2015 Nedbank Limited Annual Report and Consolidated Annual Financial Statements

172 Pages·2016·1.62 MB·English

SECTION HEADING (continued)
2015
NEDBANK LIMITED
aNNUal RePORt
for the year ended 31 December 2015
NedbaNk limited – ANNUAL RepoRt 2015 A
2015 HigHligHts
Headline earnings
8 275
(2014: 8 077)
Increase Return on equity
2,5% 15,4%
(2014: 12,4%) (2014: 16,5%)
Common-equity
NIR/expense ratio Credit loss ratio
tier 1 ratio
74,7% 78 bps
10,6%
(2014: 73,5%) (2014: 82 bps)
(2014: 11,0%)
Return on assets
1,05%
(2014: 1,13%)
CONtENts
Financial highlights 2
Ten-year review: Consolidated statement
of comprehensive income 4
Ten-year review: Consolidated statement
of financial position 6
ANNUAL Responsibility of our directors 8
Certification from our Company Secretary 9
RepoRt
Report from our Group Audit Committee 10
Report from our directors 12
Independent auditors' report to the
shareholders of Nedbank Ltd 15
audited consolidated financial
statements
Consolidated statement of
comprehensive income 16
Consolidated statement of financial
position 17
Consolidated statement of changes in
equity 18
Consolidated statement of cashflows 20
Segmental reporting 21
Notes to the consolidated financial
statements 24
additional information not covered by
the auditors' report
Compliance with IFRS - financial
statement notes 121
Worldclass risk management 122
Report from group remuneration
committee chair 140
Reporting back on remuneration 142
Board of directors 152
information to our shareholders
Notice of our annual general meeting 154
Form of proxy 157
Notes to form of proxy 158
Terms used in our report 159
Abbreviations, acronyms and initialisms
used in our report 163
Contact details 167
1
FINANCIAL hIGhLIGhTS
for the year ended 31 December
2015 2014
Headline earnings reconciliation
Profit attributable to equity holders of the parent Rm 8 163 7 998
Non-headline earnings items Rm (112) (79)
Non-headline earnings items Rm (144) (96)
Taxation on non-headline earnings items Rm 32 17
headline earnings Rm 8 275 8 077
key ratios
Net interest income to average interest-earning banking assets % 3,07 3,37
Credit loss ratio – banking advances % 0,78 0,82
Non-interest revenue to total income % 43,9 42,7
Efficiency ratio % 58,8 58,1
Total equity attributable to equity holders of the parent Rm 56 170 52 236
Return on ordinary shareholders’ equity % 15,4 16,5
Average interest-earning banking assets Rm 729 118 644 737
Total assets Rm 860 733 753 444
Return on total assets % 1,05 1,13
Total risk-weighted assets Rm 415 541 368 823
Bank capital adequacy ratios (including unappropriated profits):
– Common equity tier 1 % 10,6 11,0
– Tier 1 % 11,5 12,1
– Total % 14,1 14,7
Share statistics
Number of shares in issue:
– Ordinary shares m 27,6 27,2
– Preference shares m 358,3 358,3
Weighted-average number of ordinary shares m 27,6 27,2
headline earnings per ordinary share cents 30 030 29 650
Dividends per preference share:
– Declared per share cents 78,24198 75,62212
Interim cents 38,22487 36,86072
Final cents 40,01711 38,76140
– Paid per share cents 76,98627 72,56847
– Preference share traded price
Closing cents 899 975
high cents 983 1 056
Low cents 825 925
– Number of preference shares traded m 54,4 59,5
2 NedbaNk limited – ANNUAL RepoRt 2015
HEADLINE EARNINGS EXPENSES AND EFFICIENCY RATIO
(Rm)
Rm %
10 000 25 000 Expenses (Rm) 80
Efficiency ratio (%)
8 000 20 000
60
6 000 15 000
40
4 000 10 000
20
2 000 5 000
3 711 5 656 5 469 3 823 3 838 5 531 6 488 7 189 8 077 8 275 11 72561,5 12 76854,8 12 67150,4 13 79253,3 14 98356,3 16 95556,8 18 56556,3 20 19956,6 22 03158,1 23 45958,8
0 0 0
20062007200820092010 2011 2012 2013 2014 2015 20062007200820092010 2011 2012 2013 2014 2015
TOTAL EQUITY TOTAL ASSETS AND RETURN ON TOTAL ASSETS
(Rbn)
Rbn %
60 1 000 Total assets (Rbn) 1,5
Return on total assets (%)
50
800 1,2
40
600 0,9
30
400 0,6
20
200 0,3
10
28,1 33,1 36,4 38,0 38,4 43,0 51,7 56,0 56,0 60,0 4021,0 4611,3 5471,1 5450,7 5760,7 6140,9 6451,0 6991,1 7531,1 8611,1
0 0 0
20062007200820092010 2011 2012 2013 2014 2015 20062007200820092010 2011 2012 2013 2014 2015
NET INTEREST INCOME TO AVERAGE NON-INTEREST REVENUE TO TOTAL INCOME
INTEREST-EARNING BANKING ASSETS
(%)
Rm %
5 20 000 Non-interest revenue (NIR) (Rm) 50
NIR to total income (%)
4 40
15 000
3 30
10 000
2 20
5 000
1 10
4,1 4,1 3,8 3,5 3,2 3,2 3,4 3,4 3,5 3,3 8 56645,0 9 72541,8 9 87739,3 10 33840,0 10 74140,4 12 55542,1 14 15142,9 15 46643,3 16 19642,7 17 51443,9
0 0 0
20062007200820092010 2011 2012 2013 2014 2015 20062007200820092010 2011 2012 2013 2014 2015
NedbaNk limited – ANNUAL RepoRt 2015 3
TEN-yEAR REvIEW
CONSOLIDATED STATEMENT OF COMPREhENSIvE INCOME
Rm 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006
Rm
Interest and similar income 55 128 50 075 44 107 42 900 41 417 43 421 49 332 55 154 40 185 27 089
Interest expense and similar charges 32 724 28 322 23 873 24 102 24 119 27 556 33 795 39 874 26 631 16 600
Net interest income 22 404 21 753 20 234 18 798 17 298 15 865 15 537 15 280 13 554 10 489
Impairments charge on loans and advances 4 608 4 478 5 529 5 239 5 321 6 360 6 659 4 755 2 115 1 465
income from lending activities 17 796 17 275 14 705 13 559 11 977 9 505 8 878 10 525 11 439 9 024
Non-interest revenue 17 514 16 196 15 466 14 151 12 555 10 741 10 338 9 877 9 725 8 566
Operating income 35 310 33 471 30 171 27 710 24 532 20 246 19 216 20 402 21 164 17 590
Total operating expenses 23 459 22 031 20 199 18 601 16 955 14 983 13 792 12 671 12 768 11 725
Indirect taxation 668 522 480 460 413 387 402 356 298 334
Profit from operations before non-headline earnings items 11 183 10 918 9 492 8 649 7 164 4 876 5 022 7 375 8 098 5 531
Non-headline earnings items (144) (96) (55) (49) (48) (103) (32) 745 25 183
Profit from operations 11 039 10 822 9 437 8 600 7 116 4 773 4 990 8 120 8 123 5 714
Share of (losses)/profits of associate companies and joint arrangements (1) 12 28 (1) 9 54 68
Profit before direct taxation 11 038 10 834 9 465 8 600 7 116 4 773 4 989 8 129 8 177 5 782
Direct taxation 2 828 2 786 2 297 2 159 1 610 983 960 1 791 2 185 1 669
Profit for the year 8 210 8 048 7 168 6 441 5 506 3 790 4 029 6 338 5 992 4 113
Profit attributable to:
– Ordinary and preference equity holders 8 163 7 998 7 152 6 410 5 483 3 737 3 790 6 106 5 681 3 870
– Non-controlling interest – ordinary shareholders 47 50 16 31 23 53 224 217 298 243
– Non-controlling interest – preference shareholders 15 15 13
8 210 8 048 7 168 6 441 5 506 3 790 4 029 6 338 5 992 4 113
Headline earnings 8 275 8 077 7 189 6 460 5 531 3 838 3 823 5 469 5 656 3 711
4 NedbaNk limited – ANNUAL RepoRt 2015
CONSOLIDATED STATEMENT OF COMPREhENSIvE INCOME
Rm 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006
Rm
Interest and similar income 55 128 50 075 44 107 42 900 41 417 43 421 49 332 55 154 40 185 27 089
Interest expense and similar charges 32 724 28 322 23 873 24 102 24 119 27 556 33 795 39 874 26 631 16 600
Net interest income 22 404 21 753 20 234 18 798 17 298 15 865 15 537 15 280 13 554 10 489
Impairments charge on loans and advances 4 608 4 478 5 529 5 239 5 321 6 360 6 659 4 755 2 115 1 465
income from lending activities 17 796 17 275 14 705 13 559 11 977 9 505 8 878 10 525 11 439 9 024
Non-interest revenue 17 514 16 196 15 466 14 151 12 555 10 741 10 338 9 877 9 725 8 566
Operating income 35 310 33 471 30 171 27 710 24 532 20 246 19 216 20 402 21 164 17 590
Total operating expenses 23 459 22 031 20 199 18 601 16 955 14 983 13 792 12 671 12 768 11 725
Indirect taxation 668 522 480 460 413 387 402 356 298 334
Profit from operations before non-headline earnings items 11 183 10 918 9 492 8 649 7 164 4 876 5 022 7 375 8 098 5 531
Non-headline earnings items (144) (96) (55) (49) (48) (103) (32) 745 25 183
Profit from operations 11 039 10 822 9 437 8 600 7 116 4 773 4 990 8 120 8 123 5 714
Share of (losses)/profits of associate companies and joint arrangements (1) 12 28 (1) 9 54 68
Profit before direct taxation 11 038 10 834 9 465 8 600 7 116 4 773 4 989 8 129 8 177 5 782
Direct taxation 2 828 2 786 2 297 2 159 1 610 983 960 1 791 2 185 1 669
Profit for the year 8 210 8 048 7 168 6 441 5 506 3 790 4 029 6 338 5 992 4 113
Profit attributable to:
– Ordinary and preference equity holders 8 163 7 998 7 152 6 410 5 483 3 737 3 790 6 106 5 681 3 870
– Non-controlling interest – ordinary shareholders 47 50 16 31 23 53 224 217 298 243
– Non-controlling interest – preference shareholders 15 15 13
8 210 8 048 7 168 6 441 5 506 3 790 4 029 6 338 5 992 4 113
Headline earnings 8 275 8 077 7 189 6 460 5 531 3 838 3 823 5 469 5 656 3 711
NedbaNk limited – ANNUAL RepoRt 2015 5
TEN-yEAR REvIEW (continued)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Rm 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006
assets
Cash and cash equivalents 18 151 10 757 17 467 12 587 11 514 7 469 6 823 7 638 9 545 11 165
Other short-term securities 60 078 56 322 35 004 37 575 31 715 21 955 14 408 10 411 11 775 13 855
Derivative financial instruments 30 948 15 644 13 811 14 660 14 314 14 077 12 871 23 114 9 924 10 314
Government and other securities 42 733 26 828 31 279 26 194 29 991 31 667 35 754 41 834 29 271 22 031
Loans and advances 666 807 603 329 566 047 520 116 493 107 471 447 446 428 436 420 375 421 321 724
Other assets 3 925 5 393 4 204 4 528 3 989 3 613 3 917 4 731 4 920 5 120
Current taxation assets 904 236 340 241 629 440 580 314 29 138
Investment securities 1 648 2 369 2 932 2 832 3 549 2 999 3 012 2 743 2 739 2 385
Non-current assets held for sale 2 16 12 508 8 5 12 10 41
Investments in private-equity associates, associate companies and joint
arrangements 1 400 1 158 1 098 1 029 565 933 922 913 735 690
Deferred taxation assets 67 165 69 362 66 48 36 71 65 48
Investment property 87 84 488 82 102 104 75 66
Property and equipment 8 114 7 459 6 571 6 171 6 082 5 394 4 754 4 124 3 757 3 323
Long-term employee benefit assets 4 885 4 409 2 847 1 992 2 027 1 965 1 783 1 667 1 305 1 357
Mandatory reserve deposits with central banks 16 190 14 843 13 199 12 641 11 862 11 068 10 437 10 061 8 351 7 026
Intangible assets 4 881 4 516 4 188 3 830 3 634 3 328 3 151 2 977 2 715 2 605
total assets 860 733 753 444 699 155 645 350 613 540 576 490 544 990 547 132 460 627 401 888
equity and liabilities
Ordinary share capital 28 27 27 27 27 27 27 27 27 27
Ordinary share premium 18 532 17 422 17 422 17 422 14 422 14 422 14 422 14 422 14 422 14 422
Reserves 37 610 34 787 30 524 26 140 24 856 20 281 18 174 16 927 13 954 9 583
total equity attributable to equity holders of the parent 56 170 52 236 47 973 43 589 39 305 34 730 32 623 31 376 28 403 24 032
Preference share capital and premium 3 561 3 561 3 561 3 561 3 561 3 560 3 483 3 122 3 122 2 770
Non-controlling interest attributable to:
– Ordinary shareholders 223 183 141 136 121 110 1 796 1 644 1 307 955
– Preference shareholders 91 300 300 300
total equity 59 954 55 980 51 675 47 286 42 987 38 400 37 993 36 442 33 132 28 057
Derivative financial instruments 33 996 15 479 16 588 13 475 13 791 11 930 10 799 23 077 10 336 11 549
Amounts owed to depositors 708 036 634 623 585 497 542 671 516 540 491 038 467 924 464 082 391 526 341 708
Provisions and other liabilities 9 911 8 404 10 016 9 273 8 286 6 179 5 218 6 145 10 419 9 098
Current taxation liabilities 87 35 13 67 27 76 162 117 275 338
Other liabilties held for sale 36
Deferred taxation liabilities 763 287 297 367 997 1 358 1 514 1 982 1 470 1 410
Long-term employee benefit liabilities 3 009 3 002 1 804 1 880 1 473 1 408 1 298 1 227 1 145 1 210
Long-term debt instruments 44 977 35 634 33 265 30 295 29 439 26 101 20 082 14 060 12 324 8 518
total liabilities 800 779 697 464 647 480 598 064 570 553 538 090 506 997 510 690 427 495 373 831
total equity and liabilities 860 733 753 444 699 155 645 350 613 540 576 490 544 990 547 132 460 627 401 888
6 NedbaNk limited – ANNUAL RepoRt 2015
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Rm 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006
assets
Cash and cash equivalents 18 151 10 757 17 467 12 587 11 514 7 469 6 823 7 638 9 545 11 165
Other short-term securities 60 078 56 322 35 004 37 575 31 715 21 955 14 408 10 411 11 775 13 855
Derivative financial instruments 30 948 15 644 13 811 14 660 14 314 14 077 12 871 23 114 9 924 10 314
Government and other securities 42 733 26 828 31 279 26 194 29 991 31 667 35 754 41 834 29 271 22 031
Loans and advances 666 807 603 329 566 047 520 116 493 107 471 447 446 428 436 420 375 421 321 724
Other assets 3 925 5 393 4 204 4 528 3 989 3 613 3 917 4 731 4 920 5 120
Current taxation assets 904 236 340 241 629 440 580 314 29 138
Investment securities 1 648 2 369 2 932 2 832 3 549 2 999 3 012 2 743 2 739 2 385
Non-current assets held for sale 2 16 12 508 8 5 12 10 41
Investments in private-equity associates, associate companies and joint
arrangements 1 400 1 158 1 098 1 029 565 933 922 913 735 690
Deferred taxation assets 67 165 69 362 66 48 36 71 65 48
Investment property 87 84 488 82 102 104 75 66
Property and equipment 8 114 7 459 6 571 6 171 6 082 5 394 4 754 4 124 3 757 3 323
Long-term employee benefit assets 4 885 4 409 2 847 1 992 2 027 1 965 1 783 1 667 1 305 1 357
Mandatory reserve deposits with central banks 16 190 14 843 13 199 12 641 11 862 11 068 10 437 10 061 8 351 7 026
Intangible assets 4 881 4 516 4 188 3 830 3 634 3 328 3 151 2 977 2 715 2 605
total assets 860 733 753 444 699 155 645 350 613 540 576 490 544 990 547 132 460 627 401 888
equity and liabilities
Ordinary share capital 28 27 27 27 27 27 27 27 27 27
Ordinary share premium 18 532 17 422 17 422 17 422 14 422 14 422 14 422 14 422 14 422 14 422
Reserves 37 610 34 787 30 524 26 140 24 856 20 281 18 174 16 927 13 954 9 583
total equity attributable to equity holders of the parent 56 170 52 236 47 973 43 589 39 305 34 730 32 623 31 376 28 403 24 032
Preference share capital and premium 3 561 3 561 3 561 3 561 3 561 3 560 3 483 3 122 3 122 2 770
Non-controlling interest attributable to:
– Ordinary shareholders 223 183 141 136 121 110 1 796 1 644 1 307 955
– Preference shareholders 91 300 300 300
total equity 59 954 55 980 51 675 47 286 42 987 38 400 37 993 36 442 33 132 28 057
Derivative financial instruments 33 996 15 479 16 588 13 475 13 791 11 930 10 799 23 077 10 336 11 549
Amounts owed to depositors 708 036 634 623 585 497 542 671 516 540 491 038 467 924 464 082 391 526 341 708
Provisions and other liabilities 9 911 8 404 10 016 9 273 8 286 6 179 5 218 6 145 10 419 9 098
Current taxation liabilities 87 35 13 67 27 76 162 117 275 338
Other liabilties held for sale 36
Deferred taxation liabilities 763 287 297 367 997 1 358 1 514 1 982 1 470 1 410
Long-term employee benefit liabilities 3 009 3 002 1 804 1 880 1 473 1 408 1 298 1 227 1 145 1 210
Long-term debt instruments 44 977 35 634 33 265 30 295 29 439 26 101 20 082 14 060 12 324 8 518
total liabilities 800 779 697 464 647 480 598 064 570 553 538 090 506 997 510 690 427 495 373 831
total equity and liabilities 860 733 753 444 699 155 645 350 613 540 576 490 544 990 547 132 460 627 401 888
NedbaNk limited – ANNUAL RepoRt 2015 7
RESPONSIBILITy OF OUR DIRECTORS
The directors are responsible for the preparation and fair presentation of the consolidated financial statements of Nedbank Ltd (comprising the statement
of financial position at 31 December 2015, the statement of comprehensive income, the statement of changes in equity and statement of cashflows for the
year then ended), the segmental reporting and the notes to the financial statements (including a summary of significant accounting policies and other
explanatory notes) in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and
IFRS Interpretation Committee (IFRS IC), the South African Institute of Chartered Accountants (SAICA) Financial Reporting Guides as issued by the
Accounting Practices Committee, Financial Pronouncements as issued by the Financial Reporting Standards Council, the requirements of the Companies
Act, 71 of 2008 (as amended), and the JSE Listings Requirements. In addition, the directors are responsible for the preparation of the directors' report.
The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error and for maintaining adequate accounting records and an effective system of risk management
as well as the preparation of the supplementary schedules included in these financial statements.
The directors have made an assessment of the ability of the company and its subsidiaries to continue as going concerns and there is no reason to believe that
the business will not be a going concern in the year ahead.
The independent auditors are responsible for reporting on whether the consolidated financial statements are fairly presented in accordance with IFRS.
Approval of consolidated annual financial statements
The consolidated annual financial statements of Nedbank Ltd, as identified in the first paragraph, were approved by the Nedbank Ltd Board of Directors on
1 March 2016 and are signed on its behalf by:
V Naidoo mWt brown
Chairman Chief Executive
Sandown
1 March 2016
8 NedbaNk limited – ANNUAL RepoRt 2015