Nedbank reported strong growth in earnings for the full year 2023 – but still took a blow from constrained customers being unable to pay back their loans. <\/p>\n\n\n\n
However, the group is also hopeful that the South African economy is turning things around.<\/p>\n\n\n\n
Speaking in the group’s financial results for the year ended 31 December 2023 (FY23), CEO Mike Brown said that the operating environment for banks in 2023 was more difficult than initially expected. <\/p>\n\n\n\n
“In addition to a weaker global economy, domestic economic activity was impacted by record levels of load shedding, logistical constraints, higher-than-expected levels of inflation and, as a result, higher-than-expected increases in interest rates,” Brown said. <\/p>\n\n\n\n
“Collectively, these conditions have put increasing pressure on consumers’ finances and led to reductions in business confidence and investment in most sectors other than energy.” <\/p>\n\n\n\n
In the face of this operating environment, though, Brown expressed that there is a spark of hope with the partnership between businesses and the government in dealing with South Africa’s big issues.<\/p>\n\n\n\n
“Progress, albeit slow, is being made in the partnership between government and business to help address the key issues of energy security, transport and logistics, and crime and corruption that are collectively resulting in very low levels of economic growth in South Africa and a weakening fiscal position,” he said.<\/p>\n\n\n\n
Despite the challenges, the group reported improved headline earnings per share, which increased by 11% to R15.7 billion<\/strong>, underpinned by revenue and associate income growth of 12% and cautious expense management that enabled pre-provisioning operating profit (PPOP) growth of 15%. <\/p>\n\n\n\n However, the growth was partially offset by a 30% increase in the impairment charge<\/strong>. This was an improvement from the 57% increase seen in H1 2023. <\/p>\n\n\n\n The group’s credit loss ratio (CLR) thus improved from 121 bps (H1 2023) to 109 bps for the full year. <\/p>\n\n\n\n Although there was an improvement throughout the year, the CLR was still far higher than the 89bps seen in FY22. <\/p>\n\n\n\n Several financial institutions have highlighted elevated CLRs amid a strained consumer environment. <\/p>\n\n\n\n For instance, FNB’s credit loss ratio increased from 128 bps in the six months ended 31 December 2022 to 155 bps on 31 December 2023. <\/p>\n\n\n\n