Nedbank Group has delivered solid financial results for the six months ended June 2024, despite a challenging macroeconomic environment.
Financial Highlights:
Headline Earnings: R7,911 million, up 8% from R7,329 million in June 2023
Revenue: R35,159 million, up 4% from R33,691 million in June 2023
Credit Loss Ratio: 104 basis points, improved from 121 basis points
Operating Expenses: R19,775 million, an 8% increase from R18,229 million
Cost-to-Income Ratio: 55.3%, compared to 52.9% in June 2023
Diluted Headline Earnings Per Share (HEPS): 1,650 cents, up 12% from 1,477 cents
Interim Dividend: 971 cents per share, an 11.5% increase from 871 cents
Net Asset Value Per Share: 23,097 cents, up 2% from 22,548 cents
Despite ongoing economic difficulties—including geopolitical uncertainties, high interest rates, persistent inflation, and pre-election uncertainties in South Africa—Nedbank Group has showcased a strong financial performance.
Jason Quinn, Chief Executive of Nedbank Group, said household finances remained under pressure as real incomes contracted and job prospects remained muted.
"Corporate activity was also weak on the back of the uncertain political and economic environment. The financial implications of these difficult macroeconomic outcomes were evident in continued elevated levels of consumer strain and slow lending and transactional revenue growth across both wholesale and retail clients."
The first half of 2024 saw continued consumer strain and sluggish lending growth, yet the group achieved notable results through effective non-interest revenue growth, controlled impairment charges, and stringent cost management.
The conclusion of a peaceful and fair election, along with the formation of a government of national unity (GNU), has infused cautious optimism into the financial markets. This positive shift led to improved bond yields, stronger equity markets, and a strengthened rand.
Strategic Developments and Technological Advancements
Nedbank said its technology platform, developed through the Managed Evolution (ME) programme, is now 95% complete.
This advancement has created significant growth in digital metrics, high client satisfaction, increased main-banked client growth, and notable market share gains in areas that create most value, including retail deposits, home loans, vehicle finance and overdrafts, said Quinn.
"We have also continued to create wider positive impacts through R154bn of funding that supports sustainable development finance, aligned with the United Nations Sustainable Development Goals."
He highlighted growth in renewable energy finance by 20% in the year to date.
"We remain cautiously optimistic around the potential benefits associated with SA's GNU and expect better macroeconomic conditions in the second half of 2024 and into the medium-to-long term," said Quinn.
Nedbank forecast SA's gross domestic product to increase by 0,9% in 2024, inflation to continue to decline and the South African prime lending rate to decline by a cumulative 50 bps in 2024 to end the year at 11.25%.
"Our aim to increase our ROE to 17% by 2025 and above 18% in the long term," said Quinn.
Quinn expressed his satisfaction with the smooth transition from Mike Brown and reaffirmed his commitment to the group's performance targets.
Shares in Nedbank have climbed around 17% in the year to date, to around R275.
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