Results for the year ended 31 December 1999

OUTLINE  Stuart Morris  Financial highlights  Provisions  Richard Laubscher  Metric dashboard  Divisions  Positioning

FINANCIAL HIGHLIGHTS

INCOME STATEMENT

EARNINGS PER SHARE - UP 25% CAGR 3 Year 25%

PEER GROUP

OPERATING COMPANIES * NIB reported earnings growth of 25% to R500 million, of which R21 million was attributable to NIB minorities

NET INTEREST MARGIN

SHAREHOLDERS’ FUNDS UP 10%

PROVISIONS Provisions were bolstered, not fed into earnings

NON-PERFORMING LOANS

Metric dashboard Beacons or markers

Multiple of revenue / earnings Marker = ROE –gearing level - financial leverage, financial risk –benchmarks in low inflation economies –proportion of NAV in hard currencies –ROE required to self-service capital –separate management of shareholders’ funds –capital allocated to best ROE opportunities

RESULTS OF ROE FOCUS Capital ratio grown to 12% –Gearing of 8.5 times is low –Surplus capital held centrally and allocated to best ROE opportunities Exit inadequate ROE businesses –Travel, air-ticket processing, linked products –Duplicate areas & international businesses Positioned to gear capital mix at low rates Much less need for earnings retention

ROE PROSPECTS >R6bn invested in hard currencies –plans to create currency for further acquisitions, for example listing DDIL Capital held in cash during high rates –recent moves with Didata - R3bn invested –market value surplus of >R3bn not booked –high earnings growth, hard currency assets –cellular & internet deals in pipeline Shareholders’ funds are working hard

ASSET PRODUCTIVITY Marker = ROA –nearing 2% –high return relative to low risk –provisions nearly 3% of advances Gross coverage 86%, net coverage 167% Ahead of indicated standardised provision regulations –strong provisions enable improvements to flow through to bottom line

RETAIL DIVISION Capital One JV for underserved through Peoples Bank –pilots show high upside –information based strategy - data analysis –empowerment deal under negotiation Right client, brand affinity & attitudinal pull –Nedbank & Permanent Bank –positioned to follow suburban drift Nedbank Private Bank –merged Nedbank, Syfrets & UAL, leading player New card system –big growth in electronic base

COMMERCIAL ROE per client capability –focused service (six-pack teams) on valued clients –factored into all credit decisions –manage client channel choices 65% of commercial clients have electronic facilities business clients use telecentre specialised service centres (outside branches) High ROE/low cost ratio division Formative relationships, piggy-back growth

CORPORATE Core credit analysis capability –clean sheet, small share of main failures Quality growth –running at 24%, 18-20% prospective Term lending = 40% (annuity component) Rate competition has always been keen Client profitability MIS capability New electronic platform NIB/ENF deal flow

INTERNATIONAL Do not do –High-street banking –Investment banking –Global treasury –Take risk in unknown countries Do –go virtual –minimise capital intensity –share skills and risk with partners –use armour-piercing strategies for barriers to entry

RESULTS Only major bank gaining market share Commercial market gains, doubled in 5yrs High ROA, high asset quality, low risk –high provisions/low NPLs –economic upturn goes directly to bottom line CBD properties written down

NON-INTEREST REVENUE Marker = NIR/Total income –target 45% –low capital intensity –choice of channel, ability to analyse activity –high inflation protection –high intellectual capital Results –cost consequences of channel choice –insurance sales platform, at least R150m upside –private equity growing

EXPENSES Efficiency ratio (cost/income) –sustainable efficiency without compromising service via process re-engineering culture Other beacons/markers –assets per employee up by 20% in 1999 to R7.5m –profits per employee up by 37% in 1999 to R –fixed assets/income now inside 3 months –transaction volumes, cycle times, error rates, unit costs

Efficiency curve PROCESS ENGINEERING IT BASED PROCESS RE-ENGINEERING VOLUME & SCALE INTERNATIONALISE Unit Cost 25% 50% 20% ADD VOLUME 3rd Party/Stanbic Underbanked PROJECT SYNERGY PROJECT ALPHA REPLICATE INTERNATIONALLY 75%

EXPENSE FOCUS RESULTS Cost ratio now under 52% –lowest in SA –international benchmarks within sight –continuing momentum, eg R400m via projects –ratio in Retail >60% under attack Branch closures & repositioning Staff productivity way ahead of peers Share options in lieu of bonuses 3rd year of zero increase in processing costs State of the art technology platform –substantial volume headroom

PLATFORMS Major spend on –new internet engine –direct telecentre –cell phone (view phone) –electronic banking –network “pipe” Client choice, pricing for functionality

PLATFORM RESULTS 903 4th generation ATMs, top in Saswitch 337 SSTs, user friendly touch screen business clients contracted at Nedtel –first with WAP/MMM internet connectivity internet clients – transactions per month Lower costs/higher functionality

BUSINESS MODEL Smaller units –co-operation, participation, ownership –performance driven, individual and team –invest in performers/exit non-performers Values based culture –fairness, development, integrity, performance –people management rewarded Concentration on –virtual form & ensuring convergence play –intellectual capacity –partnerships (share knowledge & risk) Didata, Capital One, Dresdner & BNP, HSBC, Old Mutual, State Street, American Express

CONCLUSION Less risk More capital appreciation Higher returns Inch by inch sustainable performance improvements Pick-ups in GDP, volume & efficiency go straight to the bottom line