NEDBANK CAPITAl - Nedbank Group Limited

CHIEF FINANCIAL OFFICER’S REPORT ... continuedImpairments charge on loans and advancesThe credit loss ratio of 1,47% for 2009 (2008: 1,17%) showedsigns of improvement after having peaked at 1,67% at31 March 2009. This ratio is higher than the internal targetrange of 60 to 100 basis points. The wholesale ratios, althoughhigher than in 2008, are within their through-the-cycle targets,while Retail remains challenging. The target ratio changedduring the year, from the previous range of 55 – 85 basis pointsto 60 – 100 basis points. This is due to a reassessment of theranges within each cluster and the projected change in mixbetween secured and unsecured products in Retail. Unsecuredretail products tend to have higher credit loss ratios, resultingin an increase in Nedbank Group’s target credit loss ratio range.The credit cycle has to date largely impacted consumers andsmaller businesses, as reflected in the continued deteriorationof retail credit loss ratios. High levels of unemployment, lowercollateral values due to weak housing and vehicle markets, anddelays in recoveries resulting from the debt counselling processhave all played a part in the increase in defaulted advances inretail secured loans.Credit loss ratio (%) 2009 2008Nedbank Capital 0,26 0,06Nedbank Corporate 0,24 0,12Nedbank Business Banking 0,52 0,59Nedbank Retail 3,08 2,47Imperial Bank 1,97 1,71Nedbank Group 1,47 1,17Defaulted advances increased by 56,3% from R17 301 millionto R27 045 million and represent 5,9% of total advances. Totalimpairment provisions increased by 24,7% from R7 859 millionto R9 798 million. Although early arrears have improved for thelast seven consecutive months of the year, defaulted advanceshave continued increasing, albeit at a slower rate.Defaulted advances/impairment provision/credit loss ratioRm30 0001,67%1,57%1,47%%1,6025 0001,4020 00015 00010 0000,96% 1,17%1,201,000,800,600,40Targetcredit lossratio rangeDefaulted advancesImpairment provisionCredit loss ratio5 0000,200June 08 Dec 08 Mar 09 June 09 Dec 090,0090NEDBANK GROUP ANNUAL REPORT 2009