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Old Mutual's Nedbank pleased with 2018 prospects
Nedbank Group, the majority-owned South African banking subsidiary of Old Mutual, issued its preliminary audited results for the year ended 31 December on Friday, reporting that it continued to create value for all stakeholders in a "challenging" political and economic environment.
The bank's headline earnings of ZAR 11.8bn were up 2.8%, which the Nedbank board said reflected a "good performance" from its managed operations, with headline earnings growth of 7.8% and a return on equity excluding goodwill of 18.1%.
Slower revenue growth was reportedly offset by reduced impairments and good cost management, while Nedbank's share of the loss from its associate ETI following its fourth quarter 2016 results decreased in the second half of the year, as the ETI business returned to profitability.
"The achievements of the last few years have provided us with a solid base and we continue delivering on our strategies and building the capabilities that will enable us to meet the 2020 targets we have now set of a return on equity, excluding goodwill, of greater than or equal to 18% and an efficiency ratio of less than or equal to 53%," said chief executive Mike Brown.
"We released exciting digital innovations such as the new Nedbank Money app, the Nedbank Private Wealth app and Karri app, chatbots and UNLOCKED.ME - an exclusive e-commerce marketplace for millennials - and continued to gain share of transactional banking clients in both our retail and wholesale businesses."
Brown said the bank was "actively optimising" its cost base, as reflected in cost growth at 5.1%, and maintained a strong balance sheet as evidenced by a CET1 ratio of 12.6%, above the top end of its internal target range.
"Our strategic enablers are making a difference for our operations and for our clients as we create a more agile, competitive and digital Nedbank."
Looking forward, Brown said 2018 started with positive changes to South Africa's political and socioeconomic landscape and brought renewed prospects for higher levels of inclusive growth.
"Nedbank is acutely aware of the increased responsibility that we, and indeed all businesses, have to work alongside government, labour and civil society to play our part in improving the lives of all South Africans.
"Reflecting on the impact on the group of the greater levels of business and consumer confidence evident in the early part of 2018, an improving economic outlook, ongoing delivery on our strategy and ETI's returning to sustained levels of profitability, our guidance for growth in diluted headline earnings per share for 2018 is to be in line with our medium-to-long-term target of greater than or equal to GDP plus CPI plus 5%."