The Nedbank Group, one of Africa’s largest banking groups, with operations in South Africa, Namibia, Eswatini, Lesotho, Zimbabwe and Mozambique, presented its financial performance report for the first half of 2024 on Tuesday 6 August.
At a press conference, and looking in more detail at the bank’s performance in Mozambique, Terence G. Sibiya, CEO of Nedbank Africa Regions, began by praising “the importance of Mozambique as one of the bank’s growth vectors, continuing to be a key country for us, especially due to energy, gas, renewables, infrastructure, hospitals, schools and all the opportunities that come with that,” he said.
And if, at group level, we highlight the 8 per cent increase in net profits compared to the same period last year, reaching 7.9 billion rand, and an improvement in return on equity (ROE), to 15.0 per cent (H1 2023. 14.2 per cent), these results are noteworthy: 14.2%), results that are underpinned by growth in the complementary margin (NIR, non-interest revenue), a lower impairment rate and a rigorous cost management strategy, partially offset by moderate growth in the financial margin (NII, net interest income), the results of the Mozambique operation end up being ‘in line’ with those of the South African group.
Joel Rodrigues, chairman of Nedbank’s Executive Committee in the country, then presented some of the financial indicators for the first half of the year, including net profits of 430 million meticals, an increase of 7 per cent on the previous year (402 million), growth in the deposit portfolio of 7.04 per cent, the improvement in return on equity (ROE) to 15.92%, an efficiency ratio (CTI, cost to income) of 54.98%, the liquidity ratio reaching 43.69%, demonstrating continuous improvement and remaining above the Central Bank’s regulatory limit (25% minimum ratio) and a solid capital structure, with a solvency ratio of 26.11% (the regulatory is 12%).
Regarding this last point, he said: “It shows the conservative way we like to manage our balance sheet. We always want to be prepared for events and have liquidity cushions that allow us to be prepared for the most diverse events on our balance sheet.”
Challenging context even as interest rates fall
The economic context, combined with the high levels of mandatory reserves that have been heavily targeted by commercial banks over the last year and a half, can be seen in the downward trend in interest rates over the last few months (four since the beginning of the year by the Bank of Mozambique), one of the few pieces of good news in recent months. “We already know that the increase in mandatory reserves to almost 40 per cent has naturally altered our ability to generate results because we now have a number of parked assets that don’t generate dividends. But, more importantly, it’s up to us to look at the way we manage our balance sheet and that’s what we’ve been doing, prudently.
Hence the attention paid to our very robust liquidity levels, which can be seen in the solid financial indicators, despite the difficult macroeconomic context impacted by the instability in the north of the country, and living through an election year, which is always a different year, plus the issue of kidnappings,” all issues which, in the PCE’s opinion, ‘cool’ investor appetite. However, the interest rate cuts that have been announced “are a good sign for banks and, above all, for customers.
We have no interest in high interest rates, contrary to what you might think. What we would like is for the reduction in interest rates to be accompanied by a gradual recovery in credit volumes. We have a growth of 500 million meticals (4.5 per cent more than in the same period last year, with a focus on growth in consumer credit), but we would like to see it increase, now with interest rates that are more ‘friendly’ than a few months ago,” he said.
The Nedbank Group is a bank holding company listed on the Johannesburg Stock Exchange (JSE Limited), with total assets of 1.3 trillion rand (702.7 billion dollars) and assets under management of 448 billion rand (23.8 billion dollars) as at 31 December 2023.
Nedbank is one of Africa’s largest banking groups, with operations in South Africa, Namibia, Eswatini, Mozambique, Lesotho and Zimbabwe, and offshore in the Isle of Man and Jersey. It also has representative offices in other African countries, including Kenya, and has major global financial centres to provide international banking services to multinational clients based in South Africa and high net worth clients in London, Toronto and Dubai.
Germano Ndlovo
