UNITED NATIONS GLOBAL COMPACT - COMMUNICATION OF PROGRESS FOR THE YEAR ENDED 31 DECEMBER 2019 - AWS

 
UNITED NATIONS GLOBAL COMPACT - COMMUNICATION OF PROGRESS FOR THE YEAR ENDED 31 DECEMBER 2019 - AWS
UNITED NATIONS GLOBAL COMPACT         UNGC
COMMUNICATION OF PROGRESS
FOR THE YEAR ENDED 31 DECEMBER 2019
UNITED NATIONS GLOBAL COMPACT - COMMUNICATION OF PROGRESS FOR THE YEAR ENDED 31 DECEMBER 2019 - AWS
CONTENTS

    1   LETTER FROM OUR CHIEF EXECUTIVE

  2     NEDBANK GROUP AT A GLANCE

  4     REFLECTIONS FROM OUR CHAIRMAN

  6     OUR VALUE-CREATING BUSINESS MODEL

  8     OUR PURPOSE, VISION, BRAND AND VALUES

 10     REFLECTIONS FROM OUR CHIEF EXECUTIVE

 14     RESPONSE TO COVID-19

 17RISK AND OPPORTUNITIES IN
		 OUR OPERATING ENVIRONMENT

27      OUR STRATEGIC FOCUS AREAS AND ENABLERS

40      RECOGNITION AND RATINGS

 41     VALUE FOR STAKEHOLDERS

55      TEN-YEAR REVIEW

63 GLOBAL REPORTING INITIATIVE
		 STANDARDS INDEX

IBC     CONTACT DETAILS
UNITED NATIONS GLOBAL COMPACT - COMMUNICATION OF PROGRESS FOR THE YEAR ENDED 31 DECEMBER 2019 - AWS
LETTER FROM OUR
CHIEF EXECUTIVE

NEDBANK GROUP – CONTINUED COMMITMENT
TO THE UNITED NATIONS GLOBAL COMPACT
As Chief Executive of Nedbank Group, I reaffirm our commitment to the United
Nations Global Compact and the 10 principles that underpin it. In addition, as
a Group, we remain a signatory to the Equator Principles and the CEO Water
Mandate and we continue to support the UNEP FI Positive Impact Working Group.

These commitments, along with deliberate focus on the Sustainable Development
Goals (SDGs), form an important part of our overall strategy as we align our core
business to deliver on our purpose – to use our financial expertise for the good of
individuals, families, businesses and society.

The SDGs represent a powerful lens to identify opportunities for business
innovation and growth, and they define the ‘good’ in our purpose. As such, in 2019
we continued to reorient our strategic approach to focus on the most material
SDG targets through our three main points of leverage – Products and Services:
Sustainable Development Finance, Operations and Corporate Social Investment.

In recent weeks we have seen the increasing impact of Covid-19 on individuals,
families, businesses, societies and countries as infection rates escalate around
the world and here in SA. In response to this, governments everywhere are
implementing emergency lockdown measures to curb the spread of the virus and
these in turn are having enormous impacts on economic activity. The duration and
impact of these interventions are not possible to forecast accurately.

I would like to assure stakeholders that we are working tirelessly to ensure that
we are able to deal with this escalating challenge. While our number-one focus is
on the health and safety of our staff as we continue to serve our clients given that
banking is an essential service, we have pivoted our strategy to increase focus
on managing liquidity, capital, market and credit risk alongside ongoing scenario
modelling and stress testing.

We are proud to support the work undertaken by the UNGC, cognisant of the
important role that the private sector plays in this.

Yours sincerely

Mike Brown
Chief Executive Officer

31 March 2020

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UNITED NATIONS GLOBAL COMPACT - COMMUNICATION OF PROGRESS FOR THE YEAR ENDED 31 DECEMBER 2019 - AWS
NEDBANK
GROUP
AT A GLANCE
OVERVIEW OF
NEDBANK GROUP
Nedbank Group is one of the largest financial
services groups in Africa, offering wholesale and
retail banking services as well as insurance, asset
management and wealth management. In SA
we have a strong franchise evidenced by a 19%                             TOTAL                      HEADLINE                   CET1
deposit and 19% advances market share.                                    ASSETS                     EARNINGS                 CAPITAL
                                                                                                                               RATIO
Outside SA we operate in five countries in SADC,                  R1,1 trillion R12,5bn
through subsidiaries and banks in Lesotho,                                                                                     11,5%
Mozambique, Namibia, eSwatini (Swaziland) and
Zimbabwe (during 2019 we sold our operations
in Malawi). In Central and West Africa we have
                                                                  BANKING ADVANCES                       DEPOSITS
a strategic alliance with Ecobank Transnational                   (Rbn)                                  (Rbn)
Incorporated (ETI) and we have representative
offices in Angola and Kenya.
Outside Africa we have a presence in key global
financial centres to provide international financial
services for Africa-based multinational and high-
net-worth clients, in Guernsey, Isle of Man, Jersey

                                                                                                                                      904
                                                                    648

                                                                                               764
                                                                                 679

                                                                                                                                826
                                                                          672

                                                                                                          726

                                                                                                                 762

                                                                                                                        772
                                                                                         713

and London, and we have a representative office
in Dubai.                                                          2015   2016   2017    2018 2019       2015    2016   2017   2018 2019

  WHAT DIFFERENTIATES NEDBANK?
     We are a purpose-led business,                   Good                              Experienced              Selective origination
     underpinned by a unique corporate                governance and                    management               and sound risk
     culture and progress towards being               ESG leadership                    teams                    management
     more client-centred and innovative

     Leadership positions in renewable-energy           Prudent management of                        Strong position as a bank that
     finance, corporate and commercial-                 our expenses over time and                   is committed to doing business
     property lending, small business services,         continuing to lower our cost-                in a manner that positively
     retail vehicle finance, card acquiring,            to-income ratio through cost                 builds society at large
     digital client value propositions, asset           optimisation initiatives
     management and wealth management

     Technology strategies and innovations              Top-tier ESG rankings                        Improving and, in many cases,
     that position Nedbank to be more                   and practices                                leading client satisfaction
     digital, agile and competitive                                                                  metrics

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UNITED NATIONS GLOBAL COMPACT - COMMUNICATION OF PROGRESS FOR THE YEAR ENDED 31 DECEMBER 2019 - AWS
MARKET                                  CLIENTS                  EMPLOYEES                 TOP-TIER CLIENT                            MARKET-
CAPITALISATION                                                                                 SATISFACTION                              LEADING
                                           7,8m                      29 403                     AND LEAGUE                                DIGITAL
  R107bn                                                                                      TABLE RANKINGS                           INNOVATIONS

 ASSETS UNDER
 MANAGEMENT                                       Level 1                     MSCI
                                                                               ESG
                                                                                                 CARBON-
                                                                                                 NEUTRAL
                                                                                                                                      DOW JONES
                                                                                                                                    SUSTAINABILITY
 (Rbn)
                                                  BBBEE                      RATING:            OPERATIONS                            EMERGING
                                               CONTRIBUTOR
                                                 STATUS
                                                                                 AA           AND EFFECTIVELY
                                                                                                 NET-ZERO
                                                                                                                                    MARKETS INDEX
                                                                                                                                      INCLUSION
                                                                                               OPERATIONAL                            SINCE 2004
                                                                                               WATER USAGE
            273

                           297
  257

                                   331
                   312

  2015     2016    2017   2018 2019
                                                                                                                        Information as at 31 December 2019

    A wholesale-biased business model                               Access to the largest banking                     Well positioned to benefit
    positions us well to benefit from an                            network in Africa through our                     from a recovery in SA
    increase in business confidence and                             own operations in SADC and                        economic growth
    economic growth                                                 our strategic alliance with ETI
                                                                    in 39 countries                                   ASSETS BY GEOGRAPHICAL
                                                                                                                      AREA
    WHOLESALE VERSUS RETAIL                                                                                           (%)
    ADVANCES
    (%)                                                                                                                          7 3

         36,5                                                                                                                    R1 143bn
                  R797bn
                            63,5                                                                                                         90
                                                                      Ecobank presence
                                                                      Nedbank presence
                                                                                                                            South Africa         International
                                                                      Ecobank and
          Retail             Wholesale                                Nedbank presence                                      The rest of Africa

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UNITED NATIONS GLOBAL COMPACT - COMMUNICATION OF PROGRESS FOR THE YEAR ENDED 31 DECEMBER 2019 - AWS
BEING
POSITIONED
FOR VALUE
CREATION
REFLECTIONS FROM
OUR CHAIRMAN
     As a trusted brand with a growing footprint in Africa and innovative
     new products and services, Nedbank is well positioned to build on the
     positive and sustainable impact it has already made. The social and
     economic impact of Covid-19 is unlike anything we have seen before.
     Global markets and equities have come under pressure and in SA
     we have had the dual impact of the lockdown as well as the ratings
     downgrades. We are more focused than ever on remaining future
     fit in fulfilling our role to our clients, our staff, shareholders
     and broader society.
     Vassi Naidoo, Chairman

In a difficult environment, the beginning of a new year always brings           It comes as no surprise that company profits and household finances
with it a sense of renewed hopefulness and optimism that things will be         deteriorated during the year. In particular, the increase in impairments
better in the year ahead. In 2018, Cyril Ramaphosa became President             off a low base had a negative impact on Nedbank’s headline earnings
and expectations of a better year for South Africa in 2019 surged. We           in 2019.
had great expectations that the right medication (no matter how bitter)
                                                                                Given the challenging macroeconomic environment, we will, as always,
would be administered to fix a nation reeling from the impacts of state
                                                                                continue to look for innovative ways to assist our clients to weather the
capture. It was not to be in 2019.
                                                                                storm and deliver great client experiences to ensure their loyalty and
The factors largely responsible for much of SA’s economic woes are not          our continued license to operate.
new and have remained mostly unaddressed for more than a decade and
as a result economic growth has continued to trend downwards.                   50 YEARS ON THE JSE
This ‘slow squeeze’ in economic growth and sagging tax revenues, has in         Nedbank celebrated its 50th year as a listed company on the
large part been attributed to the lack of progress on the much-needed           Johannesburg Stock Exchange in 2019. There is a certain amount of
structural reform, compounded by the rapid growth in the public sector          agility that has helped us navigate both the headwinds and tailwinds
wage bill, increased government spending commitments and the erosive            over the past 50 years and speaks to our sustainable business
impact of wasteful and corrupt spending over the past decade. More              practices, and improved risk management and overall governance over
recently, the perilous financial and operational state of most major SOEs       the years.
has compounded the strain on government’s finances. The unreliable and          Notwithstanding the challenges outlined above, the SA we operate in
increasingly expensive electricity supply has come at a huge economic           today is far removed and a much better place to do business than it was
cost.                                                                           50 years ago. The market is larger and more inclusive. I believe Nedbank
Regulatory, legislative and policy uncertainties continued to weigh on          has the potential to bring significant tangible value to SA’s future
business and investor confidence. While government has promised                 through its experience and expertise and its strong desire to partner
to bring clarity, progress has been frustratingly slow and patchy.              with government, labour and civil society in realising the vision and goals,
Uncertainties persist and disputes continue around land reform, National        set out in our country’s Constitution and the National Development Plan.
Health Insurance, the mining charter, the new competition policy, further
rounds of debt relief as well as proposed legislation on intellectual
                                                                                A TRANSITIONING SKILLSET AND
property rights.                                                                WORKFORCE
The controversial and damaging visa regulations for adults travelling           New technologies are impacting customer behaviours and how they
with children were finally scrapped. President Ramaphosa hosted the             consume banking services. A constantly learning workforce that is
second annual SA Investment Conference, promising to cut red tape               adaptable to these changes is a key competitive advantage and
and reduce the cost of doing business. More investment commitments              reskilling is therefore a strategic imperative for us to remain relevant.
were made by private firms. The Minister of Energy finally released the         This has meant that many roles continue to be impacted by digitisation.
long-awaited Integrated Resource Plan that envisions a greater role for         As a result, 2019 required of us to step up our efforts of reskilling and
renewable energy and independent power producers although traditional           redeployment, to ensure that redundancies and retrenchments were
coal-fired power and Eskom are still expected to play a dominant role.          done responsibly and staying true to our commitment to only retrench
                                                                                as the last resort.
SA managed to stave off a sovereign-risk-rating downgrade by Moody’s
in 2019. However, SA was subsequently downgraded in March 2020 by               In 2018, the President called on business to play an active role in the fight
both Moody’s and Fitch, retaining a negative outlook given the ongoing          against poverty, unemployment and inequality to help build an inclusive,
risks, particularly in the light of the Covid-19 pandemic.                      growing and transforming economy for the benefit of all South Africans.

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UNITED NATIONS GLOBAL COMPACT - COMMUNICATION OF PROGRESS FOR THE YEAR ENDED 31 DECEMBER 2019 - AWS
Given the challenges facing SA, we know this        meaning particularly as the rate at which         most impacted, banking regulators have begun
requires collaboration from all sectors of          some jobs may become obsolete or irrelevant       to introduce capital and liquidity relief measures.
society – and at scale; it cannot be business       due to new technologies is rapidly increasing.
                                                                                                      For SA, this will be another blow to an already
as usual.
The work being done by the YES initiative
                                                    RESHAPING FINANCE                                 stagnant economy. There is no doubt that
                                                                                                      turbulent times lie ahead and we will all have to
is very important and significant in creating       At the World Economic Forum in January            adjust to the new normal post the pandemic.
sustainable work opportunities for unemployed       2020, BlackRock, the world’s largest asset
youth.                                              manager and one of our shareholders,              APPRECIATION
                                                    noted that climate change would lead
We have embraced our role as change agents                                                            Thank you to our 29 403 employees who remain
                                                    to a ‘fundamental reshaping of finance’.
and active contributors to building a thriving                                                        committed to living our purpose and serving
                                                    Nedbank endorses the objectives of the
society and are extremely proud to have                                                               our 7,8 million clients. Your work goes beyond
                                                    United Nations Framework Convention
welcomed 3 315 recruits to Nedbank and our                                                            our lending and transactional activities and I
                                                    on Climate Change (UNFCCC) and of the
implementation partners in May 2019. From                                                             am proud to be associated with you. During the
                                                    Paris Agreement to prevent dangerous
being one of the first to sign the CEO initiative                                                     lockdown period, as a consequence of Covid-19,
                                                    anthropogenic interference with the climate
and making the biggest commitment to YES,                                                             you have further shown your dedication and
                                                    system by limiting the global average surface
we understand the need to partner with our                                                            tenacity by enabling us to continue to serve
                                                    temperature rise to well below 2˚C versus
social partners to accelerate economic growth.                                                        our clients and the broader societies through
                                                    the long-term preindustrial level. As part of
                                                                                                      a complex and difficult time – I am deeply
                                                    our journey as a purpose-led business, we
LEADING WITH                                        are committed to playing a leading role in
                                                                                                      grateful.

INTEGRITY AND                                       addressing climate change in ways that are        Thank you to our Chief Executive, Mike Brown,
                                                                                                      and the executive team for their leadership
EMPATHY                                             sensitive to the local socioeconomic context
                                                    and climate vulnerability.                        and skilfully steering the ship in stormy waters.
The risk and corporate governance landscape                                                           The team quickly pivoted to manage the crisis
is changing rapidly. Corporate conduct              Nedbank’s climate change journey continues
                                                                                                      brought on by Covid-19 and I am confident in
continues to come under scrutiny. Evolving          to mature through the development of our
                                                                                                      the leadership team’s ability to successfully
governance and controls for automation, big         policy regarding the financing of thermal-
                                                                                                      navigate us through this extraordinary time.
data and digitisation have introduced new           coal mining and related activities. As part of
                                                    this ongoing and maturing journey, we will        Thank you to my fellow Nedbank
questions to a board attempting to steer
                                                    continue to engage with clients, shareholders,    boardmembers for their support and a special
a ship in uncertain waters. The Nedbank
                                                    governments, relevant non-government              word of appreciation to Joel Netshitenzhe. His
board continues to adapt to this changing
                                                    organisations and thought-leaders so as           wisdom, guidance, intellect and experience
environment. What remains important,
                                                    to ensure we continue to play an important        will be missed during our board deliberations.
however, when presented with these new risks,
                                                    role in leading the energy transition through     In addition, thank you to Peter Moyo for his
from cyberrisk to contemplating regulatory
                                                    innovative solutions and appropriate              contribution and involvement with the group
change from emerging technologies, is that
                                                    financial choices. Our governance has been        since his appointment in 2018 in terms of the
Nedbank remains guided by our values. Our
                                                    further bolstered by the establishment            relationship agreement between Old Mutual
responsibilities and our commitment to our
                                                    of a new Climate Risk Leadership Group.           Limited and Nedbank Group.
purpose will not change.
                                                    This formal governance committee, under           In Charles Dickens’ novel Great Expectations,
In response to the recent dramatic changes in       the chairmanship of the Nedbank Chief             the author was persuaded to write a happier
the macro environment and the impact of the         Risk Officer, guides Nedbank with regard          ending to the book after the original ending
Covid-19 pandemic, the board of directors has       to the process of measuring, assessing            was deemed too sad. Our country is at a
unanimously agreed to a zero percent increase       and disclosing its financial exposure to          turning point and skilful, economic leadership is
in non-executive directors’ fees for the period     climate-related risks. This committee is          needed. Implementing some of the good plans
1 July 2020 to 30 June 2021.                        also supported by a Climate Task Team             mentioned in the 2020 State of the Nation
Ongoing vigilance is required to ensure that        that assists with the operationalisation of       address combined with some conviction in
the public trust that has been established over     strategic climate-change-related decisions.       getting the nation’s finances in order could see
our long history – through sound governance         In 2019 we signed up to be part of the UNEP       a dramatic turn in investor confidence toward
and good conduct – is secure.                       FI Task Force for Climate-related Financial       SA and hopefully we can write a new ending to
                                                    Disclosures working group, which will enable      this story.
DIGITAL DISRUPTION                                  us to learn from others in the sector as well
                                                    as participate in the development of tools        From a Nedbank perspective we are preparing
Digital disruption is the new normal. The digital
                                                    to assess the physical and transitional risk      to be future-fit. As a trusted brand with a
banking race has begun as a sprint, but it is
                                                    that climate change poses for banks. We           growing footprint in Africa and innovative
going to be a marathon, and we continue with
                                                    commit to report on Nedbank’s approach            new products and services, I believe Nedbank
our investments in this area. I am mindful that
                                                    to measuring, disclosing and assessing our        is well positioned to build on the positive and
the winners have not emerged yet, despite
                                                    exposure to climate-related risks.                sustainable impact it has already made. We
what many may infer.
                                                                                                      look forward to continuing delivering on our
The Fourth Industrial Revolution presents as        I am pleased that Nedbank has once again          purpose to use our financial expertise to
many challenges as it does opportunities.           achieved a level 1 BBBEE contributor status       do good for individuals, families, businesses
Today we have digital capabilities that have        for the full year 2019 under the Amended          and society. In the challenging economic
the power to transform experiences; improve         Financial Sector Code in South Africa. We         environment of 2020 we are committed to
connectivity and knowledge sharing between          have always seen transformation as one            support and work alongside our clients and
humans; creating access; improving lives and        of the key strategic focus areas for our          staff alike in what is likely to be a long road to
indeed customer outcomes.                           business and this achievement demonstrates        recovery post the pandemic. I would also like
                                                    our ongoing commitment to sustainable             to assure our shareholders, that while we won’t
I would like to take this opportunity to welcome    transformation.                                   escape the market impact that has plagued the
Professor Tshilidzi Marwala to the Nedbank
board, who brings extensive knowledge and           A NEW NORMAL                                      sector, the board together with management,
                                                                                                      are working tirelessly to manage through
experience in these specific digital capabilities   At the time of concluding this note, the          this difficult period and continue to build a
and insights.                                       Covid-19 pandemic had reached our shores          sustainable bank.
The Nedbank board has spent a lot of time           and all indications point to a global human and
on Nedbank’s strategic response to this             economic catastrophe.
changing environment from a culture, staff
                                                    Economists and analysts worldwide are
and client point of view. We recognise that the                                                       Vassi Naidoo
                                                    predicting a global recession for 2020.
challenge of the digital talent gap is no longer                                                      Chairman
                                                    Central banks have already started
just an organisational issue; it is a nationwide    introducing fiscal and monetary actions, and
challenge. The result is that talent acquisition,   with the banking sector likely to be one of the
training and upskilling will take on a whole new

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UNITED NATIONS GLOBAL COMPACT - COMMUNICATION OF PROGRESS FOR THE YEAR ENDED 31 DECEMBER 2019 - AWS
OUR VALUE-CREATING BUSINESS MODEL
Key drivers of change in our business model                                                                                                                THE MACROECONOMIC
                                                                                                                                                              ENVIRONMENT
                                                                                                                                                          Managing through a difficult SA
                                                                                                                                                          environment and investing in the
       For a discussion of our material matters refer to pages 35 to 44 in our 2019 Integrated Report.                                                     rest of Africa for the long term

                                                  O UR C APITAL S . . .                                                            . . . E NAB L E VALU E - ADD IN G

INPUTS
Financial
• Equity of R98bn (2018: R91bn)                                                                                                                                                            EAS
                                                                                                                                                                                       S AR
• Strong CET1 capital ratio: 11,5%, well above minimum regulatory requirement of 7,5%                                                                                    C           U
• Banking advances of R764bn (2018: R713bn)                                                                                                                         C FO
                                                                                                                                                                  GI       New loan payouts
                                                                                                                                                                TE
                                                                                                                                                                              ▲ 15%
• Deposits of R904bn (2018: R826bn)
                                                                                                                                                              RA
                                                                                                                                                            ST                               to R208bn
Intellectual  

                                                                                                                                                     R
                                                                                                                                                    U
• Tenth-most valuable SA brand (2018: ninth) and fourth-most valuable SA banking

                                                                                                                                                    O
  brand (2018: fifth)
                                                                                                                                                                                                       CREDIT
• Market-leading IT capabilities (Managed Evolution and Digital Fast Lane)

                                                                                                                                                       S
                                                                                                                                                                                             EXTENSION

                                                                                                                                                    UT
• A leader in renewable-energy finance, corporate and commercial-property lending,                                                                                                  Extend credit through
  small business services, retail vehicle finance, card acquiring, digital client value                                                                                               responsible lending

                                                                                                                                                TP
  propositions, asset management and wealth management
                                                                                                                         De
                                                                                                                           live                                                 practices (eg mortgages,
                                                                                                                                                                             credit cards, vehicle finance,

                                                                                                                                              OU
                                                                                                                                ri

                                                                                                                                                                                 overdrafts, and personal
                                                                                          ng

Human                                                                                                                                                                                 and business loans)
                                                                                             in

                                                                                                                                                                                                                          ES
                                                                                               nova

• A total of 29 403 employees (2018: 31 277), embracing a culture that is:
  »» client-driven and people-centred;                                                                                                                                                                                  TI

                                                                                                                                                                                                             I
                                                                                                   tive, m

                                                                                                                                                                                                            V
                                                                                                                                                                                                         TI
  »» increasingly innovative and competitive; and

                                                                                                                                                                                                              AC
  »» strong in compliance and governance
                                                                                                                                                                                ASSET
                                                                                                          arket-leading client expe

                                                                                                                                                                                                                              E
                                                                                                                                                                                                      USINESS
• Reward structures linked to performance and value drivers                                                               Assets under

                                                                                                                                                                                                                        URPOS
                                                                                                                                                                        AND WEALTH
• R760m invested in employee training, including upskilling employees for                                                 management                                   MANAGEMENT
  digital transformation (2018: R468m)
                                                                                                                                     ▲ 11,4%                          Provide solutions

                                                                                                                                                                                                                      RP
• Experienced and diverse executive team and a strong board                                                                                                                to manage,
                                                                                                                                 to R331bn

                                                                                                                                                                                                 RY B
                                                                                                                                                                           protect and
• A transformed workforce

                                                                                                                                                                                                                   OU
                                                                                                                                                                          grow wealth  

                                                                                                                                                                                                         MA
                                                                                                                                                                                                       RI          P
Manufactured                                                                                                                                                                                                            R
                                                                                                                                   rienc

                                                                                                                                                                                                                            OU
• 117 core IT systems (2018: 119), which are being modernised as
  part of our technology journey
                                                                                                                                        es

• R9,6bn invested in our technology platform since 2010 (2018: R7,4bn)
• 692 outlets (covering more than 84% of the population in SA), 4 398 ATMs and                                                                                                         TRANSACTIONAL
                                                                                                                                 Gro

  101 000 point-of-sale devices (2018: 800, 4 462 and 96 000 respectively)                                                                                                            Facilitate payments
                                                                                                                                                                                        and transactions
                                                                                                                                    wi

• Market-leading digital products, services and client value propositions
                                                                                                                                      ng
                                                                                                                                             ou
                                                                                                                                               rt

Social and relationship
                                                                                                                                               ra

                                                                                                                                                                              22,9bn
                                                                                                                                                 ns

• 7,8 million total clients (2018: 7,9 million)
                                                                                                                                                                            transactions
                                                                                                                                                   ac

• Embracing sustainable development financing to meet the SDGs as well
                                                                                                                                                    iot

                                                                                                                                                          l-                 processed
                                                                                                                                                      na

  as responsible ESG practices                                                                                                                              ba
• One of SA’s most transformed banks                                                                                                                          nk
                                                                                                                                                                 i   ng
                                                                                                                                                                             ▲ 3,8%
• Solid relationships across all stakeholders                                                                                                                             fra
                                                                                                                                                                             nc
                                                                                                                                                                               h is
                                                                                                                                                                                   ef
                                                                                                                                                                                     as
                                                                                                                                                                                       ter
                                                                                                                                                                                             th a
                                                                                                                                                                                                 n th
                                                                                                                                                                                                     e ma
                                                                                                                                                                                                                     rket

Natural
• We impact the natural environment directly in our operations and
  indirectly through the financing of client activities:
  »» leader in renewable-energy financing; and
  »» a total of nine Green Star-rated buildings

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UNITED NATIONS GLOBAL COMPACT - COMMUNICATION OF PROGRESS FOR THE YEAR ENDED 31 DECEMBER 2019 - AWS
DIGITAL                                                                TRANSFORMATION OF SOCIETY                                                                            SCARCE AND
                         TRANSFORMATION                                                               WITHIN ENVIRONMENTAL                                                                             EVOLVING SKILLS
                   From physical products, services                                                       CONSTRAINTS                                                                             Transforming and enabling our
                      and channels to digital and                                                     Delivering on our purpose and the SDGs                                                         workforce for the future
                            client-centred

  ACTIVITIES TH AT CR EAT E ...                                                                                                                              . . . VALU E FOR OU R S TAK E H OLD ER S.

                                                                                                                                                      OUTCOMES
frica
           Provk in A                                                                                                                             Financial
            woridin
        net        go                                                                                                                             + Distributed R7,1bn in dividends        – ROE of 15,0%, down from 16,8%,
                     ur c

                                                                                                                                                                                                                                        STAKEHOLDERS IMPACTED
                                         s
                                      ice
                         lien                         rv
                                                                                                                                                  + Cost-to-income ratio improved             however above cost of equity of 14,1%
                             ts                  l se
                                             c ia  wi                                                                                                                                      – Share price down by 22,0%
                                                      th      n                                                                                       from 57,2% to 56,5%
                                                            ac
                                                           ina
                                                              ce       f                                                                          + NAV per share up by 3,7%               – Headline earnings R12,5bn, down 7,2%
                                 Deposits                       ssbe
                                                                    st
                                                                      to
                                ▲ 9,5%                                     th
                                                                             e
                                                                           th
                                                                             to

                                                                                                                                                  Intellectual
                                                                            e

                            to R904bn
                                                                                      ss
                                                                                 be

                                                                                    ce

                                                                                                                                                  + IT modernisation programme (ME):                   + Attracted market-leading
                                                                                   st
                                                                                   c
                                                                                      f
                                                                                 ha
                                                                                    in

                                                                                                                                                      70% complete                                       skills in areas such as data
                                                                                      an
                                                                                                  t
                                                                                               wi

                                                                                                                                                  + Implemented a market-leading end-to-end              analytics, IT, equities and
                                                                                        cia

    FUNDING AND
                                                                    O

                                                                                            ts

                                                                                                                                                                                                         advisory solutions
                                                                                           ls

                                                                                                                                                      retail digital onboarding capability (Eclipse)
                                                                                           n

    DEPOSITS
                                                                     UT

                                                                                             er
                                                                                       clie

                                                                                                                                                  + First SA bank to launch an open-banking            – Delay in juristic onboarding
                                                                                              vic

    Raise funding and
                                                                                                   r

                                                                                                                                                      application programming interface                  capability to 2020
                                                                                                ou
                                                                                                 es
                                                                       PU

    provide savings and
                                                                                                                                                      (API) platform
                                                                                                    net
                                                                                                          ing

    investments products
                                                                                                       vid
                                                                                    TS

                                                                                                        wo

                                                                                                                                                  Human
                                                                                                    Pro
                                                                                                          rk in

OU                                                                                                                                                Maintained employee motivation,                      Improved staff satisfaction
  R
                                                                                                            Afric

                                                                                                                                                  skills and diversity through:                        levels:
 PR

                                                                                                                                                  + R17,3bn paid in salaries and benefits
                                                                                                                   nally excellent in all we do

                                                                                                                                                                                                       + 75% staff engagement,
                                                                                                                 a
    IM

                                                                                                                                                  + Percentage salary increase for                       above the average industry
       AR
        OU

                                                                                                                                                      unionised staff greater than                       level of 67%
                                        INSURANCE AND
                                                                                    R3,1bn
                                                                                                         Being operationally ex
         Y BUSINESS A

                                        OTHER SERVICES                                                                                                management                                       Digitisation and automation of
           RP

                                                                                     benefits
             URPOS

                                        Offer insurance                                                                                           + A more transformed workforce (79% black            the workforce environment:
                                        solutions (eg                                  paid                                                           and 62% female representation)                   + Altogether 620 employees
                                        life and home                             (2018: R2,4bn)
                                                                                                                                                      Staff attrition of 10,8% up from 10,1%,            reskilled or redeployed
                                        insurance cover)                                                                                              although still below industry benchmark          – 158 staffmembers
                    E

                                                                                                                                                      of 11–13%                                          retrenched
                      C

                                                                                                             eratio
                        TI
                           V

                                                                                                                                                  Manufactured
TI
                            I

                                                                                                                                celle

  ES
                                                                                                             p

                                                                                                                                                  + Digital product sales up to 21% of total sales
                                                                                                         ng o

                                                                                                                                                                                                     SA branches reduced by 2,5%
                                                                                                                                     nt in

                                                                                                                                                  + Digitally active clients up to 1,8m (+16%)     – Data security issue at
                                                                                                      Bei

                                                                                                                                                  + Digitised 114 of targeted > 180 branch
                                                                                                    all w

                                                                                                                                                                                                     premises of third-party
     TRADING                                                                                                                                        services                                         provider – no Nedbank
                                                                                                         ed

     Provide trading and
                                                                                                                                                    Uptime of application systems at 99,1%           systems or client accounts
                                                                                                           o

     global markets-
                                                                                              es

                                                                                                                                                    (marginally down on 2018)                        were compromised
                                                                                                m

     related solutions
                                                                                     Ma     tco
                                                                                       n  ou

                                         Trading                                                                                                  Social and relationship
                                                                                        ag
                                                                                       ic
                                                                                     om

                                                                                                                                                  + The only large SA bank to increase Net
                                                                                          i ng

                                       value at risk                                                                                                                                                   + Responsible procurement
                                                                                   on
                                                                                   sc

                                                                                                                                                      Promoter Score in 2019
                                         ▲ 7,2%                                                                                                                                                          practices (> 75% locally
                                                                                 ec
                                                                                 ar

                                                                                                                                                  + Growth in main-banked clients in the
                                                                                   c

                                                                          i
                                                                             e
                                                                                                                                                                                                         procured)
                                                                           se

                                        to R31,4m
                                                                    re
                                                                       tim                                                                            middle and professional segments
                                                                      so
                                                                      p                                                                                                                                + MSCI ESG rating improved
                                                                     o
                                                                        ur
                                                ce            o                                                                                   +   Number of client complaints down 26,5%
                                                            st                                                                                                                                           from A to AA
                                                  st
                                                    oo
                                                         rce                                                                                      +   R11,6bn direct and indirect tax contributions    – Decline in main-banked
                                                       ou
                                                      pt
                                                 res                                                                                              +
                                                         im
                                                                                                                                                      More than 3 300 YES recruits for 2019              clients in the entry-level
                                              ce
                          ise
                                       c ar                                                                                                                                                              and youth segments
                              eco
                                 nom
                                     gs                                                                                                           +   R130m socioeconomic spend
                 ag
                ic ou           in
             Man                                                                                                                                  +   Maintained level 1 BBBEE contributor status
     tcom
es

                                                                                                                                                  Natural
                                                                                                                                                  +   The first SA commercial bank to launch a green bond on the JSE
                                               + Positive outcome
                                                                                                                                                  +   Disbursed R27bn renewable-energy deals adding 3 517 MW to the national grid
                                               – Negative outcome
                                                                                                                                                  +   Carbon-neutral operations and effectively net-zero operational water usage
                                                  Neutral outcome                                                                                 +   Supporting the transformation of the energy system over time through
                                                                                                                                                      interventions such as our new Thermal Coal Policy
                                                                    NEDBANK GROUP UNITED NATIONS GLOBAL COMPACT COMMUNICATION OF PROGRESS 2019

                                                                                                                                                        7
UNITED NATIONS GLOBAL COMPACT - COMMUNICATION OF PROGRESS FOR THE YEAR ENDED 31 DECEMBER 2019 - AWS
OUR PURPOSE, VISION AND VALUES

        OUR                        To use our financial expertise to do good for
    PURPOSE                        individuals, families, businesses and society

  OUR VISION                                                                                                  OUR BRAND PROMISE
  To be the most admired financial services
  provider in Africa by our staff, clients,
  shareholders, regulators and society

NEDBANK SUSTAINABLE DEVELOPMENT FRAMEWORK
                                                                                         L IN V E S T M E N
                                                                                   CIA                        T
 Our purpose guides our strategy, behaviours                                  SO
                                                                          E
 and actions towards delivery of long-term
                                                                      T
                                                                    RA

 value. We are aware that operating a
                                                                PO
                                                            CO R

 successful and sustainable business                                                                                                  A BLE
                                                                                                                                              DEVELOP
                                                                                                                                                        ME
                                                                                                                                 IN                          NT
 requires a thriving economy, a well-                                                                                     S   TA                                  FIN
                                                                                                                       SU                                               AN
 functioning society and a healthy                                                                                                                                           C
 environment. We also know that we have

                                                                                                                                                                             E
 a responsibility and an opportunity to
 contribute to these.

 As such, our response cannot be a                              S
                                                       I   ON
 secondary aspect of our business                   AT
                                               ER

 – it must be central to it, with a
                                           OP

 commitment to sustainable
 development as the only
 reasonable response. We believe
 that this approach is not only
 desirable but also achievable. For
 Nedbank, this is the future we
 want. And we are committed to
 doing our share to realise it.

 Mike Brown, Chief Executive

  OUR EMPLOYEE VALUE PROPOSITION:
  BEING THE DIFFERENCE THAT IMPACTS OUR WORLD
        Purpose-                   Service                                High                                     Growth and                      Diversity and
           led                    excellence                          performance                                 development                        inclusion

  OUR VALUES
  Integrity          Respect            Accountability                                        People-centred                             Client-driven

                               NEDBANK GROUP UNITED NATIONS GLOBAL COMPACT COMMUNICATION OF PROGRESS 2019

                                                                                              8
DELIVERING VALUE BY DELIVERING ON OUR PURPOSE
      We understand that our success depends on the degree to which we deliver value to society. It is therefore
      important to understand our role in society and how society can be different, because Nedbank is a part of it. Banks
      play a crucial role in facilitating economic activity and enabling sustainable growth and development by moving
      capital from where it is to where it is required. A deep understanding of one’s purpose helps to guide strategy and
      decisionmaking in this regard and should result in an optimal balance between long-term value creation and short-
      term results.

                                                                              SHAREHOLDERS
         STAFF                                                                The financial capital we source from our equity and debt
         Our 29 403 staff are key to making Nedbank a great                   investors and our retained earnings enable business continuity
         place to bank and work. Motivated and skilled staff,                 and growth, including strategic investments.
         together with efficient and value-creating solutions,
         services and operations, offer value to our clients.                 Value is created through …
         Staff, as part of society, contribute materially to the              • increasing net asset value, returns, dividends and share price;
         communities in which they live and work.                             • maintaining a strong balance sheet to protect against
                                                                                downside risk;
         Value is created through …
                                                                              • sustainably investing in and growing our client franchises and
         • employing citizens in the jurisdictions in which we
                                                                                our people; and
           operate;
                                                                              • following good governance and sustainable business
         • rewarding staff for the value they add;
                                                                                practices that ensure a sustainable business for the long term.
         • creating job opportunities as we grow;
         • encouraging our staff to embrace technological
           changes, further their careers and improve our                     GOVERNMENT
           services and products; and
                                                                              The tax we pay and investments in bonds we make as part of
         • contributing to the transformation towards an                      our statutory liquid asset requirements are imperative for the
           inclusive society through employment equity and                    economic and social development of the countries in which we operate.
           gender equality.
                                                                              Value is created through …
                                                                              • contributing meaningfully to government budgets through our
NEDBANK GROUP                                                                   own corporate taxes and staff paying personal taxes; and
A strong and profitable business enables                                      • investing in government and public sector bonds as required by
continued investment in our staff and                                           prudential regulation, thereby supporting the funding needs of
operations, which in turn creates value for                                     government.
our clients, shareholders and society at
large. Trust is core to our relationships with
all our stakeholders and to creating value.                                   REGULATORS
                                                                              Regulation ensures a sound and stable banking system,
                                                                              which reduces systemic risk and promotes the healthy
                                                                              functioning of an economy in which all stakeholders prosper.
         CLIENTS                                                              Good governance and compliance support client confidence
         Our clients remain our largest source of deposits,                   in Nedbank and reduce the potential for reputational risk. We
         which enable us to fund lending activities. Gaining                  have a responsibility to comply fully with the regulations of the
         more clients and deepening existing relationships                    countries in which we operate.
         result in greater revenue growth, while responsible
         banking practices and worldclass risk management                     Value is created through …
         mitigate bad debts.                                                  • embracing sustainable banking practices and regulatory
                                                                                compliance, which enable a safe and stable banking system
         Value is created through …                                             and a thriving society.
         • safeguarding deposits, investments and wealth,
           while growing returns;
                                                                              BROADER SOCIETY
         • providing credit that enables wealth creation,
                                                                              We embrace our role in society as an active contributor to
           sustainable development and job creation in line
                                                                              building a thriving society and can do this only with engaged
           with the SDGs;
                                                                              communities that have aligned values.
         • facilitating transactions that are the backbone of
           economic value exchange;                                           Value is created through …
         • enabling financial inclusion by providing the                      • transforming economies and society positively through our
           previously unbanked with access to affordable                        lending and transactional activities, which are increasingly
           products;                                                            aligned with the SDGs;
         • providing financial education and advice; and                      • playing a meaningful role in the broader society as a
         • developing innovative solutions that meet our                        procurer and consumer of goods and services; and
           clients’ specific needs.                                           • making a difference through our partnerships and CSI
                                                                                activities.

            Read more about our value creation for our stakeholders on pages 74 to 87 of our 2019 Integrated Report.
                                       NEDBANK GROUP UNITED NATIONS GLOBAL COMPACT COMMUNICATION OF PROGRESS 2019

                                                                             9
CREATING
VALUE IN A
SUSTAINABLE
MANNER
THROUGH OUR
STRATEGY
REFLECTIONS FROM
OUR CHIEF EXECUTIVE
 In March 2020, just as we closed the chapter on our 2019 financial year,
 the rapid escalation of the Covid-19 pandemic and the Moody’s and
 Fitch downgrades of the SA sovereign credit ratings combined to place
 unprecedented challenges on the SA economy. 2020 will require us to focus
 on keeping our staff safe and to support our clients in managing through
 this difficult period, while maintaining our responsibilities to all our other
 stakeholders and the economies where we operate. While it is not
 possible at this stage to predict accurately what the outcomes
 of these health and economic challenges may be for our
 country or our industry, Nedbank is well prepared to
 play our part.
 Mike Brown, Chief Executive

 A VERY DIFFICULT OPERATING
 ENVIRONMENT
 In my 10 years as Chief Executive and six years as Chief                         SA is now in the longest economic downswing since
 Financial Officer before that, outside of the global financial                   records began in 1945. This was mainly due to severe
 crisis a decade ago, the operating environment in 2019 was                       and frequent power outages, the unsustainable fiscal
 the most difficult I have experienced in SA and in Africa. Given                 trajectory and ongoing policy uncertainty, combined with a
 recent events, 2020 will be significantly more difficult.                        deteriorating global outlook. Under these difficult domestic
                                                                                  conditions, company profits and household finances
 Economic growth in SA during 2019 was much slower than                           deteriorated during the year, resulting in subdued credit
 expected as recessionary conditions prevailed and GDP                            demand, lower transactional volume growth, downward
 growth ended the year at 0,2% compared to our expectations                       revaluations of equity portfolios and rising defaults across
 of 1,3% at the start of the year.                                                the SA banking industry.

 2019 TIMELINE

 MARCH                          APRIL                        MAY                                   JUNE                       JULY
 • Launched SA’s first          • Listed SA’s first          • Launched Eclipse, our end-          • Board strategy           • Zimbabwe
   zero-monthly-fee               commercial green             to-end digital onboarding             day.                       designated as
   account.                       bond on the JSE.             solution for individual clients.                                 hyperinflationary
 • Launched SA’s first          • Nedbank signed the         • Nedbank Group AGM.                                               effective from
   API platform.                  CEO Pledge.                                                                                   1 July 2019.
                                                             • SA held national elections.

                               NEDBANK GROUP UNITED NATIONS GLOBAL COMPACT COMMUNICATION OF PROGRESS 2019

                                                                      10
In our Nedbank Africa Regions’ operations,      DELIVERING ON OUR                                       money management changes. In
hyperinflation eroded the value of the                                                                  addition, a total of 175 500 clients
Zimbabwean dollar as the country                PURPOSE                                                 attended financial wellness workshops
transitioned from a dual-currency system        Our purpose remains core to what we do,                 and a further 6,1 million individuals were
to a monocurrency Zimbabwean dollar             irrespective of the environment around us.              reached through radio and television
system, with the inflation index reaching       Our purpose gives us our social licence to              shows, reinforcing our message around
552% in December 2019. Elsewhere                operate and is well aligned with the theme              money management, touching on topics
in SADC, conditions were similarly              of stakeholder capital emerging from                    such as budgeting, savings and debt
challenging given their dependency and          Davos this year and the social compacting               management.
integration with the SA economy. Further        messages from the State of the Nation                 • Lastly, we retained our level 1 BBBEE
north, conditions in Nigeria remained           address in SA. I believe that any business              contributor status.
difficult for our associate investment in       that sees itself as separate to the society
Ecobank Transnational Incorporated (ETI),
from both an economic and regulatory
                                                in which it operates will not be successful
                                                and sustainable over time. It is very difficult
                                                                                                      GOOD STRATEGIC
perspective.                                    to operate a successful business in an                AND OPERATIONAL
                                                unsuccessful society. Our purpose – to                PROGRESS
OUR FINANCIAL                                   use our financial expertise to do good
                                                                                                      We continued to make good strategic and
                                                for individuals, families, businesses and
PERFORMANCE IN                                  society – is what we are about and what
                                                                                                      operational progress throughout the year.
2019 WAS BELOW                                  we do to help society prosper. It has kept            A key achievement in 2019 was the launch
EXPECTATIONS                                    us sustainable and successful over that               of our simplified digital onboarding
                                                time and celebrating our 50th year of                 capability for individual clients, coupled
In this environment Nedbank Group’s
                                                being listed on the JSE in 2019 is testimony          with the ability to apply digitally for a
financial performance was below
                                                to this.                                              personal loan and transactional account.
expectations as headline earnings declined
7,3% to R12,5bn and the group produced                                                                We also concluded pilots for cards,
                                                This year we have continued to bring our
an ROE of 15,0%, above our cost of equity                                                             investment products and overdrafts.
                                                purpose to life and a few highlights stand
of 14,1%. In addition to the challenging                                                              This is fundamentally changing how we
                                                out for me:
environment, headline earnings were                                                                   do business, sell products and service
impacted by additional items in the second      • In April 2019 we activated our                      our clients.
half of the year, including accounting for        commitment to the YES initiative,
                                                                                                      At the end of 2019 more than 70% of
the effects of hyperinflation in Zimbabwe,        placing 3 315 previously unemployed
                                                                                                      personal loans and transactional products
the early exercise of an option that will         youth both directly and through
                                                                                                      were sold through this new platform and
increase our shareholding in Banco Único          sponsored placements to give
                                                                                                      through our apps or the web. In 2020 we
to 87,5% (subject to regulatory approval),        them their first job opportunity. It is
                                                                                                      aim to roll out digital onboarding and sales
the downward revaluation of a number              unfortunate that in 2020 we will have to
                                                                                                      to our wholesale clients (juristic) and have
of private-equity investments and the             scale back on this.
                                                                                                      our top 10 products digitised. This is a key
increase in impairments off a low base          • Nedbank became the first commercial                 part of establishing Nedbank as a leader in
to just above the mid-point of our target         bank to launch a green bond on the                  digital innovation.
range of 60 bps to 100 bps.                       JSE and at our upcoming AGM we will
                                                  be proactively putting two climate-                 Services previously only available through
The underlying franchise performance
                                                  change-related resolutions to the vote              our staff-assisted channels such as
was solid and we produced good balance
                                                  as we continue to strive to impact the              changing your PIN or freezing a card, are
sheet growth with banking advances up
                                                  environment positively. This builds on              now available on our digital channels – an
7,2%, deposits up 9,5% and assets under
                                                  our leadership position in renewable-               increase from 70 in 2018 to 114 in 2019, and
management increased 11,4%. Good cost
                                                  energy financing, our operations being              we plan to have more than 180 self-service
management, due to lower variable
                                                  carbon-neutral and offsetting our water             options available on our app and web
remuneration and the ongoing benefits
                                                  usage through the removal of invasive               channels by the end of 2020.
from optimisation of processes and
                                                  alien plants.
operations as part of our digital journey,                                                            Implementation at scale is never easy, and
resulted in our cost to-income ratio            • We brought our purpose to market                    we had to overcome some initial challenges
improving from 57,2% to 56,5%. Our IFRS           through our brand essence of being                  on stability and response times. These
9 fully phased-in CET1 capital ratio of           money experts who do good and our                   were addressed by our IT and operational
11,5%, average LCR for the fourth quarter         payoff line of ‘see money differently’.             teams and by November, and in particular
of 125% and an NSFR of 113% are all Basel         Our ‘Money secrets’ campaign got South              during Black Friday, we processed more
III-compliant, well above regulatory minima       Africans talking about money as a first             than 30% higher volumes than the prior
and reflective of a strong balance sheet.         step to making positive and sustainable             year and our new systems were stable.

AUGUST                       NOVEMBER                                                             MARCH 2020
• Nedbank celebrates         • Nedbank the only bank to improve its NPS in 2019.                  • Moody's and Fitch downgrades of SA's
  50 years of being          • Option to increase shareholding in Banco Único to 87,5%.             sovereign-credit rating to subinvestment grade
  listed on the JSE.                                                                                and retained a negative outlook.
                             • S&P and Moody’s changed SA sovereign-credit-ratings
                               outlook to ‘negative’.                                             • Covid-19 pandemic emerged in SA.

                             • Board signs off the 2020 to 2022 business plan.                    • President Ramaphosa announces a nationwide
                                                                                                    lockdown effective from 26 March 2020.

                               NEDBANK GROUP UNITED NATIONS GLOBAL COMPACT COMMUNICATION OF PROGRESS 2019

                                                                      11
REFLECTIONS FROM OUR CHIEF EXECUTIVE continued

When you manage money well, you can            only 1,7% during 2019 and the cost-to-           year for our operations in SADC, while
make a real difference in people’s lives,      income ratio reducing from 57,2% to 56,5%.       our strategic partner in West Africa, ETI,
and the launch of our refreshed loyalty                                                         experienced pressure in its operations in
and rewards programme in the second            As we digitise services that were                Nigeria.
half of 2019 embraces our purpose of           previously offered only inbranch, we are
using our financial expertise to do good.      also benefiting from efficiencies as the cost    In this context, we continue to optimise
The programme assists, incentivises and        to onboard and serve our clients decreases       our portfolio in SADC to position us for
rewards the right money management             significantly – more and more transactions       the long term:
behaviours while doing good for society. In    are performed seamlessly and from end
                                               to end without human intervention. Our           • Following a strategic review, we
2020 we will expand this programme to
                                               Target Operating Model programme                   disposed of our 100% shareholding in
offer more benefits to clients.
                                               (TOM 1.0) recorded additional savings of           Nedbank Malawi and the transaction
We are also innovating around ecosystems       R480m in 2019, with cumulative savings             concluded in the first quarter of 2020.
and will launch some exciting innovations      now amounting to R1,1bn at 31 December             Nedbank Malawi was a small bank in a
to the market in the year ahead. To enable     2019, which is ahead of our R1,0bn target          small market and only contributed 0,1%
this, we have made investments in data,        by 2019 and on track to exceed the                 to the assets and headline earnings of
platforms and interfaces. Another example      R1,2bn target by 2020 (as disclosed in the         the group.
in 2019 was Nedbank becoming the first         corporate performance targets in our             • Operating in Zimbabwe remains
bank in Africa to launch an application        long-term incentive scheme).                       challenging as policy uncertainty,
programming interface (API) platform                                                              increased government expenditure
that is aligned with international Open        We are currently strategising about a              and a lack of foreign direct investment
Banking Standards, making it possible          TOM 2.0, which will look at the shape of our       have severely damaged the
for approved African fintechs to develop       branch infrastructure in the context of an         Zimbabwean economy, contributing to
innovative digital services. To date, over     increasingly digital world, a shift in our RBB     hyperinflationary conditions. This had
100 fintechs and clients of Nedbank have       structure to be more client-centred, as well       a negative R142m headline earnings
received access and we have successfully       as shared services optimisation across the         impact on the group compared to a
launched integrated solutions in our           group. We anticipate targets for TOM 2.0           positive R108m of headline earnings
personal loans business.                       will be communicated to the market in              in 2018. In 2020 we will be focusing on
                                               early 2021.                                        the reconfiguration of the shape of our
These innovations, along with many others,                                                        balance sheet and business operations
position us well to protect and grow our       FOCUSING ON OUR                                    in the country where we have R123m of
revenues and compete against existing
competitors as well as new entrants.
                                               PEOPLE AS OUR                                      capital invested alongside a loyal client
                                                                                                  base and staff contingent.
                                               BUSINESS TRANSITIONS
Doing good for clients also means focusing                                                      • We are increasing our shareholding
                                               Rapid technological advancement and
on improvements in client satisfaction                                                            in Banco Único in 2020 from 50% plus
                                               changing client behaviours have been
levels, leading to more clients doing more                                                        one share to approximately 87,5%
                                               the catalyst for many organisations in
of their banking with us and, in turn,                                                            and the transaction is expected to
                                               the financial services sector to reshape
leading to a more sustainable and valuable                                                        be concluded in the first half of 2020,
                                               their business models in order to remain
Nedbank business. Our successes in 2019                                                           subject to regulatory approval. This
                                               relevant and competitive, and Nedbank is
have been acknowledged by our clients as                                                          positions us well to benefit from the
                                               no different. We are doing everything we
well as independent surveys and league                                                            growth opportunities in Mozambique
                                               can to make sure this transition is fair and
tables. A few highlights include:                                                                 particularly around liquefied
                                               just, and in line with our history and values
                                                                                                  natural gas.
• Nedbank being the only SA bank to            to ensure that job losses are only as a very
                                               last resort.                                     With regard to ETI, our focus will remain
  improve its Net Promoter Score during
                                                                                                on the delivery of the ETI board-driven
  the year and becoming the second-
                                               Globally, administrative jobs are being          agenda, commercialisation of initiatives
  highest-rated bank in the Consulta
                                               replaced increasingly by digital solutions       and the increase of business flows. The
  customer satisfaction index.
                                               and during 2019 our overall headcount            recent drop in the oil price is likely to
• The Nedbank Money and Private Wealth         reduced by 1 874, mainly through natural         add to the already difficult conditions in
  apps continue to be rated at the top-end     attrition. Through our Agility Centre we         Nigeria and increases the risk of future
  of the SA peer group.                        placed 620 staffmembers in other internal        impairment of our investment in ETI.
• On wholesale league tables, CIB              jobs and limited retrenchments to 158. We
  continued to lead industry league tables     continue to focus on training, developing        LOOKING AHEAD TO
                                               and reskilling our people to be prepared
  in various categories, coming first in
  dealflow for M&A advisors and third in       for this ongoing digital transformation.         THE CHALLENGES OF
  deal value for M&A sponsors, as well         In addition, our cultural transformation         2020
  as winning the Dealmakers M&A BEE            programme and new Ways of Work                   In recent weeks we have seen the
  deal of the year. The business was also      practices continue to transform Nedbank          increasing impact of Covid-19 on
  ranked number one for debt capital           to become more client-focused, digital,          individuals, families, businesses, societies
  market bond issuances in 2019.               competitive and agile.                           and countries as infection rates
• Nedgroup Investments was named                                                                escalate around the world and here in
  Offshore Management Company of the
                                               STRATEGIC PROGRESS                               SA. In response to this, governments
  Year for the fifth consecutive year at the   IN THE REST OF AFRICA                            everywhere are implementing
  Raging Bull Awards.                                                                           emergency lockdown measures to
                                               Operating in the rest of Africa remains
                                                                                                curb the spread of the virus and these
As a bank, while we cannot control the         volatile and challenging, and our success
                                                                                                in turn are having enormous impacts
economic environment around us, we have        in this area needs to be measured over
                                                                                                on economic activity. The duration and
to do all that we can to focus on those        the long term. The continent provides a
                                                                                                impact of these interventions are not
things that we can control, and in this        compelling long-term growth opportunity
                                                                                                possible to forecast accurately. I would
regard expense management has been a           for Nedbank as our SA clients expand in
                                                                                                like to assure stakeholders that we are
big focus with overall expenses increasing     sub-Saharan Africa. 2019 was a difficult

                               NEDBANK GROUP UNITED NATIONS GLOBAL COMPACT COMMUNICATION OF PROGRESS 2019

                                                                    12
working tirelessly to ensure that we are able    The SA banks through the Banking                APPRECIATION
to deal with this escalating challenge. While    Association of South Africa (BASA) are
                                                                                                 Our people are at the heart of what we
our number-one focus is on the health and        actively engaged with SARB and have
                                                                                                 do and the value we deliver. Thank you
safety of our staff as we continue to serve      agreed to do all in their power to play their
                                                                                                 to all Nedbankers for the incredible work
our clients given that banking is an essential   role in supporting their clients and the
                                                                                                 you do, particularly in the challenging time
service, we have pivoted our strategy to         economy in this period while at the same
                                                                                                 we are facing, and bringing our purpose
increase focus on managing liquidity, capital,   time preserving the safety and soundness
                                                                                                 to life. We thank our 7,8 million retail and
market and credit risk alongside ongoing         of the financial system. We commend
                                                                                                 wholesale clients for choosing to bank
scenario modelling and stress testing.           SARB on the proactive stance they have
                                                                                                 with Nedbank and we appreciate the
                                                 taken in amending certain prudential
In early March 2020 at the time we released                                                      support of shareholders as well as all other
                                                 regulations and guidelines to enable banks
our 2019 results, the Nedbank Economic                                                           stakeholders who continue to work with
                                                 to increase their support of clients and the
Unit forecast SA’s GDP growth prospects                                                          us to create a better SA and an African
                                                 economy in these difficult times.
to remain subdued at 0,7% in 2020 and 1,1%                                                       continent for all its people.
in 2021, undermined by persistent energy         Nedbank Group’s capital position remains
                                                                                                 I would like to thank the Chairman, the
constraints, weak government finances            solid with large liquidity buffers, having
                                                                                                 board and my executive team for their
and slow progress in structural reforms.         reported a CET1 capital ratio of 11,5%, well
                                                                                                 continued guidance and support. A special
As highlighted in our results, our financial     above the regulatory minimum of 7,5%
                                                                                                 word of appreciation to Brian Kennedy,
guidance that we released on 3 March 2020        and strong liquidity metrics evidenced in
                                                                                                 who retired at the end of March 2020
for growth in DHEPS for the full year 2020       a liquidity coverage ratio (LCR) of 125%
                                                                                                 and was instrumental in building Nedbank
to be around nominal GDP growth was              and net stable funding ratio (NSFR) of
                                                                                                 CIB as one of SA’s strongest corporate
based on this macroeconomic outlook.             113% at 31 December 2019. At time of
                                                                                                 and investment banks. Congratulations
                                                 writing Nedbank Group remained in full
As a result of the rapid escalation in the                                                       to Anél Bosman on her appointment
                                                 compliance with all prudential regulatory
impact of the Covid-19 pandemic since                                                            as Managing Executive: CIB to replace
                                                 requirements.
3 March 2020 and the 35-day lockdown in                                                          Brian and to Terence Sibiya, Managing
SA, together with the Moody’s downgrade          In 2019 as we celebrated 50 years of            Executive: Nedbank Africa Regions, on his
and noting the high degree of forecast risk      being listed on the Johannesburg Stock          appointment to the Group Exco. I am also
in this environment – on 14 April 2020 the       Exchange this year, I reflected on the          grateful to Brian Kennedy for agreeing
Nedbank Group Economic Unit updated our          resilience we have displayed and the            to remain as a special advisor to CIB for
macroeconomic outlook and we now expect          ups and downs we have had over time.            the next six months in the context of the
a GDP decline of 7% in 2020. Growth in           2020 will be a challenging year, but this       current environment.
2021 is expected at 2% off a low base. As a      reflection filled me with optimism and
result of this change in our macroeconomic       confidence that no matter what challenges
outlook, on 14 April 2020 we have withdrawn      there are in the years to come, Nedbank is
the financial guidance we issued as part         well equipped to adapt and thrive over the
of our 2019 financial results announcement       long term.                                      Mike Brown
on 3 March 2020. Revised guidance will                                                           Chief Executive
be provided when economic outcomes
and regulatory interventions become
more certain.

                                NEDBANK GROUP UNITED NATIONS GLOBAL COMPACT COMMUNICATION OF PROGRESS 2019

                                                                    13
RESPONDING TO
                                                                                  THE IMPACT OF
                                                                                  COVID-19

While our material matters on the following pages set the agenda for our strategic actions
over the coming years, from March 2020 we witnessed the impact of the Covid-19 pandemic
on individuals, families, businesses, societies and countries as infection rates escalated around
the world and in SA. In response to this, governments globally have implemented emergency
measures to curb the spread of the virus. At Nedbank we have and continue to work tirelessly to
ensure that all our stakeholders deal with this escalating challenge. Our primary focus is on the
health and safety of our staff alongside the continuous and uninterrupted provision of worldclass
banking and other financial services to our clients.
Financial markets dropped sharply and market movements are more volatile than during the global financial crisis as investors
reduced their risk appetite and grappled with estimating the economic impacts of Covid-19 – with many economists predicting
that some form of global recession is likely. In addition, global oil markets have also dropped sharply following disagreements
between Russia and Saudi Arabia on levels of supply. Events like these are difficult to predict and referred to as 'black swan' events
– meaning they are rare events that can have extreme consequences. On their own, the spread of Covid-19 or the oil price fall
would be difficult for many parts of the world to deal with, but together they are exceptionally challenging.

Despite various scientific and forecasting models, the real long-term impact of these events on economic growth will only emerge
over time – but in the short term economic activity in many places has dropped materially and financial markets are likely to
continue to be volatile as more data on infection rates and economic activity emerges. This is likely to be particularly the case in SA
as our economy was already under stress, so these events could not have come at a worse economic time for our country.

                                              COVID-                                                                         COVID-
                                               19                                                                             19
    SA GOVERNMENT’S                                                     WHAT WE HAVE DONE
    RESPONSE                                                            IN RESPONSE
    President Ramaphosa announced a                                     While the circumstances leading to this outbreak are
    nationwide lockdown effective from midnight,                        largely out of our control, at Nedbank we manage the
    26 March 2020, resulting in non-essential                           escalating spread by being proactive and responsible.
    services being closed for a period of 35 days.                      We have implemented precautionary and preventative
    Banks have been declared an essential                               actions to help ensure the health and wellbeing of all
    service during the 35-day lockdown. As a                            our staff, clients and other stakeholders, and to ensure
    result, all Nedbank essential banking services                      Nedbank’s business continuity and continuous service to
    will remain open during the lockdown to                             our valued clients.
    ensure clients can continue to access essential
    financial services while keeping our staff safe                     We have established the Market Crisis 2020 and Covid-19
    through the significant health and safety                           Exco Committee to oversee our actions and manage
    measures taken.                                                     the unfolding risks. This committee is supported by the
                                                                        Pandemic Steering Committee, focusing on operational
    The banks through the Banking Association                           matters, including managing business continuity plans,
    of South Africa (BASA) have agreed to do all                        the Liquidity Covid-19 Crisis Steering Committee focusing
    in their power to play their role in supporting                     on maintaining a healthy liquidity position and the Credit
    their clients in this period of enormous                            Covid-19 Crisis Committee looking at and managing
    challenge for all South Africans while at                           credit risks as they emerge and working with BASA on
    the same time preserving the safety and                             regulatory relief required to enable banks to continue
    soundness of the financial system.                                  supporting their clients through the crisis. In addition, our
                                                                        various clusters have specific working groups in place to
    Similar measures have been taken by                                 manage through the crisis.
    governments in other African countries.

                            NEDBANK GROUP UNITED NATIONS GLOBAL COMPACT COMMUNICATION OF PROGRESS 2019

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