NEDBANK CAPITAl - Nedbank Group Limited

isk and BALANCE SHEET management reportCredit riskLoans and advances and Basel II exposureDemand for credit grew at historically low rates and retail impairments increased dramatically as consumers came under severepressure from falling income, job losses, declining asset prices and record high debt burdens. By the end of 2009 growth in assetfinance had slowed to 1,0% year-on-year. Interest rates were reduced by 450 basis points to cushion the effects of a rapidly slowingeconomy and increasing unemployment.Corporate demand for credit initially held up but lost momentum due to weak global and local demand, which eroded corporateprofits through weaker pricing power, lower commodity prices and a strong rand. Support came from construction projects andincreased government spending, boosted primarily by the public sector’s infrastructure drive and preparations for the 2010 FIFAWorld Cup.Net loans and advances after impairments are R450 billion, 3,7% up on the previous year. Gross loans and advances increased by4,1% to R460 billion. The gross loans and advances by business cluster are as follows:Gross loans and advances by business cluster380 03652 97836 2237,0%25,7%13,3%442 09255 69845 546154 572(9,5%)13,4%5,7%460 09951 33551 640163 395136 42551 617102 577(6,8%)33,6%48 119136 99615,8%0,9%55 699138 285(25%)(>100%)216* 161* (255)*200720082009* These relate to eliminations passed through Central Management.The 4,1% increase in gross loans and advances reflects:• Ongoing growth in Nedbank Capital and Imperial Bank.• Slower growth in Nedbank Corporate and Nedbank Retail.• Reduced advances in Nedbank Business Banking due to a slowdown in client demand for credit and a reduction of single-productloans in line with the drive to reduce higher risk exposures and focus on primary clients.Growth in advances took place across a number of products, including personal loans, mortgage loans, preference shares, depositsplaced under reverse repurchase agreements and other loans, offset by an ongoing decrease in overnight loans.138NEDBANK GROUP ANNUAL REPORT 2009