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Nedbank Group Reports Increased Net Profit and “Solidity” in a “Challenging” 2023

Nedbank Group Reports Increased Net Profit and “Solidity” in a “Challenging” 2023

The Nedbank Group, one of Africa’s largest banking groups, with operations in South Africa, Namibia, Eswatini, Mozambique, Lesotho and Zimbabwe, revealed on Tuesday 5 March in Maputo that its net results increased by 11% last year.

At a session to present the group’s results to the press, the group showed a robust financial performance in the 12 months to 31 December 2023, compared to the same period last year, as earnings before interest and tax (LAI) rose 11% to R15.7 billion.

In an “adverse” global economic climate, this growth was made possible by a solid operating performance, as operating profit before provisions increased by 15 per cent, underpinned by a 12 per cent increase in revenue, including income from associates, and prudent expense management, partially offset by a 30 per cent increase in impairments, which paled in comparison to the 57 per cent increase in this charge reported in the first half of 2023. As a result, the group’s credit loss ratio (CPR) improved from 121 basis points (bp) in the first half of 2023 to 96 bp in the second half of 2023, and therefore 109 bp for the full year.

“The advantage of diversification across our portfolio of businesses was evident in very strong LAI growth from Nedbank Africa Regions (NAR), despite starting from a low base, alongside solid performances with increases in both LAI and return on equity (ROE) from Nedbank Corporate and Investment Banking, Nedbank Retail and Business Banking and Nedbank Wealth.”

Mike Brown, CEO of Nedbank, points out in a press release that one of the highlights of the year was achieving all of the group’s post-Covid objectives for 2023, announced in March 2021. “Two of these objectives were already achieved in 2022 – surpassing 2019’s core diluted earnings per share (EPS) of 2,565 cents and ranking #1 in the Net Promoter Score (NPS).

“In 2023, we further increased EPS to 3,199 cents, an increase of 14 per cent year-on-year (y-o-y), and maintained our #1 ranking in NPS among South African banks. Pleasingly, at the end of 2023, we also achieved the remaining 2 targets by reporting an ROE of 15.1 per cent, above the target level of 15.0 per cent, and a cost-income ratio of 53.9 per cent, which is below our target of 54.0 per cent.”

Terence G. Sibiya, Group Chief Executive Officer of Nedbank Africa Regions, noted at the session that he was “delighted that the group has delivered a strong performance” and was “incredibly pleased” that the business had performed “very well” which he attributed to improvements in the performance of the operations managed in SADC and strong gains from the associated investment in Ecobank Transnational Incorporated (ETI), including the release of the 175 million rand provision from the Ghana sovereign bond that Nedbank set up in 2022.

“As I approach the end of my 14 years as CEO of the Nedbank Group, I look back with pride at our achievements and the challenges we have overcome together. When I retire at the annual general meeting in May 2024 and pass the baton to Jason Quinn, I know that I leave behind a better Nedbank than the one I was entrusted with, and that Jason and the Nedbank team will inherit solid foundations from which to build an even better future for all our stakeholders.”

Joel Rodrigues, CEO of Nedbank in Mozambique, pointed out to DE that the bank’s performance throughout the year “contributed to the encouraging results presented at group level”, while not forgetting that, “since the bank’s results for the Mozambique operation have not yet been officially presented, 2023 was a challenging year, marked by the increase in mandatory reserves and the finalisation of the transition to the SIMO network”, facts which he nevertheless considered “had an operational weight for which Nedbank was always well prepared”.

The Nedbank Africa Regions (NAR) business has operations in Eswatini, Lesotho, Mozambique, Namibia and Zimbabwe, as well as representative offices in Ghana and Kenya and also has a 21.2 per cent stake in Ecobank Transnational Incorporated (ETI), which is a leading pan-African private banking group present in thirty-five (35) sub-Saharan African countries in Francophone West Africa, Nigeria, Anglophone West Africa and Central, East and South Africa (CESA).

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