Nedbank delivers positive financial results

The 2022 financial performance of Nedbank Namibia reflected an excellent performance across all key metrics, in a complex and difficult external environment.

“We are proud to share our year end results, which demonstrate the resilience and adaptability of our business,” said Sebby Kankondi, chairman of Nedbank Namibia.

Nedbank Namibia delivered strong headline earnings growth of 35% for the financial year ended 31 December 2022, driven by increased interest rates as well as growth in the group’s non-interest income, combined with good cost management.

The group continued to make good progress on its strategic value drivers of growth, productivity and management of risk and capital.

Growth trends across net interest income (NII) ( 7%), non-interest revenue (NIR) ( 28%) and client growth ( 8%) improved from the prior years. The increase in NII was driven by increased interest rates as well as by maintaining a strong balance sheet capital plus liquidity position. Solid growth from NIR was driven by continued recovery in client activity and increased client demand.

Nedbank Namibia also had good outcomes from forex and equity trading. A total income of N$1.2 billion was recorded for the year—an increase of 13% from the prior year. Profit after tax increased by 35% to N$275 million.

Operating expenses of which 48% includes staff costs, were in line with the average inflation rate for the year. This reflects a solid operating performance, with focus on efficiencies. “It is noticeable that the expenses incurred in fulfilling the operational mandates of the Bank are overwhelmingly in favour of improving the lives and livelihoods of Namibians over a broad spectrum of our society, including staff, families, businesses and society,” said Kankondi.

The year saw earnings, excluding impairments, showing growth of 18%, indicating that impairments did not impact the financial results significantly for this financial period. The group’s return on equity (ROE) increased to 10% (December 2021: 8%).

NedNamibia Holdings holds N$2 billion Common Equity Tier 1 (CET 1) capital, as the group remains appropriately conservative in an uncertain external environment. The strong momentum in the second half of 2022 likely pushed the economic growth rate to its highest level in seven years, buoyed by supportive global demand and higher domestic output. The Bank of Namibia (BoN) has revised its 2022 growth forecast to 3.9% from 3.2%, citing the more robust activity in diamond mining and tourism. Therefore, the economy likely expanded at its fastest pace since 2015, but growth will be dampened by the less favourable global conditions, moderating to 2.7% in 2023 and 2.4% in 2024. The World Bank forecasts a softer 2.8% in 2022 and a slowdown to 2% and 1.9% in 2023 and 2024, respectively.

Inflation

Inflation rose significantly in the second half of 2022, with global price pressures pushing it to a peak of 7.3% year on year in August, before easing slowly as international food and fuel inflation moderated. The Bank of Namibia hiked its repo rate from 3.75% to 6.75%, raising the prime lending rate to 10.5%. Nedbank expects the lending rate to peak at 11% in the second half of 2023.

“A continuation of the good strategic and operational delivery experienced in 2022 should support strong growth for the 2023 financial year. Our clients continue to embrace digital transactions and we recorded 46% digitally active customers at the end of December. The NNH Group continue to invest in new technology and processes in order to become more agile and efficient and to better respond to our customer needs. We do not plan to reduce our branch network but to adapt to meeting both digital and physical needs of our clients and to provide more contact points for our customers’ convenience,” said Martha Murorua, Managing Director of Nedbank Namibia.

Moreover, the bank’s commitment to its employees and to community development, including promoting sustainability, further underlines its vision of ‘being financial experts who do good.’ “The mid-year launch of our People Promise— our cultural transformation journey, with a key focus on learning and development—showed our continued focus on the health and safety of staff and clients as fundamental to entrenching Nedbank as a great place to work, giving new impetus to that positioning and purpose of doing good,” said Murorua.

Nedbank Namibia recognises that corporates carry the responsibility of having an authentic response to environmental, social and governance (ESG) matters genuine ambition to be an effective catalytic agent of positive change in our society. Being effective is possible only with a clearly defined purpose. “For Nedbank that means using our financial expertise to do good for all our stakeholders and using the sustainable development goals as guidance for investing in new markets and meeting unmet client needs,” concludes Murorua.