Wrap Text
Preliminary Audited Results for the year ended 31 December 2015
Nedbank Limited
Reg No 1951/000009/06
Incorporated in the Republic of South Africa
JSE share code: NBKP
ISIN: ZAE000043667
PRELIMINARY AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2015
OVERVIEW
Nedbank Limited ('Nedbank') is a wholly owned subsidiary of Nedbank Group Limited ('Nedbank Group'), which is listed on JSE Limited (‘the JSE').
The summary consolidated financial results are published to provide information to holders of Nedbank's listed non-redeemable non-cumulative
preference shares.
Commentary relating to the Nedbank summary consolidated financial results is included in the Nedbank Group results, as
presented to shareholders on 2 March 2016. Further information is provided on the website at nedbankgroup.co.za.
BOARD CHANGES
During the period the boards of Nedbank Group and Nedbank Limited ("the companies") announced the appointment of:
- Vassi Naidoo as Non-executive Director with effect from 1 May 2015, and Chairman from 11 May 2015,
- Stanley Subramoney as independent Non-executive Director with effect from 23 September 2015; and
- Bruce Hemphill as Non-executive Director with effect from 25 November 2015 following his appointment as CEO of Old Mutual plc.
The following board directors retired at the annual general meeting on 11 May 2015, either having served on the board as a non-executive for nine years or
having retired from executive service:
- Dr Reuel Khoza, Non-executive Chairman;
- Mustaq Enus-Brey, Non-executive Director;
- Gloria Serobe, Non-executive Director; and
- Graham Dempster, Executive Director.
On 31 October 2015, subsequent to his retirement from Old Mutual plc, Julian Roberts retired as non-executive director from the boards of the companies.
Following the announcement by Old Mutual plc regarding the stepping down of Mr Paul Hanratty as Chief Operating Officer, the boards of the companies
advise that Mr Paul Hanratty will end his term as a Non-executive Director of the companies on 12 March 2016.
GROUP EXECUTIVE CHANGES
The group's executive leadership team is key to the delivery of our strategic focus areas and during the period we announced the following appointments:
- With effect from 1 January 2015,
- Mfundo Nkuhlu succeeded Graham Dempster (who retired) as Chief Operating Officer and was appointed to the board as an executive director;
- Brian Kennedy was appointed as Managing Executive of Nedbank Corporate and Investment Banking, formed through the integration of our
Corporate and Investment Bank;
- Mike Davis was appointed as Group Executive of Balance Sheet Management;
- Iolanda Ruggiero was appointed as Managing Executive of Nedbank Wealth with effect from 1 May 2015; and
- Priya Naidoo was appointed as Group Executive for Strategic Planning and Economics with effect from 1 June 2015.
- Mike Davis, Iolanda Ruggiero and Priya Naidoo were also appointed to our Group Executive Committee.
Philip Wessels, Group Managing Executive Nedbank Retail and Business Banking, has requested to take early retirement from Nedbank for personal
reasons, which request has been supported by the Board. This will be effective from 31 March 2016, some 2 years ahead of his normal retirement age of
60. Philip has had a long and successful career at Nedbank spanning more than 20 years across various businesses in the group. We thank Philip for his
contribution to the group and wish him well in his retirement.
In line with our succession planning, Nedbank is pleased to announce the appointment of Ciko Thomas, to succeed Philip with effect from 1 April 2016,
subject to regulatory approval. Ciko is currently Managing Executive of Consumer Banking and has been a part of the RBB leadership team and the Group
Executive Committee for six years. He has wide-ranging banking and leadership experience across the group. Ciko's appointment ensures continuity in
RBB's leadership and strategy, and he inherits a strong RBB cluster with an experienced management team. Ciko completed the Harvard AMP in 2015, and
holds BSc and MBA degrees.
ACCOUNTING POLICIES
Nedbank is a company domiciled in SA. The audited summary consolidated financial statements of the group at and for the year ended 31 December 2015
comprise the company and its subsidiaries (the 'group') and the group's interests in associates and joint arrangements.
The summary consolidated financial statements contained in the SENS announcement has been extracted from the audited summary consolidated financial
statements, which have been prepared in accordance with the provisions of the JSE Limited Listings Requirements for preliminary reports and the Companies Act
applicable to summary financial statements. The Listings Requirements require preliminary reports to be prepared in accordance with the framework, concepts
and the measurement and recognition requirements of International Financial Reporting Standards (IFRS), the South African Institute of Chartered Accountants,
Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards
Council and to also, as a minimum, contain the disclosure required by International Accounting Standard 34: Interim Financial Reporting. The accounting policies
applied in the preparation of the consolidated financial statements, from which the summary consolidated financial statements results were derived, are in terms
of IFRS and are consistent with the accounting policies applied in the preparation of the previous consolidated annual financial results.
The summary consolidated financial results have been prepared under the supervision of Raisibe Morathi CA(SA), the Chief Financial Officer.
EVENTS AFTER THE REPORTING PERIOD1
There are no material events after the reporting period to report on.
AUDITED SUMMARY CONSOLIDATED FINANCIAL STATEMENTS – INDEPENDENT
AUDITORS' OPINION
The summary consolidated financial statements comprise the summary consolidated statement of financial position as at 31 December 2015, summary
consolidated statement of comprehensive income, summary consolidated statement of changes in equity and summary consolidated statement of
cashflows, for the year then ended and selected explanatory notes.
These summary consolidated financial statements for the year ended 31 December 2015 have been audited by KPMG Inc. and Deloitte & Touche, who
expressed an unmodified opinion thereon. The auditors also expressed an unmodified opinion on the financial statements from which these summary
consolidated financial statements were derived.
A copy of the auditors' report on the summary consolidated financial statements and of the auditors' report on the consolidated financial statements are
available for inspection at the company's registered office, together with the financial statements identified in the respective auditors' reports.
The auditors' report does not necessarily report on all of the information contained in the financial results. Shareholders are therefore advised that in order
to obtain a full understanding of the nature of the auditors' engagement, they should obtain a copy of the auditors' report together with the accompanying
financial information from Nedbank's registered office.
FORWARD-LOOKING STATEMENTS
This announcement contains certain forward-looking statements with respect to the financial condition and results of operations of Nedbank and its
companies that, by their nature, involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the
future. Factors that could cause actual results to differ materially from those in the forward-looking statements include global, national and regional
economic conditions; levels of securities markets; interest rates; credit or other risks of lending and investment activities; as well as competitive and
regulatory factors. By consequence, all forward-looking statements have not been reviewed or reported on by the group's auditors.
NEDBANK NON-REDEEMABLE NON-CUMULATIVE PREFERENCE SHARES – DECLARATION
OF DIVIDEND NO 26
Notice is hereby given that gross preference dividend no 26 of 40,01711 cents per share has been declared for the period from 1 July 2015 to
31 December 2015, payable on Monday, 4 April 2016, to shareholders of the Nedbank non-redeemable non-cumulative preference shares recognised in the
accounting records of the company at the close of business on Friday, 1 April 2016. The dividend has been declared out of income reserves.
The dividend will be subject to a dividend withholding tax rate of 15% (applicable in SA), resulting in a net dividend of 34,01454 cents per share to those
shareholders who are not exempt from paying dividend tax. Nedbank's tax reference number is 9250/083/71/5 and the number of preference shares in
issue at the date of declaration is 358 277 491.
In accordance with the provisions of Strate, the electronic settlement and custody system used by the JSE, the relevant dates for the payment of the
dividend are as follows:
Last day to trade (cum dividend) Wednesday, 23 March 2016
Shares commence trading (ex dividend) Thursday, 24 March 2016
Record date (date shareholders recorded in books) Friday, 1 April 2016
Payment date Monday, 4 April 2016
Share certificates may not be dematerialised or rematerialised between Thursday, 24 March 2016, and Friday, 1 April 2016, both days inclusive.
Where applicable, dividends in respect of certificated shares will be transferred electronically to shareholders' bank accounts on the payment date. In the
absence of specific mandates, dividend cheques will be posted to shareholders. Shareholders who have dematerialised their share certificates will have
their accounts, at their participant or broker, credited on Monday, 4 April 2016.
For and on behalf of the board
Vassi Naidoo Mike Brown
Chairman Chief Executive
2 March 2016
AUDITED SUMMARY CONSOLIDATED FINANCIAL STATEMENTS FOR THE 12 MONTHS ENDED 31 DECEMBER 2015
SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended
Change 31 December 31 December
(Audited) 2015 2014
% (Audited) (Audited)
Rm Rm
Interest and similar income 10,1 55 128 50 075
Interest expense and similar charges 15,5 32 724 28 322
Net interest income 3,0 22 404 21 753
Impairments charge on loans and advances 2,9 4 608 4 478
Income from lending activities 3,0 17 796 17 275
Non-interest revenue 8,1 17 514 16 196
Operating income 5,5 35 310 33 471
Total operating expenses 6,5 23 459 22 031
Indirect taxation 28,0 668 522
Profit from operations before non-trading and capital items 2,4 11 183 10 918
Non-trading and capital items 50,0 (144) (96)
Net loss on sale of property and equipment (26)
Net impairment of property and equipment, and intangible assets (118) (96)
Profit from operations 2,0 11 039 10 822
Share of (losses)/profits of associate companies and joint arrangements <-100 (1) 12
Profit from operations before direct taxation 1,9 11 038 10 834
Total direct taxation 1,5 2 828 2 786
Direct taxation 2 860 2 803
Taxation on non-headline earnings items (32) (17)
Profit for the year 2,0 8 210 8 048
Other comprehensive income net of taxation >100 578 126
Items that may subsequently be reclassified to profit or loss
Exchange differences on translating foreign operations 190 14
Fair-value adjustments on available-for-sale assets (9) (113)
Items that may not subsequently be reclassified to profit or loss
Gains on property revaluations 118 163
Remeasurements on long-term employee benefit assets 279 62
Total comprehensive income for the year 7,5 8 788 8 174
Profit attributable to:
– Ordinary and preference equity holders 2,1 8 163 7 998
– Non-controlling interest – ordinary shareholders 47 50
Profit for the year 2,0 8 210 8 048
Total comprehensive income attributable to:
– Ordinary and preference equity holders 7,6 8 739 8 123
– Non-controlling interest – ordinary shareholders (3,9) 49 51
Total comprehensive income for the year 7,5 8 788 8 174
HEADLINE EARNINGS RECONCILIATION
for the year ended
31 December
31 December 2015 31 December 31 December
2015 (Audited) 2014 2014
(Audited) Rm (Audited) (Audited)
Change Rm Net of Rm Net of
% Gross taxation Gross taxation
Profit attributable to ordinary and preference equity holders 2,1 8 163 7 998
Less: Non-headline earnings items (144) (112) (96) (79)
Net loss on sale of property and equipment (26) (26)
Net impairment of property and equipment, and intangible assets (118) (86) (96) (79)
Headline earnings attributable to ordinary and preference equity
holders 2,5 8 275 8 077
SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at
31 December 31 December
2015 2014
Change (Audited) (Audited)
% Rm Rm
Assets
Cash and cash equivalents 68,7 18 151 10 757
Other short-term securities 6,7 60 078 56 322
Derivative financial instruments 97,8 30 948 15 644
Government and other securities 59,3 42 733 26 828
Loans and advances 10,5 666 807 603 329
Other assets (27,2) 3 925 5 393
Current taxation assets > 100 904 236
Investment securities (30,4) 1 648 2 369
Non-current assets held for sale (87,5) 2 16
Investments in private-equity associates, associate companies and joint arrangements 20,9 1 400 1 158
Deferred taxation assets (59,4) 67 165
Property and equipment 8,8 8 114 7 459
Long-term employee benefit assets 10,8 4 885 4 409
Mandatory reserve deposits with central banks 9,1 16 190 14 843
Intangible assets 8,1 4 881 4 516
Total assets 14,2 860 733 753 444
Equity and liabilities
Ordinary share capital 3,7 28 27
Ordinary share premium 6,4 18 532 17 422
Reserves 8,1 37 610 34 787
Total equity attributable to equity holders of the parent 7,5 56 170 52 236
Preference share capital and premium 3 561 3 561
Non-controlling interest attributable to ordinary shareholders 21,9 223 183
Total equity 7,1 59 954 55 980
Derivative financial instruments > 100 33 996 15 479
Amounts owed to depositors 11,6 708 036 634 623
Provisions and other liabilities 17,9 9 911 8 404
Current taxation liabilities > 100 87 35
Deferred taxation liabilities > 100 763 287
Long-term employee benefit liabilities 0,2 3 009 3 002
Long-term debt instruments 26,2 44 977 35 634
Total liabilities 14,8 800 779 697 464
Total equity and liabilities 14,2 860 733 753 444
SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Non-controlling
Total equity interest
attributable to Preference attributable to
equity holders share capital ordinary
of the parent and premium shareholders Total equity
Rm Rm Rm Rm
Audited balance at 31 December 2013 47 973 3 561 141 51 675
Preference share dividend (323) (323)
Dividend to ordinary shareholders (3 400) (9) (3 409)
Total comprehensive income for the year 8 123 51 8 174
Share-based payment reserve movement (145) (145)
Regulatory risk reserve provision 7 7
Other movements 1 1
Audited balance at 31 December 2014 52 236 3 561 183 55 980
Preference share dividend (371) (371)
Dividend to ordinary shareholders (5 200) (9) (5 209)
Issues of shares net of expenses 1 111 1 111
Total comprehensive income for the year 8 739 49 8 788
Share-based payment reserve movement (343) (343)
Other movements (2) (2)
Audited balance at 31 December 2015 56 170 3 561 223 59 954
SUMMARY CONSOLIDATED STATEMENT OF CASHFLOWS
for the year ended
31 December 31 December
2015 2014
(Audited) (Audited)
Rm Rm
Cash generated by operations 19 257 18 386
Change in funds for operating activities (9 508) (16 624)
Net cash from operating activities before taxation 9 749 1 762
Taxation paid (3 771) (3 463)
Cashflows from/(utilised by) operating activities 5 978 (1 701)
Cashflows utilised by investing activities (2 070) (2 011)
Cashflows from/(utilised by) financing activities 4 884 (1 354)
Effects of exchange rate changes on opening cash and cash equivalents (excluding foreign borrowings) (51) (1)
Net increase/(decrease) in cash and cash equivalents 8 741 (5 066)
Cash and cash equivalents at the beginning of the year(2) 25 600 30 666
Cash and cash equivalents at the end of the year(2) 34 341 25 600
(1) Represents amounts less than R1m.
(2) Including mandatory reserve deposits with central banks.
SUMMARY SEGMENTAL REPORTING
for the year ended
Total assets Total liabilities Operating income/(losses) Headline earnings/(losses)
31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December
2015 2014 2015 2014 2015 2014 2015 2014
(Audited) (Audited) (Audited) (Audited) (Audited) (Audited) (Audited) (Audited)
Rm Rm Rm Rm Rm Rm Rm Rm
Nedbank Corporate and
Investment Banking 470 567 381 241 447 471 363 744 12 101 10 875 5 208 4 727
Nedbank Retail and Business
Banking 292 560 278 079 265 636 250 514 23 715 21 975 4 460 4 031
Nedbank Wealth 61 322 57 609 58 588 54 779 4 320 3 986 1 134 1 042
Rest of Africa 32 941 27 428 26 142 23 879 1 358 1 631 691 357
Centre 68 336 64 956 49 138 45 486 (650) 300 (662) (277)
Total for Nedbank Group 925 726 809 313 846 975 738 402 40 844 38 767 10 831 9 880
Fellow-subsidiary adjustments (64 993) (55 869) (46 196) (40 938) (5 534) (5 296) (2 556) (1 803)
Total 860 733 753 444 800 779 697 464 35 310 33 471 8 275 8 077
During the period the Nedbank Corporate and Nedbank Capital Clusters were merged to form the Nedbank Corporate and Investment Banking Cluster.
Similarly, the Nedbank Retail and Nedbank Business Banking Clusters were merged to form the Nedbank Retail and Business Banking Cluster. The
comparative segment information previously presented for Nedbank Corporate, Nedbank Capital, Nedbank Retail and Nedbank Business Banking has been
represented based on the new merged clusters, ie Nedbank Corporate and Investment Banking and Nedbank Retail and Business Banking. This had the
consequential effect that certain intergroup assets and liabilities and the related eliminations between Nedbank Retail and Business Banking and the
Centre have been restated.
CONTINGENT LIABILITIES AND COMMITMENTS
Contingent liabilities and undrawn facilities
31 December 31 December
2015 2014
(Audited) (Audited)
Rm Rm
Guarantees on behalf of clients 26 374 22 807
Letters of credit and discounting transactions 4 419 3 248
Irrevocable unutilised facilities and other 101 747 102 968
132 540 129 023
The group, in the ordinary course of business, enters into transactions that expose it to tax, legal and business risks. Provisions are made for known
liabilities that are expected to materialise. Possible obligations and known liabilities where no reliable estimate can be made or it is considered improbable
that an outflow would result are reported as contingent liabilities. This is in accordance with IAS 37: Provisions, Contingent Liabilities and Contingent
Assets.
There are a number of legal or potential claims against Nedbank Limited and its subsidiary companies, the outcome of which cannot be foreseen at
present.
Commitments
Capital expenditure approved by directors
31 December 31 December
2015 2014
(Audited) (Audited)
Rm Rm
Contracted 1 314 1 292
Not yet contracted 2 222 1 278
3 536 2 570
Funds to meet capital expenditure commitments will be provided from group resources. In addition, capital expenditure is incurred in the normal course of
business throughout the year.
FAIR-VALUE HIERARCHY
for the year ended
Financial instruments carried at fair value
The fair value of a financial instrument is the price that would be received for the sale of an asset or paid for the transfer of a liability in an orderly
transaction between market participants at the measurement date. Underlying the definition of fair value is an assumption that an entity is a going concern
without any intention or need to liquidate, to curtail materially the scale of its operations or to undertake a transaction on adverse terms. Fair value is not,
therefore, the amount that an entity would receive or pay in a forced transaction, involuntary liquidation or distressed sale.
The existence of published price quotations in an active market is the most reliable evidence of fair value and, where they exist, they are used to measure
the financial asset or financial liability. A market is considered to be active if transactions occur with sufficient volumes and frequencies to provide pricing
information on an ongoing basis. These quoted prices would generally be classified as level 1 in terms of the fair-value hierarchy.
Where a quoted price does not represent fair value at the measurement date or where the market for a financial instrument is not active, the group
establishes fair value by using a valuation technique. These valuation techniques include, but are not limited to, reference to the current fair value of
another instrument that is substantially the same in nature, reference to the value of the assets of underlying business, earnings multiples, discounted-
cashflow analysis and various option pricing models. Valuation techniques applied by the group would generally be classified as level 2 or level 3 in terms
of the fair-value hierarchy. The determination of whether an instrument is classified as level 2 or level 3 is dependent on the significance of observable
inputs versus unobservable inputs in relation to the fair value of the instrument. Inputs typically used in valuation techniques include discount rates,
appropriate swap rates, volatility, servicing costs, equity prices, commodity prices, counterparty credit risk, and the group's own credit on financial
liabilities.
The group has an established control framework for the measurement of fair value, which includes formalised review protocols for the independent review
and validation of fair values separate from the business unit entering into the transaction. The valuation methodologies, techniques and inputs applied to
the fair-value measurement of the financial instruments have been applied in a manner consistent with that of the previous financial year.
Fair-value hierarchy
The financial instruments recognised at fair value have been categorised into the three input levels of the International Financial Reporting Standards
(IFRS) fair-value hierarchy as follows:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date.
Level 2: Valuation techniques based on (directly or indirectly) market-observable inputs. Various factors influence the availability of observable inputs.
These factors may vary from product to product and change over time. Factors include the depth of activity in the relevant market, the type of product,
whether the product is new and not widely traded in the market, the maturity of market modelling and the nature of the transaction (bespoke or generic).
Level 3: Valuation techniques based on significant inputs that are not observable. To the extent that a valuation is based on inputs that are not market-
observable the determination of the fair value can be more subjective, depending on the significance of the unobservable inputs to the overall valuation.
Unobservable inputs are determined on the basis of the best information available and may include reference to similar instruments, similar maturities,
appropriate proxies or other analytical techniques.
All fair values disclosed below are recurring in nature.
Total financial assets recognised Total financial assets classified Total financial assets classified Total financial assets classified
Total financial assets at amortised cost as level 1 as level 2 as level 3
31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December
2015 2014 2015 2014 2015 2014 2015 2014 2015 2014
(Audited) (Audited) (Audited) (Audited) (Audited) (Audited) (Audited) (Audited) (Audited) (Audited)
Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm
Financial assets
Cash and cash equivalents 34 341 25 600 34 341 25 600
Other short-term securities 60 078 56 322 32 863 32 593 459 27 215 23 270
Derivative financial instruments 30 948 15 644 86 10 30 844 15 634 18
Government and other securities(1) 42 733 26 828 18 807 9 245 11 239 10 055 12 687 7 528
Loans and advances 666 807 603 329 571 603 518 592 95 171 84 704 33 33
Other assets 3 925 5 393 3 913 4 992 12 401
Investments in private-equity associates,
associate companies and joint arrangements 1 154 898 1 154 898
Investment securities 1 648 2 369 432 624 526 945 690 800
841 634 736 383 661 527 591 022 11 769 11 549 166 443 132 081 1 895 1 731
(1) Floating rate notes of R1 097m included in the prior year as loans and receivables whereas these instruments are classified as available for sale. Accordingly, the loans and receivables and available-for-sale categories have been restated.
Financial liabilities
Total financial liabilities Total financial liabilities Total financial liabilities Total financial liabilities
Total financial liabilities recognised at amortised cost classified as level 1 classified as level 2 classified as level 3
31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December
2015 2014 2015 2014 2015 2014 2015 2014 2015 2014
(Audited) (Audited) (Audited) (Audited) (Audited) (Audited) (Audited) (Audited) (Audited) (Audited)
Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm
Derivative financial instruments 33 996 15 479 126 5 33 870 15 474
Amounts owed to depositors 708 036 634 623 538 540 517 985 169 496 116 638
Provisions and other liabilities(1) 8 980 7 435 6 020 6 533 2 744 767 216 135
Long-term debt instruments 44 977 35 634 44 576 33 594 156 575 245 1 465
795 989 693 171 589 136 558 112 3 026 1 347 203 827 133 712 – –
(1) R969m of provisions and other liabilities were previously included in the financial liabilities at amortised cost category within the categories of financial instruments. However, these balances are not within the scope of the IAS 39 categories of financial instruments. Therefore, this amount has been presented under non-financial assets,
liabilities and equity and the comparative information has been restated to align with current year presentation.
There were significant transfers between level 1 and level 2 of the fair-value hierarchy within government and other securities and other short-term securities due to changes in the level of market activity. The impacted
categories are:
- Held for trading – R1 308m
- Designated – R2 397m
- Available for sale – R2 074m
Level 3 reconciliation
Gains/
(Losses)
Gains/ in other
Opening (Losses) comprehensive
balance at in profit for income for Closing
1 January the year the year Purchases Sales and Transfers in/ balance at
31 December 2015 (Audited) Rm Rm Rm and issues settlements (out) 31 December
Financial assets
Derivative financial instruments 18 18
Loans and advances 33 33
Investment securities 800 (36) 1 (75) 690
Investments in private-equity associates, associate companies and joint arrangements 898 89 304 (137) 1 154
1 731 71 – 305 (212) – 1 895
Gains/
(Losses)
Gains/ in other
Opening (Losses) comprehensive
balance at in profit for income for Closing
1 January the year the year Purchases Sales and Transfers in/ balance at
31 December 2014 (Audited) Rm Rm Rm and issues settlements (out) 31 December
Financial assets
Loans and advances 33 33
Investment securities 831 208 27 (266) 800
Investments in private-equity associates, associate companies and joint arrangements 860 42 142 (146) 898
1 724 250 169 (412) – – 1 731
Effect of changes in significant unobservable assumptions to reasonable possible alternatives – level 3 instruments
The fair-value measurement of financial instruments are, in certain circumstances, measured using valuation techniques that include assumptions that are not market observable. Where these scenarios apply, the group
performs stress testing on the fair value of the relevant instruments. In performing the stress testing, appropriate levels for the unobservable-input parameters are chosen so that they are consistent with prevailing
market evidence and in line with the group's approach to valuation control. The following information is intended to illustrate the potential impact of the relative uncertainty in the fair value of financial instruments for
which valuation is dependent on unobservable-input parameters and which are classified as level 3 in the fairvalue hierarchy. However, the disclosure is neither predictive nor indicative of future movements in fair value.
Financial assets
Value per
statement of Favourable Unfavourable
Variance in financial change in fair change in fair
Significant fair value position value value
31 December 2015 (Audited) Valuation technique unobservable input % Rm Rm Rm
Discounted-cashflow model, Discount rates, risk-free rates, Between (13)
Black-Scholes model and volatilities, credit spreads and and 10
Derivative financial instruments multiple valuation techniques valuation multiples 18 2 (2)
Discounted cashflows Credit spreads and discount Between (13)
Loans and advances rates and 10 33 3 (4)
Discounted cashflows, Valuation multiples, Between (13)
adjusted net asset value, correlations, volatilities and and 10
earnings multiples, third-party credit spreads
Investment securities valuations, dividend yields 690 62 (77)
Investments in private-equity associates, associate companies and joint Discounted cashflows, Valuation multiples Between (7)
arrangements earnings multiples and 8 1 154 96 (108)
Total financial assets classified as level 3 1 895 163 (191)
Financial assets
Value per
statement of Favourable Unfavourable
Variance in financial change in fair change in fair
Significant fair value position value value
31 December 2014 (Audited) Valuation technique unobservable input % Rm Rm Rm
Discounted cashflows Credit spreads and discount Between (13)
Loans and advances rates and 13 33 3 (4)
Discounted cashflows, adjusted Valuation multiples, Between (13)
net asset value, earnings correlations, volatilities and and 13
multiples, third-party valuations, credit spreads
Investment securities dividend yields 800 76 (95)
Investments in private-equity associates, associate companies and joint Discounted cashflows, earnings Valuation multiples Between (16)
arrangements multiples and 16 898 124 (134)
Total financial assets classified as level 3 1 731 203 (233)
Unrealised gains or losses
The unrealised gains or losses arising on instruments classified as level 3 include the following:
31 December 31 December
2015 2015
(Audited) (Audited)
Rm Rm
Private-equity gains 71 193
71 193
Summary of principal valuation techniques - level 2 instruments
The following table sets out the group's principal valuation techniques used in determining the fair value of financial assets and financial liabilities
classified as level 2 in the fair-value hierarchy:
Assets Valuation technique Key inputs
Other short-term securities Discounted–cashflow model Discount rates
Derivative financial instruments Discounted–cashflow model Discount rates
Black-Scholes model Risk-free rate and volatilities
Multiple valuation techniques Valuation multiples
Government and other securities Discounted–cashflow model Discount rates
Loans and advances Discounted–cashflow model Interest rate curves
Investment securities Discounted–cashflow model Money market rates and interest rates
Adjusted net asset value Underlying price of market–traded instruments
Dividend yield method Dividend growth rates
Liabilities
Derivative financial instruments Discounted–cashflow model Discount rates
Black-Scholes model Risk-free rate and volatilities
Multiple valuation techniques Valuation multiples
Amounts owed to depositors Discounted–cashflow model Discount rates
Provisions and other liabilities Discounted–cashflow model Discount rates
Long-term debt instruments Discounted–cashflow model Discount rates
Liquidity coverage ratio
Total Total
unweighted weighted
value(1) value(2)
Rm (average) (average)
High-quality liquid assets
Total high-quality liquid assets (HQLA) 114 258
Cash outflows
Retail deposits and deposits from small-business clients, of which 150 658 15 066
Stable deposits – –
Less stable deposits 150 658 15 066
Unsecured wholesale funding, of which 200 158 103 929
Operational deposits (all counterparties) and deposits in institutional networks of cooperative banks 99 997 28 749
Non-operational deposits (all counterparties) 100 161 75 180
Unsecured debt – –
Secured wholesale funding 15 115 63
Additional requirements, of which 136 571 17 640
Outflows related to derivative exposures and other collateral requirements 814 814
Outflows related to loss of funding on debt products 1 161 1 161
Credit and liquidity facilities 134 596 15 665
Other contractual funding obligations 49 280 3 868
Other contingent funding obligations – –
Total cash outflows 551 782 140 566
Cash inflows
Secured lending (eg reverse repos) 6 928 812
Inflows from fully performing exposures 24 365 12 953
Other cash inflows 2 090 2 090
Total cash inflows 33 383 15 855
Total
adjusted
value(3)
Total HQLA 114 258
Total net cash outflows 124 711
Liquidity coverage ratio (%) 91,6
(1) Unweighted values are calculated as outstanding balances maturing or callable within 30 days (for inflows and outflows).
(2) Weighted values are calculated after the application of respective haircuts (for HQLA) or inflow and outflow rates (for inflows and outflows).
(3) Note that total cash outflows less total cash inflows may not be equal to total net cash outflows to the extent that regulatory caps have been applied to cash inflows as specified by the regulations.
The figures above reflect the simple average of the month-end values at 31 October 2015, 30 November 2015 and 31 December 2015 based on regulatory
submissions to SARB. This section on the liquidity coverage ratio has not been audited by the group's auditors.
Registered office: Nedbank 135 Rivonia Campus, 135 Rivonia Road, Sandown, Sandton, 2196; PO Box 1144, Johannesburg, 2000.
Transfer secretaries: Computershare Investor Services Proprietary Limited, 70 Marshall Street, Johannesburg, 2001; PO Box 61051, Marshalltown, 2107.
Directors:
V Naidoo (Chairman), MWT Brown* (Chief Executive), DKT Adomakoh (Ghanaian), TA Boardman, BA Dames, ID Gladman (British), PB Hanratty (Irish),
JB Hemphill, PM Makwana, Dr MA Matooane, NP Mnxasana, RK Morathi* (Chief Financial Officer), JK Netshitenzhe, MC Nkuhlu* (Chief Operating
Officer), S Subramoney, MI Wyman** (British).
*Executive **Senior independent non-executive director
Company Secretary TSB Jali
Sponsors Investec Bank Limited, Nedbank CIB
Date: 02/03/2016 08:01:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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