NEDBANK CAPITAl - Nedbank Group Limited

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OVERVIEWIn August 2009 Nedbank Groupannounced a new structure for the GroupExecutive Committee. As part of thenew structure Graham was appointedto the newly created position of ChiefOperating Officer (COO) and as anexecutive director of both NedbankGroup Limited and Nedbank Limited.In his role as COO Graham has overallaccountability for several of the centralfunctions in Nedbank Group, namelyNedbank Group Finance, Balance SheetManagement, Information Technology,Human Resources, Marketing,Communications and Corporate Affairs,and Strategic Planning, as well asresponsibility for managing the alliancewith our Pan-African banking partnerEcobank.Business approachOver the past six years Nedbank Grouphas focused on addressing the basics ofbanking and building the performanceof the bank for the next phase of growththat it is now able to embark upon.The central functions housed within theCOO portfolio have a key role to playby operating in a coordinated way toenable the frontline business clustersto be well-positioned and supportedin order to compete strongly in themarkets in which they operate.In this regard it is critical that,through the strategic planningprocesses undertaken each year, thegroup determines its key strategicchange thrusts to achieve its growthobjectives, and that we ensure thatthe scarce resources required in termsof appropriate allocation of economiccapital, technology projects, specialistpeople skills and the marketing ofthe brand are aligned in an efficientand effective manner to support thefrontline business in order to achieve thegroup’s key strategic change thrusts.Transition from NedbankCorporate‘Over the past six years it was agreat privilege to head NedbankCorporate and be involved in thebuilding of the businesses with asuperb cluster executive team whoare valued friends and colleagues.It has been wonderful to see manyexecutives in the cluster achieveoutstanding results both in theircareers and personally. I will alwaystreasure this as a very special time inmy career and thank my colleagueson the Nedbank Corporate ExecutiveCommittee over those years formaking it such a special journey. Toeach member of staff I thank you formaking a very important contributionto the growth of the businesses andwish you all the best in the future.I am delighted that Mfundo Nkuhluwas appointed to head NedbankCorporate and I know he will be anexcellent leader of the cluster.’GROUP REPORTSOPERATIONAL REVIEWSManagement teamTrevor Adams (47)Group Executive: Balance Sheet Management14 years’ serviceBCom(Hons), CA (SA)John Bestbier (54)Group Executive: Strategic Planning.14 years’ serviceBBusSc (Actuarial); CA (SA)Smit Crouse (33)Executive Head: Ecobank Alliance2 years’ serviceLLB, LLMRaisibe Morathi (40)Chief Financial Officer3 years’ serviceBCompt(Hons), CA (SA), H Dip Tax, AMP(Insead Business School)Fred Swanepoel (46)Chief Information Officer13 years’ serviceBCom(Hons), MBA, SEPSA (Harvard and WitsBusiness School), AMP (Harvard BusinessSchool, USA)Ciko Thomas (40)Group Executive: Group Marketing,Communications and Corporate AffairsJoined 18 January 2010BSc, MBAShirley Zinn (48)Group Executive: Human Resources5 years’ service.DEd (Harvard)GOVERNANCE81NEDBANK GROUP ANNUAL REPORT 2009
CHIEF operating OFFICER’S REPORT ... continuedFinancial targetsMedium-to-long-term targets2010 outlookReturn on equity (excl goodwill) 5% above monthly weighted-average Improving, but below target.cost of ordinary shareholders’ equityEfficiency ratio < 50,0% Worsening, remaining above target.NIR-to-expenses ratio > 85% Improving, but below target.Growth in diluted headline earningsper shareImpairments charge(credit loss ratio)At least consumer price index + grossdomestic product growth + 5%Between 0,6% and 1,0% of averageadvancesImproving, forecast to exceed target.Improving, but above target.Basel II core Tier 1 capital adequacy ratio 7,5% to 9,0% Improving, above top end of range.Basel II Tier 1 capital adequacy ratio 8,5% to 10,0% Improving, above top end of range.Basel II total capital adequacy ratio 11,5% to 13,0% Improving, above top end of range.Economic capitalCapitalised to 99,93% confidence interval A including 10% buffer.on economic capital basis (target debtrating A including 10% buffer)Dividend cover policy 2,25 to 2,75 times 2,25 to 2,75 times.Initial areas of focus include:• A three-year stategy and planningprocess for 2010 to 2012 that soughtto align future economic capitalallocation more closely to economicprofit generation in order to enhanceshareholder value creation.• An intensive project prioritisationprocess to agree which technologydevelopments to undertake and toincrease the level of project spendwith an emphasis on high clientimpact and financial return criteria.• A refinement of our economic capitalallocation methodologies moreaccurately to reflect the risk profile ofthe individual clusters to assess anddrive the returns on capital – this willbe implemented in the first halfof 2010.• A formulation of overall bank andcluster risk loss ranges to provide theline businesses with a clear directivein terms of risk propensity in which torun their business.• The establishment of a non-interestrevenue (NIR) project to drivethe organisation to improve theNIR:expense ratio following thesetting of the medium-to-long termtarget ratio at > 85%.• A cross-cluster process of talentdevelopment and successionplanning to identify and support thedevelopment of our key executives.• The continued focus and commitmentto achieving Nedbank Group’saspiration of being a leader intransformation and the introductionof a dynamic target-setting processthat aligns our employmentequity targets in terms of both theEmployment Equity Act and theDepartment of Trade and IndustryCodes,• A review of the progress made inthe building of the brand and thecommencement of a more detailedassessment of the strength of thebrand in the wholesale bankingmarket in which Nedbank Group has astrong position and market presence.• Managing the alliance relationshipwith Ecobank to ensure the deliveryof a seamless one-bank experienceacross 33 countries in Africa, providingclients with access to banking servicesacross the largest geographic coveragebanking network on the continent.Operational reviews for each of thesecentral functions for 2009 follow thisoverview.82NEDBANK GROUP ANNUAL REPORT 2009
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NEDBANK CAPITAl - Nedbank Group Limited

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