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TO BE AFRICA's MOST ADMIRED BANK TO BE AFRICA'S MOST ADMIRED BANK INTEGRATED REPORT for the year ended 31 December 2015 CONTENTS ABOUT NEDBANK HOW WE CREATE DELIVERING VALUE GROUP VALUE sustainaBLY TO OUR 2 Overview of our group 14 Reflections from our STAKEHOLDERS Chief Executive: 7 Our vision and values 44 Reflections from our Our value-enhancing strategy Chief Financial Officer: 11 Our purpose 18 Drivers guiding our strategy Demonstrating value creation 12 Our value-creating business 19 Determining our material 54 Engaging with our stakeholders model matters 56 Investing in our staff 27 Strategic focus areas 59 Innovating for our clients 63 Delivering consistently 42 Delivering our strategy to our shareholders through our business clusters 66 Engaging with our regulators 69 Delivering value through a commitment to our communities and the environment Smooth leadership transition Created 714 new permanent jobs Market-leading innovations such as Market EdgeTM Nedgroup Investments ranked best SA and offshore asset management company of 2015 Dividend up 7,7% ahead of HEPS growth at 7,4% Unlocked R8bn of value for BBBEE shareholders 2015 Bank of the year for Africa Strong balance sheet: CET1: 11,3% and SA by Financial Times’s The and LCR 88,5% Banker magazine Paid R8,2bn in direct, indirect and Main banked retail clients up employee-related tax HIGHLIGHTS 8,5% Carbon neutral for six years 36% of outlets in ‘branch of the Level 2 BBBEE rating for seventh OF 2015 future’ format consecutive year Integration of CIB Most transformed bank Headline earnings SAP ERP implemented Committed R35bn to finance R10,8bn up 9,6% renewable-energy projects Bedded down acquisition of Return on equity excluding approximately 20% in ETI and Dow Jones Sustainability Index goodwill: 17,0% 38% in Banco Único inclusion: 10th year in a row R1,8bn Fair Share 2030 lending Net asset value per share Landed new core banking up 9,0% system in Namibia 75% procurement sourced locally ENSURING sustainaBLE VALUE CREATION 72 Reflections from our Chairman: Value through good governance 76 Committed to good governance 84 Established and admired Nedbank Group prides itself leadership teams on supplying stakeholders 88 Reports from our directors, Company Secretary and with up-to-date information auditors on a regular basis. 94 Reports from group board This information can be found committee chairs at nedbankgroup.co.za. 106 Worldclass risk management 124 Reporting back on remuneration 134 The investment case for Nedbank Group ADDITIONAL inforMation for OUR StaKEHOLDERS The Nedbank Group Integrated Report is supplemented by the following information, which is available online at nedbankgroup.co.za as part of our comprehensive integrated reporting that caters for the diverse needs of our broad stakeholder base. Financial reporting Governance reporting ■ ■ 2015 Results Booklet 2015 Governance and ■ Ethics Review 2015 Results Presentation ■ ■ 2015 Nedbank Group Consolidated 2015 register of directors’ Annual Financial Statements attendance ■ ■ 2015 Nedbank Ltd Director and executive profiles Annual Report ■ 2015 King III Principles ■ 2015 Remuneration Report Risk management reporting Appointed new chairman ■ 2015 Pillar 3 Risk and Capital Sustainability reporting Management Report ■ 2015 Transformation Report Broadened board skills profile ■ 2015 Sustainability Review in financial services, Rest of Annual general meeting Africa and auditing ■ Global Reporting Initiative G4 ■ Notice of the 49th Attained majority independent annual general meeting boardmembers: 56% ■ Form of proxy (44% in 2014) ■ Shareholder register Diversified board: Three female (19%) and nine black (56%) Refined the group’s Enterprisewide Risk Management Framework Nedbank Group – Integrated Report 2015 1 ABOUT OUR integrateD REPORT Nedbank Group is committed to the principles of integrated reporting as it aligns to our thinking and approach to long-term value creation and the role we play as a bank in society. Integrated reporting allows our group to tell a clear and comprehensive story about our commitment to create value for all our stakeholders and provide details of our successes and challenges in realising value, as well as our strategies and targets going forward. SCOPE AND BOUNDARY OF REPORTING KEY CONCEPTS Reporting period The Six Capitals The Nedbank Group Integrated Report is produced and published annually. The 2015 Our relevance as a bank today and in the report covers the period 1 January to 31 December 2015. Any material events after this future, and our ability to create long-term date and up to approval by the group’s board of directors on 11 March 2016 have also value is interrelated and fundamentally been included. This report builds on our previous integrated report for the period dependent on the forms of capital available 1 January to 31 December 2014. to us (inputs), how we use them (value- adding activities), our impact on them and The report also contains Nedbank Group’s outlook, targets and objectives for the short the value they deliver (outputs and (2016) and medium to long term (2017 to 2020 and beyond). outcomes), as shown on pages 12 and 13. Operating businesses In this report we link the Six Capitals model The scope of this report includes the group’s business clusters and key support areas identified by the International Integrated in SA, the rest of Africa and internationally. It excludes detailed information on Reporting Council to our stakeholders and investments in which the group holds a minority stake. how we create long-term value. Financial and non-financial reporting Materiality and material matters The boundary of the report extends beyond financial reporting and includes non- We apply the principle of materiality in financial performance, opportunities, risks and outcomes attributable to or associated assessing what information is included with our key stakeholders that have a significant influence on our ability to create value. in our integrated report. This report focuses particularly on those issues, Targeted readers opportunities and challenges that impact The report is our primary report to stakeholders and is intended to address the materially on Nedbank Group and its information requirements of long-term investors (our shareholders). We also present ability to be a sustainable business that information relevant to other key stakeholders, including our staff, clients, regulators consistently delivers value to all its and communities. stakeholders. Our material matters as described on pages 19 to 26 influence our Regulatory reporting requirements group’s strategy and inform the direction The content of this report is aligned with the requirements of the International taken in this report. Integrated Reporting Framework and the King Code of Governance Principles for SA (King III Code), and is in accordance with the ‘core’ level of the Global Reporting Defining value Initiative (GRI) G4. As an SA bank and company listed on JSE Ltd (’the JSE‘), we align Value created is the consequence of how to the JSE Listings Requirements, the South African Companies Act, 71 of 2008 (as we apply and leverage our six capitals in amended), and the Banks Act, 94 of 1990. delivering financial performance (outputs) and outcomes for all stakeholders while making tradeoffs. Our value creation process is described on pages 12 and 13. Through ‘case in point’ illustrations we also provide examples of how value is created. You may be interested in Material matters 19–26 Our value-creating business model 12 and 13 Nedbank Group – Integrated Report 2015 (i) How to READ THIS report This report tells the story of how Nedbank Group creates, delivers and ensures value Navigation creation for its stakeholders. icons ■ About Nedbank Group provides the reader with a succinct overview of the group, our ✓ Limited assurance positioning in the market, our broad, important role as a bank and our business model. ■ Each of the following main sections focus on a specific element of value as described below: CAPITALS How we create value sustainably describes the context in which we operate, Financial the drivers that add or detract value (material matters) and our strategic response (strategic focus areas). We also evaluate how we performed and the Human short-, medium- and long-term strategic outlook. Manufactured Delivering value to our stakeholders describes how value was created during 2015, primarily for our investors, through our financial performance, but also for Intellectual all our stakeholders. Social and relationship Ensuring sustainable value creation reflects on how the group is governed to protect value, including the key deliberations of our board and board Natural committees, but also how we manage risk and remunerate our people. This culminates in the investment case for Nedbank Group. Material Matters Tough economic conditions with limited forward visibility Assurance AND INDEPENDENT assessment Banking relevance amid The group makes use of various independent service providers to assess and assure consumerism and increased various aspects of the business operations including elements of external reporting. competition External assurance is the responsibility of a combined financial and non-financial Increased demands on assurance team. Assurance statements are available online. governance, regulation and This integrated report conforms with the requirements of the South African Companies risk management Act, 71 of 2008 (as amended), and the JSE Listings Requirements. While the group’s Growth opportunities in
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