TIDMOML
RNS Number : 4683G
Old Mutual PLC
02 March 2018
Old Mutual plc
Ref 94/18
2 March 2018
NEDBANK GROUP limited preliminary audited RESULTS 2017
Nedbank Group Limited ("Nedbank Group"), the majority-owned
South African banking subsidiary of Old Mutual plc, released its
preliminary audited results for the year ended 31 December 2017
today, 2 March 2018.
The following is the commentary from Nedbank Group's
announcement. The full announcement including detailed financial
information is available from the Nedbank Group website
http://www.nedbankgroup.co.za.
"Preliminary audited results for the year ended 31 December
2017
A solid performance in a volatile and challenging domestic
environment
Nedbank continued to create value for all our stakeholders in a
challenging political and economic environment. Our headline
earnings of R11,8bn, up 2,8%, reflect a good performance from our
managed operations, with headline earnings growth of 7,8% and a ROE
(excluding goodwill) of 18,1%. Slower revenue growth was offset by
reduced impairments and good cost management, while our share of
the loss from our associate ETI following its Q4 2016 results
decreased in the second half of the year as the ETI business
returned to profitability.
The achievements of the last few years have provided us with a
solid base and we continue delivering on our strategies and
building the capabilities that will enable us to meet the 2020
targets we have now set of an ROE (excluding goodwill) of greater
than or equal to 18% and an efficiency ratio of less than or equal
to 53%. We released exciting digital innovations such as the new
Nedbank Money app, the Nedbank Private Wealth app and Karri app,
chatbots and UNLOCKED.ME (an exclusive e-commerce marketplace for
millennials) and continued to gain share of transactional banking
clients in both our retail and wholesale businesses. We are
actively optimising our cost base, as reflected in cost growth at
5,1%, and maintained a strong balance sheet as evident in a CET1
ratio of 12,6%, above the top end of our internal target range. Our
strategic enablers are making a difference for our operations and
for our clients as we create a more agile, competitive and digital
Nedbank.
Looking forward, 2018 started with positive changes to SA's
political and socioeconomic landscape and brought renewed prospects
for higher levels of inclusive growth. Nedbank is acutely aware of
the increased responsibility that we, and indeed all businesses,
have to work alongside government, labour and civil society to play
our part in improving the lives of all South Africans.
Reflecting on the impact on the group of the greater levels of
business and consumer confidence evident in the early part of 2018,
an improving economic outlook, ongoing delivery on our strategy and
ETI's returning to sustained levels of profitability, our guidance
for growth in diluted headline earnings per share for 2018 is to be
in line with our medium-to-long-term target of greater than or
equal to GDP plus CPI plus 5%.
Mike Brown
Chief Executive
2017 results commentary
Banking and economic environment
Economic growth in developed markets improved, despite ongoing
geopolitical tensions, supported by accommodative monetary policies
and stronger manufacturing production, and reinforced by increased
global trade. Emerging and developing economies also improved as a
consequence of better-than-expected growth in China and higher
global commodity prices. Emerging-market equity and bond markets
benefited from increased capital inflows as global investors search
for higher yields.
SA's slow economic recovery continued into the second half of
the year, with 2017 GDP growth estimated at 0,9%, driven mainly by
a recovery in agricultural production following good summer
rainfall and some improvement in mining production in response to
stronger global demand and firmer international commodity prices. A
revival in consumer spending added further momentum in the second
half of 2017 as households benefited from lower inflation and the
marginal reduction in interest rates in July. Despite this recovery
and reflective of weak business and consumer confidence, business
volumes in 2017 were generally lower than in the prior year, as
evident in client loan applications across multiple products and in
slower client trading activity.
The pace of economic activity picked up moderately in
sub-Saharan Africa, with agricultural and mining output recovering
on the upturn in global demand and international commodity prices,
and the prolonged El Niño-induced drought finally broke in many
countries. According to the International Monetary Fund (IMF),
sub-Saharan Africa is expected to record GDP growth of 2,6% in
2017.
Domestic inflation averaged 5,3% in 2017, significantly lower
than the 6,4% recorded in 2016, brought about mainly by sharply
lower food inflation given the strong summer harvest. Relatively
moderate and selective consumer demand coupled with a resilient
rand also helped contain price pressures during the course of the
year. After a year of volatile trade the rand ended 2017 2,5%
stronger against the trade-weighted basket of currencies. The
largest gains occurred near year-end as sentiment surged following
the election of Mr Cyril Ramaphosa as the new leader of the ruling
ANC in mid-December on expectations of a change in the country's
leadership, improved governance and structural reforms that are
likely to support investment and higher levels of inclusive
growth.
After cutting the repo rate by 25 bps to 6,75% in July, SARB's
Monetary Policy Committee left interest rates unchanged at both the
September and November 2017 policy meetings. The central bank's
more cautious approach was driven by concerns over the upside risk
that the rand posed to the inflation outlook at that time. Fears
mounted that SA's rand-denominated sovereign debt ratings could be
downgraded to subinvestment grade by all three major rating
agencies, given the escalation in political uncertainty and the
sharp deterioration in the country's fiscal position, as set out in
the Medium Term Budget Policy Statement.
In November 2017 Fitch affirmed the country's BB+ rating with a
stable outlook (one notch below investment grade). Moody's placed
SA's Baa3 foreign and local currency ratings on review for
downgrade, with the decision to follow the 2018 National Budget in
February. However, S&P Global downgraded SA's local currency
rating to BB+ (one notch below investment grade) and our foreign
currency rating to BB (two notches below investment grade), while
changing the rating outlook to stable. All three rating agencies
highlighted similar concerns, including weaker-than-expected public
finances, weak economic growth, ineffective government spending and
policies as well as the paralysing impact of political infighting
and poor governance.
Review of results
Nedbank produced a solid performance in a domestic macro and
political environment that has proved volatile and challenging.
Headline earnings, including losses in associate income from ETI of
R744m, increased 2,8% to R11 787m. This translated into an increase
in DHEPS of 2,4% to 2 406 cents and an increase in HEPS of 2,2% to
2 452 cents. As in prior periods, we highlight our results both
including and excluding ETI (referred to as managed operations) to
provide a better understanding of the operational performance of
the business given the volatility in ETI's results in 2016 and
2017. However, we will revert to group-level reporting in 2019. Our
managed operations produced headline earnings growth of 7,8% to R12
762m, with slower-than-expected revenue growth more than offset by
reduced impairments and good cost management.
ROE (excluding goodwill) and ROE remained flat at 16,4% and
15,3% respectively. ROE (excluding goodwill) in managed operations
also remained stable at 18,1%. ROA decreased 0,01% to 1,22% and,
excluding ETI, ROA in managed operations improved from 1,29% to
1,33%. Return on RWA increased from 2,23% to 2,30%.
Our CET1 and tier 1 capital ratios of 12,6% and 13,4%
respectively, average LCR for the fourth quarter of 116,2% and an
NSFR of above 100%, are all Basel III-compliant and are a
reflection of a strong balance sheet. On the back of solid earnings
growth in managed operations and a strong capital position, a final
dividend of 675 cents was declared, an increase of 7,1%. The total
dividend per share increased 7,1% to 1 285 cents.
Delivering sustainably to all our stakeholders
Nedbank continues to play an important role in society and in
the economy, and we remain committed to delivering on our purpose
of using our financial expertise to do good and contributing to the
societies in which we operate by delivering value to our staff,
clients, shareholders, regulators and society.
For staff
We had 31 887 staffmembers in our employ, invested R355m in
training and paid salaries and benefits of R16,5bn. As part of our
People 2020 groupwide programme aimed at transforming and aligning
our leadership culture and talent to our strategic objectives, we
refreshed our executive management programmes to be more digitally
focused. We brought together 500 of our leaders across the group at
the Leadership Accelerator to ensure the adoption of new insights
that will drive accelerated levels of change. We are implementing
New Ways of Work practices to transform Nedbank into a more agile
organisation, holistically rethinking the way we work, communicate
and manage talent on our journey to creating a high-performing
culture. Transformation remains a key imperative and we have
continued to focus on this fundamental change across all levels at
Nedbank, from our board of directors to all our staffmembers.
Currently black representation at board level is 61%, at executive
level 50% and 78% for our total staff. A total of 62% of our staff
is female.
For clients
Our clients' access to banking improved through our network of 1
003 Intelligent Depositor devices and we increased the total number
of digitally focused new-image branches to 336 or 55% of all
outlets. Digitally active and enabled clients grew as we launched
new market-leading digital innovations, with the new Nedbank Money
app having been downloaded more than 300 000 times since its launch
in November 2017. We supported our clients by advancing R153bn of
new loans in 2017. Our Net Promoter Score is second-highest among
full-service banks in SA. Nedgroup Investments has grown to be the
fifth-largest unit trust manager and fourth-largest offshore unit
trust manager in SA, with overall assets under management growing
by 14% to R312bn. Nedgroup Investments has for the third
consecutive year maintained its first position in the 2017 Annual
Raging Bull Awards offshore category.
For shareholders
Nedbank's net asset value per share increased 7,3% to 16 990
cents, with our share price up 7,5% over the year. Our total
dividend increased 7,1%, ahead of growth in HEPS. We engaged
constructively with shareholders in over 400 meetings in the past
12 months, and at our 50th annual general meeting all resolutions
were passed, with more than 90% of votes in favour. We ensure
transparent, relevant and timeous reporting and disclosure to
shareholders, as acknowledged by the Nedbank Group Integrated
Report having been ranked in the top tier of JSE-listed companies.
Nedbank's valuation metrics remain attractive with price/earnings
and price-to-book ratios of 10,4 times and 1,5 times respectively
and a dividend yield of 4,8% at 31 December 2017.
For regulators
We maintained Basel III requirements ahead of full compliance
timelines. We improved the group's capital position, achieving a
CET1 ratio of 12,6%, strengthened the average LCR ratio to 116,2%
in the fourth quarter of 2017 and maintained an NSFR of above 100%,
positioning us well for the compliance date of 1 January 2018. We
have invested over R100bn in government and public sector bonds as
part of our HQLA requirements and, in doing so, remain committed to
making a meaningful contribution to the countries in which we
operate, thereby appropriately supporting the funding needs of
governments. Cash taxation contributions of R9,8bn were made
relating to direct, indirect, pay-as-you-earn and other taxation,
increasing from R8,9bn in 2016. We continued to work closely with
all our regulators to ensure efficient delivery of the various
regulatory programmes, and implemented IFRS 9 and IFRS 15 on 1
January 2018, with an estimated impact of less than 20 bps on our
CET1 ratio at 1 January 2018.
For society
We understand that our long-term success is contingent on the
degree to which we deliver value to society. We have defined our
purpose as 'using our financial expertise to do good for
individuals, families, businesses and society'. It follows then
that it is through the considered development and delivery of
products and services that satisfy societal needs that we can
enable a thriving society, create long-term value, maintain trust
and ensure the success of our brand. This is particularly important
in the current context of SA.
In addition to the R66bn made available to retail clients in new
loans and advances in 2017, evidence of how we have delivered on
our purpose includes:
-- A focus on sustainable-development finance that was evident
in more than R1,1bn of new lending to support student
accommodation, R1,3bn lent to construct green buildings, R18,4bn
dispersed for renewable-energy deals and R863m to
affordable-housing developments.
-- Having maintained our level 2 broad-based black economic
empowerment (BBBEE) contributor status for nine years, as well as
in 2017 when the Amended Financial Sector Code (FSC), gazetted in
terms of section 9(1) of the BBBEE Act, 53 of 2003, came into
effect on 1 December 2017. We invested R168m in socioeconomic
development, with more than 50% allocated to education and 75% of
our procurement spend used to support local SA business. While
Nedbank has achieved industry leadership based on the old FSC, we
recognise that the Amended FSC, which comprises stricter weighting,
higher targets and higher thresholds, will lead to an industry
rebasing and as a result possibly lower BBBEE levels in future.
-- Water efforts focused on support for drought-impacted clients
and national relief efforts as well as our own internal reduction
initiatives.
-- Continuing to participate in the CEO Initiative, working with
government, business and labour towards a more inclusive SA
society. We committed R20m to the R1,5bn SME Fund and will become
one of the first participants in the Youth Employment Scheme, in
which we, as corporate SA, aim to provide internship opportunities
for more than one million South Africans.
It was pleasing to have some of our efforts to build a thriving
society recognised by external bodies. These included being
recognised as the winner at the 2017 Independent Top Empowered
Companies Awards (in conjunction with Business Report, Empowerdex
and Intellidex), being included as a member of the Carbon
Disclosure Project Climate A-list (recognition for efforts to
address climate change) and being the only African company among
the top 20 in the global 2017 Thomson Reuters Diversity and
Inclusion Index, which is informed by environmental, social and
governance outcomes.
Cluster financial performance
Nedbank's managed operations generated headline earnings growth
of 7,8% to R12 762m and delivered an ROE (excluding goodwill) of
18,1%. CIB and Wealth were impacted the most by the challenging
operating environment, RBB made a strong earnings contribution and
RoA subsidiaries delivered an improved performance off a low
base.
Change Headline ROE
earnings (excluding
goodwill)
------------------ ------- ----------------- --------------
(%) (Rm) (%)
------------------ ------- ----------------- --------------
2017 2016 2017 2016
------------------ ------- -------- ------- ------ ------
CIB 5,0 6 315 6 014 20,7 21,1
------------------ ------- -------- ------- ------ ------
RBB 6,9 5 302 4 960 19,1 18,9
------------------ ------- -------- ------- ------ ------
Wealth (10,4) 1 068 1 192 27,5 35,2
------------------ ------- -------- ------- ------ ------
RoA subsidiaries 89,7 165 87 3,3 2,1
------------------ ------- -------- ------- ------ ------
Centre 78,7 (88) (414)
------------------ ------- -------- ------- ------ ------
Nedbank managed 12 11
operations 7,8 762 839 18,1 18,0
------------------ ------- -------- ------- ------ ------
(>
ETI 100) (975) (374)
------------------ ------- -------- ------- ------ ------
11 11
Group 2,8 787 465 16,4 16,5
------------------ ------- -------- ------- ------ ------
CIB maintained an attractive ROE of above 20% and produced solid
results, driven by lower credit losses and good expense management.
Revenue lines were affected by slowing economic activity as clients
postponed projects and borrowed and transacted less. Early
repayments and managed settlements, together with slower drawdowns
resulted in weaker advances growth, although the pipelines remained
stable. Credit quality remained strong through proactive risk
management as we continued to monitor stressed sectors of the
economy, such as certain areas in retail and certain state-owned
enterprises, closely.
RBB delivered an improved ROE and good headline earnings growth,
underpinned by solid transactional NIR growth, lower impairments
and expense growth, and achieved PPOP growth of 4,0%. NII was
underpinned by solid growth in advances and strong growth in
deposits, offset by a lower NIM due in part to the impact of
prime-JIBAR squeeze. Lower expense growth reflects the initial
impact of optimising processes and operations, including headcount
reductions.
Nedbank Wealth maintained an attractive ROE, although headline
earnings were impacted by subdued markets and negative investor
sentiment, further compounded by entropic weather conditions and
the strengthening rand, as well the once-off profit from the sale
of our Visa share in the 2016 base.
RoA headline earnings were negatively impacted by the
fourth-quarter 2016 ETI associate loss accounted for quarterly in
arrear. The loss was reported on in our interim results and was
followed by subsequent quarterly profits from ETI up to 30
September 2017. Our subsidiaries grew headline earnings off a low
base, supported by the consolidation of Banco Único (included for
three months in 2016), notwithstanding continued investment in
infrastructure, systems and skills.
The improvement in the Centre was largely due to the R350m
release from the central provision, of which R150m was in the first
half of the year, and fair-value gains on certain hedging
portfolios.
Financial performance
Net interest income
NII increased 4,5% to R27 624m, ahead of average
interest-earning banking asset growth of 2,2% (adjusted for the
removal of the liquid-asset portfolio).
NIM expansion of 8 bps to 3,62% (2016: 3,54% rebased) was
largely driven by an endowment benefit of 5 bps and improved asset
mix changes of 8 bps. Asset pricing pressure, in part due to the
NCA interest rate caps, the narrowing of the prime-JIBAR spread and
the increased cost associated with enhancing the funding profile
each reduced NIM by 2 bps.
Impairments charge on loans and advances
Impairments decreased by 27,5% to R3 304m. The CLR declined by
0,19% to 0,49%, driven by lower specific impairments mostly from
resolutions and settlements in CIB. The decrease in impairments
reflects the quality of the portfolio across all our businesses and
we have specific coverage ratios levels of 36,2%.
Impairments in CIB declined by 82,4% to R193m, driven by lower
specific impairments relating largely to resolutions of historic
client matters. Impairments are individually determined in CIB and
84% of impairments are concentrated in approximately 10 counters.
RBB impairments declined by 1,2% to R3,2bn as a result of ongoing
lower risk origination strategies and an improvement in
collections. The decrease in unsecured lending and home loan CLRs
reflects the benefits of historic selective origination improving
the quality of the book over time and the release of additional
impairment overlays previously raised for risks and events that did
not materialise. Continued proactive collection and resolution
strategies within CIB and RBB contributed to group writeoffs
decreasing 6,0% to R4 675m and postwriteoff recoveries increasing
5,8% to R1 224m.
The group's central provision decreased to R150m (from R500m at
31 December 2016 and R350m in June 2017) as a result of risks that
had previously been identified but had not materialised. The
balance is retained for prudency in a volatile macroeconomic
environment. Excluding the central provision release, the group CLR
would have been 0,54%.
CLR (%) Banking 2017 2016 TTC target
advances ranges
(%)
--------- ---------- ------ ----- -----------
CIB 47,3 0,06 0,34 0,15-0,45
--------- ---------- ------ ----- -----------
RBB 45,5 1,06 1,12 1,30-1,80
--------- ---------- ------ ----- -----------
Wealth 4,3 0,09 0,08 0,20-0,40
--------- ---------- ------ ----- -----------
RoA 2,9 1,02 0,98 0,65-1,00
--------- ---------- ------ ----- -----------
Group 100,0 0,49 0,68 0,60-1,00
--------- ---------- ------ ----- -----------
All business units successfully applied selective origination
strategies that enabled an overall derisking of the advances
portfolio, leading to defaulted advances remaining flat at R19,6bn.
Lower defaulted advances in CIB resulting from positive client
resolutions were offset by increased defaulted advances in RBB.
The decrease in specific coverage from 37,4% to 36,2% was
primarily due to lower specific coverage in RBB as well as
increased resolutions of various client issues in CIB resulting in
lower specific impairments. The lower coverage reflects increased
performing defaults in RBB and the recovery success in CIB. Nedbank
considers the coverage ratios appropriate given the higher
proportion of wholesale lending, compared with the mix of its
peers, high recovery rates and the collateralised nature of the
commercial-mortgages portfolio, with low loan-to-value ratios.
Portfolio coverage increased marginally from 0,69% to 0,70%,
reflecting the offsetting effects of higher portfolio impairments
due to stronger advances growth in RBB and the reduction of the
central provision and RBB overlays.
Non-interest revenue
NIR growth of 2,4% to R24 063m reflects the impact of weak
business and consumer confidence levels.
-- Commission and fee income grew 4,0% to R17 355m. RBB reported
good transactional NIR growth of 6,0%, notwithstanding an
increasing number of clients who are transacting within fixed-rate
bundles and spending less. CIB experienced lower corporate activity
off a high base the previous year.
-- Insurance income decreased 9,3% to R1 566m as a result of an
abnormal number of significant weather-related claims, lower
homeowner's cover and credit life volumes, and an increase in
lapses.
-- Trading income increased 3,7% to R3 900m, given muted
activity levels among wholesale clients, particularly in the second
half of the year, and avoidance of the potential negative impacts
in markets around event risks such as political changes and credit
rating downgrades.
-- Private-equity income, including positive realisations in the
Commercial Property Finance portfolio, decreased 23,7% to R708m,
given the high base in the comparative period.
Expenses
Expense growth of 5,1% to R29 812m was below inflation and in
line with the guidance we provided for the full 2017 year (being
growth of mid-single digits), demonstrating disciplined and careful
management of discretionary expenses in an environment of slower
revenue growth. The underlying movements included:
-- Staff-related costs increasing at a slower rate of 6,5%, following:
-- an average annual salary increase of 6,5% and a 859 reduction
in staff numbers since December 2016; and
-- a 0,1% decrease in short-term incentives.
-- Computer-processing costs increasing 3,8% to R4 201m off a higher base the previous year.
-- Fees and insurance costs being 7,8% higher at R3 277m, due
mostly to additional regulatory-related costs.
The group's growth in expenses exceeded total revenue growth
(including associate loss) of 2,1% (3,2% in managed operations),
resulting in a negative JAWS ratio of 3,0% and an efficiency ratio
of 58,6%, compared with 56,9% in 2016. Excluding associate income,
our efficiency ratio was 57,8%. Expense growth, excluding RoA where
we continued to invest in distribution, technology and new-product
rollouts, was 4,3%.
Earnings from associates
The loss of R838m in earnings from associates was attributed
largely to ETI's loss of R1 203m in the fourth quarter of 2016
(announced on 18 April 2017), partly offset by the profit of R459m
reported by ETI for the nine months to 30 September 2017, in line
with our policy of accounting for ETI earnings a quarter in arrear.
The total effect of ETI on the group's headline earnings was a loss
of R975m, including the R321m impact of funding costs.
Accounting for this associate loss, together with Nedbank's
share of ETI's other comprehensive income and movements in
Nedbank's foreign currency translation reserves, resulted in the
carrying value of the group's strategic investment in ETI declining
from R4,0bn at 31 December 2016 to R3,3bn at 31 December 2017.
Since the introduction of the new foreign exchange regime by the
Central Bank of Nigeria on 21 April 2017, confidence has improved
and the Nigerian banking index has increased by 73%. In line with
this ETI's quoted share price - albeit illiquid - increased by 65%
during 2017 which resulted in the market value of the group's
investment in ETI increasing during the year to R3,6bn at 31
December 2017 and R4,1bn at 28 February 2018. While risks remain,
the actions taken to improve ETI's financial position and
governance, along with an improving macroeconomic environment, is
expected to drive an improved financial performance from ETI in
2018.
As required by IFRS, the R1bn impairment provision recognised at
31 December 2016 was reviewed at 31 December 2017 and it was
determined that currently no change to the provision was
required.
A R96m associate loss was incurred due to operational losses in
an associate, which is the cash-processing supplier to the four
large banks.
Statement of financial position
Capital
The group continued to strengthen its capital position, with our
CET1 ratio of 12,6% now above the top end of our internal target
range of 10,5-12,5%, following organic capital generation through
earnings growth, lower asset growth and some RWA optimisation.
In the current environment of slower advances growth, capital
generation has been stronger following lower credit RWA growth and
continued refinement of Basel models. This was partially offset by
the impact of the rand strengthening at the back end of 2017, which
adversely impacted foreign currency translation reserves and led to
higher credit valuation adjustment RWA. Higher levels of equity
exposure resulted in increased equity RWA. As a result overall RWA
increased 3,7% to R528,2bn.
The group's tier 1 ratio improved to 13,4% and includes the
issuance of R600m of new-style additional tier 1 capital
instruments during the year, offsetting the progressive
grandfathering of old-style perpetual preference shares as we
transition towards end-state Basel III requirements. The group's
total capital ratio has improved to 15,5% and includes the issuance
of R2,5bn of new-style tier 2 capital instruments during the year,
partially offsetting the redemption of R3,0bn in old-style tier 2
capital instruments.
Basel 2017 2016 Internal Regulatory
III (%) target minimum(1)
range
---------- ----- ----- ---------- ------------
CET1
ratio 12,6 12,1 10,5-12,5 7,25
---------- ----- ----- ---------- ------------
Tier
1 ratio 13,4 13,0 > 12,0 8,75
---------- ----- ----- ---------- ------------
Total
capital
ratio 15,5 15,3 > 14,0 10,75
---------- ----- ----- ---------- ------------
(Ratios calculated include unappropriated profits.)
(1) The Basel III regulatory requirements
are being phased in between 2013 and 2019,
and exclude any idiosyncratic or systemically
important bank minimum requirements.
---- -----------------------------------------------
Funding and liquidity
Optimising our funding profile and maintaining a strong
liquidity position remain a priority for the group, especially in
the current environment.
The group's three-month average long-term funding ratio was
27,0% for the fourth quarter of 2017, supported by growth in
Nedbank Retail Savings Bonds of R5,7bn to R24,9bn and the
successful capital market issuances of R3,5bn senior unsecured
debt, R2,5bn new-style tier 2 debt and R1,0bn in securitisation
notes.
The group's quarterly average LCR of 116,2% exceeded the minimum
regulatory requirement of 80% in 2017 and 90% effective from 1
January 2018. The group maintains appropriate operational buffers
designed to absorb seasonal and cyclical volatility in the LCR.
Nedbank Group LCR 2017 2016
-------------------- -------- --------
HQLA (Rm) 138 180 137 350
-------------------- -------- --------
Net cash outflows
(Rm) 118 956 125 692
-------------------- -------- --------
Liquidity coverage
ratio (%)(3) 116,2 109,3
-------------------- -------- --------
Regulatory minimum
(%) 80,0 70,0
-------------------- -------- --------
(3) Average for the quarter.
---- -------------------------
Further details on the LCR are available in the table section of
the Securities Exchange News Service (SENS) announcement.
Nedbank's portfolio of LCR-compliant HQLA increased by 0,6% to a
quarterly average of R138,2bn. Notwithstanding the low growth in
HQLA, the LCR still increased yoy as a result of a decrease in LCR
net cash outflows attributable to a positive tilt in our deposit
mix towards proportionally more Basel III-friendly deposits in the
form of RBB and Wealth deposits together with market share gains in
commercial deposits. The HQLA portfolio, taken together with our
portfolio of other sources of quick-liquidity, resulted in total
available sources of quick liquidity of R195,4bn, representing
19,9% of total assets.
Nedbank has maintained the NSFR at above 100% on a pro forma
basis and is compliant with the minimum regulatory requirements
that are effective from 1 January 2018.
Loans and advances
Loans and advances increased by 0,5% to R710,3bn, driven by
solid growth in RBB offset by a decline in term and other loans in
CIB.
Loans and advances by cluster are as follows:
Rm Change 2017 2016
(%)
-------------------- --------------- -------- --------
CIB (3,8) 356 029 370 199
-------------------- --------------- -------- --------
Banking activities (3,1) 324 673 335 113
-------------------- --------------- -------- --------
Trading activities (10,6) 31 356 35 086
-------------------- --------------- -------- --------
RBB 5,3 305 198 289 882
-------------------- --------------- -------- --------
Wealth 2,9 29 413 28 577
-------------------- --------------- -------- --------
RoA 4,9 20 541 19 582
-------------------- --------------- -------- --------
Centre(4) 26,7 (852) (1 163)
-------------------- --------------- -------- --------
Group 0,5 710 329 707 077
-------------------- --------------- -------- --------
(4) Intercompany eliminations.
---- ---------------------------
RBB loans and advances grew 5,3% to R305,2bn, with MFC (vehicle
finance) increasing by 8,6% as new-business volumes improved
despite the contracting vehicle sales market. RBB's growth was
achieved across all asset classes by increasing the contribution
from lower-risk clients in line with risk appetite and prudent
origination strategies. We take comfort in the quality and overall
performance of the unsecured-lending portfolio based on the
conservative rules we apply to consolidation, restructuring and
term strategies. Home loans grew at below-inflation levels, but
market share was maintained.
CIB loans and advances decreased 3,8% to R356,0bn due to a
combination of unexpected early repayments and managed selldowns,
which allowed for the diversification of risk. Demand for new loans
was weak as a result of muted client capital expenditure in a
competitive market in the subdued economic climate.
Commercial-mortgage loans and advances grew by 6,5% to R161,6bn,
maintaining our leading share of the SA market. The portfolio
contains good-quality collateralised assets with low LTVs,
underpinned by a large secure asset pool and a strong client base,
and is managed by a highly experienced property finance team.
Deposits
Deposits grew 1,3% to R771,6bn, with total funding-related
liabilities increasing 1,2% to R823,2bn, while the loan-to-deposit
ratio improved to 92,1%.
Through the active management of the RBB franchise, deposits
grew 8,5% to R295,3bn, resulting in household deposits market share
gains increasing yoy to 18,9% from 18,7%, supported by Nedbank's
strong market share in household current account deposits of 19,1%.
Through the growth in current accounts, savings and fixed deposits
and other structured deposits Nedbank has successfully reduced the
proportion of funding from negotiable certificates of deposit as
well as more expensive foreign currency funding used in the general
rand funding pool.
This positive tilt towards more Basel III-friendly deposits
achieved across RBB, Nedbank Wealth and RoA and through market
share gains in commercial deposits has resulted in lower HQLA and
long-term funding requirements as well as a stronger LCR in terms
of ensuring cost-effective regulatory compliance and a strong
balance sheet position.
Group strategic focus
During 2017 we continued to focus on delivering on our five
strategic focus areas designed to make Nedbank a more agile,
competitive and digital bank, and underpin sustainable earnings
growth and improving returns.
-- Delivering innovative market-leading client experiences. We
launched various market-leading innovations such as the new Nedbank
Private Wealth mobile app. This was one of the first products
delivered through our Digital Fast Lane capability. It ranked joint
sixth in the global Mobile Apps for Wealth Management 2017 survey
and was placed third among 600 apps in the Best Enterprise Solution
category at the MTN Business App of the Year Awards. The new
Nedbank Money app, which makes banking more convenient for our
retail clients, was downloaded more than 300 000 times since
November 2017. We launched UNLOCKED.ME, an exclusive e-commerce
marketplace for millennials. Karri, our mobile payment app that
enables users to make cash-free payments for school activities
quickly, securely and hassle-free, has been rolled out to more than
100 schools across the country. In Nedbank Wealth we piloted geyser
telemetry, an innovative smart home solution that reduces
electricity consumption. As far as our integrated channels are
concerned, we have converted 55% of our outlets to new-image
branches to date, and our investment in distribution channels over
the next three years (until 2020) will result in 73% of our retail
clients being exposed to the new-image branch format and
self-service offerings. The introduction of chatbots and
robo-advisors will continue to enhance client experiences through
our contact centre and web-servicing capabilities. We launched
NZone, our digital self-service branch at the Sandton Gautrain
station, as well as Africa's first solar-powered branch to enable
banking in deep-rural communities. The foundations put in place
through Managed Evolution (our core systems and technology platform
transformation), digital enhancements and New Ways of Work will
lead to ongoing incremental digital benefits and enhanced client
service. In 2018 Nedbank will bring further exciting digital
innovations to market to enhance client experiences and drive
efficiencies. Some of these include a refreshed internet banking
experience in line with our mobile banking apps, the ability to
sell an unsecured loan bundled with a transactional account,
simplified client onboarding with convenient, FICA-compliant
account opening from your couch, a new and exciting loyalty and
rewards solution, and further rollout of chatbots, robo-advisors
and software robots (robotic process automation).
-- Growing our transactional banking franchise faster than the
market. Nedbank's RBB franchise grew its total client base 1,6% to
7,5 million, with 6,0 million clients having a transactional
account and 2,8 million main-banked clients supporting retail
transactional NIR growth of 6,0%. Our main-banked client numbers
remained flat as slower transactional activity caused some of our
existing clients to fall outside our main-banked definition,
particularly in the youth segment, while the middle-market,
professional and small business client segments continued to
increase. The newly launched Consulta survey estimates Nedbank's
share of main-banked clients at 12,7%, up from the 10,1% recorded
through the 2015 AMPS survey (using a similar methodology) as we
aim to reach a share of more than 15% by 2020. Our integrated model
in CIB enabled deeper client penetration and increased cross-sell,
resulting in 26 primary-bank client wins in 2017.
-- Being operationally excellent in all we do. Cost discipline
is an imperative in an environment of slower revenue growth. We
have ongoing initiatives to ensure this, such as having reduced our
core systems from 251 to 129 since inception of the Managed
Evolution programme, with us being well on our way to reaching a
target end state of less than 60 core systems by 2020; and the
reduction of floor space in RBB by more than 30 000 m(2) by 2020;
of which 24 485 m(2) has been achieved to date. We worked with our
sister companies in the Old Mutual Group to deliver synergies of
just in excess of R1bn, R393m of which accrued to Nedbank. Good
progress was also made with our target operating model (TOM)
initiatives, which aim at generating R1,0bn pretax benefits for
Nedbank by 2019 (and R1,2bn by 2020) and are linked to our
long-term incentive scheme. Most cost initiatives have been
identified in RBB and we delivered savings of R621m in 2017, which
includes TOM savings. During the year we reduced headcount by 859
(mostly through natural attrition), optimised our staffed points of
presence by closing 32 inretailer and 53 personal-loan outlets
(while maintaining our
coverage of the bankable population at 84%). We achieved
efficiencies through the recycling of cash through our increased
footprint of Intelligent Depositor devices. Four client-servicing
functions, previously only accessible through branches, as well as
the new Nedbank Money app were launched during the fourth quarter
of 2017, while another 33 are planned for deployment across our
digital channels by March 2018. We implemented 50 software robots
(robotic process automation) to enhance efficiencies and reduce
processing errors in administrative-intense processes, with more
than 200 planned for rollout in 2018.
-- Managing scarce resources to optimise economic outcomes. We
maintained our focus on growing activities that generate higher
levels of EP, such as growing transactional deposits and increasing
transactional banking revenues, with commission and fees in RBB up
5,3%, and achieved earnings growth of 6,9% in RBB and 5,0% in CIB.
Our selective origination of personal loans, home loans and
commercial-property finance has proactively limited downside risk
in this challenging operating climate, enabling a CLR of 0,49%,
below the bottom end of our TTC target range. At the same time our
balance sheet metrics remain strong and we continue to deliver
dividend growth above the rate of HEPS growth.
-- Providing our clients with access to the best financial services network in Africa.
-- In Central and West Africa ETI remains an important strategic
investment for Nedbank, providing our clients with access to a
pan-African transactional banking network across 39 countries and
Nedbank with access to dealflow in Central and West Africa. We have
made good progress in working with ETI's board and other
institutional shareholders to strengthen its board and management.
We have increased our board representation and our involvement in
the group as Brian Kennedy joined Mfundo Nkuhlu on ETI's board.
Mfundo was appointed Chair of the ETI Risk Committee and Brian was
appointed to the Remuneration and Audit Committees. Risk management
practices are being enhanced and the audit of ETI's 2017 interim
results provides comfort that the risk of another fourth-quarter
loss as in 2015 and 2016 has decreased. We are pleased that ETI
reported a profit for the nine months to 30 September 2017. We
remain supportive of ETI's endeavours to deliver an ROE in excess
of its COE over time. While risk remains, economic conditions in
Nigeria and other economies in West Africa are improving and ETI
should provide a strong underpin to Nedbank Group's earnings growth
in 2018.
-- In SADC we continue to build scale and optimise costs. Our
core banking system, Flexcube, which was successfully rolled out in
Namibia in 2016, was also implemented in Lesotho, Malawi and
Swaziland in 2017 and we plan to roll it out in Zimbabwe during
2018. We also launched a number of new digital products and we
continue to grow our distribution footprint. As a result, clients
increased 14% and online digital activations were up 22%. The
acquisition of a majority stake in Banco Único in 2016 continued to
deliver value and positioned Nedbank well to leverage off higher
levels of economic growth in Mozambique. In 2018 we will rebrand
MBCA in Zimbabwe to Nedbank while completing the last of our core
banking system implementations in our subsidiaries.
Old Mutual plc managed separation
On 1 November 2017 Old Mutual plc announced that the strategic
minority shareholding to be retained in Nedbank Group by Old Mutual
Limited (OML) to underpin the ongoing commercial relationship
between the companies has been agreed at 19,9% of the total Nedbank
Group ordinary shares in issue, as held by shareholder funds. This
followed the 11 March 2016 announcement by Old Mutual plc about the
Old Mutual managed separation, and the subsequent communication on
25 May 2017 in which Old Mutual plc stated that the new SA holding
company, to be named OML, would retain a strategic minority
shareholding in Nedbank Group after the implementation of the
managed separation. The 19,9% shareholding will be held by OML,
which will have a primary listing on JSE Limited and a secondary
listing on the London Stock Exchange. OML will be listed at the
earliest opportunity in 2018, following the publication of Old
Mutual plc's 2017 full-year results.
The decrease in OML's shareholding in Nedbank Group will be
achieved through the unbundling of Nedbank Group ordinary shares to
OML's shareholders. This will result in OML, immediately after the
implementation of unbundling, holding a 19,9% strategic minority
shareholding in Nedbank Group. The unbundling will occur at an
appropriate time and in an orderly manner, after the listing of OML
and allowing suitable time for the transition of the OML
shareholder register to an investor base with an SA and
emerging-market focus and mandate. After the unbundling, Nedbank
Group is likely to see an increase in the number of its shares held
by emerging-market-mandated index funds, which will adjust
according to the improved free float (from about 45% before
unbundling to about 80% after unbundling) and a normalisation of SA
institutional shareholding (some of which are currently underweight
on a straight-market-capitalisation basis given some Nedbank Group
holding through the Old Mutual plc shareholding). As part of this
process Nedbank Group will continue to market itself as an
attractive investment for local and international investors.
Nedbank Group will continue business as usual and the managed
separation will have no impact on our strategy, our day-to-day
management or operations, our staff and our clients. Our
engagements have been at arm's length and overseen by independent
board structures. Old Mutual operates predominantly in the
investment, savings and insurance industry, which has little
overlap with banking, even though we compete in the areas of wealth
and asset management and personal loans. Our technology systems,
brands and businesses have not been integrated.
As noted before, our collaboration with Old Mutual to unlock
synergies by the end of 2017 was successful. Future synergies will
continue to be underpinned by OML's strategic shareholding in
Nedbank Group. We are fully committed to working with OML to
deliver ongoing synergistic benefits at arm's length.
Economic and regulatory outlook
While structural challenges remain, 2018 has started with
renewed optimism that these will be addressed and that improving
business and consumer confidence should lead to a cyclical upturn
off a low base. The SA economy is forecast to grow about 1,6% in
2018 as a resilient world economy and relatively firm international
commodity prices are expected to provide further support to
domestic production and exports. Business and consumer confidence
should also improve from very weak levels in 2017, boosted by newly
elected SA President Ramaphosa's promises to restore good
governance, take immediate action against corruption and state
capture, and make changes to many cabinet portfolios. Moderate
growth in consumer spending and credit are forecast for 2018, while
fixed investment, as well as government consumption and capital
expenditure, is forecast to remain subdued.
The recovery in sub-Saharan Africa is expected to gather pace in
2018, underpinned by the ongoing global commodity price upswing as
well as improved government finances and structural reforms in some
African countries. The International Monetary Fund expects
sub-Saharan Africa to grow faster at 3,4% this year.
Domestic inflation is forecast to recede moderately in the early
part of 2018, before edging higher towards the end of the year,
averaging about 5,1% over the year as a whole. Early in the year a
stronger rand, coupled with easing food and fuel prices, should
help contain inflation off the higher base that prevailed at the
start of 2017. The rand remains the key risk to the inflation
outlook. High expectations of political, policy and fiscal reforms
have been built into the rand's recent rally. If the new ANC
leadership fails to deliver, especially on the fiscal concerns, SA
still runs the risk of being downgraded to universal subinvestment
grade status, which could place the rand under pressure and alter
the inflation outlook for the year. Given these uncertainties, the
anticipated rise in US interest rates, the gradual tapering of
quantitative easing programmes by other major central banks and the
expected upturn in the domestic inflation cycle towards year-end,
the SARB's Monetary Policy Committee is forecast to keep interest
rates unchanged at current levels throughout 2018 and into
2019.
Fitch indicated that a failure to implement credible fiscal
consolidation and any further economic deterioration could trigger
another rating downgrade. S&P will act if both the economy and
standards of public governance weaken further, while Moody's will
downgrade the country if the measures to address the fiscal funding
gap lack credibility or the chosen structural reforms fail to
encourage investment and growth.
Overall economic conditions should improve off a low base and,
despite the many challenges faced by the SA economy, the SA banking
system remains sound, liquid and well capitalised.
Prospects
Our guidance on financial performance for the full year 2018 is
currently as follows:
-- Average interest-earning banking assets to grow in line with
nominal GDP.
-- NIM to be slightly above the 2017 level of 3,62%.
-- CLR to increase into the bottom half of our target range of
60 to 100 bps (under IFRS 9).
-- NIR to grow above mid-single digits.
-- Associate income to be positive (ETI associate income
reported quarterly in arrear).
-- Expenses to increase by mid-single digits.
Given the loss in associate income from ETI in the 2017 base and
continued delivery on the Nedbank strategy, our financial guidance
is for growth in DHEPS for the full 2018 year to be in line with
our medium-to-long-term target of greater than or equal to GDP +
the consumer price index + 5%.
The outlook for our medium-to-long-term targets in 2018 is as
follows, and we have now set ourselves specific 2020 targets of ROE
(excluding goodwill) of greater than or equal to 18% and cost to
income of lower than or equal to 53% as a pathway to ongoing and
sustainable improvements in the key metrics that support
shareholder value creation.
Metric 2017 performance Full-year 2018 Medium-to-long-term
outlook target
------------------- ----------------- ----------------- --------------------
ROE (excluding 16,4% Improves, but 5% above COE(5)
goodwill) remains below
target
(> 18% by 2020)
------------------- ----------------- ----------------- --------------------
Growth in 2,4% > consumer price > consumer
DHEPS index + GDP price index
growth + 5%, + GDP growth
supported by + 5%
ETI recovery
------------------- ----------------- ----------------- --------------------
CLR 0,49% Increases into Between 0,6%
the bottom half and 1,0% of
of our target average banking
range (under advances
IFRS 9)
------------------- ----------------- ----------------- --------------------
NIR-to-expenses 80,7% Improves, but > 85%
ratio remains below
target
------------------- ----------------- ----------------- --------------------
Efficiency 58,6% Improves, but 50-53% (< 53%
ratio (including remains above by 2020)
associate target
income)
------------------- ----------------- ----------------- --------------------
CET1 capital
adequacy
ratio (Basel Within or above
III) 12,6% target 10,5-12,5%
------------------- ----------------- ----------------- --------------------
Economic Internal Capital Adequacy Assessment
capital Process (ICAAP):
------------------- ----------------------------------------------------------
A debt rating, including 10% capital
buffer
------------------- ----------------------------------------------------------
Dividend 1,91 times Within target 1,75-2,25 times
cover range
------------------- ----------------- ----------------- --------------------
(5) The COE is forecast at 13,2% in 2018.
Shareholders are advised that these forecasts are based on
organic earnings and our latest macroeconomic outlook, and have not
been reviewed or reported on by the group's auditors.
Board and leadership changes during the period
Tom Boardman and David Adomakoh resigned from the board as
independent non-executive directors with effect from the end of
Nedbank Group's Annual General Meeting on Thursday, 18 May
2017.
Neo Dongwana and Linda Manzini were appointed as independent
non-executive directors of the group with effect from 1 June 2017
and Hubert Brody with effect from 1 July 2017.
Thulani Sibeko, Group Executive of Group Marketing,
Communications and Corporate Affairs, resigned with effect from 27
June 2017. In October 2017 Abe Thebyane, Group Executive of Human
Resources, announced his early retirement, to be effective on the
appointment of a suitable successor to ensure a seamless handover
of responsibilities. These positions are expected to be filled in
the first half of 2018.
Basis of preparation*
Nedbank Group Limited is a company domiciled in SA. The summary
consolidated financial statements of the group at and for the year
ended 31 December 2017 comprise the company and its subsidiaries
('group') and the group's interests in associates and joint
arrangements.
The summary consolidated financial statements comprise the
summary consolidated statement of financial position at 31 December
2017, summary consolidated statement of comprehensive income,
summary consolidated statement of changes in equity and summary
consolidated statement of cashflows for the year ended 31 December
2017 and selected explanatory notes, which are indicated by the
symbol*. The summary consolidated financial statements and the full
set of consolidated financial statements have been prepared under
the supervision of Raisibe Morathi CA(SA), the Chief Financial
Officer.
The summary consolidated financial statements are prepared in
accordance with the requirements of the JSE Limited Listings
Requirements for preliminary reports, and the requirements of the
Companies Act applicable to summary financial statements. In terms
of the Listings Requirements preliminary reports have to be
prepared in accordance with the framework concepts and the
measurement and recognition requirements of IFRS and the SAICA
Financial Reporting Guides as issued by the Accounting Practices
Committee and Financial Pronouncements as issued by the Financial
Reporting Standards Council and also, as a minimum, to contain the
information required by IAS 34 Interim Financial Reporting. The
accounting policies applied in the preparation of the consolidated
financial statements, from which the summary consolidated financial
statements were derived, are in terms of IFRS and are consistent
with the accounting policies applied in the preparation of the
previous consolidated annual financial statements.
IFRS 9 Financial instruments*
IFRS 9 is effective and will be implemented by the group from 1
January 2018. IFRS 9 replaces IAS 39 and sets out the updated
requirements for the recognition and measurement of financial
instruments. These requirements specifically deal with the
classification and measurement of financial instruments,
measurement of impairment losses based on an expected credit loss
model, and closer alignment between hedge accounting and risk
management practices.
As permitted by the transitional provisions of IFRS 9, the group
has elected not to restate comparative figures. Any adjustments to
the carrying amount of financial assets and financial liabilities
at the date of transition will be recognised in the opening
retained earnings and other reserves at 1 January 2018. The group
has elected to continue to apply the hedge accounting requirements
of IAS 39 on adoption of IFRS 9.
The estimates below are based on accounting policies,
assumptions, judgements and estimation techniques, which will be
regularly reviewed and assessed during the year in preparation for
the financial statements for the year ending 31 December 2018.
Classification and measurement*
The group has implemented the following on adoption of IFRS
9:
-- Revocation of the fair value through profit or loss
designation for certain loans and advances, amounts owed to
depositors and long-term debt instruments to facilitate the
implementation of macro fair-value hedge accounting of interest
rate risk and hedge accounting of inflation risk. It is anticipated
that the aforementioned changes will reduce accounting volatility
experienced with respect to fair value through profit or loss
accounting.
-- Reclassification of certain loans from amortised cost to fair
value through other comprehensive income and fair value through
profit or loss to align with the business-model-driven
classifications of IFRS 9.
-- Review of the effective interest rate calculation for certain
loans based on the additional guidance provided in IFRS 9.
The implementation of the above IFRS 9 classification and
measurement requirements decreased reserves at 1 January 2018 by
approximately R200m.
Impairment*
The IFRS 9 impairment implementation progressed during 2017. The
following were the main areas of focus for 2017:
-- Finalisation of the IFRS 9 impairment model methodology.
-- Implementation of an IT framework facilitating efficient model execution and management.
-- Development, build and testing of IFRS 9 impairment models
with respect to a substantial portion of the group's portfolios,
leveraging off the aforementioned IT framework.
-- Documentation and implementation of the relevant control
environment and related governance processes.
The following areas will continue to receive the required
attention as the implementation of IFRS 9 progresses during the
2018 financial reporting period:
-- Further refinement of certain models.
-- Finalisation of the interim and year-end reporting and disclosure frameworks.
-- Observing local and international industry trends with respect to IFRS 9 adoption.
The implementation of the IFRS 9 expected credit loss model
requires increases in balance sheet impairments at 1 January 2018
of approximately R3,2bn, with reserves decreasing by approximately
R2,3bn on an after-tax basis.
IFRS 15 Revenue from contracts with customers*
IFRS 15 replaces all existing revenue requirements in IFRS and
applies to all revenue arising from contracts with clients, unless
the contracts are in the scope of the standards on leases,
insurance contracts and financial instruments. The standard is
effective and will be implemented by the group from 1 January
2018.
The group has concluded that the loyalty points awarded to
clients are accounted for as consideration payable to clients in
terms of new IFRS 15 guidance. The standard requires revenue to be
decreased by the amount of consideration expected to be paid to
clients, with this amount recognised as a liability until payment
is effected. The liability for the amount expected to be paid to
clients under the loyalty programme increased by approximately
R300m on 1 January 2018 due to the application of IFRS 15
requirements. Reserves at 1 January 2018 decreased by approximately
R216m on an after-tax basis.
Events after the reporting period*
There are no material events after the reporting period to
report on.
Audited summary consolidated financial statements - independent
auditors' opinion
The summary consolidated financial statements for the year ended
31 December 2017 have been audited by KPMG Inc and Deloitte &
Touche, who expressed an unmodified opinion thereon. The auditors
also expressed an unmodified opinion on the annual consolidated
financial statements from which these summary consolidated
financial statements were derived.
The copies of the auditors' report on the summary consolidated
financial statements and of the auditors' report on the annual
consolidated financial statements are available for inspection at
the company's registered office, together with the financial
statements identified in the respective auditors' reports.
The auditors' report does not necessarily report on all of the
information contained in this results announcement. Shareholders
are therefore advised that, to obtain a full understanding of the
nature of the auditors' engagement, they should obtain a copy of
the auditors' report, together with the accompanying consolidated
financial statements, from Nedbank Group's registered office.
Forward-looking statements
This announcement contains certain forward-looking statements
with respect to the financial condition and results of operations
of Nedbank Group and its group companies that, by their nature,
involve risk and uncertainty because they relate to events and
depend on circumstances that may or may not occur in the future.
Factors that could cause actual results to differ materially from
those in the forward-looking statements include global, national
and regional political and economic conditions; levels of
securities markets; interest rates; credit or other risks of
lending and investment activities; as well as competitive,
regulatory and legal factors. By consequence, all forward-looking
statements have not been reviewed or reported on by the group's
auditors.
Final dividend declaration
Notice is hereby given that a final dividend of 675 cents per
ordinary share has been declared, payable to shareholders for the
six months ended 31 December 2017. The dividend has been declared
out of income reserves.
The dividend will be subject to a dividend withholding tax rate
of 20% (applicable in SA) or 135 cents per ordinary share,
resulting in a net dividend of 540 cents per ordinary share, unless
the shareholder is exempt from paying dividend tax or is entitled
to a reduced rate in terms of an applicable double-tax
agreement.
Nedbank Group's tax reference number is 9375/082/71/7 and the
number of ordinary shares in issue at the date of declaration is
498 108 914.
In accordance with the provisions of Strate, the electronic
settlement and custody system used by the JSE, the relevant dates
for the dividend are as follows:
Event Date
--------------------------------- -------------------
Last day to trade (cum dividend) Tuesday, 3 April
2018
--------------------------------- -------------------
Shares commence trading Wednesday, 4 April
(ex dividend) 2018
--------------------------------- -------------------
Record date (date shareholders Friday, 6 April
recorded in books) 2018
--------------------------------- -------------------
Payment date Monday, 9 April
2018
--------------------------------- -------------------
Share certificates may not be dematerialised or rematerialised
between Wednesday, 4 April 2018, and Friday, 6 April 2018, both
days inclusive.
On Monday, 9 April 2018, the dividend will be electronically
transferred to the bank accounts of shareholders. Holders of
dematerialised shares will have their accounts credited at their
participant or broker on Monday, 9 April 2018.
The above dates are subject to change. Any changes will be
published on SENS and in the press.
For and on behalf of the board
Vassi Naidoo Mike Brown
------------- ----------------
Chairman Chief Executive
------------- ----------------
2 March 2018
Registered office
Nedbank Group Limited, Nedbank 135 Rivonia Campus, 135 Rivonia
Road, Sandown, Sandton, 2196.
PO Box 1144, Johannesburg, 2000.
Transfer secretaries in SA
Computershare Investor Services Proprietary Limited 15 Biermann
Avenue, Rosebank, Johannesburg, 2196, SA.
PO Box 61051, Marshalltown, 2107, SA.
Transfer secretaries in Namibia
Transfer Secretaries (Proprietary) Limited, Robert Mugabe Avenue
No 4, Windhoek, Namibia.
PO Box 2401, Windhoek, Namibia.
Directors
V Naidoo (Chairman), MWT Brown** (Chief Executive), HR Brody, BA
Dames, NP Dongwana, ID Gladman (British), JB Hemphill, EM Kruger,
RAG Leith, PM Makwana, L Manzini, Dr MA Matooane, NP Mnxasana, RK
Morathi** (Chief Financial Officer), JK Netshitenzhe, MC Nkuhlu**
(Chief Operating Officer), S Subramoney, MI Wyman*** (British).
** Executive *** Lead independent director
Company Secretary: TSB Jali
-------------------- ---------------------------------
Reg number: 1966/010630/06
-------------------- ---------------------------------
JSE share code: NED
-------------------- ---------------------------------
NSX share code: NBK
-------------------- ---------------------------------
ISIN: ZAE000004875
-------------------- ---------------------------------
Sponsors in Merrill Lynch SA Proprietary
SA: Limited
-------------------- ---------------------------------
Nedbank CIB
-------------------- ---------------------------------
Sponsor in Namibia: Old Mutual Investment Services
(Namibia) (Proprietary) Limited
-------------------- ---------------------------------
This announcement is available on the group's website at
nedbankgroup.co.za, together with the following additional
information:
-- Detailed financial information.
-- Financial results presentation.
-- Link to a webcast of the presentation.
For further information please contact Nedbank Group Investor
Relations at nedgroupir@nedbank.co.za."
ENDS
Enquiries
External communications
Patrick Bowes +44 20 7002 7440
Investor relations
Dominic Lagan +44 20 7002 7190
Media
William Baldwin-Charles +44 20 7002 7133
+44 7834 524833
Notes to Editors
About Old Mutual plc
Old Mutual plc is a holding company for several financial
services companies. In March 2016, it announced a new strategy of
managed separation entailing the separation of its underlying
businesses into independently-listed, standalone entities.
The managed separation strategy seeks to preserve and release
the value currently trapped within the group structure. The managed
separation will be materially complete by the end of 2018.
OM Asset Management, a US based institutional asset manager, is
now independent from Old Mutual. The remaining underlying
businesses are:
Old Mutual Emerging Markets: A South African based leading
provider of financial services in sub-Saharan Africa.
Nedbank: One of South Africa's four largest banks, with a 20%
stake in pan-African Ecobank Transnational Inc.
Old Mutual Wealth: a leading, integrated, advice-led wealth
management business focused on the UK upper and middle market.
For the year ended 31 December 2016, Old Mutual reported an
adjusted operating profit before tax of GBP1.7 billion and had
GBP395 billion of funds under management. For further information
on Old Mutual plc and the underlying businesses, please visit the
corporate website at www.oldmutualplc.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR JBMPTMBTMBJP
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