By: Natasha Archary
Nedbank posted a 10% rise in headline earnings despite an increase in bad loans in the first half of 2023.
Mfundo Nkuhlu, Nedbank Chief Operating Officer speaks to Nastassia Arendse about the trends which partially offset the bank’s increases in retail impairments.
“This is an environment that has been characterized by slower global growth, lower commodity prices, domestic debt activity hugely impacted by higher levels of loadshedding, and higher inflation levels.
As a consequence of all of these factors, and a high interest rate environment, has meant Nedbank’s Headline earnings increased by 10%.
Headline earnings per share increased by 11%, and basic earnings per share increased by 8%.”
Nkhulu said its earnings growth was underpinned by strong revenue growth, including associate income of 14%, and good expense management, enabling Pre-Provisioning Operating Profit (PPOP) growth of 22%.
The bank also saw a 9% increase in its profit for the period compared to the previous year, growing from R7.41 billion in 2022 to R8.10 billion.
In terms of appetite for credit from a household and business side, Nkhulu says with households just recovering from the effects of the Covid-19 pandemic, savings that cushioned people have been exhausted.
“We’ve seen this, particularly in the mid-market, and the bottom-market that expenditure patterns show discretionary expenditure has dropped, because people had to tighten their belts and focus on critical expenditure items.
This has affected credit demand from a household point of view, but even in the corporate market because of a target environment, there’s also been relatively slow growth.”
With regards to bad loans, and how conservative the bank is about loans and advances in this environment, Nkhulu says despite the tough market there is still high demand for home loans and also corporate loans.
Listen to the conversation on Kaya Biz:
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