Final Results Presentation 2001 · Title: Final Results Presentation 2001 Author: Ewald M�ller...
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Transcript of Final Results Presentation 2001 · Title: Final Results Presentation 2001 Author: Ewald M�ller...
Programme
• Highlights Richard Laubscher
• Financial review Stuart Morris
• Operational review Derek Muller
• Conclusion Richard Laubscher
Highlights Richard Laubscher
Chief Executive
Highlights • Headline eps up 2% to 630c
• Core eps up 17% to 645c
• South African profits up 21% to R1,3bn
• International profits up 8% to R277m
• Market share growth from 15,7% to 18,3% over
5 years
Highlights (continued)
• Margin down 17% (over 5 years)
• Credit extension: advances up 14%
• Flight to quality: domestic deposit growth 21%
• Microlending: credit-based lending approach
• Only genuine empowerment bank in
Peoples Bank
Six-year interim review
HEPS (cents per share)
NAV (cents per share)
Share Price
ROE (%)
ROA (%)
Margin (%)
NIR (%)
Expense/Income
1997
266
2 839
100,50
19,9
1,40
4,05
41,7
61,7
2002
630
6 112
117,00
20,9
1,70
3,05
48,5
53,4
5 year CAGR %
18,8
16,6
3,1
Strategy + International
Gerrard Private Bank (Wealth Management Model)
SwissCard
Asian Trade Finance
New Initiatives
Bancassurance Capital One JD Group
Pick ’n Pay Imperial Bank
Old Mutual Bank
ORGANIC
(Market share)
18,3%
15,7%
BoE
(Market share)
23,3%
18,3%
Synergies + + +
+
+
+
Financial Review Stuart Morris
Group Financial Director
Key messages • Ongoing disclosure and transparency
• Sustained core earnings growth
• Core businesses performing well
Disclosure & transparency
• Speed of reporting
• Materiality thresholds
• Banking Council initiative
• Options – fully diluted earnings
• AC 133 – financial instruments
Nedcor accounting issues
• Translation gains/(losses) – Foreign entities – directly to reserves – Integrated operations – through income statement – “Normalised” – “Exceptional” – New exposure draft
• Reversal of general risk provision
• Computer development costs
• Didata mark-to-market
Rand depreciation R/USD
Income statement: core earnings six months ended 30 June
% change 2002 Rm
2001 Rm
10 2 857 2 604 26 2 690 2 141 17 5 547 4 745 13 560 494 17 4 987 4 251 16 2 962 2 550 19 2 025 1 701 – 404 402 25 1 621 1 299 (8) 92 100
(153) (82)
Net interest income Non-interest revenue Total income Provisions Net income Expenses Net operating income Taxation Net income after taxation Associate income Minorities Core earnings 18 1 560 1 317
Core earnings to headline earnings
% change
June 2002 Rm
June 2001 Rm
18 1 560 1 317
(436) 168
400 –
Core earnings
3 1 524 1 485
Translation gains/(losses)
General risk provision
Headline earnings
Dec 2001 Rm
3 098
1 096
(400)
3 794
Net interest income
Rm %
Non-interest revenue
2001 Rm
Commission and fees 1 520
Securities and exchange trading 373
Translation (losses)/gains 168
144
2 309
Other
Total
% change
2002 Rm
16 1 761
80 670
(436)
64 236
(2) 2 254
26 2 690 2 141
% mix
78
30
(19)
11
100
119
Provisions charged against income
Rm %
Non-performing loans
Non-performing loans Expected recoveries
Expected losses
Provisions (coverage)
Adequacy of provisions – Gross coverage (%) – Net coverage (%)
June 2002
Rm %
adv 7 014 4,4 3 603 2,3
3 411 2,2
4 691
67 138
3,0
June 2001 Rm
% adv
6 437 4,7 3 009 2,2
3 428 2,5
4 792
74 140
3,4
Dec 2001
Rm %
adv 6 974 4,4 3 473 2,2
3 501 2,2
5 154
74 147
3,3
Expenses
Rm %
• Total costs R714m (Dec 2001: R881m) • Capitalised in terms of AC129 • Projects approved per business case:
– new products and services – client functionality – cost efficiencies
• Represents >100 projects including: Credit card Credit risk CRM & CIS Treasury risk Branch efficiency Insurance
Computer development costs
Taxation
Rm %
Return on equity Rm %
Return on assets Rm %
Headline & core earnings
98 99 00 01 02
Core earnings (Rm)
Headline earnings(Rm)Core eps (c)
Headline eps (c)
Rm C
Operational review Derek Muller
Managing Director: Business Divisions
June 2001 Rm
107 15 92
348 285 20 43
578 429 149 (30)
57 1 060
By operation South Africa Retail banking
Nedbank Peoples Bank
Commercial banking Nedbank Imperial Bank * Cape of Good Hope Bank
Corporate and Investment banking Nedbank Nedcor Investment Bank *
T & O investments Internal funding and group operations
% change
95 507 28 20 19 30 16 13 10 24 40
(21) 21
June 2002 Rm
209 91
118 416 340
26 50
655 470 185 (42)
45 1 283
Segmental analysis
June 2001 Rm
% change
June 2002 Rm
Segmental analysis (continued)
International (including Africa) Nedcor Bank Gerrard Private Bank Nedcor Investment Bank *
Core (excluding translation gains)
Translation gains and exceptional items Statutory (including translation gains)
By geography South Africa Rest of Africa Rest of the world Core (excluding translation gains)
Translation gains and exceptional items Statutory (including translation gains)
3
13
(24) 380
8 18
(121) 3
21 (22)
32 18
(121)
24 65
188 277
1 560
(36) 1 524
1 283 91
186 1 560
(36) 1 524
85 5
167 257
1 317
168 1 485
1 060 116 141
1 317
168 1 485
Nedbank Retail (6% of core earnings) • Major increase in bottom line
• Core expense growth of 2% before new ventures
• Mortgage arrears down 41% over 18 months
• Product growth rates: – Home loans 13%
– Asset-based finance 28%
– Card volumes 19%
Peoples Bank (8% of core earnings)
• Net income after tax up 28%
• Total advances of R7,2bn
• Conservative dynamic provisioning policy applied to microlending book
Nedbank Commercial (22% of core earnings)
• Net income after tax up 19% to R340m
• Margin improvement
• Deposits growth of 17% to R19,3bn
• Expense growth 3%
Cape of Good Hope Bank (3% of core earnings)
• Net income after tax up 16% to R50m
• Advances growth of 29%
• Efficiency ratio of 41%
Nedbank Corporate (30% of core earnings) • Net income after tax up 10% to R470m
• Advances up 21%
• Margin pressure offset by volume-driven non-interest revenue growth
• Expenses growth of 18% – $-based costs and risk systems expenditure
International (17% of core earnings)
• International earnings up 8% to R277m
• London up 4%. Hong Kong down • Singapore rapidly reaching breakeven • Good performance by
Gerrard Private Bank • Nedbank Africa up 3% • Swisscard set-up costs of R4,5m
Conclusion Richard Laubscher
Chief Executive
BoE update
• EPS effect – Pro forma HEPS growth of 10% – excluding potential synergies – Pro forma NAV growth of 7%
• Work to date – Strong endorsement from shareholders – Capital structure optimised, gearing now in line with
competitors – Management, operating and board structures announced – Izak Botha heading up integration with senior management
team – International consultants reviewing integration plans – Client information and retention programme launched – Staff communications underway
BoE update (continued)
• Integration drivers – 8 Banking licenses to be reduced – Integration of:
statutory entities into 4 operating clusters shared services systems and infrastructure risk management
– Cost of Capital and performance measurement to be consistently introduced across group
– Non-core and underperforming assets to be restructured or disposed of
Conclusion
• Historic core competency – Optimise business – Extract costs
• Two year focus: – Integrate and optimise BoE – Restructure and optimise Nedcor
(NIB & COGHB)
• Additive – Strong core performance and new initiatives
Questions
Income statement analysis 6 months ended 30 June
Alliances R’000 18 671 70 075 88 746 17 412 71 334
112 218 (40 884) (9 591)
(31 293)
Net interest income Non-interest revenue Total income Provisions Net income Expenses Net operating income Taxation Net income after taxation
2001 R’000 70 214
126 655 196 869 71 563
125 306 171 878 (46 572) (9 254)
(37 318)
2002
New banking initiatives
•184 Peoples Bank branches •31 000 clients •R181m advances book
•Margin 5,1% •Advances up 41% to R6,4bn •Cost-to-income 34%
•131 000 microloans •R1 030m advances book (40% secured) •Arrears 20%
•Present in 215 stores •250 Go Bankers recruited •Cash back launched
Old Mutual
• Bancassurance – Personal financial planning
• Net profit up 510% to R12,7m – OMBS regulatory approval outstanding – Group schemes
• 8 500 policies sold
• Gerrard Private Bank contributed R24m
