Nedbank reports strong earnings growth – lifts interim dividend
Nedbank Group on Wednesday (10 August) published its interim results for the six months ended June 2022 showing a strong performance across all key metrics in “a complex and difficult external environment”.
The group delivered revenue growth of 11% to R30.5 billion, while headline earnings increased by 27% to R6.7 billion. Return on equity (ROE) increased to 13.6%, up from 11.7% a year ago.
Headline earnings per share of R13.70 climbed 26%, and an interim dividend declaration of 783 cents per share (June 2021: 433 cents) was declared.
“During the past six months we continued to make good progress on our strategic value drivers of growth, productivity, and risk and capital management,” said Mike Brown, Nedbank chief executive. “Growth trends across net interest income (NII) (+9%), non-
interest revenue (NIR) (+13%) and gross advances (+7%) improved from the Covid-19 pandemic lows, supported by main-banked client gains across our business clusters and strong growth in digital activity.”
Brown said that the group’s Managed Evolution (ME) technology strategy has reached 89% completion of the IT build, enabling continued double-digit growth in digital metrics.
He highlighted strong digital & client-driven growth with digital uptake and usage continuing to accelerate with app volumes up 35% year on year. Retail main-banked clients climbed 2% to 3.04 million, the bank said.
Nedbank’s digital ecosystem Avo, which enables clients to buy essential products and services online and have them delivered to their homes, has signed up more than 1.5 million users, up 4.6 times year on year, along with over 24,000 businesses registered and offering their products and services on this e-commerce platform.
“Looking forward, we currently expect SA’s GDP to increase by 1,8% in 2022; interest rates to increase by a further 75 bps, taking the repo rate to 6,25%; and the prime lending rate to 9,75% by the end of the year,” said Brown.
Inflation is expected to peak in Q3 at around 7.8% and average 6.8% for 2022. A continuation of the good strategic and operational delivery, as evidenced in H1 2022, should support strong earnings growth for the full-year 2022 and a yoy increase in ROE, the chief executive said.
“We remain on track to meet our medium-term targets by exceeding our 2019 diluted headline earnings per share (DHEPS) level of 2,565 cents by the end of 2022 – a year earlier than planned) and achieving an ROE greater than the 2019 ROE level of 15%,” he said.
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