NEDBANK GROUP TRANSFORMATION JOURNEY Presentation to Parliaments National

NEDBANK GROUP TRANSFORMATION JOURNEY Presentation to Parliament’s National Assembly Standing Committee on Finance and Portfolio Committee on Trade and Industry – Transformation of the Financial Sector 13 MARCH 2017 Version: FINAL Presented by: Mike Brown – Nedbank Group Chief Executive Nedbank Limited Reg No 1951/000009/06. Authorised financial services and registered credit provider (NCRCP 16).

WHY TRANSFORMATION MATTERS TO NEDBANK? Nedbank’s socioeconomic transformation journey began before BEE legislation: – Transformation is much more than compliance with any codes. – It is a moral and business imperative to contribute to a sustainable future for all. – Ongoing transformation is needed to remain relevant in the transforming societies in which we operate. Our approach supports both business and national strategic priorities: – The National Development Plan (NDP) details a comprehensive approach to transformation. The NDP acknowledges that: If South Africa registers progress in deracialising ownership and control of the economy, without reducing poverty and inequality, transformation will be superficial. Similarly, if poverty and inequality are reduced without demonstrable changed ownership patterns … the country's progress will be stifled. – Transformation needs to be a catalyst for the higher levels of inclusive growth our country needs. – Nedbank is committed to play its part, working together with business, government, labour and civil society to address structural socioeconomic challenges in the country and improve lives of all South Africans. 2

NEDBANK GROUP’S TRANSFORMATION APPROACH AND VISION Nedbank’s Holistic Transformation Approach Additional elements of transformation beyond the FSC. Depicts all elements of transformation based on the FSC. Ownership Preferential Procurement Brand image Management Control Enterprise and Supplier Development Stakeholder relationships Employment Equity Access to Financial Services Leadership development and cultural change Skills Development Empowerment Financing Impact of underlying legislation Socioeconomic Development Individuals Communities Environment Nedbank’s Transformation Vision To be a pan-African bank with an inclusive culture, relevant in the societies in which we operate and admired as a business that significantly advances the development of historically disadvantaged people across all our stakeholder groups. 3

TRANSFORMATION CONTINUES TO BE A KEY ENABLER TO ACHIEVE OUR PURPOSE OF USING OUR FINANCIAL EXPERTISE TO DO GOOD PURPOSE VISION DEEP GREEN ASPIRATIONS TRANSFORMATION A KEY STRATEGIC ENABLER To use our financial expertise to do good for Individuals, Families, Businesses and Society To be the most admired financial services provider in Africa by our staff, clients, shareholders, regulators and communities Great place to work Great place to bank 2004 Beyond Transformation Great place to invest Worldclass at managing risk 2008 Accelerated Transformation Green and caring bank 2009 – Present Leading Transformation OUR BRAND WHO WE ARE LIVING OUR VALUES 4 A universal bank with an integrated wealth franchise delivered through a regional footprint with strategic access to pan-African banking network Integrity Respect Accountability Client-driven People-centred

BBBEE SCORE CULTURAL ENTROPY SCORE HEADLINE EARNINGS (Rbn) PROGRESS MADE FROM 2006 TO 2016 AS A RESULT OF AN INTEGRATED STRATEGY TO TRANSFORM AND GROW 5, 9 4, 5 2006 4, 3 2007 2008 2009 4, 9 7, 5 9, 9 11, 4 NEDBANK GROUP PROFILE 2010 2011 2012 2013 2014 2015 2006 2016 Market capitalisation 19 R 60. 1 bn 2016 R 118 bn 17 14 13 13 11 10 11 12 13 12 Number of employees Number of clients 2006 2007 2008 82, 44 2009 86, 62 2010 89, 5 2011 2012 95, 23 94, 87 2013 91, 21 2014 2015 2016 95, 65 97, 34 98, 56 Number of ATMs Number of branches 67, 49 24 034 (58% black) 3. 5 m (< 50% black) 1 235 441 32 401 (78% black) 7. 7 m (69% black) 3 865 509 56, 61 2006 5 5, 8 6, 2 8, 7 10, 5 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Country presence across Africa 5 39 (incl. strategic shareholding in ETI)

OUR ROLE IN SOCIETY CONTRIBUTING BY DELIVERING VALUE TO ALL OUR STAKEHOLDERS SHAREHOLDERS STAFF § Paid R 15. 5 bn in salaries & benefits to support our 32 401 staffmembers & their families § Achieved a 32. 3% total shareholder return § Facilitated transfer of R 3. 5 bn payroll taxes on behalf of staff to government … to shareholders who represent pension funds & investments of all South Africans (incl GEPF, a 6. 0% shareholder in Nedbank) § Paid R 5. 6 bn dividends § Created almost 4 000 new jobs since 2010 § Transforming our workforce towards SA demographics (> 78% black employees) § Leadership in transformation acknowledged at 15 th Oliver Empowerment Awards CLIENTS § R 162 bn loan payouts to enable clients to finance their homes, vehicles, education & grow their business, including R 26 bn loan payouts to SME & BB clients & R 3. 6 bn for affordable housing TO BE THE MOST ADMIRED FINANCIAL SERVICES PROVIDER IN AFRICA BY OUR STAKEHOLDERS § Unlocked R 8. 2 bn in value for our more than 500 000 BBBEE shareholders 1 REGULATORS § Maintained a strong balance sheet to support a safe & stable banking system § Paid R 5. 2 bn direct & indirect taxes § Invested more than R 100 bn in government & public sector bonds to support the funding needs of government COMMUNITIES § Infrastructure financing – over R 50 bn drawn & committed § Provided consumer finance education to 180 000 people § Safeguarded R 762 bn deposits at competitive interest rates § Procured 75% of our goods & services locally § Processed over 15 bn transactions to enable clients to pay for their goods & services § Education & black student support: § Top 3 SA asset manager for eight consecutive years – managing our clients’ investments § Nedbank Mogale Empowerment Trust – R 100 m investment § R 11 m contribution to issues around Fees Must Fall § R 141 m to socioeconomic development (50% spent on education) § Invested R 20 m in the government SME Fund § Maintained level 2 BBBEE status for eight consecutive years 1. As reported in February 2016 based on our BBEEE schemes that matured in 2015.

SOLID GOVERNANCE STRUCTURE ENSURING OVERSIGHT AND EXECUTION OF THE BANK’S TRANSFORMATION PROGRAMME u – Transformation is led by the Nedbank Board and Group Executive Committee Nedbank Group Board Transformation and Sustainability Committee p p u – All forums and committees meet quarterly with the exception of Group Exco that meets monthly Group Executive Committee (Exco) p – Transformation KPIs set and monitored through performance contracts Transformation and HR Exco Sub-Committee – Progress against KPIs rigorously monitored and tracked through all forums and committees p u Group Transformation Forum p Group Procurement Committee 7 Socioeconomic Development Forum – BBBEE external verification conducted annually by Sizwe. Ntsaluba. Gobodo Inc p Nedbank Employment t Equity Forum Cluster Employment Equity Forums – Staff are regularly updated through CEO roadshows

NEDBANK GROUP BOARD MONITORS PROGRESS OF THE BANK’S TRANSFORMATION PROGRAMME The Nedbank Group Board is diverse in demographics, skills and experience and consists of 56% independent non-executive directors of whom 60% are Black and 19% executive directors of whom 67% are Black. * NON-EXECUTIVE DIRECTORS MIKE BROWN 50 Chief Executive RAISIBE MORATHI 47 Chief Financial Officer MFUNDO NKUHLU 50 Chief Operating Officer VASSI NAIDOO 62 Chairman IAN GLADMAN 52 BRUCE HEMPHILL 53 ROB LEITH 54 INDEPENDENT NON-EXECUTIVE DIRECTORS MALCOLM WYMAN 70 Lead Independent Director 8 DAVID ADOMAKOH 51 TOM BOARDMAN 67 BRIAN DAMES 51 ERROL KRUGER 60 * David Adomakoh excluded from percentages per FSC codes as although black, he is non-South African MPHO MAKWANA 46 MANTSIKA MATOOANE 41 NOMAVUSO MNXASANA 60 JOEL NETSHITENZHE 60 STANLEY SUBRAMONEY 58

NEDBANK GROUP EXECUTIVE COMMITTEE ACCOUNTABLE FOR IMPLEMENTATION OF THE BANK’S TRANSFORMATION PROGRAMME The Nedbank Group Executive Committee comprises the Chief Executive, Chief Operating Officer, Chief Financial Officer and 10 other members of senior management, with a combined 178 years of service. 54% of the Group Exco are Black. CLIENT-FACING CLUSTERS EXECUTIVE DIRECTORS MIKE BROWN 50 Chief Executive RAISIBE MORATHI 47 Chief Financial Officer MFUNDO NKUHLU 50 Chief Operating Officer BRIAN KENNEDY 56 Managing Executive: Nedbank Corporate and Investment Banking IOLANDA RUGGIERO 46 Managing Executive: Nedbank Wealth CIKO THOMAS 47 Managing Executive: Nedbank Retail and Business Banking CENTRAL CLUSTERS TREVOR ADAMS 54 Chief Risk Officer 9 MIKE DAVIS 45 Group Executive: Balance Sheet Management THABANI JALI 58 Group Executive: Enterprise Governance and Compliance; Group Company secretary PRIYA NAIDOO 43 Group Executive: Strategy and Economics THULANI SIBEKO 45 Group Executive: Group Marketing, Communications and Corporate Affairs FRED SWANEPOEL 53 Chief Information Officer ABE THEBYANE 56 Group Executive: Group Human Resources

SOME HIGHLIGHTS OF NEDBANK’S TRANSFORMATION JOURNEY 10 Nedbank Limited Reg No 1951/000009/06. Authorised financial services and registered credit provider (NCRCP 16).

CREATING VALUE FOR BBBEE SHAREHOLDERS AND COMMUNITIES Nedbank has total measured Black shareholding of 37, 55% and Black women shareholding of 17, 39% based on our 2016 FSC verified score by Sizwe. Ntsaluba. Gobodo Inc. The Nedbank BBBEE Eyethu scheme unlocked R 8. 2 bn in realised value for more than 500 000 SA shareholders. Participants included clients, staff, community interest groups and active Black Business Partners: – The WIPHOLD-sponsored Centane Agricultural Development Legacy Project (producing white maize meal) is currently supporting 1431 direct beneficiaries that have received training on farming and financial management, with 43 jobs created. – The Imbizo initiative that was a collaboration between Old Mutual, Nedbank, Mutual & Federal and WIPHOLD built sustainable communities and markets to stimulate the local economy through commercial and CSI activity. 11

CREATING VALUE FOR BBBEE SHAREHOLDERS AND COMMUNITIES Donated R 360 m over 20 years to affinities trusts whenever a client transacts at no cost to the client: – Green Affinity R 237 m – Arts Affinity R 22 m – Sports Affinity R 27 m – Children’s Affinity in association with the Nelson Mandela Children’s Fund R 74 m Nedbank Cup celebrates a decade of making a developmental impact in SA’s most popular sport: – The Ke Yona Team Search initiative has unearthed more than 15 soccer stars in the making, who have been given the opportunity to become professional footballers. – Total prize money is R 7 m, with every team in the last 32 assured of earning at least R 100 000. 12

TRANSFORMATION WITHIN NEDBANK – Good progress made in transforming top management Category Black Top Management Black Middle Management Black Junior Management Nedbank’s Highlights 2016 Commission of Employment Equity Report 2015 54% 60% 88% 28% 59% 76% – Significant progress made in Black representation at junior and middle management – Significant progress in increasing the representation of people with disabilities from 0. 21% in 2006 to 3. 01% in 2016, exceeding industry targets – Grown learnerships from 451 in 2006 to 1500 in 2016 to create job experience opportunities and support business needs – Training spend for black staff increased from R 80 m in 2006 to R 320 m in 2016 13

EFFECTIVE PARTNERSHIPS ENABLING SOCIO ECONOMIC TRANSFORMATION In collaboration with government and various stakeholders, Nedbank continues to commit significant resources to EDUCATION DEVELOPMENT: – > 50% of the R 141 m SED budget (exceeds target of R 99 m) is dedicated to primary, secondary and tertiary education – R 11. 9 m in support of Chairs in Accounting and Economic Science at Limpopo and Fort Hare respectively – R 9 m per annum for external bursary programme – R 9. 2 m of direct funding and alignment to the 6 NECT themes to the value of R 2. 5 m – Sponsored 42 special undergraduate bursaries through Ikusasa Student Financial Aid Programme (ISFAP) pilot project, to enable top performing final year students to graduate in 2016 and awarded 6 special post-graduate sponsorships – R 2. 5 m towards the Partners for Possibility programme – R 100 m investment from Nedbank Mogale Empowerment Trust for the benefit of black students and enterprise development 14

EFFECTIVE PARTNERSHIPS ENABLING SOCIO ECONOMIC TRANSFORMATION In collaboration with government and various stakeholders, Nedbank continues to commit to ENTERPRISE DEVELOPMENT: – 24 Expanded Public Works Programme (EPWP) projects with 554 Learner Contractors, R 2. 7 m in mentorship funding and 2977 job opportunities created. R 41 m total lend thus far and no bad debts in this program. Tender re-awarded. – 2400 SMMEs benefitting from various business skills and capacity building interventions through 23 Municipalities. – R 3. 3 m in funding Branson Centre of Entrepreneurship in SA supported the creation of 474 jobs. – Riversands Incubation Hub, a registered Non-Profit Company between Century Property Developments and The Jobs Fund, incubates businesses for growth, expansion and job creation within the community in Diepsloot. 15

EFFECTIVE PARTNERSHIPS ENABLING SOCIO ECONOMIC TRANSFORMATION In collaboration with government and various stakeholders, Nedbank continues to commit to CONSUMER EDUCATION: – R 15 m spent on empowering communities through financial literacy. – Entrenched as part of our community integration strategy and in line with our Fair Share 2030 aspirations, reached 650 000 individuals over the past 10 years. – Support to the Department of Basic Education in Gauteng in their digital roll-out strategy for piloting financial literacy. – Working with Department of Education in Limpopo to impart knowledge on retirement readiness for the senior staff members. 16

ENABLING INCLUSIVE GROWTH Nedbank prioritises its role in creating real economic opportunities for Black businesses in South Africa, partnering with them to ensure their success as viable, productive participants in the country’s socio-economic development. By continuing with a holistic approach, Nedbank’s empowerment financing model has led to the bank providing funding to a range of initiatives Transformational Infrastructure R 5, 8 bn* Affordable Housing R 11, 3 bn* Black Agriculture R 471 m* Black Small and Medium Enterprises R 17. 3 bn* BBBEE Transaction Financing R 29, 6 bn* Black Industrialist Funding Projects that support economic development in underdeveloped areas and contribute towards equitable access to economic resources Make quality affordable housing more readily available and accessible to many people Key drivers of SA’s sustainable and food-secure future Partner with our clients for growth for a greater SA Provide financing to BO businesses through our innovative and flexible solutions Requirement for new FSC supported by Nedbank (new FSC not yet effective) Specialist Teams 17 * Cumulative amount since 1 January 2012

ENABLING INCLUSIVE GROWTH ACHIEVEMENTS – Financed more than 55 000 affordable housing units, disbursing more than R 7 bn towards new and existing residential developments. – Assisted clients in the agricultural sector to withstand the effects of the droughts by restructuring debt and providing an additional R 70 m of working capital to ensure business sustainability and viability. – 75% local procurement. – Bidvest Prestige Cleaning and Monabo jointly participated in Nedbank’s cleaning tenders, Monabo’s turnover increased from R 300 000 in 2012 to R 15 m in 2016. – 19% of Entry Level Banking client acquisition is from rural areas in South Africa. 18

ENABLING INCLUSIVE GROWTH Great progress has been made on our journey to offer affordable and transparent products for all South Africans. The seventh annual Solidarity Bank Charges Report was published on 11 August 2016, Nedbank is acknowledged ‘as competing well in the basic-banking market with the launch of the new Nedbank PAYU account in February 2016’. 2005 Expensive Niche Bank 2006 2007 Bank for All strategy - 13% Price Reduction - Ad valorem fees to fixed fees 2008 In-line or below inflationary increases from this year onwards, further simplification Further scrapping of fees - 6% Fee Decrease - Lowest Prices of Big 4 Banks 19 2012 Nedbank institutes fee reductions and further simplification 2014 2015 -16 0% Price increase supporting aggressive acquisition and retention strategies. Nedbank’s fees very competitive and transparent.

LEARNINGS, CHALLENGES AND TRANSFORMATION OUTLOOK 20 Nedbank Limited Reg No 1951/000009/06. Authorised financial services and registered credit provider (NCRCP 16).

KEY TRANSFORMATION LEARNINGS AND CHALLENGES KEY LEARNINGS CHALLENGES – Transformation must happen from the inside out - this requires vision, values and structural alignment – Stricter targets across the Codes will lead to lower BBBEE levels for all going forward – Must be Board and CEO led and seen as a key strategic enabler – More work needed to prevent discounting on priority elements of new scorecards – particularly enterprise and supplier development – Culture change is imperative – Ensure good governance and set KPIs – “what gets measured gets done” – Be true to your brand promise – Improving our work force profiles at Senior Management level, to be more demographically represented – focus on African – Collaboration and effective partnerships with key internal and external stakeholders – Accelerating the development of Black SMME’s – Appreciate all aspects of diversity, including employment equity and thought – Subdued economic growth slows transformation opportunities – Adopt a holistic approach and have resilience - this is a long term journey that is vital for our business and our country and will continually be influenced by the rapidly changing environment – Low headcount growth – Communicate with, engage and educate staff along the journey 21 – Low attrition rates

NEDBANK TRANSFORMATION OUTLOOK AND KEY MESSAGES Nedbank is committed to transformation as an imperative for South Africa and for our business. Transformation extends far beyond compliance and is embedded in our strategy and business plans. Progress is diligently measured, tracked and monitored through our governance structures. We have made significant progress but recognise we still have more to do. Nedbank thanks the Honourable Chairpersons Carrim and Fubbs and honourable committee members for the opportunity to present and engage on this matter of national importance. We remain open for continued engagement. We look forward to continue being a partner for inclusive growth as we use our financial expertise to do good for individuals, families, businesses and society. 22

THANK YOU 23 Nedbank Limited Reg No 1951/000009/06. Authorised financial services and registered credit provider (NCRCP 16).