Nedbank Group reported an 11% rise in annual profit on Tuesday on strong revenue and associate income growith, and said it achieved all its post-COVID pandemic targets for 2023, including a 15.1% return on equity.
Nedbank, one of the top five lenders in the country, announced the targets in March 2021, with two of these achieved in 2022, such as exceeding the 2019 diluted headline earnings per share (DHEPS)- a profit measure – of 2,565 cents.
It said its reported return on equity (ROE)- a measure of how much profit a company earns for each rand invested by shareholders – for the year ended Dec. 31 was ahead of the target level of 15%.
In the reporting period it further increased DHEPS to 3,199 cents, up 14%. Meanwhile the bank’s headline earnings grew to 15.7 billion rand ($824 million) from 14.1 billion rand a year earlier.
“While we were pleased to have achieved all our 2023 targets while operating in a more difficult economic environment, we aspire to deliver ongoing improvements in ROE to increase shareholder value,” group CEO Mike Brown said.
The lender’s revenue grew by 11% to 69.1 billion rand, with net interest income up 14%.
The top five private South African banks – among the continent’s biggest – are generally considered well-capitalised, conservative in lending and help drive an otherwise ailing economy.
But inflationary pressures, high interest rates, regular power blackouts and logistical bottlenecks are taking a toll on the banks’ most sensitive retail and small business customers, leading to defaults.
Nedbank’s credit loss ratio – a measure of bad loans as a percentage of total loans – was at 109 basis points (bps), up from 89 bps posted a year earlier and beyond its target range of 80 bps to 100 bps. But the ratio improved from the first half when it was 121 bps.
Nedbank said as consumers reduced spending and commercial banks tightened lending standards amid rising defaults, household loans and advances growth slowed significantly to 4.3%from 7.7% in December 2022.
Reuters
