NEDBANK GROUP REPORTS 8% RISE IN HALF-YEAR PROFIT

MBABANE – The Nedbank Group has reported an 8 per cent rise in half-year profit, supported by lower impairment charges and solid growth in non-interest revenue (NIR).

The bank reported that its headline earnings rose to E7.9 billion in the six months ended June 30. The bank released its half year financial results yesterday. The new Nedbank Chief Executive (CE), Jason Quinn, stated that the operating environment in the first-half of 2024 was challenging, as economic activity remained weak.

Uncertainty

“In addition to geopolitical uncertainty, persistent inflation, high interest rates and uncertainty ahead of the national elections in South Africa (SA) impacted domestic activity negatively,” he said. The bank’s return on equity (ROE) increased to 15 per cent, while in the first-half of 2023, it was reportedly at 14.2 per cent. The increase in headline earnings was underpinned by good NIR growth, a lower impairment charge and targeted expense management, partially offset by muted net interest income (NII) growth and lower associate income.

The bank’s NIR increased by 7 per cent to E14.4 billion, slightly ahead of the group’s full-year guidance of above mid-single-digit growth. This was thanks to good growth in commission and fees, a strong trading performance and higher equity investment income, the bank said. The group’s headline earnings per share (HEPS) increased by 11 per cent to 1 699 cents, diluted HEPS (DHEPS) increased by 12 per cent to 1 650 cents and basic earnings per share (EPS) increased by 12 per cent to 1 700 cents, ahead of the headline earning growth of 8 per cent, as a result of the E5 billion capital optimisation initiative that was materially completed in H1 2023.

The group’s balance sheet remained very strong. CET1 and tier 1 capital ratios of 13.3 per cent and 14.7 per cent were well above board-approved target ranges and South African Reserve Bank (SARB) minimum requirements. Following a solid performance and strong capital and liquidity positions, the group declared an interim dividend of 971 cents per share, up by 11.5 per cent (June 2023: 871 cents per share) at a payout ratio of 57 per cent. The group further reported headline earning in Nedbank Africa Regions (NAR) decreased by 36 per cent to E725 million and a ROE of 18.2 per cent was generated.

Investment

This performance was driven by decreases in headline earnings in the Southern African Development Community (SADC) operations and the performance of the Ecobank Transnational Incorporated (ETI) associate investment during the period. SADC operations decreased by 41 per cent to E271 million and its ROE decreased to 7.3 per cent. These decreases were largely because of changes in the functional currency of Zimbabwe to the US Dollar, causing the non-repeat of the unrealised forex gains from the prior year. Excluding the impact of the prior year forex gains impacting NIR, HE in SA would have increased by 65 per cent.

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