Nedbank Limited - Credit Rating Action by Moody’s NEDBANK GROUP LIMITED (Incorporated in the Republic of South Africa) Registration number: 1966/010630/06 JSE share code: NED NSX share code: NBK ISIN: ZAE000004875 (“Nedbank Group” or “the group”) NEDBANK LIMITED (Incorporated in the Republic of South Africa) Registration number: 1951/000009/06 JSE share code: NBKP ISIN: ZAE000043667 NEDBANK LIMITED - CREDIT RATING ACTION BY MOODY’S Nedbank Group Limited (“the group”) has noted Moody’s press release and rating actions on the South African banks, including the ratings of Nedbank Limited (“Nedbank” or “the bank”), the 100%- owned subsidiary of Nedbank Group, whereby Moody’s has downgraded Nedbank’s local currency and national scale ratings by one notch to Baa1 (from A3) and Aa3.za (from Aa2.za), respectively. Moody’s stated that, “This updated opinion was prompted, most recently, by the actions taken by the South African Reserve Bank (SARB) in response to the abrupt loss of creditor confidence in African Bank Limited (ABL)”. The group wishes to highlight that this ratings action references Moody’s assessment of the industry as a whole and is not specific to Nedbank. These actions are in line with international rating agency actions taken on a number of banks in recent years as Basel III resolution regimes have been implemented, as central banks no longer bail-out all creditors at the expense of the tax payer, and instead bail-in sub-debt holders, bond holders and potentially other creditors. Nedbank Group announced its 2014 Interim results on 5 August 2014 showing strong growth of 16,1% in diluted headline earnings per share for the six months to June and continued strengthening of the balance sheet. Key highlights included: - Headline earnings up 17,5% to R4 599m. - Credit loss ratio improved to 83 basis points, below the mid-point of the group’s through-the-cycle range of 80 to 120 basis points. - ROE (excluding goodwill) increased to 16,5%. - Total coverage ratio at 65,9% is amongst the highest in the industry. - Well-funded with an average long-term funding ratio of 24,9% and a liquid asset buffer of R26,4bn. - Common equity tier 1 (Basel III) capital ratio strengthened to 12,1%. - Interim dividend per share up 17,9%. Nedbank Limited on a stand-alone basis maintains a strong capital and liquidity position as highlighted in the bank’s 2014 Interim results. Our bank’s retail and wholesale banking business clusters continue to generate well diversified earnings growth, contributing to Nedbank’s headline earnings growth of 23,4% to R3 899m. The specific rating changes for Nedbank Limited are as follows: - The local currency long term deposit rating has been downgraded to Baa1 from A3. - The national scale long term deposit and issuer ratings have been downgraded to Aa3.za from Aa2.za. - The provisional foreign-currency senior unsecured debt rating of the bank's EMTN programme has been downgraded to (P)Baa1 from (P)A3. Nedbank’s ratings remain on rating review for further downgrade as a result of Moody’s concerns around the potential impact of the increasingly challenging economic conditions in South Africa. In terms of the scope of the review Moody’s notes the broad resilience demonstrated by South African banks in the past, including the management of adverse economic environments, and solidity of key system financial metrics, including healthy buffers that will facilitate the weathering of strong headwinds. Nedbank supports the SARB’s view that South Africa’s banking sector remains healthy and robust, and there have been no indications that other SA banks have been affected negatively by the specific issues around African Bank. Sandton 20 August 2014 Sponsors to Nedbank Group in South Africa: Merrill Lynch South Africa (Pty) Limited Nedbank Capital Sponsor to Nedbank Group in Namibia: Old Mutual Investment Services (Namibia) (Pty) Ltd Sponsors to Nedbank Limited: Investec Bank Limited Nedbank Capital Date: 20/08/2014 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.