Nedbank’s headline earnings in the year to end-December rose 14.5% to R13.5bn thanks to the turnaround of its Togo-based associate company, Ecobank Transnational Incorporated (ETI), Business Day reports.
“In 2018, Nedbank Group seamlessly concluded the process of managed separation from Old Mutual and delivered a resilient financial performance, boosted by the ongoing turnaround in our share of associate income from ETI,” said Nedbank CEO, Mike Brown.
ETI contributed a headline profit of R375m, from a loss of R975m in 2017. Nedbank bought a 20% stake in the pan-African lender in 2014.
Excluding that investment, Nedbank’s headline earnings grew at a more modest pace of 2.8%.
Nedbank said its total assets crossed the R1-trillion mark for the first time ever, while revenues grew 6%.
That helped it lift its total dividend for the year by 10.1% to R14.15 per share.
The lender’s return on equity, excluding goodwill, improved from 16.4% to 17.9%.
However, impairments increased 11.6% to R3.7bn, and the group’s credit loss ratio rose four basis points to 0.53% as advances in the retail and business banking unit grew faster than advances from the corporate and investment banking cluster.
Brown said Nedbank grew its market share of main-banked clients across all its business clusters, and this underpinned “solid” non-interest revenue growth.
He said the trading environment in Nedbank’s home market would probably improve.
“From the low base in the SA economy in 2018, we anticipate a slow improvement in business and consumer confidence, and economic and credit growth in the year ahead.”
This supported its projection that growth in diluted headline earnings per share (HEPS) for 2019 would be at least in line with nominal GDP growth, versus 13.7% growth in 2018.
The lender said economic conditions in West Africa were improving, and its investment in ETI “should continue to support Nedbank’s earnings growth”.
