LONDON, United Kingdom, Sept. 15, 2003 (PRIMEZONE) -- Nedcor Ltd. ("Nedcor"), the South African banking group in which Old Mutual plc ("Old Mutual") (Other OTC:ODMTF) has a 53% holding, has today issued a statement:
It is expected that Richard Laubscher will stand down as an Executive Director of Old Mutual plc in due course as a consequence of his ceasing to hold the office of Chief Executive, Nedcor.
Richard Laubscher Announces Plans to Step Down by Year End
Chief Executive
After 32 years at Nedcor, the last ten as Chief Executive, Richard Laubscher has given notice of his intention to stand down by December 31, 2003 as Chief Executive and as a director. Richard will remain with the Group until a suitable candidate has been appointed and will ensure that a smooth handover occurs.
For some time Richard has indicated to the Chairman, Chris Liebenberg, and also publicly, that he felt it was time to stand down as Chief Executive. Following the BoE acquisition, he was asked to commit to remain as Chief Executive to oversee the merger and reorganisation (M & R) process with BoE, NIB and Cape of Good Hope Bank before handing over the reins to a successor. The M & R process is continuing to progress smoothly and the board expects that operational synergies will exceed R660 million. These synergies will be realised over time with the full benefit from 2006 onwards. The M & R process is now at a point where Richard and the Board feel comfortable for a successor to take over. This has been expedited to ensure that Richard and Chris Liebenberg, who retires in October 2004, do not leave at the same time.
The Board takes this opportunity to publicly thank Richard for his considerable contribution to the group over many years. Widely regarded as a charismatic leader, Richard has led Nedcor's strategic drive to participate in banking consolidation and grow from being the smallest of the big four banks to a bank of significant scale matching its major competitors. This culminated last year in the acquisition of BoE. Under Richard's leadership, since 1994 Nedcor has grown from total assets of R54 billion to R316 billion at June 2003, from core profits of R603 million to R3,3 billion in 2002 and from a market capitalisation of R5,9 billion to a current value of R20 billion.
The Board has an ongoing succession planning process and the Nominations Committee has identified a number of excellent potential internal successors. At the same time, the board is reviewing external candidates to ensure the best person possible is selected for the position.
Results expectations
The Board wishes to take this opportunity to align market and analysts' expectations for 2003. Following Nedcor's disappointing interim results for the six months ended June 30, 2003, which were below market expectations, analysts have updated their estimates of results for the full year to December 31, 2003. Due to the volatility of interest and exchange rates, the uncertain nature of various revenue streams and the accounting complexities of the mergers, analysts' expectations of Nedcor's core earnings cover a wide range.
Nedcor's statutory results for the year will be published on a post-AC 133 basis. However, due to the inherent volatility and unpredictability of the AC 133 results, analysts have prepared their estimates of core earnings largely on a pre-AC 133 basis. The current analysts' consensus estimate of core earnings per share (based on Nedcor's internal view of consensus) is 1204 cents (2002 - 1330 cents).
Nedcor's pre-AC 133 core earnings for the first half of 2003 were 445 cents per share, meaning that analysts' consensus estimates anticipate substantially improved earnings of 759 cents per share for the second half of 2003. While the Group remains solidly profitable, indications at this early stage are that earnings for the second half are unlikely to be lower than the first half, but will not meet the levels of the analysts' consensus estimates.
As communicated during the interim results process, the bank has taken a conservative stance on its funding, particularly over the merger period, by having a higher proportion of longer dated fixed interest deposits. This conservative funding profile at a time of falling interest rates, together with the endowment effect of lower rates on capital and reduced asset growth in a competitive environment, is a contributing factor to the lower anticipated earnings.
All the banks within the Group (Nedbank, Peoples Bank, Imperial Bank and Gerrard Private Bank) operate with statutory capital ratios comfortably in excess of the regulatory minimums. Nedcor Limited, the bank holding company, has a lower capital ratio at close to the regulatory requirement of 10%, and the Group is looking to raise additional capital in due course to act as a buffer against undue volatility. The capital raised is likely to include a blend of preference shares, secondary and tertiary capital.
Management's action plan to improve the group's profitability is being vigorously pursued. The actions include changing the funding mix, improving returns on low yielding assets, increasing transactional income, focussing on annuity income, continually improving credit quality, containing expense growth and the sale of non-core investments and assets.
Chris Liebenberg, Chairman, Nedcor Limited
ENQUIRIES:
Old Mutual, London James Poole, Tel: +44 20 7569 0100