NEDBANK GROUP LIMITED ANNUAL ar RESUL TS 2017 FOR THE YEAR ENDED 31 DECEMBER
Cyclical economic upturn off a low base Macroeconomic drivers 1 (%) Prospects Clients 2017 2018 2019 2020 – Increasing levels of consumer & business confidence. Initial benefits likely in CIB & Wealth GDP SA 0.9% 1.6% 1.8% 2.4% Balance sheet – Stronger wholesale & retail advances growth GDP SSA 2.4% 3.2% 3.5% 3.5% – Liquidity metrics & capital levels to remain strong Income statement Inflation (CPI) 5.3% 5.1% 5.5% 5.5% – Revenue growth in 2018 higher than 2017 Industry credit – Impairments to increase cyclically; & IFRS 9 5.0% 6.5% 7.9% 10.1% growth impact – Expenses continue to be well managed Average prime 10.4% 10.3% 10.3% 10.7% Assets under management interest rate – Good growth, particularly in cash & offshore 1 Assuming no local currency downgrade | All Nedbank economic unit forecasts as at 15 February 2018 | GDP SSA as per World Bank. ar NEDBANK GROUP LIMITED – Annual Results '17 2
Old Mutual managed separation Listing of Allow OML shareholder Nedbank Group Old Mutual Limited base to transition to an Unbundling shareholding post (OML) SA & EM investor base unbundling At the earliest Sufficient time for OML’s Unbundling of Nedbank Group Increased index ordinary shares to OML opportunity in 2018, shareholder register to weightings (free-float transition to an SA & EM shareholders – approximately 6 from ~45% to ~80%) following OM plc’s months after listing OML 2017 full-year results focused & mandated Normalisation of SA announcement investor base OML retaining a strategic shareholding (mostly minority shareholding 1 of 19.9% Exit of non-EM underweight given shareholders in Nedbank Group (underpins holding via OM) the ongoing commercial ‘Independent’ Nedbank relationship) attractive for SA & international investors Business as usual for Nedbank − No impact on strategy, day-to-day management or operations, nor on staff or clients − Technology, brand & businesses have not been integrated Engagements have been at arm’s length – overseen by independent board structures − − No impact on ongoing OM collaboration in SA & Rest of Africa. > R1bn synergies achieved in 2017 (R393m to Nedbank) ar NEDBANK GROUP LIMITED – Annual Results '17 3 1 Calculated as OML shareholder funds divided by the total Nedbank Group ordinary shares in issue
Delivering value to shareholders NAV per share (cents) ROE & cost of equity (%) Dividend per share (cents) CAGR: +6.6% +7.3% CAGR: +9.5% +7.1% 18.1 18.1 17.2 17.2 17.0 16.8 16.4 16.5 14.2 14.0 13.5 13.0 13.0 13 143 14 395 15 685 15 830 16 990 1 028 1 107 1 200 1 285 895 13 14 15 16 17 13 14 15 16 17 13 14 15 16 17 ROE (excl GW) COE ROE (excl GW & ETI) ar NEDBANK GROUP LIMITED – Annual Results '17 4
Key performance indicators – good performance from managed operations Managed operations 2017 2016 2017¹ 2016¹ Headline earnings (Rm) 2.8% 11 465 7.8% 11 839 11 787 12 762 ROE (excl goodwill) 16.5% 18.1% 16.4% 18.1% Diluted HEPS growth 4.8% 15.1% 2.4% 7.3% Preprovisioning operating profit growth 4.4% 10.0% (3.2%) (0.3%) Net interest margin 2 3.54% 3.62% Credit loss ratio 0.68% 0.49% CET1 CAR 12.1% 12.6% Dividend per share (cents) 7.1% 1 200 1 285 1 Excluding ETI associate income/losses, as well as ETI-related funding costs. Managed operations reporting provided to assist in analysis of group performance during the period of ETI Q4 2015/16 losses, but we will revert to blended results in 2019. 2 2016 rebased. ar NEDBANK GROUP LIMITED – Annual Results '17 5
Good performance from our managed operations – group headline earnings up 2.8% Headline earnings (Rm) Earnings contribution (Rm) (8%) (1%) +5.0% 1% +6.9% 9% (10.4%) 54% 1 068 1 192 6 014 6 315 4 960 5 302 45% (88) (287) (414) (810) CIB RBB CIB RBB Wealth Rest of Centre Wealth Rest of Africa Africa ETI Centre 16 17 ar NEDBANK GROUP LIMITED – Annual Results '17 6
Headline earnings – good performance from managed operations Headline earnings (Rm) HE growth (%) 7.8 (1 446) 1 250 2.8 560 (733) 1 198 (507) Group Managed operations ROE excl GW (%) 18.1 11 787 16.4 +4.5% +2.4% (27.4%) +5.1% (> 100.0%) 11 465 2016 NII NIR Impairments Expenses Associate Direct tax 2017 Group Managed income & other operations ar NEDBANK GROUP LIMITED – Annual Results '17 7
Headline earnings – improved H2 2017 performance from both managed operations & ETI H1 2017 vs H2 2017 (Rm) NII Impairments HE managed operations +4.0% +5.1% (27.9%) (27.0%) +6.7% +9.0% 13 028 13 548 13 398 14 076 1 594 2 343 1 710 6 030 6 433 5 809 6 329 2 211 H1 H2 H1 H2 H1 H2 NIR Expenses Associate income +1.5% +5.2% (34%) +3.3% +5.0% (144%) (1 053) 215 326 12 146 12 333 13 686 14 369 14 680 15 443 11 357 11 730 (431) H1 H2 H1 H2 H1 H2 ETI: (446) (1061) 321 317 16 17 ar NEDBANK GROUP LIMITED – Annual Results '17 8
Net interest margin – driven by endowment & asset mix Net interest margin (bps) (2) 8 (2) (2) 1 5 13 362 341 354 2016 Removal of 2016 Endowment Asset Asset Liability Prime- Other 2017 trading LAP rebased impact mix pricing pricing JIBAR & mix impact Average interest-earning banking assets 1 : +2.2% 1 Rebased NIM for twelve months ended 31 December 2016 would have been 354 bps & AIEBA of R745bn, had HQLA been removed from the banking book & included in the trading book from 1 January 2016. ar NEDBANK GROUP LIMITED – Annual Results '17 9
Advances up 0.5% – solid growth & market share gains across retail portfolios offset by early repayments in CIB BA900 market share 3 (%) Gross advances (Rbn) Wholesale Retail Share Trend Leveraging Mostly Selective origination Commercial relationships & ST & (0.3) & unique positioning 40.5 property pipeline volatile +6.5% (8.3%) Core corporate 4 (1.3) 21.0 +3.2% (5.2%) +6.3% Home loans 0.0 14.5 Vehicle finance 5 +0.4 28.1 +4.1% +6.3% 20 Personal loans +0.1 19 15 16 10.3 152 162 162 148 121 145 150 106 114 112 Card +0.3 14.0 Commercial Term Other Home Vehicle Personal Card 2 1 property loans loans loans finance loans Dec 16 Dec 17 1 Terms loans & other longer-dated loans. | 2 Other loans include overdrafts, overnight loans, preference shares, deposits placed under reverse repurchase agreements & other smaller corporate loans. | 3 BA900 – Dec 2017 (Compared to Dec 2016). | 4 Core corporate loans comprise commercial mortgages, corporate overdrafts, corporate credit cards, corporate instalment credit, foreign sector loans, public sector loans, preference shares, factoring accounts & other corporate loans (other loans and advances excluding household personal loans). | 5 VAF per BA 900 comprises total lease & Instalment sales. ar NEDBANK GROUP LIMITED – Annual Results '17 10
Deposits up 1.3% – good household deposit growth, particularly in RBB, up 8.5%, evident in ongoing market share gains Deposits (Rbn) BA900 market share 1 (4) 1 Share Trend 2 Wholesale (1.1) 21.2 (11) 23 Corporate +0.2 16.5 (non-financial) 772 Household +0.2 18.9 761 Foreign +0.2 12.8 +8.5% +4.8% +4.2% (1,3%) (13,3%) currency 2016 RBB Wealth Rest of CIB Central 2017 Africa Mgnt Basel III + Basel III - 1 BA900 – Dec 2017 (Compared to Dec 2016). ar NEDBANK GROUP LIMITED – Annual Results '17 11
Non-interest revenue up 2.4% – resilient underlying performance, offset by high base, the impact of a challenging economic environment & weak insurance result Non-interest revenue (Rm) NIR growth per cluster (%) CIB RBB Wealth 16 17 16 17 16 17 14.5 (3.9) 6.9 5.0 (5.1) (0.6) Other¹ 534 ▲ ▼ Private 708 equity 2.3 (24.1) ▼ ▼ Insurance 1 566 income (4.5) (10.0) ▲ ▲ Trading 3 900 income 18.9 3.1 ▲ ▼ ▲ ▲ Commission 17 355 & fees 16.4 (4.3) 7.1 5.3 2 1 Represents sundry income, investment income & fair-value adjustments. | 2 C&F 72% of NIR. Rest of Africa & Centre excluded as not material. ar NEDBANK GROUP LIMITED – Annual Results '17 12
Retail transactional NIR growth ahead of client growth – deeper client penetration Total retail client base (#000) Retail NIR (Rm) +5.2% +1.6% +7.4% 10 537 +4.8% 10 015 9 321 7 538 Total 7 417 Total 7 080 0.0% 4 737 +3.0% Main- 4 566 2 783 2 784 4 223 banked 2 703 Transactional +6.0% +6.9% 1 616 1 430 Consumer 1 385 Retail excl card issuing main- 4 755 banked 4 633 4 377 4 184 4 019 3 713 Other 15 16 17 15 16 17 ar NEDBANK GROUP LIMITED – Annual Results '17 13
Client-centred strategy intact but measure impacted by the macro environment Main-banked, # 000 Kids & youth Professional +1% (7%) +3% +4% 407 410 70 382 68 66 +2% +1% Entry level 0% +1% Banking 1 Business 1 381 1 404 1 411 22,2 22,3 22,4 +1% +6% +6% +6% Small Business 797 786 739 113 107 101 Middle 15 16 17 15 16 17 1 Client groups with gross operating income contributions in excess of R500 pm. Note: Non-resident, non-individual segment not shown. ar NEDBANK GROUP LIMITED – Annual Results '17 14
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