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Nedbank Retail &
Business Banking
Client centred differentiators
for sustainable growth
Ingrid Johnson
Group Managing Executive:
Nedbank Retail & Business Banking
HSBC conference
Topic: Game changers
4 December 2012
1
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 will prove to be 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 whatsoever and howsoever arising as a result of the reliance by
any party thereon, including, but n limited to, loss of earnings, profits, or consequential loss or damage.
2
Nedbank is building a client centred, vision led, values driven organisation
for the benefit of all stakeholders
OUR VISION
3
Since 2004 Nedbank has sought to deliver sustainably across all parts of the
group, focusing on a number of ‘game changers’ …
Wealth Cluster & bought Old Mutual
minority JV shareholdings
Imperial Bank acquisition of
remaining 49.9%
Investment in product & teams for quality NIR growth
Business Banking
as key strategic thrust
Repositioning Nedbank Retail
Portfolio Tilt widely embedded
Committed to building a vision-led, values driven
organisation
Basel II & focus on world class
risk management Re-igniting the innovation culture
Lower risk, integrated investment
bank
2004 2012
Established Ecobank Nedbank
Alliance
4
Retail Banking1 - headline earnings, Rm
Rest of Nedbank - headline earnings, Rm
896
1 463 1 876
1 002
(156)
2005 2006 2007 2008 2009
2 271 2 972
4 045 4 763 4 433
2005 2006 2007 2008 2009
17.6 23.1 22.1 10.8 -1.6 RoE
%
19.5 21.6 26.3 24.5 20.0 RoE
%
…resulting in strong wholesale businesses while revealing strategic challenges
in Retail as well as opportunities across Nedbank’s key strategic focus areas
FY
FY Emphasis for today’s presentation
1. Includes Wealth businesses
Prime interest rate 2008: 15.1%, 2009: 11.9%
Core Tier 1 equity 2007: 7.2%, 2009: 9.9%
5
SOURCE: Retail & BB 2012 Investor Day Presentation
United Nations; IFC; Financial Inclusion Expert Group;
World bank – doing business; team analysis
Core differentiators Trends
▪ Consumer preference for choice,
simplicity, increased transparency and
lower cost banking
▪ Technological innovation (e.g. digital
channels) offering opportunity for lower
cost distribution and process simplicity
▪ Higher cost of capital and liquidity from
Basel regulations put risk management
and liabilities at a premium
▪ Rising demographics and 6% p.a. small
business growth represent tomorrow’s
valued, aspirational clients
▪ Collaborative cultures increasingly
recognised as central to organizations
effectiveness and innovation
To deliver on Nedbank’s strategic intent, Retail & BB have distinctive & differentiated positionings that leverage key trends & core strengths/competencies
A choice of distinctive client
centred banking experiences,
delighting in moments of truth
Integrated channels strategy
leveraging digital, high potential
micro-markets & optimising cost
Collaborative people culture
with a client-centred,
relationship-oriented DNA
Robust risk management for
quality asset portfolios &
liabilities innovation sustaining
historical strength
A rigorous approach to capturing
virtuous circle of household &
business
6
Retail & BB are capturing the powerful virtuous circle of the individual and business
through collaboration and changes to the business operating models …
Retail
strategic
wheel
(capturing
elements of
organisational
design)
BB Delivery
model
(evolved to
capture the
opportunity
around the
business
owner &
employees)
Entrepreneur
/ Small Bus
owner
Youth
Powerful ‘virtuous circle’ of individual & business
Employees
Business Seniors
1. Including their household
1
Business
owner 1
7
… while also enhancing the client value proposition to unlock the virtuous
circle through the business owner as a key influencer…
Results
• > 500 new business
owners & key
individuals banked in
just ~ 8 months
• Positive feedback from
business owners
• Business Banking now
50% of all new home
loan registrations in
Nedbank
• Contributing to a
significant shift in Net
Promoter Score, now
at > 6 year high
• > 2 500 business leads
for N@W offering
Source: BB ATL marketing campaign Q3 2012
8
… leading to strong client reception of N@W offering and excellent new Retail
client gains of SME company employees
0
5
10
15
20
25
Ja
n
Feb
Ma
r
Ap
r
Ma
y
Ju
n
Ju
l
Aug
Se
p
Oct
No
v
De
c
Ja
n
Feb
Ma
r
Ap
r
Ma
y
Ju
n
Small & Med Business
Corporate & Public Sector
N@W monthly account sales, #’000
9
Nedbank is also investing in the Youth, our future clients & entrepreneurs, for
medium term benefits through compelling CVP’s and links with the influencer
10
Integrated channels strategy is enabling a choice of distinctive client centred
banking experiences…
Voice of client in
Nedbank’s integrated
channels vision
I have convenient access to my preferred
choice of channel(s)
My bank ensures simple and seamless
sales & delivery of product
I am guided on the use of different channels &
associated benefits
I can move seamlessly between channels
My bank provides me with appropriate
benefits as I do more with them
My bank helps me to improve my financial
fitness
11
…through 6 key drivers for implementation
Developing
seamless sales &
servicing capability
within/across
channels
Upgrading mobile
& digital to true
alternatives &
growing digitally
enabled client base
Educating clients
on most efficient &
attractive choice of
channels
Area collaboration
accelerating leads
flow for greater share
of wallet
Optimising channel
footprint to capture
full potential in each
micro market
Aligning processes
for seamless operation
& fulfillment
1. Vehicle and Asset finance
Gather Client
Information
Pre-population of
existing client
information
Make Credit
Decision
Integrated credit
approval
Automated VAF
agreement creation
Complete
Application
Automatically
generate application
and client record
where applicable
Conclude
Transaction
Automated accounted
opening
System driven
completion of payout
12
Micro-market growth / optimise strategies guiding relevant mix of integrated
channels format, functionality & location …
Nedbank micro-market opportunity P
ote
nti
al G
OI (R
m)
Low
High
Current GOI (Rm) High Low
Rising Stars:
Invest and
develop
Movers &
Shakers:
Retain
and grow
Right size:
Capture quick
wins
Cash Cows:
Optimise mix
& cost
Grow share
Reviewed
holistically for
both
wholesale &
retail client
needs
13
…enabling a step change investment in distribution to increase accessibility for
clients across South Africa as a bank for all
STRATEGIC INTENT
1 174 1 361
679 1 355
1 874
2 716
2009 2012H1
2015
Branches & Outlets
(# )
ATMs
(# )
2009 2012H1
2015
Alternate
outlets
Branches
543 712
Over R1.3bn investment in distribution since
2009; further R1.3bn in the next 3 years
33%
increase!
45%
increase!
STRATEGIC INTENT Footprint optimised in line with micro-market
opportunity - ~ 50% growth in non-urban
50
< 5yrs old
> 5yrs old
Rural
Urban
Semi-
urban
440
557
53
71
50
84
543
712
2009 2012 H1
+34%
+68%
+27%
H1
H1
14
Developing seamless end-to-end client-centred servicing and fulfilment
Consolidation of front end systems in branch “Easy-to-do-Business” philosophy
From 22 disparate, product-driven front-
line systems…..
...to an integrated client driven platform for
enhanced client and staff banking
experience
End-to-end process automation for quick
decision making & fulfilment
Gather Client
Information
Pre-population of
existing client
information
Make Credit
Decision
Integrated credit
approval
Automated VAF
agreement creation
Complete
Application
Automatically
generate application
and client record
where applicable
Conclude
Transaction
Automated accounted
opening
System driven
completion of payout
15
Upgrading mobile & digital for highly secure anytime, anywhere banking
Enable digital
channels as true
alternatives
Be a leader or fast
global follower in
commercially
viable digital
innovation
Increase digitally
enabled client
base & revenue
contribution from
digital channels
Market leader Fast global follower
Home Loans online
application channel as true
alternative to originators
Cashvault with
online logistics -
cost effective &
more seamless
alternative to
traditional cash
handling
• Nedbank App SuiteTM - 100 000 downloads reached within 3 months
• Home Loan online channel contributing 10% of new intake within 2 months
• MyFinancialLifeTM - R2.7bn of net worth aggregated across ~9 000 users
• Social media: ~6 800 twitter followers, ~10 000 facebook likes and ~12 600
Linkedin followers within a year
16
Integrated channels strategy – translating smaller scale to a strength
o Social media listening centre
launched
o Integrated Banking System
simplifying front-line
fulfilment
o Cash recycling within areas
improved by ~R1bn per month
o Branch redesign in pilot phase
o Capex payback time for 2011
branch investment halved
o Expansion in 30 geographic
growth nodes to capture “white
space” opportunities (50%
complete)
o Area Collaboration unlocking
lead flow within micro-markets
Nedbank Integrated Channels Strategy Implementation progress
ATM
Contact
centre
RM Internet
Mobile
Branch
Nedbank Integrated Channels Strategy Implementation progress
17
SOURCE: 2012 Investor Day Presentation
United Nations; IFC; Financial Inclusion Expert Group;
World bank – doing business; team analysis
Core differentiators Trends
▪ Consumer preference for choice,
simplicity, increased transparency and
lower cost banking
▪ Technological innovation (e.g. digital
channels) offering opportunity for lower
cost distribution and process simplicity
▪ Higher cost of capital and liquidity from
Basel regulations put risk management
and liabilities at a premium
▪ Rising demographics and 6% p.a. small
business growth represent tomorrow’s
valued, aspirational clients
▪ Collaborative cultures increasingly
recognised as central to organizations
effectiveness and innovation
A choice of distinctive client
centred banking experiences,
delighting in moments of truth
Integrated channels strategy
leveraging digital, high potential
micro-markets & optimising cost
Collaborative people culture
with a client-centred,
relationship-oriented DNA
Robust risk management for
quality asset portfolios &
liabilities innovation sustaining
historical strength
A rigorous approach to capturing
virtuous circle of household &
business
To deliver on Nedbank’s strategic intent, Retail & BB have distinctive & differentiated positionings that leverage key trends & core strengths/competencies
18
Building Retail into a high performing sustainable business with increased
clients and returns while sustaining wholesale strengths in a tough cycle
58 102 104
105
161
299
39
95
182
2701
202
628 585
2010 2011 2012
358
STRATEGIC INTENT
5 008 Total
Clients2 4 380 5 593
Middle &
RRB
ELB
Youth
H1
Retail Banking1 - headline earnings, Rm
Rest of Nedbank - headline earnings, Rm
(69)
133
863 1 194
2009 2010 2011 2012
2 057 2 020 1 909 2 274
2009 2010 2011 2012
-1.2 1.7 9.3 11.8 RoE
%
RoE
% 21.8 20.6 17.4 19.0
H1
H1
Growth in Retail client numbers (‘000)
14.2%
excluding
HL’s back
book
1. Excludes Wealth businesses
2. 2011 includes 270K clients acquired as part of MFC
Source: Interim Analyst Results 1H12
Prime interest rate 2009: 11.9%, H1 2012: 9.0%
19
Nedbank Group is a vision led, values driven organisation delivering
sustainable performance relative to peers
3 year - share price relative
Price : tangible book
1.68 1.88
2.03
2.59
1.0
1.5
2.0
2.5
3.0
2009 2010 2011 2012
145
107
106
167
90
110
130
150
170
Oct 09 Oct 10 Oct 11 Oct 12