Eclipse – simplified end-to-end digital client onboarding for individuals in 2019 End-to-end digital client onboarding, digitising our top 10 products & more than 180 services by end-2020 H1 2019 H2 2019 H1 2020 H2 2020 H2 2021 a Juristic client Juristic client Individual client onboarding Clients: onboarding onboarding a a In branch Web & app Channels: a a ▪ Home loans ▪ Home loans (1) * ▪ Card issuing (1) ▪ Card issuing (2) (2) * ▪ Personal loans Products 1 : ▪ Investments (1) ▪ Investments (2) ▪ Transactional products ▪ Vehicle Finance * ▪ Overdrafts (1) ▪ Overdrafts (2) ▪ Stockbroking * Investments include unit trusts & ▪ Forex * retirement annuities (additional benefit) ▪ Student Loans * Services: 86 114 > 180 NEDBANK GROUP LIMITED – Annual Results 2019 1 The number (1) refers to first minimal viable product launch on the new platform; (2) refers to additional enhancements. 12 * Delivery timelines remain under review given dependencies on other core Managed Evolution programmes.
Eclipse & app – improved client experiences & unlocking efficiencies Sales through Eclipse & app Time to open a personal loan & transactional (% of total) product (minutes, majority of transactions) Paper volumes in 79% backoffices down 75% 50 – 60% 3% 45-50 61% 14% 2% Skilled staff can Existing clients 50% do in < 10 mins 3 to 7 mins 38% 9% 32 76% 1% ≤ 20 ≤ 20 61% 59% 16% 41% 37% ≤ 10 ≤ 10 2% 14% 0% 0% Q4 19 Q4 19 End Q2 19 2018 2018 Q3 19 Q4 19 (branch) (web & app) (branch) Personal loan Transactional product App-related sales All channels NEDBANK GROUP LIMITED – Annual Results 2019 13
In addition, our various new innovations & digital BOOKLET SLIDE enhancements delivered improved client experiences iOS & Android app store client ratings 1 Net promoter score 2 (%) (stars / 5) Only SA bank to increase NPS in 2019 60 < 55 < 2.6 3.3 3.7 3.7 4.4 4.6 4.6 26 37 38 34 Bank A Bank B Bank C Bank D Nedbank Nedbank Bank E 17 18 19 Digital Average SA Leading Money Wealth banks International banks Nedbank 1 As at Dec 2019 (simple average of iOS & Android app ratings). | 2 Source: Consulta (SA-csi), research of various international banks that are leading in their digital journeys including Sberbank, CBA, Garanti, DBS, Moneta. NEDBANK GROUP LIMITED – Annual Results 2019 14
Value to shareholders NAV per share (cents) ROE & cost of equity (%) Dividend per share (cents) Flat +4% 17.9 17.0 16.5 16.4 16.0 Economic profit 14.1 14.2 14.1 14.0 13.0 15 685 15 830 16 990 17 560 18 204 1 107 1 200 1 285 1 415 1 415 15 16 17 18 19 15 16 17 18 19 15 16 17 18 19 CAGR: +4% COE ROE (excl GW) CAGR: +6% NEDBANK GROUP LIMITED – Annual Results 2019 15
Our role in society SHAREHOLDERS ▪ Celebrated 50 years on the JSE in 2019. STAFF ▪ Paid R7.1bn dividends to shareholders. ▪ Paid R17.3bn in salaries & benefits. ▪ Supportive outcomes at 52nd AGM. ▪ Staff engagement score strong at 75% – ▪ Engaging on ESG & climate change well above industry levels. matters. ▪ Accelerated leadership & culture REGULATORS change programmes. Our purpose – ▪ Transforming our workforce towards SA ▪ Maintained a strong balance sheet to to use our demographics (79.5% black employees). support a safe & stable banking system. financial ▪ Paid R11bn direct, indirect & other taxes. expertise to CLIENTS do good ▪ R111bn invested in government & public sector bonds. ▪ R208bn new-loan payouts, up by 15%. SOCIETY ▪ Safeguarded R904bn deposits at competitive interest rates. ▪ Procured 76% of our goods & services locally. ▪ Exciting innovations launched – Eclipse, HeyNed ▪ R130m SED spend – more than 50% on education. (digital concierge), Loyalty & Rewards, & API ▪ Ongoing delivery on the SDGs – including SA’s first & Marketplace. only commercial bank to list a green bond on the JSE. ▪ First large SA bank to introduce a zero-monthly-fee ▪ YES initiative – created 3 315 meaningful job opportunities account. for our youth in 2019. ▪ Only SA bank to increase NPS score. ▪ Level 1 BBBEE contributor (under the Amended FSC). NEDBANK GROUP LIMITED – Annual Results 2019 16
Being a responsible corporate citizen & focus on ESG BOOKLET SLIDE Delivering on our purpose Dow Jones Sustainability Index – one of only of using our financial expertise to do good 27 banks & included for 14 th year Launched 3 >50% of SED Africa’s first carbon -neutral financial spend on zero-monthly- organisation – carbon neutral since 2010 education fee accounts (& offset our water consumption) WWF Nedbank Green Trust Partnership – 76% First SA bank invested > R260m since inception in support of procurement to launch a over 200 environmental & social projects spend - support green bond SA business on the JSE Committed Only SA company awarded overall winner at YES – placed all three major reporting awards – IAS (SA), R25m >3 300 previously EY Integrated Reporting & JSE Chartered safeguarding unemployed Secretaries Integrated Reporting - awards critical water youth source areas Top 20 2 nd 2 nd AA ESG among global among all SA among global banks rating banks & services ESG companies (similar size) companies NEDBANK GROUP LIMITED – Annual Results 2019 17
FINANCIAL OVERVIEW Financial performance reflects impact of higher impairments Raisibe Morathi CFO NEDBANK GROUP LIMITED – Annual Results 2019 18
Key performance indicators 2018 2019 Headline earnings (Rm) (7%) 13 495 12 506 Economic profit (Rm) (51%) 2 868 1 412 ROE 16.8% 15.0% ROE (excl goodwill) 17.9% 16.0% Diluted HEPS (cents) (6%) 2 736 2 565 Preprovisioning operating profit (Rm) +3% 21 990 22 577 Net interest margin 3.65% 3.52% Credit loss ratio 0.53% 0.82% Cost-to-income ratio 57.2% 56.5% CET1 ratio 11.7% 11.5% NEDBANK GROUP LIMITED – Annual Results 2019 19
Headline earnings down by 7% – impact of higher impairments Headline earnings (Rm) 22 1 348 (2 441) (296) 265 660 (547) +2% +50% +5% +0% +66% 13 495 12 506 2018 NII NIR Impairments Expenses Associate Zimbabwe Direct tax 2019 income net monetary & other loss (1) 1 Net monetary loss – hyperinflation accounting for operations in Zimbabwe (pre-minorities). NEDBANK GROUP LIMITED – Annual Results 2019 20
Quality of earnings – illustrative impact of various items & higher impairments Headline earnings (Rm) 500 238 140 186 96 75 61 12 506 13 653 2019 Net PRMA Africa Regions YES Zimbabwe Banco Private CIB 2019 benefit once-offs costs Único equity impairments after (1) option revaluations items (2) (3) (4) H1 2019 2019 H2 2019 1 Zimbabwe hyperinflation accounting (post minorities, R142m) & legacy debt impairment (R44m). | 2 Accounting for Banco Único option. | 3 Private-equity revaluations of two large CIB counters. | 4 CIB’s three largest impairment charges. NEDBANK GROUP LIMITED – Annual Results 2019 21
H1 vs H2 performance BOOKLET SLIDE H1 H2 H1 H2 2018 2018 2019 2019 Round 4 renewable energy NII 6% 14 006 4% 14 813 14 819 15 348 deals in H2 2018 base, not repeated in 2019 Impairments (40%) (1 815) 91% (1 873) (2 543) (3 586) Impairment increase from CIB watchlist clients in Q4, cyclical NIR 5% 12 236 (5%) 13 740 12 874 13 123 increase in RBB & central provision increase Expenses 6% (14 756) (2%) (16 876) (15 565) (16 614) Negative private-equity revaluations given more difficult Net monetary loss – Zimbabwe >100% (296) macroeconomic environment & Banco Unico option Associate income >100% 207 +16% 321 422 371 Zimbabwe hyperinflation : gross up of income statement offset by Direct tax (6%) (2 362) (30%) (2 445) R296m monetary loss: R142m (2 222) (1 720) HE impact Headline earnings 3% 6 696 (17%) 6 799 6 870 5 636 Note: Only key lines of the income statement shown. NEDBANK GROUP LIMITED – Annual Results 2019 22
Net interest income +5% – strong AIEBA growth offset by a decrease in NIM Net interest margin (bps) (3) 2 (6) (4) (2) 365 352 2018 Endowment Asset Asset IFRS 16 Other 2019 impact mix pricing Average interest-earning banking assets: +8.6% NEDBANK GROUP LIMITED – Annual Results 2019 23
Net interest margin – evolution of Tier 2 & SUD pricing BOOKLET SLIDE Pricing (bps above JIBAR) Sovereign ABIL Nenegate South African elections downgrades 450 400 350 300 250 200 150 100 50 - Mar Apr Jun Oct Nov Feb Apr May Jun Jul Nov Feb May Jul Sep Feb Mar May Jun Feb Mar Jul Nov Jan Feb Mar Apr May Jun Jul Sep Oct Nov Jan 14 14 14 14 14 15 15 15 15 15 15 16 16 16 16 17 17 17 17 18 18 18 18 19 19 19 19 19 19 19 19 19 19 20 3 year SUD 5 year SUD 7 year SUD 10 - 12 year SUD Tier 2 NEDBANK GROUP LIMITED – Annual Results 2019 24
Net banking advances +7% − momentum in RBB & solid BOOKLET SLIDE growth in CIB Banking vs trading advances (Rbn) CIB & RBB banking advances (Rbn) 800 350 700 300 600 250 500 400 200 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 15 15 16 16 17 17 18 18 19 19 15 15 16 16 17 17 18 18 19 19 Banking advances Trading advances CIB (excl trading advances) RBB NEDBANK GROUP LIMITED – Annual Results 2019 25
Gross banking advances +7% – selective origination BA900 market share 2 (%) Gross banking advances (Rbn) Wholesale Retail Yoy Share trend Selective origination & unique Leveraging relationships positioning & pipeline Commercial property (0.4) 38.7 +8% +9% +50% (14%) +4% +7% +12% +3% Core corporate 3 +0.6 21.2 Home loans (0.1) 14.4 Vehicle finance 4 +0.6 36.4 Personal loans (0.2) 10.2 34 25 29 22 182 199 22 17 17 15 166 180 156 162 121 130 Card (0.7) 13.0 Commercial Term Loans to Other Home Vehicle Personal Card property loans banks loans loans finance loans 1 2018 2019 1 Term loans include a reclassification of some investment banking loans from other loans. | 2 BA900 at December 2019 (compared with December 2018). 3 Core corporate loans exclude volatile short-term lending. | 4 Vehicle finance per BA900 comprises total lease & instalment sales from a household perspective. NEDBANK GROUP LIMITED – Annual Results 2019 26
Deposits +9.5% – committed to grow retail & commercial deposits, while managing the funding profile Deposits (Rbn) BA900 market share 1 Yoy 29 Share trend 904 Wholesale +1.6 23.2 1 31 Corporate (non- 1 (0.1) 16 16.5 financial) 826 Household (1.1) 16.9 Foreign +1.6 12.0 currency +5% +1% +9% +3% +34% LCR: 125% (min reg: 100%) NSFR: 113% (min reg: 100%) 2018 RBB Wealth CIB Africa Centre 2019 Loan-to-deposit ratio: 88% (2018: 89%) Regions Long-term funding ratio: 30% (2018: 26%) 1 BA900 at Dec 2019. NEDBANK GROUP LIMITED – Annual Results 2019 27
NIR growth flat – solid underlying growth offset by private equity revaluations NIR (Rm) Key drivers ▪ Commission & fees +3% – Solid underlying Retail transactional NIR growth: +6% (deeper share of wallet & main- banked growth in upper client segments) – Subdued client activity ▪ Trading – impacted by low volumes, low volatility & a firm 2018 base +2% (1%) (62%) (11%) ▪ Insurance – good sales volume increases offset 1 837 by higher weather-related claims in H1 19 18 739 4 524 635 262 ▪ Private equity – reflective of impact of weak SA economy on revaluations of a few specific Commission Trading Insurance Private Other¹ counters & fees income income equity ▪ Other NIR – includes cost of exercising an option to increase our shareholding in Banco Único (R140m) 1 Represents sundry income, investment income & fair-value adjustments. NEDBANK GROUP LIMITED – Annual Results 2019 28
Private equity – 2019 reduction driven by less dividends BOOKLET SLIDE received & downward revaluations (unrealised income) Private equity investments 1 (Rbn) Key income statement drivers (Rm) (62%) 8 697 15 262 6 330 144 45 4 534 509 (157) 2 (461) - 15 16 17 18 19 18 19 Unlisted property Investment Banking Realised income Dividends received Unrealised income Other income 1 Numbers have been restated to included historic investments previously disclosed in investment in associates & joint ventures to ensure comparability. NEDBANK GROUP LIMITED – Annual Results 2019 29
Credit loss ratio up to 82 bps – normalisation of credit losses off a low base & increased provisioning in H2 2019 Group CLR 1 (bps) Cluster CLR (bps) 138 128 82 77 108 106 68 101 53 49 51 26 18 16 14 13 4 2 3 4 5 15 16 17 18 19 CIB RBB Wealth NAR 18 H1 19 19 Ave banking 46.3% 46.5% 4.2% 3.0% advances 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 NAR through-the-cycle target range: 75 – 100 bps. 1 Nedbank through-the-cycle target range: 60 – 100 bps. NEDBANK GROUP LIMITED – Annual Results 2019 30
Impairments +66% – increases across stage 1, 2 & 3 impairments Impairment drivers (Rm) Stage 1 coverage (%) 1 491 0.45 0.49 580 Dec 18 Dec 19 370 Stage 2 coverage (%) 4.97 5.31 3 688 6 129 Dec 18 Dec 19 2018 Stage 1 Stage 2 Stage 3 2019 NEDBANK GROUP LIMITED – Annual Results 2019 31
Stage 3 advances – increase in RBB defaults as the macroeconomic environment deteriorated, offset by successful restructures in CIB Stage 3 advances 1 (Rbn) Stage 3 coverage (%) +10% yoy 27.6 +4% 26.8 +6% 25.2 Total 2.4 2.3 Other 2.2 (28%) yoy 4.1 36.8 37.1 38.0 5.4 (24%) CIB 5.7 (5%) Dec 18 Jun 19 Dec 19 Stage 3 advances/gross advances (%) +22% yoy 21.1 19.2 +10% RBB 17.3 +11% 3.47 3.57 3.55 Dec 18 Jun 19 Dec 19 Dec 18 Jun 19 Dec 19 1 Excludes FVOCI NEDBANK GROUP LIMITED – Annual Results 2019 32
Expenses +2% – good cost management in response to slowing revenue growth & benefits from digitisation Expenses (Rm) Key drivers Digital & TOM ▪ benefits Staff packages Average salary increases of 5.4% – +5% (24%) +12% +1% Reduction in headcount of 1 874 – Incentives – STI decline > earnings decline ▪ ▪ Computer processing Software amortisation +22% ‒ Strong volume growth ‒ ▪ Other costs 2 550 Benefits from TOM (R1.1bn cumulative) ‒ 14 772 4 878 9 979 R134m YES costs ‒ Residual PRMA benefit: R354m ‒ Staff Incentives Computer Other packages (STI & LTI) processing & other NEDBANK GROUP LIMITED – Annual Results 2019 33
Expenses – progress on key cost optimisation initiatives BOOKLET SLIDE Central costs, property & Process RBB & branch Technology procurement optimisation optimisation ▪ ▪ Improved IT project delivery ▪ Digital client onboarding & sales ▪ Number of outlets – ongoing Group shared services (onboarding & back office benefits) optimisation ‒ IT projects using agile & hybrid ‒ Reduced number of staff methodologies ▲ 80% ‒ PL & transactional sales ▲ >90% ‒ Closed 21 points of presence ▪ Procurement savings (from 21% two years ago) (Total digital sales: 21%, LT digital (target dependent on digital sales target: > 75%) uptake). ‒ Paper consumption ▼ 25% ▪ Cloud services (826 tons from 1 104 tons) ▪ Self-service & staff-assisted banking ▪ Branch floor space ‒ savings from migration to cloud over ‒ Procurement spend ▼ 3% time (‘19: Office 360 & staff email) – New digital services on mobile, app ‒ Saved ▲ 42k m 2 to date & web: ▲ 114 (from 33k m 2 in 18 & target (R18.1bn cashflow in ‘19) ▪ IT systems 1 > 49k m 2 by ‘20) (51 in 2018, target: > 180 by ‘20) ▪ Central property savings ‒ Core systems ▼ to 117 – Self-service cash deposits: ▪ Sales & service integration ‒ Campus sites: ▼ 4 (target of < 85 by ‘20) ▲ 73% of all cash (61% in ‘18) ‒ new operating model, business (27 sites, LT target: 22) ▪ Data-driven intelligence reconfiguration & simplification ▪ Robotics & automation ‒ Floor space saved ▲ 54k m 2 (mostly complete by 2020) RPAs in use: ▲ > 300 (since ‘16, LT target: ‒ ▪ Backoffice & RBB support > 100k m 2 ) (from 51 in 18, excl the VBS > 160 function optimisation onboarding bots) ▪ General costs – expense growth: Travel & comms: ► 0% ▪ Marketing: ▼ 5% ▪ Overall headcount reduction ▼ 1 874 (with ongoing reduction planned into 2020/1) NEDBANK GROUP LIMITED – Annual Results 2019 34
IT spend reducing from 2020 BOOKLET SLIDE IT software development spend (Rbn) Capitalised IT costs (Rbn) Amortisation charge (Rbn) Regulatory projects almost complete & development cost on new technologies decreasing 2.3 2.1 2.1 8.3 7.4 1.7 6.0 0.8 0.8 1.0 1.2 1.2 4.6 1.0 0.7 0.7 3.1 3.5 14 15 16 17 18 19 20 21 22 14 15 16 17 18 19 20 21 22 14 15 16 17 18 19 20 21 22 Compliance-related Illustrative only NEDBANK GROUP LIMITED – Annual Results 2019 35
Zimbabwe – financial impacts of hyperinflation & impairment of legacy debt CPI index ZWL : ZAR exchange rate Key drivers Hyperinflationary accounting 3.71 ▪ Rebased Dec ’18 equity (R246m) ▪ Gains from indexing of non-monetary assets 2 R30m 552 6.21x ▪ Income statement indexing 1 (R80m) 473 Net monetary loss (R296m) 403 ▪ Income statement indexing 1 R80m 1.94 ▪ Less minorities R74m 290 247 (R142m) 209 Other changes – blocked funds 173 0.83 124 Impairment of legacy debt (R44m) ▪ 110 104 100 98 89 (R186m) Size of Nedbank Zimbabwe in Nedbank ▪ 0.1% of total equity (R123m / R87.4bn) Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1 Indexing of IS lines of R80m has an equal & opposite charge in the IS. 2 Nedbank / banks likely to be small in proportion to other companies, therefore not enough to offset impact of rebasing equity. NEDBANK GROUP LIMITED – Annual Results 2019 36
ETI associate income – reflects ETI progress, although environment in Nigeria remains challenging & growth has slowed Associate income from ETI 1 (Rm) ETI 9M 2019 results Q1 191 Nigerian operations ▪ 870 Challenging economic ‒ 668 608 & regulatory Q2 190 environment ‒ NPLs remain elevated Q3 180 ‒ $1m profit & ROE: 0.1% (125) Q4 107 Robust performance in other ▪ ETI geographies (744) ‒ ROEs > 25% 15 16 17 18 19 1 ETI accounted for one quarter in arrear. NEDBANK GROUP LIMITED – Annual Results 2019 37
ETI carrying value – Value-in-use slightly above carrying value Carrying value drivers vs market value (Rbn) (1.0) (2.1) Value-in-use (0.5) > R2.7bn (1) 6.3 3.2 2.7 1.3 4.3 Original cost of Carrying value Carrying value Market value Share of ETI investment Dec 2018 Dec 2019 Dec 2019 NAV Sep 2019 Impairment provision Associate income/(loss), FCTR & other 1 FCTR & other loss offset by R0,7bn of associate income. NEDBANK GROUP LIMITED – Annual Results 2019 38
Capital – CET1 at the midpoint of our target range CET1 capital ratio (%) – after full IFRS implementation (1.2) 2.1 (0.7) (0.2) (0.2) CET1 target range: 10.5 – 12.5% 11.7 11.5 11.3 SARB minimum CET1: 7.5% Dec IFRS 16 Organic Dividends RWA Intangibles Dec Jun 2018 impact profit paid increase 2019 2019 NEDBANK GROUP LIMITED – Annual Results 2019 39
Dividend – within board-approved target range, supporting a dividend yield that is attractive for investors Dividend cover (times) Dividend yield (%) 8 Board-approved target range: 1.75 – 2.25x 7 6.6 2.06 2.00 6 1.97 1.91 1.84 5 4 Payout ratio: 3.6 3 2 1 49% 50% 52% 51% 54% 0 2015 2016 2017 2018 2019 Dec Dec Dec Dec Dec 2015 2016 2017 2018 2019 Nedbank All Share NEDBANK GROUP LIMITED – Annual Results 2019 40
Headline earnings by cluster Headline earnings (Rm) Earnings contribution (Rm) (3%) (8%) (2%) (8%) (35%) (5%) 4% 8% 49% 1 133 1 042 702 457 6 714 6 167 5 379 5 293 42% (433) (453) CIB RBB CIB RBB Wealth Africa Centre Regions Wealth Africa Regions Centre 2018 2019 NEDBANK GROUP LIMITED – Annual Results 2019 41
Centre – key drivers include once-offs Headline earnings (Rm) (433) (453) Central provision increase ▪ (net R100m pretax). None in 2018. ▪ PRMA credit of R354m pretax in H1 19 vs H1 18: R250m pretax 26 ▪ YES cost of R134m pretax (96) 75 (72) (new in 2019) 187 Banco Unico option cost of (140) ▪ R140m in 2019 Central Net Net YES Banco Other 2019 2018 provision PRMA fair-value costs Unico increase gain gains option NEDBANK GROUP LIMITED – Annual Results 2019 42
NEDBANK CIB Stable revenues & impairment headwinds Brian Kennedy Group Managing Executive NEDBANK GROUP LIMITED – Annual Results 2019 43
Stable revenues & impairment headwinds Headline earnings, ROE Key messages ▪ GOI flat: Maintained revenue in a difficult 12 000 28.0 macroeconomic environment 22.6 21.1 20.7 20.0 10 000 23.0 ▪ Advances +7%: Good advances growth but 17.7 pressure on margins impacting NII 8 000 18.0 (8%) ▪ NIR -4%: Impacted by negative private equity revaluations & a high 2018 base 6 000 13.0 ▪ CLR at 26 bps (2018: 4 bps): Increased off a 4 000 8.0 low base but still within target range 5 208 6 014 6 315 6 714 6 167 ▪ Expenses < 1%: Well contained with continued 2 000 3.0 investment in skills & technology - -2.0 15 16 17 18 19 Headline earnings (Rm) ROE (%) NEDBANK GROUP LIMITED – Annual Results 2019 44
Corporate & Investment Banking – financial highlights BOOKLET SLIDE Nedbank CIB Other clusters Year ended % change FY 2019 FY 2018 Headline earnings (Rm) (8) 6 714 6 167 Gross operating income (Rm) 0 15 684 15 686 PPOP (Rm) (1) 9 014 8 919 50% 50% Net interest margin (%) 2.12 1.99 NIR-to-expense ratio (%) 129.7 123.8 Cost-to-income ratio (%) 41.9 42.1 Advances Credit loss ratio (%) 0.04 0.26 Average banking advances (Rm) 7 324 384 346 452 49% Average deposits (Rm) 8 339 676 367 804 51% Headline economic profit (Rm) 1 (38) 1 976 1 234 Average allocated capital (Rm) 4 33 555 34 885 ROE (%) 20.0 17.7 Headline earnings 1 Cost of equity 2018: 14.1% | 2019: 14.1% NEDBANK GROUP LIMITED – Annual Results 2019 45
NIR down off a high base NIR (Rm) Key drivers (4%) Trading income +3% despite low volatility & ▪ CAGR 8 521 decreased volumes in the first half of 2019 8 175 +6% (45%) 954 529 (16%) Continued investment in market-leading ▪ 6 508 trading capabilities across the asset (1%) 3 256 classes 1 068 3 289 +8% ▪ Commission & fees down slightly – 2 430 subdued client activity offset continued primary-client wins +10% +3% 4 390 4 278 Private-equity income impacted by ▪ 3 010 negative revaluations due to the weaker performance of certain investments 15 18 19 Trading income Commission & fees Private equity & other NEDBANK GROUP LIMITED – Annual Results 2019 46
Continuous improvement across all major league tables 2015 2018 2019 Market leader >30% CIB commercial property market share Market leader with R36bn committed Renewable-energy financing #3 #1 #1 DCM rankings Dealmakers M&A advisors #22 #10 #4 ▪ Value Volume /Flow #12 #2 ▪ #1 Spire awards #3 ▪ Best team government bonds #1 #1 Best interest rate derivative house #4 ▪ NR #1 #3 ▪ Best bond house NR #1 1 2 6 ▪ Number of 1st place awards #4 #1 #1 Primary-dealer rankings >25 per annum Primary-client wins NEDBANK GROUP LIMITED – Annual Results 2019 47 NR: Not ranked
Ongoing primary-client wins position CIB for revenue uplift BOOKLET SLIDE Primary-client wins (#) Selected primary-transactional-account wins 39 2 2 32 30 10 4 26 2 2 3 8 10 7 25 22 11 20 16 5 15 16 17 18 19 Tier 2 Tier 4 Tier 3 Tier 1 NEDBANK GROUP LIMITED – Annual Results 2019 48
Strong advances growth amid competition for high-quality assets Banking advances, including corporate bonds (Rbn) Key messages +9% ▪ Conversion of significant deals in H2 2019 393 ▪ Leveraging leadership in CPF & energy 368 4 359 338 2 4 − Continued drawdowns of round 4 renewable- 3 energy deals 163 154 151 150 − Selective origination in Property Finance off leading market share position ▪ NII impacted by competitive pricing 227 211 204 ▪ Awarded Sponsor of the Year in the Project 186 Finance International (PFI) Awards (Enel Green Power) & Infrastructure & Project Finance Deal of the Year in The Banker Awards (Geita Gold Mine) H1 18 H2 18 H1 19 H2 19 1 Banking Property Finance Other 1 Banking defined as Investment Banking & Working Capital combined. NEDBANK GROUP LIMITED – Annual Results 2019 49
Client solutions leading to significant wins BOOKLET SLIDE 2019 2019 2019 2019 Appointed sole mandated lead Concluded a bespoke funding CIB was mandated as arranger and Concluded a refinancing of Tsogo arranger, sole bookrunner, sole solution with Caterpillar Financial funder to Barloworld’s Kula Sizwe Sun Gaming’s credit facility coordinator and sole hedge Services South Africa following their B-BBEE Share Scheme coordinator for R10bn debt entrance into the South African refinance market 2019 2019 2019 2019 Sole arranger and lender of R4bn CIB concluded the inaugural bank Joint global coordinator of Successfully concluded a record credit facility issuance in Africa of green R5.5bn credit facility US$5bn international capital market renewable energy bonds into the raise for the Republic of South Africa debt capital markets for R2.7bn in the international Eurobond market 2019 2019 2019 2019 Appointed as co- lead arranger on MBSA’s Successfully concluded a credit Successfully concluded a credit Successfully concluded a credit Debt Capital Market auctions, facility positioning us as the largest funding in the capacity of sole facility in the capacity of co- successfully raising R3.6bn in listed bonds funding partner to the group funder funder NEDBANK GROUP LIMITED – Annual Results 2019 50
Coverage & impairments increased as the credit environment deteriorated in H2 – quality of book maintained Quality of book & CLR (bps) Stage 3 advances (Rbn) 5.7 0.40% 0.26% 4.1 4.1 CLR 0.04% 15 18 19 Coverage ratios (%) 24.6 Investment 66% 65% 63% grade 12.8 11.6 0.37 0.36 0.28 15 18 19 Dec 18 Jun 19 Dec 19 Stage 1 & 2 Stage 3 NEDBANK GROUP LIMITED – Annual Results 2019 51
Coverage & impairments increased as the credit environment BOOKLET SLIDE deteriorated in H2: Quality of book maintained Top 10 client contribution (%) CIB selected sector exposures (%) Change – Change – Migration Downside Migration Downside risk risk Risk Risk State Owned 3.5% ▼ ▼ Entities L 3.4% M 13% 15% 2.5% Retailers ▲ - CPF H M 1.9% 28% 4.4% ▲ Mining - M M 4.3% 87% 85% Share Based 4.8% ▲ ▼ Other Debt M M 3.3% 72% 1.3% Construction - - M L 1.3% Specific Stage 3 impairment defaults 41.3% ▲ (stage 3) - Property Finance M M 40.1% 10 largest exposures Other 18 19 ▼ - ▲ [ ] Risk decrease [ ] No change [ ] Risk increase NEDBANK GROUP LIMITED – Annual Results 2019 52
Quality commercial property book BOOKLET SLIDE CLR (bps), LTVs (%) Key drivers ▪ Strong client base supported by an experienced team 8 4 (5) 10 (2) CLR ▪ Awarded Top African Real-Estate Bank (API Awards) ▪ Well-diversified portfolio & weighted to the correct segments in the market ▪ CLR below target range of 15 bps to 35 bps LTV 48% 47% 45% 44% ▪ Low gearing - adequate collateralisation significantly reduces potential 42% losses ▪ Primary lending operation supplemented by private-equity arm ▪ Valuations are updated on an ongoing basis, predominantly by our internal valuers, with a portion outsourced to external valuers 15 16 17 18 19 ▪ Stage 2 & 3 clients valued every 6 months Average LTV by sector (%) & property type (%) Portfolio view ▪ 82% concentrated to the core segments of office, retail & industrial (including 48 56 52 52 38 37 34 LTV multiple portfolio) ▪ 10% relates to residential, including cashflow producing rental stock portfolio ▪ Vacant land < 2% of the portfolio ▪ LTVs > 90% amount to 1% of the portfolio & 83% of the book is below 70% 26% 25% SECTOR 18% LTV based on Nedbank’s internal valuations 13% % 2% 10% 6% ▪ Average LTVs reflect risk appetite across sectors – lower LTVs on higher-risk Retail Offices Industrial Multiple Residential Vacant Other sectors portfolio land NEDBANK GROUP LIMITED – Annual Results 2019 53
Commercial property sector insights BOOKLET SLIDE Office space – oversupplied Retail sector – largely oversupplied in metros Retail vacancies currently at 4.4%, above the long-term ▪ Office vacancies remain high but stable at 11.0% across the ▪ average of 2.9% board ▪ Rentals remain under pressure with negative reversions Rentals remain under pressure with negative reversions ▪ common as landlords look to protect vacancies. Retailers’ common cost of occupancy on an upward trend ▪ The C-grade segment had largest improvement in vacancies Retail likely to remain under pressure due to difficult ▪ due to residential conversions economic conditions & consumer spending constraints Development activity is at a 13-year low. Developers opting ▪ ▪ Vacancies in super regional centres (>100 000 sqm) at 4.7% for tenant-driven approach before committing capital compared to neighbourhood & small regionals at 5.5% and ▪ 61% of new development concentrated in Sandton, 4.9% respectively Rosebank, Waterfall & Menlyn Industrial sector – resilient Residential – cautious ▪ Strong demand for residential product in lower price brackets ▪ Industrial vacancy currently at 3.4% across the board & is – purchase price below R1m & monthly rental under R8 500 lower than retail & office sector vacancies Affordable rental stock market buoyant in the current market ▪ Rental growth of 5.3% in H1 2019, but lower capital growth ▪ Developers in general are cautious in the current economic ▪ at 2.4% environment ▪ Industrial property fundamentals have benefitted from relatively constrained supply & stable capacity utilisation NEDBANK GROUP LIMITED – Annual Results 2019 54
Prospects for CIB A powerful wholesale business highly focused on its clients Financial targets 1 Leverage strengths ROE Transactional Property Investment Markets ▪ Medium term: ≥ 18% Services Finance Banking Strong advisory & Disruptive thinking Best-in-class Market ▪ Long term: ≥ 20% & technology sector expertise teams leader solutions Strategic focus Cost-to-income Client Transformation & ▪ Medium term: ≤ 4 2% Sustainability Africa optimisation Centricity ▪ Long term: ≤ 40 % 1 Medium-term defined as 2 to 3 years. Long-term defined as 5+ years. NEDBANK GROUP LIMITED – Annual Results 2019 55
NEDBANK RBB Strong growth in pre-provisioning operating profit offset by higher impairments Ciko Thomas Group Managing Executive NEDBANK GROUP LIMITED – Annual Results 2019 56
Strong growth in pre-provisioning operating profit offset by higher impairments Headline earnings, ROE Key messages 7 000 19.1 18.9 18.9 20.0 17.3 6 500 ▪ PPOP +11% 16.6 (2%) 6 000 − NII +6%: solid advances & deposit growth 15.0 5 500 − NIR +6%: driven by inflationary pricing 5 000 increases & volume-related growth 10.0 4 500 − Expenses +2%: benefit from optimising processes & operations 4 000 5.0 4 460 4 960 5 302 5 379 5 293 3 500 − CLR at 138 bps (+32 bps): impairments increased cyclically off a low base with 3 000 - 15 16 17 18 19 worsening macroenvironment in the fourth quarter Headline earnings (Rm) ROE (%) NEDBANK GROUP LIMITED – Annual Results 2019 57
Retail & Business Banking – financial highlights BOOKLET SLIDE Nedbank RBB Other clusters Year ended % change 2019 2018 (2) 5 379 Headline earnings (Rm) 5 293 Gross operating income (Rm) 6 31 283 33 149 44% PPOP (Rm) 11 10 926 12 175 56% 5.69 Net interest margin (%) 5.67 NIR-to-expense ratio (%) 62.9 65.3 Cost-to-income ratio (%) 64.0 61.5 Advances 1.06 Credit loss ratio (%) 1.38 Average banking advances (Rm) 7 312 119 335 101 42% Average deposits (Rm) 8 305 151 328 272 58% (29) 1 359 Headline economic profit (Rm) 1 967 Average allocated capital (Rm) 7 28 471 30 573 18.9 ROE (%) 17.3 Headline earnings 1 Cost of equity 18: 14.1% | 19: 14.1%. NEDBANK GROUP LIMITED – Annual Results 2019 58
Consumer Banking – HE down as impairments normalised, but well positioned for future growth Advances (Rbn) Income statement drivers Key messages 17 18 19 Quality business well ▪ HE growth 3.3% +5% positioned for growth +2% 203 208 217 PPOP growth 12.8% ▪ Strong growth in PPOP & an 67 improvement in cost-to- 66 income ratio NIR growth 4.7% 59 ▪ Growth in impairments off a low base muted HE growth Financial ratios ▪ Most improved of SA’s five ROE 14.4% retail banks on three different measures of client CLR 1.95% experience ▪ Focus is to be even more NIR-to-expenses 61.7% client-centred , & deliver even better client Cost-to-income 60.3% Asset payouts Average Balances experiences . NEDBANK GROUP LIMITED – Annual Results 2019 59
Business Banking well positioned for growth Advances (Rbn) Income statement drivers Key messages 17 18 19 HE growth 1 0.4% ▪ Quality business well positioned for growth +11% +13% PPOP growth 14.0% Client groups increased to 74.7 ▪ 26.6 Ave deposit balance 9.0% 14 700 67.6 23.6 62.5 NIR growth 8.8% Favourable NPS score of ▪ 20.3 45.1% (up 2.7% yoy) Financial ratios ▪ Good momentum evidenced across assets & liabilities 18.3% ROE Steadily improving brand ▪ 52 bps CLR awareness & consideration by the market 51.5% NIR-to-expenses 61.9% Cost-to-income Asset payouts Average balances Excludes internal client migrations between divisions | 1 HE -5.4% including migrations. NEDBANK GROUP LIMITED – Annual Results 2019 60
Retail Relationship Banking consistently delivering a profitable performance Advances (Rbn) Key messages Income statement drivers 17 18 19 ▪ Quality business in a resilient HE growth 1 28.8% sector of the economy +11% 39.1 +9% PPOP growth 32.9% Good momentum evidenced ▪ 35.1 across all lines – transactional, 9.6 32.5 assets & liabilities 8.8 NIR growth 9.5% ▪ Steadily improving client 6.9 Financial ratios metrics & market perception ROE 31.7% CLR 32 bps NIR-to-expenses 57.4% Cost-to-income 63.8% Asset payouts Average balances Excludes internal client migrations between divisions | 1 HE +40.2% including migrations. * RRB core excludes internal migrations NEDBANK GROUP LIMITED – Annual Results 2019 61
Good growth in advances & deposits BOOKLET SLIDE Average banking advances (Rbn) Average deposits (Rbn) 17 18 19 7.6% 7.4% +7.7% 3.5% +5.8% 335 328 +5.9% +7.1% +7.1% 98 312 91 295 +17.1% 219 305 88 207 85 197 84 83 18 75 17 70 16 65 15 14 14 282 41 35 33 RBB Business Relationship Consumer Home Vehicle Personal Card Deposits total Banking Banking Banking & loans finance loans other Graphs not drawn to scale & do not include BB/ RRB restructure. Product lines exclude RRB & BB. NEDBANK GROUP LIMITED – Annual Results 2019 62
Impairments – higher given the impact of the macroeconomic environment Impats (R m) Credit loss ratio (bps) Key messages PL Other BB MFC HL CLR increased by 32 bps: Within the 130 bps to 180 bps ▪ 180 TTC target range Target 1.38 range ▪ Cyclical increase off a low base 130 Risk normalised, driven largely by ▪ 1.06 1.06 deteriorating macroeconomic environment ▪ MFC increase due to higher levels of repossessions & writeoffs BB increase given continued ▪ impact of low business confidence Regulatory impacts including ▪ setoff treatment 2017 2018 2019 NEDBANK GROUP LIMITED – Annual Results 2019 63
Retail transactional NIR growth ahead of client growth – deeper client penetration Total retail client base (#000) Retail NIR (Rm) +6.1% +1.8% +0.1% (0.3%) 11 384 10 725 7 538 7 543 7 523 10 537 3 714 Total Total 3 507 3 572 4 578 4 567 4 755 Other Retail, excl main- banked +6.3% +3.6% Transactional & consumer (1.0%) +6.9% Main- card issuing banked 2 783 2 976 2 945 6 965 7 218 7 670 1 17 18 19 17 18 19 1 Declines in acquisition were balanced out by improvements in attrition. NEDBANK GROUP LIMITED – Annual Results 2019 64
Client-centred strategy intact – strong growth across most segments Main-banked, # 000 +9% +10% (3%) Kids & youth (10%) Professional 84 77 70 382 372 336 Small Business +6% (2%) +8% +6% Entry level Services 2,3 1 525 130 1 495 123 1 411 116 +2% +2% +1% +9% Business Banking 1,3 Middle 22.0 21.1 21.5 872 884 797 17 18 19 17 18 19 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. 3. 2019 reflects a like-for-like comparison prior to move of 7k client groups from BB to RRB (resulting in 9k additional mainbanked). Post move actuals are 14.7k and 139k for BB & RRB respectively | Note: Non-resident, non-individual segment not shown. NEDBANK GROUP LIMITED – Annual Results 2019 65
Nedbank Retail & Business Banking – building more enduring BOOKLET SLIDE client relationships through transactional product cross-sell Total retail clients 1 % yoy growth Number of product line clients with % yoy growth # 000 transactional products, #000 18 19 1,086 1,000 1 570 Investments (4,4) (7,9) 69% 67% 1 501 633 608 1 024 Card +2,3 +4,1 59% 60% 1 048 273 257 451 Personal loans +0,4 +6,2 60% 57% 453 589 151 142 MFC +2.4 +6,3 (vehicle finance) 25% 24% 603 296 118 122 (0,3) +3,4 Home loans 41% 40% 295 Transactional clients with product line 1,650 1,615 5 974 Transactional (0,5) (2,1) 28% 27% products 5 946 18 19 1 Transactional declines in acquisition were balanced out by improvements in attrition NEDBANK GROUP LIMITED – Annual Results 2019 66
Nedbank Retail & Business Banking – NIR growth supported by BOOKLET SLIDE good volume growth, but muted by strategic choices & other factors NIR growth (Rm) 89 233 43 0 28 14 323 15 727 312 164 1 2 4 5 Trans- Card Secured Price Mix Personal Activity Card margin IFRS Other YOY NIR actional lending increases loans & prod mix growth Volume-related 2018 NIR growth (Rm) +160 +517 +73 +288 3 (4) +1 +111 (300) (582) +14 +278 1 Growth predominantly driven by the acquisition and volume growth of key acceptance clients 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 Margin reduction driven by a changes in customer transacting behaviour as well as industry forces 5 Includes 2018 swap profits in MFC and timing difference on review fees in BB. NEDBANK GROUP LIMITED – Annual Results 2019 67
Strong results in the annual Consulta SA-csi results & Brandseye social media survey Industry Nedbank Competitors Net Promoter Score #3 SA-csi #2 79.3 37.1% 80.2 38.1% 76.3 26.1% 1 474 1 544 2017 2018 2019 2017 2018 2019 Social Media Sentiment #1 Home Loans SA-csi #1 74.7 74.3 20.4% (7.7%) 70.2 (5.8%) 2017 2018 2019 2017 2018 2019 SA-csi = South African Customer Satisfaction Index & NPS = Net Promoter Score Source: SA-csi and NPS are measured annually as part of Consulta’s Banking Industry SA -csi survey which has been running since 2012. The 2019 sample size for Nedbank was 3 015, consisting on a combination of telephonic and web-based surveys. Sampling was done on a channel, product and segment level (the sample size for Home Loans was 334). Social Media Sentiment is measured by BrandsEye’s . BrandsEye's 2019 Banking Sentiment Index, analysed 1.9 million social media posts about South Africa’s largest banks and included an analysis of 68 500 posts about the new entrants, Bank Zero, Discovery Bank & Tyme. NEDBANK GROUP LIMITED – Annual Results 2019 68
Highlights of client innovations in RBB Greenbacks programme Digital onboarding Homebuying journey Lending API Money management programme Seamless onboarding for clients Digital homebuying experience Disruptive & inclusive lending ▪ Simple transactional ▪ Access to property search, ▪ Access credit to finance ▪ New Greenbacks money account opening launched property reports and credit management programme transactions on merchants’ on the self-service kiosk preapprovals on app sites in under 5 minutes launched ▪ 1 st in Africa to align to ▪ Enabled small businesses ▪ Simplified, chat based ▪ Incentivising & rewarding to open a transactional home loan application – Open Banking standards desired behaviours, account end-to-end on additional digital sales through API platform encouraged through nedbank.co.za channel prompts & nudges NEDBANK GROUP LIMITED – Annual Results 2019 69
Accelerated digitisation of technology & operations Digitally enabled clients Digitally active clients Self-service cash deposit (# 000) (# 000) volumes (%) +3% +24% +10% 73 +5% +15% 61 48 6 185 1 777 5 784 5 911 1 474 1 544 1 544 1 474 73 61 48 17 18 19 17 18 19 17 18 19 Digital vas 1 NIR Money app active users Mobile app third-party (# 000) payments & transfers (Rbn) (Rm) +36% +29% +85% +82% 832 91 250 194 450 50 134 0 26 17 18 19 17 18 19 17 18 19 1 Value-added services (electricity, data, airtime, instant payments, etc). NEDBANK GROUP LIMITED – Annual Results 2019 70
Optimisation of processes & operations Total RBB employees Branch floor space saved Number of retail outlets (#) (‘000 m 2 ) 1 (#) -7% -10% 20 243 19 545 17 669 613 604 589 42 33 24 17 18 19 18 19 17 18 19 17 Teller activity Cumulative robotics process Cumulative efficiencies (# 000) 2 automation (#) (Rm) 3 36 860 30 911 23 343 36 860 30 911 1 507 23 343 1 017 444 125 1 48 17 18 19 17 18 19 17 18 19 1 Represents the total branch floor space we saved since 2014 with a target of > 49 000m 2 equating to approximately 23% of our branch floor space in 2014 when we started the journey. | 2 Refers to the volumes of interactions. | 3 2019 includes R1bn of TOM-related efficiencies. NEDBANK GROUP LIMITED – Annual Results 2019 71
Prospects for RBB Building sustainable , profitable businesses through the cycle Financial targets 1 ROE Leverage strengths ▪ Medium term: Consumer Retail Relationship ≥ 19% Business Banking client-centred model accountable, Banking delivering market-leading personalised, flexible empowered, decentralised ▪ Long term: ≥ 20% experiences business service model & proactive approach Cost-to-income Strategic focus ▪ Medium term: ≤ 59% Disruptive Loyalty & Data analytics Digital First, Sales & service ▪ Long term: ≤ 57% First in Digital excellence CVPs rewards & BI 1 Medium-term defined as 2 to 3 years. Long-term defined as 5+ years. NEDBANK GROUP LIMITED – Annual Results 2019 72
NEDBANK WEALTH Earnings adversely impacted by revenue pressure Iolanda Ruggiero Group Managing Executive NEDBANK GROUP LIMITED – Annual Results 2019 73
Earnings adversely impacted by revenue pressure Headline earnings, ROE 1 Key messages 41.5 ▪ Headline earnings -8% 42.0 35.2 37.0 − NII +3%: steady international deposit growth 27.5 2001 offset by a decline in US interest rates 26.8 32.0 24.8 27.0 − NIR -1.4%: lower brokerage, portfolio & asset (8%) 1501 22.0 management fees & higher non-life claims ratio 17.0 1001 12.0 − Expenses +3%: below inflationary growth 7.0 501 1 134 1 192 1 068 1 133 1 042 − CLR at 18 bps (+5 bps): increase in 2.0 impairments off a low base with worsening 1 -3.0 macro environment in the fourth quarter 15 16 17 18 19 Headline Earnings ROE (%) 1 During 2016, the group changed its capital allocation methodology. The ROE for 2015 would have been 36.7% using the updated methodology. NEDBANK GROUP LIMITED – Annual Results 2019 74
Earnings adversely impacted by revenue pressure BOOKLET SLIDE Headline earnings per division (Rm) Key drivers Wealth Management (14.4%) (5.4%) (6.1%) ▪ Poor local market conditions ▪ Steady international deposit & AUM ▪ Declining US interest rates Asset Management ▪ Strong net inflows ▪ Shift to lower-margin fixed income & passive asset classes ▪ Continued pressure on margins Insurance ▪ Growth in life VNB 252 471 295 501 337 319 ▪ Higher non-life claims Wealth Management Asset Management Insurance 18 19 NEDBANK GROUP LIMITED – Annual Results 2019 75
Wealth – financial highlights BOOKLET SLIDE Year ended % change 2019 2018 Wealth Other clusters Headline earnings (Rm) (8) 1 042 1 133 8% Gross operating income (Rm) (0) 4 584 4 597 PPOP (Rm) (8) 1 357 1 477 Net interest margin (%) 2.17 2.31 92% NIR-to-expense ratio (%) 110.4 115.7 Cost-to-income ratio (%) 67.9 65.5 Headline earnings CLR (%) 0.18 0.13 Assets under management (Rm) 11 331 361 297 338 ▪ Net inflows R15bn Life embedded value (Rm) 14 3 188 2 786 ▪ Life APE Life value of new business (Rm) 11 (1.2%) 421 380 Headline economic profit (Rm) 1 (17) ▪ Non-life GWP 447 536 0.5% Average allocated capital (Rm) 4 204 4 225 ROE (%) 24.8 26.8 1 Cost of equity 18: 14.1% | 19: 14.1%. NEDBANK GROUP LIMITED – Annual Results 2019 76
Wealth Management – strong international client flows Key drivers Liabilities & advances Liabilities Advances International (1.2%) ▪ Strong AUM growth ▪ Growth in lending balances negatively impacted by Brexit uncertainty & fierce competition from ring- +1.4% fenced banks ▪ Steady growth in deposits 15 16 17 18 19 Local Wealth Management International ▪ Negative investor confidence impacting brokerage SA client flows SA clients % 33% & planner commissions ▪ Higher impairments off a low base 16% 15 16 17 18 19 NEDBANK GROUP LIMITED – Annual Results 2019 77
Asset Management – strong market share growth in cash & passive Assets under management (Rbn) Key drivers Local International +11% ▪ Strong net inflows & market share growth 331 312 297 273 ▪ Change in mix as investors continue to shift to 257 passive & fixed-income asset classes ▪ Global range expanded & well positioned ▪ Top offshore manager for 5 consecutive years 15 16 17 18 19 Market share 1 (%) SA unit trust FSCA approved offshore unit trust 11% 8% 5% 2% 10 11 12 13 14 15 16 17 18 19 Quarterly 1 Source: ASISA. NEDBANK GROUP LIMITED – Annual Results 2019 78
Insurance – increased claims negatively impacted revenue Life value of new business (Rm) Key drivers +11% Life 500 ▪ Higher credit life & funeral Gross Written Premiums 450 400 350 ▪ Growth in VNB driven by increased sales & 300 250 200 reduced acquisition costs 150 380 421 100 50 - Non-life 15 16 17 18 19 ▪ Higher claims from a low 2018 base Non-life gross written premiums (Rm) ▪ Increased penetration into Nedbank VAF through +1% vehicle value-added products 1 200 1 180 1 160 1 140 1 120 1 100 1 080 1 060 1 180 1 175 1 040 1 020 1 000 980 15 16 17 18 19 NEDBANK GROUP LIMITED – Annual Results 2019 79
Prospects for Nedbank Wealth Financial targets 1 Creating value in a challenging environment ROE Leverage strengths Asset Management Wealth Management Insurance ▪ Medium term: ≥ 28% International offering Best-of-breed philosophy Single policy administration system ▪ Long term: ≥ 30% Holistic advice International fund performance Access to Nedbank clients Cost-to-income Strategic focus ▪ Medium term: ≤ 65% Delivering long term Expanding offering, Focus on HNW advice performance leveraging data & digital ▪ Long term: ≤ 65% 1 Medium-term defined as 2 to 3 years. Long-term defined as 5+ years. NEDBANK GROUP LIMITED – Annual Results 2019 80
NEDBANK AFRICA REGIONS SADC – adversely impacted by Zimbabwe ETI – earnings growth slowing Mfundo Nkuhlu COO NEDBANK GROUP LIMITED – Annual Results 2019 81
Nedbank Africa Regions – SADC adversely impacted by Zimbabwe & ETI earnings growth slowing Headline earnings, ROE Key drivers (35%) NAR – HE of R457m (-35%) & RoE of 7.7% 10.3 SADC 10.2 ▪ HE of R20m (-94%) 7.7 − Hyperinflationary conditions (R142m) & impairment of legacy debt (R44m) in Zimbabwe 691 702 457 − Once-off tax adjustments & non-operational write- off (R61m) in H1 2019 (287) (810) − Gross operating income down (-2%) (3.6) − Cost growth managed below inflation ETI (Ecobank Transnational Incorporated) ▪ Sustained recovery of profitability, with earnings (12.6) growth slowing 15 16 17 18 19 ▪ Associate income of R668m, up 10%, while HE was Headline earnings (Rm) ROE (%) R437m, up 17% NEDBANK GROUP LIMITED – Annual Results 2019 82
Nedbank Africa Regions – financial highlights BOOKLET SLIDE Year ended % change FY 2019 FY 2018 NAR Other clusters SADC Headline earnings (Rm) (94) 327 3% 20 Gross operating income (Rm) (2) 3 157 3 088 Net monetary loss (Rm) - 296 PPOP (Rm) (50) 554 278 Net interest margin (%) 7.3 7.0 97% NIR-to-expense ratio (%) 49.9 50.3 Advances Efficiency ratio (%) 76.5 78.5 Credit loss ratio (%) 0.51 1.01 4% Average gross banking advances (Rm) 0.3 22 670 22 748 Average deposits (Rm) 2 30 263 30 969 Headline economic profit (Rm) (42) (495) (701) Average allocated capital (Rm) (12) 5 815 5 094 ROE (%) 5.6 0.4 96% ETI investment Headline earnings Headline earnings (Rm) 17 375 437 (35) 702 Total headline earnings (Rm) 457 NEDBANK GROUP LIMITED – Annual Results 2019 83
SADC – strategic developments Portfolio optimisation Adapting to market changes Sale of Nedbank Malawi 1 Zimbabwe hyperinflation Reviewed strategic fit Nedbank Zimbabwe: R108m HE loss ▪ ▪ (2018: R142m profit) Less than 0.1% of group assets & earnings ▪ Re-configuring the shape of the balance sheet ▪ Transaction to be concluded in H1 2020 ▪ and business operations Client experience & digital enhancements Increased shareholding in Banco Unico Investment in innovative market leading client Allocating capital to tap into growth ▪ ▪ experiences: opportunities in Mozambique Increasing our shareholding from 50% +1 ‒ Money App (Africa) enhancements, 49 ▪ additional services added in 2019 share to 87.5%, subject to regulatory approval Launch of PAYU account with zero ▪ Transaction to be concluded in H1 2020 ‒ maintenance fees in Namibia Launch of new corporate internet banking ‒ in Namibia & eSwatini 1 Accounted for under IFRS 5 – Non-current Assets Held for Sale & Discontinued Operations. NEDBANK GROUP LIMITED – Annual Results 2019 84
SADC – delivering innovative market-leading client experiences BOOKLET SLIDE Digital solutions Digital solutions Client value Improved value propositions Improved value propositions Improved value propositions Launched PAYU account with Mobile banking solution launched in Launched Nedbank Money app in May 2019 November 2019 zero maintenance fees Zimbabwe Lesotho, Namibia, Malawi, eSwatini Namibia NEDBANK GROUP LIMITED – Annual Results 2019 85
Nedbank Africa Regions app – additional 49 functional & BOOKLET SLIDE digitised services launched by end of 2019 Selected / unique features Single app store publication Personal loan, vehicle ▪ ▪ with multicountry selection finance & home loan instalment calculators ▪ Credit card ATM limit change Launched in May 2019 , over ▪ ‘Apply now’ requests ▪ Block & reorder cards 17,900 users by year end Dashboard view of ▪ International card usage ▪ consolidated balances notification request 19 additional features added over Leave feedback’ & ‘Contact ▪ previous App suite at launch Share account info with third ▪ us’ within app parties using WhatsApp, message or email Great platform for future enhancements App enrolments ('000) 9.2 8.2 UI & UX aligned to SA Money app, achieving consistency 5.4 4.9 4.1 30 functional enhancements & 2.9 digitised services added in Nov 19 3.1 2.7 2.1 26-May Jul Sep Nov 22-Jan Namibia Eswatini Lesotho NEDBANK GROUP LIMITED – Annual Results 2019 86
SADC – mixed financial performance impacted by Zimbabwe Average gross banking advances (Rbn) Average deposits (Rbn) Credit loss ratio (bps) +0.3% +2% 50 bps 51 101 23 23 30 31 18 19 18 19 18 19 Cost-to-income ratio (%) NIM (bps) NIR (Rm) +3% 27 bps +1% 727 700 76 79 1 206 1 220 18 19 18 19 18 19 NEDBANK GROUP LIMITED – Annual Results 2019 87 Note: Excluding Zimbabwe: average advances +3.6%, average deposits +11.1%, NIR +5.1%, NIM -40bps & cost-to-income 80.4%.
SADC – non-financial performance metrics show positive progress Point-of-sale devices (#) Clients (#000) 1 Active App users (#) 2 +94% (1%) +27% Revenue drivers 339 336 16 789 6 443 8 161 8 653 18 19 18 19 18 19 ATMs (#) Headcount (#) Branches (#) (1%) +5% (1%) Cost drivers 220 218 98 103 2 619 2 582 18 19 18 19 18 19 NEDBANK GROUP LIMITED – Annual Results 2019 88 1 Taking into account auto closure rules (2018 rebased to cater for this) 2 Excluding Banco Unico (Mozambique) and Zimbabwe.
Nedbank Africa Regions – growing the asset & transactional portfolio in 2019 BOOKLET SLIDE Transaction done in collaboration with CIB CIB CIB Puma Zuva Petroleum Consolidated Tobacco Matekane Mining Namibia Zimbabwe Processors Zimbabwe Lesotho Borrowing Base Facility/Facility agent Letter of credit facility Tobacco Mining fleet (New Transactional account opened) (New POS devices rolled out) trade finance facility Asset-based finance US$30m US$13.5m US$12m M109.8m CIB CIB CIB International Housing Let’seng Diamonds Debmarine Surface Wilmar Solutions Namibia Namibia Zimbabwe Lesotho Residential Property Development Letter of credit facility Debt and facility Agent Working capital facility Loan (New account opened) US$25M M150m N$131m US$5m Mimosa Mining Hilton Hotel Royal Swaziland Sugar eSwatini Sugar eSwatini Corporation Zimbabwe Association Medium Term Loan US$10m Medium term-loan Sugar stock funding loan Primary banking including POS and e- & Working Capital commerce solution E200m E750m ZWL$12m NEDBANK GROUP LIMITED – Annual Results 2019 89
ETI – recovery across three regions, while Nigerian challenges persist Headline earnings (Rm) Highlights Sustained recovery from three regions, offset by poor 644 performance from Nigerian franchise 437 375 ▪ AWA & UEMOA delivered strong earnings growth, sustainably generating economic profits ▪ CESA’s financial recovery continued, albeit at a slower rate ▪ Ecobank Nigeria’s performance deteriorated (374) further, due to: persistently elevated NPLs ‒ adverse regulatory intervention ‒ ongoing economic headwinds ‒ (975) 15 16 17 18 19 NEDBANK GROUP LIMITED – Annual Results 2019 90
Prospects for Nedbank Africa Regions Financial targets 1 Leveraging enterprise capabilities to unlock opportunities ROE Strengths SADC – manage, own & control banks West & Central Africa – ETI ▪ Medium term: ≥ 15% ▪ Strong wholesale client service model ▪ Widest Pan African network ▪ Competitive digital platforms ▪ LocalknowledgeAfrica TM ▪ Long term: ≥ 20% ▪ Strong credit risk management Focus Cost-to-income ▪ Digitisation & automation ▪ Support board-driven agenda ▪ Risk management & cost control ▪ Medium term: ≤ 65% ▪ Commercialise collaboration ▪ Zimbabwe business reconfiguration & & increase deal flows Mozambique growth ▪ Long term: ≤ 60% Zimbabwe 1 Medium-term defined as 2 to 3 years. Long-term defined as 5+ years NEDBANK GROUP LIMITED – Annual Results 2019 91
OUTLOOK & 2020, MT & LT TARGETS Well positioned to grow off 2019 base, but macroeconomic risks remain elevated Mike Brown Chief Executive NEDBANK GROUP LIMITED – Annual Results 2019 92
Our environment – slow recovery, but macroeconomic risks remain elevated Macroeconomic drivers 1 (%) Prospects ▪ Balance sheet 2019 2020 2021 2022 – Stable wholesale & retail advances growth 0.3% 0.7% 1.1% 1.3% GDP SA – Liquidity profile & capital levels to remain strong ▪ Income statement GDP SSA (excl SA) 4.0% 4.1% 4.4% 4.6% – Revenue growth dependent on SA economic recovery Inflation (CPI) 4.1% 4.3% 4.3% 4.9% – Impairments to increase, but at more normalised levels – Expense management remains a key focus Industry 5.3% 6.3% 7.0% 7.2% ▪ Assets under management credit growth – Weaker flows into higher-margin equity products Ave prime 10.1% 9.8% 9.8% 9.8% interest rate – Solid flows into lower-margin cash & passive 1 All Nedbank Economic Unit forecasts at January 2020. | GDP SSA as per IMF (January 2020). NEDBANK GROUP LIMITED – Annual Results 2019 93
We have reviewed our targets in the context of the material downward revision of the macroeconomic environment since targets were set SA GDP growth – c2% lower by 2020 CPI (inflation) – c1% lower by 2020 Financial targets 1 3 8 ROE 6 2 ▪ Medium term: ≥ 17% 4 ▪ Long term: ≥ COE + 4% 1 2 ▪ Previous MLT: ≥ COE + 5% 0 0 (excl goodwill) 17 18 19 20 21 22 17 18 19 20 21 22 ▪ Previous 2020: ≥ 18% SA credit growth – c3% lower by 2020 Interest rates – c1% lower by 2020 (excl goodwill) 12 12 ▪ Cost-to-income 9 11 ▪ Medium term: ≤ 53% 6 10 ▪ Long term: ≤ 50% 3 9 ▪ Previous MLT: 50 to 53% 0 8 ▪ Previous 2020: ≤ 53% 17 18 19 20 21 22 17 18 19 20 21 22 Forecasts at Feb 2018 Forecasts at Feb 2020 1 Medium-term: 2-3 years, Long-term: 5+ years. NEDBANK GROUP LIMITED – Annual Results 2019 94
2020 financial guidance 1 based on current macroeconomic forecasts ▪ Average interest-earning banking asset growth just above mid-single digits . NII ▪ NIM similar to the 2019 level of 3.52% . ▪ Similar to the 2019 CLR of 82 bps (within our target range of 60 – 100 bps) . CLR ▪ Around mid-single-digit growth . NIR ▪ Below mid-single-digit growth . Expenses Growth in DHEPS for full-year 2020 around nominal GDP growth [H1 2020 expected to be down on H1 2019 & stronger H2 2020 growth expected on H2 2019] 1 Based on current economic forecasts. Nominal GDP forecast for 2020 at 5.2% (CPI: 4.5% + GDP: 0.7%) | ETI associate income base d on ETI’s own guidance. NEDBANK GROUP LIMITED – Annual Results 2019 95
NEDBANK GROUP LIMITED – Annual Results 2019 96
2020 & medium-to-long-term targets BOOKLET SLIDE vs Medium-term Long-term 2019 target (2-3 years) target (5+ years) 2020 outlook 1 Metric 2019 Around ROE ≥ COE + 4% ≥ 17% 15.0% ▲ 2019 levels Diluted HEPS Around CPI + Around CPI + ≥ CPI + (6.3%) ▼ growth GDP growth GDP growth GDP growth + 5% Credit loss ratio Similar to 2019 60 – 100 bps 82 bps ▲ NIR-to-expenses Increases, but ▲ > 85% 80.8% ratio remains below targets Cost-to-income Decreases slightly, but ▲ ≤ 53% ≤ 50% 56.5% ratio remains above MT target Basel III basis: CET1 CAR 11.5% Within ▲ 10.5 – 12.5% Tier 1 CAR 12.8% target range > 12% Total CAR 15.0% > 14% Within ▲ Dividend cover 1.75 to 2.25 times 1.84 x target range 1 2020 outlook compared with FY 2019 based on current economic forecasts. NEDBANK GROUP LIMITED – Annual Results 2019 97
Macroeconomic scenarios BOOKLET SLIDE ‘More of the same’ ‘Seeing light’ ‘Sinking into darkness’ (base case) (positive scenario) (high-stress scenario) 19 20 21 22 19 20 21 22 19 20 21 22 SA GDP growth 0.3% 0.7% 1.1% 1.3% 0.3% 1.4% 2.0% 2.1% 0.3% 0.3% (0.2%) (0.4%) Ave prime 10.1% 9.8% 9.8% 9.8% 10.1% 9.4% 9.0% 9.0% 10.1% 10.3% 10.5% 10.3% interest rate Inflation (CPI) 4.1% 4.3% 4.3% 4.9% 4.1% 4.2% 4.3% 3.9% 4.1% 5.2% 6.1% 6.1% Credit growth 5.3% 6.3% 7.0% 7.2% 5.3% 9.6% 10.7% 10.9% 5.3% 5.3% 3.7% 3.8% Probability 2 (%) 50% 20% 10% 1 Nedbank forecasts & scenarios updated: January 2020 (Nedbank Group Economic Unit). | 2 Excludes mild-stress scenario of 20%. NEDBANK GROUP LIMITED – Annual Results 2019 98
Macroeconomic scenarios BOOKLET SLIDE ‘More of the same’ ‘Seeing light’ ‘Sinking into darkness’ (base case) (positive scenario) (high-stress scenario) 19 20 21 22 19 20 21 22 19 20 21 22 Limited structural reform Significant improvements Domestic reform stalls and global ▪ Fight against corruption continues ▪ Structural reform agenda implemented conditions deteriorate ▪ Land issue leads to rising tensions & social ▪ Ongoing debate around land, NHI remains ▪ Found solutions for land reform without a discontent (no immediate resolution) negative impact on confidence ▪ Internal conflict increases and fight against ▪ Pace of structural reforms remains slow ▪ More market & investment friendly Domestic corruption loses momentum policies ▪ Moody’s downgrade sometime in 2020, ▪ Structural reforms fail drivers: but discounted by the market & search for ▪ Public finances improving higher yields ▪ Universal sovereign downgrades – rand ▪ SA averts a Moody’s downgrade under significant pressure ▪ Eskom – deterioration in finance ▪ Accelerated Eskom turnaround continues. Level 1 & 2 load-shedding for ▪ Eskom loadshedding beyond level 1 & 2. next 18 months, with some private sector Little progress on turnaround energy generation over time Global environment less favourable than Highly favourable environment Adverse global conditions emerge ▪ Synchronised growth, global trade wars ▪ Commodity price pressures, increased trade before, but still supportive Global ▪ Sentiment swings between risk-on & risk- subside & commodity prices gain protection, adverse Brexit, heightened global momentum tensions off conditions drivers: ▪ Chinese recovery post Q1 on corona-virus ▪ Risk-on global conditions & corona virus ▪ Risk-off global conditions given Corona-virus impact contained NEDBANK GROUP LIMITED – Annual Results 2019 99
Nedbank Group in a strong position BOOKLET SLIDE Headline earnings (Rm) Loan growth (CAGR %) 20.1 16.3 Global financial 6.0 3.3 crisis 06 – 08 15 – 19 Wholesale Retail (28%) NII sensitivity for 1% change in interest rates (Rbn) 1.3 0.6 0.5 13 495 12 506 11 787 5 921 5 765 4 277 06 07 08 09 10 11 12 13 14 15 16 17 18 19 08 09 19 NEDBANK GROUP LIMITED – Annual Results 2019 100
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