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OLD MUTUAL PLC - Nedbank Group Limited Interim Results 2013

Release Date: 06/08/2013 08:02
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Nedbank Group Limited Interim Results 2013

OLD MUTUAL PLC
ISIN CODE: GB00B77J0862
JSE SHARE CODE: OML
NSX SHARE CODE: OLM
ISSUER CODE: OLOML

Ref 60/13

6 August 2013

NEDBANK GROUP LIMITED INTERIM RESULTS 2013

Nedbank Group Limited ("Nedbank Group"), the majority-owned South African banking subsidiary of
Old Mutual plc, released its interim results for the six months ended 30 June 2013 today, 6 August
2013.

The following is the full text of Nedbank Group's announcement:

NEDBANK GROUP LIMITED

Reviewed financial results for the six months ended 30 June 2013

       -   Headline earnings increased 13,3% to R3 914m(1)
       -   Diluted headline earnings per share up 12,6% to 831 cents(1)
       -   Strong NIR growth of 15,4% to R9 535m(1)
       -   ROE (excluding goodwill) increased to 16,1%
       -   Common-equity Tier 1 ratio increased to 11,8% (December 2012: 11,6%)
       -   Interim dividend per share up 14,7% to 390 cents

'In a tougher economic environment Nedbank Group delivered a solid performance in the first six
months of 2013. Strong NIR growth and disciplined expense management resulted in the NIR-to-
expense ratio target of over 85% being exceeded for the first time and the return on equity increasing.

The group benefited from its portfolio of diverse businesses and strong performances in the wholesale
and wealth businesses resulted in overall headline earnings growth of 13,3%.

Despite the more challenging economic environment and increasing consumer credit stress that has
led to higher retail banking impairments, Nedbank Group is targeting, for the full year, growth in
diluted headline earnings per share to meet its medium-to-long-term target'.

Mike Brown
Chief Executive

Banking and economic environment
Globally economic conditions in most developed markets improved during the first half of 2013, with
the exception of the Eurozone. Emerging-market economies continued to post moderate but slower
growth, with currencies and international commodity prices experiencing pressure following the US
Federal Reserve's announcement on likely future monetary policy changes.

At the same time SA's economic growth deteriorated as weakness in production and exports
persisted, leading to first-quarter GDP growth of 0,9%. Domestic financial markets were
characterised by volatility and rand depreciation, reflecting lower levels of investor confidence
primarily as a result of the current account and fiscal deficits, slow growth and ongoing labour
tensions mainly in the mining sector.

Both household credit and corporate credit demand remained subdued. Consumer stress has
become increasingly evident with pressure from increased living costs and weak job prospects.

In the corporate environment companies continued to postpone capacity expansion, given fragile
global economies and lower domestic growth prospects. On the upside the recovery in government's
capital expenditure continued, with the bulk of the increase in expenditure devoted to housing and
other social infrastructure.

Review of results
Nedbank Group produced a solid set of results for the six months ended 30 June 2013 ('the period').
The results reflect the impact of a tougher-than-anticipated economic environment, offset by
continued internal momentum in building the Nedbank franchise.

Headline earnings grew 13,3% to R3 914m (June 2012: R3 454m), driven by good revenue growth
and disciplined expense management, countering the higher level of impairments.(1)

Diluted headline earnings per share increased 12,6% to 831 cents (June 2012: 738 cents) and diluted
earnings per share increased 11,6% to 830 cents (June 2012: 744 cents).(1)

The group generated economic profit (EP) of R749m, up 28,7% (June 2012: R582m). The return on
average ordinary shareholders' equity (ROE), excluding goodwill, increased to 16,1% (June 2012:
15,8%) and the ROE increased to 14,6% (June 2012: 14,2%), benefiting from an increased return-on-
assets (ROA) ratio of 1,15% (June 2012: 1,07%).

Nedbank Group is well capitalised, with the Basel III common-equity Tier 1 ratio at 11,8 % (December
2012: Basel III pro forma ratio 11,6%). Funding and liquidity levels remained sound with the surplus
liquidity buffer at R25,0bn (December 2012: R24,4bn), while the average long-term funding ratio
increased to 28,0% (December 2012: 26,0%).

The net asset value per share continued to increase, growing 7,9% (annualised) to 12 180 cents from
11 721 cents in December 2012.(1)

Delivering sustainably to all our stakeholders
Nedbank Group's foundations are strong, with diversified earning streams, strong capital ratios, sound
funding and liquidity positions, well-managed liquid asset portfolios, mitigated risks in higher-risk asset
classes through ongoing selective origination and strengthened provisioning and coverage ratios
through early action. The investment in the Nedbank franchise over the past few years is proving to
be beneficial to all stakeholders and providing good support for revenue growth during more difficult
macroeconomic circumstances.

We continue to deliver sustainably to all our stakeholders:

For staff  creating 211 new employment opportunities; investing R148m in training our people; 647
of our staff members participating in our Leading for Deep Green programme; supporting 160 external
bursars across 17 universities; and progressing well on staff transformation initiatives.

For clients  significantly investing in our distribution footprint, with a 46% increase in new outlets
and 81% new ATMs since the first half of 2009; accelerating delivery in innovation during the past 18
months, including launching the 'branch of the future', PocketPOS(TM), the eBill(TM) invoice issuing and
payment system as well as a new, lower-price credit life product; increasing the value of loan payouts
to R83bn (June 2012: R69bn) and client inflows in assets under management by 33,2% to R167,2bn
(June 2012: R125,5bn).

Client satisfaction scores continue to reflect these investments, remaining at multiyear highs. This has
led to overall group client numbers increasing to 6,4m, up 10,0%, since June 2012 and growing
numbers of clients transacting through our channels.

For shareholders  delivering EP of R749m and increasing the interim dividend by 14,7% ahead of
12,4% growth in headline earnings per share (HEPS); our lower share price to June (down 6,6%)
performing in line with the JSE Bank Index; creating shareholder value through our rights to acquire
20% in Ecobank Transnational Incorporated (ETI); entering into an agreement to acquire an initial
stake of 36,4% of Banco Unico with a pathway to control, subject to regulatory approval, and signing
an alliance agreement with the Bank of China to enable increased participation in ChinaAfrica flows.

For regulators  implementing Basel III successfully on 1 January 2013, with the group's common-
equity Tier 1 strengthening further to 11,8%; making cash taxation contributions of R3,4bn relating to
direct, indirect, PAYE and other taxation; continuing with our strong, open and transparent
relationships with all regulators and our commitment to responsible banking practices.

For communities  expanding our branch footprint into peri-urban areas, resulting in increased
accessibility to Nedbank's relevant product offerings for the community; since 2009 contributing
R394m to socioeconomic development and R47m in the first half of 2013; ranking first among the top
100 companies in the Mail & Guardian dti Code Survey; sourcing 74% or R3,4bn of our procurement
locally, improving on an already high benchmark; making good progress with our Sustainable
Agriculture and Water Balance partnerships with WWF-SA; clients investing more than R1,6bn in our
Nedbank Retail Green Savings Bond; and being recognised as a leader in socially responsible
banking at the 2013 African Banker Awards.

Cluster performance
The business clusters generated an increased ROE of 17,6% (June 2012: 17,5%) and headline
earnings growth of 4,6%, with strong performances across the Capital, Corporate and Wealth
businesses.

                                           % change       Headline             ROE
                                                          earnings             (%)
                                                            (Rm)
                                                        June     June     June     June
                                                        2013     2012     2013     2012

Nedbank Capital                                16,9      801      685     28,4     24,1

Nedbank Corporate                              23,7     1069      864     25,9     22,2
Nedbank Business Banking                      (19,4)     349      433     15,2     20,5
Nedbank Retail                                (11,7)   1 054    1 194     10,0     11,8

Nedbank Wealth                                 17,9      421      357     35,9     29,3

Business clusters                               4,6    3 694    3 533     17,6     17,5

Centre including Rest of Africa*             >100,0      220      (79)

Total                                          13,3    3 914    3 454     14,6     14,2

* June 2012 restated by R14m to reflect the adoption of IAS 19 Employee Benefits (2011).

Nedbank Capital's growth in earnings and ROE was driven by good pipeline conversion in investment
banking, together with a solid performance from global markets, while impairments improved.

Nedbank Corporate produced strong earnings growth and an improved ROE, underpinned by
increased cash and electronic banking volumes, a strong delivery from the listed-property investment
portfolio together with fair-value gains and favourable deposit growth. This performance was achieved
within a well-managed impairment and expense environment across its businesses.

Nedbank Business Banking reported a decrease in headline earnings and ROE following a R182m
specific impairment charge in June on a R240m exposure to a single client. The credit loss ratio
(CLR) is expected to revert to the upper end of its through-the-cycle target range for the full year,
enabling improved returns, reflective of the quality of client advances, proactive risk management
practices and underlying momentum in the business. Notwithstanding the protracted challenges
facing the small-and-medium-enterprise (SME) sector in South Africa, Business Banking continued to
deliver strong growth in asset payouts, current account creditors and non-interest revenue (NIR) on
the back of new-client gains and deepening cross-sell.

Nedbank Retail generated headline earnings of R1,1bn, down 11,7%, which were impacted by the
early and comprehensive risk-mitigating actions to address the concerning personal-loan industry
dynamics observed in 2012, particularly in relation to the high industry growth rates that masked the
true underlying level of consumer financial distress. Balance sheet impairments have been further
strengthened to 4,2% of retail advances (June 2012: 4,0%), notably in personal loans where an
additional R498m has been raised since June 2012 through methodology changes to increase
prudency in provisioning policies, including R60m for in duplum, with R306m of this provision reflected
against the performing portfolio. Consequently, the Nedbank Retail CLR of 2,56% (June 2012: 2,00%)
and ROE of 10,0% (June 2012: 11,8%) reflect these effects. The embedding of sound risk
management practices ensured that the CLR for the balance of advances remained within
expectations.

The excellent momentum in sustainably repositioning the Retail Cluster strategically and financially
was maintained in a very challenging macroeconomic environment. Investment in distribution and
distinctive client value propositions is yielding significant client gains, with good increases in related
transactional, deposit and lending volumes, contributing to strong NIR growth of 10,6%, which is well
ahead of expense growth of 6,9%.

Nedbank Wealth's earnings growth and ROE increase were supported by excellent performance in
the asset management and life insurance businesses, offset by a normalisation in the short-term
insurance claims environment. In addition, the CLR improved to within the cluster's through-the-cycle
target range.

Headline earnings at the centre represents, inter alia, the after-tax effects of a release of R60m of the
R200m central impairment provision to offset the R60m in duplum model overlay incurred in Retail, a
reversal of R88m of insurance provisions following court rulings in our favour and an earnings uplift in
the Rest of Africa Division.(1)

Detailed segmental information is available in the results booklet and on the group's website at
www.nedbankgroup.co.za under the 'Financial information' section.

Financial performance

Net interest income
Net interest income grew 6,9% to R10 309m (June 2012: R9 642m), supported by growth in average
interest-earning banking assets of 6,1%.(1)

The net interest margin (NIM) of 3,58% increased from the comparative period (June 2012: 3,54%)
and the prior year (December 2012: 3,53%). Margin gains were underpinned by advances and
deposit mix changes, risk-adjusted pricing of new advances and backbook advances runoff.

Impairments charge on loans and advances
Impairments increased to R3 325m (June 2012: R2 702m) and the CLR to 1,31% (June 2012:
1,11%).

The CLR is comprised of a specific charge of 1,24% and a portfolio charge of 0,07% (June 2012:
specific: 1,00% and portfolio: 0,11%).

                                              Jun                 Jun                 Dec
CLR (%)
                                             2013                2012                2012
Specific impairments                         1,24                1,00                0,91
Portfolio impairments                        0,07                0,11                0,14

Total CLR                                    1,31                1,11                1,05

Total group defaulted advances decreased year-on-year to R20 176m (June 2012: R21 838m) from
ongoing improvements in the residential and commercial mortgage books. Defaulted advances were
up 9,4% (annualised) on the 2012 year-end (Dec 2012: R19 273m) from increases in personal loans
and in the wholesale businesses.

The coverage ratio for total and specific impairments increased to 58,8% (June 2012: 52,9%) and
40,9% (June 2012: 39,0%) respectively. Portfolio coverage on the performing book continued to
strengthen to 0,7% (June 2012: 0,6%).

Our collections processes generated post-writeoff recoveries of R412m (June 2012: R428m),
reflecting the prudent approach of cash accounting the recoveries on the written-off book. This
includes personal-loan recoveries of R130m (June 2012: R114m).

CLR (%)                                             %       Jun      Jun       Dec        Through-
                                              banking      2013     2012      2012       the-cycle
                                             advances                                       target
                                                                                            ranges
Nedbank Capital                                  11,3      0,77     1,41      1,06     0,10 - 0,55
Nedbank Corporate                                32,1      0,30     0,30      0,24     0,20 - 0,35
Nedbank Business Banking                         11,9      1,02     0,41      0,34     0,55 - 0,75
Nedbank Retail                                   38,2      2,56     2,00      2,01     1,50 - 2,20

Nedbank Wealth                                    3,8      0,24     0,46      0,61     0,20 - 0,40

Group                                                      1,31     1,11      1,05     0,60 - 1,00

Asset quality remains sound. In Nedbank Corporate the CLR was maintained within its through-the-
cycle target range, and both Nedbank Capital and Nedbank Wealth reported lower impairments. The
Business Banking CLR was affected by the aforementioned impairment and is likely to revert to the
through-the-cycle target range by year-end. The deterioration in Nedbank Retail's CLR reflects
changes in advances mix, higher consumer credit stress and the outcome of the more prudent
impairment methodologies and early risk mitigation actions taken in Personal Loans.

Non-interest revenue
NIR increased by 15,4% to R9 535m (June 2012: R8 265m)(1), due to the following:
- Commission and fee income of R6 771m was up 14,2% (June 2012: R5 928m)(1), driven by strong
  client gains, improved cross-sell, good volumes and higher levels of client activity.
- Insurance income of R950m increased 15,4% (June 2012: R823m), benefiting from growth in
  personal loans offset by the base effect of the benign short-term claims experienced in H1 2012.
- Trading income increased to a robust R1 272m (June 2012: R1 252m) from a high 2012 base as
  a result of ongoing strong performance within the fixed-income, commodities, credit and
  currencies and forex environments.
- Private equity generated income of R63m (June 2012: R139m).
- Fair-value gains of R94m (June 2012: R125m loss) were recognised mainly as a result of basis
  risk on centrally hedged banking book positions and accounting mismatches in hedged fixed-rate
  advances portfolios as market yields increased. This positive fair value gain follows a period of
  cumulative fair-value losses of R583m since 2010. NIR, excluding fair-value gains, was up 12,5%.

The strong uplift from NIR resulted in the NIR-to-expense ratio increasing to 88,7% (June 2012:
83,0%) and for the first time Nedbank achieved its medium- to-long-term target of more than 85%.(1)
The strength of the Nedbank franchise is reflected in the sustained growth in NIR, increasing 15,4,%
(15,7%, excluding fair-value adjustments) on a compound basis since June 2009.

Expenses
Disciplined cost management resulted in expenses growing at 8,0% to R10 750m [June 2012: R9
957m, restated by R18m to reflect the adoption of IAS 19 Employee Benefits (2011)].(1)

Growth in expenses was primarily driven by:
· staff-related costs increasing 8,6%, comprising remuneration cost growth of 8,0% following
   average inflation-related annual increases of 6,5% and 0,7% growth in predominantly frontline
   headcount; and
· marketing and computer processing cost growing 15,6% and 7,4% respectively, consistent with
   the group's focus on revenue-generating business activities and building the franchise.

Taxation(1)
The base effect of capital gains tax and secondary tax on companies in June 2012, combined with
lower levels of dividend income, resulted in an effective tax rate of 25,9% (June 2012: 27,9%)(1).

Statement of financial position
Capital
Strong balance sheet management resulted in all capital adequacy ratios remaining well above the
Basel III minimum regulatory capital requirements and well within the group's new Basel III internal
target ranges.

 Nedbank                 June             June          December          Internal      Regulatory
 Group                   2013             2012              2012      target range        minimum*
                   (Basel III)     (Basel II.5)       (Pro forma       (Basel III)     (Basel III)
                                                       Basel III)
 Common-equity           11,8%            10,6%             11,6%     10,5% - 12,5%         9,00%
 Tier 1 ratio
 Tier 1 ratio            13,0%            12,1%             13,1%     11,5% - 13,0%         10,5%
 Total capital           14,8%            14,4%             15,1%     14,0% - 15,0%         12,5%
 ratio                                                                      
(Ratios calculated include unappropriated profits.)

* The Basel III regulatory minima include minimum regulatory requirements for common-equity Tier 1
  in 2019 and Tier 1 and total ratios in 2015, including a conservative add-on for Pillar 2A and
  domestic systemically important financial institutions (D-SIFIs). These requirements exclude Pillar
  2B add-ons and any countercyclical capital buffer requirements.

The group's capital ratios are expected to be maintained at these strong levels in 2013 through
projected earnings growth and the portfolio tilt strategy, offset by risk-weighted asset growth.

A total of R1,8bn of new-style, fully loss-absorbent, Basel III-compliant, Tier 2 subordinated-debt
capital was successfully issued during July 2013 to replace the R1,8bn Basel II Tier 2 capital that
matures in September 2013.

Further detail on risk and capital management will be available in the Risk and balance sheet
management review section of the group's analyst booklet and the Pillar 3 Report to be published on
the website at www.nedbankgroup.co.za in September 2013.

Funding and liquidity
Nedbank Group remains well funded, with a strong liquidity position that is underpinned by a well-
diversified and lengthened funding profile, a surplus liquid asset buffer of R25,0bn in anticipation of
the Basel III liquidity coverage ratio (LCR), a strong loan-to-deposit ratio and low reliance on interbank
and foreign currency funding. The average long-term funding ratio for the second quarter of 28,0%
(December 2012: 26,0%) was supported by growth in the Retail Savings Bond to R7,7bn.

The attractiveness of the Nedbank franchise as a capital market issuer was again demonstrated in
that a R2,0bn five-year commercial mortgage securitisation was successfully concluded in March
2013 as well as R3,2bn of three-year senior unsecured debt in July 2013.

Loans and advances
Loans and advances grew 11,5% (annualised) to R557,4bn (December 2012: R527,2bn)(1),
underpinned by gross new-advances payouts increasing 20,3% to R83bn (June 2012: R69bn).

Loans and advances by cluster are as follows:
                                                     June        December 2012             % change
Rm                                                   2013                               (annualised)
Nedbank Capital                                    97 161               82 494                 35,9
Banking activities                                 59 897               52 732                 27,4
Trading activities                                 37 264               29 762                 50,8
Nedbank Corporate                                 169 066              162 730                  7,9
Nedbank Business Banking                           62 627               60 115                  8,4
Nedbank Retail                                    193 027              190 647                  2,5
Nedbank Wealth                                     22 138               19 864                 23,1
Centre, including Rest of Africa                   13 330               11 316                 35,6
                                                  557 349              527 166                 11,5

Nedbank Capital's banking advances growth was boosted by good drawdowns of the deal pipeline,
including the first tranche of the Renewable Energy Independent Power Producer Procurement
Programme (REIPPPP). Growth in the trading advances book came largely from foreign-currency
placements and deposits placed under reverse repurchase agreements related to the hedging of the
group's liquid-asset portfolio.

In Nedbank Corporate, Corporate Banking recorded favourable growth in term loans of 13,4%
(annualised), whereas commercial mortgages decreased 1,8% (annualised) as a result of higher
levels of early settlements.

Good momentum in quality-client gains and support of existing relationship-banked clients led to the
increase in Nedbank Business Banking's advances growth.

Retail banking advances grew by a modest 2,5% (annualised), reflecting the difficult consumer
environment, selective origination in higher-risk asset categories in line with our portfolio tilt strategy,
rolloff of the home loans backbook and early repayments. Advances growth arose from Card and
MFC increasing advances 19,4% and 10,7% respectively, while personal loans and home loan
advances declined 5,8% and 1,9% respectively in line with the planned slowdown in both advances
categories. Personal loans represent 3,9%% of the overall group advances book.

Growth in advances at the Centre was led by increased business activity in the Rest of Africa,
consistent with the group's focus on deepening its Pan-African banking relationships and expanding
its presence in Africa.

Deposits
Deposits grew 10,2% (annualised) to R578,8bn (December 2012: R550,9bn)(1) and the loan-to-deposit
ratio increased slightly to 96,3% (June 2012: 95,7%).

The growth in call and term deposits of 13,8%, fixed deposits of 13,6% and cash management
deposits of 2,8% demonstrates the strong focus on portfolio tilt and attracting retail and corporate
funding through competitive and innovative liability products.

Current and savings accounts increased by 2,3% and 27,5% respectively, with good contributions
from Retail, Business Banking and Wealth. Ongoing improvements in the funding profile ensured that
Nedbank continued to hold a higher proportion of household deposits relative to the size of its current
retail transactional banking franchise.

Group strategic focus
The group maintained progress in growing its franchise and delivering on the four key strategic
initiatives of repositioning Nedbank Retail, growing NIR, implementing the portfolio tilt strategy and
expanding into the rest of Africa.

-   Nedbank Retail's revenue and preprovisioning operating profit continued to grow strongly.
    Momentum from investment in footprint, people, client value propositions, including integrated
    channels and new innovations, as well as collaboration with and leveraging wholesale
    relationships, continues to support growth in the number and quality of clients and related cross-
    sell. The deteriorating credit health of consumers in the last quarter of 2012 as indicated in the
    2012 annual results and the implementation of a more prudent provisioning methodology for
    personal loans will likely result in Retail achieving its goal of an ROE at or above the cost of equity
    of 13,0% in line with the original target date of 2014..
    Early risk-mitigating actions taken should enable the CLR to improve by year-end, being closer to
    the upper end of the through-the-cycle target range, and in that event Nedbank Retail's headline
    earnings for 2013 could be similar to the 2012 earnings level. There is downside risk if levels of
    consumer financial distress deteriorate further.

-   The NIR-to-expense ratio at a better-than-expected 88,7% exceeded our target of more than 85%
    for the first time. Momentum came from good-quality annuity income through growth in
    commission and fees from client gains and ongoing cross-sell, insurance income, a solid
    performance in trading as well as fair-value gains.

-   The portfolio tilt strategy is evident in EP growth from R57m in 2009 to R582m in June 2012 and
    R749m in June 2013. We will continue to focus on growing EP-rich activities through Nedbank
    Wealth, deposits, and transactional and investment banking. We will maintain a selective growth
    approach in personal loans, home loans and commercial property finance as we proactively seek
    to limit downside risk in this challenging operating climate.

-   Our Rest of Africa strategy represents a client-focused, risk-mitigated, capital-efficient growth
    lever for the medium to long term. The strategic alliance with Ecobank provides clients with
    access to the largest Pan-African banking network focused on Central and West Africa and the
    rights to acquire a shareholding of up to 20% in ETI, which can be exercised between November
    2013 and November 2014. The agreement to acquire an initial stake of 36,4% of Banco Unico in
    Mozambique with the right to a majority shareholding over time, subject to regulatory approval,
    will contribute to strengthening our position in the Southern African Development Community and
    East Africa as planned.

Economic outlook
Globally, economic growth is expected to be slightly firmer in the remainder of 2013. However,
downside risk remains high, particularly in some key emerging markets, including China, where
concerns of a credit crisis and economic slowdown have moderated growth momentum.

SA's GDP is forecast to grow by 2,0% in 2013 and 3,2% in 2014. The weakening rand will provide
limited benefit to export growth in light of the low productivity, soft commodity prices and
infrastructural constraints, but will add to inflationary pressures. Overall, given the outlook of lower
growth, interest rates are anticipated to remain unchanged until possibly the second half of 2014.

Household credit demand, including residential mortgages, is likely to remain muted, albeit with
pockets of growth in areas such as instalment sales and leasing finance. Growth in unsecured loans
will continue to slowdown as consumer stress increases and lending risk appetite diminishes.

Infrastructure spending by the public sector is anticipated to increase, but corporate credit demand is
expected to remain subdued, with increasing competition for fewer deals.

Prospects
Financial performance for the full year as set out below is currently anticipated to remain broadly in
line with the guidance communicated in the 2012 annual results, with the exception of the CLR that is
now expected to be below the 1,31% in June 2013, but above 1,00%:
- Advances to grow at mid to upper single digits.
- NIM to remain at levels similar to 2012.
- The CLR to improve from the June 2013 level, but remain above the top end of group's through-
     the-cycle target range of 60 to 100 basis points.
- NIR (excluding fair-value adjustments) to grow at low double digits and allow the group to meet
     the medium-to-long-term NIR-to-expense target of more than 85%.
- Expenses to increase by mid to upper single digits.

Nedbank Group is targeting full-year growth in diluted HEPS to meet our medium-to-long-term target
in the context of a tougher-than-expected economic environment and ongoing market volatility. The
group's medium-to-long-term targets remain unchanged and the 2013 outlook for these is highlighted
below:

Metric                         2012         Medium-to-long-term targets                      2013
                        performance                                                       outlook

ROE (excluding                16,4%           5% above cost of ordinary      Improving, remaining
goodwil)                                           shareholders' equity              below target

Growth in diluted             19,0%            >=consumer price index +               Meet target
HEPS                                                    GDP growth + 5%

CLR                           1,05%               Between 0,6% and 1,0%           Below June 2013,
                                                     of average banking     remaining above target
                                                               advances                     range

NIR-to-expense ratio          84,4%                               > 85%               Meet target
                                                                             
Efficiency ratio              55,6%                             < 50,0%      Improving, remaining
                                                                                     above target
Common-equity Tier
1 capital adequacy            11,8%                      10,5% to 12,5%             Strengthening
ratio (Basel III)
                                 
Economic capital                   Internal Capital Adequacy Assessment Process (ICAAP):
                                        A debt rating (including 10% capital buffer)

Dividend cover              2,18 times              1,75 to 2,25 times         1,75 to 2,25 times



Shareholders are advised that these forecasts have not been reviewed or reported on by the group's
auditors.

Board changes
Mr Don Hope resigned as a non-executive director of Nedbank Group and Nedbank Limited with
effect from 30 June 2013 following his retirement from Old Mutual plc at the end of June 2013.

Accounting policies(1)
Nedbank Group Limited is a company domiciled in SA. The condensed consolidated interim financial
results of the group at and for the six months ended 30 June 2013 comprise the company and its
subsidiaries (the 'group') and the group's interests in associates and jointly controlled entities.

Nedbank Group's condensed consolidated interim financial results have been prepared in accordance
with the measurement and recognition criteria of International Financial Reporting Standards (IFRS)
and are presented in accordance with the disclosures prescribed by International Accounting
Standards (IAS) 34: Interim Financial Reporting, the South African Institute of Chartered Accountants
(SAICA) Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncement as issued by Financial Reporting Standards Council and the provisions of the
Companies Act of SA.

Nedbank Group's principal accounting policies have been prepared in terms of IFRS of the
International Accounting Standards Board (IASB) and have been applied consistently over the current
and prior financial years, with the exception of changes mentioned below.

The following standards in particular have been newly adopted or amended with effect from 1 January
2013:
- IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12
   Disclosure of Interests in Other Entities, as well as the consequential amendments to IAS 27
   Separate Financial Statements (2011) and IAS 28 Investments in Associates and Joint Ventures
   (2011).

As a result of adopting IFRS 10 the group has changed its accounting policy with respect to
determining whether it has control over and consequently whether it is required to consolidate an
investee. IFRS 10 introduces a new set of criteria for assessing control by referring to the investor's
exposure or rights to variable returns from its involvement with the investee and the ability to affect
those returns through its power over the investee.

IFRS 11 requires that the group classifies its interests in joint arrangements as either joint operations
or joint ventures depending on the group's rights to assets and obligations for the liabilities of the
arrangements. There has been no change to the method of accounting for joint arrangements.

These standards have been applied retrospectively and have not required any material restatement in
the groups' financial report.

-   IFRS 13 Fair-value Measurement
    IFRS 13 provides a revised definition of fair value and establishes a single source of guidance for
    the measurement of fair value, which had previously been contained in various standards. The
    adoption of this standard did not have a material impact on the measurement of the group's
    assets and liabilities. The group has an established control framework with respect to the
    measurement of fair value, which includes an ongoing review of the valuation methodologies
    applied.

-   Disclosures  Offsetting Financial Assets and Financial Liabilities (amendments to IFRS 7)
    The group has adopted the amendments to IFRS 7, which requires extensive disclosures in
    respect of offsetting. The adoption had no impact on the measurement of the group's assets and
    liabilities.

-   IAS 19 Employee Benefits (2011)

The group has adopted IAS 19 Employee Benefits (2011). The amendments include revised
requirements for pensions and other postemployment benefits, termination benefits and certain
other changes. The key amendments include:
-requiring the recognition of changes in net defined-enefit liabilities/assets due to changes in
  determined expense/income in 'other comprehensive income' (eliminating the 'corridor
  approach' previously permitted in IAS 19);
-modifying the accounting for termination benefits; and
-clarifying various miscellaneous issues.

The amendments have been applied retrospectively and required certain restatements that are not
material.

-   IAS 1 Presentation of Financial Statements
    Amendments to IAS 1 require identification of items that may be reclassified from 'other
    comprehensive income' to 'profit or loss', and those that may not be so reclassified. As a
    consequence of adopting the amendments to IAS 1, items that may be reclassified from 'other
    comprehensive income' to 'profit or loss' have been denoted as such in the statement of
    comprehensive income.

In the preparation of these condensed consolidated interim financial results the group has applied key
assumptions concerning the future and other inherent uncertainties in recording various assets and
liabilities. The assumptions applied in the financial results for the six months ended 30 June 2013
were consistent with those applied during the 2012 financial year. These assumptions are subject to
ongoing review and possible amendments. The financial results have been prepared under the
supervision of Raisibe Morathi, the Chief Financial Officer.

Events after the reporting period(1)
A total of R1,8bn of new-style, fully loss-absorbent, Basel III-compliant, Tier 2 subordinated-debt
capital was successfully issued during July 2013 to replace the R1,8bn Basel II Tier 2 capital that
matures in September 2013. Furthermore, R3,2bn of three-year senior unsecured debt was also
successfully issued.

Reviewed results  auditors' report
KPMG Inc and Deloitte & Touche, Nedbank Group's independent auditors, have reviewed the
condensed interim financial results of Nedbank Group Limited. The review was conducted in
accordance with International Standards in Review Engagements 2410: Review of Interim Financial
Information by the Independent Auditor. They have expressed an unmodified review conclusion on
the results. The condensed consolidated interim financial results comprise the consolidated statement
of financial position at 30 June 2013, consolidated statement of comprehensive income, condensed
consolidated statement of changes in equity and condensed consolidated statement of cashflows for
the six months then ended and selected explanatory notes. The related notes are marked with (1). The
review report is available for inspection at Nedbank Group'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 Group and its group 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, but are not limited to, 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.

Interim dividend declaration
Notice is hereby given that a gross interim dividend of 390 cents per ordinary share has been
declared, payable to shareholders for the six months ended 30 June 2013. The dividend has been
declared out of income reserves.

The dividend will be subject to a dividend withholding tax rate of 15% (applicable in South Africa) or
58,5 cents per ordinary share, resulting in a net dividend of 331,5 cents per ordinary share, unless the
shareholder is exempt from paying dividend tax or is entitled to a reduced rate in terms of a applicable
double-tax agreement. Nedbank Group Limited's tax reference number is 9375/082/71/7 and the
number of ordinary shares in issue at the date of declaration is 510 204 377.

In accordance with the provisions of Strate, the electronic settlement and custody system used by
JSE Limited, the relevant dates for the dividend are as follows:

Event                                                        Date
Last day to trade (cum dividend)                             Friday, 6 September 2013
Shares commence trading (ex dividend)                        Monday, 9 September 2013
Record date (date shareholders recorded in books)            Friday, 13 September 2013
Payment date                                                 Monday, 16 September 2013

Share certificates may not be dematerialised or rematerialised between Monday, 9 September 2013,
and Friday,13 September 2013, both days inclusive.

On Monday, 16 September 2013, the dividend will be electronically transferred to the bank accounts
of all certificated shareholders where this facility is available. Where electronic funds transfer is either
not available or not elected by the shareholder, cheques dated Monday, 16 September 2013, will be
posted on that date.

Holders of dematerialised shares will have their accounts credited at their participant or broker on
Monday, 16 September 2013.

The above dates and times are subject to change. Any changes will be published on the Securities
Exchange News Service (SENS) and in the press.

For and on behalf of the board

Dr Reuel J Khoza                                   Michael WT Brown
Chairman                                           Chief Executive

6 August 2013

Financial highlights                                                                                                        
at                                                                                     30 June      30 June   31 December   
                                                                                          2013         2012          2012   
                                                                                    (Reviewed)   (Reviewed)     (Audited)   
Statistics                                                                                                                  
Number of shares listed                                                         m        510.2        507.5         507.5   
Number of shares in issue, excluding shares held by group entities              m        460.8        456.0         457.3   
Weighted average number of shares                                               m        459.2        455.7         456.3   
Diluted weighted average number of shares                                       m        471.2        468.0         470.7   
Preprovisioning operating profit*                                              Rm        8 652        7 550        15 543   
Economic profit*                                                               Rm          749          582         1 521   
Headline earnings per share*                                                cents          852          758         1 640   
Diluted headline earnings per share*                                        cents          831          738         1 590   
Ordinary dividends declared per share                                       cents          390          340           752   
 Interim                                                                    cents          390          340           340   
 Final                                                                      cents                                     412   
Ordinary dividends paid per share                                           cents          412          340           680   
Dividend cover*                                                             times         2.18         2.23          2.18   
Net asset value per share*                                                  cents       12 180       11 143        11 721   
Tangible net asset value per share*                                         cents       10 444        9 435         9 989   
Closing share price                                                         cents       17 553       17 389        18 800   
Price/earnings ratio*                                                  historical         10.2         11.4          11.5   
Market capitalisation                                                         Rbn         89.6         88.2          95.4   
Number of employees                                                                     28 889       28 678        28 748   
Key ratios (%)                                                                                                              
Return on ordinary shareholders' equity (ROE)*                                            14.6         14.2          14.8   
ROE, excluding goodwill*                                                                  16.1         15.8          16.4   
Return on total assets (ROA)                                                              1.15         1.07          1.13   
Net interest income to average interest-earning banking assets**                          3.58         3.54          3.53   
Credit loss ratio  banking advances                                                       1.31         1.11          1.05   
Non-interest revenue to total operating expenses*                                         88.7         83.0          84.4   
Non-interest revenue to total income                                                      48.0         46.2          46.8   
Efficiency ratio*                                                                         54.2         55.6          55.6   
Efficiency ratio (excluding BEE transaction expenses)*                                    54.1         55.3          55.4   
Effective taxation rate                                                                   25.9         27.9          26.8   
Group capital adequacy ratios (including unappropriated profits):***                                                        
Common equity tier 1                                                                      11.8         10.6          11.4   
Tier 1                                                                                    13.0         12.1          12.9   
Total                                                                                     14.8         14.4          14.9   
Statement of financial position statistics (Rm)                                                                             
Total equity attributable to equity holders of the parent*                              56 126       50 810        53 601   
Total equity*                                                                           59 817       54 551        57 375   
Amounts owed to depositors                                                             578 807      539 506       550 878   
Loans and advances:                                                                    557 349      516 088       527 166   
 Gross                                                                                 569 208      527 633       538 037   
 Impairment of loans and advances                                                     (11 859)     (11 545)      (10 871)   
Total assets administered by the group                                                 881 493      795 568       833 453   
 Total assets*                                                                         714 330      670 052       682 958   
 Assets under management                                                               167 163      125 516       150 495   
Life assurance embedded value                                                            2 063        1 827         2 030   
Life assurance value of new business                                                       201          279           563   

* 2012 restated to reflect the adoption of IAS 19 Employee Benefits (2011).
** As communicated in the group's 2012 integrated report, clients' indebtedness for acceptances has been reclassified from interest-earning banking assets to other assets for the 
   purposes of calculating the interest margin on interest-earning banking assets, which resulted in an increase in the ratio for June 2012 from 3,53% to 3,54%.
*** 2012 and 2013 ratios were calculated according to Basel II.5 and Basel III principles respectively. These ratios are not reviewed by or reported on by the group's auditors.



Consolidated statement of comprehensive income                                                                                    
for the period ended                                                                            30 June       30 June       31 December   
                                                                                                   2013          2012              2012   
                                                                                             (Reviewed)    (Reviewed)         (Audited)   
                                                                                                    Rm            Rm                Rm   
Interest and similar income                                                                     22 400        22 362            44 730   
Interest expense and similar charges                                                            12 091        12 720            25 050   
Net interest income                                                                             10 309         9 642            19 680   
Impairments charge on loans and advances                                                         3 325         2 702             5 199   
Income from lending activities                                                                   6 984         6 940            14 481   
Non-interest revenue                                                                             9 535         8 265            17 324   
Operating income                                                                                16 519        15 205            31 805   
Total operating expenses                                                                        10 750         9 957            20 563   
 Operating expenses**                                                                           10 729         9 911            20 485   
 BEE transaction expenses                                                                           21            46                78   
Indirect taxation                                                                                  305           243               561   
Profit from operations before non-trading and capital items                                      5 464         5 005            10 681   
Non-trading and capital items                                                                      (8)            34              (18)   
 Net profit on sale of subsidiaries, investments, and property and equipment                         5            29                33   
 Net impairment of investments, property and equipment, and capitalised development costs         (13)             5              (51)   
Fair-value adjustments of investment properties                                                      4                            (12)   
Profit from operations                                                                           5 460         5 039            10 651   
Share of profits of associates and joint ventures                                                    1   
Profit before direct taxation                                                                    5 460         5 039            10 652   
Total direct taxation                                                                            1 413         1 399             2 865   
 Direct taxation**                                                                               1 413         1 394             2 861   
 Taxation on non-trading and capital items                                                         (1)             5                 4   
 Taxation on revaluation of investment properties                                                    1                               *   
Profit for the period                                                                            4 047         3 640             7 787   
Other comprehensive income/(losses) net of taxation                                                358          (32)               171   
 Exchange differences on translating foreign operations***                                         371            17               162   
 Fair-value adjustments on available-for-sale assets***                                            (2)           (1)                43   
 Remeasurements on long-term employee benefit assets**                                                          (38)              (76)   
 (Losses)/Gains on property revaluations***                                                       (11)          (10)                42   
Total comprehensive income for the period                                                        4 405         3 608             7 958   
Profit attributable to:                                                                                                                                           
Equity holders of the parent**                                                                   3 910         3 483             7 449   
Non-controlling interest  ordinary shareholders**                                                    5            15                45   
Non-controlling interest  preference shareholders                                                  132           142               293   
Profit for the period                                                                            4 047         3 640             7 787   
Total comprehensive income attributable to:                                                                                                                         
Equity holders of the parent**                                                                   4 254         3 453             7 620   
Non-controlling interest  ordinary shareholders**                                                   19            13                45   
Non-controlling interest  preference shareholders                                                  132           142               293   
Total comprehensive income for the period                                                        4 405         3 608             7 958   
Basic earnings per share**                                                     cents               851           764             1 632   
Diluted earnings per share**                                                   cents               830           744             1 583   
* Represents amounts less than R1m.                                                                                                                                                        
** 2012 restated to reflect the adoption of IAS 19 Employee Benefits (2011).                                                                                                               
*** These items are or may be reclassified to profit or loss.                                                                                                                              

Headline earnings reconciliation                                                                                                                                                           
for the period ended                                                                                                                                                                       
                                                                                                30 June           30 June      30 June           30 June   31 December       31 December   
                                                                                                   2013              2013         2012              2012          2012              2012   
                                                                                             (Reviewed)        (Reviewed)   (Reviewed)        (Reviewed)     (Audited)         (Audited)   
                                                                                                     Rm                Rm           Rm                Rm            Rm                Rm   
                                                                                                  Gross   Net of taxation        Gross   Net of taxation         Gross   Net of taxation   
Profit attributable to equity holders of the parent*                                                                3 910                          3 483                           7 449   
Less: Non-headline earnings items                                                                   (4)               (4)           34                29          (30)              (34)   
 Net profit on sale of subsidiaries, investments, and property and equipment                         5                 6            29                24           33                 29   
 Net impairment of investments, property and equipment, and capitalised development costs          (13)              (13)            5                 5          (51)              (51)   
 Fair-value adjustments of investment properties                                                     4                 3                                          (12)              (12)   
Headline earnings                                                                                                   3 914                          3 454                           7 483   
* 2012 restated to reflect the adoption of IAS 19 Employee Benefits (2011).                                                                                                                


Consolidated statement of financial position                                                      
at                                                             30 June      30 June   31 December   
                                                                  2013         2012          2012  
                                                            (Reviewed)   (Reviewed)     (Audited)  
                                                                    Rm           Rm            R   
Assets                                                                                            
Cash and cash equivalents                                       16 784       11 840       14 445   
Other short-term securities                                     44 906       42 090       43 457   
Derivative financial instruments                                13 004       14 608       13 812   
Government and other securities                                 25 022       26 693       26 753   
Loans and advances**                                           557 349      516 088      527 166   
Other assets                                                     9 585       11 775        9 488   
Current taxation receivable                                        455          976          246   
Investment securities                                           18 145       15 825       16 577   
Non-current assets held for sale                                    13           22          508   
Investments in associate companies and joint ventures              527          602          668   
Deferred taxation assets*                                          324          386          541   
Investment property                                                210          617          205   
Property and equipment                                           6 407        6 259        6 398   
Long-term employee benefit assets*                               2 132        2 099        2 095   
Mandatory reserve deposits with central banks                   11 468       12 384       12 677   
Intangible assets                                                7 999        7 788        7 922   
Total assets                                                   714 330      670 052      682 958   
Equity and liabilities                                                                            
Ordinary share capital                                             461          456          457   
Ordinary share premium                                          16 343       15 955       16 033   
Reserves*                                                       39 322       34 399       37 111   
Total equity attributable to equity holders of the parent       56 126       50 810       53 601   
Non-controlling interest attributable to                                                          
 ordinary shareholders*                                            220          180          213   
 preference shareholders                                         3 471        3 561        3 561   
Total equity                                                    59 817       54 551       57 375   
Derivative financial instruments                                16 777       15 272       13 454   
Amounts owed to depositors**                                   578 807      539 506      550 878   
Provisions and other liabilities                                16 046       16 246       15 526   
Current taxation liabilities                                       114          116          193   
Other liabilities held for sale                                                               36   
Deferred taxation liabilities*                                     596        1 039          793   
Long-term employee benefit liabilities*                          2 029        1 874        1 913   
Investment contract liabilities                                 10 519        8 709        9 513   
Insurance contract liabilities                                   3 146        2 683        2 979   
Long-term debt instruments                                      26 479       30 056       30 298   
Total liabilities                                              654 513      615 501      625 583   
Total equity and liabilities                                   714 330      670 052      682 958   

* 2012 restated to reflect the adoption of IAS 19 Employee Benefits (2011).
** As communicated in the group's 2012 integrated report, clients' indebtedness for acceptances and liabilities for acceptances have been reclassified to loans and advances and amounts owed to 
   depositors respectively for the purpose of achieving improved comparability with the majority of the group's SA banking peers. These items were previously separately disclosed in the 
   group's statement of financial position. June 2012 comparatives have been reclassified accordingly.

Condensed consolidated statement of changes in equity                                                      
                                                                               Non-controlling   Non-controlling                  
                                                                Total equity          interest          interest                  
                                                             attributable to   attributable to   attributable to                  
                                                              equity holders          ordinary        preference                  
                                                               of the parent      shareholders      shareholders   Total equity   
                                                                          Rm                Rm                Rm             Rm   
Balance at 31 December 2011                                           48 946               178             3 561         52 685   
Adoption of IAS 19 amendments                                          (250)               (4)                            (254)   
Restated balance at 31 December 2011                                  48 696               174             3 561         52 431   
Dividend to shareholders                                             (1 609)               (7)                          (1 616)   
Preference share dividend                                                                                  (142)          (142)   
Issues of shares net of expenses                                          13                                                 13   
Shares acquired/cancelled by group entities and BEE trusts                 9                                                  9   
Total comprehensive income for the period*                             3 453                13               142          3 608   
Share-based payment reserve movement                                     245                                                245   
Regulatory risk reserve provision                                          1                                                  1   
Other movements                                                            2                                                  2   
Balance at 30 June 2012                                               50 810               180             3 561         54 551   
Dividend to shareholders                                             (1 639)               (1)                          (1 640)   
Preference share dividend                                                                                  (151)          (151)   
Issues of shares net of expenses                                           1                                                  1   
Shares acquired/cancelled by group entities and BEE trusts               110                                                110   
Total comprehensive income for the period*                             4 167                32               151          4 350   
Share-based payment reserve movement                                     151                                                151   
Regulatory risk reserve provision                                          1                                                  1   
Acquisition of subsidiary                                                                    2                                2   
Balance at 31 December 2012                                           53 601               213             3 561         57 375   
Dividend to shareholders                                             (1 967)               (9)                          (1 976)   
Preference share dividend                                                                                  (132)          (132)   
Issues of shares net of expenses                                         458                                                458   
Shares acquired/cancelled by group entities and BEE trusts             (144)                                              (144)   
Total comprehensive income for the period                              4 254                19               132          4 405   
Share-based payment reserve movement                                    (75)                                               (75)   
Preference shares held by group entities                                                                    (90)           (90)   
Disposal of subsidiary                                                                     (3)                              (3)   
Other movements                                                          (1)                                                (1)   
Balance at 30 June 2013                                               56 126               220             3 471         59 817   

* Restated to reflect the adoption of IAS 19 Employee Benefits (2011).



  Condensed consolidated statement of cashflows
  for the period ended                                                                                      30 June      30 June   31 December
                                                                                                              2013         2012           2012
                                                                                                         (Reviewed)   (Reviewed)     (Audited)
                                                                                                                Rm           Rm            Rm
  Cash generated by operations                                                                              10 259        9 121        18 804
  Change in funds for operating activities                                                                     158       (4 641)       (5 947)
  Net cash from operating activities before taxation                                                        10 417        4 480        12 857
  Taxation paid                                                                                             (1 896)      (2 431)       (3 914)
  Cashflows from operating activities                                                                        8 521        2 049         8 943
  Cashflows utilised by investing activities                                                                (1 742)      (2 155)       (4 696)
  Cashflows utilised by financing activities                                                                (5 604)      (1 115)       (2 552)
  Effects of exchange rate changes on opening cash and cash equivalents (excluding foreign borrowings)         (45)          36            18
  Net increase/(decrease) in cash and cash equivalents                                                       1 130       (1 185)        1 713
  Cash and cash equivalents at the beginning of the period*
  Cash and cash equivalents at the end of the period*                                                       27 122       25 409        25 409
                                                                                                            28 252       24 224        27 122

* Including mandatory reserve deposits with central banks.

Condensed segmental reporting                                                                                                                                                         
for the period ended                                   30 June        30 June   31 December      30 June          30 June   31 December      30 June          30 June   31 December   
                                                          2013           2012          2012         2013             2012          2012         2013             2012          2012   
                                                    (Reviewed)     (Reviewed)     (Audited)   (Reviewed)       (Reviewed)     (Audited)   (Reviewed)       (Reviewed)     (Audited)   
                                                            Rm             Rm            Rm           Rm               Rm            Rm           Rm               Rm            Rm   
                                                                 Total assets                          Operating income                            Headline earnings                 
Nedbank Capital                                        159 339        157 069       142 290        2 102            1 844         4 044          801              685         1 431   
Nedbank Corporate                                      185 804        168 732       175 073        2 486            2 143         4 410        1 069              864         1 817   
Total Nedbank Retail and Nedbank Business Banking      292 113        283 495       290 198        9 201            9 129        18 989        1 403            1 627         3 496   
Nedbank Retail                                         200 339        193 889       198 072        7 196            7 062        14 693        1 054            1 194         2 552   
Nedbank Business Banking                                91 774         89 606        92 126        2 005            2 067         4 296          349              433           944   
Nedbank Wealth                                          47 212         40 953        42 270        1 695            1 468         2 993          421              357           718   
Shared Services                                          6 758          6 564         6 048           76             (11)             4          156               10            40   
Central Management, including Rest of Africa            23 104         13 239        27 079          959              632         1 365           64             (89)          (19)   
Total                                                  714 330        670 052       682 958       16 519           15 205        31 805        3 914            3 454         7 483   

The segmental results for 2012 have been restated to reflect the adoption of IAS 19 Employee Benefits (2011). The amendments to the standard include revised requirements for pensions and
other postretirement benefits, termination benefits and certain other changes. 
Restated group ratios are disclosed in the financial highlights section.

Condensed geographical segmental reporting                                                                                                                                 
for the period ended                                                             30 June            30 June   31 December      30 June             30 June   31 December   
                                                                                    2013               2012          2012         2013                2012          2012   
                                                                              (Reviewed)         (Reviewed)     (Audited)   (Reviewed)          (Reviewed)     (Audited)   
                                                                                      Rm                 Rm            Rm           Rm                  Rm            Rm   
                                                                                           Operating income                              Headline earnings                 
SA                                                                                15 515             14 217        29 748        3 742               3 164         6 869   
 Business operations*                                                             15 515             14 217        29 748        3 893               3 347         7 230   
 BEE transaction expenses                                                                                                         (19)                (41)          (68)   
 Profit attributable to non-controlling interest  preference shareholders                                                        (132)               (142)         (293)   
Rest of Africa*                                                                      655                584         1 259          124                 126           297   
Rest of world  business operations*                                                  349                404           798           48                 164           317   
Total                                                                             16 519             15 205        31 805        3 914               3 454         7 483   
* 2012 restated to reflect the adoption of IAS 19 Employee Benefits (2011).                                                                                                


Fair-value hierarchy

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 a presumption 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 best 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 volume and frequency 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 
reference to the current fair value of another instrument that is substantially the same in nature (eg other short-term securities and government and other securities), reference to the value of the assets of underlying business 
(eg investment contract liabilities), earnings multiples (eg unlisted investments), discounted cashflow analysis (eg unlisted investments, loans and advances, other short-term securities, government and other securities and amounts owed 
to depositors) and various option pricing models (eg other short-term securities and government and other securities and derivatives). 
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 (www.nedbankgroup.co.za).

FAIR-VALUE HIERARCHY

The financial instruments recognised at fair value have been categorised into the three input levels of the 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.

There were no significant transfers between level 1 and 2 during the period under review.

FINANCIAL ASSETS

                                                                                                
                                         Total financial assets                 Total financial assets recognised at         Total financial assets classified at level 1         Total financial assets classified at level 2  Total financial assets classified at level 3
                                                                                          amortised cost
                                                      30 June            31 December            30 June              31 December                30 June            31 December                30 June             31 December                30 June           31 December
                                                         2013                   2012               2013                     2012                   2013                   2012                   2013                    2012                   2013                  2012
                                                    (Reviewed)              (Audited)         (Reviewed)                (Audited)             (Reviewed)              (Audited)            (Reviewed)                (Audited)             (Reviewed)            (Audited)
                                                           Rm                     Rm                 Rm                       Rm                     Rm                      Rm                    Rm                      Rm                     Rm                    Rm
Cash and cash equivalents                              28 252                 27 122             28 252                   27 122
Other short-term securities                            44 906                 43 457             15 171                   16 599                    740                     818                28 995                  26 040
Derivative financial instruments                       13 004                 13 812                                                                 53                      10                12 951                  13 800                                            2
Government and other securities                        25 022                 26 753             10 091                   10 381                 10 171                  10 230                 4 760                   6 142
Loans and advances                                    557 349                527 166            463 129                  441 407                     62                      67                94 103                  85 575                     55                   117
Other assets                                            9 585                  9 488              6 637                    5 376                  2 948                   3 783                                           329 
Investments in associate companies and joint ventu        485                    636                                                                                                                                                             485                   636
Investment securities                                  18 145                 16 577                                                                566                     534                16 038                  14 606                  1 541                 1 437
                                                      696 748                665 011            523 280                  500 885                 14 540                  15 442               156 847                 146 492                  2 081                 2 192

FINANCIAL LIABILITIES

                                                                                              
                                 Total financial liabilities    Total financial liabilities recognised at       Total financial liabilities classified at level 1    Total financial liabilities classified at level 2   Total financial liabilities classified at level 3
                                                                            amortised cost

 
                                                     30 June            31 December            30 June             31 December                 30 June             31 December               30 June             31 December               30 June             31 December
                                                        2013                   2012               2013                    2012                    2013                    2012                  2013                    2012                  2013                    2012
                                                   (Reviewed)             (Audited)         (Reviewed)               (Audited)               (Reviewed)               (Audited)            (Reviewed)               (Audited)            (Reviewed)               (Audited)
                                                          Rm                     Rm                 Rm                      Rm                       Rm                     Rm                     Rm                     Rm                    Rm                      Rm
Derivative financial instruments                      16 777                 13 454                                                                  19                      6                 16 757                  13 447                    1                       1
Amounts owed to depositors                           578 807                550 878            447 692                 416 097                                                                131 115                 134 781
Provisions and other liabilities                      16 046                 15 526              9 764                   9 148                     6 151                 6 318                    131                      60
Investment and insurance contract liabilties          13 665                 12 492                                                                                                            13 665                  12 492
Long-term debt instruments                            26 479                 30 298             20 967                  24 668                     5 289                 5 447                    223                     183
                                                     651 774                622 648            478 423                 449 913                    11 459                11 771                161 891                 160 963                    1                       1

LEVEL 3 RECONCILIATION



                                                                                                                                                           Gains/(Losses) in
                                                                                                        Opening balance at        Gains/(Losses) in            comprehensive          Purchases and              Sales and                              Closing balance at
                                                                                                                 1 January      profit for the year      income for the year                 issues            settlements        Transfers in/(out)               30 June
2013 (Reviewed)                                                                                                         Rm                       Rm                       Rm                     Rm                     Rm                        Rm                    Rm
FINANCIAL ASSETS
Derivative financial instruments                                                                                         2                        3                                                                     (5)                                              -
Loans and advances                                                                                                     117                     (66)                        4                                                                                            55
Investment securities                                                                                                1 437                       81                       14                                            (8)                       17                 1 541
Investments in associate companies and joint ventures                                                                  636                    (289)                                              269                  (131)                                            485
                                                                                                                     2 192                    (271)                       18                     269                  (144)                       17                 2 081
FINANCIAL LIABILITIES
Derivative financial instruments                                                                                         1                                                                                                                                               1
                                                                                                                         1                        -                        -                       -                      -                        -                     1

                                                                                                     Gains/(Losses) in                                                                                  
                                                        Opening balance at     Gains/(Losses) in         comprehensive                            Sales and                        Closing balance at   
                                                                 1 January   profit for the year   income for the year   Purchases and issues   settlements   Transfers in/(out)          31 December   
2012 (Audited)                                                          Rm                    Rm                    Rm                     Rm            Rm                   Rm                   Rm   
FINANCIAL ASSETS                                                                                                                                                                                        
Derivative financial instruments                                        29                     2                                                       (29)                                         2   
Loans and advances                                                      91                    29                                                        (3)                                       117   
Investment securities                                                1 453                    68                     4                     49         (137)                                     1 437   
Investments in associate companies and joint ventures                  545                 (106)                                          275          (78)                                       636   
                                                                     2 118                   (7)                     4                    324         (247)                    -                2 192   
FINANCIAL LIABILITIES                                                                                                                                                                                   
Derivative financial instruments                                         5                   (8)                                                          4                                         1   
                                                                         5                   (8)                     -                      -             4                    -                    1   


Gains and losses include fair value gains or losses, translation gains or losses and, where applicable, dividends and interest income or expense.

EFFECT OF CHANGES IN SIGNIFICANT UNOBSERVABLE ASSUMPTIONS TO REASONABLE POSSIBLE ALTERNATIVES

As discussed above, the fair value of financial instruments is, under certain circumstances, measured by means of valuation techniques based on assumptions that are not market-observable. Where these scenarios apply, the group 
performs stress testing on the fair value of the relevant instruments. In stress testing, appropriate levels are chosen for the unobservable input parameters 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, the valuation of which depends on unobservable input parameters. However, it is 
unlikely in practice that all unobservable parameters would simultaneously be at the extremes of their ranges of reasonably possible alternatives. Furthermore, the disclosure is neither predictive nor indicative of future 
movements in fair value.

                                                                                                                                                                              Favourable change           Unfavourable   
                                                                                                                                                     Value per statement   in fair value due to   change in fair value   
                                                                                                                             Stress parameters     of financial position            stress test     due to stress test   
June 2013 (Reviewed)                                    Principal assumption stressed                                        %                                        Rm                     Rm                     Rm   
FINANCIAL ASSETS                                                                                                                                                                                                         
Loans and advances                                      Credit spreads                                                       between (14) and 14                                                                         
                                                                                                                                                                      55                      6                    (8)   
Investment securities                                   Valuation multiples, correlations, volatilities and credit spreads   between (25) and 25                                                                         
                                                                                                                                                                   1 541                    155                  (164)   
Investments in associate companies and joint ventures   Valuation multiples                                                  between (11) and 11                                                                         
                                                                                                                                                                     485                     57                   (57)   
Total financial assets classified at level 3                                                                                                                       2 081                    218                  (229)   
FINANCIAL LIABILITIES                                                                                                                                                                                                    
Derivative financial instruments                        Correlations, volatilities and credit spreads                        between (25) and 25                                                                         
                                                                                                                                                                       1                      *                      *   
* Represents amounts less than R1m.                                                                                                                                                                                      
                                                                                                                                                                              Favourable change           Unfavourable   
                                                                                                                                                     Value per statement   in fair value due to   change in fair value   
                                                                                                                             Stress parameters     of financial position            stress test     due to stress test   
December 2012 (Audited)                                 Principal assumption stressed                                        %                                        Rm                     Rm                     Rm   
FINANCIAL ASSETS                                                                                                                                                                                                         
Derivative financial instruments                        Correlations, volatilities and credit spreads                        between (14) and 14                                                                         
                                                                                                                                                                       2                      *                      *   
Loans and advances                                      Credit spreads                                                       between (14) and 14                                                                         
                                                                                                                                                                     117                     13                   (16)   
Investment securities                                   Valuation multiples, correlations, volatilities and credit spreads   between (25) and 25                                                                         
                                                                                                                                                                   1 437                    151                  (178)   
Investments in associate companies and joint ventures   Valuation multiples                                                  between (11) and 11                                                                         
                                                                                                                                                                     636                     70                   (70)   
Total financial assets classified at level 3                                                                                                                       2 192                    234                  (264)   
FINANCIAL LIABILITIES                                                                                                                                                                                                    
Derivative financial instruments                        Correlations, volatilities and credit spreads                        between (25) and 25                                                                         
                                                                                                                                                                       1                      *                      *   
* Represents amounts less than R1m.                                                                                                                                                                                      


The group has adopted IAS 19 Employee Benefits (2011). The amendments include revised requirements for pensions and other postemployment benefits, termination benefits and certain other
changes. The amendments have been applied retrospectively and required the following restatements in the consolidated statement of comprehensive income, headline earnings reconciliation
and consolidated statement of financial position:

                                                                                 Reviewed                       Reviewed                         Audited                         Reviewed
                                                                                  30 June                        30 June                     30 December                      30 December
                                                                                    2012          IAS 19            2012                            2012           IAS 19            2012
                                                                            (As reported)    restatement       (Restated)                   (As reported)     restatement       (Restated)
Consolidated statement of comprehensive income
Total operating expenses                                                           9 939              18           9 957                          20 528               35          20 563
Direct taxation                                                                    1 399              (5)          1 394                           2 871              (10)          2 861
Other comprehensive income net of taxation:
 Remeasurements on long-term employee benefit assets                                                 (38)            (38)                                             (76)            (76)
Profit attributable to:
 Equity holders of the parent                                                      3 497             (14)          3 483                           7 476              (27)          7 449
 Non-controlling interest -ordinary shareholders                                      14               1              15                             336                2             338
Total comprehensive income attributable to:
 Equity holders of the parent                                                      3 503             (50)          3 453                           7 719              (99)          7 620
 Non-controlling interest  ordinary shareholders                                      14              (1)             13                              47               (2)             45
Basic earnings per share                                                             767              (3)            764                           1 638               (6)          1 632
Diluted earnings per share                                                           747              (3)            744                           1 588               (5)          1 583

Headline earnings reconciliation
Headline earnings                                                                  3 468             (14)          3 454                           7 510              (27)          7 483

Consolidated statement of financial position
Deferred taxation assets                                                             269             117             386                             399              142             541
Long-term employee benefit assets                                                  2 185             (86)          2 099                           2 258             (163)          2 095
Total equity attributable to equity holders of the parent                         34 699            (300)         34 399                          37 460             (349)         37 111
Non-controlling interest attributable to ordinary shareholders                       185              (5)            180                             219               (6)            213
Deferred taxation liabilities                                                      1 033               6           1 039                             781               12             793
Long-term employee benefit liabilities                                             1 544              330           1 874                           1 591              322           1 913

Registered office
Nedbank Group Limited, Nedbank 135 Rivonia Campus, 135 Rivonia Road, Sandown, Sandton,
2196.
PO Box 1144, Johannesburg, 2000.

Transfer secretaries in SA
Computershare Investor Services (Pty) Limited, 70 Marshall Street, Johannesburg, 2001, SA.
PO Box 61051, Marshalltown, 2107, SA.

Transfer secretaries in Namibia
Transfer Secretaries (Pty) Limited, Shop 8, Kaiserkrone Centre, Post Street Mall, Windhoek, Namibia.
PO Box 2401, Windhoek, Namibia.

Directors
Dr RJ Khoza (Chairman), MWT Brown* (Chief Executive), TA Boardman, TCP Chikane, GW
Dempster* (Chief Operating Officer), MA Enus-Brey, ID Gladman (British), PM Makwana, NP
Mnxasana, RK Morathi* (Chief Financial Officer), JK Netshitenzhe, JVF Roberts (British), GT Serobe,
MI Wyman** (British).
* Executive ** Senior independent non-executive director

Company Secretary:                TSB Jali
Reg No:                           1966/010630/06
JSE share code:                   NED
NSX share code:                   NBK
ISIN:                             ZAE000004875
Sponsors in SA:                   Merrill Lynch South Africa (Pty) Limited
                                  Nedbank Capital
Sponsor in Namibia:               Old Mutual Investment Services (Namibia) (Pty) Limited

This announcement is available on the group's website at www.nedbankgroup.co.za, together with the
following additional information:
 - Detailed financial information in HTML and PDF formats.
 - Financial results presentation to analysts.
 - Link to a webcast of the presentation to analysts.
For further information kindly contact Nedbank Group Investor Relations at
nedbankgroupir@nedbank.co.za.

Enquiries
External communications
Patrick Bowes                   UK      +44 20 7002 7440
Investor relations
Dominic Lagan                   UK      +44 20 7002 7190
Kelly de Kock                   SA      +27 21 509 8709

Media
William Baldwin-Charles                 +44 20 7002 7133
                                        +44 7834 524833

Notes to Editors
Old Mutual provides life assurance, asset management, banking and general insurance to more than
14 million customers in Africa, the Americas, Asia and Europe. Originating in South Africa in 1845,
Old Mutual has been listed on the London and Johannesburg Stock Exchanges, among others, since
1999.

In the year ended 31 December 2012, the Group reported adjusted operating profit before tax of £1.6
billion (on an IFRS basis) and had £262 billion of funds under management from core operations.
For further information on Old Mutual plc, please visit the corporate website at www.oldmutual.com

Date: 06/08/2013 08:02:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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