Emerging Markets, Nedbank, P&C Showcase

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EMERGING MARKETS,

NEDBANK, P&C

SHOWCASE

4 December 2013 Graham Dempster: Nedbank COO

Nedbank Group positioning & strategic focus areas

INSURANCE | INVESTMENT | SAVINGS | BANKING AGENDA

Overview of the SA banking industry

Nedbank Group overview and strategic focus areas

2 TOTAL SA INDUSTRY ASSETS/ADVANCES Total assets (%) Loans & advances (%) 2012 2012 10% 6% 22% 30% 22% 26% R3.6 trillion R2.8 trillion

23% 14% 9% 3% 19% 5% 11%

Absa Firstrand Homeloans Commercial mortgages Nedbank Standard Bank Credit cards Lease & instalments Other Overdrafts Term loans Other Personal loans

Source: SARB Other loans: Loans granted/deposits placed under resale agreements, Redeemable preference shares, Factoring accounts , Trade bills 3 SA INDUSTRY DEPOSITS DIVERSIFIED AMONGST BANKS & VARIOUS PROVIDERS Total deposits (%) Composition of deposits (%) 2012 2012

9% 17% 18% 7% 32%

R2.9 trillion 16% R2.9 trillion 21% 25%

19% 28%

Absa Firstrand Asset managers Foreign funding Nedbank Standard Bank Commercial Retail Other Capital markets Other

4 THE BIG 4 BANKS

Market capitalisation (Rbn) Return on equity**(%) 250 30% 205 202 200 22.2% 20% 150 130 16.4% 110 14.2% 13.5% 100 10% 50 0 0%

Total assets (Rbn) Headline earnings*(Rbn) 2000 1699 20 15.0 15.3 1500 15

1000 871 841 8.7 714 10 7.5

500 5

0 0 Standard Bank FirstRand BGA (Absa) Nedbank Group

* As at 30 Dec 2012, FR at 30 June 2013, All other info based on latest public information ** Nedbank ROE excl goodwill 5 SA BANKS GENERATE SOUND RETURNS THROUGH CYCLES Return on equity (%) 40%

Pre-crisis average: 24.3%

30%

Post-crisis average: 15.5%

20%

Cost of equity

10%

0% 2005 2006 2007 2008 2009 2010 2011 2012 H1 2013 BGA SBK Banking FirstRand Nedbank (excl goodwill)

6 SA BANKS HIGHLY RATED AND WELL REGULATED

WEF Global ‘13/14 Well regulated industry Competitiveness Report rank

Strength of auditing & • Basel III implemented January 2013 1 reporting standards • Well capitalised (Basel III minimum - 9.5% plus pillar 2b) Efficacy of corporate boards 1 • Sound funding & liquidity ratios

• NCA implemented June 2007 – legislated Regulation of securities 1 responsible credit extension exchanges • Exchange controls – “closed loop” Availability of financial domestic funding market 2 services • Regulator proactively engages with banks

Soundness of banks 3

Source: World Economic Forum, The Global Competitiveness Report 2012-2013, 2013–2014 NCA – National Credit Act 7 SA BANKS’ STRONG CAPITAL POSITION

Average risk weight vs Basel III CET1 ratio (%, as at 31 Dec 2012)

80% Median: 9.4% Low capital ratios Well capitalised & & high risk weights high risk weights 70% Standard Bank

Investec FirstRand Ltd 60% Nedbank ABSA

50% Median: 44.5%

40% SA banks have

Average RW Average conservative risk weighted 30% assets & strong capital adequacy ratios 20%

Low capital ratios WellWell capitalised capitalised and & & low risk weights low lowrisk risk weights weights 10% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% Basel III CET1 Ratio

Source: Goldman Sachs from company reports Note: Average risk weight = Total risk weighted assets/total assets excluding derivatives & insurance assets 8 NEDBANK GROUP OVERVIEW

• Listed on the JSE – 52% held by OM Plc – R110bn market cap

• Strong capital levels, sound liquidity and balance sheet provisioning levels

• Strong wholesale bank, with momentum in retail businesses

• Strengths in corporate banking, renewable energy, commercial property finance, business banking, card acquiring & vehicle finance, asset management, mobile banking

• Together with Ecobank our alliance partner, we offer our clients access to the largest geographic footprint in Africa: 37 countries

• Leader in transformation, corporate social responsibility & environmental affairs (the green bank)

9 OUR STRATEGIC FOCUS AREAS

10 REPOSITION NEDBANK RETAIL – BUILDING A SUSTAINABLE BUSINESS Headline earnings (Rm) & ROE (%) 11.8% SustainablyContribution delivering on (%) the 2010 strategy commitments 10.0% 9.3% 1 194 • Grow the client franchise - gaining 1 054 clients, with more cross-sell, less attrition, across more micro-markets 863 • Optimise to invest – investing in integrated channels strategy, leveraging digital & area collaboration plans 1.7% • Invest in people & organisational 133 effectiveness • Accelerate client-centred innovation and usage especially (69) in digital, deposits & payments • Effective risk management - selective -1.2% origination, strong provisions & H1 H1 H1 H1 H1 collections H12009 2009 H12010 2010 H12011 2011 H12012 2012 H12013 2013

2011 restated for enhancements to economic capital allocation methodologies in 2012 11 GROW NIR – CONTINUED PROGRESS

NIR-to-expense ratio (%)

88.7% Key drivers

85.0% 83.2% . Focus on transactional 80.8% income growth across all clusters 78.2% 75.5% . Client growth >10% p.a.

. Growth in clients with 2+ products >12% p.a.

H1 H1 H1 H1 H1 M-L . Significant increase in 2009 2010 2011 2012 2013 term innovation output target

12 REST OF AFRICA: A CLIENT-CENTRED, CAPITAL EFFICIENT & RISK MITIGATED LONGER-TERM APPROACH ‘One bank’ experience for clients across 37 countries & >2000 staffed outlets

• Standardised operating model & IT system approach

• Agreement for initial 36% interest in Banco Unico, with rights to increase to >50%

• Rights to acquire up to 20% equity stake in ETI (Nov ‘13 – Nov ‘14)

• Ecobank building its franchise

13 PORTFOLIO TILT – ENHANCING RETURNS IN A BASEL III WORLD Nedbank Group economic profit (Rm) Key drivers & ROE (excl goodwill) (%) 16.1% 15.7% • Judicious use of scarce resources 28,7% 13.7% • Prepare strategically for Basel III 13.1% 749 Grow faster: 12.2% 582 • Transactional banking, deposits, wealth, asset management, insurance, 146 investment banking Selective growth: (24) • Home loans, unsecured lending (352) H1 H1 H1 H1 H1 2009 2010 2011 2012 2013

14 OUR STRATEGIC FOCUS AREAS

15 SHARE PRICE PERFORMANCE REFLECTS THE PROGRESS MADE . Strong relative share price performance (2nd best) . From #4 to #2 in price to tangible book valuation 5 year relative share price performance Price to tangible NAV 250 Nedbank BGA (Absa) 2.81 213 FirstRand 200 Standard Bank 194

151 150 140 2.09 1.92 1.82 1.71 100 1.67 1.59

1.33 50 2008 2009 2010 2011 2012 2013 2008 2009 2010 2011 2012 2013

16 COLLABORATION WITH OLD MUTUAL

• Transactional banker to M&F and Old Mutual • Custodian of OMLACSA assets Wholesale • Co-investor in Africa Investment fund (co-managed by OM) • Joint funding of various transactions

• Collaborating across asset management, insurance & wealth • Some of Nedbank’s AUM written via OM’s Fairbairn Capital platform • Nedbank Best of Breed growth fund managed by OM Wealth • Writing & distribution of OM life & non-life products • New business premiums by Nedbank NFP to OM up strongly

• Imbizo – community financial services initiative • IT procurement benefits from scale Other • OM manages Nedbank Pension, Provident and Medical aid funds • OM the insurer of Nedbank Group life scheme • Collaboration on various CSI projects

17 FOCUS FOR THE NEXT 3 YEARS

• Client-centred innovation

• Grow transactional banking franchise

• Strategic portfolio tilt

• Optimise to invest

• Establish a Pan-African banking network

• Step change in sustainably building the franchise & the brand

18 EMERGING MARKETS,

NEDBANK, P&C

SHOWCASE

4 December 2013 Ingrid Johnson: Nedbank Group Managing Executive Retail & Business Banking

Repositioning Nedbank Retail

INSURANCE | INVESTMENT | SAVINGS | BANKING RETAIL & BUSINESS BANKING CONTRIBUTIONS TO NEDBANK GROUP

Retail and Business Banking as a share of Nedbank Group Retail Business Banking H1 2013, % Rest of Nedbank Operating Income Headline Earnings Capital2 100% = R16,519m (Group) 100% = R3,914m (Group) 100% = R59,817m (Group)

27 35 44 44

64 9 57 8 12

Total Advances Deposits Employees 100% = R557,349m (Group)100% = R578,807m (Group) 100% = 28,889 (Group)

18 35 35 15 57 54 67 11 8

1. Operating income – NII plus NIR less impairments 2. Cluster allocation as a percentage of ECAP to Total Group Equity 20 AGENDA

Repositioning Nedbank Retail

Context & strategic intent

Progress on three fundamental strategic imperatives

Future trends and prospects

21 CHALLENGES IN RETAIL NECESSITATED A FUNDAMENTAL STRATEGIC REVIEW IN 2009

1 Retail Banking - headline earnings, Rm Price : tangible book Nedbank Group 4.0 Firstrand Barclays Africa Group (ABSA) RoE 17.6 23.1 22.1 10.8 -1.6 % 3.5 Standard Bank Group 1 876 3.0 1 463 896 1 002 2.5

(156) 2.0 1.5 ECAP 5.8 5.9 5.9 5.6 5.6 % 1.0 2005 2006 2007 2008 20092 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10

Rest of Nedbank - headline earnings, Rm Share price relative 200 RoE 14.8 17.0 21.1 20.4 20.0 % 150 4 763 4 045 4 433 2 972 2 271 100

50 2005 2006 2007 2008 20092 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10

1 Wealth related income is included in Retail 2 2009 subsequently restated for changes to allocated capital and exclusion of Wealth from Retail numbers Note: Core Tier 1 equity 2007: 7.2%, 2009: 9.9% or Prime interest rate 2005: 10.6%, 2008: 15.1% 22 Source: Dec 2012 HSBC conference with small refinements NEDBANK RETAIL WAS LAGGING FAR BEHIND PEERS IN CLIENT NUMBERS

Main banked client base by income segment # million, as at Dec 2009

Total 6.0 Seniors 0.4 Middle 0.9 to Upper 4.2 4.1 0.2 0.2 Entry 0.6 0.6 Level 3.7 Consequence of strategic choices in 90s Banking 1.5 2.7 2.6 0.1 • Low transactional 0.3 banking emphasis 0.9 Youth 1.0 • Positioned as elitist 0.7 0.8 0.2 Bank 1 Bank 2 Bank 3

Total 11.7 9.0 6.7 4.2 clients1 % Main 51 47 61 37 banked

1 Cannot add the client numbers to get the market as clients are multi-banked Source: AMPS data and Retail analytics 23 RISING DEMOGRAPHICS HIGHLIGHTED NEED TO BE A BANK FOR ALL IN SOUTH AFRICA

SA Population by banking segment millions

57.9 Imperatives as a bank for all Total 49.3 Middle 10.9 . Invest in growing Youth & incl. seniors 3.5 Entry Level Banking Entry level . Restore strength in Middle banking 12.1 14.6 to Upper, including seniors Youth 3.3 4.4 . Grow entrepreneurs & small businesses . Develop low cost solution Unbanked 30.5 28 for the unbanked

2009 2020 Note: Affluent: > R550,000; Middle: R100,000 to 550,000; Entry level: < R100,000; Youth: Youth aged 16-24 SOURCE: AMPS; Nedbank analysis 24 CHARTING A NEW PATH TO SUSTAINABLE PROFITABLE GROWTH FOR NEDBANK RETAIL

Source: 2010 Retail Strategy Board presentation 25 3 FUNDAMENTAL IMPERATIVES TO SUSTAINABLY TURN AROUND RETAIL

Rebuilding the client Embedding effective Evolving the organisation franchise as a risk management to be more client bank for all & culture centred and integrated

Developing client value Protecting against downside risk Leading second order change propositions better than any and extreme impairment for accelerated organisational alternative volatility alignment

500 Impairments Great products and offers 400

Marketing 300 Competitive Client that Pricing insights connects 200

Relevant 100 distribution 0

Related economics 2006 2007 2008 2009 2010 2011 2012

26 DELIVERING SUSTAINABLE RETAIL RETURNS IN A TOUGH CYCLE

1 Retail Banking - headline earnings, Rm Price : tangible book Nedbank Group RoE 3.0 Firstrand -0.2 4.6 10.8 12.1 10.0 Barclays Africa Group (ABSA) % Standard Bank Group 2 552 2 091 2.5 761 1 054 2.0 (27) 2009 2010 2011 2012 H1 1.5 2013 ECAP 9.1 8.7 10.3 10.9 10.7 1.0 % Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Rest of Nedbank - headline earnings, Rm Share price relative 230 RoE 23.4 16.6 15.7 16.7 17.6 210 % 190 4 931 170 4 304 4 139 4 093 150 2 860 130 110 90 70 2009 2010 2011 2012 H1 50 2013 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13

1 Wealth related income in rest of Nedbank Common equity Tier 1 2009: 9.9%, 2012: 11.4%. Note: Prime interest rate 2009: 11.9%, 2012: 8.8%;. Source: Dec 2012 HSBC conference with refinements 27 3 FUNDAMENTAL IMPERATIVES TO SUSTAINABLY TURN AROUND RETAIL

Rebuilding the client Embedding effective Evolving the organisation franchise as a risk management to be more client bank for all & culture centred and integrated

500 Impairments Great products and offers 400

Marketing 300 Competitive Client that Pricing insights connects 200

Relevant 100 distribution 0

Related economics 2006 2007 2008 2009 2010 2011 2012

28 CLIENT GROWTH FROM ALL SEGMENTS LEADING TO STRONG NIR CAGR OF 15.7%

Net New Client Growth 2009 to 2012 Cumulative NIR growth 2009 to 2012 #’000s CAGRRm CAGR

Youth 329 17.3% 137 18.4% • Avg. of ~150,000 clients migrated annually from ELB & Youth to Middle ELB 815 11.2% 566 11.5% • Avg NIR earned from these clients has increased by Middle & 524 14.2% 1,944 34.3% ~30% Upper • Actively addressing attrition SBS 30 5.2% 223 9.5%

Total 1,710 12.1% 2,815 15.7%

Note: NIR includes product and non-product NIR 29 DISTINCTIVE VALUE PROPOSITIONS FOR ALL SEGMENTS – RESONATING WITH TARGET MARKETS

YOUTH ENTRY LEVEL BANKING MIDDLE

SENIORS UPPER INCL PROFESSIONAL SMALL BUSINESS

30 LEVERAGING STRONG BUSINESS RELATIONSHIPS TO CAPTURE HOLISTIC BANKING OPPORTUNITY

Evolving Business Banking & RRB1 …to accelerate banking of company service model… employees and cross-sell

N@W account sales YTD Sep RRB1 66 461 Client BB growth 15 604 Banking & 38 558 through financial 4 557 Nedbank education 50 857 @Work at your 34 001 0 work place - 2011 2012 2013

Turnover through card acquiring devices sold to BB clients since 2011, Rm 1 600

Cross-sell 1 200 of card 800 products evolved to capture the virtuous circle opportunity around the business owner & 400 employees - Jan-11 Jan-12 Jan-13

1 Retail Relationship Banking servicing businesses with turnover

Over R1.3bn investment in distribution Footprint optimised in line with micro-market since 2009STRATEGIC INTENT opportunitySTRATEGIC - 128% growth INTENT in non-urban Branches & Outlets, # 40% Branches & Outlets, # 762 increase Total 762 543 190 Alternate 75 outlets1 144 572 Branches 468 +188% Total 543 91 Rural 5050 +72% 2009 H1 Semi- 53 2013 urban +20% ATMs, # 72% 3182 increase 527 440 Total 1853 Urban 1 412 < 5yrs old 679 > 5yrs old 1 174 1 636

2009 H1 2009 H1 2013 2013 1 Excludes Personal Loans kiosks (2009:250, 2012: 313 & H1 2013: 279). Growth is from 2009 year end levels. Source: 2012 results presentation with small refinements 32 RATE OF CLIENT CENTRED INNOVATION IS ACCELERATING

Focused on: • Digital & payments • Integrated channels • Enhancing client value propositions • Simplifying internal processes • Re-igniting the entrepreneurial spirit Innovations

33 COMMERCIALISATION & MARKET PENETRATION OF INNOVATIVE SOLUTIONS ACCELERATING

PocketPOS transaction volumes App suite downloads ‘000 350 300 250 200 150 100 50 0 Feb Mar Apr May Jun Jul Aug Sep Oct Nov AugSepOctNovDecJanFebMarAprMayJun Jul AugSepOct 13 13 13 13 13 13 13 13 13 13 12 12 12 12 12 13 13 13 13 13 13 13 13 13 13 MyFinancialLife registrations Secure Approve-it transactions ‘000 # mill 35 For FREE 40 30 35 25 30 20 25 20 15 15 10 10 5 5 0 0 Sep Nov Jan Mar May Jul Sep Aug Oct Dec Feb Apr Jun Aug Oct 12 12 13 13 13 13 13 12 12 12 13 13 13 13 13 34 ENSURING PRICING IS SIMPLE, AFFORDABLE & COMPETITIVE IN LINE WITH CLIENTS NEEDS

Comparable average monthly banking charges R per month Price reductions by competitors bringing 260 2014 pricing Nedbank them back in line with the market Competitor 1 Announced 240 inflationary Competitor 2 increase 220 Competitor 3 No increase 200 Next price review in 180 July 2014

160

2014 pricing 140 not available

120

100 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

Nedbank changed Only in 2012 did non-cash transactions competitors change from from ad-valorem to flat ad-valorem to flat, in 2006, saving clients contributing to large drop in R150m in fees annually their average monthly fees

Pay-As-You-Use Current Account (including monthly maintenance fees and internet banking subscription) 35 BRAND INCREASINGLY RESONATING WITH OUR CLIENTS

Rank Brand value 2013 Brand Industry Group 2013 Rm YoY 1 MTN Telecomms 43,066 -1% 2 Vodacom Telecomms 19,396 4% 3 SASOL Chemicals 18,372 8% 4 Standard Bank Banks 14,200 -21% 5 ABSA Banks 12,411 -17% 6 Nedbank Banks 10,920 20% 7 Woolworths Retail 10,778 25% 8 First National Bank Banks 9,487 6% 9 Shoprite Retail-Food / Supermarkets 9,286 4% 10 Mediclinic Healthcare-Services 8,061 36%

Q3 2013 – SA best Liked ads • 1st time ever, 1 Vodacom - Baby Nedbank has 2 ads 2 Nedbank - Eugene Want or need it ranked top five 3 Capitec Bank - Paperless Banking rd 4 Nedbank - Eugene Online Banking • Only 3 time in 5 Wimpy - Puppet 29 years to have ad in top 5

Source: BrandFinance South Africa’s 50 Most Valuable Brands survey; Millward Brown Q3 Best Liked ads 36 3 FUNDAMENTAL IMPERATIVES TO SUSTAINABLY TURN AROUND RETAIL

Rebuilding the client Embedding effective Evolving the organisation franchise as a risk management to be more client bank for all & culture centred and integrated

500 Impairments Great products and offers 400

Marketing 300 Competitive Client that Pricing insights connects 200

Relevant 100 distribution 0

Related economics 2006 2007 2008 2009 2010 2011 2012

37 IMPAIRMENTS MOST VOLATILE DRIVER OF INDUSTRY RETURNS, RETAIL LAGGING PEERS

SA banks (excl Nedbank) income statement Nedbank impairment lines lines indexed to 2006 (pre-crisis) Indexed to 2006 (pre-crisis) 600 600 20 higher Retail impairment index = 1% lower ROE 500 500 Retail

400 400 Nedbank 375 355 Impairments 351 Total 300 300 291

191 NII 200 200 175 Expenses Wholesale 162 NIR 100 100

0 0 2006 2007 2008 2009 2010 2011 2012 2006 2007 2008 2009 2010 2011 2012 Industry Retail Bank 26.7 25.8 19.2 14.9 14.6 16.3 16.0 24.3 22.1 10.8 -0.2 4.6 10.8 12.1 ROE% ROE%

38 SELECTIVE ORIGINATION TO IMPROVE RISK QUALITY OF HOME LOAN PORTFOLIO

Home cyclical triggers informing growth appetite Danger- reduce market share Neutral- caution, consider tightening/loosening Safe - lend % Nedbank HL Market Share (LHS) Rbn Strategic decision HL Market size (RHS) 18.0 to shrink property 1000 concentration risk 900 17.5 800 17.0 700 16.5 600

16.0 • 80% of new 500 registrations sourced through internal 400 15.5 channels vs 60% in 2009 300 • New online channel 15.0 contributing to 5% of 200 registrations in ‘13 14.5 100 04 05 06 07 08 09 10 11 12 13

Nedbank 19.1% -0.8% HL advances growth (CAGR) Rest of 16.5% 3.8% market 39 GIVEN INDUSTRY CONCERNS, PROACTIVELY SLOWED GROWTH IN PERSONAL LOANS Personal loans book monthly movement, Rm 0 Market growth 17.4% 1 Nedbank -91 -114 -116 vs -167 -159 -178 1 -246 Nedbank growth -1.2% 870 684 593 719 359 451 534 ABIL -19 Nedbank PL book - Average GOI margin, %

729 520 375 499 25.0 301 201 284 Capitec 113 20.0 1 129 272 278 15.0 FNB 160 150 130 -144 -126 10.0 1 600 H1 H1 H1 H1 H1 132 85 43 41 138 2009 2010 2011 2012 2013 Absa -869 -1 556 675 520 452 289 387 349 83 SBSA 29 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13

1 12-months growth to Aug 2013 40 3 FUNDAMENTAL IMPERATIVES TO SUSTAINABLY TURN AROUND RETAIL

Rebuilding the client Embedding effective Evolving the organisation franchise as a risk management to be more client bank for all & culture centred and integrated

500 Impairments Great products and offers 400

Marketing 300 Competitive Client that Pricing insights connects 200

Relevant 100 distribution 0

Related economics 2006 2007 2008 2009 2010 2011 2012

41 RETAIL CMAT RESULTS REFLECT SIGNIFICANT SHIFTS IN CUSTOMER MGT CAPABILITIES FROM 2010

Overall CMAT scores Intention, Reality and Effect scores

69 71 Best practice = 66* 61 58 57 57 54 Intention 53 60 47 49 44 55 38 42 48 50 30 43 43 Reality 37 38 33 34 34 30 Effect 25 19 2006 2007 2008 2009 2010 2011 2012 2006 2007 2008 2009 2010 2011 2012

“…this real ‘shifting up a gear’ shows the power of a clear, stable strategy, focussed execution & effective socialisation, resulting in a genuine widespread ‘will to succeed’. Retail now has truly world class intentions.” Peter Lavers, REAP Consulting

*Retail Banking Best practice benchmark (a composite of best scores in sections = realistically achievable stretch target) Source: CMAT Assessments, REAP Consulting 42 DISTINCTIVE POSITIONING TO ‘WIN THE GAME’, LEVERAGING KEY TRENDS Trends Sources of distinctiveness Consumer preference for choice, A choice of distinctive client simplicity, increased transparency and centred banking experiences, lower cost banking delighting in moments of truth

Rising demographics and 6% p.a. small A rigorous approach to business growth represent tomorrow’s capturing virtuous circle of valued, aspirational clients household & business

Technological innovation (e.g. digital Integrated channels strategy leveraging digital, high channels) offering opportunity for lower potential micro-markets & cost distribution and process simplicity optimising cost

Higher cost of capital and liquidity from Robust risk management for quality asset portfolios & Basel regulations put risk management Deposit innovation sustaining and liabilities at a premium historical strength

Collaborative cultures increasingly Collaborative people culture recognised as central to organizations with a client-centred, effectiveness and innovation relationship-oriented DNA

Source: 2012 Investor Day Presentation; United Nations; IFC; Financial Inclusion Expert Group; World bank – doing business; team analysis 43 COMMITTED TO BUILDING QUALITY BUSINESSES

Distinctive Uniquely positioned for Diligence in execution strategies macro economy & trends of imperatives

Grow A skilled leadership the client team with a track franchise as record of delivery a bank for all

Insight led strategic Collaborate choices for and innovate competitive for growth distinctiveness

Commitment to building high quality Manage businesses for risk effectively sustainable performance

44 AGENDA

Profile of banking in Africa

Nedbank Group strategy for Rest of Africa

45 Building the African Banking Champion

46 PROFILE OF BANKING IN SUB SAHARAN AFRICA South African Banks

Pre-Tax Profits (US$m) Total Assets (US$bn)

3 500 3 260 200 182 180 3 000 160 2 477 2 500 140 120 2 000 100 95 100 1 425 80 1 500 1 323 80 1 000 60 40 500 20 - - Standard FirstRand BGA Nedbank Standard FirstRand BGA Nedbank Bank (ABSA) Bank (ABSA)

Source: The Banker Top 1000 World Banks, 2012 47 PROFILE OF BANKING IN SUB SAHARAN AFRICA Top 10 Sub Saharan Africa Banks (Excl SA) Pre-Tax Profits (US$m) 1 000 658 664 536 500 348 289 360 139 174 110 106 - Zenith First Bank ETI Guaranty Access UBA Fidelity MCB BPC FCMB

Total Assets (US$bn) 50 40 30 18 20 20 17 15 11 11 10 10 6 7 6 - Zenith First Bank ETI Guaranty Access UBA Fidelity MCB BPC FCMB

Source: The Banker Top 1000 World Banks, 2012 48 PROFILE OF BANKING IN SUB SAHARAN AFRICA South African Banks Top 10 Sub Saharan Africa Banks (Excl SA) Pre-Tax Profits (US$m) Pre-Tax Profits (US$m)

4 000 4 000 3 260 3 000 2 477 3 000

2 000 1 425 1 323 2 000 658 664 1 000 1 000 536 348 360 289 139 174 110 106 - - Standard FirstRand BGA Nedbank Zenith First Bank ETI Guaranty Access UBA Fidelity MCB BPC FCMB Bank (ABSA) Trust

Total Assets (US$bn) Total Assets (US$bn)

200 182 200

150 150 100 95 100 80 100

50 50 17 18 20 11 11 15 6 7 10 6 - - Standard FirstRand BGA Nedbank Zenith First Bank ETI Guaranty Access UBA Fidelity MCB BPC FCMB Bank (ABSA) Trust

Footprint 18 8 12 6/37 Footprint 5 1 35 6 9 20 1 5 1 1 (No. (No. Countries) Countries)

Source: The Banker Top 1000 World Banks, 2012 49 PROFILE OF BANKING IN AFRICA

South African Banks’ Footprint International Banks’ Footprint Pan-African and Regional Banks’ Footprint Ecobank (ETI)

West Africa ‐ UBA

West Africa – Access Bank

East Africa ‐ KCB

Source: Press clippings, annual reports, team analysis Existing footprints Foothold markets1 Planned Ecobank 50 SUB-SAHARAN AFRICA BANKING REVENUE GROWTH At current growth rates, SSA revenues are forecast to grow from $36bn in 2011 to $87bn in 2020

Total SSA Banking Revenue Pools (SSA excl. SA) Growth Scenarios: Total SSA Banking (US$bn) Revenue Pools (US$bn)

100 87 CAGR 2020 2030

80 60 32 8% 73 158 60 36 21 40 10% 87 223 12 55 20 39

Projected Revenues Projected 24 15% 128 520 0 2011 2016 2020 Wholesale Retail

McKinsey Global Banking Pools implied compound annual growth rate

Source: McKinsey Global Banking Pools 51 NEDBANK GROUP STRATEGY FOR REST OF AFRICA A client-centred, capital efficient and risk mitigated longer-term approach

B Alliance approach (principally West & Central Africa)

B A

Nedbank Universal A Banks

(selected SADC & East African markets)

52 THE AFRICAN CHAMPION BANKING NETWORK ‘One Bank’ client experience

• Ecobank Nedbank alliance • Established in 2008 • Significant operational traction through the Alliance Committee B • Growth in the number of Nedbank wholesale clients transacting with Ecobank • Deepened the alliance in 2011 through US$285m term loan • Rights to acquire up to 20% equity stake in ETI (Nov ‘13 – Nov ‘14) • Ecobank building its franchise • Top ten bank in Africa per The Banker magazine based on capital • Earnings up 74% to US$217m for 9 month to 30 Sept 2013, ROE >15%

The largest Pan African Banking network: 37 countries & > 2 000 staffed outlets

53 GROW THE NEDBANK FRANCHISE IN SADC & EAST AFRICA

• Standardised business operating model

• Entry into Mozambique • Fast growing GDP (11% p.a. over last 5 years)

• SA Corporates & SMEs very active A • Ideal country to create a model universal bank * • Agreement for initial 36% interest in Banco Unico & pathway to control* • Amorim a strong partner & experienced management team

* Subject to regulatory approval

54 DIFFERENTIATED POSITIONING IN REST OF AFRICA

Partnership based Local knowledge

Capital efficient to ‘One bank’ client create shareholder experience value

55 EMERGING MARKETS,

NEDBANK, P&C

SHOWCASE

5 December 2013 RAISIBE MORATHI, NEDBANK CFO Nedbank Group Financial overview

INSURANCE | INVESTMENT | SAVINGS | BANKING AGENDA

Historical trends

Growth drivers

Segmental performance

Balance sheet positioning

Looking forward

57 SOLID PERFORMANCE DESPITE EXTERNAL HEADWINDS A Capital levels increased more than 30% on the back ROE excl goodwill (%) of retained earnings & Basel capital requirements 16,4 B Additional liquidity costs from 13,4 3.5 5.8 lengthening funding profile & building surplus liquid 0.9 asset buffers

4.7 C 3.1 Interest rates at 40-year lows (lost endowment)

A B C D E D Lower levels of impairments (adjusted for mix)

2009 Higher levels Basel Lower Lower Profitability 2012 E ROE uplift from Nedbank of capital liquidity interest impairments uplift costs rates strategic initiatives such as NIR growth

58 SOLID PERFORMANCE THROUGH THE GLOBAL CREDIT CRISIS

ROA (%), ROE (%) and Leverage (times)

1.40% 16.4% 16.1% • 15.3% Strong ROA recovery, 1.20% despite lower interest 13.4% 13.4% rates (endowment) & 1.13% 1.15% 1.00% retail impairment pressure 0.99%

0.80% 0.82% • Enabled higher ROEs 0.76% 0.60% despite 17.6 16.3 15.5 0.40% 14.5 14.0 • Higher capital requirements under Basel III 0.20%

0.00% 2009 2010 2011 2012 H1 2013

ROE (excl goodwill) ROA Leverage

59 POSITIVE TRENDS CONTINUED

Advances (Rbn): 4,8% CAGR Deposits (Rbn): 4,7% CAGR NIM (%): +19 bps 579 3,58 3,53 557 551 3,48* 527 524 499 492 3,39 477 471 3,35 452

2009 2010 2011 2012 H1 2009 2010 2011 2012 H1 2009 2010 2011 2012 H1 2013 2013 2013

CLR (%): -21 bps NIR : expenses (%): +990bps Efficiency ratio (%): +70bps

88,7 56,6 1,52 84,4 55,7 55,5 1,36 81,5 53,5 54,2 1,31 79,6 1,13 78,8 1,05

2009 2010 2011 2012 H1 2009 2010 2011 2012 H1 2009 2010 2011 2012 H1 2013 2013 2013

* Restated to include Acceptances 60 HEADLINE EARNINGS GROWTH DRIVERS Headline earnings (Rm)

3 629 4 158

110 837 96,9%

2 124 3 914

1 988 25,9% 3,2% 77,3% 51,0%

H1 NII Impairments NIR Expenses Direct tax H1 2009 & Other 2013

61 NET INTEREST MARGIN – SOLID RECOVERY NII (Rm) and NIM(%)

3.7 25 000 3.53 3.58 • Regulatory pressures eg 3.48 Basel III liquidity

3.5 3.39 3.35 20 000 requirements 19 680 3.3 18 034 • Endowment income 16 608 15 000 16 306 (interest rate changes)

3.1 6 mths

10 000 • Change in asset mix 10 309 2.9 • Loan & deposit pricing

5 000

2.7 dynamics

2.5 - • Level of competition 2009 2010 2011 2012 H1 2013

NII NIM

62 CREDIT LOSS RATIO – HIGHLY CYCLICAL CLR (%)

1,72 • Change in asset mix

1,46 1,60 • Provisioning methodology assumptions & changes 1,31 1,46 1,21 • Level of balance sheet 1,11 1,24 provisioning 1,10 Target range 1,00 • Client indebtedness & 60 - 100bps collateral values

• Post write off recoveries H1 H1 H1 H1 H1 2009 2010 2011 2012 2013

Total impairments Specific impairments

63 PRUDENT PROVISIONING & EARLY ACTION Defaulted advances (Rm, annualised) Total & specific coverage (%) Defaulted advances as % of book (%) 52,9% 58,8% 45,4 13,1% 35,9 38,6

28,0% 31,6% 35,8% 39,0% 40,9%

5,8% 6,2% Write-offs (Rm) 3 082 2 842 2,5% 3,5% 2 749 2,1% 2 350 2 302 28 367 25 437 25 418 21 838 20 176 Post write-off recoveries (Rm) 428 412 290 198 249

H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013

Retail Wholesale Group

64 NIR GROWTH & EXPENSE MANAGEMENT KEY DIFFERENTIATORS

NIR-to-expense ratio (%) ContributionContribution (%)

6% 88,7 13%

> 85,0 83,0 10% 80,8 71% 78,2 75,5 Comm & Fees Insurance Trading Other 5% 15%

44% 16% H1 H1 H1 H1 H1 M-L term 2009 2010 2011 2012 2013 target 11% NIR 9% 8,5% 14,5% 15,9% 15,8% 15,4% Retail BB Corporate growth: Capital Wealth Other 65 NIR GROWTH & EXPENSE MANAGEMENT KEY DIFFERENTIATORS Nedbank NIR & expenses growth (%) 20% CAGR (2009 to H1 2013*) • NIR growth has increased at 16% 12,5% a faster rate than expense growth 12% 12,3% despite 8% 9,2% • Investing for growth

4% enabling

0% • Positive jaws to widen, over 2009 2010 2011 2012 H1 a sustained period – a key 2013 differentiator for Nedbank Jaws: 0,8% 1,1% 1,1% 2,6% 7,4%

NIR NIR excl FV

* H1 2013 annualised on 2009 FYE 66 STRONG WHOLESALE & HIGH ROE HIGH GROWTH WEALTH BUSINESSES, WHILE REPOSITIONING RETAIL 45% For the period H1 2013 40%

35% Wealth

30% Capital 25% Corporate

20%

15% BB Cost of capital ROE (excl goodwill) 10% Retail

0% 0 5 10 15 20 25 Allocated economic capital (Rbn)

Relative size of headline earnings 67 SOLID ADVANCES GROWTH – PORTFOLIO TILT Advances growth • Good opportunities in Rbn MIX card, vehicle Finance 557,3 527,2 499,0 • Strong positioning in 475,3 450,3 commercial property 2,0% finance & wholesale 14,3% lending (term loans)

4,0% • Slowed down personal 12,8% loan growth given market 17,6% risk

• Poor home loan 24,4% economics & downside risk drives focus on own 2009 2010 2011 2012 H1 originated loans 2013 Home loans CPF Term loans Personal loans Vehicle Asset Finance Card Other

68 DEPOSITS A KEY FOCUS AREA

Deposit growth Rbn 578,8 MIX 550,9 • Less reliance on 524,1 expensive NCDs 490,4 469,4 14,4% • Success from cash management solutions 9,9%

6,1% • Strong positioning in call & term

39,9% • Focus on growing CASA balances off primary

3,4% banking client gains

9,8% • Low reliance of foreign funding 2009 2010 2011 2012 H1 2013 Other NCDs* Cash Man Fixed deposits Call & Term deposits Savings accounts Current Accounts

*NCDs: Negotiable Certificate of Deposits 69 STRONG BASEL III POSITION

• Capital:  LCR: PhasedOnly 2015 in from 2015  • Pro-forma ratio: compliant Common equity tier 1 ratio (%) NSFR: Only 2018

11,8 • Anticipate pragmatic approach Basel III target range: 11,6 10,5 – 12,5% Funding: 

• Ave. LT funding ratio: 28,0% • Surplus liquidity buffer R25bn • Successful placement of LT funding Leverage:  30 Dec 2012 30 June • Pro-forma leverage ratio 16,3x (incl (Pro-forma Basel III) 2013 commitments) vs. SARB max (25,0) & (Basel III) BIII max (33,3x)

70 HEALTHY CAPITAL POSITION AND LOWER DIVIDEND COVER Nedbank NAV per share & growth Dividend cover ratio (Rbn, %) (x) 2,25 – 2,75x 9,3% 9,7%

9,4%

8,0% 2.30 2.30 12180 11721 2.26 1,75 – 2,25x 10753 9831 2.18 2.18 9100

2009 2010 2011 2012 H1 2013 2009 2010 2011 2012 H1 2013

71 KEY PERFORMANCE INDICATORS

Jun Dec 2013 2012

ROE (excl goodwill) 16,1% 16,4%

Diluted HEPS growth 12,6% 19,0%

Dividend per share growth 14,7% 24,3%

Credit loss ratio 1,31% 1,05%

NIR : expense ratio 88,7% 84,4%

Efficiency ratio 54,2% 55,6%

Common equity tier 1 CAR 11,8% 11,6%1

1. CAR for Dec 2012 on proforma Basel III basis, June 2013 on Basel III basis 72 LOOKING FORWARD: 2013 GUIDANCE Inflation: 2013 SA GDP growth: Interest rates: Upper-end of 2,0% Increase in late 2014 SARB range

Advances growth at mid-to-upper single digits NII Margin to remain at levels similar to 2012

CLR Improve from the June 2013 level, but remain above the top end of the through-the-cycle target range (60 – 100bps)

NIR Low double digit growth (excluding fair-value adjustments)

Expenses Mid-to-upper single digit growth

73 NEDBANK GROUP’S INVESTMENT CASE Price to tangible NAV • Competitive franchises & diversified portfolio 2.81 • Attractive growth strategy (incl NIR growth, Retail positioning, Wealth potential)

2.09 • Longer-term risk mitigated strategy in Rest of Africa, with unmatched 1.92 Pan-African geographic footprint 1.71 • Strong balance sheet – well positioned for the future, and lower dividend cover

2009 2010 2011 2012 2013 • Stable, experienced management

Standard Bank (SBK) Barclays Africa (BGA) team & differentiated values based FirstRand (FSR) Nedbank (NED) culture