Nedbank posts 11 percent rise in half-year profit

SOUTH Africa’s Nedbank Group delivered a solid financial performance for the half year ended 30 June 2023 as the group recorded an 11 percent rise in interim profit despite growth in bad loans.

The group’s headline earnings for the period under review increased by 10 percent to R7,3 billion while return on equity (ROE) increased to 14,2 percent.

Terence Sibiya Nebank Group Managing Executive for Nedbank Africa Regions

“The increase in HE was underpinned by strong revenue growth, including associate income, of 14 percent and good expense management, enabling reprovisioning operating profit growth of 22 percent. This was partially offset by a 57 percent increase in the impairment charge, particularly in the retail consumer banking segment in South Africa,” the group said in a statement accompanying its financials.

Nedbank’s credit loss ratio, a measure of bad loans as a percentage of total loans – was at 121 basis points (bps), higher than the 85 bps it posted a year earlier and beyond its target range of 80 bps to 100 bps.

Commenting on the financials, Nedbank chief executive, Mike Brown said the operating environment in the first half was much more challenging than what was initially forecasted.

“In addition to a weak global economy and lower commodity prices, domestic economic activity continued to be negatively impacted by very high levels of load-shedding, logistical constraints, higher-than-expected levels of inflation and as a result higher-than-expected increases in interest rates,” Brown said.

Regarding Africa Regions, Nedbank Group managing executive, Terence Sibiya said the cluster delivered a stellar performance achieved on the back of improved performances from the SADC operations and strong earnings.

The Nedbank Africa Regions (NAR) business has operations in Eswatini, Lesotho, Mozambique, Namibia, and Zimbabwe as well as representative offices in Ghana and Kenya.

Nedbank Group also has a 21,2% shareholding in Ecobank Transnational Incorporated (ETI), which is a leading private pan-African banking group present in thirty-five sub-Saharan African countries in Francophone West Africa, Nigeria, Anglophone West Africa and Central, Eastern and Southern Africa (CESA).

“I am also happy that our ETI associate investment has continued to deliver an impressive performance. With the ongoing performance improvement, ETI has declared dividends in the last two cycles. A new Group Chief Executive, Jeremy Awori, assumed full executive responsibility at ETI effective 1 March 2023 and as a banking veteran his new leadership bodes well for the group’s future,” Sibiya said.

Meanwhile, Nedbank Zimbabwe recently became the first local institution to licence American Express acceptance in a development that is expected to lift American visitors spending in the country.

Based on research, American Express cardholders normally carry about three times the purchasing power of any other tourist.