Strategy and objectives – integral to the business model? 1 FINANCIAL ENVIRONMENTAL SOCIAL CULTURAL VOLUME Nedbank Financials South Africa 2010 Integrated Report NEDBANK GROUP LIMITED INTEGRATED REPORT 2010 10 NEDBANK GROUP LIMITED INTEGRATED REPORT 2010 OVERVIEW GROUP REPORTS OPERATIONAL OVERVIEW SUSTAINABLE DEVELOPMENT PERFORMANCE 11 RISK, GOVERNANCE AND COMPLIANCE GROUP STRATEGY DURING 2010 NEDBANK GROUP’S VISION WAS REFINED TO: ‘BUILDING AFRICA’S MOST ADMIRED BANK BY OUR STAFF, CLIENTS, SHAREHOLDERS, REGULATORS AND COMMUNITIES’. PORTFOLIO MANAGEMENT (PORTFOLIO TILT) This approach was adopted for sustainably optimising returns in an environment where resources, capital and liquidity are scarce commodities. The group must be more judicious in selecting strategic business opportunities that will allow better alignment of risk and returns, taking into account liquidity, capital and credit risks. Doing so will allow a transition from some of the existing portfolios, such as retail home loans (where the economic returns continue to be poor), while growing low-capital-intensive businesses. The group will, however, continue to take a long-term sustainable view of its products, client needs and its societal impact. Against this strategic backdrop the business plan for 2011 to 2013 will see Nedbank Group focus on: • building enduring primary banking relationships with more retail and wholesale clients in South Africa; • improving its primary banking positioning across all businesses; • becoming the leader in business banking for South Africa; • becoming the public sector bank of choice; • continuing as one of the top two wholesale banks; The Nedbank Group strategy can be visually represented as follows: • ramping up the wealth and asset management, and insurance businesses; • leveraging the Imperial Bank integration; • becoming the leader in client service delivery; and • building on its position as a leader in, and influencer of, integrated sustainability. The group will also continue to evolve its strategy of building Africa’s most admired bank by: • implementing its three-tier strategy to grow its physical network in the Southern African Development Community; • leveraging boutique investment banking opportunities; • leveraging the Ecobank Nedbank Alliance to provide clients with access to a Pan-African network; and • evaluating selective investment opportunities. The current strong capital position of the group, combined with these strategic focus areas, places Nedbank Group in a position for sustainable growth. While the change in wording is subtle, it represents a significant enhancement to the group’s vision and highlights the increasing focus by Nedbank Group on growing its business reach across the African continent not just in South Africa. However, the group recognises that, to become the most admired bank in Africa, it must achieve this in South Africa first, which is why Nedbank Group’s primary focus during 2010 was on developing more competitive domestic strategies for each of its frontline businesses. The group’s vision continues to be supported by its long-term objectives, which are referred to internally as Deep Green aspirations. These are: • to become a great place to work, a great place to bank and a great place to invest; • to be worldclass at managing risk; • to create a community of leaders; • to have the most respected and aspirational financial services brand; • to be recognised for being highly involved in the community and environment; • to lead in transformation; • to be great at collaboration; and • to live our values. TWO OTHER KEY AREAS RECEIVED ADDITIONAL FOCUS DURING THE 2010 STRATEGY PROCESS: IDENTIFICATION OF KEY TRENDS, THEIR IMPLICATIONS AND NEDBANK GROUP’S STRATEGIC RESPONSE TO THEM IDENTIFIED TREND Bank returns are structurally declining. NEDBANK GROUP WILL … ... respond through active portfolio management and ‘tilting’ of its portfolio of businesses to optimise sustainable profitability, utilise capital and liquidity judiciously, invest to exploit new growth opportunities, and build a lean operating model. ... focus domestically, but continue to explore expansion opportunities in Africa. VISION-LED VALUES-DRIVEN Vision Building Africa’s most admired bank ... ... by our staff, clients, shareholders, regulators and communities. Great place to work Great place to bank Great place to invest Community of leaders Living our values The SA financial services’ economic profit pool is large, but higher growth is expected in the rest of Africa in the longer term. SA prospects continue to be driven by infrastructural investment (mostly government) and a wealthier consumer. There is high growth from bandwidth, electronic, internet, mobile and new technology developments. SA demographic shifts are enabling consumer opportunities. The voice of and focus on the client are increasing. Non-banking solutions are growing faster than banking, but deposits have become a key priority. Demand for talent is greater than growth of the talent pool. Pressure on natural resources is increasing. ... ensure that it benefits from the opportunities created through infrastructure development, increase its focus on wholesale banking, and improve its retail proposition to capture disposable income shifts. The group will also continue to bring more people into the formal banking system through innovative and affordable products such as M-PESA. ... leverage new technologies and then lead in these high-growth markets and banking markets linked to these, such as mobile banking. ... target large and growing segment opportunities such as the underbanked, youth, small and medium enterprise and senior-citizen markets. A differentiated approach is essential to service such new markets in a cost-efficient manner. ... meet the need for simplicity, convenience, choice, affordability, advice, and trust from clients. Client centricity will remain a core focus, with the aim to increase direct engagement with clients. ... seek out add-on growth solutions while improving transactional banking capabilities, such as cross-sell, primary clients, and functionality. ... develop unique ways to retain, develop and grow the staff talent pool, especially in businesses that will be targeting higher growth. ... continue to reduce and neutralise its own operational impact, consider environmental impacts in its lending activities and actively support its clients in their endeavours to reposition their businesses accordingly. Deep Green aspirations Great at collaboration Most respected and aspirational brand Worldclass at managing risk Highly involved in the community and environment Leading transformation What makes us different and guides our long-term strategy? ASK ONCE: Great at listening, understanding clients’ needs and delivering Our brand expression Our eight strategic focus areas Scope of the game Our values Client-driven Manage for value Primary client and cross-sell Risk as an enabler Unique Productivity innovative Transformation and execution and culture Bank for all Green and caring bank A member of the Old Mutual Group Integrity Banking and selected financial services Respect Accountability Southern Africa focus with selected African expansion People-centred Pushing beyond the boundaries pp 10-11 To set up the strategy discussion, Nedbank provide details on key trends in the economy and marketplace, the implications of these trends, and what decisions the Company has taken to ensure an appropriate strategy is in place. The diagram which demonstrates the group ‘vision led, valuesdriven’ strategy incorporates a balance of financial and non-financial elements which are in place to ultimately lead Nedbank to becoming ‘Africa’s most admired bank by staff, clients, shareholders, regulators and communities’. 28 Integrated thinking in reporting
