Interim Results for the six months ended 30 June 2019 OVERVIEW - - PowerPoint PPT Presentation

Interim Results

for the six months ended 30 June 2019

2

NEDBANK GROUP LIMITED – Interim Results 2019

Good strategic & operational progress & a resilient financial performance in a difficult environment

OVERVIEW

MIKE BROWN

3

NEDBANK GROUP LIMITED – Interim Results 2019

Stronger economic growth dependent on structural reforms, policy certainty, improved levels of confidence, investment & job creation

Early stages of political & institutional turnaround in SA Structural reforms & policy certainty Improved levels of business & consumer confidence Increased levels of inclusive economic growth Job creation & reduced … − unemployment − poverty − inequality Increased levels of local & foreign investment Government, business, labour & civil society working together to create a more prosperous SA for all its people … … underpinned by improved skills & educational outcomes Progress on structural reforms & policy certainty – too slow

4

NEDBANK GROUP LIMITED – Interim Results 2019

• 30
• 20
• 10

10 20 30 25 50 75 100 94 97 00 03 06 09 12 15 18

Business confidence index (LHS) Consumer confidence index (RHS)

SA economic growth in 2019 slower than expected, while confidence levels remain low

SA GDP growth forecasts1 (%) Business & consumer confidence2

0.0 0.5 1.0 1.5 2.0 2.5 2019 2020 2021

Feb 19 Apr 19 Jun 19

1 Nedbank Economic Unit forecasts at point in time. 2 Bureau of Economic Research, RMB, FNB.

5

NEDBANK GROUP LIMITED – Interim Results 2019

Fixed investment declined as key structural reforms delayed & policy uncertainty continues

Gross domestic capital formation1 (Rbn) Structural reforms & policies2

1 Nedbank Economic Unit. 2 Source: Adapted from Intellidex. Potential growth impact Implementation likelihood

Urgent issues Energy policy clarity Eskom – operational stability & electricity pricing (upside/downside) / Land reform & clarity on EWC (upside/downside) / SARB nationalisation/policy changes Prescribed assets Short-term wins Visas – Tourism/Skills / / Spectrum auctions Mining charter Improved infrastructure coordination Longer-term Education reform Labour market/Empowerment reforms / National Health Insurance

H

VH VH

H M M M H

VH VH

H L L M H

VL

H H M L H L M L

VL VH

Very low Very high

M

150 175 200 225 250 300 350 400 450 08 09 10 11 12 13 14 15 16 17 18 19

Private sector (LHS) Government and public sector (RHS)

M M Delay risk Delay risk Delay risk Delay & fallout risk Fallout risk Fallout risk Fallout risk M

VH VH

6

NEDBANK GROUP LIMITED – Interim Results 2019

Good strategic & operational progress & a resilient financial performance in a difficult environment

▪ Good strategic progress − Ongoing progress on delivery of Managed Evolution IT Programme & Digital Fast Lane – building a leading digital bank − Delivered capability to digitally onboard retail clients (Eclipse) + sell a transactional account & personal loan − Retail main-banked clients up +4.9% yoy & 16 primary transactional client wins in CIB ▪ Resilient financial performance − HE growth of +2.6%, PPOP +7.0% − Solid revenue growth +6.3% (incl associate income) − Impairment normalisation off a low prior year base (CLR at 70 bps within the lower half of our 60―100 bps TTC range) − Cost-to-income ratio improved from 55.8% to 55.4% – ongoing benefits from optimisation − Interim dividend per share +3.6% ▪ Contributing to society − Largest corporate participant in YES initiative: created > 3 300 new job opportunities in 2019 − First SA commercial bank to launch a green bond on the JSE − Level 1 BBBEE contributor

7

NEDBANK GROUP LIMITED – Interim Results 2019

Nedbank strategic enablers – creating great client experiences & growing market share

Enabled by

+

delivered through process /

• perational excellence

leading to

Client growth & client satisfaction Operating efficiencies

resulting in 2020 financial targets ROE (excluding goodwill)  18% Cost-to-income ratio1  53%

Create great client experiences & grow market share in key value-creating areas

Target operating model (TOM)

(largely by New Ways of Work)

Revenue growth Cost savings

People & brand Technology

(Managed Evolution & Digital Fast Lane)

1 In March 2019 we noted to the market that our 2020 cost- to-income target has become more challenging to achieve.

8

NEDBANK GROUP LIMITED – Interim Results 2019

Our Managed Evolution strategy is enabling core banking system rationalisation, standardisation & simplification

250 176 166 145 129 114 112 60 10 14 15 16 17 18 H1 19 20 target

Core systems (#)

Rationalise, standardise & simplify

Managed Evolution approach

▪ 24/7, real-time systems ▪ Agile, flexible multilayer architecture ▪ Digitally fit & analytically strong organisation ▪ Platforms that are innovative & responsive to change ▪ Omnichannel client

• nboarding & servicing

Business value IT advancement

Opportunistic (‘Patching’) ‘Big bang’ Managed Evolution Robust, flexible IT landscape

2010 2020

2020 outcomes

Digitise Delight Disrupt

9

NEDBANK GROUP LIMITED – Interim Results 2019

New technology enhancements Core banking modernisation Client systems

Strategic payments Enterprise data Foundations

ERP

0% 20% 40% 60% 80% 100%

The Managed Evolution & IT rationalisation programmes are ~65% complete1 & forecast to be materially complete by end of 2020

IT investment profile

% completion Starting sequence & order of execution ERP – implemented SAP Foundations – Client 360, SOA, ECM, BPM, Agile, Security (60% to 83%) Data – IFRS 9, POPI, EDW (Data lake), RDARR (60% to 74%) Strategic payments – modernised payment engine, basic VAS (eg electricity), authenticated collections Client systems – 86 services digitised (from 51), branch-of-future technology, Eclipse – digital onboarding, servicing + PL & transactional sales (inbranch), call centre modernisation, CRM, DXM (single front-end), AML, loyalty & rewards (pilot), insurance platform New technologies – Karri app, Nedbank Money & Private Wealth app, MobiMoney, crossborder remittances, Unlocked.Me, chatbots, scan to pay, PL ghost account Core banking modernisation – Flexcube (RoA subsidiaries), Loan IQ, Front Arena ERP – completed Foundations completed – ongoing investment in security Data – RDARR compliance, Advance Machine Learning, RPA, artificial intelligence, single data store Strategic payments – full service hub (incl VAS, FX) Client systems – > 180 services digitised, digital onboarding & servicing – juristic + web & app, a further 8 products offered digitally, loyalty & rewards (H2 2019), FATCA/ FICAA New technologies – platforms & ecosystems Core banking modernisation – modernisation of lending & deposit systems, decommission legacy middleware R0.6bn R1.4bn R0.8bn R0.6bn R3.0bn R0.9bn R1.3bn

2020/2021 outcomes Completed to date (Rbn spend)

Bubble size indicates total estimated spend

R8.5bn

1 As reported, ME programme was ~60% complete at December 2018.

10

NEDBANK GROUP LIMITED – Interim Results 2019

Eclipse – simplified end-to-end digital client onboarding for individuals rolled

• ut in June 2019

From legacy ▪ Legacy, product-centred operations spanning front-, middle- & backoffice ▪ Sequential paper-based processes ▪ High ‘not taken up’ rate ▪ Uncompetitive turnaround times – hours/days ▪ Low cross-sell rates (particularly transactional) ▪ Legacy rules-based KYC/ FICA To digital ▪ Client centred onboarding – once for life ▪ Single onboarding process for most core products ▪ Automated front-, middle- & backoffice processes reducing turnaround times to minutes ▪ Single digital application form, enabling frictionless cross-sell ▪ Digital FICA, biometrics & contract/signature

H1 2019 H2 2019 H1 2020 H2 2020

Individual client

• nboarding

Juristic client

• nboarding

▪ Personal loans ▪ Transactional products ▪ Card issuing (1) ▪ Investments (1) ▪ Overdrafts (1) ▪ Card issuing (2) ▪ Investments (2) ▪ Overdrafts (2) ▪ Home loans (1) ▪ Home loans (2) ▪ Vehicle finance ▪ Wealth products Inbranch Web & app aligned to product releases Client: Channel: Product1:

1 The number (1) refers to first minimal viable product launch on the new platform | (2) refers to additional enhancements.

11

NEDBANK GROUP LIMITED – Interim Results 2019

Eclipse delivering great client experiences & efficiencies, building on the progress made across other digital & servicing initiatives

32 ≤ 20 45-50 ≤ 20 2018 Jun 2019 Time to open a PL & transactional product1 (min) 0% 14% 0% 37% 2018 Jun 2019 Sales through Eclipse (% of total)

2 10

2018 Jun 19 Dec 20 Digitised products (#)

PL PL PL TP PL TP

90 35 2018 Jun 2019 Time to cross-sell a PL & transactional product (min) 2.1 2.3 2.8 3.1 4.1 4.3 4.5 4.7

Old Nedbank App Bank A Bank B Bank C Bank D Bank E Nedbank Money Nedbank Wealth

iOS App Store client ratings2 (stars / 5)

Nedbank Wealth app rated 2nd best globally

Nedbank consumer NPS score3 (%)

Largest yoy increase among SA banks

26.1 37.1 17 18

Initial benefits from Eclipse

1 For 57% of all TPs opened in June 2019. For 50% of all PLs accounts opened in June 2019. | 2 As at June 2019 | 3 Source: Consulta (SA-csi).

TP Top 10

12

NEDBANK GROUP LIMITED – Interim Results 2019

13.0 14.4 13.9 13.8 14.2 17.3 15.7 15.1 18.4 17.9 15 16 17 18 19

COE ROE (excl GW)

Delivering value to shareholders

NAV per share1 (cents)

14 428 15 826 16 200 16 957 17 794 15 16 17 18 19 537 570 610 695 720 15 16 17 18 19

ROE & cost of equity (%) Interim dividend per share (cents)

+4.9% +3.6% CAGR: +5.4% CAGR: +7.6%

1 NAV per share in H1 2018 excluding IFRS 9 & 15 day 1 impacts: 17 620c. 2 NAV per share H1 2019 excluding IFRS 9, 15 & 16 day 1 impacts, Zimbabwe currency devaluation & odd lot offer: 18 863c (+7.1%). (1) Economic profit (2)

H1 H1 H1

13

NEDBANK GROUP LIMITED – Interim Results 2019

Our role in society

STAFF CLIENTS SHAREHOLDERS REGULATORS SOCIETY

▪ Paid R8.4bn in salaries & benefits to support

• ur 30 577 staffmembers & their families

▪ Staff engagement score strong at 75% – well above industry levels (+8% higher) ▪ Accelerated a leadership & culture change programme supporting strategy, incl New Ways

• f Work (> 1 550 staff)

▪ Transforming our workforce towards SA demographics (> 78% black employees) ▪ R94bn new-loan payouts, up 15%, to enable clients to finance their homes, vehicles & education & grow their businesses ▪ Safeguarded R866bn deposits at competitive interest rates ▪ Exciting innovations launched –end-to-end digital client

• nboarding & sale of transactional accounts & personal loans,

HeyNed (digital concierge) & API Marketplace ▪ First large SA bank to introduce a zero-monthly-fee account ▪ Largest increase in consumer NPS score among SA banks ▪ Celebrating 50 years on the JSE in 2019 ▪ Paid R3.5bn dividends to shareholders who represent pension funds & investments of all South Africans ▪ Supportive outcomes at 52nd AGM – with remuneration: > 98% votes in favour ▪ Committed to engage further on ESG & climate change matters ▪ Maintained a strong balance sheet to support a safe & stable banking system ▪ Paid R6.3bn direct, indirect & other taxes ▪ Invested more than R105bn in government & public sector bonds to support the funding needs of governments ▪ Procured 78% of our goods & services locally ▪ R54m SED spend – more than 50% on education ▪ Ongoing delivery on the SDGs – including R24,6bn of renewable- energy payouts to date & SA’s first & only commercial bank to list a green bond on the JSE ▪ Largest corporate participant to YES initiative to date – creating > 3 300 meaningful job opportunities for our youth in 2019 (investment of 1,5% of SA NPAT) ▪ Level 1 BBBEE contributor (under the Amended FSC)

Our purpose – to use our financial expertise to do good

14

NEDBANK GROUP LIMITED – Interim Results 2019

A resilient financial performance

FINANCIAL OVERVIEW

RAISIBE MORATHI

15

NEDBANK GROUP LIMITED – Interim Results 2019

Key performance indicators – a resilient financial performance

H1 2019 H1 2018 Headline earnings (Rm) 2.6% 6 870 6 696 Economic profit (Rm) (16.3%) 1 411 1 685 ROE (excl goodwill)1 17.9% 18.4% Diluted HEPS growth 3.7% 26.3% Preprovisioning operating profit growth 7.0% 20.2% Net interest margin 3.57% 3.67% Credit loss ratio 0.70% 0.53% Cost-to-income ratio 55.4% 55.8% CET1 ratio2 11.3% 12.4% Interim dividend per share (cents) 3.6% 720 695

1 H1 2018 ROE (excl GW) excluding IFRS 9 & 15: 17.8%. 2 H1 2019 CET1 excluding odd lot offer, Zimbabwe currency impact & IFRS 16: 11.8%.

16

NEDBANK GROUP LIMITED – Interim Results 2019

Headline earnings – a resilient financial performance

6 696 6 870 814 638 (728) (809) 215 44

H1 2018 NII NIR Impairments Expenses Associate income Direct tax & other H1 2019

+5.8% +40.1% +5.2% +5.5% >100% Headline earnings (Rm)

17

NEDBANK GROUP LIMITED – Interim Results 2019

IFRS 16 changes

BOOKLET SLIDE Rm H1 2019 H1 2018 % change IFRS 16 Adjusted H1 2019 % change NII 14 819 14 006 5.8 144 14 963 6.8 Expenses 15 565 14 756 5.5 (119) 15 684 6.3 Headline earnings 6 870 6 696 2.6 18 6 888 2.9 Total assets (Rbn) 1 102 1 019 8.1 (2.7) 1 0991 7.9 NAV/share (cents) 17 794 16 956 4.9 141 17 9351 5.8 CET1 ratio (%) 11.3% 12.4% 11.5%1 0.2 ROE (excl GW) (%) 17.9% 18.4% 17.8%1 NIM (%) 3.57% 3.67% 3.61% Cost-to-income ratio (%) 55.4% 55.8% 55.5% IFRS 16 – replacing straight-line operating lease expense with a depreciation charge for the leased asset & an interest expense on the lease liability

1 Includes day-one adjustment on equity of R658m; Asset adjustment of R2.7bn.

18

NEDBANK GROUP LIMITED – Interim Results 2019

Net interest income +5.8% – strong AIEBA growth offset by a decrease in NIM

Net interest margin (bps) Average interest-earning banking assets: +0.8% Average interest-earning banking assets: +8.7%

367 357 (2) (5) (4) (2) 3

H1 2018 Endowment impact Asset mix & pricing IFRS 16 HQLA Liability mix & pricing H1 2019

19

NEDBANK GROUP LIMITED – Interim Results 2019

• 50

100 150 200 250 300 350 400 450 Mar 14 Apr 14 Jun 14 Oct 14 Nov 14 Feb 15 Apr 15 May 15 Jun 15 Jul 15 Nov 15 Feb 16 May 16 Jul 16 Sep 16 Feb 17 Mar 17 May 17 Jun 17 Feb 18 Mar 18 Jul 18 Nov 18 Feb 19 Mar 19 Apr 19 Jun 19 3 year SUD 5 year SUD 7 year SUD 10 - 12 year SUD Tier 2

Sovereign downgrades Nenegate ABIL South African elections

Pricing (bps above JIBAR)

Net interest margin – evolution of Tier 2 & SUD pricing

BOOKLET SLIDE

20

NEDBANK GROUP LIMITED – Interim Results 2019

Net advances +6.5% yoy − ongoing momentum in RBB & increase in growth rate in CIB

200 250 300 350 H1 15 H2 15 H1 16 H2 16 H1 17 H2 17 H1 18 H2 18 H1 19 CIB (excl trading advances) RBB

CIB & RBB banking advances (Rbn) Banking vs trading advances (Rbn)

400 500 600 700 800 H1 15 H2 15 H1 16 H2 16 H1 17 H2 17 H1 18 H2 18 H1 19 Banking advances Trading advances

21

NEDBANK GROUP LIMITED – Interim Results 2019

162 161 99 153 115 21 17 171 191 89 159 124 24 17

Commercial property Term loans Trading &

• ther

loans Home loans Vehicle finance Personal loans Card Jun 2018 Jun 2019

1 1

Selective origination & unique positioning

Gross advances (Rbn)

Wholesale

Gross advances +6.7% yoy – selective origination

+5% +4% +19% (10%) +8% +14% +5%

Leveraging relationships & pipeline

Retail

1 Term loans include a reclassification of some investment banking loans from other loans. | 2 BA900 at May 2019 (compared with May 2018). 3 Core corporate loans exclude volatile short-term lending. | 4 Vehicle finance per BA900 comprises total lease & instalment sales.

BA900 market share2 (%)

Share Yoy trend Ytd trend Commercial property 38.9 (0.7) (0.2) Core corporate3 20.7 (0.6) +0.1 Home loans 14.6 +0.1 +0.1 Vehicle finance4 28.5 +0.4 0.0 Personal loans 10.2 (0.1) (0.2) Card 13.5 (0.7) (0.2)

22

NEDBANK GROUP LIMITED – Interim Results 2019

BA900 market share1 Deposits (Rbn)

Deposits +8.1% yoy – focus remains on Basel III-friendly deposits

Share Yoy trend Ytd trend Wholesale 21.8 (0.9) +0.3 Corporate (non- financial) 17.3 +0.7 +0.4 Household 17.6 (1.4) (0.4) Retail current acc 19.0 (0.3) +0.8 Foreign currency 11.5 (0.8) +1.1

801.2 865.8 24.1 3.2 38.0

Jun 2018 RBB Wealth CIB RoA & Centre Jun 2019 +8% +8% +11% (1%)

1 BA900 at May 2019.

Loan-to-deposit ratio: 88% (H1 18: 89%) LCR: 115% (min reg: 100%) NSFR: 110% (min reg: 100%)

(0.7)

23

NEDBANK GROUP LIMITED – Interim Results 2019

9 076 2 174 897 293 434

Commission & fees Trading income Insurance income Private equity Other¹

+5%

Non-interest revenue +5.2% – solid growth in commission & fees

Key drivers NIR (Rm)

1 Represents sundry income, investment income & fair-value adjustments.

+4% +4% (0%)

▪ Commission & fees – Ongoing growth in main-banked clients across all businesses – Slow growth in client transactional activity ▪ Trading – impacted by weak markets ▪ Insurance – good sales volume increases offset by higher weather-related claims in H1 19 ▪ Private equity – reflective of weak SA macro economy ▪ Other NIR includes a fair-value swing between an H1 18 loss & H1 19 gain

+36%

24

NEDBANK GROUP LIMITED – Interim Results 2019

Credit loss ratio up to 70 bps – normalisation of credit losses off a low base

46.5% 46.2% 4.3% 3.1% Banking advances

77 67 47 53 70 15 16 17 18 19 H1 1 106 15 109 16 128 14 108 CIB RBB Wealth RoA

H1 18 H1 19

Group CLR1 (bps) Cluster CLR (bps)

1 Nedbank through-the-cycle target range: 60–100 bps. 2 CIB through-the-cycle target range: 15-45 bps. | 3 RBB through-the-cycle target range: 130–180 bps. 4 Wealth through-the-cycle target range: 20–40 bps. | 5 RoA through-the-cycle target range: 75–100 bps. 2 3 4 5

25

NEDBANK GROUP LIMITED – Interim Results 2019

0.94 0.91 0.89

Jun 18 Dec 18 Jun 19

Stage 1 & 2 coverage1 (%)

Impairments +40.1% – driven by increases across stage 1, 2 & 3 impairments

Impairment drivers (Rm) 1 815 2 543 123 362 243

H1 18 Stage 1 Stage 2 Stage 3 H1 19

1 The definition of portfolio coverage (stage 1 & 2) has been refined to only include LAA held at amortised cost.

26

NEDBANK GROUP LIMITED – Interim Results 2019

Stage 3 advances (Rbn) Stage 3 coverage (%)

Stage 3 advances – increase in defaults as the macroenvironment deteriorated.

15.7 17.3 19.2 5.1 5.7 5.4 1.9 2.2 2.3

Jun 18 Dec 18 Jun 19

35.2 36.8 37.1

Jun 18 Dec 18 Jun 19

22.8 26.8

RBB CIB Other

25.2

Total +18% yoy +11% (6%) +10% +11% +11% +5% yoy +22% yoy +6%

Stage 3 advances/gross advances (%) 3.13 3.36 3.57

Jun 18 Dec 18 Jun 19

(1)

1 RBB increase in H2 2018 driven by R1.9bn as a result of change on point of writeoff.

27

NEDBANK GROUP LIMITED – Interim Results 2019

14 756 15 565 884 281 56 (189) (104) (119)

H1 18 BAU growth Computer costs Youth employment service Efficiencies Net PRMA credit IFRS 16 H1 19

Expenses +5.5% – computer costs & IT investments offset by ongoing efficiencies & benefits from PRMA credit & IFRS 16

Expenses (Rm)

1 Computer costs include: Amortisation +28% up R119m. | Other computer costs include investments in cloud, +10% up R162m. 2 R189m includes TOM (R146m) & other cost savings (R43m). 2 1 Amortisation

28

NEDBANK GROUP LIMITED – Interim Results 2019

Expenses +5.5% – balance between investing & cost optimisation

Key drivers Expenses by cluster (Rm, % growth)

3 247 10 071 1 593 1 148

CIB RBB Wealth RoA +7.6% +3.6% +1.1% +6.6%

▪ Strategic investment in CIB & IT skills offset by reduction in overall headcount of 1 015 yoy (mostly in RBB) ▪ Annual salary increases: ave +5.4% ▪ STI reduced 10% – aligned to business performance ▪ Computer processing +14%, in line with IT & digital investments – cashflow spend to peak in 2019 at just above R2,0bn ▪ Optimisation & cost savings: R189m

29

NEDBANK GROUP LIMITED – Interim Results 2019

Expenses – initiatives in place to support a reduction in our cost-to-income ratio

Central costs, property & procurement Technology Process

• ptimisation

RBB & branch

• ptimisation

▪ Shared services – finance, risk, HR, marketing etc

• ptimisation

▪ RoA synergies ▪ Procurement savings – data, telephony & other ▪ Central property savings – 27 campus sites, from 31 in H1 18 (MLT target: 22 sites, leading to significant savings in square meterage) | Desktop utilisation at 88%, (MLT target of > 95%) ▪ General costs – optimise travel, marketing etc ▪ Improved IT project delivery (using agile & hybrid methodologies) ▪ Cloud services – savings from migration to cloud over time (H1 19: Office 360 & staff email) ▪ Data-driven intelligence efficiencies ▪ Reduction IT infrastructure eg servers ▪ 112 core IT systems – decommissioned 138 systems since 2010 to date (target of < 60 by 2020) ▪ Reduced client onboarding & sales costs through digital (MLT digital sales target: > 75%) ▪ Self-service & staff-assisted banking – New digital services on mobile, app & web: 86, from 51 in H1 18 (target: > 180 by 2020) – Self-service cash deposits: 71%

• f all cash (from 58% in H1 18)

▪ Paper & postage savings through increased digitisation ▪ Robotics & automation – 92 RPAs in use (from 51 in H1 18, excl the VBS > 160 onboarding bots) ▪ Number of outlets –

• ngoing optimisation (will

be dependent on digital uptake). Closed 14 points of presence in H1 2019. ▪ Reduction in branch floor space – 37k m2 to date (from 29k m2 in H1 18 & target > 47k m2 by 2020) ▪ Sales & service integration – new operating model, business reconfiguration & simplification (mostly complete by 2020) ▪ Backoffice & RBB support function optimisation Headcount reduction – 1 015 since June 2018 (with ongoing reduction to 2020/1)

TOM initiatives Cumulative TOM savings: R826m (R146m in H1 2019)

Other initiatives BOOKLET SLIDE

30

NEDBANK GROUP LIMITED – Interim Results 2019

14 15 16 17 18 19 20 21 4.6 7.4 3.1 3.5 6.0

Peak in 2020 at just over R9bn

IT spend expected to peak in 2019

Capitalised IT costs (Rbn)

Compliance-related

1.0 1.2 1.7 2.3 2.1 14 15 16 17 18 19 20 21

Peak in 2019 as regulatory projects are completed & development cost

• n new technologies decrease

IT software development spend (Rbn)

655 718 799 793 958 14 15 16 17 18 19 20 21

Amortisation charge (Rm)

Illustrative only

BOOKLET SLIDE

Position at H1 19

1.0 7.8 541

31

NEDBANK GROUP LIMITED – Interim Results 2019

ETI associate income – reflecting ongoing ETI recovery

(1 061) 317 247 361 381

H1 H2 H1 H2 H1

Associate income from ETI1 (Rm)

(744)

1 ETI accounted for one quarter in arrear. 2 Source: ETI disclosures. ETI reported COE at ~ 17%.

17 ETI medium-to-long-term guidance2 ▪ ROTE target: COE + 5% (H1 2019: 21.5%) ▪ Cost-to-income ratio target: 50–55% (H1 2019: 66.4%) 18

608

19

32

NEDBANK GROUP LIMITED – Interim Results 2019

ETI carrying value – Value-in-use remains above carrying value

6.3 3.2 2.9 2.3 4.5 (2.1) (0.3)1 (1.0)

Original cost of investment Carrying value Dec 2018 Carrying value Jun 2019 Market value Jun 2019 Share of ETI NAV Jun 2019 Impairment provision Associate income/(loss), FCTR & other

Carrying value drivers vs market value (Rbn)

1 FCTR loss offset by R381m of associate income.

Value-in- use > R2.9bn

33

NEDBANK GROUP LIMITED – Interim Results 2019

SARB minimum CET1: 7.5%

11.7 11.3 (0.2) 1.0 (0.6) (0.6) (0.1)

Dec 2018 IFRS 16 impact Organic profit Dividends paid RWA increase Intangibles Jun 2019

CET1 target range: 10.5 – 12.5%

Capital – CET1 around the midpoint of our target range

CET1 capital ratio (%) – after full IFRS implementation Dividend cover (times)

2.10 1.99 1.80 2.00 1.99

Board-approved target range: 1.75–2.25x

Payout ratio: 48% 50% 56% 50% 50%

Jun 15 Jun 16 Jun 17 Jun 18 Jun 19

34

NEDBANK GROUP LIMITED – Interim Results 2019

Earnings contribution (Rm) Headline earnings (Rm)

48% 38% 7% 4% 3% CIB RBB Wealth Rest of Africa Centre 3 296 2 581 519 245 55 3 298 2 590 455 293 234 CIB RBB Wealth Rest of Africa Centre H1 2018 H1 2019 >100%

Headline earnings – flat earnings growth in CIB & RBB, offset by stronger growth in RoA & centre

+0.1% +0.3% (12.3%) +19.6%

35

NEDBANK GROUP LIMITED – Interim Results 2019

Centre – key drivers include once-offs

Headline earnings (Rm)

55 234 36 121 75 (53)

H1 2018 Central impairments releases Net gains on fair value PRMA Other H1 2019

▪ Central overlay release in H1 19 (R50m pretax). None in H1 18 ▪ Fair-value gain of R82m pretax in H1 19 vs loss of R86m pretax in H1 18 ▪ PRMA credit of R354m pretax in H1 19 vs H1 18: R250m pretax

1 Net yoy movement of R104m pretax 1

36

NEDBANK GROUP LIMITED – Interim Results 2019

Solid revenue growth offset by impairment headwinds

NEDBANK CORPORATE AND INVESTMENT BANKING

BRIAN KENNEDY

37

NEDBANK GROUP LIMITED – Interim Results 2019

2 485 3 004 3 211 3 296 3 298 22.9 21.3 20.8 20.1 19.2

• 2.0

• 1 000

H1 15 H1 16 H1 17 H1 18 H1 19

Headline earnings (Rm) ROE (%)

Solid revenue growth offset by impairment headwinds

▪ GOI +6.7%: Client confidence impacted by uncertainty in H1 19 ▪ Advances +6.1%: Faster growth despite the difficult environment ▪ NIR +7.7%: Good NIR growth, maintained solid growth in C&F income ▪ CLR at 16bps (+15bps): Continued strong risk management, collections & high quality portfolio – increases primarily from stage 1 & 2 impairments ▪ Cost-to-income ratio 40.9%: Continued investment in skills & technology Key messages Headline earnings, ROE 0.1%

38

NEDBANK GROUP LIMITED – Interim Results 2019

48% 52% Headline earnings 48% 52% Advances Nedbank CIB Other clusters

CIB – financial highlights

BOOKLET SLIDE

1 Cost of equity H1 18: 13.8%. | H1 19: 14.2%.

Six months ended % change H1 2019 H1 2018 Headline earnings (Rm) 0.1 3 298 3 296 Operating income (Rm) 3.3 7 631 7 384 PPOP (Rm) 7.0 4 598 4 299 Net interest margin (%) 2.10 2.13 NIR-to-expense ratio (%) 127.9 127.9 Cost-to-income ratio (%) 40.9 40.9 Credit loss ratio (%) 0.16 0.01 Average banking advances (Rm) 4.2 335 703 322 247 Average deposits (Rm) 6.0 356 300 336 199 Headline economic profit (Rm)1 (17.3) 856 1 034 Average allocated capital (Rm) 4.7 34 688 33 125 ROE (%) 19.2 20.1

39

NEDBANK GROUP LIMITED – Interim Results 2019

1.95% 2.25% 2.27%

NIR – solid growth in fee & commission income, trading income impacted by a weaker economy

Key drivers

▪ Deal activity & successful primary-client wins contributed to +7.8% fee & commission growth ▪ Trading income up 4.7% despite low volatility & decreased volumes from a high base in H1 2018 ▪ Continue to invest in market-leading trading capabilities across the asset classes ▪ Leading position maintained across all major league tables

NIR/advances (%), NIR (Rm)

NIR/advances: 1 618 2 015 2 110 1 118 1 394 1 503 335 447 541 H1 15 H1 18 H1 19

Trading Income Fees & Comms Private Equity & Other

+7% +8% +13% CAGR +8% 3 071 3 856 4 154 +8% +5% +8% +21%

1 Private equity +4%

1

40

NEDBANK GROUP LIMITED – Interim Results 2019

Advances - conversion of pipeline resulted in strong growth in advances in key selected sectors in H1

Actual banking advances, incl corporate bonds (Rbn)

▪ Conversion of significant deals in H1 led to 8.8% growth; well positioned for H2 2019 ▪ Market leader in CPF & renewable energy − Continued drawdowns of round 4 renewable-energy deals boosted advances growth − Property Finance grew 2.8% amidst competition for high-quality assets ▪ Awarded Sponsor of the Year in the Project Finance International (PFI) Awards (Enel Green Power) & Infrastructure & Project Finance Deal of the Year in The Banker Awards (Geita Gold Mine)

Key messages 339 338 359

1

368 +9% 187 186 204 211 148 150 151 154 4 3 4 2 H2 17 H1 18 H2 18 H1 19 Banking Property Finance Other

1 Banking defined as Investment Banking & Working Capital combined.

41

NEDBANK GROUP LIMITED – Interim Results 2019

Increase in transactional revenue & ongoing new primary-client wins in CIB

Primary-client wins (#) Selected primary transactional account wins

BOOKLET SLIDE

Definition of tiers: Tier 1 > R5m Tier 2 < R5m > R500k Tier 3 < R500k > R100k Tier 4 < R100k

J&J Capital 19 on Loop TOIC Holdings

25 5 16 12 10 11 10 3 2 7 2 1 22 2 3 2 15 16 17 18 H1 19

Tier 4 Tier 3 Tier 2 Tier 1 Target

16

Target = 25 pa

30 26 39

Definition of tiers: Tier 1 > R5m Tier 2 < R5m > R500k Tier 3 < R500k > R100k Tier 4 < R100k

2019 FY target = 30

42

NEDBANK GROUP LIMITED – Interim Results 2019

Client solutions leading to significant wins

BOOKLET SLIDE

Provided R3bn banking facilities to the Group Mandated Lead Arranger, for US $1bn syndicated term loan for the Government of Kenya CIB concluded the inaugural issuance of green renewable energy bonds into the debt capital markets for R1.7bn CIB was mandated as Arranger and Funder to Barloworld’s Khula Sizwe BBBEE Share Scheme Concluded of a R1,5bn term debt facility for Fortress REIT Ltd

2019 2019 2019 2019 2019

Provided R1,5bn term funding in the capacity of sole funder

2019 2019

Mandated Lead Arranger and Facility Agent for a US$ 375m Term Loan Facility for Debmarine’s new marine vessel Co-ordinating Initial Mandated Lead Arranger and Bookrunners for the US $1.3bn Pre-Export Finance deal

2019

CIB funded R1bn of the municipality’s capex requirements as part of the capex funding tender

2019

Provided R2bn term funding in the capacity of sole funder

2019

CIB funded R1.35bn of the municipality’s capex requirements as part of the capex funding tender

2019 2019

Implemented R500m revolving credit facility for AfroCentric Investment Corporation

43

NEDBANK GROUP LIMITED – Interim Results 2019

0.25 0.30 0.37 14.1 11.6 12.8 Jun 18 Dec 18 Jun 19 5.1 5.7 5.4 Jun 18 Dec 18 Jun 19 65% 67% 65% 1.99% 2.13% 2.10%

0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 0% 20% 40% 60% 80% 100%

H1 15 H1 18 H1 19 Investment Grade NIM

Proactive risk management & our quality portfolio has positioned us defensively for this difficult credit environment

Quality of book, CLR (bps) & NIM (%) Stage 3 advances (Rbn)

Stage 1 & 2 Stage 3 CLR 38 1 16

1 1 Restated to exclude trading book.

Coverage ratios (%)

+4.9%

44

NEDBANK GROUP LIMITED – Interim Results 2019

40.8% 1.6% 3.7% 4.6% 2.3% 3.9% 42.3% 1.8% 4.8% 4.3% 2.7% 5.2% Property Finance Construction Equity Mining Retailers State Owned Entities H1 18 H1 19

78% 81% 22% 19% Specific impairment (stage 3) NPLs 10 largest exposures Other

CPF 28% Other 72%

CIB – Proactive risk management & our quality portfolio has

positioned us well for this tough credit environment

BOOKLET SLIDE

CIB selected sector exposures1 (%)

Downside risk Migration risk M H M H M Change2 – migration risk

L L M L L L

• Change –

downside risk

• Top 10 client contribution (%)

[ ] Risk decrease [ ] No change [ ] Risk increase

▼

• ▲

M

▼

• 1 Restated to exclude trading bonds. 2 Change since December 2018.

45

NEDBANK GROUP LIMITED – Interim Results 2019

Quality commercial property book

Diversified book by property type (%)

22 23 11 11 5 10 2 3 3 11

Offices Retailers Warehouse Multiple portfolios Manufacturing Residential Vacant land Hotel & BB Other mortgages Other loans

▪ Strong client base supported by an experienced team ▪ Portfolio well diversified with underlying sectors impacted at different points in the cycle – diversification inherently reduces sector concentration risk ▪ CLR below target range of 15 bps to 35 bps ▪ Vacant land < 3% ▪ LTVs > 90% declined to 1.4% of the portfolio ▪ Primary lending operation supplemented by private-equity arm

CLR (bps), LTVs (%)

BOOKLET SLIDE 47% 47% 43% 43% 42% H1 15 H1 16 H1 17 H1 18 H1 19

11 (8) 13 7 (16)

CLR

Key drivers

Residential ▪ Actively reduced exposure over the past few years ▪ Selective origination – focus on developers with established track records ▪ Guideline of 120% presales applied ▪ Adequate collateralisation significantly reduces potential losses ▪ LTV @ 33.5%; default rates @ 0.1% Retail ▪ Retail centre developments funded on >70% pre-lets ▪ Low gearing/LTV ratios – LTV @ 40.4%; default rates @ 0.2% ▪ Good quality & experienced retail developers with large portfolios – able to manage some of the economic stresses within their portfolio Offices ▪ Very selective approach to funding

46

NEDBANK GROUP LIMITED – Interim Results 2019

1.95% 1.97% 1.83% 2.25% 2.27% H1 15 H1 16 H1 17 H1 18 H1 19

We have invested significantly in the CIB franchise over the past few years – leading to improved rankings & deeper levels of client coverage

Nedbank CIB NIR to gross advances (%) Improved industry rankings/share

Target: > 2.0% 2019 2013 CIB headline earnings R2.5bn R3.3bn 7.3%

CAGR

BOOKLET SLIDE CIB commercial property share Market leader > 30% market share Renewable-energy lending Market leader Primary-dealer rankings #7 #1 Dealmakers M&A advisers Value #3 #1 Volume/Flow #1 #1 Best team government bonds #7 #1 (Spire awards) DCM rankings #2 #1 Primary-client wins > 25 per annum

47

NEDBANK GROUP LIMITED – Interim Results 2019

Prospects for CIB

A powerful wholesale business focused on its clients

▪ Serve our clients better through strengthening relationships & sector insights ▪ Strong pipeline that is expected to convert as business confidence improves ▪ Continued focus on our African expansion in key sectors, including property finance ▪ Driving NIR growth through transactional banking, trading, advisory & equity franchise 2020 targets: − ROE ≥ 20% − maintain strong returns − Cost-to-income ≤ 40% − leveraging technology to improve efficiencies

Awards

1st South Africa bonds including and excluding Self Led H1 2019

48

NEDBANK GROUP LIMITED – Interim Results 2019

Underlying earnings growth impacted by higher impairments

NEDBANK RETAIL & BUSINESS BANKING

CIKO THOMAS

49

NEDBANK GROUP LIMITED – Interim Results 2019

Underlying earnings growth impacted by higher impairments

Key messages ▪ PPOP +9.9% − NII +6.3%: solid growth from advances & deposits − NIR +6.9%: growth as a result of average pricing & volume related increases − Expenses +3.6%: reflects the impact of focused & active cost management − CLR at 128 bps (+22 bps): impairments increased off a low base Headline earnings, ROE 2 132 2 371 2 544 2 581 2 590 15.9 18.3 18.7 18.6 17.3

• 5.0

• 500

H1 15 H1 16 H1 17 H1 18 H1 19

Headline earnings (Rm) ROE (%)

0.3%

50

NEDBANK GROUP LIMITED – Interim Results 2019

38% 62%

Headline earnings

45% 55%

Advances Nedbank RBB Other clusters Six months ended % change H1 19 H1 18 Headline earnings (Rm) 0.3 2 590 2 581 Operating income (Rm) 3.5 13 995 13 516 PPOP (Rm) 9.9 5 793 5 272 Net interest margin (%) 5.69 5.71 NIR-to-expense ratio (%) 64.7 62.7 Cost-to-income ratio (%) 62.3 64.0 Credit loss ratio (%) 1.28 1.06 Average banking advances (Rm) 8.0 342 578 317 216 Average deposits (Rm) 8.3 321 874 297 290 Headline economic profit (Rm)1 (30.7) 467 674 Average allocated capital (Rm) 7.9 30 145 27 928 ROE (%) 17.3 18.6

Retail & Business Banking – financial highlights

BOOKLET SLIDE

1 Cost of equity H1 18: 13.8% | H1 19: 14.2%.

51

NEDBANK GROUP LIMITED – Interim Results 2019

Impairments – higher given the impact of the macroeconomic environment

Impats (R m)

79 181 119 209 692 (19) 26 H1 17 H1 19 21 H1 18 11 1 694 1 675 505 2 180

Impairments +30% to R2.2bn driven by: – Stage 3 increases of R692m (+29%) – Offset by increase in reallocation

• f interest on impaired advances
• f R119m

– Stage 1 & 2 impairment charge reduction of R79m CLR to 128 bps – below the RBB 130 bps to 180 bps TTC target range Defaulted loan coverage at 44.9% down slightly from Dec 18

Stage 3 loans Interest on impaired Recoveries Stage 1 & 2

Key messages Impairments (Rm)

52

NEDBANK GROUP LIMITED – Interim Results 2019

Retail transactional NIR growth ahead of client growth – deeper client penetration

Total retail client base (#000) Retail NIR (Rm)

1 +27% increase in dormant account closures in H1 19 to 586 000 resulting in lower total client numbers.

3 370 3 510 3 748 1 781 1 690 1 816 17 18 19 2 702 2 771 2 907 4 829 4 884 4 516 17 18 19 Total 7 422

7 655

7 531 +1.6% +2.5% +4.9% (3.0%) Transactional & consumer card issuing Other Total 5 200 5 151 +7.0% +1.0% +6.8% +4.2% 5 564

H1 H1

1

Main- banked Retail, excl main- banked

53

NEDBANK GROUP LIMITED – Interim Results 2019

Client-centred strategy intact, with strong growth across most segments

1 Client groups with gross operating income contributions in excess of R500 pm. | 2 2017 was rebased for migration of the Grey Portfolio from BB to SBS on 1 June 2018. Note: Non-resident, non-individual segment not shown.

Main-banked, # 000

Kids & youth Entry level Middle Professional Business Banking1 Small Business Services2 356 383 367 (4%) (3%) 1 374 1 378 1 474 0% +7% H1 17 H1 18 761 H1 19 832 866 +9% +4% 72 69 79 +4% +10% 106 116 125 +9% +8% 20.6 20.9 21.5 H1 17 H1 18 H1 19 +2% +3%

54

NEDBANK GROUP LIMITED – Interim Results 2019

Nedbank Retail & Business Banking – building more enduring client relationships through transactional product cross-sell

BOOKLET SLIDE

+0.5 Card Personal loans MFC (vehicle finance) Home loans Total retail clients1 Investments Transactional products +2.5 (1.0) +1.8 +2.0 (1.3) (4.6) % yoy growth

Transactional clients with product line

72%

1,154

68%

1,085

59%

597

60%

620 262 250

56% 58%

144

24% 24%

140

40% 40%

119 119

28% 1 650 H1 18 H1 19 28% 1 643 Number of product line clients with transactional products, #000 1 609 1 026 1 594 443 1 008 452 579 594 299 295 6 125 5 840 % yoy growth +0.1 (3.6) +1.2 +1.6 +0.7

H1 18 H1 19

# 000

1 +27% increase in dormant account closures in H1 19 to 586 000 resulting in lower total client numbers

55

NEDBANK GROUP LIMITED – Interim Results 2019

Nedbank Retail & Business Banking – NIR growth supported by good volume growth, but muted by strategic choices & other factors

NIR growth (Rm)

BOOKLET SLIDE 76 259 7 107 26 20 8 109 28 421 Trans- actional Card Secured lending Price increases Mix Activity Personal loans Card margin IFRS Other Yoy NIR growth

2 4

H1 2018 NIR growth (Rm)

5

Volume-related

1 Increase mainly due to the onboarding of a large acquiring client which happened in November 2018 2 Includes average price increase of 4.5% implemented on 1 January 2019. 3 Includes average price increase of 5.3% implemented on 1 January 2018. 4 Net MSC has declined (R111m rate impact) from prior year due to the onboarding of a large acquiring . with lower MSC rate offset by higher volumes. In the Issuing portfolio the Interchange rates have remained flat yoy. 5 Includes 2018 swap profits in MFC and timing difference on review fees in BB.

3

+122 +40 +27 +129 +1 +8 (11) (6) (271) +55 +93

1

56

NEDBANK GROUP LIMITED – Interim Results 2019

Highlights of client innovations in RBB

MobiMoney

Driving Financial Inclusivity

MFC private-to-private

• nline solution

Safe, hassle-free financing

▪ USSD-based account with zero monthly fees that anyone with a valid SA identity number can open anywhere in seconds. ▪ Ability to buy airtime; electricity; pay bills & other value added services ▪ Attracted more than 170 000 users, up 174% yoy ▪ Facilitating safe, secure and hassle- free purchase of vehicles from private seller to private buyer ▪ Ensure technical inspection and roadworthy is done by seller ▪ Ensure the vehicle has an existing warranty or help you buy one

Pay-as-you-use Zero Fee

Zero monthly fee account

▪ Newly-launched no-frills transparent account with zero monthly fees ▪ Digital onboarding enabled by Nedbank eFica ▪ Staff assisted ‘Eclipse’ gives enhanced client experience in branch

HeyNed

Digital Lifestyle Concierge

▪ A digital concierge that gives clients 24/7 personal assistant in their pockets ▪ Clients can search for services and get quotes on just about anything, anywhere & at any time. ▪ Available on the Nedbank Money app for all clients who opt-in

57

NEDBANK GROUP LIMITED – Interim Results 2019

Digitally enabled clients (# 000) Self-service cash deposit volumes (%)

Accelerated digitisation of technology & operations

5 680 5 838

H1 17 H1 18

6 059

H1 19

+4%

+3%

43 58 71

H1 19 H1 17 H1 18

+22%

+28%

Money app active users (# 000)

H1 19 H1 18 H1 17

305 668

+119%

Digitally active clients (# 000) Mobile app third-party payments & transfers (Rbn) 1 451 1 464

H1 17 H1 18

1 717

H1 19

+17% +9%

13 21 37

H1 19 H1 17 H1 18

+71% +68%

Digital vas1 NIR (Rm) 111

H1 18

67

H1 17

88

H1 19

26%

+29%

1 Value added services (electricity, data, airtime, instant payments, etc).

58

NEDBANK GROUP LIMITED – Interim Results 2019

Optimisation of processes & operations

Total RBB employees (#) Branch floor space saved (m2)1 20 910 19 980 18 680

H1 18 H1 17 H1 19

24 819 28 828 37 155

H1 17 H1 19 H1 18

Efficiencies (Rm) Number of retail outlets (#) 269 237 176

H1 17 H1 18 H1 19

627 608 592

H1 19 H1 18 H1 17

1 Represents the total branch floor space we saved since 2014 with a target of > 47 000m2 equating to approximately 20% of our branch floor space in 2014 when we started the journey. | 2 Refers to the volumes of interactions

Cumulative robotics process automation (#) 27 83

H1 19 H1 17 H1 18

Teller activity (# 000)2

H1 18

18 914 18 914

H1 17

15 957 12 288

H1 19

15 957 12 288

59

NEDBANK GROUP LIMITED – Interim Results 2019

68 33 74 36 81 40 206 Consumer Banking Relationship Banking 306 327 353 RBB Total Business Banking 218 232 7.9% +10.3% +11.0% +6.5%

Advances growth – driving market share gains

17 15 19 16 21 17 114 125 Home loans 89 98 Card Personal loans Vehicle finance 108 118 5.3% +9.5% +9.7% +4.5%

Graphs not drawn to scale

H1 17 H1 18 H1 19

Key messages Gross advances (Rbn) Gross advances +7.9% driven by – Strong growth in Business Banking, Relationship Banking, Personal Loans & Vehicle Finance. – Home loans product growth at +5.3% is still ahead of market resulting in market share gain.

60

NEDBANK GROUP LIMITED – Interim Results 2019

Business Banking well positioned for growth

Key drivers of yoy change Clients Asset growth (Rbn)

64.3 75.6

Average Balances

68.2 +11% 9.6 11.4 13.6

Asset Payouts

+20% H1 17 H1 18 H1 19 35.0 36.3 44.0 +7.7% Net promoter score H1 19 H1 17 H1 18

Headline earnings PPOP Ave deposit balance NIR growth

Financial metrics

ROE CLR NIR-to-expenses 9.1% 2.1% 6.3%

2.3 2.1 4.8

1 2 3

GOI growth (%) H1 19 H1 17 H1 18

8.0% 18.8% H1 19 H1 18 24.2% 38 bps 11 bps 49.0% 48.8%

61

NEDBANK GROUP LIMITED – Interim Results 2019

Big Concerts Group

• One of SA’s leading event management

companies.

• Solution: Our holistic offering including

cash & card, global and investments solutions, coupled with an understanding

• f their specific event driven needs and

slick onboarding meant they were able to deliver a worldclass experience at the Guns and Roses, the Global Citizens and the Ed Sheeran concerts.

Retail & Business Banking – client solutions leading to significant business with both new & existing clients

BOOKLET SLIDE

One Up

• Positioned as a people’s store

combining retail and wholesale trading in basic household commodities.

• Solution: Through our understanding
• f their value chain and the importance
• f their cash arrangements, we were

able to deliver a customised solution that met their needs at competitive pricing, and to ensure a seamless client onboarding experience.

Street Fever group

• A leading retailer specialising in high-end

fashion footwear and clothing brands with a national footprint of 54 stores.

• Solution: Leading with our innovative

Unlocked.Me product offering, we were able to tailor innovative and competitive cash, card and credit solutions. We have also provided financial education for staff, aligning with their brand to nurture people from grassroots level, and do good for our communities.

The Max Group

• A large 100% BEE, Cape Town-based group

that supplies a large range of industrial, domestic and electrical products.

• Solution: Using our partnership approach, we

were able to offer sound advice to support their business growth and profitability by providing flexible, innovative transactional and lending solutions tailored for their business. We also collaborated with the group on a CSI initiative, thereby raising R150 000 for the Red Cross Children’s Hospital (ICU & Burn Unit).

Philafrica Foods

• Food across Africa, grown in Africa, for

Africa.

• Solution: Our holistic and competitive
• ffering in the agriculture sector,

including specialised funding, invoice discounting facilities and transactional solutions, coupled with our relationship- based approach, won us their business after an intensely competitive process.

Obaro Handel

• Obaro is a fast-growing agricultural

company spread across five provinces, with more than 85 years’ experience in the sector.

• Solution: Our holistic and competitive
• ffering in the agriculture sector,

including funding and transactional solutions, coupled with our relationship based approach and slick service delivery won us their business

Commercial Agriculture and SpecFin Agriculture

62

NEDBANK GROUP LIMITED – Interim Results 2019

Mangaung Metro Municipality Garden Route District Municipality

• District Municipality in George, Western

Cape.

• Solution: Awarded the full Transactional

Banking tender for a period of five years effective 1 May 2019.

• Metro Municipality in Bloemfontein,

Free State.

• Solution: Awarded the full

Transactional Banking tender for a period of five years effective 1 April 2019.

North West Community Education and Training College

• Educational College in North West.
• Solution: Awarded the full

Transactional Banking tender and assisted with workplace banking solutions enabled by our quick turnaround.

• Government entity based in Gauteng.
• Solution: Awarded the full

Transactional Banking tender and assisted with workplace banking solutions enabled by our quick turnaround.

South African Council for Social Service Professions Lekwa Local Municipality

• Local Municipality in Standerton,

Mpumalanga.

• Solution: Awarded the full

Transactional Banking tender for a period of five years effective 1 June 2019.

Stellenbosch Municipality

• Local Municipality in Western Cape.
• Solution: Awarded the funding tender

for infrastructure development for 10 years, with drawdown in June 2019.

Public Sector BOOKLET SLIDE

Retail & Business Banking – client solutions leading to significant business with both new & existing clients

63

NEDBANK GROUP LIMITED – Interim Results 2019

Building sustainable, profitable businesses through the cycle

▪ We remain committed to growing transactional clients faster than the market through focus on data-led acquisition, retention & cross-sell, enabled by: − Digital First, First in Digital – accelerated digital transformation through digitising key client journeys & services to make it simple & easy for clients to transact with us, driving takeup of digital offerings (Eclipse) − Disruptive CVPs – accelerated commercialisation of disruptive CVPs landed to date, while continuing to solution for financial inclusivity, leveraging ecosystem-based platform propositions − Sales & Service excellence – investment in front-line service excellence to empower staff with tools to better serve clients taking into account the reformatting of branches for digital migration − Loyalty & rewards – drive client retention by rewarding clients for desired behaviour through the new, differentiated loyalty & rewards programme landing in H2 2019 − Data Analytics & Business Intelligence – leverage enhanced data analytics capabilities (AI, machine learning, etc) to gain a deeper understanding of our clients to create value & commercialise successfully ▪ 2020 targets: − ROE ≥ 20% − underpinned by lower cost-to-income ratio & relative CLR outperformance TTC − Cost-to-income1 ≤ 58% − remains our focus, but has become more difficult to achieve in the short term

Prospects for Retail & Business Banking

1 In March 2019 we noted to the market that our 2020 cost-to-income target has become more challenging to achieve.

64

NEDBANK GROUP LIMITED – Interim Results 2019

Earnings decline in a challenging environment

NEDBANK WEALTH

IOLANDA RUGGIERO

65

NEDBANK GROUP LIMITED – Interim Results 2019

117 166 236 96 144 215

Wealth Management Asset Management Insurance

18 19

519 614 519 519 455 38.9 35.9 27.8 25.4 22.3

• 30.0

15 16 17 18 19

Headline Earnings (Rm) ROE (%)

Headline earnings, ROE Headline earnings per division (Rm)

Insurance

▪ High weather- related claims ▪ Higher sales & lower claims in credit life ▪ Strong investment performance

Asset Management

▪ Resilient AUM growth ▪ Positive net flows ▪ Shift in product mix

Wealth Management

▪ Strong international performance ▪ Subdued SA investor confidence ▪ Lower JSE volumes

(13.3%) (17.9%)

Earnings decline in a challenging environment

(8.9%)

H1 H1

(12.3%)

66

NEDBANK GROUP LIMITED – Interim Results 2019

Six months ended % change H1 2019 H1 2018 Headline earnings (Rm) (12.3) 455 519 Operating income (Rm) (0.2) 2 203 2 208 PPOP (Rm) (15.4) 576 681 Net interest margin (%) 2.20 2.29 NIR-to-expense ratio (%) 104.2 113.5 Cost-to-income ratio (%) 71.6 67.1 CLR (%) 0.14 0.15 Assets under management (Rm) 2.7 322 766 314 173 Life embedded value (Rm) 24.7 3 347 2 684 Life value of new business (Rm) 33.5 231 173 Headline economic profit (Rm)1 (29.7) 166 236 Average allocated capital (Rm) 4 114 4 116 ROE (%) 22.3 25.4

BOOKLET SLIDE

7% 93% Headline earnings Wealth Other clusters ▪ Net inflows R12bn ▪ Life APE (3.8%) ▪ Non-life GWP 1.5%

Wealth – financial highlights

1 Cost of equity H1 18: 13.8% | H1 19: 14.2%.

67

NEDBANK GROUP LIMITED – Interim Results 2019

+11.7% 32% 15 16 17 18 19

SA client flows to int'nl SA clients to int'nl %

Wealth Management – muted markets impact domestic performance

Key drivers International ▪ Solid earnings growth driven by strategic focus towards HNW clients & strong deposits growth Local ▪ Subdued SA investor confidence impacting brokerage and portfolio management fees ▪ Change in investor behaviour with derisking of portfolios to lower-margin products Wealth Management International

H1 +8.4% 0.8% 15 16 17 18 19 Liabilities Advances H1

Liabilities & advances

68

NEDBANK GROUP LIMITED – Interim Results 2019

234 256 295 314 323 15 16 17 18 19 Local International

10 11 12 13 14 15 16 17 18 19

SA unit trust FSCA approved offshore unit trust

Market share1 (%)

Asset Management – resilient AUM growth despite subdued investor confidence

Assets under management (Rbn)

+2.9%

1 Source: ASISA

11% 5% 2% 8% Quarterly

Key drivers ▪ Change in AUM mix as investors shift to passive & cash products ▪ Growth in AUM with positive net flows predominantly in cash ▪ Strong positioning internationally ▪ Strong cash franchise & largest unit trust passive provider

H1

69

NEDBANK GROUP LIMITED – Interim Results 2019

616 625

15 16 17 18 19 173 231

• 50

15 16 17 18 19

Non-life gross written premiums (Rm)

Insurance – performance impacted by higher weather-related claims

Key drivers Life ▪ Higher sales & lower claims in credit life ▪ Growth in life VNB supported by higher sales & statutory change in commission Non-life ▪ Higher weather-related claims ▪ Marginal growth in non-life GWP Life value of new business (Rm)

+33.5% +1.5% H1 H1

70

NEDBANK GROUP LIMITED – Interim Results 2019

Client-centred innovation

Asset Management

Frictionless client interactions

Insurance

Smart technology ▪ Launched Extraordinary Life, an automated

• nline investment portal.

▪ Introduced digital onboarding ▪ Significant increase in automation of transactions ▪ Award-winning chatbot gaining traction ▪ Progress on integration into Nedbank digital platforms ▪ “Senseable”, a telematics device that connects to the geyser through an app, enabling the client to adjust temperature, track electricity usage & reduce latent damage

• Innovation of the Year Award at the African

Insurance Awards ▪ Celent’s Model Insurer of the Year award for single administration policy system in the legacy & ecosystem transformation category

Wealth Management

Effortless trading ▪ Newly launched Stockbroking website offers clients enhanced security, research-based trading ideas, JSE-listed instruments & selected derivatives ▪ Significant reduction in client onboarding paperwork ▪ Enhanced NPW app with new features & functions

71

NEDBANK GROUP LIMITED – Interim Results 2019

Great traction on the award-winning app

Launched in July 2017 12 features added from Jul 2018 – Jun 2019 Ratings – Apple store 4.7 & Google Play store 4.4 19 348 app downloads 5 142 digitally active clients 51% active client base NPW app rated the 2nd best app globally*

Unique features

45 915 186 193

4 915 186 193

*Source: Cutter International Research

▪ Siri payments ▪ In-app (instant | secure) messaging ▪ Scan to pay ▪ Buy unit trusts & tax free investments ▪ Multiple transfer lists ▪ Recurring & future dated payments history ▪ Integration with NPW Intn’l

• incl. single-signon

▪ Share trading ▪ Biometrics authentication ▪ Online purchases – switch

• n/off

▪ ATM & branch locator using augmented reality ▪ Market value of properties bonded to Nedbank ▪ Privacy view switch ▪ Net-worth calculator & dashboard

45 915 186 193 1

NPW app transaction volumes (000)

H1 18 H1 19 > 300% 45.9 186.2 BOOKLET SLIDE

72

NEDBANK GROUP LIMITED – Interim Results 2019

Prospects for Nedbank Wealth

Creating value in a challenging environment

▪ Strong focus on cost containment as pressure on revenues persist ▪ Continue strategic focus and investing for growth in the international franchise ▪ Deliver innovative market-leading client experiences ▪ Create value through investment in systems, digital & data capabilities ▪ Continue to focus on improving Nedbank client penetration 2020 targets: ▪ ROE ≥ 30% ▪ Cost-to-income1 ≤ 60% − more challenging to achieve in the short term given pressure on NIR

1 In March 2019 we noted to the market that our 2020 cost-to-income target has become more challenging to achieve.

73

NEDBANK GROUP LIMITED – Interim Results 2019

Growth driven by ongoing ETI recovery

REST OF AFRICA

MFUNDO NKUHLU

74

NEDBANK GROUP LIMITED – Interim Results 2019

Key drivers Rest of Africa HE +19.6% & ROE of 9.8% ETI (Ecobank Transnational Incorporated) ▪ HE growth of 97% to R264m reflecting: − Strong performance from core West African operations (AWA & UEMOA). − Recovery in CESA’s business performance. − Nigeria business still facing headwinds. SADC ▪ HE of R29m, down 74%, but excluding Zimbabwe & once-

• ffs, earnings would have been up +21% to R87m:

− Adverse macroeconomic conditions, currency depreciation in Zimbabwe & once-offs. − Operating income muted. − Costs well managed, growing only 1%.

Rest of Africa – growth driven by the ongoing ETI recovery

Headline earnings, ROE 344 (550) (1 092) 245 293 15.3 (15.2) (32.4) 7.6 9.8 H1 15 H1 16 H1 17 H1 18 H1 19 Headline earnings (Rm) ROE (%)

Note: ETI results are reflected a quarter in arrear in Nedbank results

75

NEDBANK GROUP LIMITED – Interim Results 2019

3% 97% Advances Rest of Africa Other clusters

Rest of Africa – financial highlights

Six months ended % change H1 2019 H1 2018 SADC Headline earnings (Rm) (73.9) 29 111 Operating income (Rm) (3.7) 1 301 1 351 PPOP (Rm) (23.5) 195 255 Net interest margin (%) 7.3 7.6 NIR-to-expense ratio (%) 41.9 48.1 Cost-to-income ratio (%) 80.7 77.9 Credit loss ratio (%) 1.08 1.09 Average gross banking advances (Rm) 6.4 22 358 21 011 Average deposits (Rm) 11.5 29 976 26 889 Headline economic profit (Rm) (23.2) (334) (271) Average allocated capital (Rm) (7.8) 5 145 5 581 ROE (%) 1.1 4.0 ETI Headline earnings (Rm) 97.0 264 134 Total headline earnings 19.6 293 245 4% 96% Headline earnings

BOOKLET SLIDE

Note: H1 2019 ROE on subsidiary in-country statutory capital: 10.6%

76

NEDBANK GROUP LIMITED – Interim Results 2019

Headline earnings (Rm)

(74%) +21%

SADC – performance affected by once-offs & difficult conditions in Zimbabwe

77

NEDBANK GROUP LIMITED – Interim Results 2019

Zimbabwe – summary of timelines & financial impact

1 Oct 18 22 Feb 19 Monetary policy statement, presented by the Governor of the Reserve Bank of Zimbabwe, introduces RTGS $ as a means of exchange. Zimbabwe gazetted two legal instruments1; resulting in recognition of RTGS $ as legal tender & the initial exchange rate (set by government) was RTGS$ 2.5 to 1 US$. 24 Jun 19 Zimbabwe gazetted the Reserve Bank of Zimbabwe (Legal Tender) Regulations, resulting in Zimbabwe recognising RTGS $ (Zimbabwe Dollar) as the sole currency for legal tender. 31 Dec 18 30 Jun 19 Dec 17 Dec 18 Change HE2 R58m R142m 145% Fx rate– average RTGS $ 1: US$ 1 RTGS $ 1: US$ 1 NAV2 R447m R170m (R277m) Fx rate – closing RTGS $ 1: US$ 1 RTGS $ 3.88: US$ 1 Jun 18 Jun 19 Change HE2 R38m R3m (91%) Fx – average RTGS $ 1: US$ 1 RTGS $ 4.34: US$ 1 NAV2 R529m R64m (R465m) Fx rate – closing RTGS $ 1: US$ 1 RTGS $ 7.25: US$ 1

1 Exchange Control Regulations (Amendment) of 2019 (SI 32) & the Presidential Powers for (Amendment) of the RBZ Act & RTGS Electronic Dollars Regulations of 2019 (SI 33). 2 Post minorities.

For the second half of 2019, the outlook for the impact of monetary policy influences that could impact exchange rates remains negative. BOOKLET SLIDE

78

NEDBANK GROUP LIMITED – Interim Results 2019

SADC – good deposit growth & balanced performance of key financial drivers

Average gross banking advances (Rbn) Average deposits (Rbn) NIR (Rm) +6% Headline earnings (Rm), ROE (%)

▲68% ▲12% ▲6% ▲% CAGR 2015 - 2019

Cost-to-income ratio (%)

▼0.3%

14 21 22 H1 15 H1 18 H1 19 19 27 30 H1 15 H1 18 H1 19 374 546 481 H1 15 H1 18 H1 19 82 78 81 H1 15 H1 18 H1 19 +11% (12%)1 +4% NIM (%) 6.5 7.6 7.3 15HY 18HY 19HY

▲80 bps

30 bps 40 53 70 111 29 5.0 2.7 3.0 4.0 1.1

• 1.0

• 20

40 60 80 100 120

H1 15 H1 16 H1 17 H1 18 H1 19

1 Excluding Zimbabwe: average advances +10%, average deposits +18%, NIR +6% & cost-to-income 80%.

79

NEDBANK GROUP LIMITED – Interim Results 2019

96 98 H1 18 H1 19 334 359 H1 18 H1 19 397 386 H1 18 H1 19 5 439 7 000 H1 18 H1 19 2 577 2 639 H1 18 H1 19 219 223 H1 18 H1 19

SADC – growth in non-financial metrics

Clients (# 000) Branches (#) Revenue drivers Cost drivers Point-of-sale devices (#) Headcount (#) +7% +29% ATMs (#) +2% +2% +2% App transactions vol (# 000) (3%)1

1 The introduction of a 2% IMT tax by the Reserve Bank of Zimbabwe in September 2018 resulted in a reduction of mobile transactions as client behaviour changed. 1 Excluding Zimbabwe app transaction +66%

80

NEDBANK GROUP LIMITED – Interim Results 2019

SADC – delivering innovative market-leading client experiences

Digital solutions

Corporate internet banking solution with enhanced functionality Improved service offerings

Client value

Launched youth offering, with zero fees Improved value propositions

Digital solutions

Launched Nedbank Money app with additional 19 new features & benefits Improved value propositions

Payments solutions

Clients can earn SAA Voyager Miles as they spend with card. Improved value propositions

Zimbabwe Lesotho, Namibia, Malawi, Eswatini Eswatini, Namibia 1 Mozambique

1 Zimbabwe, Malawi & Lesotho rolled out in 2017 & 2018.

81

NEDBANK GROUP LIMITED – Interim Results 2019

▪ View cards linked on accounts ▪ Single app store publication with multicountry selection ▪ Touch ID login ▪ Freeze and unfreeze cards ▪ International card usage notification request ▪ Share account info with third parties via WhatsApp, message or email ▪ ‘Apply now’ requests ▪ Dashboard view of consolidated balances ▪ ATM & branch geolocation with navigation ▪ ‘Leave feedback’ & ‘Contact us’ within app ▪ Block and reorder cards ▪ Credit card ATM limit change ▪ Personal loan, Vehicle finance and Home loan instalment calculators

Digitally driven business for a digital age Nedbank Money (Africa) app published in app stores on 26 May 2019

Launched in May 2019, 13% of users converted in June 2019 19 additional features added

• ver previous App suite

Great platform for future enhancements UI & UX aligned to SA Money AppTM, achieving consistency Selected / unique features BOOKLET SLIDE

82

NEDBANK GROUP LIMITED – Interim Results 2019

SADC – growing the wholesale client portfolio

BOOKLET SLIDE

2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019

Puma Namibia Facility

Borrowing Base Facility/Facility agent US$22m

Zuva Petroleum Zimbabwe

Letter of credit facility US$13.5m

Consolidated Tobacco Processors Zimbabwe

Tobacco trade finance facility US$15m

Debmarine Namibia

Debt and facility Agent US$25M

National Foods Zimbabwe

Working Capital funding loan RTGS$12.5m

Mimosa Mining Zimbabwe

Medium Term Loan US$10m & Working Capital RTGS$12m

Trafigura Zimbabwe

Letter of credit facility US$9m

Surface Wilmar Zimbabwe

Letter of credit facility US$5m

Seedco Zimbabwe

Working Capital funding loan RTGS$10m

Matekane Mining Lesotho

Mining fleet Asset-based finance M109.8m

Pure Oil Industries Zimbabwe

Letter of Credit facility US$2.5m

Total Zimbabwe

Letter of credit facility US$2.5m

Let’seng Diamonds Lesotho

Term Loan M37.5m

Royal Swaziland Sugar Corporation

Medium term-loan E200m

Masianokeng Lifestyle Centre Lesotho

Nedbond, O/D and CPF M7.0m

Eswatini Sugar Association

Sugar stock funding loan E750m

83

NEDBANK GROUP LIMITED – Interim Results 2019

Highlights (based on ETI’s Q1 2019) ▪ Ten consecutive quarters of profitability as recovery continues (including Q2 2019) ▪ Strong performance from West African businesses (AWA & UEMOA) – combined ROE > 30%, PAT +52% ▪ Continued turnaround in CESA business performance – ROE at 37%, PAT +92% ▪ Economic environment in Nigeria remains challenging – Ecobank Nigeria ROE at 2%, PAT -99% ▪ Transition to NAFEX rate (Nov 2018) for Nigeria & FX translation changes had adverse impact on results ▪ Return on original cost of ETI investment improved to 12.3% (H1 18: 7.9%)

ETI – ongoing recovery across all regions, except Nigeria

Headline earnings (Rm) 339 (603) (1 162) 134 264

• 1400
• 1200
• 1000
• 800
• 600
• 400
• 200

200 400 600 H1 15 H1 16 H1 17 H1 18 H1 19

84

NEDBANK GROUP LIMITED – Interim Results 2019

Awards

RoA – continue to contribute to growth for the Nedbank Group SADC – own & manage banks ▪ Expect an improved performance in H2 relative to H1, with once-offs not recurring ▪ Zimbabwe to continue to be a tough and challenging environment ▪ A stronger control environment ▪ Ongoing portfolio review West & Central Africa: ETI – strategic investment ▪ ETI outlook is flat yoy, but expect yoy growth for Nedbank due to quarterly reporting in arrear ▪ Leverage the Ecobank-Nedbank-API capability & crossborder remittance solution for the convenience of clients 2020 targets – commitment to targets remain ▪ ROE ≥ cost of equity1 ▪ Cost-to-income ≤ 60% − creating scale from investments & cost optimisation

Prospects for Rest of Africa

1 Rest of Africa COE approximately 16%

Banco Único

85

NEDBANK GROUP LIMITED – Interim Results 2019

Our strategy positions Nedbank well for increased competition & higher levels of growth when SA macro improves

OUTLOOK & 2019 GUIDANCE

MIKE BROWN

86

NEDBANK GROUP LIMITED – Interim Results 2019

Our environment – lower GDP growth & lower interest rates than previously forecast

Prospects into H2 2019

▪ Balance sheet – Slightly stronger wholesale & retail advances growth » Many clients still awaiting clarity on land expropriation, Eskom, etc – Liquidity profile & capital levels to remain strong ▪ Income statement – Revenue growth momentum to continue at similar levels with more meaningful increases dependent on SA economic recovery – Growth in impairments expected to slow in H2 – Expense management remains a key focus ▪ Assets under management – Weaker flows into higher-margin equity products – Solid flows into lower-margin cash & passive 2018 2019 2020 2021 GDP SA Feb 19 forecast 0.8% 0.5% 1.3% 1.6% 1.8% 1.9% 2.0% GDP SSA (excl SA) 3.6% 4.2% 4.2% 4.1% Inflation (CPI) Feb 19 forecast 4.7% 4.4% 4.6% 5.1% 5.2% 5.0% 5.3% Industry credit growth Feb 19 forecast 5.2% 5.4% 5.9% 6.9% 7.2% 7.7% 8.2% Ave prime interest rate Feb 19 forecast 10.1% 10.1% 10.3% 10.0% 10.7% 10.0% 10.7%

Macroeconomic drivers1 (%)

1 All Nedbank Economic Unit forecasts at July 2019. | GDP SSA as per WEO (July 2019).

87

NEDBANK GROUP LIMITED – Interim Results 2019

2019 financial guidance

Growth in DHEPS for full-year 2019 around nominal GDP growth

[revised from ≥ nominal GDP growth]

▪ Average interest-earning banking asset growth of mid-to-upper single digits

[no change].

▪ NIM below the 2018 level of 3.65% [no change].

NII

▪ Within the bottom half of our target range of 60–100 bps [no change]. ▪ Around mid-single-digit growth [revised from mid-to-upper single digit growth]. ▪ Around mid-single-digit growth [revised from above mid-single-digit growth].

CLR NIR

Expenses

THANK YOU

Thank you

89

NEDBANK GROUP LIMITED – Interim Results 2019

2020 & medium-to-long-term targets

Metric H1 2019 Medium-to-long-term target (MLT) 2019 outlook 1 vs 2018

ROE (excl goodwill) 17.9% 5% above COE 3 (≥ 18% by 2020) Around MLT Diluted HEPS growth 3.7% ≥ CPI + GDP growth + 5% Around CPI + GDP growth Credit loss ratio 70 bps 60–100 bps Increases to within the bottom half of

• ur target range of 60–100 bps

NIR-to-expenses ratio 82.7% > 85% Increases, but remains below MLT Cost-to-income ratio 2 55.4% 50–53% (≤ 53% by 2020) 2 Decreases, but remains above MLT CET 1 CAR Tier 1 CAR Total CAR 11.3% 12.3% 14.6% Basel III basis: 10.5–12.5% > 12% > 14% Within target range Dividend cover 1.99 x 1.75 to 2.25 times Within target range

1 2019 outlook compared to FY 2018 based on current economic forecasts. | 2 Cost-to-income ratio includes associate income. In March 2019 we noted to the market that

• ur 2020 cost-to-income target has become more challenging to achieve. | 3 Target to be revised should Nedbank make future acquisitions that increase goodwill.

▲ ▼ ▲ ▲ ▲ ▲ ▲

BOOKLET SLIDE

90

NEDBANK GROUP LIMITED – Interim Results 2019

2020 targets – strategy in place to improve financial metrics in RBB & RoA, while maintaining good returns in CIB & Wealth

Cost-to-income ratio Return on equity1

Nedbank H1 2019 Peer average2 Nedbank 2020 target Nedbank H1 2019 Peer average2 Nedbank 2020 target

Nedbank Group

55.4% 55% ≤ 53%4 17.9% 20% ≥ 18%

Corporate & Investment Banking

40.9% 51% ≤ 40% 19.2% 20% ≥ 20%

Retail & Business Banking

62.3% 55% ≤ 58%4 17.3% 28% ≥ 20%

Wealth

71.6% 64% ≤ 60%4 22.3% 20% ≥ 30%

Rest of Africa3

70.0% 55% ≤ 60% 9.8% 21% ≥ COE

1 Nedbank ROE target at group, excluding goodwill for comparability purposes. | 2 Peer averages exclude Nedbank and are based on Dec 2018 for ABG & SBK, Jun 2018 for FSR | CIB – ABG CIB, RMB & SBK CIB | RBB – ABG SA RBB, FNB & Wesbank, SBK SA PBB, Wealth – ABG WIMI, SBK Wealth and Liberty, excluding Liberty C:I peer average is 54%, RoA – ABG RoA, SBK RoA Legal. | 3 Rest of Africa includes ETI. COE estimated at > 16%. | 4 In March 2019 we noted to the market that our 2020 cost-to-income targets have become more challenging to achieve.

BOOKLET SLIDE

91

NEDBANK GROUP LIMITED – Interim Results 2019

Macroeconomic forecasts under Ramaphobia, Ramaphoria & Ramareality

1 Nedbank forecasts & scenarios updated: July 2019 (Nedbank Group Economic Unit). | 2 Excludes mild-stress scenario of 20%.

BOOKLET SLIDE

Ramareality (base case) Ramaphoria (positive scenario) Ramaphobia (high-stress scenario) 18 19 20 21 18 19 20 21 18 19 20 21 SA GDP growth 0.8% 0.5% 1.6% 1.9% 0.7% 0.9% 2.3% 2.1% 0.8% (0.1%) (0.1%) 0.5% Ave prime interest rate 10.1% 10.1% 10.0% 10.0% 10.1% 10.0% 9.8% 9.8% 10.1% 10.4% 10.9% 10.8% Inflation (CPI) 4.7% 4.4% 5.1% 5.0% 4.7% 4.1% 4.0% 3.9% 4.7% 4.8% 6.4% 6.0% Credit growth 5.2% 5.4% 6.9% 7.7% 5.2% 7.9% 10.0% 8.9% 5.2% 4.4% 3.5% 5.0% Probability2 (%) 50% 20% 10%

92

NEDBANK GROUP LIMITED – Interim Results 2019

Macroeconomic forecasts under Ramaphobia, Ramaphoria & Ramareality

BOOKLET SLIDE Limited structural reform ▪ Fight against corruption continues ▪ Ongoing debate around land, SARB remain (no immediate resolution) ▪ Ongoing policy ambiguity & limited reforms ▪ Moody’s downgrade, but discounted by the market & search for higher yields ▪ Eskom – deterioration in finance continues with ongoing bailouts & limited progress on turn-around Global environment less favourable than before, but still supportive ▪ Sentiment swings between risk-on & risk-off conditions Significant improvements ▪ Structural reform agenda implemented ▪ Found solutions for land reform without a negative impact on confidence ▪ More market & investment friendly policies ▪ Public finances improving ▪ SA averts a Moody’s downgrade & some ratings upgrades from 2020 ▪ Accelerated Eskom turnaround Highly favourable environment ▪ Synchronised growth, global trade wars subside & commodity prices gain momentum ▪ Risk-on global conditions Populist pressures lead to unfavourable

• utcomes

▪ Land issue leads to rising tensions & social discontent ▪ Significant conflict with anti-Ramaphosa faction & fight against corruption loses momentum ▪ Structural reforms fail ▪ Universal sovereign downgrades – rand under significant pressure ▪ Eskom loadshedding continues & no progress on turnaround Adverse global conditions emerge ▪ Commodity price pressures, increased trade protection, adverse Brexit, heightened global tensions ▪ Risk-off global conditions Domestic drivers: Global drivers:

Ramareality (base case) Ramaphoria (positive scenario) Ramaphobia (high-stress scenario) 18 19 20 21 18 19 20 21 18 19 20 21

93

NEDBANK GROUP LIMITED – Interim Results 2019

5 921 5 765 4 277 11 787 13 495 06 07 08 09 10 11 12 13 14 15 16 17 18

Nedbank Group in a strong position

16.3 4.1 20.1 5.6 06–08 14–H1 19 Wholesale Retail 0.5 0.6 1.4 08 09 H1 19 (28%) Global financial crisis

Headline earnings (Rm) Loan growth (CAGR %) NII sensitivity for 1% change in interest rates (Rbn)

CAGR 13.5%

BOOKLET SLIDE

94

NEDBANK GROUP LIMITED – Interim Results 2019

32.0 33.9 37.1 08 09 H1 19 0.45 0.47 0.89

1 Includes dormant account closures. | 2 Core equity tier 1.

Nedbank Group in a strong position

Number of clients (m) NIR income contribution (%) Defaulted advances (%) CET1 ratio (%) Funding tenor (%) Coverage (%)

4.4 4.2 7.81 08 09 H1 19 39.8 42.2 46.5 08 09 H1 19 3.9 5.9 3.6 08 09 H1 19 8.22 9.92 11.3 08 09 H1 19 83% 4.3% (2.3) 1.4%

Specific Portfolio

60.9 57.9 49.3 19.9 21.0 21.9 19.2 21.1 28.8 08 09 H1 19

ST MT LT Stage 1 & 2 Stage 3

BOOKLET SLIDE

95

NEDBANK GROUP LIMITED – Interim Results 2019

Price:book1,2 (x)

Nedbank Group – attractive relative valuation

Price:earnings1,2 (x)

8.7 8.7 13.9 10.6 23.5 8.5 NED ABG FSR SBK CPI EM banks

1 IRESS Pro consensus at 30 June 2019. | 2 EM banks include Latam banks, Poland, Russia & Turkey (Data from JP Morgan). | All data based on 1-year forward forecasts.

1.3 1.4 2.9 1.8 5.8 1.4 NED ABG FSR SBK CPI EM banks 5.9 6.7 4.2 5.3 1.6 5.8 NED ABG FSR SBK CPI EM banks 3-year forecast EPS growth1 (CAGR %) 8.8 8.2 8.9 9.3 20.9 7.4 BOOKLET SLIDE

Dividend yield1,2 (%)

96

NEDBANK GROUP LIMITED – Interim Results 2019

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.