NEDBANK NET REVENUE UP TO E485.3 MILLION

MBABANE – Nedbank Swaziland Limited’s total net revenue increased to E485.3 million in the past year.
This is an increment of eight per cent as compared to 2018 (E448.4 million). This is reflected in the bank’s financial statement for the year ended December 31, 2019.

“Loans and advances grew by nine per cent to E3.9 billion (2018:E3.6 billion).
“Customer’s deposits decreased by five per cent to E4.1 billion (2018:E4.4 billion,” reads the report in part.

According to the report, a growth in assets due to increased lending activity and a decline in liabilities precipitated by the imposition of stamp duty on deposits led to the bank realising net income interest of E310.8 million. This reflected a 10 per cent growth as 2018 figures were at E282.4 million. 

The net interest income, according to Investopedia, is a financial performance measure that reflects the difference between the revenue generated from a bank’s interest-bearing assets and expenses associated with paying on its interest-bearing liabilities.

Provisions

On impairments of loans and advances, the impairment charge increased by 18 per cent to E46.2 million.
This was said to have been caused by the effects of International Financial Reporting Standards which are more stringent and an increased default rate has negatively affected the provisions raised.

A loan is considered to be impaired when it is probable that not all of the related principal and interest payments will be collected.
“Credit loss ratio was 1.19 from 0.39 per cent in 2018. Non-performing loans grew to E153.9 million to E153.9 million due to the effects of macro and micro economic challenges affecting ability to service debt by clients,” further reads the report.

Non-performing loans were at E140.3 million in 2018. In most cases, a bank loan is considered non-performing when more than 90 days pass without the borrower paying the agreed instalments or interest.
On non-interest revenue, commission and fees increased by five per cent from E165.9 million to E174.6 million. This increase was attributed to transactional volume.

Operating expenses, on the other hand, were at E268 million from E253.8 million in 2018. The six per cent increment was said to have been caused by inflation and controlled expenditure.

Stability

The bank capital adequacy ratio, according to the report, was 17.4 per cent from 17.3 per cent in 2018. The figure is above the regulatory requirement of eight per cent. 

Experts say the capital adequacy ratio (CAR) is a measurement of a bank’s available capital expressed as a percentage of a bank’s risk-weighted credit exposures.
The capital adequacy ratio, also known as capital-to-risk weighted assets ratio (CRAR), is used to protect depositors and promote the stability and efficiency of financial systems around the world.

“Capital and reserves totalled E866.9 million (2018: E782.8 million,” reads the report.
Cash and cash equivalents at the end of the period under review was E604 355 600 from E875 970 919 in 2018. As an Eswatini Stock Exchange-listed company, the bank announced that a special dividend of 568 cents per share of the year ended December 31, 2019 has been declared payable to members registered in the books of the financial institution at the close of business on May 10, 2020.  The transfer books and register of members will be closed from May 4, 2020 to May 5, 2020, both days inclusive and dividends warrants will be posted to shareholders on or about May 20, 2020.

“The sluggish regional economic growth and contractionary domestic fiscal policy added downward pressure to the bank’s performance in 2019. The bank’s headline earnings declined by five per cent to E121.5 million (2018:E128.3 million),” highlighted the report.

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