Together in unity - 18t - Integrated Report 2018 / NedNamibia Holdings Limited
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18
twenty
nedbank.com.na
twenty eighteen integrated report
Together
in unity Integrated Report 2018 / NedNamibia Holdings Limited
twenty eighteen integrated report / 1
Connecting lives.
Sharing successes.
18
Contents
The bank that resonates with the
rhythms of Namibia. 02 Group profile
04 Highlights
06 Retail branch network
07 Group structure
'I love to hear the sound made by sand dunes
I am one of those who perceive the rhythm
Of a landscape as recorded in many paintings 08 14 18 22
I am one of thousands who know I am finally home.’ Board of directors Executive committee Chairman’s report Managing director’s review
26 29 32 42
Mvula Ya Nangolo, from Watering the Beloved Desert
Group annual financial
Chief financial officer’s report Chief risk officer’s report Sustainability report
statements
45 Corporate governance and
82 Directors’ responsibility
83
Statutory actuary’s report
86
Independent auditor’s report
ethics review
88 Report of the directors
174
Company annual financial
184 Contact details
statements
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Group profile
By driving sustainable economic
growth that improves the lives
The bank that
of every Namibian, we are brings Namibia
building a stronger bank and a together
stronger Namibia.
Our adaptability and responsiveness
enables us to deliver enhanced and
innovative products, better client service
and make a broader contribution to a
sustainable Namibia.
NedNamibia Holdings Limited is the coupled with in depth knowledge of
holding company for subsidiaries engaged the Namibian market, a commitment
in financial services including commercial to Namibian development, strong
and personal banking, corporate and support from its shareholder, and
specialised finance, personal lending, adherence to international best practice
wealth management, life assurance, in risk management has enabled the
property and asset finance, foreign bank to grow.
exchange and securities trading. The
group has total assets of N$19.49 billion NedNamibia Life Assurance Company
(2017: N$ 17.05 billion). Limited provides cover for clients,
notably for their credit and overdraft
The principal subsidiary, Nedbank Namibia commitments. NedPlan Insurance Brokers
Limited, is a registered Namibian bank Namibia (Proprietary) Limited provides
with assets of N$18.87 billion (2017: insurance brokerage services.
N$16.59 billion). It provides a full range of
domestic and global services to individual, NedCapital Namibia (Proprietary) Limited,
corporate and international clients the specialist non-banking financial services
through a widespread branch network unit within NedNamibia Holdings, offers
and a business centre and head office specialised finance, syndication and advisory
in Windhoek. An innovative approach services to corporates, state-owned
to providing financial services, enterprises and empowerment entities.
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Highlights
The shared measure As a leading bank in Namibia, we strive
to connect lives, now and for the future.
Growth in loans and
advances to clients
of our success From Independence Avenue in Windhoek
to Dunes Mall in Walvis Bay, our digitally
3,92%
enabled branches are successfully
Capital adequacy ratio
delivering on this commitment.
17,99%
Group
counters another year of economic contraction
Net interest income increased
Growth
built on optimised structures, efficient allocation
of resources, increased competitiveness
Real
momentum lent to drive for private sector
led growth
8,16%
Major
mandates won for multi-billion-dollar developments
Non-interest revenue increased
Private
Wealth offering successfully launched
Marked
increase in premium income at NedNamibia
Life Assurance Company 9,99%
Operating expenses increased
6,31%
2012 1 633,2 Net asset value
per share
2013 1 922,9 (cents)
2014 2 345,5
2015 2 733,0
Profit after taxation increased
12,03%
2016 3 160,3
2017 3 327,7
2018 3 702,8
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Retail branch network Group structure
The bank that brings
The network that Nedbank Namibia together
connects Namibians Group
Limited
with the first choice
for banking 01
100%
NedNamibia
Holdings
Limited
02
03
05 04
07 18
16
06
08
14 19
15
09
100% 100% 100% 100% 100%
17 Nedbank NedProperties NedPlan Insurance NedNamibia Life NedCapital
Namibia (Proprietary) Brokers Namibia Assurance Company Namibia (Proprietary)
11 Limited Limited (Proprietary) Limited Limited Limited
12 10
Full Spectrum Property Holding Insurance Broker Long-term Insurance Specialised Financial
Banking Company Service
01 Katima Mulilo
13
02 Rundu
03 Grootfontein
04 Eenhana
05 Oshikango 10 Keetmanshoop
06 Oshakati 11 Swakopmund 15 Okahandja
100% 25% 100% 50% 50%
07 Ondangwa 12 Walvis Bay 16 Ongwediva CBN Nominees Namclear NedLoans Ten Kaiser Wilhelm Walvis Bay
(Proprietary) (Proprietary) (Proprietary) Strasse (Proprietary) Land Syndicate
Dunes Mall
08 Outapi Walvis Bay Branch
17 Rehoboth Limited Limited Limited Limited (Proprietary) Limited
09 Windhoek Kuisebmond 18 Tsumeb Safe Custodian Clearing Service Personal Lending Property Holding Property Holding
Business Centre The Grove Services Provider Administration
Am Weinberg Katutura
13 Lüderitz 19 Gobabis
Katutura Maerua Mall 14 Otjiwarongo
Main Branch Prosperita
Wernhil Westlane
Independence Ave
Windhoek South
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Board of directors
A united Theo J Frank (SC)
Chairperson
Jan A Du Plessis
Non-executive director
Trophimus T Hiwilepo
Independent non-executive director
leadership
Independent non-executive director (resigned 19 August 2018)
BSc (University of the Western Cape, SA)
BA Law, LLB, Dip Bus Man, Certificate in BCom, BCompt (Hons), CA (SA), Certificate in the Theory
Tax Law (University of South Africa) of Accountancy, HDip in Company Law, Advanced Information technology professional with extensive
Management Program (Duke University, USA) experience in leading, managing, planning as well as
delivering
Senior counsel and former judge of the High Court operational and technical expertise in information
of Namibia and was appointed as an ad hoc Judge A seasoned banker with extensive experience in financial technology and services, infrastructure and
of Appeal to the Namibia Supreme Court. He is management (including specialised and structured finance business systems.
the chairperson of both NedNamibia Holdings and products), mergers and acquisitions as well as corporate
shared
Nedbank Namibia and also the chairperson of Free banking. He was the Managing Executive of the Nedbank
Press of Namibia (Pty) Ltd. Rest of Africa subsidiaries as from January 2014.
value
We are deeply connected
to Namibia. We drive
innovation that will build a
prosperous country for all.
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Board of directors
Lionel J Matthews Liina M Muatunga Richard P Niddrie Afra R Schimming-Chase
Managing Director Independent non-executive director Independent non-executive director Independent non-executive director
(deceased 7 January 2019)
BCompt (Hons), CA (Nam), CA (SA), Executive MBA NatDip HR Management (Peninsula Technicon, Cape LLB, LLM, PGrad Dip International Law (France),
(University of Cape Town, SA), Executive Business Town, SA), Masters Dip HR Management (Rand Afrikaans Cert Financial Planner CFP® (Member of Financial
BCom, BAcc, CA (SA), CA (Nam)
Transformation (Duke University, USA) University, SA), BTech (University of South Africa), MBA Planning Institute, SA)
(Maastricht, Netherlands), EDP (UCT Graduate Business Former audit partner of the Namibian practice
Former Chief Executive Officer of Old Mutual Investment School, SA), SMP (GIBS, University of Pretoria, SA) Afra is the consultant and owner of Chase &
of Ernst & Young with 36 years’ experience as a
Group (Namibia) and the director of banking supervision Associates CC; Financial Planning & Coaching
Chartered Accountant. Richard was also a director
at the Bank of Namibia. Mr Matthews was appointed General Manager at Mpact Corrugated (Pty) Ltd with Practice. She is a partner and certified facilitator
of the Namibian Stock Exchange and chairman of
as Managing Director of NedNamibia Holdings and extensive experience in human resources management, in the FranklinCovey suite of products as well as a
its audit committee.
Nedbank Namibia in November 2013. He has more than training and development, industrial relations, customer service expert, seasoned public speaker
20 years’ experience in finance, banking, investments and performance management, operational management and dynamic facilitator.
strategic planning. and labour law.
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Board of directors
Peter C W Hibbit Karl-Stefan Altmann Ramon L Maasdorp Terence G Sibiya
Independent non-executive director Executive: CIB & Treasury Independent non-executive director Non-executive director
BCom, HDip in Tax (University of the Witwatersrand, BAcc (Hons), CA (Nam), CA (SA) BCom (Law), LLB BSc Information & Decision Systems (Carnegie Mellon
SA), CA (SA), Advanced Management Program University, USA), MSc Instructional Systems Design &
(Harvard University, USA) A graduate of Stellenbosch University and honours graduate Adv Maasdorp is a practicing member of the Society Technology, PhD Systems Design & Technology (University
in accounting from the University of South Africa, Karl-Stefan of Advocates of Namibia since 2009, experienced in of Pittsburgh, USA)
Held numerous senior positions during his 32 years’ is a member of both the SA Institute of Chartered Accountants Constitutional Law, Administrative Law, Commercial
career as a Chartered Accountant, amongst others and the Institute of Chartered Accountants of Namibia. His Litigation and Labour Law. Currently he is a member of the Effective April 2018, Dr Sibiya was appointed the Nedbank
Audit partner at Pim Goldby (now Deloitte & Touche), career in banking began after a five-year spell as an audit Council of the Law Society of Namibia (Vice-Chairperson Managing Executive for the Rest of Africa and Subsidiaries.
General Manager Finance and Accounting at The manager with Deloitte & Touche, whose clients included 2015-2016, Chairperson 2016-2017) and Board of Control He is responsible for leading and managing the Rest of
SA Permanent Building Society, Divisional Director Nedbank Namibia. It has covered appointments as financial of the Namibia Legal Practitioners Fidelity Fund (since Africa and subsidiary businesses to ensure that they grow
Management Services at Nedbank, Financial Director manager, senior financial manager and Chief Financial Officer 2014). He was appointed as an Independent Non-Executive and achieve the key strategic objectives of building scale,
at Imperial Bank, Group Financial Director of Regent at Nedbank Namibia and head of finance at ABSA Namibia Director of Nedbank Namibia Ltd. and NedNamibia increase market share, as well as the share of contribution
Insurance and Group Financial Director of Associated as well as short-term assignments in Tanzania and Zambia. Holdings Ltd in February 2018. to the Group’s earnings and to generate returns in excess
Motor Holdings ('AMH'). He retired from the accounting Currently he is the Executive for Corporate Investment Banking of the cost of equity. Until his appointment to his current role,
profession at the end of 2014. and Treasury with over 14 years of banking experience. Terence was the Managing Executive of Client Coverage
Nedbank Corporate and Investment Bank.
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Executive committee
A responsive
leadership Richard Meeks Executive: Retail and Business Banking
Richard who joined Nedbank Namibia as Chief Operating
acting for a
Officer in May 2015, began his banking career at the Bank
of Credit and Commerce International in London in 1988. He
immigrated to South Africa in 1990 and joined Standard Bank
where he served in various management roles in retail and
commercial banking operations before being assigned to
common purpose
Standard Bank Namibia in 2004 as head of operations. In 2009
he was appointed as project director for the localisation of
Standard Bank Namibia’s core banking system and delivery
of a full service banking solution. He was reappointed as head
of operations in 2013, serving as a member of Standard Bank
Namibia’s exco. He was appointed as head of the Retail and
Business Banking franchise in 2018.
Lionel J Matthews Managing Director Elaine Schlechter Executive: Wealth Management/Bancassurance
(resigned 30 June 2019)
Lionel who was appointed managing director of NedNamibia
Holdings and Nedbank Namibia from November 1, 2013, is a Elaine who was appointed to her current position in
chartered accountant by profession, with a B Compt (Hons), December 2015, joined the Group in 2006 as Senior Manager:
CA (Namibia), CA (South Africa) and an executive MBA from Bancassurance and as Chief Operating Officer of NedNamibia
the Graduate School of Business at the University of Cape Town. Life Assurance Company Limited and has led the growth of the
He has more than 20 years experience in finance, banking, life company and the Group’s broking business. In her 30-year
investments and strategic planning, and has held various career in the banking and insurance sector, 20 of which have
executive roles. These include CEO of Old Mutual Investment been at senior management level, she has gained extensive
Group (Namibia), director for banking supervision at the Bank experience in short term insurance and life assurance broking,
of Namibia and financial director at Namibian Breweries Ltd. assurance underwriting and in the banking sector. She studied at
the University of Stellenbosch, the University of South Africa and
the International Academy of Retail Banking in London. She is an
executive member of the Life Assurance Association of Namibia.
Karl-Stefan Altmann Executive: Corporate and Investment Banking Annette Stafford-Evans Head: Credit and Market Risk and acting Chief
and Treasury Risk Officer
A graduate of Stellenbosch University and honours graduate in Following her appointment in September 2007 as Head: Credit
accounting from the University of South Africa, Karl-Stefan is a of Nedbank Namibia, Annette was confirmed as a member of
member of both the SA Institute of Chartered Accountants and the the executive committee when she became Chief Risk Officer
Institute of Chartered Accountants of Namibia. His career in banking on 1 November 2013. She was appointed as Executive: Credit
began after a five-year spell as an audit manager with Deloitte and and Market Risk with effect from 1 October 2015. Annette is a
Touche, whose clients included Nedbank Namibia. It has covered chartered accountant CA (SA). She also holds post-graduate
appointments as financial manager, senior financial manager and qualifications as a certified risk analyst ('CRA'), registered
chief financial officer at Nedbank Namibia and head of finance at with the International Academy of Business and Financial
ABSA Namibia as well as short-term assignments in Tanzania and Management ('IABFM').
Zambia. He was appointed to lead the Corporate and Investment
Banking and Treasury franchise in 2018.
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Executive committee
JG Van Graan Chief Financial Officer Christoffer Chipeio Head: Legal, Compliance, Governance and
Company Secretary
JG van Graan joined the Group as Chief Financial Officer in
July 2018 from Ernst & Young (EY) where he was a partner of Christoffer, an admitted legal practitioner in the High Court
the Namibian and African firms. His role at EY included leading of Namibia, is a graduate of Stellenbosch University, and holds
the advisory practice and financial services sector in Namibia. a Diploma in Compliance Management from the University of
A B.Acc Hons graduate of the University of Stellenbosch in Johannesburg. He joined Nedbank Namibia in 2013 and has
South Africa, he is registered as a chartered accountant with served as Insurance Risk Analyst; Legal Advisor; Head: Legal;
the Institute of Chartered Accountants in Namibia and is a member Head: Legal, Governance and Compliance; and Retail Area
of the Professional Accountants’ and Auditors’ Board in Namibia. Manager before assuming his current position.
He first joined EY Namibia in 2007 and occupied various senior
management roles before moving to Rössing Uranium as finance
manager in 2012. He returned to EY in 2015 and has had extensive
experience in financial services and in the commercial sector with
listed and other major Namibian corporates.
Silke Van Der Merwe Chief Operating Officer Faith Cloete Head: Human Capital
(resigned 30 June 2019)
Faith Cloete who is Head: Human Capital, joined Nedbank
A graduate of Stellenbosch University (BA, MBA) and of the Namibia in 2006 as Human Resources Consultant after a 13-year
University of South Africa (BA Hons), Silke began her working career at the Namibian Broadcasting Corporation (NBC) where
career in Germany. After returning to Namibia, she spent more she served in various HR roles before being appointed as Human
than a decade in journalism and marketing and communication Resources Consultant. She was promoted to Senior Manager:
services before working as a project manager for an initiative HR during 2014 and then appointed as Head: Human Capital in
of the Namibia Employers’ Federation and GIZ, the German 2018. Faith completed her B.Tech Degree in Human Resources
international development company. She then focused on Management at Polytechnic of Namibia, the Senior Management
strategy and business consulting before joining Bank Windhoek Programme (SMP) at GIBS and was honoured as Nedbank’s Top
Holdings where she became Head of Corporate Strategy and Achiever during 2012.
Sustainability in 2014. She was appointed as Head of Strategy
and Transformation at Nedbank Namibia at the start of 2016,
as Executive - Strategy and Human Capital in March 2016 and
as Chief Operating Officer in 2018.
Richard Bastiaans Head: Information Communication Technology Gernot De Klerk Head: Marketing and Communications
Richard Bastiaans who was appointed as Head: Information Gernot joined Nedbank Namibia in 2007 as manager:
Communication Technology in April 2018, is a graduate of the communications and sponsorships and was appointed to his
management development programme at the University of Stellenbosch current position in December 2015. Before entering corporate
Business School. His operations experience in the financial services communications, he was manager of the Afrikaans radio service
industry covers enterprise and server architecture, requirements analysis, at the Namibian Broadcasting Corporation. He joined the NBC
group policy, and information technology infrastructure. He began his in 1995 as an assistant producer. He studied at the Universities
career in 2005 in a role at Bytes Technology Group supporting all banks of Stellenbosch and Warwick, England and has attended
ATMs in northern and central Namibia. He was appointed as a field development programmes in Namibia and South Africa. He is
service engineer at FNB Namibia in 2008, before becoming systems a member of the bank’s social investment committee and of
administrator there in 2009 and senior systems administrator in 2010. the Go Green Committee and vice-chairman of the Rehoboth
He joined Nedbank Namibia in 2014 as manager primarily responsible Development Forum, a community-based organisation aiming
for local core banking operations and support and in 2016 was appointed to improve the standard of living in the southern town.
as ICT operations manager to lead a team maintaining enterprise
wide networks, infrastructure, applications, security, industry payment
participation and operations and service delivery.twenty eighteen integrated report / 18 twenty eighteen integrated report / 19 Return to
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Chairman's report
A weak economy plagued Namibia
for a third successive year in 2018.
While global growth tracked at
above 3%, notwithstanding geo-
political tensions, market volatility
and international trade wars,
Namibia’s gross domestic product
contracted again, government
debt increased and household
Delivering debt touched 90% of disposable
income. The slowdown in domestic
consistently and foreign direct investment
constrained growth, with investors
positive client appearing to have a wait and see
approach on issues like taxation
experiences and tax reform, ownership and
broader economic participation.twenty eighteen integrated report / 20 twenty eighteen integrated report / 21 Return to
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Chairman's report
The impact of the weak economy was sketched by the
The Group’s support for growth and job creation extended to Another localisation issue continuing to receive
Minister of Finance in his mid-year budget review – a
rural areas where greater development of houses could flow attention within our parent Group is increased Namibian
review which he described as an assertion that we must
from a Nedloans initiative. The business became involved in ownership of our business in line with the aspirations
live within our means. The worrying consequences included
delivering a village home solution to government employees of the Financial Sector Charter and expectations of
falling per capita incomes and domestic demand, job
living in unproclaimed areas who are not benefitting from the Bank of Namibia. These are that existing banking
losses and stagnated production in some sectors. Youth
the government housing scheme. Since provision of vital institutions will increase local shareholdings by either
unemployment in a country rated as the second highest
services to most Namibians is dependent on attracting listing on the Namibian Stock Exchange or through
unequal society in the world topped 45% and unemployment
public service professionals to rural areas, the product is private placement or a combination of both.
overall was 34%.
seen as helping those professionals to build proper homes
in unproclaimed areas.
The economic downturn has brought a period of fiscal
consolidation, and that after government spending in
Outlook
Then in November, we broke ground on a landmark After the contractions in 2017 and 2018, real gross
recent years has represented a major slice of gross
contribution to development and job creation, the new domestic product is expected to recover to a positive
domestic product. It has also brought a package of
headquarters at Freedom Plaza in the Windhoek central growth rate of above 1.5% in 2019. Our longer term
measures to restart, as the Minister put it, the growth
business district. A building that will be energy- and outlook points to GDP growth rising to 3% in 2020/21,
engines and a drive by government for a more private-
resource-efficient, it will be another example of our subject to an uptick in private sector investment flows
sector-led growth, its aspiration being investment-led
commitment to sustainable practices. A five-star rating founded on policy certainty. The year ahead promises
rather than consumption-led growth. As an example of
from the Green Building Council will be sought. to be as challenging as the last two years as the
this and in the hope of attracting more investment in the
financial sector grapples with the pace of technological
mining industry, government relaxed rules allowing only
Apart from real momentum lent to the role of the private change, skills scarcity, increased cyber and financial
companies partly owned by black Namibians to apply
sector in contributing to revival of the economy, the Group’s crime, regulatory pressure and fierce competition. The
for mining licences.
performance in 2018 was notable for the rate of growth Group has shown its ability to adapt and is geared to
in earnings. This again outpaced the industry averages, build on the business gains of 2018 from enhanced and
The truism that stability and thanks to greater contributions despite the severely subdued innovative products, better client service and optimised
environment from Nedbank Namibia and the other main structures and to make a broader contribution to a
consistency in policy making subsidiary, NedNamibia Life Assurance Company. It is evident sustainable Namibia.
that the Group’s renewed focus on service, products and
spawns greater levels of technology also played a role in attaining this growth.
Appreciation
business confidence which The weak economy aside, these greater contributions The digital era and the needs of savvy consumers
leads to investment that in turn were achieved in the face of intensifying competition for
clients’ business, digital and technology disruption and a
are imposing rapid change in the financial services
sector and demanding more of personnel in the drive
is a catalyst for higher levels continuing barrage of regulatory changes and reforms in to deliver consistently positive client experiences.
the banking and non-banking sectors. The Namibian Banking Management and staff have the board’s sincere
of growth and job creation Association has engaged the regulator on the mounting appreciation of their commitment and dedication to
cost of projects for the banking sector, but legislative and executing strategy in a challenging year and winning
clearly defines the roles of regulatory demands continue to increase, the latest including and maintaining the trust of clients, old and new, whose
government and the private banking industry determinations on credit provisioning and
liquidity and other initiatives concerning banking fees and the
support drives our businesses. The role of our suppliers
and business partners is also gratefully acknowledged,
sector; government leads in implementation of Basel lll, the regulatory framework on bank as is the constructive engagement we continue to enjoy
capital adequacy, stress testing and market liquidity risk. with the regulatory authorities. We thank the many
policy direction setting and fiscal community-minded Namibians in guiding initiatives
Along with the threat of cybercrime, risks attaching to for sustainable development. The contribution of my
prudence and the private sector regulatory compliance, including anti-money laundering fellow directors was considerable and I thank them
remediation, and overall technology stability were closely for sharing their wisdom and insight.
leads economic recovery through, monitored. The localisation of the core banking system
particularly, foreign direct at Nedbank Namibia, as required in a banking industry
determination, was embedded in information communication
investment as a game-changing technology ('ICT') practices. The technology team refreshed
the core hosting equipment for the Group, increasing
injection into the economy. processing speeds of most daily activities, optimising end
of day runs, disaster recovery capability, and catering for
Against this backdrop, our Group provided solid support additional business growth. The board was pleased to note
of the government’s goals and recognition of the private
Theo J Frank
the establishment of an ICT command centre, with 24/7
sector’s responsibility for contributing to growth. In addition year round shifts executing end of day processing and client
to support for corporate and business clients, including small support. With cybercrime rated as one of the top five risks
and medium enterprises, Nedbank Namibia’s Corporate and across the Group, the board also welcomed greater focus on
Investment Banking arm won mandates for multi-billion- system compliance through continuous monitoring, application
Chairperson
dollar property and manufacturing investments and provided of security standards, vulnerability management and user
finance for a range of commercial and production facilities. training and awareness.twenty eighteen integrated report / 22 twenty eighteen integrated report / 23 Return to
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Managing Director’s Review
The effect of ten
consecutive quarters of
negative growth, increased
Providing relevant, competition, rapid digital
and technological disruption
competitive and and a barrage of regulatory
changes and reforms failed
innovative solutions to contain the Group’s
continued growth in 2018.twenty eighteen integrated report / 24 twenty eighteen integrated report / 25 Return to
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Managing Director’s Review
What these conditions did achieve as consumers struggled A Private Wealth offering was successfully launched in Strategic risk management ensured increased vigilance on financial
through Namibia’s worst economic crisis since independence the second half of the year with a team of handpicked, crime management and cyber security, in addition to the compliance
was a postponement by three years for the Group’s 2020 experienced wealth relationship bankers. A strong pipeline responsibility and on anti-money laundering and global trade client
goals – N$500 million earnings; 20% transactional banking of business was built for the offering, covering banking, remediation. Cyber specialists who were added to the information
growth: 20% return on equity; 20% market share; 50% cost insurance, stockbroking, philanthropy and fiduciary services. communication technology team contribute to the operations of the
to income ratio. cyber security committee within the Banking Association of Namibia.
In bancassurance, a strong performance by the broker
Some of these goals were closer in view through the 2018 network was built on the introduction of new products and
performance. There was encouraging growth in transactional expanded distribution. That was despite the slowdown in the Outlook
banking and other segments; the cost-to-income ratio was economy and pressure on disposable income of consumers, Our strategic aims are to enhance customer service, effect process
improved; and the Group’s after tax profit increased by 12.03% many of whom focussed on the bare necessities of cover and improvement and automation, enhance digital channels, launch
– a rate of growth ahead of that of competitors. shopped for lower premiums. There was a high number of innovative product and service offerings, enable staff for better
policy lapses and an increase in retrenchment claims. performance, deliver appropriate management of the risk
environment that reflects its changing complexity, and to
Nedbank Namibia benefited from The effect of the surge in Nedloans business was reflected make a broader contribution to a sustainable Namibia.
at NedNamibia Life Assurance Company in a 29% increase
a process to optimise structures in premium income on cover for these products. Premium We recognize competition in a small market of banked
and ensure efficient allocation of income on overdraft and funeral policies also rose markedly. customers and the digital and technological war is
Performance was enhanced by a drop in the cost-to- intensifying across the financial services landscape as
resources. This helped drive the income ratio to 18% from 22% in 2017. clients demand ease of use, convenience, speed, efficient
and reliability at reduced cost. To satisfy these demands
focus of increasing the number Overall, Nedbank proved to be agile in the market and we will tilt faster towards digitising, on-boarding clients
increased its competitiveness. Good gains were noted and credit decisions. One step in this direction will be the
of accounts through aggressive in an annual study of market performance across client launch of an innovative money app later in 2019.
sales, better customer service, acquisition together with loyalty, particularly for the
entry level and middle market segments, and awareness. We foresee a still subdued but better environment, with
technological enablement, Sponsorship of various sporting events and sustainability prospects tempered by potential fall-out from regional
initiatives is a major contributor to awareness levels, a economic and political volatility. However, some green
enhanced products and lower costs. headline initiative being the Nedbank Desert Dash cycle shoots have emerged in the corporate banking arena
race which draws an increasing number of foreign entrants where we aim to grow transactional banking through
The Corporate and Investment Banking and Treasury and their supporters and injects some N$25 million into the a competitive internet offering and to provide innovative
franchise made its voice heard loudly in the market. It central region. lending solutions. These along with gains in retail and business
won mandates as lead arranger for Ongos Development banking, bancassurance, Private Wealth and Nedloans and
Company for the funding of the construction of 4 500 Among staff, Nedbank made excellent progress in its delivery a focus on resilience and sustainability, collaboration, automated
houses during phase I of the development and as equity on being a great place to work. While the findings on staff processes, technology investments and better client service hold
arranger for Noric Otavi Steel Manufacturing (Pty) Ltd perceptions are encouraging, there is still a need to foster an the promise of further advances in Group financial performance.
for the equity funding of the N$2.7bn Otavi steel plant. innovative culture and to counter the effects of the downturn
It secured approval of development finance of N$270m that are seen in people’s states of mind and concerns
for the construction of the Hangana fish processing about stress and fear of making mistakes. In addition, the Thanks
plant in Walvis Bay and additional finance of N$100m compliance and regulatory environment has an impact on This was a tough year and the efforts of our personnel in
for extensions and improvements to The Dunes Mall in staff and operations, shifting the focus away from growth responding to the challenges 2018 threw at the Group and in
Walvis Bay. Further deals totalling N$235m included initiatives to meeting deadlines and requirements. ensuring the support and loyalty of our clients were marvellous.
a development loan, working capital and facilities for Their efforts have provided further momentum on which we aim
property and manufacturing operations. Staff survey findings, apart from pointing to a need to capitalise in 2019. I am also grateful to the Board of Directors
for an innovative culture, indicated other areas for for their guidance and support throughout this testing year.
Retail and Business Banking, under new leadership, improvement were the client experience with staff,
renewed its focus on business and private banking performance, talent and succession management and
and leveraging physical and digital channels. Despite rewards. Accordingly, an innovation hub was established to
pressure on consumers and businesses gains were air and assess proposals, the staff recognition programme
recorded in asset based finance and home loans. was adapted to cater for all staff, and a training hub was
opened in the north of Namibia with one to follow at the
The Nedloans personal loans business, backed by coast. Programmes on the electronic Nedlearn system dealt
a holistic client engagement plan and advertising
Lionel J Matthews
with anti -money laundering and corruption awareness,
campaign, achieved record sales. It introduced a cyber security awareness, sanctions, compliance, ethics,
product enhancement for government employees, privacy, credit life products and retail products. As part
increasing the maximum loan to N$200 000 per client, of the leadership development programme, 13 staff
subject to affordability. The contribution to net interest members completed the annual management development
Managing Director
income and non-interest revenue from allied insurance programme run in conjunction with the Business School of
sales was notable. the University of Stellenbosch.twenty eighteen integrated report / 26 twenty eighteen integrated report / 27 Return to
contents
page
Chief Financial Officer's report
Statement of Comprehensive Income
Responding with
Interest income
Notwithstanding the lower than expected growth in loans and
advances, the bank’s net interest income improved by 8.16% to
agility to meet
N$808.9 million from N$747.9 million. The net margin rose from
3.99% to 4.06%. Liquidity levels continued to improve through
2018 after the shortage experienced in 2017. Investment of
excess funding in high quality liquid assets partially offset the
impact of slow growth in loans and advances.
every challenge Margin analysis
2018 10,21% 2015
3,98%
9,07%
4,06%
6,15% 5,09%
In keeping with the anaemic The overall 2018 growth projection was down 10,33%
8,51%
from 0.6% expected in the Bank of Namibia’s main 2017 2014 4,04%
economic performance of our
3,99%
4,47%
economic outlook in July – underlines the severity 6,34%
of the pressure on the economic environment. BoN
neighbouring and key trading said the downward revision in 2018 growth from
the July outlook was mainly reflected in tertiary 9,84%
partners, South Africa industries, as growth in sectors such as wholesale 4,02%
5,82% Funding costs
and retail trade, real estate and business services, 2016
Average margin
hotels and restaurants, government sectors and
and Angola, the Namibian taxes on products was going to be significantly
lower than anticipated earlier.
Yielding assets
economy remained weak for In the dismal circumstances, economic policy was
Impairments
yet another year in 2018. Real accommodating. The repo rate was held at 6.75%
and the prime rate was steady at 10.5%, a level it
Proactive risk management as well as active involvement
gross domestic product was
has maintained since mid-2017. Inflation continued
to slow from a peak of 8.2% in January 2017 and with clients to resolve distressed assets through regular
was pegged at 4.3% in 2018. arrear management initiatives and interventions helped to
expected to contract by 0.2% With disposable incomes under pressure and many
contain the impairment charge for the year at N$65.4 million,
a 7.83% increase from N$60.6 million in 2017. The credit loss
in 2018, after a contraction of consumers wary of taking on debt, the negative
impact of economic conditions was seen in muted
ratio was marginally worse at 0.53% compared to 0.52% for
2017. Significantly, in the consumer-facing business, there
0.9% in 2017. This is in contrast demand for home loans and vehicle financing. Against were no repossessions of fixed property, a pointer to the
the backdrop of a cautious approach to investment quality of business.
with the growth of between
by business and a further decline in private sector
credit extension, Nedbank’s gross loans and advances
increased by 3.92% to N$12.2 billion from N$11.8 billion Credit loss ratio 0,53%
5.1% and 6.4% for the six years in 2017. While this muted growth was seen across
the banking industry, Nedbank recorded strong 0,58%
from 2010 to 2015.
0,52%
gains in personal loans and more modest advances
in home loans and asset based finance at the
expense of competitors.
0,39%
2018
2017
2016
0,06%
2015
2014twenty eighteen integrated report / 28 twenty eighteen integrated report / 29 Return to
contents
page
Non-interest revenue With increased contributions from the main subsidiaries, Chief Risk Officer's report
Nedbank Namibia Limited and NedNamibia Life Assurance
The bank met the challenge of increasing non-interest revenue Company Limited, profit after taxation grew by 12.03% to
in 2018, boosting income through foreign exchange solutions N$ 340.0 million for the financial year (2017:N$303.5 million).
for clients contending with currency volatility around the US$ This growth translated to earnings per ordinary share
rate and opening 12 500 new accounts as clients responded of 481.86 cents, which represents a 12.10% increase from
to innovations on its technology platform and to new products 429.81 cents in 2017. Net asset value per share grew to
Entrenching a more
and services. Non-interest revenue was up by 9.99% to 3 702.82 cents (2017: 3 327.65 cents).
N$367.6 million from N$334.2 million in 2017.
Non-interest revenue to total income EPS over five years
flexible approach to
481,86%
31,4% 31,00% 429,81%
37,00%
32,30% 40,30% 426,42%
2018
2017
2016
2018
2017
2016
388,46%
347,70%
risk management
2015 2015
2014 2014
In a highly stressed It was another year of evolution; risk
management continued to move beyond
Operating expenses
Of the key ratios, the capital adequacy ratio grew to 17.99%
(2017:16.01%), ahead of the internal target range of 12%. The
environment characterised traditional risks such as credit, operational,
market, liquidity and capital risks to newer risks.
Management kept a sharp focus on expenses during the year, with
return on average equity after taxation was 13.78 % (2017:
13.33%) and the return on average total assets after taxation
by low levels of consumer These required us to be on high alert. The new
risks are:
particular attention on ensuring discretionary expenditure provided
real value. While investment in staff development, expansion of
was 1.86% (2017: 1.83%).
and business confidence, Client/competitor
risk – competition from
our evolving business and in technology and innovation platforms non-traditional sources.
continued apace, operating expenses were well controlled and rose economic contraction, and Change
– due to the unprecedented rate
by 6.31% to N$671 million from N$630 million in 2017. Operating Outlook and level of change, including climate risk,
expenses represented 57.71% of total income compared to
58.90% in 2017, a decrease that brought the targeted efficiency
Following the two years of contraction in 2017 and 2018, the
real gross domestic product is expected, according to the
rising levels of unemployment geopolitical risk and the fourth industrial
revolution where technology is changing all
ratio of 55% in 2020 in closer view. Bank of Namibia, to recover to a positive growth rate of 1.5% in
2019. Nonetheless, risks to domestic growth are seen in a weak
and inequality, the Group’s aspects of financial institutions, from client
expectations and new products and channels,
risk, internal control,
recovery in Namibia’s trading partners and a slow recovery to organisational structure and processes,
Total cost to income in international commodity prices, particularly for uranium. as well as staffing and skills requirements.
58,90%
Namibia’s exports may also be inhibited by international trade Cyber risk which is on the increase globally.
regulatory and balance
wars. The predicted slow growth environment will present its Conduct
and culture risk, moving beyond
57,71% 58,00% own challenges but the Group is well funded and set to meet compliance.
58,80% these challenges and to build on past years’ performances.
sheet profile as well as Criminality
which is becoming increasingly
sophisticated.
57,50%
2018 Appreciation risk outcomes across the
2017
business remained strong
Leveraging the momentum of past years in a weak economic
2016 environment while satisfying client and operational needs
2015 within strict budget parameters demanded great effort by
2014 colleagues across the Group. Their focus and collaborative spirit
in supporting our finance teams, along with the commitment of
in 2018.
our suppliers to efficient operations, is gratefully acknowledged.
Statement of financial position
The year marked the adoption from 1 January of IFRS 9, the JG Van Graan
conservative provisioning principles of International Financial
Reporting Standards. The impact on the annual results was
immaterial and at Group level, NedNamibia Holdings maintained
Chief Financial Officer
a strong financial position and showed better performance
compared to last year.twenty eighteen integrated report / 30 twenty eighteen integrated report / 31 Return to
contents
page
We responded to this constantly changing risk environment O
perational risks – A sound internal control structure The year ahead
by entrenching a much broader and more flexible approach ensured operational losses were well contained within risk Strategic risk management is a cornerstone of the
to the management of risk, going well beyond the terms appetite. We continued to invest in strengthening our people, Group’s business plan for 2019-2021. We will continue
of reference prescribed by regulators. With input from all systems, policies, processes and related controls to ensure to transform to a risk management anchor that
business units and taking into account input and feedback they are robust and that sufficient measures are in place reflects the changing complexity of the environment.
from all our stakeholders, we assessed a wide range of to minimize the impact and recover swiftly from any major Investment in local skills and leveraging capabilities of
areas with potential impact on our earnings sustainability incidents affecting particularly information technology and the wider Nedbank Group and our colleagues within
and ability to create value for all our stakeholders. Issues systems availability. the Rest of Africa centre and subsidiaries are critical
identified for emphasis and prioritising focus and resources Credit
risk – Our credit portfolio and key credit metrics in this ongoing transformation. Allied to our strategic
ranged across financial, environmental, social, strategic, remained resilient, thanks to strong credit risk management, approach to business and risk management is setting
competitive, legislative, reputational and regulatory watch list management and provisioning. The IFRS 9 of an appropriate risk appetite that supports a
matters (including policy and political matters). We distilled programme of forward looking provisioning principles sustainable business.
these into a top 10, entrenching the view that leveraging of the International Financial Reporting Standards was
risk management and governance in an ever changing successfully implemented.
regulatory and socio-economic landscape is a strategic M
arket risk – In the prevailing volatile, uncertain and complex
imperative. The top 10 risks are: environment, market risk and its components were well
B
usiness risk – Namibian macroeconomic environment
managed with favourable outcomes and within risk limits.
B
alance sheet risk – Sound management of the balance sheet
Annette Stafford-Evans
and geopolitical risks. Through our proactive practices, in 2018 positively positioned the Group for 2019-2021, with
we sought to understand and prepare for the impact of capital and liquidity ratios further strengthened. Acting Chief
these risks on our business, particularly for any sovereign-
credit-rating downgrades or negative impacts from Risk Officer
neighbouring economies. As we shed a historical monitoring
Strategic
and execution risks – associated with the levels
of change in the organisation. We placed a strong focus
role and play an enhanced strategic
on execution risk and tactical operational interventions to and advisory role, enabling
enable delivery of our growth strategy.
Cyber
risk and threats – heightened by the digital differentiation from competitors
revolution in line with global trends. The escalation of cyber
risk led us to isolate it from the range of financial crime and smarter business balanced by
risks and drive the Group to being cyber resilient from
cyber secure. appropriate governance and risk
R
eputational risk – We continued to assess potential
consequence of any incidents occurring across the
tolerance, we adjusted risk strategy
operational landscape through close monitoring in business with a two-pronged approach to
units and feedback to senior management and the board.
We conveyed our stance of zero tolerance on corruption digitisation in risk management,
and criminal activity in staff and stakeholder engagements.
R
egulatory and compliance risks – The regulatory change compliance and internal audit
agenda continued unabated in 2018, with new and amended
regulation dominating time, resources and budget. The
management processes. This was
Group made significant progress in initiated projects. to ensure, firstly, smoother and
C
onduct and culture risks – Given growing consumerism
and the extent of consumer protection laws, the Group more efficient experiences for
rated these as top risks, beyond mere compliance
requirements, and renewed efforts to hold itself and clients and secondly, more agile,
stakeholders to high ethical standards.
intelligence driven outputs.twenty eighteen integrated report / 32 twenty eighteen integrated report / 33 Return to
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page
Sustainability report
A commitment to
bettering the lives
of all Namibianstwenty eighteen integrated report / 34 twenty eighteen integrated report / 35 Return to
contents
page
Sustainability report
Delivering sustainably
The building will showcase To derive as much benefit from the overabundance of
sunlight, the design counters the urban heat island effect
innovative water saving strategies, on the roof by shading it with a solar panel roof structure.
At all times, the energy, waste and water performance will
with the harvesting of rainwater
to all our stakeholders
be displayed to occupants and visitors to foster awareness.
and grey water recycling. A sky The construction steel will consist of 90% recycled metal
garden populated with endemic and 70% of the soil excavated at the site, will be re-used
on other projects rather than being diverted to a landfill.
and drought resistant plants will
To minimize greenhouse gas emissions, the design will
As a diversified financial services provider, the Group add a natural aesthetic to the incorporate a metering system, which will monitor and
control the effective use of energy.
interior. Discomfort to occupants
is committed to making a continued and broader from sunlight is being tackled With an eye to the future and the hope that staff and
contribution to a sustainable Namibia. In recognition of
visitors will ditch their cars in favour of more environmentally
through the use of solar shading. conscious transport options, the headquarters will host a
cycling facility.
this strategic aim and the important role the Group plays What is spent on solar shading will
To meet a five-star “green” rating requirement, building
in the economy, our initiatives to deliver value target our be offset by the amount of energy maintenance staff and occupants will be fully trained on how
to manage and maintain the building. For 12 months after
that would otherwise be required
staff, clients, shareholders, regulators and society. to achieve thermal comfort.
occupation, the professional team and contractors will fine-
tune all systems to ensure they perform as per the design.
The new headquarters of Nedbank Namibia, now under the new HQ addresses the need to design, construct and
construction in Windhoek, is a major job-creating investment operate buildings that are energy and resource efficient and
Developing our staff
in the economy that demonstrates this commitment. A five-star environmentally responsible. It also will provide an environment
Green Building Council rating will be sought for the project, key which allows staff to be part of a sustainable future. We have
considerations being the creation of a great place to work and begun a three year programme to prepare staff and introduce
to bank and invest. With buildings consuming 40% of the world’s sustainability practices into existing buildings, a pilot being a
energy, 25% of fresh water and generating 40% of waste landfill, waste management and recycling campaign.
Our people, leadership and culture
Nedbank Namibia’s new headquarters will stand at Freedom Plaza
in the heart of the Windhoek Central Business District.
are drivers of value, and a key
focus in 2018 was on remuneration
alignment and optimising structures
to enhance transformation and
digital capability and efficiently
allocate resources.
We compared our salary scales against the market, changed
the process for recognition, rewards and long service awards Fifth from right, Silke van der Merwe (Nedbank Chief Operating
to cater for all staff, and appointed a dedicated change Officer) stands with the Nedbank MDP 2018 Graduates.
manager to help drive development of our people and their
skills. An annual study of in-market performance showed The
graduation of 13 managers on our management
excellent progress in staff rating of Nedbank as being a development programme run in conjunction with the
great place to work. Other achievements included: University of Stellenbosch. The programme is the flagship
of our drive to equip staff and supervisory, middle and
Staff
training spend amounts to N$2.4 million. senior managers with the knowledge, leadership and change
Developing
a second training hub at the coast to complement management skills to function effectively in a demanding
the one functioning in the north of Namibia. We enhanced our environment. We finalised plans to introduce mentors for
e-learning system, Nedlearn, so staff can take advantage of future leaders as a means to developing a solid senior
the autonomy to learn at their own convenience and pace. management and executive committee group.twenty eighteen integrated report / 36 twenty eighteen integrated report / 37 Return to
contents
page
Delivering value to
As
part of Nedbank’s employee engagement An
increase in female staff representation to 65.6%.
programme, Lionel Matthews, Managing Director of An
increase in staff remuneration, including benefits, of
Nedbank Namibia, participated in a nation-wide road 5.5% to N$351.1 million, underpinned by an average salary
show during March 2018. Mike Brown, Group Managing increase of 7%. We ran sessions for staff on acquiring
our clients
Director of Nedbank, visited Windhoek on 22 August 2018. homes at a special staff rate.
Sessions with the managing directors allowed employees
to freely ask questions and have informal discussions in a In 2018, specific employee
relaxed environment. engagements included:
The
establishment of an innovation hub, supports Results
presentations and briefings on the managed
our aim of creating a high performance culture, which separation of the Nedbank Group from its parent,
encourages innovation and contribution on various levels.
An
Old Mutual plc. We supported our clients by safeguarding their deposits in 2018 of
85% participation rate in a survey of staff to determine Staff
surveys to assess the state of the culture of our
our culture. Results pointed to a need to move from a organisation and staff attitudes. N$16.2 billion, and provided credit which saw our total loans and advances
hierarchical culture to a market-oriented, innovative culture. Regular
electronic and printed newsletters.
An action plan to achieve this is part of 2019 strategy. Staff
recognition functions with awards for top achievers. reach N$12.2 billion in helping them to grow their businesses and finance
their homes, vehicles and education.
Engaging with our staff is central to our understanding and
responding to their needs and concerns, and improving their working Our strategies to deliver great client experiences through We partnered with the Lionesses of Africa Organisation, a
environment experience. Regular communication also takes place simpler, convenient and efficient service and innovative, network of 730 000 women business owners in all 54 African
competitively priced products were recognised in an annual countries, to host a women’s entrepreneurs networking event
to provide staff with strategic direction and to keep them informed study of market performance. This saw Nedbank rated for in Windhoek. It enabled delegates to establish relationships
best in class financial expertise and also ahead of competitors with peers in various sectors. It also provided a platform for us
about group activities. for client loyalty. The study also noted good client gains, to explain the Nedbank service offering to small and medium
particularly for the entry level and idle market segments. enterprises, including access to a reliable mentor, business
skills training and a designated relationship banker, and so
We improved our clients’ access to banking through more empower entrepreneurs to promote sustainable change in
efficient and cost-effective channels and increased our their communities.
transactional accounts by 5.5%. Online applications for
transactional accounts and improved functionality of our In a difficult economy, we countered factors influencing
mobile banking platform brought convenience to clients affordability by advising home loans clients about the possibility
to help them bank whenever, wherever they want. of paying loans over longer periods and incorporating a
broader, more affordable range of second hand vehicles in
We launched a Private Wealth offering covering banking, our vehicle loan offering. We introduced a Nedloans product
insurance, stock broking, philanthropy and fiduciary services enhancement for government employees, increasing the
with a team of handpicked, experienced wealth relationship maximum loan to N$200 000 per client, subject to affordability.
bankers. We introduced new products and services in Nedloans also became involved in delivering a village home
bancassurance and wealth management and extended solution to civil servants living in unproclaimed areas who are
the reach of existing products. not benefitting from the government housing scheme.
Managing Director, Lionel Matthews (front centre), with the From l to r: Nangula Shejavali, Sandra Mwiihangele, Britt du Plessis
Karl-Stefan Altmann, Executive: Corporate & Investment Banking and Treasury, (centre) pictured with Nedbank Namibia’s Top 4 achievers Nedbank Private Wealth team. Back l to r: Aubrey Hardine, (Head: Business Banking), Melanie Hawken and Melissa Mukaiwa.
(l to r) Shirlene Brits, Rozias Muzimbwa, Gracia Adams and Christo Kruger. Elaine Schlechter, Charlotte Strauss and Ralph van Wyk.
Front l to r: Chantelle Hardine and Cornell Meeks.You can also read
