Nedbank delivers strong financial performance

STAFF REPORTERNedbank Group delivered a strong financial performance for the six months to 30 June 2021 as headline earnings increased by 148% to R5.3 billion off the low base in 2020, but remain 24% below H1 2019 levels. Significantly lower impairments, higher net interest margin and disciplined expense management boosted headline earnings. Underlying non-interest revenue growth was strong thanks to higher levels of client activity and improved insurance income, however this growth was negatively impacted by a high H1 2020 trading revenue base and an unwind of prior-year fair-value gains.Nedbank Chief Executive (CE) Mike Brown said the group’s performance in the first half of 2021 reflects a strong financial recovery off a low base. “Operating conditions in the first half of 2021 were better than we had expected at the start of the year helped by improved commodity prices. This was evident in upward revisions to South Africa Gross Domestic Product (GDP) growth, vaccine rollouts gathering pace and positive developments on key reforms. A 53-year low in interest rates supported robust demand for retail credit while transactional activity increased off a low base and benefited from ongoing strong digital growth. Against this progress, demand for corporate loans remained muted and excess cash was used to repay debt, particularly in the commodity sector.”On the back of the performance in the first half and strong capital and liquidity positions, Nedbank declared an interim dividend of 433 cents per share.Risks“We remain well prepared to manage risks associated with the impact of the third wave of Covid-19 infections, which appears to have passed its peak, and helping our clients deal with any further waves as well as the impact of recent civil unrest and looting in parts of SA,” Brown said.During the first week of unrest, 226 branches (52% of total branches) and 60 Boxer outlets (55% of outlets) were closed, and in total 55 (10% of total branches and outlets) of these were vandalised. In addition, 325 ATMs (8% of total ATMs) were vandalised. At the end of July, 29 branches and 23 Boxer stores were damaged and remain closed. All damages to Nedbank premises and equipment, currently estimated at R250 million to R300 million, are fully recoverable under Sasria, government’s unrest insurance cover with zero excess.“Our primary focus during the unrest and looting was to ensure the safety and security of our employees and clients. We are grateful that there were no related injuries or casualties. These developments are a stark reminder of the importance of accelerating structural economic reforms to deliver higher levels of sustainable economic growth to address the challenges of poverty, unemployment and inequality. Law and order and the protection of citizens’ assets are the foundation for investment and economic growth, and it will be vital for government to provide suitable explanations as to what happened, why it happened and assurances that this will not be allowed to happen again,” Brown said, “and those responsible must be speedily held to account.”

Nedbank delivers strong financial performance

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