Segmental reporting
For the year ended 31 December

The group’s identification of its segments and the measurement of segment results are based on the group’s internal management reporting as used for day-to-day decisionmaking and as reviewed by the chief operating decisionmaker, which in Nedbank Group Limited’s case is the Group Executive Committee. The segments have been identified according to the nature of their respective products and services and their related target markets.

Nedbank Capital

Nedbank Capital comprises the group’s investment banking businesses that together manage the structuring, lending, underwriting and trading businesses. Nedbank Capital seeks to provide seamless specialist advice, debt and equity raising and execution and trading capabilities in all the major SA business sectors.

Nedbank Corporate

Nedbank Corporate comprises the client-focused businesses of Corporate Banking, Property Finance, Nedbank Africa and the specialist businesses of Transactional Banking and Shared Services. These businesses focus mainly on providing lending, deposit-taking and transactional banking solutions and execution services to the wholesale banking client base of Nedbank Group Limited. Corporate Banking services companies with an annual turnover in excess of R400m as well as black economic empowerment (BEE) and public sector clients. Property Finance specialises in commercial and industrial property finance in the middle to large corporate market and also invests in property equities and in large property developments in partnership with selected clients. Nedbank Africa has banking operations in Lesotho, Malawi, Namibia, Swaziland and Zimbabwe. Nedbank Africa operates in the retail and wholesale banking segments in each country.

Nedbank Wealth

Nedbank Wealth provides insurance, wealth and asset management solutions to the broader Nedbank Group and provides its offering via financial planners, independent financial advisers and third-party intermediaries. The cluster is also responsible for the high-net-worth (HNW) segment of Nedbank Group.

Nedbank Retail

Nedbank Retail serves the financial needs of all individuals (excluding high-net-worth individuals) and small businesses with a turnover of up to R7,5m to whom it offers a full spectrum of banking and assurance products and services. The Nedbank Retail product portfolio includes transactional accounts, home loans, vehicle and asset finance [including Motor Finance Corporation (MFC)], card (both card-issuing and merchant-acquiring services), personal loans and investments.

Nedbank Business Banking

Nedbank Business Banking offers the full spectrum of commercial banking products and related services to companies with an annual turnover of up to R400m.

Shared Services

Shared Services is an aggregation of business operations that provide various support services to Nedbank Group Limited, which includes the following clusters: Group Technology, Group Strategy and Corporate Affairs, Human Resources, Enterprise Governance and Compliance, Group Risk and Group Finance.

Central Management

Includes group capital instruments together with certain group overheads not recoverable from business segments, mainly within the Balance Sheet Management Division.

		Nedbank Group		Nedbank Capital
		2011	2010	2011	2010
Statement of financial position (Rm)
Cash and cash equivalents		25 409	19 745	4 474	2 732
Other short-term securities		35 986	27 044	31 329	20 792
Derivative financial instruments		12 840	13 882	12 755	13 790
Government and other securities		30 176	31 824	13 044	12 083
Loans and advances		496 048	475 273	68 510	62 328
Other assets		47 668	40 950	10 048	7 578
Intergroup assets		–	–	62 464	95 886
Total assets		648 127	608 718	202 624	215 189
Equity and liabilities
Total equity		52 685	47 814	5 335	5 116
Derivative financial instruments		13 853	12 052	13 824	12 006
Amounts owed to depositors		521 155	490 440	174 043	184 201
Provisions and other liabilities		30 992	32 308	8 610	13 200
Long-term debt instruments		29 442	26 104	812	666
Intergroup liabilities		–	–
Total equity and liabilities		648 127	608 718	202 624	215 189
Statement of comprehensive income (Rm)
Net interest income		18 034	16 608	1 180	1 201
Impairments charge on loans and advances		5 331	6 188	549	535
Income from lending activities		12 703	10 420	631	666
Non-interest revenue		15 412	13 215	2 454	2 264
Operating income		28 115	23 635	3 085	2 930
Total operating expenses		18 919	16 598	1 737	1 561
	Operating expenses	18 725	16 450	1 726	1 506
	BEE transaction expenses	194	148	11	55
Indirect taxation		505	447	51	23
Profit/(Loss) from operations		8 691	6 590	1 297	1 346
Share of profits of associates and joint ventures		–	1
Profit/(Loss) before direct taxation		8 691	6 591	1 297	1 346
Direct taxation		2 194	1 366	72	139
Profit/(Loss) after direct taxation		6 497	5 225	1 225	1 207
Profit attributable to non-controlling interest:
– ordinary shareholders		32	59		5
– preference shareholders		281	266
Headline earnings/(loss)		6 184	4 900	1 225	1 202
Selected ratios*
Average interest-earning banking assets (Rm)		521 149	495 930	156 188	156 864
Return on assets (%)		1,0	0,8	0,6	0,6
Return on equity (%)		13,6	11,8	23,0	23,5
Net interest income to average interest-earning banking assets (%)		3,46	3,35	0,76	0,77
Non-interest revenue to total income (%)		46,1	44,3	67,5	65,3
Non-interest revenue to total operating expenses (%)		81,5	79,6	141,3	145,0
Credit loss ratio – banking advances (%)		1,14	1,36	1,23	1,27
Efficiency ratio (%)		56,6	55,7	47,8	45,1
Efficiency ratio (excluding BEE transaction expenses) (%)		56,0	55,2	47,5	43,5
Effective taxation rate (%)		25,2	20,7	5,6	10,4
Contribution to group economic profit		924	(289)	531	477
Number of employees		28 494	27 525	721	699
* These ratios (unless otherwise stated) were calculated using amounts to Rm.   Depreciation costs of R789m (2010: R714m) and amortisation costs of R609m (2010: R560m) for property, equipment, computer software, capitalised development and other intangible assets are charged on an activity-justified transfer pricing methodology by the segment owning the assets to the segment utilising the benefits thereof.

 

		Nedbank Corporate		Nedbank Wealth		Total Nedbank Retail and Nedbank Business Banking		Nedbank Retail		Nedbank Business Banking		Shared Services		Central Management		Eliminations
		2011	2010	2011	2010	2011	2010	2011	2010	2011	2010	2011	2010	2011	2010	2011	2010
Statement of financial position (Rm)
Cash and cash equivalents		3 615	1 868	602	327	1 852	1 494	1 852	1 494			168	154	14 698	13 170
Other short-term securities		1 130	1 357	3 279	4 200	–	(1)		(1)					248	696
Derivative financial instruments		(74)	(65)	2		–	–							157	157
Government and other securities		5 011	4 314			–	–							12 121	15 427
Loans and advances		164 754	157 703	19 625	16 869	241 935	238 099	183 663	187 334	58 272	50 765	20	(6)	1 204	280
Other assets		6 513	5 097	14 252	12 524	5 576	5 263	4 884	4 567	692	696	7 126	6 643	4 153	3 845
Intergroup assets						29 591	28 364			29 591	28 364			12 901	3 747	(104 956)	(127 997)
Total assets		180 949	170 274	37 760	33 920	278 954	273 219	190 399	193 394	88 555	79 825	7 314	6 791	45 482	37 322	(104 956)	(127 997)
Equity and liabilities
Total equity		6 696	7 603	1 614	1 445	20 659	19 683	16 963	16 560	3 696	3 123	1 485	1 362	16 896	12 605
Derivative financial instruments		16	20			–	–							13	26
Amounts owed to depositors		157 601	131 194	13 713	11 356	175 139	162 973	91 404	87 204	83 735	75 769	408	370	251	346
Provisions and other liabilities		4 806	3 570	11 375	9 794	4 571	3 357	3 447	2 424	1 124	933	418	1 718	1 212	669
Long-term debt instruments		3	2			1 517	1 760	1 517	1 760					27 110	23 676
Intergroup liabilities		11 827	27 885	11 058	11 325	77 068	85 446	77 068	85 446			5 003	3 341			(104 956)	(127 997)
Total equity and liabilities		180 949	170 274	37 760	33 920	278 954	273 219	190 399	193 394	88 555	79 825	7 314	6 791	45 482	37 322	(104 956)	(127 997)
Statement of comprehensive income (Rm)
Net interest income		3 570	3 306	441	405	12 467	11 611	9 655	9 181	2 812	2 430	(244)	(156)	620	241
Impairments charge on loans and advances		458	307	45	25	4 053	5 320	3 729	5 110	324	210		1	226
Income from lending activities		3 112	2 999	396	380	8 414	6 291	5 926	4 071	2 488	2 220	(244)	(157)	394	241	–	–
Non-interest revenue		1 771	1 566	2 252	1 958	8 538	7 353	7 052	6 011	1 486	1 342	494	401	(55)	(246)	(42)	(81)
Operating income		4 883	4 565	2 648	2 338	16 952	13 644	12 978	10 082	3 974	3 562	250	244	339	(5)	(42)	(81)
Total operating expenses		2 609	2 496	1 703	1 471	12 612	11 110	9 889	8 770	2 723	2 340	187	113	71	(153)	–	–
	Operating expenses	2 592	2 455	1 701	1 469	12 597	11 090	9 878	8 761	2 719	2 329	147	73	(38)	(143)
	BEE transaction expenses	17	41	2	2	15	20	11	9	4	11	40	40	109	(10)
Indirect taxation		39	41	68	53	210	232	185	210	25	22	132	94	5	4
Profit/(Loss) from operations		2 235	2 028	877	814	4 130	2 302	2 904	1 102	1 226	1 200	(69)	37	263	144	(42)	(81)
Share of profits of associates and joint ventures			1			–	–
Profit/(Loss) before direct taxation		2 235	2 029	877	814	4 130	2 302	2 904	1 102	1 226	1 200	(69)	37	263	144	(42)	(81)
Direct taxation		531	504	252	222	1 245	717	871	342	374	375	(58)	(218)	152	2
Profit/(Loss) after direct taxation		1 704	1 525	625	592	2 885	1 585	2 033	760	852	825	(11)	255	111	142	(42)	(81)
Profit attributable to non-controlling interest:
– ordinary shareholders		32	29			–	–								25
– preference shareholders						31	–	31						250	266
Headline earnings/(loss)		1 672	1 496	625	592	2 854	1 585	2 002	760	852	825	(11)	255	(139)	(149)	(42)	(81)
Selected ratios*
Average interest-earning banking assets (Rm)		166 814	158 943	22 159	21 471	267 364	264 010	180 794	183 756	86 570	80 254	14	117	25 267	22 748	(116 657)	(128 223)
Return on assets (%)		1,0	0,9	1,8	1,7	1,0	0,6	1,1	0,4	1,0	1,0
Return on equity (%)		25,0	19,7	38,7	41,0	13,8	8,1	11,8	4,6	23,1	26,4
Net interest income to average interest-earning banking assets (%)		2,14	2,08	1,99	1,89	4,66	4,40	5,34	5,00	3,25	3,03
Non-interest revenue to total income (%)		33,2	32,1	83,6	82,9	40,70	38,80	42,2	39,6	34,6	35,6
Non-interest revenue to total operating expenses (%)		67,9	62,8	132,2	133,1	67,70	66,20	71,3	68,5	54,6	57,4
Credit loss ratio – banking advances (%)		0,29	0,20	0,25	0,15	1,63	2,18	1,98	2,67	0,54	0,40
Efficiency ratio (%)		48,9	51,2	63,3	62,2	60,1	58,6	59,2	57,7	63,3	62,0
Efficiency ratio (excluding BEE transaction expenses) (%)		48,5	50,4	63,2	62,2	60,0	58,5	59,1	57,7	63,2	61,7
Effective taxation rate (%)		23,8	24,8	28,8	27,3	30,1	31,2	30,0	31,0	30,5	31,3
Contribution to group economic profit		801	421	415	388	169	(1 201)	(203)	(1 583)	372	382	(203)	62	(789)	(436)
Number of employees		3 546	3 611	1 991	1 896	18 668	17 863	16 323	15 473	2 345	2 390	3 479	3 381	89	75
* These ratios (unless otherwise stated) were calculated using amounts to Rm.   Depreciation costs of R789m (2010: R714m) and amortisation costs of R609m (2010: R560m) for property, equipment, computer software, capitalised development and other intangible assets are charged on an activity-justified transfer pricing methodology by the segment owning the assets to the segment utilising the benefits thereof.