NEDBANK GROUP BEING POSITIONED CREATING VALUE IN A DELIVERING AND AT A GLANCE FOR VALUE SUSTAINABLE MANNER REWARDING FOR CREATION THROUGH OUR STRATEGY VALUE CREATION INTEGRATED IR REPORT FOR THE YEAR ENDED 31 DECEMBER 2019 NEDBANK GROUP INTEGRATED REPORT 2019 A CONTENTS We present our CREATING VALUE IN A Overview of the report in four SUSTAINABLE MANNER context in which INTRODUCTION sections to enable we operate that 2 our stakeholders to 28 THROUGH OUR STRATEGY informs our strategy 2 About our integrated make an informed 28 Reflections from our Chief Executive and the tradeoffs report assessment of our necessary to ongoing ability to 32 Responding to the impact of Covid-19 ensure ongoing create sustainable value creation and 35 Risks and opportunities in our value. management of NEDBANK GROUP operating environment (material FORWARD-LOOKING STATEMENTS risks. 4 AT A GLANCE Overview of the matters) OUR This report contains certain forward-looking statements group, as well as with respect to Nedbank Group’s financial position, results, 4 Overview of Nedbank of our businesses, 45 Our strategic focus areas operations and businesses. These statements and forecasts Group market position, and enablers involve risk and uncertainty, as they relate to events and differentiators, our 6 Nedbank Group in context 55 Strategic enablers PURPOSE business model depend on circumstances that occur in the future. There are various factors that could cause actual results or 8 Our organisational and the needs and 58 Strategic focus areas – key developments to differ materially from those expressed or structure, products and expectations of our performance indicators stakeholders. implied by these forward-looking statements. Consequently, services To use our financial all forward-looking statements have not been reviewed or 60 Making tradeoffs and the impact reported on by the group’s auditors. 10 Our value-creating on our capitals business model expertise to do good Forward-looking statements made by Nedbank Group 62 Managing risk strategically on 3 March 2020 at the time of releasing our 2019 12 Our stakeholders – their results were informed by the group’s business plans and needs and expectations for individuals, families, DELIVERING AND REWARDING Assessment of how economic forecasts in January 2020 before the outbreak value was created FOR VALUE CREATION of the Covid-19 pandemic in SA. Some of these forward- Overview of how 66 through our financial BEING POSITIONED our purpose, vision, businesses and society. looking statements may not be achievable in the current 66 Reflections from our Chief Financial performance for FOR VALUE CREATION values, strong environment and in addition the financial guidance provided 14 Officer shareholders and leadership and good on 3 March 2020 has subsequently been withdrawn in the 14 Reflections from our how remuneration Securities Exchange News Service (SENS) announcement governance position 74 Value for stakeholders outcomes Chairman us for long-term published on 14 April 2020. We will update the market once correlated with value creation. 86 Stakeholder value creation – key we have more clarity. 16 Our purpose, vision our performance. performance indicators and values 88 Remuneration outcomes 17 Delivering value by delivering on our purpose 18 Leading the way for value SUPPLEMENTARY creation through good 95 INFORMATION Abbreviations and governance company details. 95 Abbreviations and acronyms 26 Our board and board 96 Company details committees 27 Our Group Executive Committee Our integrated report is supplemented by our full suite of online publications, which caters for the diverse needs of our broad stakeholder base as part INTEGRATED IR FINANCIAL AND RISK SUSTAINABLE GOVERNANCE SHAREHOLDER REPORT MANAGEMENT REPORTING DEVELOPMENT REPORTING REPORTING INFORMATION of our comprehensive FOR THE YEAR ENDED 31 DECEMBER 2019 FOR THE YEAR ENDED 31 DECEMBER 2019 FOR THE YEAR ENDED 31 DECEMBER 2019 FOR THE YEAR ENDED 31 DECEMBER 2019 FOR THE YEAR ENDED 31 DECEMBER 2019 integrated reporting. These can be accessed at nedbankgroup.co.za. INTEGRATED FINANCIAL AND RISK SUSTAINABLE GOVERNANCE SHAREHOLDER REPORT 2019 MANAGEMENT REPORTING DEVELOPMENT REPORTING REPORTING INFORMATION • Results booklet and • Sustainable Development Review • Governance and Ethics Review • Notice of 53rd AGM presentation • Stakeholder Engagement Report • Director and executive profiles • Form of proxy • Nedbank Group Annual • People Report • Remuneration Report • Shareholding profile Financial Statements • Transformation Report and • Key policies • Pillar 3 Risk and Capital BBBEE certificate Management Report • Global Reporting Initiative • Tax Report Standards • ESG disclosures nedbankgroup.co.za NEDBANK GROUP INTEGRATED REPORT 2019 1 REPORTING NAVIGATION ICONS KEY CONCEPTS INTRODUCTION FRAMEWORKS Our capitals Our strategic focus areas Our value creation process AND COMBINED Our relevance as a bank today and in the ABOUT OUR INTEGRATED Value creation is the consequence of how we apply and ASSURANCE future and our ability to create long-term Delivering innovative, leverage our capitals in delivering financial performance market-leading client Our integrated reporting value are interrelated and fundamentally (outcomes) and optimising value (outcomes and experiences REPORT process, as well as the contents dependent on the forms of capital outputs) for all stakeholders. Our value creation process available to us (inputs), how we use them This report is prepared in accordance with the International <IR> of this report, is guided by the is embedded in our purpose (page 16), described as (value-adding activities), our impact on Framework of the International Integrated Reporting Council (IIRC) principles and requirements of Managing scarce resources part of our business model on pages 10 and 11, and them and the value we deliver (outputs and provides our stakeholders with a concise and transparent the International <IR> Framework, to optimise economic integrated into the way we think and make decisions. and outcomes). We also make tradeoffs assessment of our ability to use our financial expertise to do good IFRS and the King Code of outcomes between our capitals, as discussed on and create sustainable value. Governance Principles for Materiality and material matters South Africa (King IV), and is in pages 60 and 61. We apply the principle of materiality in assessing accordance with the ‘core’ option Growing our transactional- SCOPE AND BOUNDARY OF REPORTING what information should be included in our integrated banking franchise faster of the Global Reporting Initiative Financial Reporting period report. This report therefore focuses particularly on (GRI) standard. As a SA bank than the market those issues, opportunities and challenges that impact Our shareholders’ equity, deposits This report is produced and published annually. It provides material and a company listed on the JSE, materially on Nedbank Group and its ability to be a and funding from investors and information relating to our strategy and business model, operating we align with the JSE Listings sustainable business that consistently delivers value clients that are used to support our Being operationally context, material risks, stakeholder interests, performance, Requirements, the Companies to shareholders and key stakeholders. Our material business and operational activities, excellent in all we do prospects and governance, covering the year 1 January 2019 to Act, 71 of 2008, and the Banks matters, as described on pages 35 to 44, influence our including credit extension. 31 December 2019. Any material events after this date and up to the Act, 94 of 1990. group’s strategy and inform the content of this report. board approval date of 14 April 2020 have also been included. Intellectual Providing our clients with However, responding to the Covid-19 pandemic that We employ a coordinated Our brand and franchise value, access to the best financial emerged in SA during March 2020 (followed by Moody’s assurance model to assess and Operating businesses research and development, services network in Africa and Fitch’s downgrades of SA’s sovereign-credit rating) assure various aspects of the The report covers the primary activities of the group, our business innovation capacity, reputation and has become our primary focus and will significantly business operations, including clusters, key support areas and subsidiaries in our African and strategic partnerships. impact all our material matters. We discuss this on elements of external reporting. international operations. pages 32 to 34 and highlight our preliminary views of These assurances are provided Human Our stakeholders the impact of the Covid-19 pandemic on our material by management and the board, Financial and non-financial reporting Our culture and our people, our The report extends beyond financial reporting and includes matters. internal audit and independent external service providers, collective knowledge, skills and Staff non-financial performance, opportunities, risks and outcomes Identifying our potential material matters is a groupwide experience to enable innovative attributable to or associated with our key stakeholders, which have including: Ernst & Young and responsibility and requires input from all business Deloitte & Touche (Deloitte), and competitive solutions for a significant influence on our ability to create value. units and divisions and an assessment of the risks and our external auditors and our clients and value