MAKE THINGS HAPPEN

Nedbank Group

Review of 2009

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Staff:

‘A great place to work’, ‘Create a community of leaders’ and ‘Living our values’.

	Objective	Making it happen in 2009		2009 self- assessment
	Build an enabling high-performance culture	Limiting values have been eliminated from the top 10 values in the Nedbank Culture Survey and five matches of values from existing culture to ideal culture were recorded, indicating a closer alignment between reality and what staffmembers are seeking. This trend has been consistent over the past five years. Eight out of the top 10 culture sets identified by staff are shared across all race and gender groups.		Exceeded.
	Improve staff satisfaction	Staff morale remains positive despite the tough operating environment. The Nedbank Group 2009 Staff Survey scores have shown significant improvements from 75,1% to 78,8%, with the greatest progress in strategic direction, change and transformation, rewards, recognition and performance management and diversity.		Exceeded.
	Embed talent management	Staff attrition declined to well below the normal industry average. This decrease was helped by the economic crisis and global job security concerns. At an organisational level the structural changes have been well-received and have resulted in positive employee movements, as most of the new positions were internal appointments. Emigration of staff has declined due to the economic pressures and severity of the economic climate in other countries.
	Enable human resources capability and excellence	The HR 2010 programme progressed through two phases in 2009, with many key deliverables having been attained. The programme will continue to run until 2012.		Achieved.
	Learn and grow	The continued rollout of the Management Development Programme gained momentum in 2009 and is ahead of target. The Leading for Deep Green leadership transformation initiative continued to build on its gains. Nedbank Group has spent R258 million on training in 2009, which is 4,32% of basic payroll. Of this total amount 2,97% of basic payroll was spent on black staff after the adjusted recognition for gender.		Exceeded.
	Accelerate transformation	In 2009 the Nedbank Group employment equity targets were revised upward as a result of strong performance in 2008. This revision was to ensure that, where good progress had been made, there was no capacity for regression. Good headway was made in 2009, especially for the underrepresented African group, as this figure continued to increase.		Achieved.

Staff Survey 2009 Report

Clients:

‘A great place to bank.’

	Objective	Making it happen in 2009		2009 self- assessment
	Rebuild Nedbank Retail	Market share was broadly maintained across the board. However, Motor Finance Corporation (Imperial bank) continued to benefit from its focus on the used-vehicle market by growing its share of vehicle lending. The following market share changes occurred for key products: Home loans was flat at 17,1%; vehicle and asset finance, including Imperial, increased from 28,8% to 29,2%; and Nedbank personal loans grew from 14,0% to 14,4%. The deposit market share ended the year at 24,0%. The total number of clients grew by 11,3% to 4,8 million. Mzansi clients increased by 38% to 1,16 million.		Did not achieve.
	Retain our leadership position in wholesale banking	Maintained a strong market share in other private sector loans (excluding foreign currency loans). Maintained the largest property finance market share among banks in South Africa. Accolades received included: Top Crossborder and Domestic Custodian of the Year for southern Africa rating by Global Custodian. Best Subcustodian Bank – Africa and South Africa rating at the Global Finance Awards. Property Finance number-one ranking by peers in the 2009 PricewaterhouseCoopers Strategic and Emerging Issues in SA Banking Report. Africa Investor awards for Transport Deal of the Year (Bakwena) and ICT/Telecoms Deal of the Year (Neotel). African Banker award for Deal of the Year (Bakwena).		Achieved.
	Leader in business banking for South Africa	Investments into the Business Banking franchise continued during 2009, with focus on refining the client service teams to enhance the client’s experience when interacting with Nedbank. There were further releases to the NetBank Business electronic platform, which now ranks second overall in the business banking market. Another focus was maintaining positive staff morale despite a tougher external environment. Strong funding position maintained, with Corporate Saver product a market leader. The effective rigorous regional risk management capabilities ensured the credit loss ratio was well-contained, while we remained open for business to support our clients. Client service teams focused on client-centric revenue growth through proactive client engagements, new-client acquisition, cross-selling and full-client economic profitability analytics. Furthermore, highly innovative client value propositions gained traction, including for the public sector, franchising and tourism. The enterprise development offering allowed us to explore and assist emerging business entrepreneurs, while increasing the business pipeline for growing future clients.		Achieved.
	Grow primary client status and transactional income streams	Retail primary clients grew by 9,1% or by 108 000 primary clients. Business Banking gained a net 446 new primary clients. Nedbank Corporate primary clients grew by 19 clients.		Achieved.
	Improve service levels to worldclass standards	Ask Afrika Orange Index on service excellence showed Nedbank posting a 0,55 improvement in score to 66,2. However, while Nedbank made modest improvements in the latest survey, our competitors made more gains and closed on the previous gaps, putting us in number-four position on the banking industry rating.		Did not achieve.
		The Client Management Assessment Tool™ score was above the retail average; a score of 47% was achieved, which equates to an improvement of 3%.		Achieved.
		AskOnce proposition extended to include a specific promise for clients wishing to switch their current accounts to Nedbank. Nedbank promised to move their debit orders hasslefree and free of charge.		Achieved.
		Fairbairn Private Bank was voted Best International Wealth Manager 2009. Fairbairn Private Bank rose to number 15 overall in the Top 100 Small Companies to Work For Survey. In the UK Best Companies Accreditation Fairbairn Private Bank received a maximum three-star rating, classified ‘extraordinary’.		Exceeded.
		BoE Private Clients was rated No 1 for Service and Advice in an independent survey conducted by SMRC Marketing Solutions (Pty) Limited.		Exceeded.
		Corporate Finance was awarded third place by Ernst & Young and Dealmakers (by volume).		Achieved.
		Good progress was made in Nedbank Corporate by improving most scores in the 2009 StarTrack Client Survey. Nedbank ranked number one in five of the seven most important aspects of client needs.		Achieved.
		Nedbank Corporate retained and acquired new awards in 2009: Top Crossborder and Domestic Custodian of the Year for southern Africa rating by Global Custodian. Best Subcustodian Bank – Africa and South Africa rating at the Global Finance Awards.		Exceeded.
	Expand our distribution footprint	In 2009 Nedbank added 10 new branches, 23 new Nedbank in Retailer outlets, 5 new Personal Loans branches, 14 new Personal Loans kiosks, 261 new transacting automated teller machines, 20 new transacting self-service terminals, 12 new consumer sales teams and 1 468 new point-of-sale devices, and closed 21 non-profitable automated teller machines.		Achieved.
	Improve our positioning in the public sector	Nedbank Group participated in the majority of public sector business tenders during 2009, and was appointed primary banker by six municipalities and by the Parliament. The business retained its fair share of the public sector liabilities and exceeded the targets for non-interest revenue (NIR) and asset creation. Feedback from various levels of government has indicated that Nedbank Group is now well-recognised as a partner to the public sector.		Achieved.
	Selectively expand into Africa and leverage the Ecobank alliance	The implementation of the Nedbank Ecobank alliance presents good prospects for consolidating Nedbank Group’s operational presence in sub-Saharan Africa. Progress was made in achieving the compatibility of systems to create a common electronic banking platform. The Business Intelligence Unit was established to provide Nedbank clients with relevant market information and guidance in their endeavours to grow their African business operations.		Achieved.

Shareholders:

‘A great place to invest’.

	Objective	2009	2009 self- assessment	Medium-to-long- term targets	2010 outlook
	Return on equity (excl goodwill)	13,0%	Did not achieve.	5% above monthly weighted- average cost of ordinary shareholders’ equity (cost of equity).	Improving, but below target.
	Efficiency ratio	53,5%	Did not achieve.	< 50%.	Worsening, remaining above target.
	Growth in diluted headline earnings per share	(29,8%)	Did not achieve.	At least CPIX + gross domestic product (GDP) growth + 5%.	Improving, forecast to exceed target.
	Credit loss ratio	1,47%	Did not achieve.	Between 0,60% and 1,00% of average advances*.	Improving, but above target.
	NIR:expense ratio	78,8%	New measure.	> 85%.	Improving, but below target.
	Core Tier 1 ratio	9,9%	Exceeded.	7,5% to 9,0%.	Improving, above top end of range.
	Tier 1 ratio	11,5%	Exceeded.	8,5% to 10,0%.	Improving, above top end of range.
	Total ratio	14,9%	Exceeded.	11,5% to 13,0%.	Improving, above top end of range.
	Economic capital	R11,8 billion surplus	Exceeded.	Capitalised to a 99,93% confidence interval on economic capital basis target A debt rating (+ 10% buffer).**	A including 10% buffer.
	Dividend cover policy	2,30	Achieved.	2,25 to 2,75 times.	2,25 to 2,75 times.

*		Previous target: 0,55% to 0,85%.
**		Previous target: A- debt rating.

Total shareholder return – ‘big five’ South African banks (2009)

Regulators:

‘Worldclass at managing risk’.

	Objective	Making it happen in 2009		2009 self- assessment
	Manage risk as an enabler	Developed, sustained and maintained a holistic integrated Enterprisewide Risk Management Framework (ERMF) and provided independent oversight of implementation thereof.		Achieved.
		Prepared for SA Reserve Bank approval of Advanced Management Approach.		Application submitted early 2010.
		Strong risk culture prevailed, underpinned by sound risk governance and endorsed by the ERMF.		Achieved.
		Refined credit parameters and bolstered collection capabilities across the bank.		Achieved.
		Relationships were sound, with good feedback received from regulators and government stakeholders.		Achieved.
		Proactively engaged in and influenced policy development processes.		Achieved.
		Engaged in prudent, proactive risk management practices.		Achieved.
		Embedded and leveraged the principles of economic profit and Basel II.		Achieved.
		Proactive fraud and security risk management measures implemented.		Achieved.
		Risk and capital management systems proved to be effective.		Achieved.
	Optimise capital and liquidity	Capital adequacy again increased significantly. Liquidity remained sound; successful senior-debt issuances. As As regards global regulatory developments response to global financial crisis was proactive and effective.		Achieved.

Communities:

‘Highly involved in the community’, ‘Become a bank for all South Africans’, ‘Leading transformation’, ‘Most respected and aspirational brand’ and ‘Leading as a corporate citizen’.

	Objective	Making it happen in 2009		2009 self- assessment
	Build the Nedbank brand and become a bank for all South Africans	Our efforts in building the Nedbank brand and executing our brand strategy continued to receive intense focus in 2009. Our strategically aligned brand communications, flighted through various mediums, continued to reinforce Nedbank Group as a group that is respected, caring, understanding, aspirational and, most importantly, for all South Africans.		Exceeded.
		During the course of the year increased focus was afforded to profiling our green credentials, our community and client involvement, and our range of affinity offerings.		Exceeded.
		Core sponsorship properties (golf, road running and soccer) played an increasingly important role in supporting our brand objectives. In 2009 the Nedbank Cup made a significant contribution to increasing brand salience levels and positively influencing consumer perceptions. Off a zero base in 2008 Nedbank now ranks as one of the major sponsors of soccer in South Africa. Overall awareness of Nedbank as a sponsor of soccer increased to 64% in 2009 (28% in 2008), with awareness in the mass market having doubled since 2008 to 77%.		Exceeded.
		The effectiveness of our overall marketing efforts for the year was reflected in the steady improvement in all key brand metrics as measured by our brand-tracking study, Brand Dynamics, conducted by Millward Brown. Nedbank continues to gain brand equity at the expense of our peers, with good gains in presence, relevance and advantage.		Exceeded.
		There were also significant positive shifts in six out of eight key brand strategy attributes, with significant positive shifts in perceptions relating to Nedbank as a proudly South African bank for all South Africans. Nedbank is currently positioned well among the big four banks to maintain and increase brand equity going forward.		Exceeded.
	Become South Africa's green and caring bank	Nedbank Group won various environmental sustainability awards: SA Carbon Disclosure Leadership Index – 2009 overall winner. First large SA corporate to commit itself to carbon neutrality. Ask Afrika Trust Barometer® 2009 – Leading Green Corporate. Following Nedbank Group’s founding signatory commitment to the Climate Neutral Network, 2009 saw Nedbank Group signing the University of Cambridge Prince’s Rainforest Project – Copenhagen Communiqué and the United Nations Environmental Programme Finance Initiative (UNEP FI) Statement on Climate Change. Nedbank Group is a member on the UNEP FI African Task Force, the Biodiversity and Ecosystem Services Workstream and the Water and Finance Initiatives Workstream. The Nedbank 135 Rivonia Road phase II building was the first building to receive a Green Building Council rating of four stars for the phase II expansion of its headoffice.		Exceeded.
		Other sustainability indices, representations and awards include the following: Included in the Dow Jones World Sustainability Index for 2009 – the sixth year in succession. In 2009 again included in the JSE Social Responsibility Index (included since 2004). Association of Chartered Certified Accountants Sustainability Award for the best Sustainability Report in the financial sector and was encouraged also to receive an Award of Excellence in the Ernst & Young Excellence in Sustainability Reporting Awards. 2009 saw Nedbank Group shortlisted for the Financial Times Sustainable Bank of the Year award for Emerging Markets: Middle East and Africa and Nedbank Group was named Social Responsible Banker of the Year in the African Banker Awards 2009. Nedbank Group is also represented on the National Business Initiative’s Sustainable Futures Advisory Committee and The Banking Association South Africa’s Sustainable Finance Committee. National business awards – Corporate Social Investment Programme Award for Local Hero Programme.		Exceeded.
		On the Affinities Programme, we: grew clients within the Affinity Programme by 10%; grew donations to the affinity partners by 20% year-on-year; and added new products and services, namely the affinity investment accounts, insurance, new Nedbank eStatements and client voluntary donations, all resulting in additional donations being made to the trusts and fund.		Exceeded.
	Accelerate transformation	Nedbank Group managed to achieve a level improvement of the Department of Trade and Industry (dti) scorecard for the fourth consecutive year by moving from level-three to a leveltwo empowered company, despite the tough economic climate.		Exceeded.

Progress on transformation



This page was updated on 29 March, 2010	Return to top