Nedbank focused on long-term value creation

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Nedbank focused on long-term value creation

The group reported that net interest income (NII) for the nine months ending 30 September 2014 grew by 8.4 per cent, underpinned by average interest-earning banking assets growth of 9.9 per cent.

“Nedbank Group’s performance in the nine months continues to be reflective of the early actions taken in anticipation of a challenging macro-economic environment,” Brown said.

“We are focused on the drivers of long term value creation for our shareholders as we build our transactional banking franchise and our pan-African banking network.”

[DATA NED:Nedbank] recently announced that it would be acquiring a 20 per cent shareholding in Ecobank Transnational Incorporated (ETI).

(READ MORE: Nedbank Group to acquire 20% of Ecobank Transnational)

Brown believes that through the shareholding in ETI, the group has strengthened its ability to provide banking service support for its clients across 39 countries in West and Central Africa.

“Economic growth in the rest of Africa is faster than South Africa and our investment in ETI offers our shareholders access to earnings in these higher economic growth markets,” he said.

“Our balance sheet metrics remain strong and our ability to generate earnings and capital should continue to support our progressive dividend policy. We remain well positioned to meet our full-year guidance for growth in organic diluted HEPS of greater than nominal GDP growth.”

Nedbank said that its credit loss ratio for the nine months improved to 0.77 per cent from 0.83 per cent at June 2014, reflecting the outcome of asset mix changes, together with effective credit risk management policies.

These include early actions taken in reducing unsecured lending and the approach of selective origination followed in the last few years.

The group also stated that its non-interest revenue (NIR) increased 2.4 per cent and was driven by commission and fee income growth of 3.4 per cent, insurance income decreasing 3.5 per cent, trading income growth of 1.1 per cent and negative fair-value adjustments of 64 million rand.

Total advances grew 6.8 per cent, annualised, largely due to growth in wholesale banking advances and deposits increased 8.0 per cent, annualised.

(READ MORE: Nedbank Group’s client base hits 6.9 million)

“The group’s forecast for gross domestic product (GDP) growth for 2014 is currently at 1.5 per cent with risk to the downside. Credit growth is expected to continue to be driven largely by the wholesale sector including activity in the rest of Africa,” Nedbank said.

“Our financial guidance for organic growth in DHEPS in 2014 to be greater than nominal GDP growth remains unchanged as communicated at the 2014 interim results presentation.”