1 NEDBANK GROUP LIMITED _Incorporated in the Republic of

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1 NEDBANK GROUP LIMITED _Incorporated in the Republic of Powered By Docstoc
(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')


‘Whilst economic conditions have improved since 2009, the global recovery remains
muted and uneven. South Africa’s gross domestic product growth in the second half
of 2010 is likely to be slower than in the first half. Against this background we are
pleased that the group and bank remain well capitalised, liquid and solidly profitable
at levels ahead of the prior period.

Nedbank Group has built a solid platform from which to grow and to service clients
and our vision remains to build Africa’s most admired bank by strategically focusing
on areas with strong economic profit potential in South Africa and in the rest of Africa.

Nedbank Group has a clear strategy, a good track record, a fundamentally well
positioned banking business and a strong management team to grow our business,
and increase shareholder value as we deliver on our vision. We have recently
completed our 2011-13 planning process and, given our current economic outlook,
remain confident that we will meet all our medium- to long-term financial targets by

Mike Brown
Chief Executive


Shareholders were advised on 15 October 2010 that HSBC Holdings plc (“HSBC”)
ended talks on a proposal to submit a bid for a controlling interest in Nedbank Group.

Nedbank Group stated at the time of the initial cautionary announcement that the
proposal may or may not lead to a bid by HSBC. Old Mutual plc (“Old Mutual”)
commented in their announcement on Friday 15 October 2010 that the reasons for
HSBC's withdrawal were not disclosed to Old Mutual, but were not, as far as Old
Mutual was aware, related to any adverse findings during HSBC's due diligence of
Nedbank Group.

The HSBC proposal to Old Mutual represented an opportunity to accelerate the
delivery of the group’s vision and accordingly the board and management were
disappointed when HSBC informed Old Mutual that they had decided to withdraw the

The cautionary announcement originally issued on 23 August 2010 and renewed on
30 September 2010 is accordingly withdrawn. Caution is no longer required to be
exercised by shareholders when dealing in Nedbank Group securities.


The global and domestic banking environment remains challenging for the banking
industry and recent indicators from key industrialised countries suggest that the
economic recovery is losing momentum. Global confidence levels remain fragile as
business conditions continue to be impacted by the uncertainty associated with
evolving banking regulations, risks emanating from high levels of public and private
sector debt and weak property markets.

Locally, the economy gained some momentum in the first half of the year mainly
driven by a revival in household spending brought about by higher household
income, lower interest rates and the boost from the FIFA World Cup.

Household demand for credit edged up from a low base as a result of improved
demand for asset-based finance. The decline in instalment sales and leasing finance
moderated while mortgages showed weak but steady growth. Encouragingly,
households increased debt repayment levels, resulting in the ratio of household debt
to disposable income easing to 78,2% at the end of June 2010 from just over 80% at
the end of 2009. Corporate demand for credit remains weak as underlying
confidence is still low and businesses remain reluctant to expand operations too
quickly in the current economic environment where there is still excess
manufacturing capacity.


Nedbank Group remains solidly profitable and well capitalised. The strategic focus on
areas with strong economic profit potential is showing some early signs of success,
particularly in the growth in core fee and commission income within non-interest
revenue (NIR).

Net interest income (NII) at R12 214 million for the nine months ended September
2010 (“the period”) was slightly up on the prior period (Q3 2009: R12 198 million).
The net interest margin held up better than anticipated at 3,32% for the period (Q3
2009: 3,40%), compared to 3,34% for the six months ended June 2010. The benefit
of increased margins on new advances and widening of asset margins due to a
change in asset mix was largely offset by the negative endowment impact from falling
interest rates on capital and the non-repricing of current and savings accounts and
higher term funding costs as the group lengthened its funding book earlier this year.

Encouragingly, impairments have continued to slow, reflected in lower levels of early
arrears and reduced inflows into defaulted advances in the retail portfolio.
Consequently, the group’s credit loss ratio has improved from 1,46% for the six
months to June 2010 to 1,36% for the period (Q3 2009: 1,52%). Although impairment
levels have improved across most of the clusters, the group remains cautious given
the sustained high levels of unemployment, personal indebtedness and tough
operating conditions in the wholesale sector. During the period the adequacy of
impairments (both current and forecast) in the retail home loan portfolio were

reviewed by an independent global risk management consultancy firm. The results of
this review confirmed that current provisioning is appropriate and that forecast
provisioning for the medium term is in line with group planning assumptions.

NIR grew by 10,2% to R9 413 million (Q3 2009: R8 542 million). Core fee and
commission income grew by 17,1% (13,2% growth including in 2009 the Wealth joint
ventures acquired last year from Old Mutual). Growth resulted from increased
volumes in electronic banking, cash handling, vehicle asset finance, personal loans
and insurance related fee income. Trading income was flat as a result of low market
volatility. Private equity income was impacted by lower market revaluations on certain
investments and NIR was negatively impacted by R207 million over the period as a
result of fair value adjustments from our subordinated debt unwinding as credit
spreads narrowed.

Expenses remain in line with expectations and the guidance given in the 2010 interim

Total assets at 30 September 2010 increased by 10,0% (annualised) to R613,4
billion from December 2009. Advances grew by 10,1% (annualised) to R484,2 billion
reflecting solid growth across most of the retail asset categories, with the exception
of home loans where market share decreased marginally in line with the group’s
strategy of growing higher economic profit generative businesses. Credit appetite in
the business sector remains subdued due to excess capacity and public sector
spending momentum which has slowed, as expected, post the FIFA World Cup.

Optimising the group’s funding and liquidity profile remains a key management focus,
with particular emphasis on lengthening the liquidity duration of our funding profile.
The long-term funding ratio improved to in excess of 24% as at 30 September 2010
(Q3 2009: 21,2%). Deposits increased 8,3% to R498,6 billion (annualised) and long-
term senior debt grew by 42,9% (annualised) to R26,5 billion during the period.

The group continues to be well capitalised with capital ratios well above current
regulatory and anticipated Basel III requirements, as well as the group’s own internal

                              August 2010                 Internal         Regulatory
                                      ratio *        target range           minimum
 Core Tier 1 ratio                     9,8%          7,5% to 9,0%               5,25%
 Tier 1 ratio                         11,4%         8,5% to 10,0%               7,00%
 Total capital ratio                  14,6%        11,5% to 13,0%               9,75%
   * September 2010 capital adequacy ratios will be reported on when the group
   releases its Pillar III report in due course.


Activity in the corporate environment in South Africa is likely to remain muted for the
balance of the year owing to uncertainty in global markets, whilst consumer
confidence continues to be weighed down by job losses and a weak property market.
Lower interest rates are expected to continue to benefit impairments, although it is
likely to take some time before this translates into higher transaction volumes and
asset growth. The prospect of further interest rate reductions, if they occur, could
impact margins negatively in the short term but should benefit impairments over the
longer term.

In this challenging environment the group remains focused on sustainable growth
and continues to seek opportunities to unlock existing value while continuing to invest
for long-term growth.

Nedbank Group’s headline earnings for 2010 are expected to be between 6% and
14% higher than the 2009 year. The group’s diluted headline earnings per share for
2010 are currently expected to be between 0% and 8% higher than the 983 cents per
share reported for the year to December 2009.

Diluted earnings per share are currently expected to be between 5% and 13% lower
than the 1 109 cents per share reported for the year to December 2009. Diluted
earnings per share in 2009 contained a one off accounting benefit of R547million
resulting from the purchase of the Wealth joint ventures acquired from Old Mutual in
2009. Earnings per share have been impacted by a higher than usual scrip take-up of

82% earlier this year. This created a higher base compared to diluted headline
earnings per share as forecast for year end.

Shareholders are advised that these forecasts and the figures stated in this trading
update have not been reviewed or reported on by the group’s auditors.


This announcement contains certain forward-looking statements with respect to the
financial condition and results of operations of Nedbank Group and its group
companies, which by their nature involve risk and uncertainty because they relate to
events and depend on circumstances that may 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, together with competitive and regulatory factors.

18 October 2010

For further information kindly contact
Tier 1 Investor Relations
Tel: +27 (0)21 702 3102

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