IR Results 17 for the six months ended 30 June 2017 Using our - PowerPoint PPT Presentation

Interim IR Results ’17 for the six months ended 30 June 2017 Using our financial expertise to do good

OVERVIEW Creating value in a challenging political & economic environment MIKE BROWN IR NEDBANK GROUP LIMITED – Interim Results '17 2

Political & policy uncertainty leading to sovereign-credit-ratings down- grades, lower levels of confidence & recessionary economic conditions Reduced confidence Nedbank & client business impacts  Clients Jun 16 Dec 16 Jun 17 – Delayed investment & strong repayment behaviours SACCI BCI 1 95.1 93.8 94.9 – Increased savings with focus on lower risk assets/cash RMB/BER BCI 2 32 38 – Liquidations & insolvencies down 29 – Slower transactional activity & increasing levels of in-bundle behaviour FNB/BER CCI 3 -9 -10 -9  Balance sheet – Wholesale pipelines strong, but conversion slower & early repayments increased, leading to slower wholesale advances growth Key indicators – 2017 forecasts – Muted retail advances growth As at Jul 16 Feb 17 Jul 17 – Strong deposit growth & excellent liquidity metrics – Strong organic capital generation SA GDP 1.0% 0.7% 0.6%  Income statement Ave prime rate 10.3% 10.4% 10.3% – Slower revenue & expense growth Ave inflation (CPI) 6.5% 5.7% – Improvement in impairments – particularly wholesale 5.3% – Currently no material impact of sovereign-credit downgrades on Pvt sector credit growth 8.0% 6.2% 5.2% funding costs  Assets under management – Good growth, particularly in cash & offshore 1 SACCI Business Confidence Index. 2 RMB/BER Business Confidence Index (50 indicates neutral position, 100 extremely positive). 3 FNB/BER Consumer Confidence Index (+10 very positive | -10 very negative). IR NEDBANK GROUP LIMITED – Interim Results '17 3

Delivering value to shareholders NAV ROE > COE Dividends NAV per share 1 (cents) ROE & cost of equity (%) Dividend per share (cents) CAGR: +7.4% +2.4% CAGR: +11.8% +7.0% 18.9 18.4 17.3 16.5 16.1 15.7 15.1 14.4 13.9 13.5 13.0 13.0 12 180 13 596 14 428 15 826 16 200 390 460 537 570 610 13 14 15 16 17 13 14 15 16 17 13 14 15 16 17 H1 H1 H1 ROE (excl GW) COE ROE (excl GW & ETI) 1 NAV per share excluding ETI: CAGR +8.8% & +6.6% yoy. IR NEDBANK GROUP LIMITED – Interim Results '17 4

Our role in society – contributing by delivering value to all our stakeholders Our purpose - to use our financial expertise to do good for individuals, families, businesses & society SHAREHOLDERS STAFF  Increased NAV per share to 162 00 cents  Paid R7.8bn in salaries & benefits to support  Paid R3.1bn dividends to shareholders who our 32 349 staffmembers & their families represent pension funds & investments of all  Facilitated transfer of R2.4bn payroll taxes on South Africans (incl GEPF, a 6.5% shareholder behalf of staff to government in Nedbank)  Leadership & culture change programme Supportive outcomes at 50th AGM – all  TO BE THE supporting strategy resolutions passed with > 90% votes of MOST ADMIRED  Transforming our workforce towards SA approval FINANCIAL SERVICES demographics (> 77% black employees) REGULATORS PROVIDER IN AFRICA CLIENTS  Maintained a strong balance sheet to support a BY OUR safe & stable banking system  R76bn new loan payouts to enable clients to STAKEHOLDERS finance their homes, vehicles, education & grow  Paid R5.5bn direct, indirect & other taxes their businesses  Invested more than R100bn in government &  Enhance client convenience – 74 new public sector bonds to support the funding Intelligent Depositors, reformatted 303 digitally focused needs of government branches to date & added 234 video-banking stations COMMUNITIES  Infrastructure financing – over R50bn drawn &  Procured 75% of our goods & services locally committed  Contributed R66m to socioeconomic development (50%  Safeguarded R763bn deposits at competitive interest spent on education) rates  Maintained level 2 BBBEE status for eight consecutive years  Top 3 SA asset manager for nine consecutive years – managing our clients’ investments  Paid out R14.9bn in renewable-energy financing to date IR NEDBANK GROUP LIMITED – Interim Results '17 5

FINANCIAL OVERVIEW Solid performance from managed operations underpinned by good cost management & high-quality advances book RAISIBE MORATHI IR NEDBANK GROUP LIMITED – Interim Results '17 6

Key performance indicators – solid performance from managed operations Managed operations H1 H1 H1 H1 2017 2016 2017¹ 2016¹ Headline earnings (Rm) (2.9%) 5 427 6.7% 6 030 5 271 6 433 ROE (excl goodwill) 15.7% 18.4% 15.1% 18.9% Diluted HEPS growth 1.6% 19.7% (3.7%) 5.9% Preprovisioning operating profit growth 1.5% 11.6% (5.7%) (0.1%) Net interest margin 2 3.52% 3.58% CLR 0.67% 0.47% NIR-to-expenses ratio 83.0% 81.6% CET1 CAR 11.6% 12.3% Assets under management (Rbn) 15.2% 256 295 Dividend per share (cents) 7.0% 570 610 1 Excluding associate income/losses, as well as funding costs. | 2 H1 2016 rebased. IR NEDBANK GROUP LIMITED – Interim Results '17 7

Headline earnings – solid performance from managed operations Headline earnings (Rm) HE growth (%) 6.7 617 (683) 373 (2.9) (622) 520 Group Managed (361) operations ROE excl GW (%) 6 320 6 254 5 947 5 632 18.9 5 427 5 427 5 271 5 271 15.1 +4.0% +3.3% (27.9%) +5.0% (>100.0%) H1 NII NIR Impairments Expenses Associate Direct tax H1 Group Managed 2016 income & other 2017 operations IR NEDBANK GROUP LIMITED – Interim Results '17 8

Net interest margin – driven by endowment & asset mix Net interest margin (bps) (5) (1) (4) 6 1 9 15 358 352 337 H1 Trading Rebased Endowment Asset Asset Liability Net prime - Other 2 H1 1 2016 LAP 1 H1 2016 impact mix pricing pricing JIBAR 2017 & mix impact Average interest-earning banking assets 1 +2.4% 1 Rebased NIM for six months ended 30 June 2016 would have been 352 bps & AIEA of R745m, had HQLA been removed from the banking book & included in the trading book from 1 January 2016. 2 HQLA -1 bps included in Other. IR NEDBANK GROUP LIMITED – Interim Results '17 9

Net interest margin – narrowing of prime - JIBAR spread in H2 2016 Prime – 3-month average JIBAR spread (bps) H2 2016 H1 2016 H1 2017 3.60 Ave: 345 bps Ave: 320 bps Ave: 320 bps 3.50 Narrowing of the prime - JIBAR spread H1 2017 vs H1 2016 as short end JIBAR rates priced in prime interest rate hikes that have not materialised in 3.40 H2 2016 & H1 2017 3.30 3.20 3.10 3.00 Jan 16 Mar 16 May 16 Jul 16 Sep 16 Nov 16 Jan 17 Mar 17 May 17 IR NEDBANK GROUP LIMITED – Interim Results '17 10

Advances up 2.4% – solid growth across retail portfolios driving mix benefit in NIM Gross advances (Rbn) BA900 market share Wholesale Retail Share 3 Trend Leveraging Mostly Selective origination Commercial relationships & ST & & unique positioning 40.3 property pipeline volatile Core corporate 4 (1.1%) 21.2 +8.3% +2.8% (4.0%) Home loans 14.5 +6.0% Vehicle finance 27.6 +5.1% +6.9% Personal loans 18 19 16 15 10.8 142 154 158 156 127 122 144 148 101 107 Card 14.1 Commercial Term Other Home Vehicle Personal Card 2 1 property loans loans loans finance loans H1 2016 H1 2017 1 Terms loans & other longer-dated loans in CIB. 2 Other loans include overdrafts, overnight loans, preference shares, deposits placed under reverse repurchase agreements & other smaller corporate loans. 3 BA900 – May 2017 (Compared to June 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). | Negative impact of ~R4bn on CIB loan book as a result of ZAR strength. IR NEDBANK GROUP LIMITED – Interim Results '17 11

Deposits up 2.8% – good transactional & Basel III deposit growth, particularly in RBB, up 8.8%, evident in ongoing market share gains Deposits (Rbn) BA900 market share Transactional Lengthen funding Share 3 franchise profile Trend 1 Linked to Increasing Driven by client Increasing Wholesale 22.0 trading contractual behaviour in the behavioural tenure activities cycle tenure (+ for Basel III) +6.3% (+ for Basel III) Commercial 17.1 (1.9%) Household 19.1 +6.1% (8.6%) +5.4% +8.0% +9.2% Foreign 13.9 102 108 277 294 160 157 currency 52 64 67 89 81 56 50 55 2 Current & Cash NCDs L/T Fixed Call & Other savings acc Mgmt debt deposits term H1 2016 H1 2017 1 Nedbank’s market share of medium- & long-term wholesale funding is 25% and 26% respectively (May 2017). The favourable Basel III treatment of longer-term funding reduces the need to hold HQLA, thereby . positively impacting the all-in marginal cost of longer-term wholesale funding vs short-term wholesale funds. Including NCDs with tenure of > 30 days. 2 Includes foreign currency liabilities, deposits received under repurchase agreements & other. 3 BA900 – May 2017 (Compared to June 2016). IR NEDBANK GROUP LIMITED – Interim Results '17 12