By Neo Kolane
Nedbank registered a strong financial performance in the past year, with Headline Earnings (HE) up by 11 percent to R15.7bn and Return Of Equity (ROE) rising by to 15.1 percent.
This was disclosed during the Nedbank Group’s announcement of its 2023 annual results on Tuesday this week, where it emerged that all the targets were achieved.
Another positive milestone is that the Group delivered a strong financial performance for the 12 months to December 31, 2023 compared to the 12-month prior period.
According to a statement released by the Nedbank Group, despite the difficult economic environment, the growth in HE was enabled by a strong operational performance as pre-provisioning operating profit increased by 15 percent.
It was, however, underpinned by 12 percent revenue growth including associate income and prudent expense management, partially offset by a three percent increase in the impairment charge, which reduced from the 57 percent increase in this charge reported in H1 2023.
Nedbank Chief Exective, Mike Brown, said the highlight of the year was achieving all the group’s post-COVID-19 targets for 2023 announced in March 2021.
Brown noted that two of these targets were already achieved in 2022 – exceeding the 2019 diluted headline earnings per share (DHEPS) of 2 565 cents and ranking #1 on Net Promoter Score (NPS).
“In 2023 we further increased DHEPS to 3 199 cents, up by 14 percent year-on-year (yoy), and we maintained our #1 NPS ranking among South African banks.
“Pleasingly, at the end of 2023, we also met the remaining two targets, by reporting an ROE of 15,1 percent ahead of the target level of 15,0 percent and a cost-to-income ratio of 53,9 percent which is lower than our target of 54,0 percent,” he indicated.
Presenting the results, Nedbank Africa Regions (NAR) managing executive, Dr Terence Sibiya, said he was incredibly pleased that the NAR business delivered a stellar performance
This was reached because of improved performances from the SADC managed operations and strong earnings from their Ecobank Transnational Incorporated (ETI) associate investment and the reversal of the R175m provision that Nedbank raised in 2022 in lieu of the Ghana sovereign debt, he pointed out.
The Nedbank Africa Regions 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 percent shareholding in Ecobank Transnational Incorporated (ETI), which is a leading private Pan-African banking group present in 35 sub-Saharan African countries in Francophone West Africa, Nigeria, Anglophone West Africa and Central, Eastern and Southern Africa.
The group’s balance sheet remained very strong. CET1 and tier 1 capital ratios of 13.5 percent and 15.0 percent were well above board-approved target ranges and SARB minimum requirements.
Following solid earnings, growth and strong capital and liquidity positions, the group declared a final dividend of 1 022 cents per share, up by 18 percent (December 2022: 866 cents per share), bringing the total dividend for 2023 to 1 893 cents per share, up by 15 percent (2022: 1 649 cents).
“Nedbank’s world-class technology platform, delivered through our Managed Evolution (ME) programme which has reached 95 percent completion, supported continued double-digit growth in all digital-related metrics; client satisfaction scores remaining at the top-end of the South African banking peer group; higher levels of cross-sell; main-banked client gains across all segments; market share gains in key product categories; and improved efficiencies,” Sibiya further noted.
“Our focus currently across Nedbank’s SADC operations is to transform the business and converge our technology infrastructure, enabling closer alignment to the South Africa business so that a client in Maputo has the same experience as a client in Mbombela, or Maseru and Bloemfontein.
“Our harmonisation journey is underway and progressing well and will enable the business to unlock greater efficiencies and provide a more consistent brand experience to clients across our markets,” he added.
Another positive impact is that Nedbank continued to create positive impacts through R145bn of exposures that support sustainable development finance aligned with the United Nations Sustainable Development Goals; maintained high levels of employee satisfaction; supported clients during difficult times; retained its top-tier rankings on environmental, social and governance scores.
The Group said although geopolitical uncertainties increase forecast risk, Nedbank currently expects the economic environment in SA to remain challenging into 2024 but improve off a low 2023 base.
The Nedbank Group Economic Unit forecasts SA’s gross domestic product (GDP) to increase by 1 percent in 2024 and inflation to continue to decline and average 5 percent over the year ahead. The South African prime lending rate is forecast to decline by a cumulative 75
bps in the second half of 2024 to end the year at 11, 0 percent and private sector
credit growth is expected to be muted at around percent.
