2005 Annual Report

Operational segmental reporting

for the year ended 31 December

  Nedbank Group Nedbank Corporate
    Restated   Restated
  2005 2004 2005 2004
Balance sheet (Rbn)        
Cash and cash equivalents 17 10 1  
Other short-term securities 17 16 1 1
Derivative financial instruments 16 27    
Government and public sector securities 23 26 2 2
Mortgage loans 114 96 44 39
Leases and instalment debtors 35 29 12 11
Loans and overdrafts 105 103 48 45
Other assets* 25 21   2
Intergroup assets     30 23
Total assets 352 328 138 123
Current and savings accounts 47 45 15 15
Other deposit and loan accounts 255 226 113 99
Derivative financial instruments 17 28    
Intergroup liabilities        
Long-term debt 7 7    
Allocated capital 26 22 10 9
Total liabilities 352 328 138 123
Income statement (Rm)        
Net interest income 8 529 7 145 4 025 3 986
Impairment charge on loans and advances 1 189 1 217 228 259
Income from lending activities 7 340 5 928 3 797 3 727
Non-interest revenue 8 483 8 379 2 426 2 118
Foreign currency translation gains/(losses) 126 (280)    
Operating income 15 949 14 027 6 223 5 845
Total expenses 11 157 10 939 3 528 3 405
Operating expenses 10 764 10 939 3 495 3 405
BEE transaction expenses 393   33  
Indirect taxation 223 470 38 28
Profit/(Loss) from operations 4 569 2 618 2 657 2 412
Share of profits of associates and joint ventures 167 147 51 33
Profit/(Loss) before direct taxation 4 736 2 765 2 708 2 445
Direct taxation 1 108 668 675 644
Profit/(Loss) after taxation 3 628 2 097 2 033 1 801
Minority interest income attributable to ordinary shareholders 233 125 49 26
Minority interest income attributable to preference shareholders 228 229    
Headline earnings 3 167 1 743 1 984 1 775
Selected ratios**        
Average interest-earning banking assets (Rbn) 240 225 125 122
Return on average assets (%) 0,9+ 0,5+ 1,6 1,4
Return on average equity (%) 15,5 11,0 19,7 18,7
Return on equity (excluding BEE) (%) 17,4 11,0 20,0 18,7
Interest margin (%) 3,55 3,19 3,21 3,26
Non-interest revenue to gross income (%) 50,2 53,1 37,6 34,7
Impairments to advances (%) 0,49 0,55 0,23 0,27
Efficiency ratio (%) 65,1 71,8 54,7 55,8
Efficiency ratio (excluding BEE) (%) 62,8 71,8 54,2 55,8
Effective taxation rate (%) 23,4 24,2 24,9 26,4
Number of employees 22 188 21 103 5 236 5 472

+These ratios were calculated on simple average assets.

*Other assets are disclosed net of impairment losses on loans and advances.

**These ratios were calculated using amounts to Rm to provide more accurate information.

***ROE calculated before minority interest for Imperial Bank is 25% for December 2005; 20,3% for December 2004.

Depreciation of R427 million (2004: R457 million) and amortisation of R423 million (2004: R395 million) of property, equipment, computer software and capitalised development costs are charged on an activity-justified transfer pricing methodology by the segment owning the assets to the segments utilising the benefits thereof.

 

  Nedbank Capital Nedbank Retail Imperial Bank Shared services Central management Eliminations
    Restated   Restated   Restated   Restated   Restated   Restated
  2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004
Balance sheet (Rbn)                        
Cash and cash equivalents 8 3 1 1     1   6 6    
Other short-term securities 11 12 4 3 1              
Derivative financial instruments 16 27                    
Government and public sector securities 15 17       1     6 6    
Mortgage loans     65 52 5 5            
Leases and instalment debtors     8 7 15 11            
Loans and overdrafts 44 41 12 14 1 1   1   1    
Other assets* 8 3 6 4   (1) 8 7 3 6    
Intergroup assets 15 8                 (45) (31)
Total assets 117 111 96 81 22 17 9 8 15 19 (45) (31)
Current and savings accounts   1 32 29                
Other deposit and loan accounts 97 79 42 39     2 3 1 6    
Derivative financial instruments 17 28                    
Intergroup liabilities     17 8 19 15 6 4 3 4 (45) (31)
Long-term debt         1 1     6 6    
Allocated capital 3 3 5 5 2 1 1 1 5 3    
Total liabilities 117 111 96 81 22 17 9 8 15 19 (45) (31)
Income statement (Rm)                        
Net interest income 698 451 4 389 3 685 799 639 (366) (256) (1 016) (1 360)    
Impairment charge on loans and advances 142 77 887 725 115 243 (192) (7) 9 (80)    
Income from lending activities 556 374 3 502 2 960 684 396 (174) (249) (1 025) (1 280)    
Non-interest revenue 1 886 2 080 3 706 3 726 53 86 480 772 (21) (134) (47) (269)
Foreign currency translation gains/(losses)                 126 (280)    
Operating income 2 442 2 454 7 208 6 686 737 482 306 523 (920) (1 694) (47) (269)
Total expenses 1 150 1 216 5 804 5 753 354 316 265 718 103 (200) (47) (269)
Operating expenses 1 146 1 216 5 705 5 753 354 316 256 718 (145) (200) (47) (269)
BEE transaction expenses 4   99       9   248      
Indirect taxation 44 40 164 177 14 8 96 187 (133) 30    
Profit/(Loss) from operations 1 248 1 198 1 240 756 369 158 (55) (382) (890) (1 524)    
Share of profits of associates and joint ventures     54 9     61 103 1 2    
Profit/(Loss) before direct taxation 1 248 1 198 1 294 765 369 158 6 (279) (889) (1 522)    
Direct taxation 224 333 332 183 78 15 40 (138) (241) (369)    
Profit/(Loss) after taxation 1 024 865 962 582 291 143 (34) (141) (648) (1 153)    
Minority interest income attributable to ordinary shareholders 7 2 24 18 147 72 1 6 5 1    
Minority interest income attributable to preference shareholders                 228 229    
Headline earnings 1 017 863 938 564 144 71 (35) (147) (881) (1 383)    
 
Selected ratios**		                        
Average interest-earning banking assets (Rbn) 44 36 81 71 17 14 1 1 9 8 (37) (27)
Return on average assets (%) 1,3 1,4 1,1 0,7 0,7+ 0,4+            
Return on average equity (%) 29,2 29,3 18,4 12,1 12,4 10,0            
Return on equity (excluding BEE) (%) 29,4 29,3 20,3 12,1 12,4 10,0            
Interest margin (%) 1,58 1,23 5,44 5,20 4,74 4,63            
Non-interest revenue to gross income (%) 73,0 82,2 45,8 50,3 6,2 11,9            
Impairments to advances (%) 0,43 0,29 1,14 1,05 0,65 1,72            
Efficiency ratio (%) 44,5 48,0 71,7 77,6 41,6 43,6            
Efficiency ratio (excluding BEE) (%) 44,3 48,0 70,5 77,6 41,6 43,6            
Effective taxation rate (%) 18,0 27,8 25,7 23,9 21,1 9,5            
Number of employees 616 602 12 127 11 232 793 753 3 398 3 025 18 19    

+These ratios were calculated on simple average assets.
*Other assets are disclosed net of impairment losses on loans and advances.
**These ratios were calculated using amounts to Rm to provide more accurate information.
***ROE calculated before minority interest for Imperial Bank is 25% for December 2005; 20,3% for December 2004.

Basis of preparation

Management information systems and reporting continue to be enhanced, with matched-maturity funds transfer pricing now operational and activity-justified funds transfer pricing refined to allocate additional costs from the centre to the respective operating divisions.The segmental reports have been adjusted to reflect these changes as well as other changes as a result of the group reorganisation completed in late 2004. Good progress has also been made in implementing economic capital measurement, which is currently being run in parallel with the existing reporting systems, with a view to full implementation for 2006.

 
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