Nedbank Group has published its results for the year ended December 2024, showing an improved financial performance despite a challenging operating environment.

The group’s headline earnings increased by 8% to R16.9 billion, reflecting a solid recovery amidst a subdued South African economic landscape.

For 2024, South Africa’s GDP growth remained weak, with expectations at just 0.5%, down from 0.7% in 2023. The first half of the year was especially tough, marked by geopolitical uncertainty, high interest rates, and the anticipation of South Africa’s national elections.

A successful election outcome, coupled with the formation of a national unity government, helped stabilize financial markets. This shift resulted in improved bond yields, stronger equity markets, and a more favourable rand exchange rate.

Despite these headwinds, Nedbank Group said it made significant progress toward meeting its return on equity (ROE) targets, with ROE increasing to 15.8%, up from 15.1% in 2023.

This progress was largely driven by an increase in net interest revenue (NIR), a lower impairment charge, and rigorous expense management strategies. Net interest income (NII) growth, however, remained muted due to slower loan growth and margin pressures.

The bank also benefited from a share buy-back program executed in 2023, leading to an 11% increase in diluted headline earnings per share (HEPS), reaching 3,538 cents, compared to 3,199 cents in 2023. A final dividend of 1,104 cents per share was declared, marking an 8% increase from the previous year, with a full-year dividend of 2,075 cents, up 10%.

A key highlight for the group in 2024 was the completion of its Managed Evolution IT transformation, which successfully modernized Nedbank’s technology platform. This transformation, along with enhanced digital capabilities, resulted in strong digital growth and solid client satisfaction metrics.

Market share gains were also recorded in critical areas, including home loans, vehicle finance, wholesale term lending, and retail deposits.

Additionally, the group’s Target Operating Model 2.0 programme ended successfully, delivering R3 billion in cumulative cost savings through various efficiencies, including headcount reductions and real estate space optimisation.

Financial Highlights:

-Headline earnings: R16.9 billion, up 8%
-Revenue: R72.2 million, up 4%
-Credit loss ratio: 87 bps (2023: 109 bps).
-Expenses: R41 billion, up 8%
-Cost-to-income ratio: 55.9% (2023: 53.9%).
-Diluted headline earnings per share (HEPS): 3,538 cents, up 11% from 2023 (3,199 cents).
-Final dividend per share: 1,104 cents, up 8% from 2023 (1,022 cents).
-Full-year dividend per share: 2,075 cents, up 10% from 2023 (1,893 cents).
-Net asset value per share: 24,039 cents, up 4% from 2023 (23,192 cents).

Looking ahead, Nedbank said it remains cautiously optimistic about the local economy, expecting GDP growth to rise to 1.4% in 2025. Inflation is projected to remain within the South African Reserve Bank’s target range of 3% to 6%, and the prime lending rate is expected to decline by 50 basis points, to 10.75%.

Corporate lending is anticipated to pick up, although household lending growth will likely remain subdued, it said.

The group said it is confident in its ability to achieve continued growth, aiming for an ROE of over 16% in 2025, with longer-term targets of 17% and above 18%.

The bank’s strategic focus on technology, data, AI, and new market expansions will play a critical role in driving future success.

A major organisational restructure is also underway, focused on creating a more client-centric approach. The RBB and Nedbank Wealth clusters will evolve into two new focused units: Personal and Private Banking (PPB) and Business and Commercial Banking (BCB), designed to enhance cross-selling, increase client engagement, and unlock growth opportunities, it said.

“We have embarked on an organisational restructure of our RBB and Nedbank Wealth clusters, evolving into an organisational design more focused on client
centricity. The new structure will see the creation of Personal and Private Banking (PPB), an individual/non-juristic focused cluster, and Business and Commercial Banking (BCB), a juristic-focused cluster,” said chief executive, Jason Quinn.