 2023 and a decline in balance sheet lending.
160
Nedbank Group Annual Results 2023
Economic capital adequacy
Nedbank Group economic capital requirement
Credit risk
Market risk
Business risk
Operational risk
Insurance risk
Other assets risk
Model Risk
Minimum economic capital requirement
Add: Stress-tested capital buffer 1
Total economic capital requirement
AFR
Tier A capital
Tier B capital
Total surplus AFR
AFR: Total economic capital requirement (%)
2023
2022
Rm
Mix %
Rm
Mix %
47 609
9 590
3 722
4 912
331
1 284
1 471
68 919
5 274
74 193
123 896
100 429
23 467
49 703
167
69
14
5
7
1
2
2
100
100
81
19
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
50 947
170
70
13
5
7
<0
2
3
100
100
79
21
1 The stress-tested capital buffer is calculated as: (the sum of credit risk, market risk, business risk, operational risk, insurance risk and other asset risk, multiplied by
10%) less the portion recognised separately for model risk.
• Nedbank Group’s minimum economic capital requirement increased by R1,5bn during the FY 2023, driven primarily by the following:
• An increase of R343m in credit risk, driven primarily by a combination of growth in the CIB portfolio as well as deterioration of risk
profiles in CIB and RBB.
• An increase of R754m in market risk, driven primarily by an increase in investment exposure and interest rate risk in the banking
book (IRRBB) due to higher stochastic results and changes in the yield curves, resulting from higher interest rates.
• An increase of R300m in operational risk due to the review of the risk scenarios and the update of internal loss data used, including
the AMA floor, which is driven by movements in GOI.
• An increase of R100m in other assets due to balance sheet movements.
• An increase of R154m in business risk due to annual model parameter updates, reflective of the higher risk environment.
• A decrease in model risk due to an enhancement of the allocation approach for model risk to clusters, which is based on multipliers
of total minimum economic capital linked to model materiality.
• Nedbank Group’s AFR increased by R632m in FY 2023, mainly as a result of the following:
• A R2,8bn increase in tier A capital, which was driven by organic capital generation over the period, offset with dividends and the
execution of the capital optimisation initiative of R5,0bn, including an odd-lot offer.
• A R2,2bn decrease in tier B capital following the redemption of R5,3bn of tier 1 and tier 2 debt instruments, which were offset by
the issuance of tier 1 and tier 2 instruments amounting to R3,1bn.
161
Nedbank Group Annual Results 2023Statement of financialposition analysisSupplementaryinformationIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
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
162
163
164
166
166
167
168
170
172
173
174
175
178
IBC
Nedbank Group Annual Results 2023 Earnings per share and weighted-average shares
Earnings per share
2023
Earnings for the year
Basic
Diluted
basic
Headline
Diluted
headline
15 305
15 305
15 650
15 650
Weighted-average number of ordinary shares
472 509 532 489 235 413 472 509 532 489 235 413
Earnings per share (cents)
2022
Earnings for the year
3 239
3 128
3 312
3 199
14 287
14 287
14 061
14 061
Weighted-average number of ordinary shares
486 867 063 500 654 864 486 867 063 500 654 864
Earnings per share (cents)
2 934
2 854
2 888
2 809
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)
Traditional schemes
Nedbank Group Restricted-share Scheme (2005)
Nedbank Group Matched-share Scheme
Total BEE schemes
BEE schemes – SA
Community
BEE schemes – Namibia
Total
2023
2022
Weighted-
average
dilutive
shares
Weighted-
average
dilutive
shares
Potential
shares1
25 484
15 167
12 229
20 973
4 511
1 592
1 559
1 559
33
12 988
2 179
1 559
1 559
1 559
10 376
1 853
1 559
1 559
1 559
27 076
16 726
13 788
1 Potential shares are the total number of shares arising from historic grants, schemes or awards available for distribution.
163
Nedbank Group Annual Results 2023SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
Nedbank Group employee incentive schemes
for the year ended 31 December
Nedbank Group employee incentive schemes
2023
2022
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
16 577 839
16 946 909
2 917 857
3 238 649
19 495 696
20 185 558
10 149 887
9 908 892
6 427 952
7 038 017
Deferral (compulsory) subject to time-based and match subject to performance-based (CBSS1)
2 022 676
2 096 140
Deferral (voluntary) and match subject to performance-based (VBSS2)
895 181
1 142 509
Instruments outstanding at the end of the year
19 495 696
20 185 558
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 for deferral of short-term incentives.
2 Voluntary Bonus Share Scheme for deferral of short-term incentives.
20 185 558
19 490 024
6 188 628
5 567 475
(4 542)
(21 569)
(6 201 894)
(3 801 327)
(672 054)
(1 049 045)
19 495 696
20 185 558
Nedbank Group (2005) Matched- and Restricted-share Schemes
Matched shares
Instrument expiry date
1 April 2024
1 April 2025
1 April 2026
Matched shares outstanding not exercised at 31 December 2022
Shares exercised and forfeited during the year
Total potential shares
Weighted-average dilutive shares applicable for the year
Number of
shares
689 531
890 193
1 338 133
2 917 857
1 592 684
4 510 541
2 178 640
– 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 existed at 31 December 2023 and therefore had a dilutive effect.
– Matched shares are not issued and are therefore not recognised as treasury shares. However, until they have been issued, there
remains a potential dilutive effect.
164
Nedbank Group Annual Results 2023
Restricted shares1
Details of instruments granted and not exercised at 31 December 2023 and the resulting dilutive effect:
Instrument expiry date
26 March 2024
27 March 2024
20 August 2024
21 August 2024
18 March 2025
19 March 2025
19 August 2025
20 August 2025
23 March 2026
24 March 2026
18 August 2026
19 August 2026
Restricted shares not exercised at 31 December 2023
Unallocated shares
Treasury shares
Shares exercised and forfeited during the year
Additional shares expected to vest
Total potential shares
Weighted-average dilutive shares applicable for the year
P
P
P
P
P
P
P
P
Number of
shares
4 265 198
3 237 496
82 902
72 898
2 573 158
1 587 203
68 301
40 149
3 046 592
1 454 421
113 736
35 785
16 577 839
342 553
16 920 392
2 426 114
1 626 788
20 973 294
12 987 793
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 achieving
performance conditions). Participants have full rights and receive dividends.
P Awarded subject to corporate performance targets and/or minimum individual performance conditions.
165
Nedbank Group Annual Results 2023SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
Long-term debt instruments
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)
2023
2022
13 648
16 041
9 073
429
4 146
1 241
30 114
72
2 702
13 594
428
2 018
1 240
31 864
61
2 697
Total long-term debt instruments in issue
47 777
51 903
1 Loss-absorbing instruments.
More information is available on our group website
Capital and risk management reports
https://www.nedbank.co.za/content/nedbank/desktop/gt/en/investor-relations/information-hub/capital-and-risk-management-reports.html
Debt investors programme
https://www.nedbank.co.za/content/nedbank/desktop/gt/en/investor-relations/debt-investor/debt-investors-programme.html
External credit ratings
Standard & Poor’s
Moody’s Investors Service
Nedbank
Limited
Sovereign
rating SA
Nedbank
Limited
Sovereign
rating SA
Dec 2023
Dec 2023
Aug 2023
Aug 2023
Stable
Stable
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.za
P-1.za
Outlook
Foreign currency deposit ratings
Long term
Short term
Local currency deposit ratings
Long term
Short term
National scale rating
Long-term deposits
Short-term deposits
166
Nedbank Group Annual Results 2023
Additional tier 1 capital instruments
The group has issued additional tier 1 capital instruments as follows:
Instrument code
Subordinated
Callable notes (rand-denominated)
NGLT1B
NGT103
NGT104
NGT105
NGT106
NGT107
NGT108
NGT1G – Green AT1
NGT109
NGT110
NGT111
NGT112
NGT113
Instrument terms
2023
2022
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
3-month JIBAR + 3,28% per annum
750
671
1 829
1 000
500
472
1 537
910
700
350
1 000
500
671
1 829
1 000
500
472
1 537
910
700
350
1 000
500
1 000
Total non-controlling interest attributable to
additional tier 1 capital instruments
10 469
10 219
The additional tier 1 notes represent perpetual and subordinated instruments, with no redemption date. These 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 a tax event. The payment of interest is at the discretion of the issuer and interest
payments are non-cumulative. In certain circumstances, the regulator may prohibit Nedbank from making interest payments.
Accordingly, these instruments are classified as equity instruments and disclosed as a separate category of equity.
167
Nedbank Group Annual Results 2023SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
Shareholders’ analysis
Register date
29 December 2023
Authorised share capital
600 000 000 shares
Issued share capital
488 105 724 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
Nedbank Foundation Trust
Nedbank Social Development Fund Trust
Public Investment Corporation (SA)
Allan Gray Investment Council (SA)
Coronation Fund Managers (SA)
BlackRock Incorporated (international)
Dimensional Fund Advisors (international)
The Vanguard Group Incorporated (international)
GIC Asset Management Proprietary Limited (international)
Sanlam Investment Management Proprietary Limited (SA)
Lazard Asset Management (international)
Old Mutual Life Assurance Company (SA) Limited and associates (includes funds
managed on behalf of other beneficial owners)
Major beneficial shareholders2
Government Employees Pension Fund (SA)
Allan Gray Balanced Fund (ZA)
1 Source: JP Morgan Cazenove at 29 December 2023.
2 Source: Vaco Ownership at 29 December 2023.
Number
of
shares
2023
% holding
2022
% holding
23 539 726
2 597 880
2 482 790
115 090
16 920 392
47 512
2 055
3 971 887
71 984 634
45 804 806
23 888 472
22 097 549
18 630 117
18 598 031
16 757 561
14 980 915
13 032 543
9 903 310
75 003 214
33 557 680
4,82
0,53
0,51
0,02
3,47
0,01
0,81
14,75
9,38
4,89
4,53
3,82
3,81
3,43
3,07
2,67
2,03
15,37
6,88
4,74
1,29
1,26
0,03
3,44
0,01
13,55
9,79
4,61
4,01
1,09
3,28
5,61
2,43
2,91
2,58
14,69
6,97
Index classified shareholding
(%)
Foreign shareholding
(%)
,
3
1
2
,
1
1
2
,
5
6
2
,
5
6
2
,
4
8
2
,
2
6
2
,
1
4
2
,
4
1
3
,
2
3
3
,
7
5
3
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
168
Nedbank Group Annual Results 2023
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 at 29 December 2023.
Number
of
shares
2023
% holding
2022
% holding
313 911 736
291 324 765
8 971 203
13 615 768
174 193 988
77 017 235
28 557 175
23 348 512
15 205 866
30 065 200
64,31
59,68
1,84
2,79
35,69
15,78
5,85
4,78
3,12
6,16
66,84
59,74
1,90
5,20
33,16
14,38
8,15
4,80
3,27
2,56
488 105 724
100,0
100,00
23 539 726
464 565 998
169
Nedbank Group Annual Results 2023SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
Basel III balance sheet credit exposure
by business cluster and asset class
2
23
180 213
57 004
22 050
389 676
177 909
451 499
22 496
Specialised lending – HVCRE4
4 920
4 920
Rm
AIRB Approach
Corporate
Nedbank
CIB
Property
Finance
Nedbank
Retail and
Business
Banking
Nedbank
Wealth
Nedbank
Africa
Regions
Centre
Nedbank
Group
2023
Change
(%)
weighting1
Downturn
Risk
expected loss
Nedbank
Group
2022
Downturn
expected
loss (dEL)2
BEEL3
Specialised lending – IPRE5
112 487
112 428
1 356
4 933
Specialised lending – project finance
46 338
SME – corporate
Public sector entities
Local governments and municipalities
Sovereign
Banks
Retail mortgage
Retail revolving credit
Retail – other
SME – retail
Securities firms
Securitisation exposure
4 375
5 274
7 296
7 220
21 211
5
337
3 557
42 683
1 721
19
2 599
27
12
169 592
17 760
162 287
32 942
172
4 671
9 335
66
126
1 619
10
10
88 166
951 847
18 815
938 945
8 499
16 681
88 166
202 275
4 943
118 776
46 338
48 779
5 293
9 895
95 413
25 894
178 927
17 826
162 413
34 566
337
172
(dEL)2
9 176
988
47
234
191
278
88
67
37
234
1 141
952
4 341
569
9
–
Mix
(%)
91,40
19,42
0,47
11,41
4,45
4,68
0,51
0,95
9,16
2,49
17,18
1,71
15,60
3,32
0,03
0,02
6,81
0,54
0,17
0,05
2,42
1,67
1,27
0,03
0,32
0,33
0,02
1,77
39,27
40,54
91,79
30,24
54,73
53,17
65,16
57,55
14,13
58,48
28,52
62,12
50,65
43,97
16,55
55,24
98,31
68,44
86,72
99,27
60,85
33,62
32,25
33,22
68,92
64,43
142,66
1,37
(0,83)
(3,80)
2,98
7,72
2,33
(40,53)
(4,06)
10,38
(38,84)
6,40
2,97
4,65
(0,15)
(8,92)
5,16
39,04
6,90
25,85
(54,55)
58,27
(33,54)
3,21
7,42
3,61
23,38
9,52
4,72
1,68
1 754
203 960
329
455
46
1 120
201
48
3 076
1 869
9 075
842
5 138
115 338
43 016
47 667
8 901
10 314
86 444
42 336
168 160
17 312
155 199
34 618
370
172
4 062
1 682
441
44
15 938
26 226
12 812
256
3 187
2 780
189
17 577
27 991
9 176
18 815
(28 430)
(439)
BEEL3
2 132
257
515
135
733
243
39
20
2 023
1 765
7 938
881
940
44
197
160
331
29
44
19
98
955
949
4 177
556
25 180
8 499
16 681
(26 146)
(966)
TSA6
–
–
307
35 373
35 226
–
70 906
–
67 428
–
–
Corporate
SME – corporate
Public sector entities
Local government and municipalities
Sovereign
Banks
Retail mortgage
Retail revolving credit
Retail – other
SME – retail
PiPs
Non-regulated entities
18 366
307
1 491
5 648
555
20
13 217
12 008
14 349
5 945
301
70
14
3 081
7 278
275
3 001
3 360
129
64
41
5 648
1 798
555
20
25 225
17 430
13 223
275
3 302
3 430
207
18 407
Total Basel III balance sheet exposure7
408 042
177 909
451 911
57 883
35 365
88 166
1 041 367
100.00
9 176
18 815
1 024 139
8 499
16 681
dEL (AIRB Approach)
Expected loss performing book
BEEL on defaulted advances
IFRS impairment on AIRB loans and
advances
Excess of downturn expected loss over
eligible 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
Approach (TSA).
2 dEL is in relation to performing loans and advances.
3 Best estimate of expected loss (BEEL) is in relation to defaulted loans and advances.
4 High-volatility commercial real estate.
5
Income-producing real estate.
170
Nedbank Group Annual Results 2023
Mix
(%)
91,40
19,42
0,47
11,41
4,45
4,68
0,51
0,95
9,16
2,49
17,18
1,71
15,60
3,32
0,03
0,02
6,81
0,54
0,17
0,05
2,42
1,67
1,27
0,03
0,32
0,33
0,02
1,77
Total Basel III balance sheet exposure7
408 042
177 909
451 911
57 883
35 365
88 166
1 041 367
100.00
Nedbank
Retail and
Nedbank
Property
Business
Nedbank
CIB
Finance
Banking
Wealth
Regions
Centre
389 676
177 909
451 499
22 496
88 166
951 847
Nedbank
Africa
10
10
2
23
Specialised lending – HVCRE4
4 920
4 920
Specialised lending – IPRE5
112 487
112 428
1 356
4 933
Specialised lending – project finance
46 338
180 213
57 004
22 050
3 557
42 683
1 721
Local governments and municipalities
88 166
4 375
5 274
7 296
7 220
21 211
5
337
2 599
19
27
12
169 592
17 760
162 287
32 942
172
4 671
9 335
66
126
1 619
TSA6
–
–
307
35 373
35 226
–
70 906
Rm
AIRB Approach
Corporate
SME – corporate
Public sector entities
Sovereign
Banks
Retail mortgage
Retail revolving credit
Retail – other
SME – retail
Securities firms
Securitisation exposure
Corporate
SME – corporate
Public sector entities
Sovereign
Banks
Retail mortgage
Retail revolving credit
Retail – other
SME – retail
PiPs
Local government and municipalities
13 217
12 008
307
1 491
14 349
5 945
301
70
14
64
41
5 648
555
20
3 081
7 278
275
3 001
3 360
129
Nedbank
Group
2023
202 275
4 943
118 776
46 338
48 779
5 293
9 895
95 413
25 894
178 927
17 826
162 413
34 566
337
172
5 648
1 798
555
20
25 225
17 430
13 223
275
3 302
3 430
207
18 407
Non-regulated entities
18 366
dEL (AIRB Approach)
Expected loss performing book
BEEL on defaulted advances
IFRS impairment on AIRB loans and
advances
Excess of downturn expected loss over
eligible provisions8
Change
(%)
Risk
weighting1
Downturn
expected loss
(dEL)2
Nedbank
Group
2022
Downturn
expected
loss (dEL)2
BEEL3
BEEL3
39,27
40,54
91,79
30,24
54,73
53,17
65,16
57,55
14,13
58,48
28,52
62,12
50,65
43,97
16,55
142,66
55,24
98,31
68,44
86,72
99,27
60,85
33,62
32,25
33,22
68,92
64,43
1,37
(0,83)
(3,80)
2,98
7,72
2,33
(40,53)
(4,06)
10,38
(38,84)
6,40
2,97
4,65
(0,15)
(8,92)
5,16
39,04
6,90
25,85
(54,55)
58,27
(33,54)
3,21
7,42
3,61
23,38
9,52
4,72
1,68
9 176
18 815
938 945
8 499
16 681
988
47
234
191
278
88
67
37
234
1 141
952
4 341
569
9
–
1 754
203 960
329
455
46
1 120
201
48
3 076
1 869
9 075
842
5 138
115 338
43 016
47 667
8 901
10 314
86 444
42 336
168 160
17 312
155 199
34 618
370
172
940
44
197
160
331
29
44
19
98
955
949
4 177
556
2 132
257
515
135
733
243
39
20
2 023
1 765
7 938
881
–
67 428
–
–
4 062
1 682
441
44
15 938
26 226
12 812
256
3 187
2 780
189
17 577
9 176
18 815
1 024 139
8 499
16 681
27 991
9 176
18 815
(28 430)
(439)
25 180
8 499
16 681
(26 146)
(966)
6 A portion of the legacy Imperial Bank book in Nedbank RBB, Nedbank Private Wealth (UK) and the non-South African banking entities in Africa are covered by TSA.
7 Balance sheet credit exposure includes on-balance-sheet, repurchase and resale agreements and derivative exposure.
8 Excess impairments compared to downturn expected loss for IRB exposures totaled R439m at 31 December 2023 (2022: R966m). 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 amounted to R2 720m
at 31 December 2023 (2022: R2 576m).
171
Nedbank Group Annual Results 2023SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
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 expense
Fair-value adjustments
Net trading income
Equity investment income
Investment income
Net sundry income
Share of gains of associate companies
Total income
Impairments charge on financial instruments
Net income
Total operating expenses
Indirect taxation
Impairments charge on non-financial instruments and other losses
Profit before direct taxation
Total direct taxation
Direct taxation
Taxation on impairments charge on non-financial instruments and other losses
Change
%
42
65
11
7
(20)
10
31
6
8
2
>100
3
(4)
2023
2022
111 796
74 645
37 151
22 033
78 612
45 224
33 388
20 573
16 528
15 667
21 599
(5 071)
(78)
533
20 229
(4 562)
(47)
171
3 559
3 403
689
125
677
80
59 264
9 380
49 884
33 625
1 019
175
15 065
3 259
3 306
(47)
776
103
500
100
54 061
7 154
46 907
31 274
1 002
(50)
14 681
3 378
3 362
16
Profit for the year
4
11 806
11 303
172
Nedbank Group Annual Results 2023
Rm
Other comprehensive income/(losses) (OCI) net of taxation
Items that may subsequently be reclassified to profit or loss
Exchange differences on translating foreign operations
Debt investments at FVOCI – net change in fair value
Cash flow hedge losses
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
Total comprehensive income for the year
Profit attributable to:
– Ordinary shareholders
– Holders of participating preference shares
– Non-controlling interest – ordinary shareholders
Profit for the year
Total comprehensive income attributable to:
– Ordinary shareholders
– Holders of participating preference shares
– 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
Change
%
>100
2023
837
651
235
(190)
(37)
201
(23)
2022
(496)
(110)
132
(160)
(359)
1
17
4
57
>100
12 643
10 807
11 634
11 194
166
6
106
3
4
11 806
11 303
17
57
>100
17
4
>(100)
12 471
10 698
166
6
106
3
12 643
10 807
11 634
11 194
(128)
(175)
47
34
50
(16)
Headline earnings attributable to ordinary and preference shareholders
5
11 762
11 160
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
2023
2022
14,5
1,00
4,07
1,10
56,7
13,9
1,00
3,93
0,90
57,8
173
Nedbank Group Annual Results 2023SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive
Nedbank Limited consolidated statement
of financial position
at 31 December
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
174
Change
%
2023
2022
10
41
59
6
96
4
(22)
28
63
6
>100
6
61
(1)
18
(4)
40 611
59 299
13 539
36 950
42 043
8 522
164 961
156 325
3 563
1 820
870 768
840 269
36 174
8 643
96
7 675
315
1 089
570
9 353
4 690
9 210
46 605
6 770
59
7 252
38
1 031
354
9 467
3 982
9 594
5
1 230 556
1 171 081
28
20 073
65 485
28
20 073
64 842
85 586
84 943
106
10 469
22
96 183
13 802
51
10 219
16
95 229
9 182
1 058 634
1 003 663
16 190
12 939
51
156
228
187
45 540
49 653
1 134 373
1 075 852
1 230 556
1 171 081
1
1
>100
2
38
1
50
5
25
(78)
(17)
(8)
5
5
Nedbank Group Annual Results 2023
Definitions
12-month expected credit loss (ECL) Expected credit loss that results from default events on financial instruments occurring within the
12 months after the reporting date (or a shorter period if the expected life of the financial instrument is less than 12 months), weighted
by the probability of the defaults occurring.
Assets under administration (AUA) (Rm) Market value of assets held in custody on behalf of clients.
Assets under management (AUM) (Rm) Market value of assets managed on behalf of clients.
Basic earnings per share (cents) Attributable income divided by the weighted-average number of ordinary shares.
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.
Contractual service margin (Rm) for general measurement model (GMM) products represents unrecognised shareholders’ future profit
on long-term products.
Countercyclical buffer (CCyB) CCyB is a capital buffer requirement that aims to protect the banking sector through increased capital
requirements in periods when credit growth consistently exceeds economic growth.
Default In line with the Basel III definition, default 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 6-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 7/2015 A directive from the PA that provides clarity on how banks should identify restructured credit exposures and how
these exposures should be treated for purposes of the definition of default.
Dividend cover (times) Headline earnings per share divided by dividend per share.
Economic profit (EP) (Rm) Headline earnings less the cost of equity (total equity attributable to equity holders of the parent, less
goodwill, multiplied by the group's cost-of-equity percentage).
175
Nedbank Group Annual Results 2023SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive 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).
Flac instruments A new tranche of loss-absorbing and non-regulatory debt instruments that will be subordinated to other unsecured
liabilities. These debt instruments are intended for bail-in resolution.
Forward-looking economic expectations The impact of forecast macroeconomic conditions in determining a SICR and ECL.
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 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.
Non-interest revenue and income (NIR) to total income (%) Non-interest revenue and income as a percentage of total income,
excluding the impairments charge on loans and advances and share of gains or losses of associate companies.
Number of shares listed (number) Number of ordinary shares in issue, as listed on the JSE.
Off-balance-sheet exposure Undrawn loan commitments, guarantees and similar arrangements that expose the group to credit risk.
Ordinary dividends declared per share (cents) Total dividends to ordinary shareholders declared in respect of the current period.
Performing stage 3 loans and advances (Rm) Loans that are up to date (not in default) but classified as having defaulted due to
regulatory requirements, ie Directive 7/2015 or the curing definition.
Positive cycle-neutral CCyB (PCN CCyB) PCN CCyB is a macroprudential tool that can be used to build up and maintain capital buffers
when risks are assessed to be neither subdued nor elevated to be released in the event of sudden shocks, including those unrelated to
the credit cycle.
176
Nedbank Group Annual Results 2023 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 the total days in the year, divided by
the 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 (%) Associate income from the group’s ETI investment 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.
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.
177
Nedbank Group Annual Results 2023SupplementaryinformationStatement of financialposition analysisIncome statementanalysisSegmentalanalysisFinancial results2023 resultscommentaryResultspresentationMessage from ourChief Executive Abbreviations and acronyms
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
CSM contractual service margin
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
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
HPI house price index
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
178
M&A mergers and acquisitions
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 Annual Results 2023 Company details
Nedbank Group Limited
Incorporated in the Republic of SA
Registration number 1966/010630/06
Registered office
Nedbank Group Limited | Nedbank 135 Rivonia Campus
135 Rivonia Road | Sandown | Sandton | 2196
PO Box 1144 | Johannesburg | 2000
Transfer secretaries in SA
JSE Investor Services Proprietary Limited
One Exchange Square | Gwen Lane | Sandown | Sandton | 2196
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
PO Box 4844 | Marshalltown | 2000 | SA
Namibia
Transfer Secretaries Proprietary Limited
Robert Mugabe Avenue No 4 | Windhoek | Namibia
PO Box 2401 | Windhoek | Namibia
More information
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 10 234 5329
Company Secretary
Sponsors in SA
Sponsor in Namibia
J Katzin
Merrill Lynch SA Proprietary Limited t/a BofA Securities
Nedbank Corporate and Investment Banking, a division of Nedbank Limited.
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 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 them.
The risks and uncertainties inherent in the forward-looking statements include changes to IFRS and the interpretations, applications and practices
related to these standards 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 in this document and does not assume responsibility for any loss or
damage arising as a result of any party’s reliance on them, including loss of earnings, or profits, or consequential loss or damage.
nedbankgroup.co.za