Nedbank Retail &

Business Banking

Client centred differentiators

for sustainable growth

Ingrid Johnson

Group Managing Executive:

Nedbank Retail & Business Banking

HSBC conference

Topic: Game changers

4 December 2012

1

Disclaimer

Nedbank Group has acted in good faith and has made every reasonable effort to ensure the accuracy and

completeness of the information contained in this document, including all information that may be defined as

'forward-looking statements' within the meaning of United States securities legislation.

Forward-looking statements may be identified by words such as ‘believe’, 'anticipate', 'expect', 'plan', 'estimate',

'intend', 'project', 'target', 'predict' and 'hope'.

Forward-looking statements are not statements of fact, but statements by the management of Nedbank Group based

on its current estimates, projections, expectations, beliefs and assumptions regarding the group's future

performance.

No assurance can be given that forward-looking statements will prove to be correct and undue reliance should not be

placed on such statements.

The risks and uncertainties inherent in the forward-looking statements contained in this document include, but are

not limited to: changes to IFRS and the interpretations, applications and practices subject thereto as they apply to

past, present and future periods; domestic and international business and market conditions such as exchange rate

and interest rate movements; changes in the domestic and international regulatory and legislative environments;

changes to domestic and international operational, social, economic and political risks; and the effects of both current

and future litigation.

Nedbank Group does not undertake to update any forward-looking statements contained in this document and does

not assume responsibility for any loss or damage whatsoever and howsoever arising as a result of the reliance by

any party thereon, including, but n limited to, loss of earnings, profits, or consequential loss or damage.

2

Nedbank is building a client centred, vision led, values driven organisation

for the benefit of all stakeholders

OUR VISION

3

Since 2004 Nedbank has sought to deliver sustainably across all parts of the

group, focusing on a number of ‘game changers’ …

Wealth Cluster & bought Old Mutual

minority JV shareholdings

Imperial Bank acquisition of

remaining 49.9%

Investment in product & teams for quality NIR growth

Business Banking

as key strategic thrust

Repositioning Nedbank Retail

Portfolio Tilt widely embedded

Committed to building a vision-led, values driven

organisation

Basel II & focus on world class

risk management Re-igniting the innovation culture

Lower risk, integrated investment

bank

2004 2012

Established Ecobank Nedbank

Alliance

4

Retail Banking1 - headline earnings, Rm

Rest of Nedbank - headline earnings, Rm

896

1 463 1 876

1 002

(156)

2005 2006 2007 2008 2009

2 271 2 972

4 045 4 763 4 433

2005 2006 2007 2008 2009

17.6 23.1 22.1 10.8 -1.6 RoE

%

19.5 21.6 26.3 24.5 20.0 RoE

%

…resulting in strong wholesale businesses while revealing strategic challenges

in Retail as well as opportunities across Nedbank’s key strategic focus areas

FY

FY Emphasis for today’s presentation

1. Includes Wealth businesses

Prime interest rate 2008: 15.1%, 2009: 11.9%

Core Tier 1 equity 2007: 7.2%, 2009: 9.9%

5

SOURCE: Retail & BB 2012 Investor Day Presentation

United Nations; IFC; Financial Inclusion Expert Group;

World bank – doing business; team analysis

Core differentiators Trends

▪ Consumer preference for choice,

simplicity, increased transparency and

lower cost banking

▪ Technological innovation (e.g. digital

channels) offering opportunity for lower

cost distribution and process simplicity

▪ Higher cost of capital and liquidity from

Basel regulations put risk management

and liabilities at a premium

▪ Rising demographics and 6% p.a. small

business growth represent tomorrow’s

valued, aspirational clients

▪ Collaborative cultures increasingly

recognised as central to organizations

effectiveness and innovation

To deliver on Nedbank’s strategic intent, Retail & BB have distinctive & differentiated positionings that leverage key trends & core strengths/competencies

A choice of distinctive client

centred banking experiences,

delighting in moments of truth

Integrated channels strategy

leveraging digital, high potential

micro-markets & optimising cost

Collaborative people culture

with a client-centred,

relationship-oriented DNA

Robust risk management for

quality asset portfolios &

liabilities innovation sustaining

historical strength

A rigorous approach to capturing

virtuous circle of household &

business

6

Retail & BB are capturing the powerful virtuous circle of the individual and business

through collaboration and changes to the business operating models …

Retail

strategic

wheel

(capturing

elements of

organisational

design)

BB Delivery

model

(evolved to

capture the

opportunity

around the

business

owner &

employees)

Entrepreneur

/ Small Bus

owner

Youth

Powerful ‘virtuous circle’ of individual & business

Employees

Business Seniors

1. Including their household

1

Business

owner 1

7

… while also enhancing the client value proposition to unlock the virtuous

circle through the business owner as a key influencer…

Results

• > 500 new business

owners & key

individuals banked in

just ~ 8 months

• Positive feedback from

business owners

• Business Banking now

50% of all new home

loan registrations in

Nedbank

• Contributing to a

significant shift in Net

Promoter Score, now

at > 6 year high

• > 2 500 business leads

for N@W offering

Source: BB ATL marketing campaign Q3 2012

8

… leading to strong client reception of N@W offering and excellent new Retail

client gains of SME company employees

0

5

10

15

20

25

Ja

n

Feb

Ma

r

Ap

r

Ma

y

Ju

n

Ju

l

Aug

Se

p

Oct

No

v

De

c

Ja

n

Feb

Ma

r

Ap

r

Ma

y

Ju

n

Small & Med Business

Corporate & Public Sector

N@W monthly account sales, #’000

9

Nedbank is also investing in the Youth, our future clients & entrepreneurs, for

medium term benefits through compelling CVP’s and links with the influencer

10

Integrated channels strategy is enabling a choice of distinctive client centred

banking experiences…

Voice of client in

Nedbank’s integrated

channels vision

I have convenient access to my preferred

choice of channel(s)

My bank ensures simple and seamless

sales & delivery of product

I am guided on the use of different channels &

associated benefits

I can move seamlessly between channels

My bank provides me with appropriate

benefits as I do more with them

My bank helps me to improve my financial

fitness

11

…through 6 key drivers for implementation

Developing

seamless sales &

servicing capability

within/across

channels

Upgrading mobile

& digital to true

alternatives &

growing digitally

enabled client base

Educating clients

on most efficient &

attractive choice of

channels

Area collaboration

accelerating leads

flow for greater share

of wallet

Optimising channel

footprint to capture

full potential in each

micro market

Aligning processes

for seamless operation

& fulfillment

1. Vehicle and Asset finance

Gather Client

Information

Pre-population of

existing client

information

Make Credit

Decision

Integrated credit

approval

Automated VAF

agreement creation

Complete

Application

Automatically

generate application

and client record

where applicable

Conclude

Transaction

Automated accounted

opening

System driven

completion of payout

12

Micro-market growth / optimise strategies guiding relevant mix of integrated

channels format, functionality & location …

Nedbank micro-market opportunity P

ote

nti

al G

OI (R

m)

Low

High

Current GOI (Rm) High Low

Rising Stars:

Invest and

develop

Movers &

Shakers:

Retain

and grow

Right size:

Capture quick

wins

Cash Cows:

Optimise mix

& cost

Grow share

Reviewed

holistically for

both

wholesale &

retail client

needs

13

…enabling a step change investment in distribution to increase accessibility for

clients across South Africa as a bank for all

STRATEGIC INTENT

1 174 1 361

679 1 355

1 874

2 716

2009 2012H1

2015

Branches & Outlets

(# )

ATMs

(# )

2009 2012H1

2015

Alternate

outlets

Branches

543 712

Over R1.3bn investment in distribution since

2009; further R1.3bn in the next 3 years

33%

increase!

45%

increase!

STRATEGIC INTENT Footprint optimised in line with micro-market

opportunity - ~ 50% growth in non-urban

50

< 5yrs old

> 5yrs old

Rural

Urban

Semi-

urban

440

557

53

71

50

84

543

712

2009 2012 H1

+34%

+68%

+27%

H1

H1

14

Developing seamless end-to-end client-centred servicing and fulfilment

Consolidation of front end systems in branch “Easy-to-do-Business” philosophy

From 22 disparate, product-driven front-

line systems…..

...to an integrated client driven platform for

enhanced client and staff banking

experience

End-to-end process automation for quick

decision making & fulfilment

Gather Client

Information

Pre-population of

existing client

information

Make Credit

Decision

Integrated credit

approval

Automated VAF

agreement creation

Complete

Application

Automatically

generate application

and client record

where applicable

Conclude

Transaction

Automated accounted

opening

System driven

completion of payout

15

Upgrading mobile & digital for highly secure anytime, anywhere banking

Enable digital

channels as true

alternatives

Be a leader or fast

global follower in

commercially

viable digital

innovation

Increase digitally

enabled client

base & revenue

contribution from

digital channels

Market leader Fast global follower

Home Loans online

application channel as true

alternative to originators

Cashvault with

online logistics -

cost effective &

more seamless

alternative to

traditional cash

handling

• Nedbank App SuiteTM - 100 000 downloads reached within 3 months

• Home Loan online channel contributing 10% of new intake within 2 months

• MyFinancialLifeTM - R2.7bn of net worth aggregated across ~9 000 users

• Social media: ~6 800 twitter followers, ~10 000 facebook likes and ~12 600

Linkedin followers within a year

16

Integrated channels strategy – translating smaller scale to a strength

o Social media listening centre

launched

o Integrated Banking System

simplifying front-line

fulfilment

o Cash recycling within areas

improved by ~R1bn per month

o Branch redesign in pilot phase

o Capex payback time for 2011

branch investment halved

o Expansion in 30 geographic

growth nodes to capture “white

space” opportunities (50%

complete)

o Area Collaboration unlocking

lead flow within micro-markets

Nedbank Integrated Channels Strategy Implementation progress

ATM

Contact

centre

RM Internet

Mobile

Branch

Nedbank Integrated Channels Strategy Implementation progress

17

SOURCE: 2012 Investor Day Presentation

United Nations; IFC; Financial Inclusion Expert Group;

World bank – doing business; team analysis

Core differentiators Trends

▪ Consumer preference for choice,

simplicity, increased transparency and

lower cost banking

▪ Technological innovation (e.g. digital

channels) offering opportunity for lower

cost distribution and process simplicity

▪ Higher cost of capital and liquidity from

Basel regulations put risk management

and liabilities at a premium

▪ Rising demographics and 6% p.a. small

business growth represent tomorrow’s

valued, aspirational clients

▪ Collaborative cultures increasingly

recognised as central to organizations

effectiveness and innovation

A choice of distinctive client

centred banking experiences,

delighting in moments of truth

Integrated channels strategy

leveraging digital, high potential

micro-markets & optimising cost

Collaborative people culture

with a client-centred,

relationship-oriented DNA

Robust risk management for

quality asset portfolios &

liabilities innovation sustaining

historical strength

A rigorous approach to capturing

virtuous circle of household &

business

To deliver on Nedbank’s strategic intent, Retail & BB have distinctive & differentiated positionings that leverage key trends & core strengths/competencies

18

Building Retail into a high performing sustainable business with increased

clients and returns while sustaining wholesale strengths in a tough cycle

58 102 104

105

161

299

39

95

182

2701

202

628 585

2010 2011 2012

358

STRATEGIC INTENT

5 008 Total

Clients2 4 380 5 593

Middle &

RRB

ELB

Youth

H1

Retail Banking1 - headline earnings, Rm

Rest of Nedbank - headline earnings, Rm

(69)

133

863 1 194

2009 2010 2011 2012

2 057 2 020 1 909 2 274

2009 2010 2011 2012

-1.2 1.7 9.3 11.8 RoE

%

RoE

% 21.8 20.6 17.4 19.0

H1

H1

Growth in Retail client numbers (‘000)

14.2%

excluding

HL’s back

book

1. Excludes Wealth businesses

2. 2011 includes 270K clients acquired as part of MFC

Source: Interim Analyst Results 1H12

Prime interest rate 2009: 11.9%, H1 2012: 9.0%

19

Nedbank Group is a vision led, values driven organisation delivering

sustainable performance relative to peers

3 year - share price relative

Price : tangible book

1.68 1.88

2.03

2.59

1.0

1.5

2.0

2.5

3.0

2009 2010 2011 2012

145

107

106

167

90

110

130

150

170

Oct 09 Oct 10 Oct 11 Oct 12