Graham Dempster (53)
Group Executive: Nedbank Corporate
28 years’ service • BCom, CTA, CA (SA), AMP (Harvard, USA)
Graham joined the group in 1980 in the Corporate Finance Division of UAL Merchant Bank. He was appointed General Manager of the division in 1987 and Joint Head of the Special Finance Division in 1989. In 1992 he was transferred to Nedbank, initially in a general management role in respect of strategy, and in 1998 was appointed Head of the International Division. He assumed responsibility for the Corporate Banking Division in 1999 and Nedbank Corporate late in 2003.
Frank Berkeley (52)
Denys Denya (44)
Adriaan du Plessis (49)
Keith Hutchinson (50)
Ingrid Johnson (42)
Priya Naidoo (36)
Mfundo Nkuhlu (42)
Anton Redelinghuis (59)
Murray Stocks (42)
Ashley Sutton-Pryce (55)
Nedbank Corporate comprises the client-focused businesses of Business Banking, 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 execution services to the wholesale-banking client base of Nedbank. From 1 January 2009 Business Banking, which has been a business unit within Nedbank Corporate, will commence operating as a separate business cluster with a direct reporting line to the Group Chief Executive (CE).
The year 2008 was generally challenging for banks globally. Notwithstanding the difficult economic environment, Nedbank Corporate has been able to produce good results, with all the banking businesses performing well. The property investment business generated positive earnings in a difficult climate, albeit down from the record levels of 2007 when the market was buoyant.
Nedbank Corporate's core strength is to provide a personalised relationship-based banking service by thoroughly understanding our clients' needs and delivering banking solutions to wholesale banking clients through our teams of highly qualified, experienced professionals, who are dedicated to providing the highest-quality service to their clients.
We seek to achieve our strategy by ensuring that we attract the best-quality people in the market, develop a full suite of banking products and services, and support this through outstanding service delivery. In executing this strategy we seek to be a significant market share player in each of our market segments.
Nedbank Corporate adopts a consistent set of principles in terms of efficient deployment of capital, risk propensity and decisionmaking, pricing, marketing and rewards to enhance its returns on economic capital employed. This approach is based on the similarities of the market segments it operates in – specifically the specialist relationship management philosophy, service standards and discretionary credit decisionmaking, which rely on indepth personalised knowledge of our clients.
We continue to be committed to focusing on client acquisition and retention through best-practice client satisfaction, the highest service standards and innovative solutions, and by reducing problem incidence and improving problem resolution.
Our focus is on transforming the businesses in line with the objective of being a truly South African bank in terms of culture and employment equity in all respects, and aspirational targets have been set in this regard.We also seek to leverage our black economic empowerment (BEE) financing strengths, striving to become the custodian of empowerment initiatives in terms of BEE financing and enterprise development, underpinned by the Nedbank Group Eyethu Corporate BEE Scheme, which was implemented in 2005.
Nedbank Corporate has produced robust core banking earnings growth with all the business units showing growth in headline earnings. The property investment business generated positive earnings in difficult market conditions, albeit down from the record levels of 2007, which were generated in a buoyant market.
Key to the performance of Nedbank Corporate is outstanding leadership and management and an emphasis on personal growth and team effectiveness, which have been focus areas for the last three years. Progress is evidenced by a further improvement in the overall staff morale as reflected by a further 4% increase in the positive mean in the Nedbank Employee Survey. The material increase in the alignment of our staff corporate culture for the fourth consecutive year highlights the positive shift in attitudes and perceptions of our people, who are crucial to client service and ultimately market growth.
As referred to earlier Business Banking became a separate cluster with effect from 1 January 2009 and the Managing Executive, Ingrid Johnson, now reports directly to Tom Boardman, the Group CE, and has been appointed to the Group Executive Committee (Group Exco). This is an acknowledgement of the leadership strengths of Ingrid and her impeccable track record in building a high-quality, sustainable, large business in an area of strategic importance for the bank. In addition to his current responsibilities as Managing Executive of Corporate Banking, Mfundo Nkuhlu was appointed as Deputy Managing Executive of Nedbank Corporate and joined the Group Exco on 1 January 2009. The Nedbank Corporate Executive team is very proud of these appointees and wishes them great success in their new roles, and will continue to support them fully through their specialist functional roles.
Nedbank Corporate's commitment to transformation is demonstrated by it having exceeded all its employment equity and BEE lending targets.
Nedbank Corporate is benefiting from the image and positioning of the Nedbank brand and continues to contribute to the strengthening of the brand through various media campaigns.
The risk management function in Nedbank Corporate had an outstanding year, managing risk in an exceptionally difficult environment. The proactive hands-on approach enabled Nedbank Corporate to achieve a credit loss ratio of 0,27%, which is below the low end of the forecast through-the-cycle impairment range.
Notwithstanding the economic slowdown, the wholesalelending activity provided the opportunity to grow wholesale lending, assisted by the demand for financing capital projects.We have been able to increase the number of primary-banked transactional banking clients in line with our stated strategy.
We continue to focus on building our public sector client base and have contributed to the financing needs of our public sector clients. A number of municipalities were added to the list of existing public sector clients.
The migration of our Business Banking clients onto NetBank Business, the new electronic banking platform, continued with the vast majority of new clients now being able to benefit from the enhanced functionality. NetBank Business plays an important part in new-client acquisition and improved client retention. The focus for 2009 will be on providing the remaining functionality required for Corporate Banking clients and migrating the corporate clients onto the new platform.
Electronic banking volumes in the wholesale market continue to grow strongly, whereas a further decline in revenue and volumes from cheque processing occurred, in line with the market experience, as processing switches to electronic and card platforms.
Business Banking managed the growth level of average advances carefully, positioning the business to focus on the quality of the book.
Average advances in Corporate Banking grew strongly at 29%, with the annuity nature of the book strengthening by a substantial shift from short-term advances. The strong growth in net interest income (NII) is driven by both volume growth and improved credit margins.
Non-interest revenue (NIR) grew strongly in line with the strategy of focusing on increasing our primary-banker market share to deepen our transactional banking cross-selling and enhance returns on capital in Corporate Banking and Business Banking.
Transactional Banking provided the drive for investment in transactional banking products in line with the strategy to enhance Nedbank's wholesale-banking product offering to clients with the implementation of the first phase of the letters-of-guarantee system and further enhancements to the electronic banking platform.
Shared Services had another good year in delivering accurate and efficient processing during volatile and uncertain global banking conditions. Nedbank Investor Services received the top rating as Crossborder and Domestic Custodian by Global Custodian for the third year running and was rated the Best Subcustodian Bank – Africa and South Africa by Global Finance for the second consecutive year.
Nedbank Africa had a solid performance, building on the investment in prior years in governance and risk frameworks, information technology, employee skills and the streamlining of operations.
Towards the end of the year Nedbank entered into a strategic business cooperation agreement with Ecobank, the largest Pan-African banking group, creating a network of more than 1 000 branches in 30 countries in Africa. Ecobank has the largest geographic banking coverage in Africa in terms of number of countries. It operates in 25 countries, mainly in west, central and east Africa (including Ghana, Nigeria and Kenya).
The alliance will enable the two banks to extend their coverage across Africa on a cooperative basis while managing costs and risk effectively. Ecobank will retain its focus on expansion into less mature, growing markets and will also enhance its service offering in southern Africa. Nedbank will continue focusing on establishing banking operations in the Southern Africa Development Community and, together with Ecobank, provide its clients with comprehensive banking services in west, central and east Africa and grow its banking services in these markets.
The strategic alliance with Ecobank is a very exciting development. It provides Nedbank with the opportunity to expand its sphere of activity significantly in a low-risk, lowcapital- intensive manner, which is the preferred approach to adopt during these challenging times in global financial services.
This significant step forward for Nedbank will enable its clients to access banking services in many countries across the African continent through one integrated banking group operating under the Ecobank brand.
Nedbank Corporate increased headline earnings by 11,1% to R2 924 million and achieved a return on risk-adjusted capital (RORAC) of 28,7%. During 2007 the investments in Bond Choice and Lion Match were sold down and, excluding this, headline earnings grew by 13,4%.
The core banking activities generated strong headline earnings growth of 20,1% in 2008 on top of the growth of 28% in 2007. It is pleasing to note that all the core banking businesses performed well, with each business growing headline earnings. Impairments were well-managed and expense growth was controlled significantly below the level of income growth.
Overall, Property Finance generated R800 million in earnings, which was down 12% on 2007, with the core banking operations showing an increase in earnings and the property investment activities generating earnings of R154 million at a good return on capital, but down from the record level of R272 million in 2007.
NII and NIR on core banking business grew 16% and 13,5% respectively, mostly from the volume increase in transactional banking products and gains in primary-banking clients in both the public and private sectors in all the businesses. Average advances increased by 21,2%.
The credit loss ratio of 0,27% is up from the unsustainably low level of 0,11% in 2007, but below the through-the-cycle benchmark, which is very pleasing in the current difficult economic and business environment.
In line with the key strategy to be a leader in the attractive business banking market, Business Banking increased headline earnings strongly by 22,6% and 2008 is the fourth consecutive year of consistent strong performance.
Corporate Banking had an excellent year with headline earnings up 44%, resulting from strong asset growth, increased credit margins and good NIR growth across all sectors.
Nedbank Africa increased headline earnings by 20,5% with solid performances from all the underlying businesses.
The global economic crisis will have a negative effect on the performance of Nedbank Corporate. This, coupled with the expected decrease in interest rates, which will reduce income on capital, and the likelihood of higher impairment levels, will constrain growth. Further infrastructure development is likely to benefit Nedbank Corporate.
Each business in Nedbank Corporate has clear strategies and plans for the future, and the leadership teams are well positioned to respond to the challenges ahead.
The business cooperation agreement with Ecobank has opened up new avenues for business creation. Generating value from this agreement will be an important focus area for 2009.
Nedbank Corporate's position in the market place will be maintained through sound underlying business practices and continued focus on developing the quality and capability of all our people, products and services to provide the highest level of service and delivery to our clients.
It is also well-placed to grow and optimise business opportunities in the private and public sector markets by leveraging off its strong and valued client base and by providing innovative solutions through skilled, dynamic teams.
Business Banking services companies with an annual turnover from R7,5 million to R400 million and is differentiated by its decentralised, empowered, accountable business model and client-centric approach.
Corporate Banking services companies with an annual turnover in excess of R400 million and generates business through lending, transactional banking, structuring and advisory fee income opportunities, significant wholesale funding, treasury execution, custodial services and global trade activities.
Property Finance specialises in commercial and industrial property finance in the middle to large corporate market. The division 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. The Ecobank alliance enables Nedbank to extend its coverage across more than 1 000 branches in 30 countries in Africa.
Transactional Banking provides product development and support, and specialist transactional banking solutions and services to Business Banking and Corporate Banking clients, working closely with the relationship-banking teams.
Corporate Shared Services provides transaction execution services for local and foreign payment and trade activities, client service centres and client onboarding project migration teams.
Nedbank Investor Services provides custodial services to entities trading on JSE and facilitates share-lending activities.