Boardman sets his goals
Service contract extended to 2010
NEDBANK’S 2006 ANNUAL REPORT outlines CEO Tom Boardman’s exit strategy ahead of the 2010 Soccer World Cup in South Africa. By then he would have served the group as CEO for a little over six years.
Boardman’s five-year service contract began on 10 December 2003 but has been extended to 28 February 2010. “To allow him the opportunity to present the 2009 financial results.”
By then, shareholders will be able to objectively judge the quality of the Nedbank turnaround embarked upon by the Boardman-led management team. By then, Boardman will be two months past his 60th birthday – the mandatory retire- ment age for Nedbank executives.
Some analysts have privately expressed concern with regard to the source of Nedbank’s future growth once it has completed the “fixing phase” of the business.
With the turnaround almost complete, the group has confidently re-emphasised its commitment to achieving the crucial targets of a return on equity of 20% and an efficiency ratio of 55% by year-end 2007.
However, those targets will be made more difficult by the costs associated with the expansion of the group’s onceneglected retail franchise as it invests in its small retail branch network and chain
Investors will take heart from the fact that the group, which for much of the past three years has been haemorrhaging clients and losing market share across many of its divisions, is gradually making a comeback in some segments.
Boardman writes: “Winning back market share on a profitable and sustainable basis is the true mark of the turnaround within Nedbank.” There were some signs of a turn-around in its card division and Imperial bank towards year-end 2006, while Nedbank Corporate, says Boardman, saw strong growth in wholesale advances ahead of its peer group.
Key to the success of the strategy will be whether or not the bank can meet its stated intention of “unleashing synergies” with its fellow Old Mutual subsidiaries, OMSA and Mutual & Federal.
Controlling shareholder Old Mutual plc has developed a joint strategy for the three companies that will see them seek both new revenue sources through greater co-operation as well as cost-saving opportunities. To date, Nedbank and OMSA have jointly outsourced their data and voice networks, giving them greater buying power, while their forays into bancassurance are starting to generate new revenues.
Nedbank’s turnaround process has been methodical and, by necessity, a time-consuming process. Meanwhile, its competitors have been reaping the benefits of a robust macro-economy, record business and consumer confidence.
But the annual report suggests that the bank is preparing to seek new business opportunities. Among the initiatives outlined by new chairman Reuel Khoza is a “controlled expansion” into Africa. While southern Africa will remain the core focus of the group, it sees expansion to other parts of the continent as offering growth potential.
The group has lagged its peers due to its prolonged inward focus but now says its first priority will be to grow its existing businesses in Namibia (where it now has a secondary listing), Lesotho, Swaziland, Zimbabwe and Malawi.
In addition, says Khoza, the group is also on the hunt for foreign full-service banks in sub-Saharan countries. Established players in Africa – such as Absa and Standard Bank – know that’s considerably easier said than done.
Turnaround’s almost complete. Tom Boardman