Nedbank Group Limited (NED) Earnings Call Transcript & Summary

Good morning [Foreign Language], ladies and gentlemen. Welcome to the 54th Annual General Meeting, AGM, of Shareholders of Nedbank Group Limited. My name is Paul Mpho Makwana, and I'm the Acting Chairman of the group. As you know, from the SENS we released on 22nd January 2021, our Chairman, Vassi Naidoo, has been on leave of absence to focus on treatment he was receiving for a medical condition that is not -- or was not related to COVID-19. Vassi's recovery has been going very well and he, this morning, joined us for this AGM today. And Vassi, we wish to welcome you back and we wish you well in your continued journey towards recovery and cherish the prospect of having you fully restored to good health and back in the office. This is our second virtual AGM, and I'm pleased to welcome a number of guests, advisers and senior staff of Nedbank Group who are attending this meeting, together with our Nonexecutive Directors who are participating virtually via the virtual connection. There's a small contingent of people in our boardroom at our 135 Rivonia campus, including our executive directors sitting here by my side, representatives from JSE Investor Services, our transfer secretaries, who will be recording shareholders' votes and acting as scrutineers. We also have senior staff and technical personnel with us. We wish to also confirm that we are adhering to social distancing and all the regulations relating to compliance with COVID-19. The notice convening this meeting on Page 11 of the AGM booklet has been in your hands for the prescribed period and is taken as read. In terms of quorum, we are required to note the quorum and voting requirements on resolutions to be proposed at this meeting. In terms of our memorandum of incorporation, the quorum for an AGM is 3 or more shareholders present and entitled to vote and shareholders representing at least 25% of the issued ordinary shares. The percentage voting rights required to pass ordinary resolutions is more than 50% of the voting rights entitled to be exercised thereon. And to pass special solutions, at least 75% of the voting rights entitled to be exercised thereon. The Company Secretary has confirmed that the necessary quorum is present. And I hereby declare the meeting duly constituted. The documents required by law, including the MOI, the share register and declarations of interest by the directors are available from the group secretary for inspection. If you wish to have sight of these, let us know and the group company secretary will arrange for you to have access. In terms of section 63(4) of the Companies Act, voting may either be by a show of hands or by way of a poll. It is my intention to conduct voting on a poll -- on all the proposed resolutions. In accordance with section 63(7)(b) of the Companies Act, I confirm that Old Mutual Limited holds a strategic minority shareholding of 19.9% in Nedbank Group and supports the proposal to conduct voting by way of a poll. As indicated in the notice, shareholders who are participating online will be able to view the live webcast of this meeting and ask questions. Certificated shareholders who have not cast their votes via proxy prior to the meeting will be able to access the voting platform and vote during the meeting. All other shareholders who have lodged proxy or voting instruction forms prior to the meeting for their proxy or proxies, participant or broker to vote on their behalf will not be able to vote at the meeting as their votes have already been recorded by the transfer secretaries. But they may follow the live webcast or follow the proceedings via teleconference and ask the Board questions. [Operator Instructions] They will be received and read out by the Company Secretary and responded to when time is allocated for questions. If you receive any technical issues, there is a help button on the left-hand side of the webcast page. Shareholders participating via teleconference will be individually enabled by Chorus Call to ask their questions on the line and will be responded to when time is allocated for questions. The voting platform is now open and will remain open until all the proposed resolutions have been dealt with. Those of you who are eligible to vote at this meeting may do so now if you wish to or at any stage during the meeting by clicking on the action button, Click to Vote, on your screen to view the resolutions to be voted on. Once you have made your voting selections, press the green Submit button at the foot of the screen on the Vote or Resolutions page. The platform will confirm that your vote has been accepted. Thereafter, by clicking on the dashboard link on the screen, you will be able to return to the screen to continue viewing the webcast. The voting platform will remain open for a short time after the last resolution has been proposed to allow you to complete your votes. The voting results for all resolutions will be announced at the end of the meeting to allow time for the scrutineers to record the online votes. We shall now proceed with the proceedings of the meeting. The audited financial statements for the financial year ended 31 December 2020, the directors' and auditors' reports and the report of the Group Audit Committee have been in your hands for some time and are taken as read. Allow me now just to share some brief reflections on the year 2020. 2020 has been referred to in varied terms. The most common being that it was one laden with turbulence and uncertainty on a scale that occurs once in 100 years. Early last year, the rapid spread of COVID-19 virus changed our world rather profoundly, changed the way we work, it changed the way we express the warmth of our human touch, our consciousness in terms of hygiene and many aspects of human endeavors will never be the same. As Nedbank, our role as a financial service provider in society and in the economy became even more important during the COVID-19 crisis. We remain committed to delivering on our purpose of using our financial expertise to do good and are proud that we continue to withstand the crisis with remarkable resilience. We stayed open for business, and we're profitable in a period of unprecedented health, economic and social challenges. I am pleased to report that Nedbank management seamlessly changed gears in what can be described as an extremely difficult environment. Initially, our focus shifted to resilience as management navigated their way through the most restrictive phases of the lockdown. Transition followed as the strict level 4 and 5 lockdown levels eased and we reintroduced our full suite of financial services. Focus then shifted further to reimagine in the latter part of the year as we revised the group's medium-term targets to 2023. The Board and executive colleagues worked closely together to outline the emergence of a stronger Nedbank in the context of a post-COVID-19 world. There are a few top-of-mind points I'd like to reiterate at this AGM. Nedbank's central priority throughout the year was in ensuring the health, safety and well-being of our employees, clients and other stakeholders. Soon after the first few positive COVID-19 cases were confirmed, business continuity plans were invoked. I am pleased that we have not retrenched any employee as a result of COVID-19 and have paid our 28,324 employees their full remuneration. We supported more than 400,000 clients who were in good standing as at 29 February 2020 with payment relief or payment holidays on ZAR 121 billion worth of loans. We worked closely with the government, regulators and The Banking Association South Africa to mitigate the risks of COVID-19 and the associated lockdowns in the economy in a common quest to ensure that the safety and soundness of the South African banking system is preserved. COVID-19 had a devastating impact on small and medium enterprises. And to this end, Nedbank adopted a standard of paying small suppliers within 30 days through the pay-in-30 initiative. This culture of responsible payment terms is a key lever for sustainability while ensuring the survival of these businesses. The members of various Board committees were involved actively in overseeing and monitoring the group's response to the COVID-19 pandemic, including the management of business, operational and cyber risk as well as the group's balance sheet and liquidity, credit, capital and market risks. The group ended the year with a strong balance sheet, prudent levels of impairments against loans and advances, while other inherent risks reduced significantly when compared to the height of the crisis. Nedbank has had an excellent record and strong credentials in leading the change required to address and mitigate climate-related issues. In 2021, we delivered on our commitments as part of the 2 climate change-related resolutions that we proactively raised at our 2020 AGM and our shareholders supported these unanimously. During the year, we constituted a Board Climate Resilience Committee to provide independent oversight, monitor and steer operationalization of the climate risk management framework. Our inaugural 2020 Task Force on Climate-related Financial Disclosures, in short TCFD, report was published on 22 April 2021 coinciding with World Earth Day. We also developed an energy policy that builds on our climate change position statement. This policy outlines our commitment to align our business strategy, policies, mandates and incentives with The Paris Agreement over time. It further informs how we will help clients and society more broadly to transform, to achieve the net zero economy by 2050. As our sustainability journey continues to grow and mature, the Board acknowledges that in context of The Paris Agreement and the rising impact of climate change, more needs to be done. Shareholders would have seen the amaBhungane article published on 8 February 2021, speculating on Nedbank's past relationship with Regiments. As a start, we want to reiterate that Nedbank has 0 tolerance for corruption. We also expect our employees, clients and service providers to conduct themselves with integrity. Under the oversight of the Nedbank Board and Directors' Affairs Committee, we had previously commissioned detailed internal forensic investigations of all of the transactions referred to in the media article. And in the case of the transit-related matters, this was supplemented with an external legal review of specific conclusions arising from the internal forensic investigation. These investigations found no evidence of any Nedbank or Nedbank employees' dishonesty, corruption, collusion or breaches of laws or regulations. At the time of entering into these transactions, Nedbank was not aware of and did not suspect any unlawful or corrupt conduct by Regiments or collusive relationships between Regiments and the state-owned entity enterprises clients they were advisers to. In all cases, Nedbank's returns were reasonable and market-related for the risks assumed. Nedbank's activities are conducted ethically and transparently for the benefit of our clients and our shareholders. Although there was nothing unlawful or unusual about the agreements that I referred to in the media reports, we continue to learn and engage and enhance our oversight as well as processes to preempt and address emerging risks. We will also continue to support and cooperate with the relevant authorities or commissions looking into these matters. With regards to the subject of remuneration, the REMCO has deliberated at length on the most appropriate way to remunerate our people for their outstanding effort under the most difficult circumstances during 2020. Soon after the onset of the pandemic, it became evident that the group's remuneration objectives, arrangements for motivating and retaining our employees set in a pre-COVID-19 environment were severely compromised by the significantly changed circumstances and as a result -- and the resultant changes in the Nedbank strategy to focus primarily on resilience. The Nedbank REMCO's responsibility was driven by a desire to ensure that any such resultant changes to the remuneration arrangements maintained a healthy balance between the interest of our shareholders, regulators and society at large, while addressing retention risk to ensure the continued sustainability and competitiveness of the bank from a human capital point of view. We believe discretion and discerning judgment by remuneration committees play an important role in this unusual environment where the risk of materially over or underachieving targets has increased considerably. The REMCO held 2 meetings over and above its 6 scheduled meetings to workshop these implications. REMCO further developed what it believed was a responsible and appropriate response. One of the outcomes of our deliberations was that we do not favor any reset or replacement of historical or in-flight incentive awards. Vesting of the long-term incentives with corporate performance targets that we issued in 2018, 2019 and 2020 are following the impact of COVID on the economy and our clients. We expected vesting to be very low at only around 15% of 2018 long-term incentives, 16% for 2019 long-term incentives and 0 in the case of the 2020 award made only weeks before COVID hit. Taking guidance from our inquiries with some of our larger shareholders and some of the bigger proxy advisers' publications, our remuneration report fully discloses the rationale for this year's remuneration changes, which were made by the Remuneration Committee. In addition, the formulaic determination of the short-term incentives or bonus pool made up 63% of the total. And the augmentation based on performance in respect of the resilience factors, such as measures on liquidity, capital and helping clients, contributed the balance of the 37% for -- or a lesser impact. In our recent governance roadshow with shareholders, we were pleased with the general support received for the way in which Nedbank managed remuneration through the crisis. But we acknowledge that there are many different shareholder views on these matters. So it is hard to align with all of these views. In this context, I'd like to reiterate that we have and will always be available for engagement with our shareholders and we will intend to do so even after this AGM. Many lives have been lost as a result of this pandemic. Our sincerest condolences go to our employees, our clients, stakeholders who have lost their loved ones during this period. May we all find the courage to tap into our resilience and carry on living with gratitude for the gift of life. As I noted in the 2020 Integrated Report, great crises tend to bring about profound change. The plague marked the end of the Middle Ages and the beginning of the Renaissance. Similarly, the Spanish flu in 1918 and 1919 gave rise to the euphoric '20s, a period of dramatic change. Although uncertainty abounds, we do know that all pandemics come to an end, and we must use the COVID-19 crisis as that defining opportunity that offers us an opportunity to forge ahead and be bankers on a quest to leave Nedbank, South Africa and the planet a better place than we stepped into when we assumed our various roles of service to our clients and stakeholders. Thank you. And I now hand over to our Chief Executive, Mr. Mike Brown, to reflect on 2020 and also provide an update on the group's performance in our first 4 months of 2021. Over to you, Mike.

Great. Thank you, Chairman, and good morning, everybody. As I reflect on what has been, in so many words, an unprecedented year filled with uncertainty, health challenges, economic hardship and stress for millions of people, I know and I am proud that the South African banking sector and Nedbank demonstrated very, very strong levels of resilience. As the Chairman had noted, we focused initially on the health and safety of our employees and supporting clients while at the same time, we remained well capitalized, liquid and profitable, albeit at levels lower than the year before. Importantly, the uptime and stability of our IT systems has been exceptional and has recorded multiyear highs. Despite the difficult operating environment in 2020, employee engagement levels remained high. Our employee insights survey highlighted that 85% of the participating employees are proud to work for Nedbank, and our employee Net Promoter Score increased from 7 to 17. We did not retrench any employees as a result of COVID-19 and paid special leave was introduced for employees who were unable to perform their duties, but did not fall into the essential services category, as well as for those in self-quarantine who are unable to perform their duties remotely. As we transitioned out of the peak of the crisis, a major highlight for me in 2020 was the excellent progress we made on our strategic goal of delivering market-leading client experiences supported by our investments in technology, digital platforms and people. This is evident in our improved client satisfaction ratings with Nedbank now rated the second best bank on client satisfaction in South Africa. In the 2020 Consulta survey, Nedbank also increased its position to #2 in Net Promoter Score among the large 5 South African banks. During the lockdown, our digital capabilities were vital as we launched various innovations such as Avo, which is our super app, and rolled out our digital onboarding to juristic clients and included several new products and services in our retail digital suite. As a result, our retail digital sales including our digital wallet called MobiMoney, increased to 49% -- increased from 49% of all sales -- sorry, apologies, increased to 49% of all sales up from 21% the year before while digitally active clients increased by 25% to 2.2 million. The 2020 volume and value of app transactions increased by 70% and 53%, respectively. Our digital success has been underpinned by our Managed Evolution IT strategy, which is materially complete for the foundational elements and 78% complete overall, which means that much of the execution risk and risks of material overspend that plagued projects of this nature are now largely behind us. Our financial performance in the second half improved with full year headline earnings declining by 57% to ZAR 5.4 billion compared to a decline of 69% in the first half of last year. Importantly, the group performed in line with the guidance that we provided to the market at the time of our interim results reporting despite the challenges of accurate forecasting in such a complex and volatile health and economic environment. Headline earnings was impacted by higher impairments and lower revenues, the latter mainly from lower levels of client activity and the impact on endowment from the reduction in interest rates. Expenses were well managed and declined on the prior year, and the group's return on equity at year-end of 6.2% improved from the 4.8% reported in the first half. However, improving the ROE from these levels to back above our cost of equity is a key focus of the management team to improve shareholder value. Our credit loss ratio was up to 161 basis points, inclusive of ZAR 3.9 billion of COVID-19-related overlays and judgmental estimates, as well as the impact of the International Financial Reporting Standards forward macro looking -- macro forward-looking assumptions. But our credit loss ratio did end the year lower than the peak of 187 basis points in the first half, but slightly higher than the global financial crisis peak of 152 basis points. At Nedbank, we continue to focus on the drivers of value creation and leveraging our strategic foundations that have been beneficial during the COVID pandemic and will support the delivery of our strategy. I believe the Nedbank franchise is well positioned for growth as reflected in our Reimagine strategy, which includes delivering market-leading client solutions, exploring new revenue growth opportunities, unlocking increased value through our IT investments and related strategic portfolio tilt to and target operating model to initiatives, creating positive impacts as we deliver on our purpose of using our financial expertise to do good for all our stakeholders. On the back of our 3-year economic forecast from the Nedbank Group Economic Unit and our Reimagine strategy, we have revised our medium-term targets so that they reflect the current environment. And by the end of 2023, we aim to have exceeded our 2019 diluted headline earnings per share level of ZAR 25.65, achieved an ROE greater than the 2019 level of 15%, reduced our cost-to-income ratio to below 54% and ranked #1 in Net Promoter Score amongst South African banks. We do believe these targets have sufficient stretch to ensure that they are suitably challenging. And in my experience, shareholders are better served by management setting challenging targets even if they are not fully achieved than by setting low-ball targets that are easily met. Thank you to the more than 28,000 Nedbank employees for continuing to observe the COVID-19 health protocols while diligently supporting our clients and the economy throughout the crisis. We extend our heartfelt condolences to the families, friends and communities of employees and clients who have succumbed to COVID-19 and related illnesses. I would also like to thank the Chairman, the Acting Chairman and the Board for your continued counsel as we navigated the ups and downs of 2020. And on behalf of management, also wish the Chairman a speedy recovery. Thank you to my executive team for your support and dedication as we successfully responded to the COVID-19 pandemic by quickly pivoting our strategy and making a difference in extraordinary circumstances. I would also like to thank our 7.6 million retail and wholesale clients for embracing Nedbank as the most helpful bank in Africa and South Africa during COVID-19. We also appreciate the support of our shareholders as well as other stakeholders during the crisis, in particular, the excellent work done collectively by the Reserve Bank, National Treasury and The Banking Association. I will now shift to our trading update for the first 4 months of this year. And yesterday, ahead of the AGM today, we released the following voluntary trading update on the JSE SENS. The economic environment in the first 4 months of 2021 improved but remained challenging, impacted initially by the return to stricter lockdown levels as a result of the second wave of COVID-19 infections, but also constrained by continued power outages, uncertain job prospects and depressed levels of business and consumer confidence. On a more positive note, the 55-year low South African interest rate environment continued to support credit-active customers and a global commodity boom has been beneficial to exporters. Real GDP is expected to have grown by around about 0.4% quarter-on-quarter in the first quarter of 2021. Industry turnover data recorded on Nedbank's point-of-sale devices and digital channels in the first 4 months of this year continues to show year-on-year growth with turnover levels for that 4-month period up 22% when compared to the 4 months to the 30th of April 2020 or the prior period. In May 2021, the Nedbank Group Economic Unit revised its GDP forecast for South Africa for this year from 3.4% to 4.4%. And we currently expect that the prime interest rate will remain flat for 2021 before beginning to increase by 100 basis points in 2022. Turning now to financial performance. The financial performance of the group for the first 4 months of this last -- of this year should be considered in the light of the health and economic environment in the prior period being very different to that in the 4 months to April 2021. The prior period, as you may recall, included 2 months, January and February, of largely pre-COVID conditions and then the significant impact of COVID and the start of the hard lockdown level 5 in March and into April. Market volatility in the prior period delivered a strong global markets trading performance, evident in our noninterest revenue, but from April last year reflected the significant negative impacts on commission and fees, also part of noninterest revenue, given the impact of the lockdown level 5 on our clients' underlying transactional activity. Impairments in the prior period were significantly higher as a result of the initial negative impact of the forward-looking IFRS 9 macro factor models and judgmental overlays. While the first 4 months of this year still reflects the ongoing impact of the difficult macroeconomic environment on revenue growth, the group has recorded a material reduction in the impairment charge compared to the prior period. Headline earnings for the first 4 months of this year are materially higher than the ZAR 2.1 billion of headline earnings that we reported for the first 6 months of last year. Average interest-earning banking assets have declined year-over-year, reflecting the impacts of lower gross loans and advances in our Corporate and Investment Banking franchise as a result of clients using excess liquidity to repay committed facilities as well as a conscious focus on portfolio optimization by reducing lower-yielding assets. Current demand for new wholesale loans remains moderate, and the timing of drawdowns is uncertain. In contrast, gross loans and advances in our Retail and Business Banking franchise continued its momentum from the back end of 2020, benefiting from both client demand for secured loans as a result of the 300 basis point reduction in interest rates, as well as an increase in unsecured lending volumes originated through the group's expanded digital channels, notwithstanding continued lower loan approval rates. Net interest income growth for the first 4 months of this year increased by low single digits when compared to the prior year as the decline in overall loan growth was more than offset by an increase in the group's net interest margin from the 336 basis points we recorded in the full year last year. This was driven by ongoing improved asset pricing and high-quality liquid asset optimization. The growth in both net interest income and the improvement in the net interest margin for the first 4 months of this year was ahead of management's expectations. Impairments in the first 4 months of this year declined substantially, and the group's credit loss ratio was below the bottom end of the 110 to 130 basis point guidance that we have provided for the full year in 2021 and is well below management's expectations for the first 4 months of this year. While this is a very encouraging start to the year, it is too early to reduce our full year guidance, that 110 to 130 basis points for the credit loss ratio. The reduction in the group's credit loss ratio when compared to the prior period, and indeed, the full year last year was supported by lower credit loss ratios across all of our clusters, CIB, RBB, Nedbank Wealth and Nedbank Africa Regions. In Retail and Business Banking, the reduction in impairments was driven by an improving macroeconomic outlook, excellent collection outcomes in the first 4 months, the benefit of the 300 basis point lower interest rates on clients' ability to service their debt, as well as the tightening of credit criteria ahead of the COVID-19 crisis and the group's decision not to perpetually extend so-called D3 loans and a better-than-expected payment performance on D7 loans exiting their monitoring period. In our Corporate and Investment Banking franchise, impairments declined compared to the prior period as a result of the improving IFRS 9 macroeconomic forecasts as well as better client operating performance despite ongoing stress, particularly in the aviation and hospitality sectors. Importantly, for Nedbank, the commercial property portfolio continues to perform as expected with underlying client rental collections remaining strong and arrears low. The group remains well provided, importantly, with no material change in the ZAR 3.9 billion of overlays that were raised during 2020 as we do remain cognizant of the ongoing risks relating to future waves of COVID-19 infections and delays in the rollout of vaccines. D3 or payment relief loans reduced to ZAR 14.8 billion at the end of April 2021, down from the ZAR 27.7 billion we reported at the end of last year with Retail Business Banking, Wealth and Nedbank Africa Regions reducing to negligible amounts and CIB contributing ZAR 14.6 billion, also down from the ZAR 25 billion at the end of last year. This is expected to reduce further over the coming months. Noninterest revenue for the first 4 months of this year declined on the prior period reflecting the faster-than-expected further unwind of a significant portion of the group's fair value gains that were recorded in the first half of last year, as well as the impact of the high trading revenue base in the prior period. Again, importantly, noninterest revenue, excluding fair value adjustments increased by low single digits. Commission and fees increased driven by improving transactional activity as evidenced in increased levels of client spend, cash withdrawals and purchase of value-added services as well as improved levels of cross-sell. Insurance income also grew as we benefited from higher investment returns and higher premiums on life products. Credit life loss of income and funeral claims remained elevated when compared to the prior period, although they are showing a declining trend from recent highs. Trading income in the first 4 months was robust tracking above our expectations, but did decline on the prior period given the high base arising from the volatile market conditions in the prior period. Private equity income reflected good growth compared to the negative revaluations in the prior period. Expenses increased by low to mid-single digits and continued to be well managed in response to the more challenging environment. Variable incentive costs increased, driven by the group's improved financial performance. Expense growth is still expected to increase from these levels as new additional costs, such as deposit insurance and Twin Peaks are likely to be incurred as well as the return of some discretionary spend during the remainder of 2021. The group's JAWS ratio, just a reminder, that's revenue growth including associate income, less cost growth remained negative as we expected and projected in our year-end results. However, excluding those fair value adjustments in noninterest revenue, the JAWS ratio was flat. For the first quarter in 2021, associate income of ZAR 113 million relating to Nedbank Group's 21% shareholding in ETI has been recognized. A reminder, ETI reported attributable income to their shareholders of $36 million in the fourth quarter of 2020, and we account for ETI 1 quarter in arrears. In addition, ETI has subsequently released its first quarter 2021 results on the 26th of April this year, and in that, they reported attributable income to shareholders of $52 million and Nedbank's share of this is estimated to contribute ZAR 159 million to associate income in our second quarter of 2021, again, accounted for 1/4 in arrears. So taking these together, as a result, we estimate that associate income relating to ETI for the first half this year will be approximately ZAR 272 million, subject to any final exchange rate adjustments. This is up 257% compared to associate income of 76% in the first half of last year. As a result of the group's significantly improved financial performance, our return on equity in the first 4 months of this year increased to early double digits. And while this is still below our cost of equity, it is well above both the prior period and the 6.2% we reported for the full year in 2020. At the 31st of March 2021, Nedbank reported a CET1 capital adequacy ratio of 11.3%. A reminder that the year before, March 2020 and December 2020, that ratio was 10.9%. And at 11.3%, this is now above the midpoint of our Board-approved target range of 10% to 12%. We reported a liquidity coverage ratio of 128%, up on March last year of 110% and up on December last year of 126% and a net stable funding ratio of 112%, up on March last year of 110% and largely in line with December last year at 113%. As reported in our group's 2020 annual results announcement, we do expect to resume dividend payments when reporting interim results in 2021 with the payout ratio still to be determined by the Board, taking into consideration growth opportunities, our responsibility to support clients and the economy as well as the progression of the virus and the then rollout of the vaccine program and its effectiveness. In our full year results announcement last year that we released on the 17th of March, we advised shareholders that, at that stage, headline earnings per share and basic earnings per share for the first 6 months of this year ending the 30th of June were expected to increase by more than 20% when compared to those in the 6-month period to 30th of June last year. A further trading statement will be issued to provide more specific guidance once there is reasonable certainty regarding the extent of this increase in earnings and the relevant headline earnings per share and earnings per share ranges. Nedbank Group's results for the first 6 months of this year are currently expected to be released on the JSE SENS on or about the 11th of August 2021. Thank you. And I'll now hand back to the Chairman.

Thank you, Mike. In terms of the regulations of the Companies Act, we are required to share our Group Transformation, Social and Ethics Report with shareholders. So the report of the Group Transformation, Social and Ethics Committee, as required, already indicated by Regulation 43 (5) (c) of the Companies Act, is included on Page 18 of the Governance Report which is a supplementary report to the 2020 Integrated Report, and this is available on our website. We have a video to present to shareholders on the activities of the committees during the year, which we will display whilst the votes are counted at the end of the meeting. We would now like to focus on questions from shareholders, and I will now deal with any questions relating to the financial statements and proposed resolutions as set out in the notice of the AGM, which we take as read. Have any questions been submitted from Chorus Call?

[Operator Instructions]

While we wait for the question from Chorus Call, we do have a question on the link provided, which is a question from Robyn Hugo relating to the Nedbank position on our climate change journey. I'll just respond briefly and maybe invite Mr. Brian Dames, our Chair of the Climate Resilience Committee, to also add a further perspective. Robyn Hugo asks whether -- firstly, commends Nedbank for the release of its ambitious energy policy and asks whether in terms of the International Energy Agency, which last week released its first-ever energy scenario aligned with the urgent goal of limiting global warming to 1.5 degrees Celsius. And that this net zero by 2050 scenario holds that there's no need for investment in new fossil fuel supply and that beyond projects already committed as of 2021. Robyn asks -- indicates that there are no new oil and gas fields approved for development in this pathway, and Nedbank has committed to successfully strengthen all relevant sector policies, guidelines, mandates, incentives, et cetera, to remain in line with advancing scientific understanding, technological progress and local market conditions. As a leader in this space, she asks, do you envisage updating your energy policy to take into account the IEA's new scenario? So the key response from our side is, as we've said in the Chairman's statement, that we've just begun with the work of our Climate Change Resilience Committee. It has had 2 sittings thus far. And our approach remains a pragmatic one. We've always said in our policy, energy policy, that we have no intention of finding ourselves at kilter with the realities of the market in which we operate. We will remain resilient in terms of our aspirations and looking ahead with our 2050 journey. So it means that we will pragmatically review our position relative to where we are and where the rest of the world is from time to time. But for a more added response, can I invite Mr. Dames to take the question further?

Thank you, Chairman. Just to add on what you say, I think our energy policy is quite clear around our position for new oil and new gas exploration. That's absolutely clear. And I think our policy provides for how do we make sure that we support this energy transition. That transition is one that entails new technologies and how do we support our clients in investing in those new technologies. We will, on a continuous basis, look at our glide path and make sure that we update our policies with new information. Thank you, Chair.

Thank you, Mr. Dames. Are there any further questions that may have been submitted? It would appear that there are no further questions, and we would now like to move on to the proposed resolutions.

I remind you that you may submit your votes on all resolutions at any time during the meeting. After proposing all resolutions, the voting platform will remain open for a short period to allow you to complete your votes. We now move on to directors' appointment resolutions. The CVs of all directors being put to shareholders for election or reelection are included in the notice of the AGM. I remind you that shareholders were advised via SENS on 26 April 2021 that Iain Williamson will step down as a Nonexecutive Director of Nedbank Group Limited at the close of this AGM. He is therefore no longer available for election and ordinary resolution 1.1 that was to have dealt with his election is withdrawn from the agenda. We will therefore start by dealing with ordinary resolution 1.2, which deals with the election of Mr. Mike Davis. Ordinary resolution #1. The Board appointed Mr. Mike Davis as a Director of the company on 1 October 2020. Mr. Davis must retire in terms of clause 19.2 of the company's Memorandum of Incorporation, and being eligible, offers himself for reelection -- for election. I propose that Mr. Davis be elected a Director of the company. Please complete your ballot paper or indicate your vote online. [Voting]

In terms of the next resolution, as I am personally conflicted with regards to ordinary resolution 2.1, I wish to hand over to Mike Brown to put this resolution to shareholders.

Thank you, Chair. Ordinary resolution 2.1 deals with the reelection of Mr. PM Makwana as a Director. In terms of the Nedbank Group's Board continuity program, Mr. Paul Makwana was due to retire at the end of this meeting following the conclusion of his term of 9 years on the Board. However, the Boards have agreed that, subject to shareholder approval, his term on the Nedbank Board should be extended beyond 9 years to provide for additional stability during the COVID-19 pandemic and following his assumption of the role of Acting Group Chairman of the Nedbank Board while Chairman Vassi Naidoo is on medical leave. The Prudential Authority of the South African Reserve Bank has granted approval under paragraph 8.1.1.2 (b) of the South African Reserve Bank Directive 4 of 2018 for Nedbank to retain Paul as Lead Independent Director during this period. And that Paul may be regarded as independent provided that the Board, through its regular assessments, is satisfied that he remains independent. I now propose that Mr. Paul Makwana be reelected a Director of the company. I will hand you back to the Acting Chairman. [Voting]

Thank you, Mike. If we then proceed with the resolutions and we go to ordinary resolution 2.2 up to 2.3, which is the resolution dealing with the reelection of directors retiring by rotation. You are now asked to consider the reelection of those directors retiring by rotation in terms of the Memorandum of Incorporation. The Board supports the reappointment of directors who are retiring by rotation. The retiring directors being eligible and who make themselves available for reelection are: Mrs. Neo Dongwana and Mr. Mfundo Nkuhlu. We shall be dealing with the reelection of each of the retiring directors individually. I propose that Ms. Neo Dongwana be reelected a Director of the company. I also propose, in terms of 2.3, that Mr. Mfundo Nkuhlu be reelected a Director of the company. I would like to request you to please complete your ballot papers or indicate your vote online for each resolution. [Voting]

We proceed then to ordinary resolution 3.1 and 3.2, which are resolutions relating to the reappointment of independent external auditors. You are now asked to consider the reappointment of external auditors, Deloitte & Touche with Mr. Lito Nunes as designated registered audit partner and Ernst & Young Incorporated with Mr. Farouk Mohideen as designated registered audit partner for the ensuing year, as per the requirements of section 90 of the Companies Act, and the relevant provisions of the Banks Act. Their reappointments have been recommended by the Group Audit Committee with the endorsement of the Nedbank Group Board taking into account that large banks are required to be audited by 2 sets of auditors. We shall now be dealing with the appointment of each of these external auditors individually. I propose that Deloitte & Touche be and is hereby reappointed as external auditor to hold office from the conclusion of the 54th Annual General Meeting until the conclusion of the next Annual General Meeting of Nedbank Group. In terms of 3.2, I further propose that Ernst & Young Incorporated be and is hereby reappointed as external auditor to hold office from the conclusion of the 54th Annual General Meeting until the conclusion of the next Annual General Meeting of Nedbank Group. We now request you to please complete your ballot papers or indicate your vote online for each of these 2 resolutions. [Voting]

As we proceed to ordinary resolution #4, which deals with the appointment of the Nedbank Group Audit Committee, the Board believes it is good governance for shareholders to vote on the appointment of the members of the Group Audit Committee and has elected to propose the appointment of the Group Audit Committee members annually. The Board is satisfied that the membership of the Group Audit Committee meets the requirements of the Companies Act and the Banks Act and that the committee complies with the relevant regulatory requirements and that the members have the necessary knowledge, skills and experience to enable the committee to perform its duties in terms of these requirements. The Board, therefore, recommends the election of the Group Audit Committee members. We shall be dealing with the election of each of the members individually. With regard to resolution 4.1, I propose that Mr. Stanley Subramoney be elected a member of the Group Audit Committee. In terms of 4.2, I propose that Mr. Hubert Brody be elected a member of the Group Audit Committee. In terms of 4.3, I propose that Ms. Neo Dongwana be elected a member of the Group Audit Committee. And in terms of 4.4, I propose that Mr. Errol Kruger be elected as a member of the Group Audit Committee. Please may I now ask you to complete your ballot papers or indicate your vote online for each of these resolutions. [Voting]

In terms of ordinary resolution #5, which relates to placing the unauthorized but unissued ordinary shares under the control of the directors. This authority granted to the directors at the last AGM expires at this meeting. In the director's opinion, it is desirable that the unissued ordinary shares should remain under the control of the directors. This authority is limited to 12,551,362 shares, which comprise 2.5% of the number of ordinary shares in issue as at 1 January 2021. It is further limited to existing contractual obligations and issuances under the Nedbank Group (2005) Share Option, Matched-share and Restricted-share schemes only. The authority granted in terms of this ordinary resolution will remain valid until the next Annual General Meeting of the company to be held in 2022. At which meeting, a similar resolution will be put to shareholders for approval. Accordingly, I propose that the authority is granted to the directors to issue ordinary shares in the share capital of Nedbank Group on such terms and conditions and at such times as they deem fit, subject to the provisions of this resolution, the Companies Act, the Banks Act and the listing requirements of the JSE. I now put the resolution to the meeting and request that you please complete your ballot paper, indicate on your vote or vote online. [Voting]

Proceeding then to advisory endorsements 6.1 and 6.2, which relates to -- on a nonbinding basis of the Nedbank Group remuneration policy and the remuneration implementation report. In accordance with the principles of King IV, shareholders are requested to endorse Nedbank Group's remuneration policy and the implementation thereof. Kindly note that the votes on these advisory endorsements are nonbinding. However, the Board will take cognizance of the outcome of the votes when considering its remuneration policy and the implementation thereof in future and will seek to engage further with stakeholders in the event that either has been voted against by 25% or more of the voting rights exercised by shareholders. I now put the advisory endorsements to the meeting. We shall be dealing with each of the advisory endorsements individually. To endorse through a nonbinding advisory vote in terms of 6.1, the company's remuneration policy excluding the remuneration of Nonexecutive Directors for their services as directors, members of the Board committees as set out in the remuneration report contained in the summary consolidated -- in the summarized consolidated annual financial statements. In terms of the remuneration implementation report 6.2, the request is to endorse through a nonbinding advisory vote the company's remuneration implementation report as set out in the remuneration report contained in the summary consolidated annual financial statements. We now please request you to complete your ballot paper or indicate your vote online for each resolution. [Voting]

If we then proceed to special resolutions, we've got special resolutions 1.1 up to 1.12, which relates to the approval of remuneration of Nonexecutive Directors. In accordance with the Companies Act, shareholders are required to approve the fees paid to directors in respect of their services as directors. I confirm that only Nonexecutive Directors receive such fees. The proposed fee increase represents a 3% increase overall. Remembering that in the prior year, there was 0% increase, and these fees exclude VAT. We shall be dealing with approval of the various fees payable with effect from 1 July 2021 individually and note that the fees payable to the Chairman of the respective Board committees are 2.5x the member fees. In terms of then 1.1, I propose that the remuneration of the Chairman of the Board, as set out in the notice, be approved. With regards to Resolution 1.2, as I'm personally conflicted, being the matter relating to the remuneration of the Lead Independent Director, I wish to, at this point, hand over to our CEO, Mike Brown, to put this resolution to shareholders.

Thank you, Chairman. Special resolution 1.2, I propose that the remuneration of the Lead Independent Director, as set out in the notice, be approved. And I will hand you back to the Acting Chairman.

Thank you, Mike. In terms of resolution 1.3, I propose that the remuneration of the Nedbank Group Board members, as set out in the notice, be approved. In terms of resolution 1.4, I propose that the remuneration of the Nedbank Group Audit Committee members, as set out in the notice, be approved. In terms of resolution 1.5, I propose that the remuneration of the Nedbank Group Credit Committee members, as set out in the notice, be approved. In terms of resolution 1.6, I propose that the remuneration of the Nedbank Group Directors' Affairs Committee members, as set out in the notice, be approved. In terms of resolution 1.7, I propose that the remuneration of the Nedbank Group Information Technology Committee members, as set out in the notice, be approved. In terms of resolution 1.8, I propose that the remuneration of the Nedbank Group Related-party Transaction Committee members, as set out in the notice, be approved. In terms of resolution 1.9, I propose that the remuneration of the Nedbank Group Remuneration Committee members, as set out in the notice, be approved. Resolution 1.10, I propose that the remuneration of the Nedbank Group Risk and Capital Management Committee members, as set out in the notice, be approved. Resolution 1.11, I propose that the Nedbank -- the remuneration of the Nedbank Group Transformation, Social and Ethics Committee members, as set out in the notice, be approved. Resolution 1.12, I propose that the remuneration of the Nedbank Group Climate Resilience Committee members, as set out in the notice, be approved. We herewith then request to please, in terms of all these resolutions from 1 to 12, to please complete your ballot paper or indicate your vote online for each of the resolutions. [Voting]

We now proceed to special resolutions 2.1 to 2.3, which deal with the remuneration of Nonexecutive Directors appointed as Acting Group Chairman, Acting Lead Independent Director or Acting Committee Chair. As detailed in the notice, the Board wishes to acknowledge the additional responsibilities and time commitments for Nonexecutive Directors who may, in exceptional circumstances, be required to perform the role of Acting Group Chairman of the Nedbank Board, Acting Lead Independent Director or Acting Board Committee Chair for extended periods of time. Although the appointment to an acting position would only arise in exceptional circumstances, the Board would like the flexibility to consider, and if deemed appropriate, the ability to remunerate that director appropriately for the additional responsibilities and time commitments. The Board, therefore, proposes the payment of an additional fee to Nonexecutive Directors who are required to perform an acting role. The fees would be in addition to the normal nonexecutive directors' fees as detailed in special resolution #1. The payment of additional fees to any nonexecutive director appointed to an acting role will be subject to prior approval by Nedbank Group Remuneration Committee, who will consider the relevant circumstances and the extent of additional commitments on a case-by-case basis. We shall be dealing with the approval of the fees payable to nonexecutive directors who may be required to perform the role of Acting Group Chairman of the Nedbank Board, Acting Lead Independent Director or Acting Board Committee Chair individually. These resolutions, if approved, will be with effect from the conclusion of this AGM until the conclusion of the next AGM. As I'm personally conflicted with regards to special resolution 2.1, being that which relates to remuneration of the Acting Group Chairman, I wish to once more hand over to our CEO, Mr. Mike Brown, to put this resolution before shareholders.

Thanks, Paul. And in terms of special resolution 2.1, I propose that the remuneration of any Board member who may be appointed as the Acting Group Chairman, as set out in the notice, be approved. I'll hand back to Paul.

Thank you for that, Mike. In terms of 2.2, I propose that the remuneration for any board member who may be appointed as Acting Lead Independent Director, as set out in the notice, be approved. In terms of 2.3, I propose that the remuneration for any Board member appointed as Acting Committee Chairman, as set out in the notice, be approved. With that, then we proceed to special resolution #3, which is the resolution that deals with general authority to repurchase ordinary shares. In terms of the Company Act, the JSE listing requirements and the MOI, the shareholders may authorize the directors by way of a general authority to acquire shares in the capital of the company subject to certain limitations. This resolution is a renewal of an existing authority, which was granted at the last Annual General Meeting held in May 2020. I now propose that the general authority to repurchase ordinary shares be granted, and I put the resolution to the meeting. Please, could you complete your ballot paper or indicate your vote online. [Voting]

Our next order of business relates to special resolution #4, which is the general authority to provide financial assistance to related and interrelated companies. The Companies Act requires the approval by shareholders for the provision of financial assistance in certain circumstances. Both sections 44 and 45 of the Companies Act provide, among others, that such financial assistance may only be provided pursuant to a special resolution passed by shareholders within the previous 2 years. Furthermore, the provision of any such financial assistance is subject to the solvency and liquidity test as referred to in the Companies Act. I now propose that authority be granted for the company to provide financial assistance to related and interrelated companies as contemplated in the Companies Act. I put the resolution to the meeting for consideration. [Voting]

We then proceed to special resolution #5, which relates to amendments to the rules of the Nedbank Group (2005) Share Option, Matched-share and Restricted-share schemes. The proposed amendment is to align the 2005 share scheme to the JSE listing requirements with regards to the overall limit on the number of shares that may be issued to a participant. I now propose that the amendments to the rules of the Nedbank Group (2005) Share Option, Matched-share and Restricted-share schemes be granted. I herewith put the resolution forward before the meeting. All proposed resolutions have now been put to shareholders. The voting platform will remain open for a further 3 minutes for you to complete your votes. Thereafter all votes will be closed and the scrutineers will record the votes and provide the results. [Voting]

So while we wait for the scrutineers to finalize the voting results, in my role as the Chair of the Group Transformation, Social and Ethics Committee, I have arranged for a short video, which showcases some of Nedbank's community social investment activities for shareholders' information. And we'll have the video be screened now. [Presentation]

We hope that the video has shared with you what we strive to do as a purposeful organization and hope that it will keep you informed in terms of some of the efforts that Nedbank is doing in various aspects of society as a responsible corporate citizen. The scrutineers have confirmed that all resolutions have been passed by the requisite majority. And we now declare all the resolutions passed. The detailed voting results will be published on SENS later today. The scrutineers have confirmed that all the solutions have been passed by the requisite majority. However, advisory endorsement 6.1 to endorse the company's remuneration policy received 66%, which is slightly below the required 75%. And as we've indicated, the Board takes cognizance of this and will engage further with shareholders in this regard. And further details will also be provided on SENS. Before I declare this meeting closed, I want to thank Board colleagues in their respective individual roles and the various responsibilities they fulfill with regards to our Board committees. I also want to thank our executive teams and management. I also want to thank our staff, in particular, for their diligence in a rather tough climate in which we find ourselves. In particular, I also wish to single out Iain Williamson for his contribution during his tenure as a member of our Board and wish him well in his continued endeavors at Old Mutual Limited. Given that all the business that we had before us on our agenda has now been dealt with and noting that the detailed voting results will be published on the SENS later today, I now formally close the proceedings of the 54th Annual General Meeting of Nedbank Group Limited and thank you all for your participation and attendance. Thank you very much.