‘Mantšali Phakoana
Nedbank Group delivered a solid financial performance in the first half of 2023 ending 30 June 2023 as headline earnings (HE) increased by 10 percent to M7.3 billion in a challenging environment.
Return on equity increased to 14.2 percent during the same period.
On Tuesday this week, as it celebrated 135 years in business, the group said the increase in the headline earnings was underpinned by strong revenue growth including associate income of 14 percent and good expense management, enabling pre-provisioning operating profit growth of 22 percent.
According to a statement released by the group, this was partially offset by 57 percent increase in the impairment charge, particularly in the retail consumer banking segment in South Africa.
The group further stated that its clientele across the African region grew by five percent, with the growth coming mostly from entry-level banking segment due to the new mobile money electronic wallet offering launched in Eswatini, Lesotho and Namibia. This boosted the growth the wealth segment, which now offers international and stockbroking services to clients in Namibia and Zimbabwe.
“The operating environment in the first half was much more challenging than we had initially forecast.
“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,” Nedbank Chief Executive Mike Brown said.
He also noted that the group’s solid financial performance and strong balance sheet metrics enabled the group to declare an interim dividend of 871 cents per share, up by 11 percent, at a pay-out ratio of 57 percent.
Presenting the results on Tuesday, Nedbank Africa Regions (NAR) managing executive, Terence Sibiya, said he was incredibly pleased that the NAR cluster delivered a stellar performance.
He indicated that was achieved because of improved performances from the Southern African Development Community (SADC operations and strong earnings from the Ecobank Transnational Incorporated (ETI) associate investment, as well as the release of the R175m Ghana domestic sovereign bond provision the group took in 2022.
The NAR business has operations in Eswatini, Lesotho, Mozambique, Namibia, and Zimbabwe as well as representative offices in Ghana and Kenya.
“Digitally active clients across NAR business grew year over year from 57 percent to more than 60 percent of total active client base, with good growth in digital channel usage. 95 percent of digitally active clients were using the Nedbank Money App (Africa) as the preferred channel of choice.
“Value-added services, including airtime and electricity purchases are increased by 10 percent year over year and Nedbank Send Money’s money transfer volumes increased by 19 percent during the same period.
“I am also happy that our ETI associate investment has continued to deliver an impressive performance. With the ongoing improvement in performance, ETI has declared dividends in the last two cycles,” Sibiya revealed.
Nedbank MobiMoney, an electronic wallet-based account, forms part of the bank’s efforts towards financial inclusion in Lesotho, Namibia and Eswatini.
The group also stated that they have improved online banking for corporates in Lesotho, Eswatini and Namibia, including new features and functionalities that enhance convenience for clients.
“Fulfilling our purpose of using our financial expertise to do good is best demonstrated through our ongoing delivery against the UN Sustainable Development Goals (SDGs), our continued focus on leading in ESG matters, and our sustainable-development finance (SDF) commitments as we proactively tilt our portfolio to areas that create positive impacts.
“In H1 2023, we made new SDF-related pay-outs to the value of more than R10 billion and at 30 June 2023 had exposures of R134billion (December 2022: R123bn) that support SDF, representing 15 percent of the group’s gross loans and advances.
“By the end of 2025, it is our ambition to have increased our SDF exposures to around 20 percent of the group’s total gross loans and advances, achieved by supporting more than R150 billion in new SDF (from our starting base in 2021).
The group further pointed out that the International Monetary Fund (IMF) expects sub-Saharan Africa to grow by a softer 3,5 percent in 2023, down from 3,9 percent in 2022, before accelerating to 4,1 percent in 2024,”
Nedbank said currently it expects the economic environment in South Africa to remain very challenging, given the high levels of electricity shortages and increased levels of pressure on consumers’ disposable income as a result of higher levels of inflation and interest rates. To support the clients during these challenging times, the group said it offers clients tailored payment plans to help address their temporary financial distress. It also provides restructures and debt consolidation options that reduce monthly debt payments to help clients deal with the increase in interest rates and keep them in their homes and in their vehicles.
