GROWTH PROSPECTS IN OUR KEY FOCUS REGIONS Majority of business currently from SA market… … with significant earnings opportunity across the continent 600 20 Largest insurance market Insurance Penetration rate (%) on the African continent 500 2016 GDP (US$ billion) < 1% 15 400 Anchor of the Group, resilient 300 10 89% 89% market with stable cash Underpenetrated markets generation with large and growing 200 potential customer bases 2% 5 100 Near term opportunity to grow sales 9% 0 0 0.0 2.0 4.0 6.0 8.0 1.0 1.5 2.0 2.5 3.0 GDP growth (%) 1 2017 - 2020 population CAGR (%) Population size # OMEM customers Contribution to OMEM Gross Sales 2 South Africa SADC East Africa West Africa Source: World Bank 2017, WEO 2017, AXCO 2016 15 1. Weighted average of 2020 forecast growth using 2016 GDP figures 2. Based on FY 2016 results; excluding LatAm & Asia and inter-Group eliminations
EXTENSIVE OFFERING MEETING ALL CUSTOMER NEEDS Market mapping to our franchises Market size 1 (m) OM Wealth & Corporate OM Insure Investments Wealth market 0.4 Employee Investments and Traditional benefits, Group asset mgmt. individual P&C Personal Finance risks, asset capabilities products gathering, across all major including home, Life and motor, consultancy asset classes protection, Middle income commercial, agri savings and 3.5 and SME Rbn FUM 9 South Africa market pension 695 252 Rbn FUM 7 million % FUM 3.9 Rbn Mass & Foundation policies % VNB 10 market 12 69 market GWP 11 share 10 % life APE share 8 OM Finance, % market 14 market funeral and simple Mass market 11 share by 7.1 share 6 savings products premium 12 as well as unsecured lending 3.2 million customers 3 Foundation 5.9 million policies 4 10.6 market 58 % APE written market share 5 West Africa, Through Life, Health, Savings, Protection/Risk, P&C, Banking, ROA East Africa, 424 2 Microfinance and Asset Management offerings SADC ex-SA 6. Own estimates of competitor equivalents relevant to top 5 listed insurers; OM and Sanlam adjusted to exclude Wealth businesses. Company financials 1. Market size by number of people; Bureau of Market Research, 2017 7. 1H2017, start manager basis 2. United Nations, Department of Economic and Social Affairs, Population Division (2017). World 8. The share of VNB represents an internal management view, derived from publicly available listed peer Population Prospects: The 2017 Revision. Figure represents total population. Regions information correspond to OM presence. Excludes SA. 9. 1H2017, end manager basis 3. This represents the whole of MFC which includes OMF and iWYZE 10. Retail assets managed market share, as at 30 June 2017 4. This represents the whole of MFC which includes loans, investments and risk 11. FY 2016 16 5. OM and 3 listed peers Sanlam, MMI and Liberty. Company filings and OM estimates 12. Derived from FSB market statistics for 2015
LARGEST MULTI-CHANNEL DISTRIBUTION NETWORK AND REACH AMONGST TRADITIONAL SA PEERS 1 Largest advisor network across SA 2 Largest customer-facing owned branch footprint 3 # Advisors # Branches 6.2% 5.0% 292 7,524 7,424 6,827 261 259 2014 2015 2016 2014 2015 2016 Growing direct channel in SA Total mass field force APE generated in worksites 4 Life direct APE (Rm) (Rm) iWYZE direct GWP (Rm) 22.9% 11.1% 12.8% 2,416 484 475 2,103 623 385 540 1,599 490 2014 2015 2016 2014 2015 2016 2014 2015 2016 Investing in digital capabilities for advisors / sales / services 1. Market positioning statements are based on management’s beliefs and expectations as at 30 June 2017 as informed by the public disclosures regarding our traditional SA peers. We consider our traditional SA peers to be Sanlam, MMI, Liberty and Discovery 2. Comprises of MFC advisors and Personal Financial Advisors (PFA) & Direct Financial Advice (DFA) advisors within Personal Finance (PF) 3. Relative to traditional insurance peers 4. Worksite annual premium equivalent (“APE”) represents field force APE. APE is the value of regular premiums received during a financial % 2014 – 2016 CAGR year plus 10% of any new single premiums written for the financial year. Figure represents MFC’s share of APE written by SA l isted 17 insurers. Company financials and OM estimates
STRONG TRACK RECORD OF PROFITABLE GROWTH IN SOUTH AFRICA 1 Strong double-digit customer growth outside SA Sustained growth in FUM 2 (m) (Rbn) 12.5% 9.1% 9.4% 3.7% 10.9 30.8% 1,086 886 5.9 14.8% 5.0 258 2016 2016 Gross sales 3 Pre-tax AOP 4 (Rbn) (Rbn) 12.8% 8.8% 12.7% 9.9% 12.7 213 11.0 12.9% 155 20.7% 74 2.3 2016 2016 SA ROA & LatAm Total FY 2016 OM Financial Disclosure Supplements 1. All figures at FY 2016 % 2012 – 2016 CAGR 2. Start manager basis. Regional totals exclude R57bn of inter-Group FUM eliminations 18 3. Regional totals exclude R17bn of inter-Group sales eliminations 4. Regional totals exclude central debt costs of R529m
OUR 8 BATTLEGROUNDS: A CLEAR STRATEGY TO DELIVER 1 Defend SA share in Mass & Corporate Consolidating and growing our 2 leadership position Defend and grow in SA Personal Finance market 3 Improve the competitiveness of the Wealth & Investments Cluster Improving key 4 Growth, ROE Continued turnaround of Old Mutual Insure underperforming businesses and cash 5 generation Turnaround East African business and improve ROEs across ROA opportunity 6 Win the war for talent Building long-term 7 competitive Refresh the technology offering advantage 8 Cost efficiency leadership 19
NEW AND AGILE MANAGEMENT TEAM… OML CEO Designate Peter Moyo Peter Moyo Delivering Old Mutual to our customers Mass & Foundation Cluster Personal Finance OM Corporate Clement Chinaka Clarence Nethengwe Karabo Morule Wealth & Investments Old Mutual Insure Rest of Africa LatAm & Asia Cluster Dave Macready Raimund Snyders Jonas Mushosho David Buenfil 20
…ENHANCING CUSTOMER FOCUS AND EFFICIENCY OML CEO Designate Peter Moyo Delivering Old Mutual to our customers Mass & Wealth & Old Mutual Rest of LatAm Personal OM Investments Foundation Insure Africa and Asia Finance Corporate Cluster Cluster Clarence Karabo Clement Dave Raimund Jonas David Nethengwe Morule Chinaka Macready Snyders Mushosho Buenfil Driving efficiency and change Chief Customer Governance, Human Financial Operating Solutions Regulatory & Resources Director Officer Director Corporate Affairs Director Iain Raymond Joel Mike Anisha Williamson Berelowitz Baepi Ilsley Archary Chief Chief Marketing Risk Officer Officer Vuyo Richard Lee Treagus 21
…OPTIMISING FOR A LISTED ENVIRONMENT Continuing Non-Executive Board members New Non-Executives ▪ Trevor Manuel (Chair) ▪ Itumeleng Kgaboesele ▪ ▪ Thys du Toit James Mwangi ▪ ▪ Bruce Hemphill Nombulelo Moholi ▪ John Lister ▪ Ignatius Sehoole ▪ ▪ Paul Baloyi Nosipho Molope ▪ ▪ Sizeka Stewart van Graan ▪ Peter de Beyer ▪ Vassi Naidoo Magwentshu-Rensburg ▪ ▪ Albert Essien Marshall Rapiya ▪ Thoko Mokgosi-Mwantembe ▪ Ingrid Johnson Industry Experience Functional / Executive Experience Life assurance Listing requirements Finance / audit Banking Asset management International Credit risk Property & Casualty Org. effectiveness Strategy Information Technology Social / responsible business Actuarial Regulatory Marketing Remuneration Ops General consumer M&A Digital enablement Wealth & Investments Africa 22
A PREMIUM AFRICAN FINANCIAL SERVICES GROUP Strong business with a great market position Sustained high cash generation Positioned for longer term sustainable growth Substantial business improvement and cost efficiency opportunities Creating value for shareholders by meeting customer needs 23
NEDBANK Mike Brown & Raisibe Morathi CEO & CFO, Nedbank INVESTMENT | SAVINGS | INSURANCE | BANKING 24
Old Mutual Limited Showcase 1 November 2017 Strong franchises, clear opportunities for improved financial metrics & attractive valuation
Agenda Market overview Mike Brown & positioning Strategic focus areas that Mike Brown underpin growth & create value Strong franchise with clear pathway to meeting our Raisibe Morathi medium to long term targets Mike Brown Conclusion 26
Nedbank Group – an overview Access to the largest Total retail clients Old Mutual (SA) Market banking network in Africa 7.8m 54% capitalisation 39 Large corporate clients shareholding in R104bn Countries > 600 Nedbank Group (21.2% share in ETI) Advances Assets SA’s most Deposits SA 91% R966bn Transformed R763bn +7.6% bank 1 +7.3% (5 year CAGR) (5 year CAGR) ROA Intl 3% 6% Assets under Advances Total ATMs management Retail Employees 4 060 38% R295bn 32 349 Total outlets +10.8% 62% 716 Wholesale (5 year CAGR) Note: As at 30 June 2017, unless otherwise specified | 1 Independent Top Empowered Companies Awards 2017 based on 2007 FSC scorecard (Empowerdex, Intellidex & Business Report) 27
Nedbank Group – track record of delivering value to shareholders NAV + Dividend growth (19% CAGR) > Nominal GDP (7% average) NAV per share 1 (cents) ROE & cost of equity (%) Dividend per share (cents) 18.9 CAGR: +7.4% CAGR: +11.8% 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% 28
Rationale of the Nedbank – Old Mutual strategic relationship ▪ Benefits of a strategic shareholder (Confirmation of strategic minority stake Improved free-float/ liquidity) ▪ Nedbank manufactures & distributes simple bancassurance products & works alongside Old Mutual as preferred product provider on complex risk products – arms-length agreements in best interests of clients ▪ Nedbank transactional banker to Old Mutual ( Nedbank’s largest transactional client) ▪ Synergies, costs savings & joint procurement − R1bn joint synergy target by 2017 remains on track (c30% of which accrue to Nedbank) − Continue to assess opportunities to create value where there is commercial rationale to do so ▪ Continuity of confidence in Nedbank for multiple stakeholders 29
Nedbank Group – one of Africa’s largest banks Largest banks in Africa 1 (Tier 1 capital, USD$) SA advances market share 2 (%) 5% 9000 1% 8% 25% 6000 19% 22% 20% 3000 Standard FirstRand Barclays Africa Nedbank SBK FSR BGA NED ETI INL Investec Capitec CPI 0 Other South African North African West African 1 The Banker Magazine (July 2017) | 2 BA 900 (June 2017) AR NEDBANK GROUP LIMITED – Annual Results '16 30
Nedbank Group – a strong, diversified & growing financial services provider Corporate & Retail & Business Wealth Rest of Africa Investment Banking Banking Banking solutions to corporates, Banking solutions to individual retail Integrated insurance, asset & wealth Banking solutions to retail, small & institutions & parastatals with clients, as well as businesses with a management solutions for a wide medium enterprises (SMEs), turnover of >R750m per annum. turnover of <R750m per annum. spectrum of clients, including entry- business & corporate clients across level to high-net-worth individuals, the 6 countries we operate in. corporates & businesses 3% 1% 4% (21%) 10% Headline 61% 51% 42% Advances R710bn R5.3bn earnings 48% CIB RBB Wealth Rest of Africa Centre * All figures as at 30 June 2017 (interim results for 6 months). Headline earnings for FY 2016: R11.5bn 31
Nedbank CIB – a core strength & leadership in key markets ROE, efficiency ratio & headline earnings (H1 ‘17) Key strengths & differentiators Partner 25 ▪ Strong franchise providing good returns network (ROE >20%) ▪ Market leadership in commercial-property & renewable-energy financing SBK RMB Return on equity (%) NED 20 ▪ Leading industry expertise in mining & resources, infrastructure, oil & gas, telecoms & energy. BGA ▪ Solid advances pipeline (growth opportunity 15 when business confidence improves) ▪ CIB integration providing significant client penetration & cross sell opportunities; & HE: +14.5% CAGR since H1 2013 attractive to attract & retain high quality intellectual capital 10 35 40 45 50 55 60 ▪ Efficient franchise (best efficiency ratio) & high Cost to income ratio (%) quality portfolio (low CLR) Size of bubbles reflect headline earnings (Rm) of CIB peers based on latest interim results 32
Nedbank RBB – ROE expansion underpinned by quality book & gaining share of SA retail profit pool ROE, efficiency ratio & headline earnings (H1 ‘17) Key strengths & differentiators 50 ▪ Investment delivering benefits as earnings grow & ROE continues to increase ▪ Strengths in deposit taking (19% market 40 FNB share), vehicle finance (31%), business Return on equity (%) banking (21%), card acquiring (>20%) 30 ▪ Market share gains in areas of strength SBK CPT BGA ▪ Track record of solid client & NIR growth (SA) 20 NED ▪ Historic selective origination & quality portfolio continue enabling relative CLR 10 outperformance HE: +16.0% CAGR since H1 2013 ▪ Digitisation & back-office optimisation to 0 drive transactional client growth & 30 40 50 60 70 efficiency ratio to <58% Cost to income ratio (%) Size of bubbles reflect headline earnings (Rm) of RBB peers based on latest interim results 33
Nedbank Wealth – high quality, high ROE business with growth potential ROE, efficiency ratio & headline earnings (H1 ‘17) Key strengths & differentiators 35 ▪ Integrated local & international high-net- worth franchise − Rich heritage & strong client base 30 − Market-leading digital innovations Return on equity (%) NED 25 ▪ Best of Breed TM Asset Management model SBK − Top 3 SA manager for 9th consecutive year Wealth 1 & top offshore manager for 3rd year 20 BGA − R295bn AUM – 5 th largest Unit Trust Manager in SA 15 HE: +5.4% CAGR since H1 2013 ▪ Growing insurance business 10 − Wider penetration of Nedbank client base 40 50 60 70 80 − New product innovation Cost to income ratio (%) Size of bubbles reflect headline earnings (Rm) of Wealth peers based on latest interim results | 1 SBK Wealth based on latest disclosure, excluding Liberty (ROE not disclosed) | Like-for-like comparison to peers difficult given different product & geographic contributions. 34
Rest of Africa – investing to create scale & unlock future growth ROE, efficiency ratio & headline earnings (H1 ‘17) Key strengths & differentiators 25 ▪ SADC (own operations) − Investment into technology & digital to SBK generate scale (Flexcube core banking & 20 mobile in 4 countries) Return on equity (%) BGA − Strong franchises in Namibia & 15 Mozambique FSR ▪ Central & West Africa (ETI alliance) 10 − The Ecobank – Nedbank Alliance: footprint across 39 countries, the largest in Africa 5 Nedbank − Increase dealflow by leveraging ETI’s local SADC presence & knowledge and Nedbank’s operations structuring expertise & balance sheet 0 30 40 50 60 70 80 90 − Transactional banking to 84 Nedbank Cost to income ratio (%) wholesale clients Size of bubbles reflect headline earnings (Rm) of RoA peers based on latest interim results | Nedbank HE growth as in prior slides not comparable given changes in internal cost allocation 35
Agenda Market overview Mike Brown & positioning Strategic focus areas that Mike Brown underpin growth & create value Strong franchise with clear pathway to meeting our Raisibe Morathi medium to long term targets Conclusion Mike Brown 36
Our purpose, vision & strategic focus areas for creating value & driving growth Purpose: To use our financial expertise to do good for individuals, families, businesses and society Vision: To be the most admired financial services provider in Africa by our staff, clients, shareholders, regulators and communities Delivering innovative market-leading client experiences Strategic focus areas Being operationally excellent Growing our transactional banking franchise faster than the market in all we do Providing our clients access to the best Managing scarce resources to optimise economic outcomes financial services network in Africa 37
Delivering innovative market-leading client experiences – underpinned by managed evolution IT approach & complemented with a Digital Fast Lane capability Core systems (#) Managed evolution approach Robust, Rationalise, “Big bang” flexible IT standardise & 211 landscape 194 simplify IT advancement 176 166 145 138 Managed evolution 60 Opportunistic (“Patching”) Today 12 13 14 15 16 H1 20 Business value 17 Target Digitising from within while ensuring we remain at the forefront of cyber resilience 38
Delivering innovative market-leading client experiences – enhancing client access through digital offerings Nedbank Private Wealth App Homeloans online process NZone digital branch Rated one of the best Unique in market Leading in digital outlets HNW Apps globally End to end online HL process Nedbank’s first digital Best in class client experience & full financial suite of digital services – leading industry turnaround time branch – self-service ▪ Independently rated a top SA High-net- ▪ Quick online answer in ~3 minutes & bond ▪ Launched at Gautrain Station (Oct ‘17) worth banking App & 6 th best globally 1 quote in ~3 hours ▪ Technology available: Intelligent Depositor, Video Banking, Quick Chat Banking, Self ▪ Launch of new Nedbank Retail Money App ▪ 11% of all applications & Rest of Africa Banking Apps Service Kiosk, Virtual Reality, Grab & Learn ▪ Unique 1% cash back up to R15,000 Wall, Facial Recognition etc 1 Rated 6th from 34 apps globally in the Mobile Apps for Wealth Management 2017 survey 39
Delivering innovative market-leading client experiences – value for clients through unique CVPs Market Edge TM Loyalty & rewards Solar rural branches Unique in market Unique in market Unique in market Leveraging Big Data Cash redemption capability Energy efficient e-banking services for client benefit ▪ Rural community – access to cashless ▪ Best Analytics product in Africa award ‘15 ▪ Since launching, less than 3 years ago, 32% of Greenback members have a Shop banking, personal loans & digital-payment ▪ EFMA Accenture Best Global Big Data & solutions through Masterpass. Card Analytics Product ‘15 ▪ Launching new, differentiated loyalty & ▪ Community upliftment – mobile service ▪ MIT best practice case study ‘16 provider owned by the community rewards programme in 2018 40
Delivering innovative market-leading client experiences – improved decision making & operational efficiencies Executive EySight TM Robotics & Artificial Intelligence Core systems Cross sell & client First implementations Implementations to date servicing benefits delivering benefits Client Intelligence Platform Executive EySight TM Real-time client & management Process efficiencies, reduced World-class, efficient core systems information insight errors & risk ▪ 50 software robots implemented to date ▪ Flexcube core banking rolled out in 4 African ▪ Insight into client cross/ up-sell – errors reduced by up to 96% subsidiaries opportunities ▪ SAP ERP implemented (Finance, ▪ Up to 300 software robots to be ▪ Insight into client & business procurement & HR) implemented in 2018 profitability ▪ CIB trading & derivative systems implemented 41
Growing our transactional banking franchise faster than the market – ongoing new primary client wins in CIB Net primary client gains (#) Primary transactional account wins 120 16 104 39 65 21 44 22 22 22 2013 2014 2015 2016 2017 YTD *2017 YTD as at end Sep 2017 42
Growing our transactional banking franchise faster than the market – growing client base with opportunities for greater cross-sell & deeper share of wallet in RBB Retail clients (m, CAGR %) Growing our share Growing our share Main-banked of retail clients ( 1 market est. to of transactional clients & client market grow 14% to 28m by 2020) increase product penetration share estimated at 7.5 More clients doing more 10-12% of their primary banking 6.2 6.1 (2013: 9%) with Nedbank Target >15% 4.6 +5% 2.7 +7% 2.2 +5% Total Transactional Main-banked 27% of clients have another product 2 H1 2017 H1 2013 1 Number of SA banked consumers estimated to grow from 24.6m (2015) to 28m by 2020 (clients are multi-banked). Source: AMPS | 2 Excluding bancassurance products, including bancassurance: 44% 43
Being operationally excellent in all we do – significant investment in the franchise, while extracting efficiencies Nedbank investments (H1 2013 – H1 2017) Expense growth H1 2013 – H1 2017 (CAGR %) ATMs +686 (+22%) ▪ Intelligent depositors +720 ▪ 9.9% ▪ New format branches +303 ▪ Annual IT cashflow spend: R1.0bn to R1.7bn 7.5% 7.1% ▪ Foundation projects – Service Oriented 6.3% Architecture, Customer Relationship Mgnt, Digital Experience Mgnt etc Digital innovations, Flexcube core banking ▪ system for ROA, SAP ERP etc ▪ Regulatory requirements ▪ Rest of Africa investment & Banco Único consolidation NED Bank A Bank B Bank C 44
Being operationally excellent in all we do – focus on optimising our footprint through digital enhancements & reduced floor space Floor space saved Outlets format mix Total & new-image outlets (thousand m 2 ) (#) (#) Target > 30k m 2 by 2020 763 764 764 763 708 33 695 708 695 171 627 627 190 193 24.8 149 148 255 115 304 82 71 55 40 18.7 0 303 13.7 730 593 504 507 512 500 491 453 7.3 391 324 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 H1 H1 H1 Inretailers Personal loans Traditional New image Branches 45
Being operationally excellent in all we do – shifting to digital products & processes Digital clients 1 (000s) Deposit volumes (000s) Change in 2017 Jun 15 Jun 16 Jun 17 Traditional Deposits Self Service Deposits Devices +5% ▪ Intelligent Depositors (ID) 38% 14 793 14 691 ▪ ATMs (3%) 13 460 ▪ Video bankers 33% 5 680 2 ▪ Self service kiosks >100% +39% ▪ Interactive tellers Launched 2016 +8% 3 861 Volumes 869 829 748 2 936 ▪ Internet usage 12% ▪ App Suite usage 48% 42% ▪ ATM & ID withdrawals 3% 32% 20% ▪ ID deposits 32% ▪ Teller activity (6%) H1 2015 H1 2016 H1 2017 Enabled Active 1 Digitally enabled & active clients have been restated to include all digital channels & to allow for only last 90 days of recent activity. 2 Growth largely as a result of the Digital Activation programme run in Q4 2016. 46
Managing scarce resources to optimise economic outcomes – selective market share growth for sustained economic profit delivery BA 900 market share (%) Share ¹ Share ¹ Deposits Trends Advances Trends Household 19.0 Home loans 14.5 Term 21.2 Vehicle finance 27.6 Commercial Personal loans 17.1 10.9 Card Wholesale 14.2 20.7 Commercial Asset 40.1 21.5 property managers Core Foreign 22.1 13.6 commercial² ¹ BA900 – June 2017 (Compared to June 2016) ² 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). 47
Providing our clients access to the best financial services network in Africa – two pronged strategy Seamless banking experience across 39 countries SADC & East Africa – Central & West Africa – alliance approach to own, manage & control access new markets banks (6 countries & (c20% strategic 2 representative offices) investment in ETI) 48
Providing our clients access to the best financial services network in Africa – investing & building scale in SADC Branches (#) ATMs (#) Core system & product rollout +16% CAGR Rolled out to date +16% CAGR Flexcube/Core banking system 192 89 Mobile 30 Card 20 162 69 50 108 H1 13 H1 17 H1 13 H1 17 Malawi Clients (# 000) Digital activation (# 000) +15% CAGR >53% CAGR Zimbabwe Mozambique 314 31 Namibia 22 11 292 Swaziland 6 181 20 Lesotho H1 13 H1 17 H1 16 H1 17 Banco Único Other Subsidiaries Note: Banco Único operates on its own new core banking system. 49
Providing our clients access to the best financial services network in Africa – ETI an important strategic investment Strategic rationale Benefits from strategic relationship ▪ Nedbank wholesale client access to key markets & 84 transactional banking with ETI ▪ Commercial relationship – opportunity for cross-border transactions & building a deal pipeline in Africa Unlock financial return on investment ▪ ETI target ROE > COE | Price : book > 1 ▪ Audited H1 ‘17 results reflect recovery underway ▪ Progress on transactional banking initiatives, operational efficiencies & risk management ▪ Strengthened governance & shareholder representation ▪ Share price up 65% YTD as sentiment improves ▪ Distinct market leader in 7 countries c20% shareholding underpins strategic relationship, #2 or #3 position in another 7 countries ▪ without attracting undue regulatory costs 50
People 2020 – transforming our leadership, culture & talent capability to deliver our strategy ▪ Purpose-led LEADERSHIP that inspires & enables individuals & teams to thrive in the Nedbank of the future ▪ Client-driven, agile, innovative, people centred CULTURE ▪ Multi-skilled & mobile TALENT that are agile – commercial & digitally savvy New World of Work – focus on organisational design, behavioural shifts, change management, analytics, reinventing skills etc 51
Agenda Market overview Mike Brown & positioning Strategic focus areas that Mike Brown underpin growth & create value Strong franchise with clear pathway to meeting our Raisibe Morathi medium to long term targets Conclusion Mike Brown 52
A strong base to weather a challenging environment Headline earnings (Rm) Loan growth (CAGR %) Global 20.1 financial 16.3 CAGR crisis 6.3 15.1% 4.8 06 – 08 13 – H1 17 Wholesale Retail (28%) Endowment benefit for 1% change in interest rates (12-months) (Rbn) 1.4 0.6 10 831 11 465 0.5 5 921 5 765 4 277 05 06 07 08 09 10 11 12 13 14 15 16 08 09 H1 17 53
A strong base to weather a challenging environment Number of clients (m) NIR income contribution (%) Defaulted advances (%) 86% 5.9 7.8 4.2% (53%) 46.4% 3.9 4.4 4.2 42.2% 2.8 39.8% 08 09 H1 17 08 09 H1 17 08 09 H1 17 CET1 ratio (%) Funding tenor (%) Coverage (%) 0.65 24% Portfolio 0.47 0.45 12.3 19.2 9.9 1 LT 21.1 33.1 8.2 1 19.9 08 09 H1 17 MT 21.0 15.7 Specific 37.2 57.9 51.2 33.9 ST 60.9 32.0 08 09 H1 17 08 09 H1 17 08 09 H1 17 1 Core equity tier 1. 54
The environment over the next 3 years Macro-economic outlook 1 (%) Anticipated developments 2017 2018 2019 2020 ▪ Political events impact short term confidence GDP SA 0.8% 1.2% 1.9% 2.3% ▪ Credit growth to improve off a low base GDP SSA 2.6% 3.5% 3.6% 3.7% ▪ Interest rates reduce in 2018 before increasing in 2019 & 2020 Inflation (CPI) 5.3% 4.8% 5.6% 5.6% ▪ Local currency downgrade not currently anticipated in our base case, but risk remains Industry credit 4.6% 6.3% 7.8% 10.0% ▪ Accelerated adoption of mobile & digital technology growth ▪ Progressive regulatory change – Basel III in place, Average 10.4% 9.7% 9.6% 10.2% but other regulatory requirements continue Prime rate 1 Assuming no local currency downgrade | All Nedbank economic unit forecasts, except GDP SSA as per IMF 55
The key drivers 1 to meet our key medium to long-term targets 18 19 20 NII June MLT Future Metric 2017 target trajectory AIEA ROE (excl 5% 15.1% times goodwill) above COE (3.7%) Net interest margin Diluted HEPS ≥ CPI + GDP +5,9% growth +5% excl ETI less Efficiency 50 – 53% Credit loss ratio 59.3% Ratio plus 10.5 – CET 1 12.3% 12.5% NIR / expenses ratio 1.75 – Remain in plus Dividend 1.80x 2.25 times range cover Associate income 1 Indicators are not financial forecasts, but indicative trends based on current economic forecasts | The financial information on which the drivers are based have not been 56 reviewed and reported on by Nedbank’s external auditors
Net interest income – driven by improving advances growth, endowment, asset pricing & funding costs Industry credit growth (%) Net interest margin drivers 40 2017 2018 2019 2020 Endowment Companies 30 2017: 4.8% Asset mix 2018: 6.7% 20 2019: 8.4% Asset pricing 2020: 12.7% Liability mix 10 Households 2017: 3.1% Liability pricing 0 2018: 6.0% 2019: 7.5% Basel 3 funding 2020: 8.0% -10 Total 00 02 04 06 08 10 12 14 16 Local currency Households (yoy%) Companies (yoy%) downgrade funding impact¹ 1 Local currency sovereign credit rating downgrade is not currently the base case for Nedbank Group forecasts. Grey arrows indicate small relative changes year on year All based on current economic outlook 57
Credit loss ratio – underpinned by a quality portfolio across all clusters Group CLR 1 (bps) Cluster CLR (bps) 131 180 114 83 77 67 60 -100 80 37 30 28 9 47 (3) 13 14 15 16 17 Outlook CIB RBB Wealth RoA range H1 2013 H1 2017 H1 Banking 1 Nedbank through-the-cycle target range: 60 – 100 bps. 48.7% 44.2% 4.3% 3.0% advances Future outlook includes IFRS 9 increases, while Day One (1 Jan 2018) impact on CET1 is expected to be immaterial 58
CLR – good asset quality & low risk retail book HL new business – low-risk clients proportion 1 (%) Vehicle finance 3- months+ arrears benchmarking 3 6.00 6% 80% 5% 70% 4.00 4% 60% 3% 2.00 2% 50% 1% 40% 0.00 0% 09 10 11 12 13 14 15 16 17 11 12 13 14 15 16 17 PL market share of new business by risk band 4 (%) HL new business – low-risk properties proportion ² (%) Low risk * Low to medium risk Medium risk High risk 70% 20% 80% 80% 15% 60% 60% 60% 10% 40% 40% 50% 5% 20% 20% 40% 0% 0% 0% 30% 14 15 16 17 14 15 16 17 14 15 16 17 09 10 11 12 13 14 15 16 17 ** Nedbank Tier 1 Tier 2 Nedbank Competitors 1 Source: Experian Delphi Score. 2 Source: Lightstone Risk Quality Grade. 3 Source: TransUnion. * Low risk (Bureau score >= 658); low-medium risk (Bureau score 644-657); medium risk (Bureau score 626-643); high risk (Bureau score <= 625). 4 Source: Experian. ** Tier 1 refers to big 4 banks, excluding Nedbank, while Tier 2 refers to remaining material providers of unsecured personal loans. 59
NIR – solid commission & fee income growth & strong trading performance NIR & key growth drivers (Rm) NIR-to-expenses ratio (%) Outlook: CAGR Total 11 730 Increase to Insurance penetration >85% 776 (5%) opportunity 86.4 9 535 Insurance 2 006 +12% 84.6 income 1 950 Benefits from integrated CIB model 1 276 Trading 83.3 income 82.8 82.9 81.6 Transactional banking 8 436 +6% client gains & cross-sell Commission & 6 771 fees 2013 2014 2015 2016 H1 H1 2013 H1 2017 2017 Nedbank Group Nedbank Group excl RoA MLT target > 85% 60 1 Downward insurance move from 2013 include the following: repricing of credit life, lower personal loans volumes & favourable claims in the base
NIR – Retail NIR growth underpinned by ongoing client gains & deepening share of wallet Retail NIR 1 (Rm) Total retail client base (000s) CAGR CAGR +5% 5 151 +5% 7 531 Total 4 203 6 164 Total 2 702 3 370 Main- Transactional 2 237 +5% banked incl card issuing 2 620 +6% Retail excl 4 829 main- 3 927 Other banked 1 781 1 583 13 17 13 17 H1 H1 61 1: Includes R38m impact from zero fee increases & some fee reductions in 2014 | Excluding this, transactional & card growth would have been 7%
NIR – CIB integrated model continues to drive revenue growth CIB NIR (Rm) CIB NIR-to-average advances ratio CAGR Leverage strong lending position +7% 3 371 158 >2.0% Total 2 557 1.8% 1 310 Other 361 +6% Comm & 1 023 Fees 1 903 Trading +13% 1 173 13 17 H1 17 Target H1 62
Expenses – opportunities to improve efficiency ratios in RBB & ROA as we progress towards our target of 50-53% Efficiency ratio vs peers¹ (%) Performance targets linked to LTIs Strategic targets set for 31 Dec 2019: Digital, scale & cost optimisation → R1bn pre-tax Target Operating Model opportunities synergies 56.5% excluding → 15% Retail transactional market share 3 ETI (currently estimated at 10-12%) → 16.5% Commercial transactional deposit market share 4 (currently 14.4%) Key cluster C:I ambitions → Maintain CIB at ~40% 59% 56% 51% 56% 42% 52% 47% 52% 63% 56% 54% 61% 65% 69% 50% 81% 71% 70% 54% → Improve RBB from 63% to ≤58% Group CIB RBB Wealth Rest of → Improve Wealth from 65% (to TBC) Africa 2 → Improve RoA from 81% (to TBC) NED Bank A Bank B Bank C 63 1: Group efficiency ratio including Associate income/ loss | 2: Nedbank Rest of Africa excludes impact of ETI loss | 3: Based on 2015 AMPS survey & Nedbank estimate of transactions through our acquiring network | 4: BA 900 (June 2017)
Expenses – cost optimisation in the variable & fixed expense base Fixed & variable expenses – Flexibility of expense Variable expenses – structural optimisation planned can be delayed or reduced base (%) ▪ Target operating model ▪ ~10% staff attrition per synergies of R1bn pre-tax by annum 2019 ▪ STI: Linked to headline ▪ Digitisation & integrated earnings & economic profit 26% channels – lower cost to serve ▪ LTI: Linked to ROE, FINI 15 & & revenue benefits strategic corporate R28.4bn ▪ Managed Evolution IT core performance targets system replacement ▪ Discretionary spend : 74% ▪ Robotics & artificial Marketing & communication, intelligence consulting fees, travel expenses etc ▪ Shared services model , including procurement, property ▪ Revenue related fees Fixed Variable strategy 64
Expenses – RBB a key contributor to the R1bn pre- tax Target Operating Model synergies Target operating model R1bn pretax synergies Removing duplication across Marketing spend ▪ ▪ shared services functions (eg optimisation Shared services finance, HR, risk, compliance) RoA head office cost cost ▪ optimisation ▪ Automation & robotics optimisation 221 initiatives across 5 broad areas Organisational simplification ▪ Credit ▪ RBB cost optimisation ▪ Procurement ▪ Evolved distribution Operational excellence through digitisation ▪ ▪ New digital technologies/products/services through partnerships with accelerators/incubators/Fintechs Revenue ▪ Innovation integration & delivery, eg Digital Fast Lane opportunities Data-driven intelligence ▪ 2019 65
Associate income – ETI performance reflective of tough but improving environment, particularly in Nigeria Associate income from ETI 1 (Rm) (745) 870 (125) 164 148 278 292 152 230 171 150 142 152 ETI medium-to-long term guidance 2 ETI H1 2017 ▪ ROTE target: COE + results 5% (H1 2017: 15.3%) audited Efficiency ratio: 50-55% ▪ (H1 2017: 60.6%) (676) (1 203) 3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 15 16 17 1 ETI accounted for one quarter in arrear | 2 Source: ETI disclosures. ETI estimate their COE at ~17% | 3 Estimate based on ETI Q3 2017 & average Q4 2017 Rand / US$ of 13.58 66
ETI – Nigerian market showing signs of recovery & ETI successfully secured $400m of convertible funding. While short-term outlook remains uncertain, the longer-term potential remains Carrying value & market value (Rbn) ETI share price vs Nigerian bank index 5.2 500 460 4.1 450 17.0 400 3.1 350 274 300 250 10.3 200 FY16 150 results: 7.1 100 50 0 Dec 16 Feb 17 Apr 17 May 17 Jul 17 Sep 17 Carrying value Market value Share of ETI NAV June 2017 30 Sep 2017 30 Sep 2017 ETI share price Nigerian Bank Index 67
Dividend – strong capital generation underpins dividend cover within target range Dividend cover (x times) Basel III capital ratios (%) 15.7 2.18 2.16 Total 14.8 2.10 2.5 Tier 2 1.8 0.9 1.99 1.2 Tier 1 CET1 range: 1.80 10.5 – 12.5% Board-approved target range: 11.8 CET1 12.3 1.75 – 2.25x SARB min CET1: 7.25% Jun Jun 13 14 15 16 17 2013 2017 H1 1 Source: I-Net 68 Note: Capital adequacy ratios are underpinned by ongoing organic profit generation & RWA optimisation opportunities. IFRS 9 is not anticipated to have a significant impact on capital adequacy.
Agenda Market overview Mike Brown & positioning Strategic focus areas that Mike Brown underpin growth & create value Strong franchise with clear pathway to meeting our Raisibe Morathi medium to long term targets Conclusion Mike Brown 69
Old Mutual Managed Separation ▪ Listing of a new South African holding company – ‘Old Mutual Limited’ (OML) − At the earliest opportunity in 2018, following OM plc’s 2017 full-year results announcement − Subsequent distribution of a significant proportion of the shareholding in Nedbank from OML − OML will retain a 19.9% strategic minority shareholding in Nedbank to underpin the ongoing commercial relationship & residual OM plc ▪ Timing − Managed Separation materially complete by the end of 2018 − Allow OML shareholder base to season (EM holders) – managing flowback/ overhang ▪ Business as usual for Nedbank No impact on strategy, day-to-day management or operations, nor on staff or clients − − Technology, brand & businesses have not been integrated − Engagements have been at arm’s length – overseen by independent board structures No impact on ongoing Old Mutual collaboration − 70
Good governance & a good corporate citizen – underpinning our strategic journey Thomson Reuters Diversity & Inclusion Index – Executive leadership Nedbank the only African company in the top 20 most diverse & inclusive organisations ▪ Highly rated management team Dow Jones World Sustainability Index – ▪ Depth of bench strength & succession one of only 27 banks on the index & included for planning the eleventh year Africa’s first carbon neutral financial organisation – carbon neutral since 2010 Board of directors ▪ 61% independent directors WWF Nedbank Green Trust Partnership – invested R211m since inception in support of over ▪ 61% black directors (FSC definition) 200 environmental projects throughout South Africa. 28% female directors ▪ JSE’s Top 100 Most Empowered Companies – Nedbank overall winner (Codes of good practice) Broad & diverse skills & experience ▪ Applying King IV principles ▪ Top 10 integrated reporting awards – fourth overall & best in financial services 71
Nedbank Group – a strong domestic foundation with attractive growth prospects both in SA & in rest of Africa Short-term political uncertainties & muted SA economic outlook Exciting growth drivers Competitive franchises ▪ Delivering innovative market-leading client ▪ CIB – strong franchise with growth opportunities experiences ▪ ▪ RBB – increase ROE as we lower efficiency Growing our transactional banking franchise faster than the market ratio to ≤ 58% Being operationally excellent in all we do ▪ Wealth – high ROE business, not impacted by ▪ managed separation ▪ Managing scarce resources to optimise economic outcomes Rest of Africa – growth opportunity ▪ Providing our clients access to the best ▪ financial services network in Africa Clear path to meet medium-to-long-term targets − Reduce efficiency ratio to 50 - 53% − Increase ROE (excl gw) to COE + 5% − Strong balance sheet & capital generative Attractive valuation – price: earnings, price : book & dividend yield 72
Q&A INVESTMENT | SAVINGS | INSURANCE | BANKING 73
BREAK INVESTMENT | SAVINGS | INSURANCE | BANKING 74
DEEP DIVE INTO BUSINESS UNITS INVESTMENT | SAVINGS | INSURANCE | BANKING 75
DEEP DIVE AGENDA 11:30 Deep Dive into Business Units 11:30 Mass & Foundation Cluster (MFC) Clarence Nethengwe, MD Mass & Foundation Cluster 11:50 Personal Finance (PF) Karabo Morule, MD Personal Finance 12:10 Wealth & Investments Cluster Dave Macready, MD Old Mutual Wealth & Investments 12:40 Q&A Session 12:55 – 13:40 Lunch 13:40 Old Mutual Corporate Clement Chinaka, MD Old Mutual Corporate 14:00 Old Mutual Insure Raimund Snyders, MD Old Mutual Insure 14:25 Rest of Africa Jonas Mushosho, MD Rest of Africa 14:50 LatAm and Asia David Buenfil, MD LatAm and Asia 15:05 Q&A Session 15:20 – 15:35 Break 76
MASS & FOUNDATION CLUSTER Key stats 2016 AOP contribution 24.0% 2016 AOP R3.1bn Customers 3.2m Clarence Nethengwe MD, Mass & Foundation Cluster INVESTMENT | SAVINGS | INSURANCE | BANKING 77
MEETING MASS & FOUNDATION CUSTOMER NEEDS ▪ Strong relationships in 5.9m 1 policies PF, 3.2m 2 unique customers communities, with a strong Wealth presence in the public sector & HNW R20k+ pm Lending and transactional – ▪ Long-term insurance business is 0.2 Money Account, unsecured lending the anchor of the cluster Lower middle Savings – 7m 1.6 income (RMM) ▪ Long-term savings and RA, TFSA, education 3 2.6 4 protection products distributed R5k to < R20k pm Protection – 1.7 through highly productive tied Funeral and life advisor force Low income Group funeral cover – 11m ▪ Unsecured lending and 0.3 Underwriting third (Foundation market) transactional offering via Old party books R1k to < R5k pm Mutual Finance (OMF) through networks of branches Other – unemployed, student # # Market size 5 MFC Customers (m) 1. Across the entirety of MFC – includes loans, investments and risk 2. Across the entirety of MFC – includes OMF and iWYZE; as at 30 June 2017; customer numbers do not add due to rounding 3. Retirement annuity (RA); Tax Free Savings Account (TFSA) 4. There are 2.6m unique Retail Mass Market (RMM) customers across both products and 700k customers with multiple needs met 78 5. Bureau Market Research, July 2017
UNIQUE POSITIONING WITH CUSTOMERS SA market shares 1 ▪ Increasing product flexibility for savings products Risk and Savings ▪ Large branch network for service and sales Share of APE written by SA listed insurers 2 58% ▪ c.4,000 strong tied agency force Risk ▪ Staff performance management tied to Share of new industry policies written 3 15% persistency Total new industry policies written (m) 3 5.2 ▪ Use of technology to maintain low admin cost per policy Savings ▪ Developing new digital distribution as younger Share of new industry policies written 3 54% customers enter market Total industry new policies written (m) 3 1.0 ▪ Advice-based training given evolving Treating Customers Fairly emphasis of regulation Unsecured lending Market share 4 6% Branches 5 307 1. As at December 2016; excludes credit life business 2. OM and 3 listed peers Sanlam, MMI and Liberty. Company filings and OM estimates 3. ASISA, December 2016 4. National Credit Regulator, December 2016 79 5. As at 30 June 2017
LARGEST ADVISOR FORCE WITH SUPERIOR PRODUCTIVITY 1 Market-leading advisor productivity 4 Field advisor force advantage Branch and field advisor productivity Over 4,000 2 advisors 9.7% ▪ 6.5 6.2 Market-leading productivity 5.4 ▪ Strong worksite advantage with presence in more than 45,000 3 worksites 2014 2015 2016 ▪ Leading position in public sector ▪ Branches display high advisor productivity, case size and persistency Branch network drives sales 30% 28% Increasing use of supporting channels 26% 26% ▪ Telesales 307 292 ▪ Accredited brokers 261 ▪ 259 Tied franchise model 2014 2015 2016 1H2017 ▪ Digital Branch life sales as % of MFC APE sales Branches 1. Based on competitor reporting of advisor numbers as at December 2016 and against traditional peers 2. June 2017; includes field and in-house advisor force % 2014 – 2016 CAGR 3. 30 September 2017 80 4. Policies per week
UNSECURED LENDING CONTINUES TO PLAY KEY STRATEGIC ROLE OM Finance loans and advances 2 ▪ Increased levels of customer intimacy (Rbn) R350m ▪ Distribution via fast growing branch infrastructure R411m (c.30 per year) 11.2 10.0 Income statement impairments ▪ 50% of new branches targeted towards middle and higher income footfall areas 1H2016 1H2017 ▪ OMF branch footprint enables strong distribution opportunity Geographic split of branches 3 LIMPOPO Polokwane ▪ Conservative lending criteria has slowed near- MPUMALANGA term asset growth Mahikeng Nelspruit Pretoria GAUTENG NORTH WEST ▪ DTI 1 industry-wide interest rate caps have Johannesburg KWAZULU-NATAL Upington FREE STATE impacted profitability Kimberley Bloemfontein NORTHERN CAPE Pietermaritzburg Durban EASTERN CAPE 1. Department of Trade and Industry East London 2. Following a methodology change (in preparation for IFRS 9) in 1H2017, long WESTERN CAPE Port Elizabeth outstanding loans were written off. The 1H2016 figure excludes long Cape Town outstanding loans to enhance comparability (further detail is provided in the appendix MFC: Financial KPIs) 3. As at 6 September 2017 81
STRONG FINANCIAL TRACK RECORD VNB 1 and VNB margin Pre-tax AOP 2 (Rm) (% of PVNBP) (Rm) 7.9% 3,058 2,993 1 400 12.00% 2,629 11.50% 1 200 1,477 1,376 1,204 1.0% 11.00% 1,055 1 000 1,035 2014 2015 2016 1H2016 1H2017 10.50% 10.3% 10.00% Pre-tax AOP contribution to the Group (2016) 3 10.2% 800 9.9% 9.50% 9.4% 600 MFC excl OMF 17.7% 602 9.00% 9.2% 585 OMF 8.50% 6.3% 400 R12.7bn OM LTIR net of 8.00% 60.7% central expenses 15.3% 200 7.50% Other BUs 0 7.00% 2014 2015 2016 1H2016 1H2017 1. Value of New Business (“VNB”) is the value of the expected future profits arising from new business written during the year 2. AOP excludes LTIR and SA central costs % 2014 – 2016 CAGR 3. The pre-tax AOP % contribution by Business Unit calculation excludes LTIR net of SA and LatAm central expenses, debt costs as 82 well as profits from OMP (a reconciliation from the Business Unit AOP to the OMEM Group is provided in the appendices)
DEFENDING OUR MASS MARKET LEADERSHIP POSITION ▪ Explore participation in full funeral value chain, in addition to pure Strengthen core value proposition underwriting ▪ Explore complementary products Expand lending and transactional ▪ Continue to build out lending product suite and Money Account solutions ▪ Continuous enhancement of our distribution capability Improve sales channels efficiency ▪ Improve efficiency of sales channels via technology enabled advice ▪ Target youth market ▪ Explore bespoke online solutions Deploy direct channel capability ▪ Develop new channels Scale Foundation Market platform ▪ Substantial foundation market opportunity with migration potential to RMM through partnerships ▪ Leveraging partnerships with administrators and funeral parlours 83
LARGE, PROFITABLE BUSINESS WELL-POSITIONED FOR SUSTAINABLE GROWTH ▪ Trusted brand which is embedded in the communities ▪ We recruit from the community for the community ▪ Market leader in the mass & foundation segment with a unique and highly efficient sales platform ▪ Simple and accessible offering that facilitates cross-sell and customer acquisition ▪ Large and profitable business ▪ Branches are a key touchpoint for seamless customer experience ▪ Multiple growth opportunities to drive top-line and maintain margins 84
PERSONAL FINANCE (PF) Key stats 2016 AOP contribution 26.9% 2016 AOP R3.4bn Customers 2.0m Karabo Morule MD, Personal Finance INVESTMENT | SAVINGS | INSURANCE | BANKING 85
ESTABLISHED SOUTH AFRICAN RISK AND SAVINGS BUSINESS ▪ We provide holistic financial advice and long-term savings, PF life APE (2016) by line of business investment, income and risk protection solutions for middle (Rm) income customers in South Africa (earning R20k – 80k pm) 447 17% 756 ▪ We aim to be every customers’ most trusted financial partner 29% 1.1% ▪ Distribute through face-to-face, broker force and direct 2,603 2013 % channels Legacy APE 2 1400 ▪ There is opportunity for PF to improve market share in the 54% pockets of growth in the market Protection Savings Profit and life APE market share 1 PF life profit (2016) by line of business 3 Income (Rm) Legacy 2 23.0% 20.9% 20.4% 730 20% 15.9% 1,357 14.4% 14.4% 0.36 34.5% 3,421 616 16% 2013 % Legacy Profit 2 2014 2015 2016 1,040 28% Profit APE 1. Own estimates of competitor equivalents relevant to top 5 listed insurers; OM and Sanlam adjusted to exclude Wealth businesses. Company financials 2. Legacy refers to products that are closed to new business 86 3. Total PF life profit of R3,421m includes capability investment in distribution channels and other entities
WELL DEVELOPED INSURANCE MARKET WITH BMI OPPORTUNITIES Growth in SA middle market customers (‘000) 2 ▪ Historic preference for face-to-face advice remains, CAGR but younger customers prefer digital 17% 21% – PF’s large advisor force and growing digital 3,537 8% 3,338 3,160 channel provides balance to meet customer 2,906 2,662 2,392 needs 2,028 5% 1,956 1,919 1,806 1,708 1,591 ▪ Macroeconomic headwinds 1,509 14% 1,381 1,241 1,100 – Customers derive comfort from trusted brand in 954 801 tough times 2011 2012 2013 2014 2015 2016 BMI customers Non- BMI customers PF BMI penetration 3 ▪ BMI 1 spend on savings, insurance and medical aid products has increased faster year-on-year than the Personal Finance - % of income spend 4 middle income market Middle-income market BMI 17% 15% 16% 14% 10% 11% 8% 9% 20% 20% 18% 16% 2015 2016 2015 2016 Servicing Debt Insurance & Medical Aid Savings 1. Black Middle Income 2. Bureau Market Research, 2017; OM customer data 3. PF BMI customer data only available from 2015 87 4. Old Mutual Savings and Investment Monitor 2017 dataset, not disclosed in this form in the public report. Consumption/living expenses not shown
MULTIPLE CUSTOMER ACCESS POINTS DRIVING RELATIONSHIPS AND SALES – FURTHER OPPORTUNITIES IN HIGH INCOME REGIONS Upside from advisor alignment to target income segment 1,2, 3 Channel Number 1 PF APE (%) – R3.4bn 1 Employed tied c.3,000 55% Tied advisors 26% 21% 24% 29% IFA / broker c.7,000 28% PF APE 29% 21% 17% 33% Franchise c.600 10% Tele-advice c.200 6% PF target market 40% 13% 24% 23% Digital n/a 1% Gauteng Kwa-Zulu Natal Western and Eastern Cape Other ▪ Growing digital contribution to new business premiums 4 Biasing our advisor recruitment to Gauteng to capture 6 opportunities and grow PF market share 90 ▪ Improving distribution productivity through: 80 4 60 Placing advisors into retail branches – 63 4 Investing in technology enablement – 2 30 31 ▪ Digital channels to target the youth and improve efficiency 2 1 0 0 2015 2016 1H2017 (annualised) New business premiums (Rm) # Digital products offered 1. As at 31 December 2016; issued APE 2. APE from tied channels (PFA and AFD) 3. Bureau of Market Research, 2017 88 4. 1H2017 new business figure
LEVERAGING MFC AND CORPORATE PLATFORMS APE generated from public sector (Rm) ▪ Customer migration opportunities as customer incomes grow 134 Mass & 125 ▪ Worksite cross-sell using On The Foundation Money financial education Cluster platform 2016 1H2017 ▪ Money Account (annualised) Worksite performance ▪ Open worksites for the retail businesses 100 3,000 79 89 97 129 90 ▪ Financial Wellbeing Programme 2,500 80 2,395 2,397 2,301 to educate and generate new 70 2,000 Corporate 2,016 60 PF customers 59 50 1,500 40 ▪ Fund selection, and savings and 1,000 30 6 risk protection solutions outside 20 23 24 ,500 10 of employer-provided benefits 0 - 2013 2014 2015 2016 Corporate outflow retained in PF (Rm) Corporate worksites opened PF retailisation cross-sell APE (Rm) 89
CONTRIBUTION TO THE BROADER OMEM BUSINESS ▪ R3.2bn in APE for Old Mutual Wealth Wealth & Investments ▪ 70% of the FUM generated is managed by OMIG (excl Absolute Guarantee Product - 5%) Cluster ▪ 5% of the FUM generated is managed by OM multi-manager ▪ R185m in APE in the form of SuperFund schemes, 6.1% of reported Corporate APE Old Mutual Corporate ▪ R4.8bn in FUM in Corporate’s smooth bonus product through Max investment offering ▪ R475m in GWP to Personal Lines Old Mutual Insure ▪ R166m in GWP to Commercial Lines ▪ R8m in GWP to iWYZE Mass & Foundation ▪ Online funeral through the digital channel Cluster ▪ Initiated debt consolidation loan offers to our customers in June 2016 90
STRONG, CASH GENERATIVE BUSINESS VNB and VNB margin Pre-tax AOP contribution to the Group (2016) 2 Pre-tax AOP 1 (Rm) (% of PVNBP) (Rm) 9.5% 600 4.5% 4.0% 500 2.8% 3,421 3.5% 2.5% 3,073 400 3.0% 2,854 Personal 1.7% 2.5% 300 Finance 1.4% 2.0% 1.1% 26.9% 200 1.5% 1,501 1,395 1.0% 100 389 500 272 112 87 OM LTIR net 0.5% 0 0.0% of central 2014 2015 2016 1H2016 1H2017 2014 2015 2016 1H2016 1H2017 R12.7bn expenses 57.9% FUM 3 NCCF 15.3% Other BUs (Rbn) (Rbn) 9.8 10.1 7.7 4.3% 4.0 3.5 (0.2) 192 188 (0.4) (1.6) (1.3) 184 179 (3.1) 169 (4.8) (5.6) (10.2) (10.3) (10.8) 2014 2015 2016 1H2016 1H2017 2014 2015 2016 1H2016 1H2017 Legacy NCCF Open book NCCF Combined NCCF 1. AOP excludes LTIR and SA central costs 2. The pre-tax AOP % contribution by Business Unit calculation excludes LTIR net of SA and LatAm central expenses, debt costs as % 2014 – 2016 CAGR well as profits from OMP (a reconciliation from the Business Unit AOP to the OMEM Group is provided in the appendices) 91 3. Start manager basis
ROBUST, PROFITABLE BUSINESS WITH UNIQUE POCKETS OF OPPORTUNITY ▪ Substantial market position with opportunity to grow market share ▪ Opportunity in the BMI customer demographic to help drive improvement in market share ▪ Industry-leading margins and profit contribution from the legacy book generate consistent cash ▪ Reach across multiple distribution channels , including growth in digital and financial education ▪ Leverage MFC and Corporate platforms alongside the trusted Old Mutual brand 92
OLD MUTUAL WEALTH & INVESTMENTS Key stats 2016 AOP contribution 12.1% 2016 AOP R1.5bn 1H2017 FUM R695bn Dave Macready MD, Old Mutual Wealth & Investments INVESTMENT | SAVINGS | INSURANCE | BANKING 93
KEY INDUSTRY DRIVERS ▪ Retail market growth greater than institutional (5Y CAGR 15% vs. 8%) 1 ▪ Retail flows dominated by Independent Financial Advisor market (c.80%) 1 ▪ Retirement reform driving transfers from standalone funds into umbrellas Industry ▪ Growth in alternatives driven by infrastructure deficits Dynamics ▪ Flows predominately into multi-asset, fixed income and global , with-multi asset the largest asset class of the institutional industry (32% vs 23% of FUM as at 31 December 2016 1 ) ▪ Move to low cost: passive and smart beta ▪ Slower asset origination on the back of subdued corporate debt issuance Asset Dynamics ▪ Increased allocation from local funds into unlisted assets ▪ Traditional managers continue to dominate market but smaller managers are gaining traction ▪ Independent Financial Advisor consolidation and dominance in retail investment market to continue ▪ Margin pressure with move to low cost passive investment strategies and competitive pricing on retail administration Competitive ▪ Quality asset origination and credit risk management are key Dynamics 94 1. Alexander Forbes FUM Survey December 2016
SIGNIFICANT PLAYER WITH INTEGRATED PROPOSITION Institutional assets managed 1,8 Retail assets managed 1,7 ▪ One of the largest private wealth and investment managers in Africa – R695bn FUM 1 ▪ Recognised leader in Responsible Investment and ESG 2 Asset management: 5.7% 9.6% ▪ 8 independent boutiques – R514bn FUM 1 R2.3trn R2.1trn Leading passive offering – R80bn FUM 1 in Customised Solutions ▪ ▪ Leader in fixed income and credit – Futuregrowth, R162bn FUM 1 Wealth: ▪ Fully integrated world class advice, platform and investment solutions #1 in Retail platform assets 3 (including offshore assets) ▪ ▪ #3 in Retail assets managed 4 Retail assets administered 1,3,7 Private equity assets 3,8 Unlisted: ▪ Largest private alternative manager in Africa – R54bn FUM 1,3,5 16.3% private equity, renewable energy, transport infrastructure, impact funds 15.3% Accounts for over 40% of Top 5 Managers 6 FUM ▪ R1.3trn R0.2trn Managing SA’s Largest Alternatives Fund 6 ▪ 1. Company financials 2. Environmental, Social & Governance 3. ASISA / LISPA Local Fund Statistics 4. ASISA / CIS Fund Statistics. ASISA Local Fund Statistics, 30 June 2017: OMUT + SIS + Marriott 5. Includes undrawn commitments 6. SAVCA 2017 Private Equity Industries Survey, KPMG, IDEAS Managed Fund (Largest Fund) 7. At 30 June 2017 95 8. At 31 December 2016
SEGMENT OVERVIEW ▪ Advice-led, vertically integrated retail business ▪ Eight boutique investment businesses ▪ Target high net worth clients, investment ▪ Listed – local and global asset classes Independent Financial Advisors and tied WHO ARE distribution WE? ▪ Future-fit lifestyle advice process and tools ▪ Diverse set of building blocks – bespoke ▪ Largest retail investment platform by assets 1,2 solutions with over 200,000 customers 2 ▪ Leading passive offering ▪ Investment management via: Multi-Managers, KEY OFFERINGS ▪ Market leader in innovative Quant strategies Old Mutual Investment Group and Private ▪ Largest fixed income manager Client Portfolio Managers ▪ Private client business ▪ Global capability and distribution ▪ Vertical integration ▪ Smart beta, passive and bespoke solutions ▪ Offshore platform ▪ Leverage Old Mutual distribution DIAL ▪ Investment Independent Financial Advisors ▪ Enhance retail unit trust shop window SHIFTERS 1. ASISA / LISPA Local Fund Statistics, 30 June 2017 2. Includes offshore, Old Mutual International 96
SEGMENT OVERVIEW (CONT’D) ▪ Market risk and asset liability management to ▪ Local and international private equity support guaranteed products and CPI linked ▪ Infrastructure and renewables Annuity products WHO ARE ▪ Impact investments ▪ Alpha capability for proprietary assets WE? ▪ Largest infrastructure/renewables investment ▪ Multiple asset classes in credit and principal manager in Africa, including social/impact investment ▪ Long and credible private equity track record ▪ Proven delivery of superior risk-adjusted return KEY OFFERINGS on capital and robust impairment experience ▪ Presence across Africa ▪ Expanded mandate to all Old Mutual ▪ Increased allocation to alternative asset guaranteed funds classes ▪ Leveraged to support innovation in product ▪ Recognised deficit in social and hard development and risk management infrastructure across Africa ▪ Continue to expand specialist origination DIAL capability SHIFTERS 97
98 Sources: African Infrastructure Investment Managers (AIIM); Futuregrowth Asset Management; Old Mutual Investment Group; Old Mutual Alternative Investments; Old Mutual Specialised Finance | Figures as at 30 June 2017
KEY STRATEGIC FOCUS Alternative Specialised Credit opportunities CAPITALISE ON FOCUS OF LEADER IN DIFFERENTIATED SKILL IN BOUTIQUE MODEL CAPABILITIES LDI Passive | Smart Beta REFOCUS ON RETAIL GROW WEALTH SEGMENT IFA MARKET BUILD AFRICAN ACCELERATE GLOBAL ALTERNATIVES CAPABILITIES & MARGIN MEGA-MANAGER LEVERAGE PROPRIETARY RISK LEVERAGE GROUP’S SCALE AND INVESTMENT CAPABILITY AND DISTRIBUTION CAPABILITIES 99
OPPORTUNITY TO UNLOCK VALUE FUM 1 NCCF Pre-tax AOP 2 (Rbn) (Rbn) (Rm) (2.9%) 6.5% 24.7 65.3% 1,663 695 1,639 1,546 641 630 613 555 16.4 815 772 6.0 6.6 1.8 2014 2015 2016 1H2016 1H2017 2014 2015 2016 1H2016 1H2017 2014 2015 2016 1H2016 1H2017 Total annuity revenue Total non-annuity revenue Pre-tax AOP contribution to the Group (2016) 3 (Rm) (Rm) 10.4% 729 12.1% WIC 3,912 (26.0%) 3,642 577 3,212 15.3% 399 OM LTIR net of 2,003 1,971 R12.7bn central expenses 203 133 Other BUs 72.6% 2014 2015 2016 1H2016 1H2017 2014 2015 2016 1H2016 1H2017 1. End manager basis, excluding Old Mutual Property (OMP) 2. AOP excludes LTIR and SA central costs % 2014 – 2016 CAGR 3. The pre-tax AOP % contribution by Business Unit calculation excludes LTIR net of SA and LatAm central expenses, debt costs as 100 well as profits from OMP (a reconciliation from the Business Unit AOP to the OMEM Group is provided in the appendices)
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