REVIEW OF 2008

Objective	Making it happen in 2008	2008 self- assessment
Improve staff satisfaction	Employee satisfaction improved by a further 3,6% in the Nedbank Employee Survey. There have been positive shifts in all of the 12 dimensions measured.	Exceeded
Build a unique culture for competitive advantage	Limiting values have been eliminated from the top 10 values in the Nedbank Culture Survey and five matches of values from existing culture to ideal culture were recorded, indicating a closer alignment between reality and what staff are seeking. This trend has been consistent over the last four years.	Exceeded
Retain our staff	Overall, staff attrition is lower than previous years.	Achieved
Improve HR effectiveness and service delivery	The HR 2010 Programme, which is dedicated to improving effectiveness, efficiencies, capability and service delivery, has reached the midway stage. 2009 sees the start of the second phase of implementation.	On track
Build our leadership and management capabilities	The rollout of the Management Development Programme and the Leading for Deep Green leadership transformation initiative has been successful and is comfortably ahead of target.	Exceeded
Transform our workforce to start to align to the demographics of the South African economically active population	Transformation of our workforce is showing good progress across key indicators. Altogether 57% of all appointments are African and demographic profiles are generally meeting or exceeding targets.	On track

The table below shows the entropy score for Nedbank Group from 2005 to 2008 as well as the graphic representation of the staff survey results.

Objective	Making it happen in 2008	2008 self-assessment
Grow Nedbank Retail and penetrate the mass market	Market share in credit cards and home loans has been maintained during 2008, while year-on-year market share in instalment credit increased by 2%. In the latter part of 2008 all business units shifted their focus to growing profitable market share (focusing on economic-profit generation rather than advances market share growth).	Partially achieved
	Retail primary clients increased by more than 119 000 to over 1,1 million.	Achieved
	Mzansi clients reached a milestone of 1 000 000 in August 2008.	Exceeded
Retain our leading positions in key wholesale market segments and grow our business banking franchise	Retained strong market positions in property finance and domestic corporate lending. Nedbank Investor Services awarded the Top-rated Domestic Custodian for 2008 by the Global Custodian. The Global Finance Survey voted Nedbank Investor Services the Best Subcustodian for South Africa and Africa for 2008 (for the third consecutive year).	Achieved
	Increased net new client acquisition by 60% in Business Banking, compared with prior year. Gained 16 new major corporates.	Achieved
	Nedbank Capital achieved top three placings in the Dealmakers corporate finance ranking by dealflow and led the Bond Exchange of South Africa (BESA) bond market share rankings in value and volume. Forex turnover continued to increase. Nedbank recorded a higher win ratio relative to the number of deals lost in tenders.	Partially achieved
Improve service levels ultimately to achieve worldclass service over time	Nedbank has been ranked number one among South African banks in the Ask Afrika Orange Index (Banking Sector Client Service) for the second consecutive year.	Exceeded
	Client Management Assessment Tool (CMAT) scores improved to the top decile of global financial services companies, while further commitments to our AskOnce service promise were launched.	Exceeded
	Client satisfaction surveys indicate upward trends in client loyalty driven by Business Banking’s decentralised, empowered delivery model.
	Capital Corporate Finance Ratings (Dealmakers) – top three in dealflow for 2007; Spire Awards (Bond Trading) – five top-three placings; improved the Nedgroup Securities Financial Mail ranking by one place.
Expand our distribution footprint through investment and innovation	A total of 15 new branches, 278 new automated teller machines (ATMs) and 23 instore branches were commissioned. Cashback at 2 193 additional point-of-sale devices.	Achieved
Provide value-for-money products	The reduction in retail bank fees over the past two years makes Nedbank the most affordable of the big four banks particularly in the lower-income and mass-market segments.	Achieved
	Maintained competitive pricing in wholesale banking products. NetBank Business (electronic platform) ranked first in South Africa in the BMI-T Survey for the value-for-money attribute.
Improve our positioning in the public sector	Appointed dedicated investment banking manager for the public sector and several pitches and mandates awarded from various public sector enterprises, eg ACSA, Eskom, Public Investment Corporation.	Achieved
	On the back of winning the Western Cape government account in 2007, Business Banking has won a number of municipalities as clients in 2008.	Achieved
Grow our presence in Africa	Approvals were received to open representative branches in Angola and Kenya.	Achieved
	Announced a strategic alliance with Ecobank to provide clients access to a combined Pan-African banking network covering 30 countries (including South Africa), with over 1 000 branches and banking outlets across the continent.	New

SHAREHOLDERS: 'A great place to invest.'

FINANCIAL TARGETS

Measure	Making it happen in 2008	2008 self- assessment	2009 outlook	Medium- to long-term targets
Return on equity (ROE) (excl goodwill)	20,1%	Did not achieve	> 15%	5% (2008: 10%) above monthl weighted average cost of ordinary shareholders’ equity (COE).
Efficiency ratio	51,1%	Exceeded	< 53%	< 50% (2008: <55%)
Growth in diluted headline earnings per share	(2,0%)	Did not achieve	+ - 10% down	At least CPIX + gross domestic product (GDP) growth + 5%.
Credit loss ratio	1,17%	Did not achieve	< 1,30%	Between 0,55% and 0,85% of average advances.
Core Tier 1	8,2%			7,5% – 9,0%
Tier 1	9,6%	Exceeded	Towards the top end of the range	8,5% – 10,0%
Tier 2	12,4%			11,5% – 13,0%
Economic capital	R9,6 billion surplus	Exceeded	A- (including 10% buffer)	Capitalised to a 99,9% confidence interval on economic-capital basis target A- debt rating (+ 10% buffer).
Dividend cover policy	2,29	Achieved	2,25 – 2,75 times	2,25 – 2,75 times.

REGULATORS: ' Worldclass at managing risk.'

Objective	Making it happen in 2008	2008 self-assessment
DELIVER WORLDCLASS RISK PRACTICES
Manage risk as an enabler	Basel II fully implemented for the group, including Advanced Internal Ratings-based (AIRB) approval from South African Reserve Bank (SARB) for credit risk in Nedbank and implementation for operational risk on track.	Achieved
	Risk-based capital allocation (including a comprehensive economic-capital system and shareholder value-add basis) now driving strategic decisionmaking, business performance measurement and incentives.	Achieved
	Strong risk culture prevails, underpinned by sound risk governance endorsed by the Enterprisewide Risk Management Framework.	Achieved
	Across the bank we have refined our credit parameters and loan-to-value (LTV) requirements on home loans, and bolstered collections capabilities.	On track
	Relationships and feedback from regulators and government stakeholders.	Achieved
	Prudent risk management in the wake of the global credit crisis limiting losses in respect of international exposures.	Achieved
OPTIMISE CAPITAL AND LIQUIDITY
	The group’s capital levels have improved significantly during 2008 in an environment where capital adequacy is a key focus area.	Exceeded
	First South African bank to successfully execute non-core Tier 1 subordinated note of R1,8 billion in 2008.	Achieved
	Liability growth was solid, specifically deposit growth at 21,4%, which exceeded asset growth at 16,1%.	Exceeded

GROUP CAPITAL ADEQUACY

COMMUNITIES: 'Highly involved in the community and environment', 'becoming a bank for all south Africans', 'leading transformation', 'most respected and aspirational brand' and 'leading as a corporate citizen.'

 

Objective	Making it happen in 2008	2008 self-assessment
Build the Nedbank brand and become a bank for all South Africans	Brand equity has improved with marked increases in awareness, relevance and loyalty, particularly in the mass consumer segment of the market. It is also very encouraging that Nedbank remains the only major South African banking brand to have made positive improvements in brand equity over the year.	Exceeded
	Nedbank expanded its sponsorship profile to cover the mass market by successfully hosting the first Nedbank Cup (soccer mass-market sponsorship deal).	Achieved
	The launch of the Local Hero Programme for our clients was highly successful, with Nedbank contributing more than R1 million to our clients’ charities of choice.	Achieved
Become South Africa’s green and caring bank	Included in the JSE SRI Index and Dow Jones Sustainability Index for the fifth consecutive year.	Achieved
	Leading position among South Africa’s banks in the South African Carbon Leadership Index, and fourth place overall in the low-carbon industries category.	Exceeded
	Added 132 000 new clients to the Nedbank Affinity Programme, which exceeded the targeted growth for 2008. Even during the tough economic times the total amount donated to various affinity trusts in 2008 grew by 8% to R10,4 million.	Exceeded
	Funding of an equity stake in an affordable-housing development, Tanganani, with the capacity to yield 12 000 housing units (developers will be reducing its carbon footprint, both during development and during occupation).	New
	Awards received:
	Financial Times Award for Emerging Markets Sustainable Bank of the Year for Middle East and Africa. African Bank Award for Gender Sensitivity. Association for Advancement of Black Accountants in Southern Africa Award. CSI Programme Award at the National Business Awards for our Client Local hero programme.
Accelerate transformation	Achieved a Financial Sector Charter (FSC) score of 99,1 and level-three black economic empowerment (BEE) contributor against the dti scorecard. Significant progress across the board, with all areas exceeding FSC targets.	Exceeded
	Reached 1 million Mzansi clients in August 2008. More than 60% of all new outlets are opened in historically unrepresented areas.	Exceeded
	During 2008 Nedbank launched various internal transformation initiatives aimed at enabling and embracing diversity conversations – these included the launch of the ‘Be the key’ transformation booklet and diversity workshops (evolving to greatness) to expose staff to the cultural diversity and history of South Africa.	On track