The comprehensive range of products, deep client insights and excellent channels are combined to deliver a choice of distinctive, client-centred banking experiences, which will allow clients to build deep and enduring relationships with Nedbank. This approach is underpinned by worldclass risk management practices.
Nedbank Business Bankingservices medium-sized businesses with an annual turnover of R7,5m to R400m (R700m as of 2013). Typically these businesses tend to be family-owned and geographically dispersed. Therefore, Nedbank Business Banking operates through a well-entrenched, decentralised, accountable business service model, which uniquely positions the business to deliver personalised relationship banking based on local knowledge and a deep understanding of clients’ businesses. Business Banking provides a seamless banking experience for the client’s business employees and household.
Client service teams, comprising sales, service and credit specialists, are located in 67 ofﬁces around the country, ensuring proactive engagements and quick responses to client requests, as well as early identiﬁcation of risks and service opportunities. The client service teams are supported by industry and product specialists who facilitate more complex client needs, including specialist ﬁnance, invoice discounting, transactional banking, card acquisition and asset management, as well as personal banking solutions for business owners and their employees. Industryspecific solutions are in place for agriculture, franchises, and the professional, medical and public sectors.
serves the ﬁnancial needs of all individuals (excluding high-net-worth clients) and small/microbusinesses with a turnover of up to R7,5m offering a full spectrum of banking and assurance products as well as other value-add services. The Nedbank Retail product portfolio includes transactional accounts, home loans, motor ﬁnance, cards (both card-issuing and merchant-acquiring services), personal loans and investments.
Within Nedbank Retail, Retail Relationship Banking (RRB) targets households requiring an ‘I know you’ client experience and small/microbusinesses with a turnover of less than R7,5m. The interaction is relationship-based (lower to higher touch), operating in branch and supported by centralised functional teams or regionalised product specialists (shared with Nedbank Business Banking).
Increased competition, lower client activity, muted economic growth and the environment of lowest interest rates in 39 years continue to constrain short-term growth prospects. A signiﬁcant portion of pretax endowment earnings (cumulatively R3,4bn from a 650 basis points interest rate reduction since 2008) will not return in the near term, yet inﬂationary cost pressures continue to impact overall earnings growth.
In response to the lower growth and lower interest rates, Retail and Business Banking remain committed to the consistent implementation of their distinctive client-centred growth strategies (Business Banking’s ASCENT and Retail’s TRUE NORTH) underpinned by effective risk management with emphasis on enhancing the six core differentiators that will drive sustainable growth. These core differentiators are:
- Distinctive client value propositions (CVPs), delighting in moments of truth and emphasising financial fitness, to attract and retain more clients.
- A rigorous approach to capturing the virtuous circle of the influencer in households and businesses, including employees.
- Leveraging integrated channels, including digital channels, to accelerate growth across more micromarkets, while optimising presence, systems and processes to lower costs.
- Robust risk management for quality asset portfolios through economic cycles in line with the targeted risk appetite.
- Client-centred innovations to be a leader in digital channels, to grow source and share of deposits, and to capture additional complementary revenues in the payment value chain.
- A collaborative, networked culture of trust to increase organisational effectiveness.
The close alignment of the Nedbank Retail and Nedbank Business Banking leadership team behind a clear strategic intent with explicit collaboration themes uniquely positions this business to accelerate delivery on its strategic imperatives.
REVIEW OF 2012
Retail and Business Banking delivered an 18,2% increase in headline earnings to R3,5bn on a combined basis (2011: R2,96bn), contributing 47% to the group headline earnings in 2012. The combined return on equity (ROE) was 13,7% (2011: 12,7%).
Our commitment to building high-quality businesses that deliver sustainable performance is reflected in the disciplined and consistent implementation of our distinctive, client-centred growth strategies, underpinned by effective risk management. This approach resulted in strong combined non-interest revenue (NIR) growth of 11,7% to R9,5bn and the effective containment of impairments to R4,1bn on average advances of R246,6bn. Balance sheet impairments were further strengthened while we actively reduced defaulted advances to 5,8% of the portfolio (2011: 6,9%).
Good progress on crosscutting strategic initiatives between the clusters delivered an enhanced client experience, further strengthened risk management and unlocked operating efﬁciencies, with speciﬁc benefits including:
- Strong transactional banking earnings growth through accelerated client gains and deeper product usage from our 5,9m individual and 210 000 small and medium enterprise (SME) clients. The innovative client-insight-led value propositions are resonating with the target markets, yielding good increases in sales, positively changing perceptions of Nedbank and making the aspirational brand more accessible for the middle market and entry-level banking segments, including the youth. In the most recent Brand Dynamics survey a new measure on switching shows that, among the peer group, Nedbank has the highest percentage of clients not likely to leave their current bank and is seen as the bank of first choice when clients consider moving to another bank.
- Greater accessibility to banking for clients across SA as we are a bank for all, following the R1,3bn investment over three years to expand our distribution while optimising micromarkets presence and investing in digital services, thereby translating Nedbank’s footprint into a strength. The enhanced quality of the actual client experience is reflected in increased client and channel satisfaction metrics.
- Impairments managed within or better than the through-the-cycle risk appetite range (cognisant of sensitivities to advances product mix), while removing the extreme credit loss ratio (CLR) volatility of past cycles in Retail and sustaining Business Banking’s high-quality risk experience.
- Quicker, more inclusive innovation cycles, enhancing the client experience across channel, product and process. Examples of innovations launched in 2012 include the home loans online channel, which now contributes 10% to 15% of all intake; the Nedbank App Suite™ with over 100 000 users to date; MyFinancialLife™ as a free online financial management tool to all in SA; the Social Media Listening Centre as an alternative communication channel for engaging clients; and the Nedbank Money Trader Investment Account.
This performance was achieved under challenging competitive, regulatory and economic conditions, through large-scale strategic and organisational change involving 20 000 people led by a skilled leadership team working collaboratively within and across the businesses.
The clusters will continue to invest in their 20 000 people and provide them with meaningful careers as they drive cohesively towards transforming Nedbank Retail and Nedbank Business Banking for the beneﬁt of the clients and the communities they serve.
With distinctive strategies, a committed leadership team and diligence in execution, Nedbank Retail and Nedbank Business Banking remain uniquely positioned to leverage key market trends, accelerate the momentum in building many more deep, enduring client relationships with all in SA and deliver sustainable profitable growth for shareholders.