Welcome to the 57th annual general meeting of shareholders of Nedbank Group Limited. My name is Daniel Mminele, and I'm the chairperson of the group. I'm pleased to welcome a number of guests, members of the press, advisors, and senior staff of Nedbank Group who are attending this meeting together with our non-executive directors. It is a requirement that everybody attending the meeting in person sign the attendance register. Should anybody still be required to sign the register, will they please do so now? JSE Investor Services, our transfer secretaries, will be recording the shareholders' votes and acting as scrutineers. The notice convening this meeting on page 13 of the AGM booklet has been in your hands for the described period and is taken as read. We are required to note the quorum and voting requirements on the resolutions to be proposed at this meeting.
In terms of our memorandum of incorporation, the quorum for an AGM is three 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 resolutions is at least 75% of the voting rights entitled to be exercised thereon. The company secretary has confirmed that the necessary quorum is present. I hereby declare the meeting duly constituted. The documents required by law, including the MOI, the share register, declarations of interest by the directors, are available from the group company secretary for inspection. If you wish to have sight of these, let us know and the group company secretary will arrange for this.
In terms of Section 63 (4) of the Companies Act, voting may either be by show of hands or by way of a poll. It is my intention to conduct voting on all the proposed resolutions by way of a poll, as in accordance with Section 63 (7A) of the Companies Act, we have received requests from a sufficient number of shareholders to conduct voting by way of a poll. For shareholders attending in person, voting will take place via an electronic device. The transfer secretaries have handed a keypad and smart card to those shareholders present in person and entitled to vote. We will begin with a short demonstration by Lumi on the use of the keypad. Then proceed with the meeting. I'll call upon a representative from Lumi to do the demonstration for us, please.
Thank you, Mr. Chair. Good morning, everyone. My name is Steven from Lumi. For those that are entitled to vote and shareholders that are entitled to vote, you would have received a device like this. It looks like a BlackBerry. It doesn't work like a cell phone, please. It doesn't take any SIM card. If you can look on your screen right now, on the screen, it should have your name or the company that you represent. Currently, it has the resolutions open. This being a poll, it has all the resolution open. You'll see there it says you have voted on zero out of 38 resolutions. For you to navigate, you either use the trackball. On a trackball, you select the resolution. It has a brief explanation of the resolution.
You click vote on the green button. You'll see the options, one, for, two, against, three, abstain. You make your selection. Once you've made a selection, it will show that option that you've selected, it's been received. Should you make a mistake, you press cancel. You'll see the options again, one, two, three. I'm voting on the first resolution. It will say, "Vote received." I want to go to the next resolution because we have 38 resolutions. Press the green button. It will show you the next resolution, which is 1.2. You click vote on the green button. You'll have the options one, two, three, or four. You'll do this until to the last resolution. For you to see the summary voting, you press the list. On the list, it will show how many resolutions have you voted on.
It has currently, I've voted on one out of 38 resolutions. I've only voted on one out of 38 resolutions. Should you have any problem or with the device, please raise your hand. One of my colleagues or me, I'll come and assist you. Thank you.
Thank you very much. As indicated, the representatives from Lumi are available, and should you require any assistance, just raise your hand and they'll come and attend to you wherever you're seated. For shareholders joining the meeting via webcast or teleconference, please take note of the following. 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 instructions forms prior to the meeting 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.
When we get to the appropriate time, we will take questions from our shareholders, starting with the shareholders attending in person, then the shareholders attending via teleconference, and then the shareholders attending via webcast. Questions from shareholders participating via webcast can be submitted by clicking the question button on the top left of your screen. They will be received and read out by the company secretary and responded to when the time is allocated for questions. If you experience 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 online and will be responded to when the time is allocated for questions. The voting platform is now open and will remain open until 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, attend and vote online button, which is on your screen to view the resolutions to be voted on. The voting options are to vote for, against, or abstain. To correct your voting choice or choices, click the button that is unticked against the relevant resolution or resolutions. You must make a single choice against each resolution. Click on the submit votes button once you are happy with your voting choices. Once your votes have been submitted, they cannot be changed. 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 meeting. The audited financial statements for the financial year ended the 31st of December 2023, 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. I shall now proceed to deliver my chairman's address. As South Africa celebrates the 30th anniversary of its democracy, it is with a sense of pride and respect for our collective journey that I address shareholders today for the first time as Chairman of the Nedbank Board.
Nedbank's own growth and evolution over the past three decades has been inextricably linked to the nation's path, and we have been privileged to witness and contribute to the country's resilience and potential. It has been an exciting journey since my appointment as Chairman in June 2023, and I would like to use this opportunity to convey that I have been impressed by the depth of talent, experience, and passion I have witnessed, not only around the Nedbank boardroom table, but throughout the Nedbank Group. The dedication and determination of the people of Nedbank to confront the challenges of a difficult operating environment and resolutely deliver on Nedbank's purpose to use its financial expertise to do good, has been an inspiration for me.
While my first year has indeed been exciting, it would be amiss of me not to mention the challenges that Nedbank has faced, and indeed all business in South Africa and in Africa, most notably, the uncertain international and domestic economic environment. The global economy faced the continuing repercussions of the pandemic, the Russia-Ukraine conflict, and pervasive cost-of-living crisis. In addition, the Israel-Gaza war and resulting geopolitical tensions in the Middle East threaten to further impact oil prices and global inflation. South Africa's economy, despite disappointingly slow growth, has shown some resilience, but the strain of many domestic challenges is becoming increasingly evident. Real gross domestic product grew by only 0.6% in 2023, highlighting the need for urgent and more focused attention on crime and corruption, electricity and water insecurity, and failing bulk transport networks.
While inflation receded from the 7.2% in 2022, it remained sticky around the 5.9% over the year. The prime rate increased by 125 basis points in the first half of the year and remained at 11.75% to the end of 2023. In this context, in 2023, the board of directors focused on several key areas to ensure the robustness and strategic growth of the Group. I highlight a few of these at this AGM. The Group Directors' Affairs Committee worked diligently to ensure the continuity of the board by planning for the succession of directors reaching the end of their tenure and retirement. The past year saw some significant transitions, including my appointment as the chairperson and Jason Quinn as the Chief Executive Designate, as well as Terence Nombembe as an Independent Non-Executive Director whose expertise spans several critical sectors.
Executive leadership transitions were also well managed with new appointments in the key roles of Chief Risk Officer and Chief Information Officer following retirements. Strategically, our board engaged in rigorous debates and contributed valuable insight to the Group's strategy, endorsing the three-year business plan and external targets to the end of 2025. At the same time, the board provided oversight with regard to the Group achieving all its 2023 targets, a monumental milestone that not many investors expected at the time when the targets were set at the start of 2021. We continue to focus on maximizing our technology investments to enhance digital experiences, drive profitable growth through superior client experiences, and cultivate an outstanding employee experience.
In addition, our risk management practices have been sharpened to navigate key risks amid global volatility and uncertainty. In particular, focusing on the Group's credit loss ratio that peaked in the first half of the year at 121 basis points, it ended the year lower at 109 basis points. In 2023, we enhanced our governance and risk management to include broader sustainability consideration with the board, expanding the mandate of the Group Climate Resilience Committee to become the Group Sustainability and Climate Resilience Committee. This year, Nedbank became the first South African bank to disclose financed emissions glide path for thermal coal to decline by 47% by 2030, and oil and gas to decline by 26% by 2030 in support of reducing greenhouse gas emissions in line with our commitments and journey to net zero.
We also retained our top-tier rankings on environmental, social, and governance ESG scores. We maintained our level 1 Broad-Based Black Economic Empowerment status under the amended Financial Sector Code for the sixth year in a row. Lastly, enhancements to our remuneration policy over the past few years resulted in a 90% vote of approval at the 2023 AGM. Remuneration outcomes in 2023 were aligned with our board-approved policy and with underlying business performance. In particular, the Nedbank share that appreciated by 67% over the past three years, the best in the peer group. Allow me to extend my deepest appreciation to the many individuals and groups who contributed to the success and vibrancy of the Nedbank Group. To our board members, your collegiality, guidance, and wisdom continue to be both an inspiration to me, as well as the compass that directs our strategic decisions.
To Mike and the Group ExCo, thank you for your leadership and commitment, which ensures that these decisions are executed with the requisite level of care and diligence as we deliver to a broad range of stakeholders. I convey on behalf of the board our appreciation to the entire Nedbank team for your dedication and hard work, which are the foundation on which our success is built. It is through your efforts that we continue to thrive in a complex and ever-changing environment. To our shareholders, your continued trust and investment empower us to pursue growth and innovation. I now hand over to Chief Executive Mike Brown to reflect for a final time on 2023 in a little more detail and provide an update on the group's performance in the first four months of 2024.
Thank you, Chairman. Firstly, as the Chair said, reflecting back on the year that was 2023, it was certainly a year where the operating environment was volatile and difficult, both for us and our clients, and that is evident in the weak SA GDP growth levels, record levels of electricity shortages, high interest rates, and high levels of inflation. In this difficult external context that I've just described, it was extremely pleasing that we met all of our 2023 targets that we announced as our post-COVID recovery targets in March of 2021. Being achieving diluted headline earnings per share above ZAR 25.65, an ROE above 15%, a cost-to-income ratio below 54%, as well as ranking number one on Net Promoter Scores.
In addition to this, importantly, all our key balance sheet metrics reflect a fortress balance sheet with the group's common equity tier 1 ratio at 13.5%, our liquidity coverage ratio at 135%, and total ECL or expected credit loss coverage at 3.62%, an all-time high. These metrics, I believe, show that Nedbank is in a very strong position to grow but is also well prepared should the macroeconomic or global geopolitical environments deteriorate. Our focus now shifts to our stretching medium and long-term targets, in particular, ongoing improvements in our return on equity. From a strategic point of view, our strategy remains appropriate and delivery on track, and we continue to see the benefits of digitization delivered through the substantial completion of our world-class technology platform that is driving continued improvements in client experience, growth in main banked clients and transactional deposit gains, as well as improvements in efficiencies.
For me, some highlights of 2023, all of which are set out in more detail in our integrated report, included the following. Our Managed Evolution IT build reached around 95% completion, with the final components scheduled to be delivered by the end of this year. We are materially on track to complete this entire program on time, scope, and budget, importantly, also without increased downtime on existing systems. This modern modular and digital IT platform is a very important foundation for future competitiveness. Digital client transaction volumes and values continue to grow at double-digit levels. External benchmarks now show that we lead in areas such as servicing features offered to our clients on our mobile channels and digital sales that have now reached 55% of all new product sales, up from only 12% in 2019.
On client satisfaction, in the Kantar survey, we ranked number one among South African banks on Net Promoter Scores for the second year in a row, an improvement from our number three ranking in 2019. In respect of lending and deposit market shares, we recorded market share gains in categories of wholesale term loans, home loans, and retail deposits, alongside a deliberately planned decline in personal loans market share due to deliberate tightening of credit criteria in the current environment. Whilst we remain selective in our areas of strength in vehicle finance and commercial property finance. By the end of 2023, we had realized ZAR 2.2 billion of cumulative benefits under our Target Operating Model, or TOM 2.0 program.
To make further progress towards our medium-term cost-to-income ratio target of 52%, we continue to explore further benefits through TOM 2.1 in areas such as data analytics, AI, process optimization, and payments. Looking at stakeholders, some other highlights that stand out for me. From an employee point of view, our Great Place to Work net promoter score recorded its second highest level since the inception of our pulse surveys, and we continue to be a leading participant in the Youth Employment Service program by providing first-time job opportunities to more than 2,800 youth in 2023. Collectively now, including this year, having provided job opportunities to around 13,500 youth in South Africa. For our clients, we provided more than ZAR 330 billion in new loans.
At the same time, in this difficult economic environment, we assisted more than 50,000 clients who struggled to meet their financial obligations, of course, we safeguarded more than ZAR 1 trillion of deposits, a key role of a bank. For shareholders, dividends per share increased by 15%, and we concluded the ZAR 5 billion capital optimization initiative. Cumulatively, over the three years, 2021, 2022, 2023, our share price was up 67%, and our total shareholder return, including dividends, was 96%. As you heard the chair say, this was the best performing of the Big Four banks over that particular period. On our contribution to society and the environment, this included the payment of more than ZAR 13 billion in corporate and employee taxes.
We have ZAR 145 billion of lending exposures that support sustainable development finance aligned to the United Nations Sustainable Development Goals, we retained a market-leading position in the key growth segment of renewable energy in South Africa and have a strong pipeline of public and private sector projects ahead. Turning now to reflect on the first few months of 2024. This morning, as we usually do ahead of the AGM, we released our four-month voluntary trading update on the JSE Stock Exchange News Service. While more detail is available on the SENS itself, I'm going to highlight a few matters. Starting, of course, with the operating environment, which during the first four months of 2024 remained challenging despite lower levels of load shedding or electricity outages, some easing in transportation bottlenecks. Generally, economic activity was weak, impacted by geopolitical uncertainty, high interest rates, and high inflation.
Household finances in South Africa remained under pressure as real incomes contracted and job prospects remained muted. Corporate activity was also weak, impacted by the uncertain political and economic environment. The implications of this difficult environment for our clients, and therefore us, are evident in continued elevated levels of consumer strain and slowing credit and transactional revenue growth across both our wholesale and retail client base. Turning to the financial performance in the first four months to the 30th of April 2024 compared to the first four months of last year, to the 30th of April 2023. This reflects headline earnings growth of around mid-single digits, supported by strong growth in our retail and business banking operations, albeit off a low base, and solid growth in our corporate and investment banking operations.
Both of these were partially offset by a decline in headline earnings in Nedbank Wealth and in Nedbank Africa Regions, the latter off a high base. Headline earnings growth was driven by softer net interest income and non-interest revenue growth when compared to our full year 2024 guidance, but also and importantly, a decline in the impairments charge and good expense management. On a per share basis, headline earnings per share growth continued to benefit from the ZAR 5 billion capital optimization that we completed last year. Turning to the income statement in a little more detail, net interest income growth for the first four months was just below mid-single digits when compared to the prior reporting period.
This increase was driven by moderate growth in average interest earning banking assets and a slight period-on-period increase in the group's net interest margin, largely as a result of the run rate benefits of interest rate increases, so-called endowment benefits in the prior period. Impairments for the first four months decreased when compared to the prior period, and the group's credit loss ratio declined period on period, but did remain above the top end of our through the cycle target range of 60 - 100 basis points as expected. This outcome and the view that the group's credit loss ratio peaked in the first half of last year is in line with management's expectations. Non-interest revenue growth for the first four months of the year was below mid-single digits.
Removing the base effect of foreign currency translation gains on our US dollar capital base in Zimbabwe in the prior period, given our change to US dollar functional currency reporting in Zimbabwe, like for like non-interest revenue growth was slightly above mid-single digits, supported by robust fees and commission and solid but volatile growth in trading income. Expenses growth in the first four months of the year was above mid-single digits and slightly better than management expectations, partly as a result of the slower than expected variable costs in line with slower revenue growth. Associate income relating to the group's 21% shareholding in Ecobank or ETI for the first half of this year is estimated to be approximately ZAR 510 million and materially in line with management's expectations, but down 32% when compared to the ETI related associate income of ZAR 749 million in the first half of last year.
Given the base effect of the reversal last year of the ZAR 175 million estimate that Nedbank provided for our share of the impact of the Ghana sovereign debt restructure on ETI. Clearly that did not repeat in the first half of this year. As per management's guidance, the group's JAWS ratio was slightly negative, and as a result, our cost to income ratio increased. Return on equity in the first four months increased on the prior period but was seasonally lower than the 15.1% ROE reported in the full year 2023. Basic earnings per share, headline earnings per share, and diluted headline earnings per share all grew by early double digits, benefiting from the ZAR 5 billion capital optimization that was executed last year.
At the 31st of March, as evident in our pillar 3 statements that were also released, Nedbank Group reported a common equity tier 1 ratio of 13.1%, well above the upper end of the board approved target range of 11%-12%. This reflects the benefit of ongoing earnings growth offset by the declaration of the group's final 2023 dividend and balance sheet growth. Liquidity metrics remain strong. On other matters, as noted in the group's media statement that was released on the 28th of May, mediation between Nedbank and Transnet in respect of the interest rate swap transactions between the parties that took place in December 2015 and March 2016, which has been widely reported on over many years, has ended after it became apparent that there is no likelihood of resolving the matter amicably despite extensive engagements.
Considering internal and independent external reviews commissioned by the Nedbank board, the board and management remain satisfied that Nedbank's internal governance processes were followed in respect of the transactions, importantly, that there is no evidence of any Nedbank staff dishonesty, corruption or collusion, and Nedbank will strongly defend itself in any litigation proceedings that may follow. Finally from me, some words of appreciation as I attend a Nedbank AGM in this capacity for the last time. It has indeed been a privilege to be the Chief Executive of the Nedbank Group and the highlight of my career. I took over from Tom Boardman as Chief Executive in early 2010, I inherited a Nedbank that, under Tom's leadership, had navigated the global financial crisis well alongside developing a market leading focus on the importance of culture and values that continues to define the Nedbank of today.
When I became the Chief Executive, I made a commitment to build on Tom's legacy and attempt to leave behind a better Nedbank than when I started. I am pleased to say that I believe I have fulfilled on that commitment. After six years as the Chief Financial Officer and then the last 14 as the Chief Executive, I look back with pride on Nedbank's achievements and the challenges that we have overcome together. I leave behind a Nedbank that is stronger, more competitive, more agile, and more digital than when I was appointed, I know that Jason Quinn will continue to build on these foundations to make Nedbank an even better bank than it is today.
Our market leading positioning in ESG in general, sustainable development financing and renewable energy in particular, stands out for me, alongside the foundations that we have laid for digital leadership through our Managed Evolution IT program. It's also appropriate for me to thank Warren Klute, Dr. Reuel Khoza, the late Professor Vassi Naidoo, Mpho Makwana, and of course, Daniel Mminele, for the guidance that they have given me as chairpersons of the Nedbank Group during my tenure. As well as Jim Sutcliffe, Julian Roberts, and Bruce Hemphill for their input in their roles as chief executives of Old Mutual PLC, our former parent company.
Thank you also to the Nedbank board and our Group ExCo members over time, of course, to all the Nedbankers who have been part of this journey, as well as the more than 7 million retail and wholesale clients who choose Nedbank to be their bank. We also appreciate and recognize the ongoing support from the investment community, from regulators, from other stakeholders. Thank you in particular also to my wife and family for their unwavering support in my 30-year career with Nedbank. As Nedbank, I know we will continue to play a constructive and positive role in society as we fulfill our purpose of using our financial expertise to do good for the benefit of all our stakeholders.
I look forward to watching Nedbank under the capable leadership of the chairman, the incoming chief executive, Jason Quinn, and the Group ExCo team, build on these foundations that are in place and go from strength to strength. Thank you, I'll now hand back to the chairman.
Thank you, Mike. A very special word of gratitude is reserved for our outgoing chief executive, Mike Brown. Mike's tenure has been nothing short of transformative. His exceptional leadership, unwavering dedication, and strategic vision have been pivotal in steering the Nedbank Group from strength to strength over the past 14 years that he has been chief executive and over the 30 years he has been with the group. Under Mike's stewardship, the group successfully navigated an ever-increasing complex and uncertain operating environment, including steering the Nedbank ship through various domestic and internationally induced crises, the most recent being the COVID-19 pandemic, ensuring that the Nedbank Group emerged stronger. Mike was at the helm of the managed separation from Old Mutual, a complex and critical milestone successfully concluded in 2018.
In a competitive landscape, he championed our digital transformation, driving the bank's innovation agenda forward and overseeing the successful Managed Evolution technology rebuild that he's just given us an update on. The initiative has firmly established Nedbank's reputation as a leader in digital innovation. Moreover, Mike has been instrumental in embedding our commitment to sustainability, recognizing the green agenda as a strategic imperative for our future and ensuring Nedbank is positioned as a market leader in renewable energy finance in particular. Mike was rightly honored with the Sunday Times Business Leader of the Year Award in 2020. A testament to the respect and admiration of his peers. As we bid farewell to Mike, we also welcome Jason Quinn as the incoming Chief Executive.
Jason brings with him a wealth of experience from his time as CFO at Absa, along with a proven track record in banking across South Africa and other parts of the African continent. We are confident that he will build upon Mike's impressive legacy and lead Nedbank into a future filled with even more promise and potential. Mike, we wish you well for your future endeavors and convey our gratitude and appreciation for all that you've done for Nedbank over the years. I'll now hand over to Linda Makalima, Chairperson of our Group Transformation, Social and Ethics Committee, to report on that committee.
Thank you, Chairman. Good morning, everyone. The report of the Group Transformation, Social and Ethics Committee, as required in terms of Regulation 43 [5] [c] of the Companies Act, is included in the governance report, which is a supplementary report to the 2023 integrated report, which is available on our website. We have a video to present to shareholders on the activities of the committee during the year, which we will display while votes are being counted at the end of the meeting. Thank you, Chair. I hand back to you.
Thank you, Linda. I'll now deal with any questions relating to the business of this annual general meeting, including the financial statements and all the proposed resolutions as set out in the notice to the AGM, which are taken as read. As indicated earlier, we will start with questions from shareholders in the auditorium on the business of this AGM, including the resolutions. Are there any questions from shareholders in the auditorium?
Thank you. Just to clarify, including general Q&A. Yes.
Indeed, relating to the business of this AGM.
Sure. Okay. Thank you. My name is Emma Schuster. I am here from Just Share. First of all, would like to congratulate the Nedbank team on publishing the new interim climate targets. I have a few questions, please bear with me. The first question relates to Nedbank's oil and gas pathway. There is two kind of relevant facts, context to my question. This year, Nedbank's exposure to upstream oil and gas increased by 13% to oil by 13%, and to upstream gas by 11%. Most concerningly, is the increase of upstream gas limits by 173%, which you report is due to commitments to gas projects. The other one is that the new oil and gas target published this year requires you to reduce exposure to upstream oil and gas by 26% by 2030.
Firstly, just to clarify, what percentage of Nedbank's oil and gas portfolio is included in the upstream oil and gas glide path? My second question relates to the fact that you have already actually achieved this 2030 oil and gas target. This means that there is significant leeway to increase upstream oil and gas exposure in the interim, as we see happening, provided exposure decreases by 2030. In light of that, what is Nedbank's strategy, and what actions will you take to ensure that you achieve the bank's fossil fuel targets in circumstances where Nedbank intends to increase its financing of gas for the foreseeable future? I will leave it there for now. Thank you.
Thank you very much for those questions from Just Share. I'll call upon the chair of our Group Sustainability and Climate Resilience Committee to provide some input in that regard.
You're absolutely correct around the numbers. We must recognize that that is of an extremely low base in terms of our funding for oil and gas. That increase that you referred to, particularly if you compare that to our financing for renewables. Our commitment around the reductions remain. That is our target and the glide path that we have indicated. In that regard, the strategy, particularly around gas, is that we certainly see gas playing an important transitional role. We must all understand, without that playing a transitional role, we will essentially be locked into what we currently have, which is a significantly high carbon base. We certainly see gas playing a transitional role to allow us, as a country and as a region, to make sure we can increase the penetration of renewables.
Our commitment to that reduction over that period, although not a straight line, is firm and clear. That is how we will manage our strategy and our financing for oil and gas. Thank you, Chairman.
Thank you very much, Brian, for providing that context and reaffirming our commitment to the glide path that we have published. Thank you very much. Are there any other questions from shareholders in the auditorium and guests?
Sorry, I don't have the mic, but I've got it at the moment. If I may just ask my final question. Well, actually, just to follow up on that last one. I understand that exposure to gas is going to increase, given the view of gas as a transition fuel. Is there a date at which we can expect it to decrease again before 2030? Or is that yet to be determined? Then just on the oil and gas question. The bank now has targets for reducing exposure for fossil fuels and power generation up to 2030. Can you please clarify whether these glide paths apply only to the bank's on-balance-sheet exposure? Do they exclude all other activities such as underwriting and facilitation of bond deals? Similarly, the restrictions to oil and gas lending in your energy policy overall all relate to specific projects.
It's exploration or production. They don't appear to cover general purpose loans to oil and gas companies, which does seem to be the case for coal companies, nor again, any of the other activities other than lending. Am I right in saying that the energy policy only covers a portion, maybe even a fraction of the bank's financing and facilitation or potential financing and facilitation of fossil fuels, especially for oil and gas? Thanks.
Thank you for that question. I mean, the first one around a specific date for seeing decrease again, just to reiterate what's just been said. That there will be fluctuations as we progress on the announced path, but the direction of travel is very clear towards overall a reduction in those emissions. I don't know if there's any further comments that colleagues might wish to make, but obviously, those are very important questions, very detailed questions around the portfolios as such. We would be happy to engage Just Share around those questions and provide more detail given some of the time constraints we have at this meeting, but happy to provide all the responses to the questions that you have in a dedicated session. Happy for colleagues to add if they would wish to.
Chairman, thank you for that. I think very important to note how we navigate these glide paths is informed by how we navigate our customers' transition and support our customers to that regard. Coming up with a specific date as to how that changes, it's quite difficult. As we said, we've clearly indicated our 2030 timelines. Lastly, on your last question, we certainly do not go and segregate our lending portfolios into different customer classes. That energy policy applied to our complete lending facilities in our customer base. Thank you, chair.
Thank you very much. Brian, Mike Davis, our group financial, Chief Financial Officer.
Sorry, chair. Just a comment. I think what's quite important with us having published glide paths is that we need to move away from facilities and drawdowns or exposures and rather focus on carbon emissions. I think that's the important issue. Just to touch on the question you asked around, we've committed to glide towards a 26% reduction by 2030. We were able to get there in December 2023, largely as a result of actually moving away from some of our largest carbon-emitting clients before the end of 2023. We set the path, and then we successfully glided quicker than that as a result of, again, moving away from a handful of clients through a strategic approach. That as a result of drawing down on facilities, you'll find that that path is nonlinear, but will continue to reflect on that 26% over time.
Thank you. Mike, do you have any other questions?
Hello, I'm Karishma, also from Just Share. My question is around gender and diversity, board diversity. As Nedbank has acknowledged, the Group's board's current 23% female representation is low. It falls below the 25% black woman target, which is aligned with the amended Financial Sector Code. Nedbank reports that gender diversity remains a key priority in the board's succession plan, and that the Group will continuously review its targets. Similar to the approach of some of your industry peers and as part of Nedbank's succession plan, would the Group consider stretching the gender diversity target to align not only with the FSC but to target gender parity at board level as well?
Thank you very much. The question I'll ask the Chairperson of our Nominations Committee or the Directors' Affairs Committee, which in our case performs that role to add. Just to reiterate, as you indicated, that remains a key focus for the board to ensure that we have a transformed board that broadly reflects the demographics of South Africa. We can deal with more detail. Hubert.
Chairman, that also corresponds with a question that we know we have coming on the system. That's a very good observation. We certainly are slightly behind our target at 23% as far as gender diversity. We're very cognizant of it, and this takes particular specific quite a bit of attention from our Directors' Affairs Committee. Firstly, how do we address that and even exceed the target of 25%? We fortunately have the opportunity to improve these ratios given the retirements of a number of our non-executive directors over the next couple of years. If you were to look at our non-executive profile as far as retirement is concerned, you'll see that in 2025, particularly in 2026, we have some retirements. Naturally, gender is not the only thing that you look at in that. Good succession is equally important.
Gender is very much part of topmost of our minds as we work towards that. We are in a recruitment and a selection journey for that. In that sort of incoming group, it's high priority in respect of this, and we are confident that you will see progress as far as gender diversity is concerned and in the intake of non-execs in the near future and leading up to 2026 and around that time. As far as our targets are concerned, let's just first make our 25% target, and it is then a journey. As we become more confident that we are able to bring more females into the mix. We will certainly continue to look at that target going forward. It's a progressive thing that one can develop further as we go along.
I certainly do believe that we will be exceeding the target by 2026. Thank you, Chair.
Thank you very much, Hubert. I hope that answers the question. Any further questions from the room? It does not appear to be the case. Thank you very much. We will now take questions from Chorus Call. Jake, are there any questions from shareholders on Chorus Call? Obviously, there's the one question that Hubert has already addressed that we are aware of.
Thank you, Sir. There's no questions from the lines.
Thank you very much. Have any question been submitted on the webcast?
Chair, apart from the question, there was a similar question on the webcast.
Oh, sorry. That was the Chorus Call, wasn't it? Chorus Call, yes.
Yeah. I think I've dealt with that question as well. I can read that question. "Director elections and appointments. The bank's gender diversity at board level is low at 23%, lagging peers, and below its own targets. May Nomco advise when this anomaly will be addressed?
Yeah. I think that was covered. Thank you very much. Just to check, do we have any other questions? Just to check with the company secretary.
No other questions.
Thank you very much. We now move on to the proposed resolution. I remind shareholders attending in person and via the webcast that you may submit your votes on all resolution 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 re-election are included in the notice to their AGM. Ordinary resolutions 1.1 and 1.2, pertaining to the election of directors of the companies appointed during the year.
The Board appointed Jason Quinn as Group Chief Executive Designate with effect from the 22nd of May 2024 to assume the role of Group Chief Executive and an Executive Director of the Board on Mike Brown's planned retirement from the Board at the end of this AGM. The appointment of Jason is accordingly hereby proposed to shareholders for approval. The Board also appointed Terence Nombembe as an Independent Non-Executive Director of the company with effect from the 1st of January 2024. Terence must retire in terms of clause 25.15 of the company's memorandum of incorporation, being eligible, offers himself for re-election. I propose that Jason Quinn be elected as Group Chief Executive and Director of the company. Please indicate your vote on your handset or your vote online. I propose that Terence Nombembe be elected a Director of the company.
Will you please indicate your vote on the handset or indicate your vote online. That then takes us to the next ordinary resolutions, 2.1 to 2.4, re-election of directors retiring by rotation. You are now asked to consider the re-election of those directors retiring by rotation in terms of the MOI. The Board supports the reappointment of the directors who are retiring by rotation. The retiring directors being eligible and who make themselves available for re-election are Brian Dames, Neo Dongwana, and Mfundo Nkuhlu. We shall be dealing with the re-election of each of the retiring directors individually. I propose that Brian Dames be re-elected a Director of the company. I also propose that Neo Dongwana be re-elected a Director of the company, and that Mfundo Nkuhlu similarly be re-elected a Director of the company.
Kindly indicate your vote on your handset or indicate your vote online for each of these resolutions. I then continue with ordinary resolutions 3.1 and 3.2 that deal with the reappointment and appointment of independent external auditors. You are now asked to consider the reappointment of external auditors, Ernst & Young Incorporated, with Rohan Baboolal as Designated Registered Audit Partner, and KPMG Incorporated with Joelene Pierce 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 reappointment and appointment have been recommended by the Group Audit Committee with endorsement from the Nedbank Group Board.
On behalf of the board, I would like to express our sincere gratitude to Deloitte, who will rotate off the Nedbank audit as external auditor as part of our audit firm rotation approach, for their professional, objective, and valuable insights over many years. I propose that Ernst & Young Incorporated be, and is hereby reappointed as external auditor to hold office from the conclusion of this 57th annual general meeting until the conclusion of the next annual general meeting of the Nedbank Group. I also propose that KPMG Incorporated be and is hereby appointed as external auditor to hold office from the conclusion of the 57th annual general meeting until the conclusion of the next annual general meeting of the Nedbank Group. Will you kindly indicate your vote on your handset or indicate your vote online for each of the resolutions.
Ordinary resolutions 4.1 to 4.6, appointment of Nedbank Group Audit Committee members. The board believes it is good governance for shareholders to vote on the appointment of 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. I propose that Stanley Subramoney be elected a member of the Group Audit Committee.
I further propose that Hubert Brody be elected a member of the Group Audit Committee. I propose that Neo Dongwana be elected a member of the Group Audit Committee. I propose that Errol Kruger be elected a member of the Group Audit Committee. I propose that Phumzile Langeni be elected a member of the Group Audit Committee. I propose that Terence Nombembe be elected a member of the Group Audit Committee. Please indicate your vote on your handset or indicate your vote online for each resolution. I then move to ordinary resolution five, placing the authorized but unissued ordinary shares under the control of directors. The authority granted to the directors at the last AGM expires at this meeting. In the directors' opinion, it is desirable that the unissued ordinary shares should remain under the control of the directors.
The board has reviewed the practice of issuing shares against the merits of acquiring shares in the open market for purposes of meeting the obligations under the Nedbank Group 2005 share option, matched share and restricted share schemes. Collectively, the Nedbank Group 2005 Share Scheme. The authority to place authorized but unissued shares under the control of the directors will be used only for purposes of the Nedbank Group 2005 Share Scheme in the event that, in the opinion of the Nedbank Group board, it was not appropriate for Nedbank Group to acquire shares in the open market. The authority is limited to 6,239,676 shares, representing approximately 1.28% of the number of ordinary shares in issue as at the 1st of January 2024. It is further limited to existing contractual obligations and issuances under the Nedbank Group 2005 Share Scheme 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 2025, 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 may deem fit, subject to the provisions of this resolution, the Companies Act, the Banks Act, and the listing requirements of the JSE. I'll put the resolution to the meeting. Please indicate your vote on your handset or indicate your vote online. Ordinary resolution number six, placing 450,000 authorized but unissued cumulative redeemable non-participating preference shares under the control of the directors.
The creation of 1 million cumulative redeemable non-participating preference shares was approved by shareholders in 2014. The purpose of these preference shares is to provide flexibility in the nature of financing instruments and sources of funding that Nedbank Group has for the purpose of funding its business activities in general. The creation of these preference shares provides Nedbank Group with the ability to source funds from either the institutional or retail investor market in a long-term dividend-yielding instrument and is a source of stable additional funding for the group. The preference shares have remained unissued to date.
In 2014, Nedbank Limited advanced ZAR 5.8 billion to Nedbank Group, which funds were used to acquire a stake in Ecobank Transnational Incorporated, ETI. The board proposes issuing up to 450,000 of the 1 million authorized but unissued cumulative redeemable non-participating preference shares to Nedbank Group subsidiaries whose business includes investments in long-term dividend-yielding instruments and to external investors. The proceeds from the issuances will be used to repay the remaining balance of the Nedbank Limited loan. Accordingly, I propose that the authority is granted to the directors to issue up to 450,000 cumulative redeemable non-participating preference shares in the share capital of Nedbank Group on such terms and conditions and at such times as they may 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.
Please indicate your vote on your handset or indicate your vote online. We now turn to advisory endorsements 7.1 and 7.2 on a non-binding 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 report on the implementation thereof. Kindly note that the votes on these advisory endorsements are non-binding. 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 shareholders 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 endorsement to the meeting. We shall be dealing with each of the advisory endorsements individually.
To endorse through a non-binding advisory vote the company's remuneration policy, excluding the remuneration of non-executive directors for their services as directors and members of board committees, as set out in the remuneration report contained in the summary consolidated annual financial statement. To endorse through a non-binding advisory vote the company's remuneration implementation report, as set out in the remuneration report contained in the summary consolidated annual financial statement. Please indicate your vote on your handset or vote online for each of the resolutions or advisory endorsements. We now turn to Special Resolutions 1.1 and 1.12, approval of the remuneration of non-executive 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 non-executive directors receive such fees. The proposed fees represent an overall 6.7% increase and exclude VAT.
We shall be dealing with the approval of the various fees payable with effect from the 1st of July 2024 individually, and note that the fees payable to the chairs of the respective board committees are two and a half times the member fees. As I am personally conflicted with regard to Special Resolution 1.1, being the remuneration of the Chairperson, I shall hand over to Mike Brown to put this resolution to shareholders.
Thanks, Chair. Under Special Resolution 1.1, I propose that the remuneration of the Chairperson as set out in the notice be approved. I will hand back to you, Chair.
Thank you, Mike. I propose that the remuneration of the Lead Independent Director, as set out in the notice, be approved. I further propose that the remuneration of the Nedbank Group Board members, as set out in the notice, be approved. That the remuneration of the Nedbank Group Audit Committee members, as set out in the notice, be approved. I propose that the remuneration of the Nedbank Group Credit Committee members, as set out in the notice, be approved. I further propose that the remuneration of the Nedbank Group Directors' Affairs Committee members, as set out in the notice, be approved. That the remuneration of the Nedbank Group Information Technology Committee members, as set out in the notice, be approved. I further propose that the remuneration of the Nedbank Group Remuneration Committee members, as set out in the notice, be approved.
I propose that the remuneration of the Nedbank Group Risk Capital Management Committee members, as set out in the notice, be approved. That the remuneration of the Nedbank Group Transformation, Social, and Ethics Committee members, as set out in the notice, be approved. I propose that the remuneration of the Nedbank Group Sustainability and Climate Resilience Committee members, as set out in the notice, be approved. That the ad hoc meeting fees, as set out in the notice, be approved. Please indicate your vote on your handset or indicate your vote online for each resolution Special Resolutions 2.1 to 2.3, remuneration of non-executive directors appointed as acting group chairperson, acting lead independent director, or acting committee chairperson.
As detailed in the notice, the board wishes to acknowledge the additional responsibilities and time commitments for non-executive directors who may, in exceptional circumstances, be required to perform the role of acting group chairperson of the Nedbank boards, acting lead independent director, or acting board committee chairperson 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 non-executive directors who are required to perform an acting role. These fees would be in addition to the normal non-executive directors' fees as detailed in Special Resolution 1.
The payment of additional fees to any non-executive director appointed to an acting role will be subject to prior approval by the 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 non-executive directors who may be required to perform the role of acting group chairperson of the Nedbank boards, acting lead independent director, or acting board committee chairperson individually. These resolutions, if approved, will be with effect from the conclusion of this AGM until the conclusion of the next AGM. The proposed fees represent an overall increase of 5%. I propose that the remuneration of any board member who may be appointed as the acting group chairperson, as set out in the notice, be approved.
I propose that remuneration of any board member who may be appointed as acting lead independent director, as set out in the notice, be approved. I propose that the remuneration of any board member appointed as acting committee chairperson, as set out in the notice, be approved. Please indicate your vote on your handset or indicate your vote online for each resolution. Special Resolution three deals with the general authority to repurchase ordinary shares. In terms of the Companies Act, the JSE listing requirements of the MOI, the shareholders may authorize the directors thereby for general authority to acquire shares in the capital of the company, subject to certain limitations. The resolution is a renewal of existing authority, which was granted at the last annual general meeting held in June 2023.
I propose that the general authority to repurchase ordinary shares be granted, and I put the resolution to the meeting. Please indicate your vote on your handset or indicate your vote online. Special resolution four deals with 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 two years. Furthermore, the provision of any such financial assistance is subject to the solvency and liquidity tests as referred to in the Companies Act. I propose that the 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. Please indicate your vote on your handset or indicate your vote online for each resolution. Special resolution five, increase in the number of authorized A non-redeemable, non-cumulative, non-participating perpetual preference shares. Shareholders approved the creation of 200,000 A preference shares in Nedbank Group with a nominal value of ZAR 1 million per share on the 2nd of June 2023. These A preference shares qualify as additional Tier 1 capital in terms of Basel III regulatory requirements. The preference shares are intended to provide, among others, an alternative source of capital, as well as to provide an attractive dividend-yielding investment product for corporates and high-net-worth individuals who are seeking a dividend return. As set out in the notice, engagements with market shareholders have indicated that a smaller nominal value of ZAR 10,000 per A preference share will improve market liquidity and investor appetite.
No A preference shares have currently been issued by Nedbank Group. The directors of Nedbank Group therefore propose that the nominal amount of each A preference share be reduced from ZAR 1 million to ZAR 10,000, and that the number of authorized A preference shares be increased from 200,000 to 1 million shares. I propose that the number of authorized A non-redeemable, non-cumulative, non-participating perpetual preference shares be increased from 200,000 to 1 million A preference shares. I propose that the nominal value of each A non-redeemable, non-cumulative, non-participating preference share be reduced from ZAR 1 million to ZAR 10,000 per A preference share. Please indicate your vote on your handset or indicate your vote online. Special Resolution six, amendments to the Memorandum of Incorporation in terms of the A non-redeemable, non-cumulative, non-participating perpetual preference shares, A preference shares.
The rationale for passing this special resolution is to amend paragraphs 8.1 and 48 of the MOI of Nedbank Group to effect the increase in the number of A preference shares and the reduction in the nominal value of each A preference shares as contemplated in special resolutions 5.1 and 5.2 above. A marked copy of the MOI with the proposed changes in terms of this special resolution, initiated by myself for purpose of identification, is available for inspection and has been available online since Thursday, the 18th of April, 2024. I propose that subject to the passing of Special Resolution five, the existing MOI of Nedbank Group is hereby amended by increasing the number of A preference shares and reducing the nominal value of each A preference share with effect from the date of filing the notice of amendment with the Companies and Intellectual Property Commission.
I put the resolution to the meeting. Please indicate your vote on your handset or indicate your vote online for each resolution. Ordinary Resolution number seven, placing the authorized but unissued A non-redeemable, non-cumulative, non-participating perpetual preference shares under the control of the directors. I propose that the board be and is hereby authorized as it is in its discretion thinks fit and subject to the passing of a Special Resolution six, to issue up to 1 million A non-redeemable, non-cumulative, non-participating perpetual preference shares of ZAR 10,000 each in the share capital of the company, subject to the provisions of the Companies Act 71 of 2008, the Banks Act 94 of 1990 and their JSE listing requirements. The authority granted in terms of this ordinary resolution will remain valid until the next AGM of the company to be held in 2025.
I'll put the resolution to the meeting and please indicate your vote on your handset or indicate your vote online. All proposed resolutions have now been put to shareholders. The voting platforms, as indicated earlier, will remain open for a further three minutes for you to complete your votes. Thereafter, all votes are closed and the scrutineers will record the votes and provide the results. While we wait for the scrutineers to finalize the voting results, Linda Makalima, in her role as the Chairperson of the Group Transformation, Social and Ethics Committee, has arranged for a short video which showcases some of Nedbank's CSI activities for shareholders' information.
[Presentation]
Thank you very much. Using our financial expertise to do good. The scrutineers have confirmed that all resolutions have been passed by the requisite majority. I now declare all resolutions passed. The detailed voting results will be published on SENS later today. Before I declare this meeting closed, I just want to thank the board and the management and staff for their contributions and unwavering commitment. As all the business on the agenda has been dealt with, noting that the detailed voting results will be published on SENS later today, as just mentioned, I now formally close the proceedings of the 57th Annual General Meeting of Nedbank Group Limited. Thank you very much for your attendance and participation.