Nedbank Group Limited (JSE:NED) News - Results and final dividend declaration for the year ended 31 December 2021

NEDBANK GROUP LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1966/010630/06
JSE share code: NED
NSX share code: NBK
ISIN: ZAE000004875
JSE alpha code: NEDI
('Nedbank Group' or 'the group')

RESULTS AND FINAL DIVIDEND DECLARATION FOR THE YEAR ENDED 31 DECEMBER 2021

Strong performance enabled by a more supportive environment, ongoing
strategic delivery and a good operational performance.

The operating environment in 2021 was more supportive for Nedbank and our
clients. The South African economy performed better than we expected at the
start of the year, resulting in upward revisions of gross domestic product
(GDP) growth to 4,9%. Off the low base in 2020, the rebound in economic
growth was underpinned by higher commodity prices, lower levels of lockdown
restrictions and some positive developments on key reforms in SA. The low-
interest-rate environment supported demand for retail credit and
transactional activity increased as lockdown levels eased. Demand for
corporate credit remained muted, particularly in the first half of the year
as excess cash was used to repay debt, and investment activity remained
low. Encouragingly, demand for corporate credit saw a recovery in the
second half. In the third quarter, the negative impacts of a prolonged
third wave of Covid-19 infections, tighter lockdown restrictions, the July
civil unrest in parts of the country and frequent power outages weighed
heavily on economic activity. Trading conditions improved in the last
quarter of 2021, supported by more lenient lockdown restrictions despite
the onset of the fourth Covid-19 wave (Omicron variant).

The Nedbank Group’s financial performance for 2021 reflects a strong
rebound off a low 2020 base. Headline earnings (HE) in 2021 increased by
115% to R11,7bn, but remains 7% below 2019 levels. HE growth was driven by
significantly lower impairments, a higher net interest margin, recovery in
NIR growth, disciplined expense management and a stronger financial
performance from our associate investment in ETI. Preprovisioning operating
profit increased by 9% and JAWS was positive at 0,8%. The key drivers of
shareholder value creation were also positive, with net asset value per
share increasing by 11%, the group’s ROE improving to 12,5% (2020: 6,2%)
and a full-year dividend of 1 191 cents per share at 2,02 times cover.

Key balance sheet metrics have all strengthened to above pre-Covid-crisis
levels. Capital and liquidity ratios increased as reflected in our tier 1
capital ratio of 14,3% (December 2020: 12,1%), common equity tier 1 (CET1)
ratio of 12,8% (December 2020: 10,9%), average fourth-quarter liquidity
coverage ratio (LCR) of 128% (December 2020: 126%) and net stable funding
ratio (NSFR) of 116% (December 2020: 113%). Overall impairment coverage
increased to multi-year highs of 3,32% (December 2020: 3,25%) and our
credit loss ratio (CLR) declined to 83 bps (December 2020: 161 bps) and is
now back within our board-approved through-the-cycle (TTC) target range of
60–100 bps.

The strong financial performance was supported by ongoing strategic
delivery. Our Managed Evolution (ME) technology journey to create a modern,
modular and digital IT stack is at 85% completion. The benefits of this are
evident in most of our digital metrics showing double-digit growth, as well
as target operating model (TOM 2.0) benefits of R967m being realised, as we
move forward towards our target of R2,5bn by the end of 2023. In the 2021
Consulta survey Nedbank achieved the #2 ranking among the five largest
South African banks on client satisfaction metrics, with our Net Promoter
Score (NPS) increasing further to 47. Progress on our strategic portfolio
tilt strategy (SPT 2.0) was evident in market share gains in key product
areas and main-banked clients, as well as improved levels of cross-sell.
Nedbank recorded the largest retail main-banked market share gain among the
large South African banks, while Corporate and Investment Banking (CIB)
gained 35 new primary clients. We continued to create positive impacts by
delivering against the United Nations Sustainable Development Goals (SDG)s
and increasing our focus on environmental, social and governance (ESG)
matters. In 2021 we released our Energy Policy and inaugural Taskforce on
Climate-related Financial Disclosures (TCFD) report and successfully
concluded Africa’s first green AT1 instrument, while maintaining ESG
ratings at the top-end of the local and international peer group.

After a strong rebound in South African GDP in 2021, we currently forecast
the country's GDP to increase by a more modest 1,7% in 2022. Good strategic
and operational delivery should support delivery of a solid financial
performance for the full-year 2022, underpinned by revenue growth and an
ongoing cost focus. We are on track to meet our medium-term targets* set
for the end of 2023. Pleasingly, we now expect to meet the diluted headline
earnings per share (DHEPS) target (greater than 2 565 cents per share) in
2022, a year ahead of our previous expectation. We continue to focus on
achieving a return on equity (ROE) greater than the 2019 ROE level of 15%,
reducing our cost-to-income ratio to below 54%, and ranking #1 on the NPS
among South African banks, all by the end of 2023.

The past two years have been unprecedented and extraordinarily difficult
for our clients and employees. Thank you to all our Nedbank employees for
remaining resilient throughout the Covid-19 crisis, continuing to follow
the Covid-19 health protocols and diligently supporting our clients and the
economy with unrelenting commitment. We extend our heartfelt condolences to
the families, friends and communities of employees and clients who have
lost their loved ones during this time.

Our Chairperson, Vassi Naidoo passed away during 2021 after a long and
brave battle with cancer. He led our board with integrity and passionately
loved the Nedbank brand and all that we stand for. We will be forever
grateful for his contribution to Nedbank.

Mike Brown
Chief Executive

* These targets are not profit forecasts and have not been reviewed or
reported on by the group’s joint auditors.

FINANCIAL HIGHLIGHTS

   -   Headline earnings R11 689m, up 114,9% (2020: 5 440m)
   -   Revenue R57 527m, up 6,1% (2020: R54 221m)
   -   Credit loss ratio 83 bps (2020: 161 bps)
   -   Expenses R33 639m, up 5,9% (2020: R31 772)
   -   Cost-to-income ratio 57,7% (2020: 58,1%)
   -   Diluted headline earnings per share 2 362 cents, up 112,2% (2020:
       1 113 cents)
   -   Headline earnings per share 2 410 cents, up 114,0% (2020: 1 126
       cents)
   -   Basic earnings per share 2 317 cents, up 223,2% (2020: 717 cents)
   -   Final dividend per share 758 cents, up greater than 100,0% (2020: 0
       cents)
   -   Full year dividend per share 1 191 cents, up greater than 100,0%
       (2020: 0 cents)
   -   Net asset value per share 20 493 cents, up 11,4% (2020: 18 391 cents)
   -   Common-equity tier 1 ratio 12,8% (2020: 10,9%)

This short-form announcement is the responsibility of the directors. It is
only a summary of the information contained in the full announcement and
does not contain full or complete details. Any investment decision should
be based on the full announcement, which can be accessed from Wednesday, 9
March 2022, using the following JSE link:
https://senspdf.jse.co.za/documents/2022/jse/isse/ned/ye2021.pdf

Alternatively, the full announcement is available on our website at
https://www.nedbank.co.za/content/nedbank/desktop/gt/en/investor-
relations/information-hub/financial-results/2021.html

The full announcement is available for inspection at Nedbank Group's
registered office on weekdays from 09:00 to 16:00, and copies thereof may
be requested free of charge from Nedbank Investor Relations at
NedgroupIR@Nedbank.co.za.

The auditors’ unmodified report (including key audit matters) to the
shareholders of Nedbank Group, is contained in our annual financial
statements for the year-ended 31 December 2021. The annual financial
statements can be accessed using the following link to our annual financial
statements at
https://www.nedbank.co.za/content/nedbank/desktop/gt/en/investor-
relations/information-hub/financial-results/2021.html

This announcement itself is not audited and therefore the audit report does
not cover this announcement.

FINAL DIVIDEND DECLARATION

Notice is hereby given that a final dividend of 758 cents per ordinary
share has been declared, payable to shareholders for the six months ended
31 December 2021. The dividend has been declared out of income reserves.

The dividend will be subject to a dividend withholding tax rate of 20%
(applicable in SA) or 151,6 cents per ordinary share, resulting in a net
dividend of 606,4 cents per ordinary share, unless the shareholder is
exempt from paying dividend tax or is entitled to a reduced rate in terms
of an applicable double-tax agreement.

Nedbank Group’s tax reference number is 9375/082/71/7 and the number of
ordinary shares in issue at the date of declaration is 508 870 678.

In accordance with the provisions of Strate, the electronic settlement and
custody system used by the JSE, the relevant dates for the dividend are as
follows:

Event                                      Date
Last day to trade (cum dividend)           Tuesday, 05 April 2022
Shares commence trading (ex dividend)      Wednesday, 06 April 2022
Record date (date shareholders recorded    Friday, 08 April 2022
in books)
Payment date                               Monday, 11 April 2022

Share certificates may not be dematerialised or rematerialised between
Wednesday, 06 April 2022, and Friday, 08 April 2022, both days inclusive.

Where applicable, dividends in respect of certificated shares will be
transferred electronically to shareholders’ bank accounts on the payment
date. The acceptance/collection of cheques has ceased, effective from 31
December 2020. In the absence of specific mandates, the dividend will be
withheld until such time that shareholders provide their banking
information. Holders of dematerialised shares will have their accounts
credited at their participant or broker on Monday, 11 April 2022.
The above dates are subject to change. Any changes will be published on the
JSE SENS and in the press.

Shareholders are advised that any forecast information contained in this
short form announcement has not been reviewed or reported on by the group’s
joint auditors.

For and on behalf of the board

Mpho Makwana                                 Mike Brown
Chairperson                                  Chief Executive

9 March 2022

Directors
PM Makwana (Chairperson), MWT Brown*** (Chief Executive), HR Brody**, BA
Dames, MH Davis*** (Chief Financial Officer), NP Dongwana, EM Kruger, RAG
Leith, L Makalima, Prof T Marwala, Dr MA Matooane, MC Nkuhlu*** (Chief
Operating Officer), S Subramoney.

** Lead Independent Director *** Executive

Registered office
Nedbank Group Limited, Nedbank 135 Rivonia Campus, 135 Rivonia Road,
Sandown, Sandton, 2196.
PO Box 1144, Johannesburg, 2000.

nedbankgroup.co.za

Sponsors in SA
Merrill Lynch SA Proprietary Limited t/a BofA Securities
Nedbank Corporate and Investment Banking, a division of Nedbank Limited
Sponsor in Namibia
Old Mutual Investment Services (Namibia) (Proprietary) Limited

Company Secretary: J Katzin

Transfer secretaries in SA
JSE Investor Services Proprietary Limited, 19 Ameshoff Street,
Braamfontein, Johannesburg, 2001, SA.
PO Box 4844, Marshalltown, 2000, SA.

Transfer secretaries in Namibia
Transfer Secretaries (Proprietary) Limited, Robert Mugabe Avenue No 4,
Windhoek, Namibia.
PO Box 2401, Windhoek, Namibia.

Date: 09-03-2022 07:05:00
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