One of South Africa’s biggest banks says the shift to flexible working is paying off

 ·10 Aug 2022

Nedbank chief executive officer, Mike Brown, says that the group’s flexible working practices and real-estate optimisation strategy is leading to cost savings.

On Wednesday (10 August) the group published its interim results for the six months ended June 2022 showing a solid performance across all key metrics.

The group delivered revenue growth of 11% to R30.5 billion, while headline earnings increased by 27% to R6.7 billion. Return on equity (ROE) increased to 13.6%, up from 11.7% a year ago.

Headline earnings per share of R13.70 climbed 26%, and an interim dividend declaration of 783 cents per share (June 2021: 433 cents) was declared.

“We have implemented a hybrid work model where a portion of our workforce will continue to work on-site while others will alternate between working on-site and remotely. Although a large part of our workforce is digitally enabled to work remotely, employees are encouraged to return to the office to collaborate and engage,” said Brown.

He said that during H1 2022, half (51%) of the banks’ employees worked from home – excluding branch employees – as many clusters commenced with workplace reintegration in a phased manner.

“Workplace reintegration allows us to reinforce our strong Nedbank culture by returning to face-to-face engagements that create not only leadership visibility but also an opportunity to build relationships and reinforce our culture that helps us perform better as one Nedbank.”

In January, the bank said that it would shift its workforce structure permanently, with many employees continuing to work from home permanently, post the Covid-19 pandemic and as part of a hybrid model.

The bank informed employees, whose jobs do not require them to be in a branch or office, that they could choose to work from home on a permanent basis. It partnered with cloud computing company Citrix Solutions to offer remote working systems and virtual desktops.

“Long before the pandemic, we saw the need to empower our employees to meet an increasingly digital customer base where they are and provide the superior service they have come to expect from us,” said Mervyn Savary, Nedbank’s executive head for End User & Communication Services.

The bank said it has leveraged predominantly cloud-based applications across its operations. “As a result, we have seen a drastic increase in bandwidth requirements and have more latency-sensitive applications that require more resilience, stability and quality than ever.”

Nedbank said that the digitisation of services and changing client behaviour, along with the impact of the Covid-19 lockdowns, have enabled the group to reduce branch teller volumes by 65% since H1 2019.

“To date, as we optimise the shape of our infrastructure through Project Imagine, branch floor space has decreased by around 69,000 sqm (December 2021: 65,000 sqm) from 2014 levels, while the number of branches declined by 80 to 419 without impacting client service.

Cost savings have also been Real estate optimisation:

“Through our strategy of consolidating and standardising our own buildings to support new Ways of Work, our number of campus sites (offices) has decreased from 31 to 24 over the past four years, with a longer-term target of 19. Since 2016 we have saved over 122,000 m2 and over 6,000 m2 in H1 2022,” said Brown.

“In the next few years, we will continue to optimise the portfolio by enhancing workstation use through enabling flexible office constructs to support more dynamic ways of work, as well as leveraging successful work-from-home experiences as a result of Covid-19, while creating further value and cost reduction opportunities.

“Our optimal workplace distribution mix is expected to settle at around 60% at Nedbank premises and at 40% as a mix of hybrid and permanent work-from-home models to support an anticipated workforce distribution model of 50% full-time on premises, 30% hybrid and 20% permanently off-site,” the chief executive said.

Nedbank reported a 10% reduction in employees since 2019, to 26,343 staff. In the first six months of the year, its Agility Centre redeployed 107 employees into alternative roles within Nedbank, while 15 employees have been retrenched as a result of “necessary operational changes”.

“A key focus has been on timeous reskilling and upskilling to enable employees to transition into future internal roles. Employees are also supported with ‘out-skilling’ support to empower them with relevant market-related skills should outplacement or external redeployment be necessary,” said the bank.

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