Nedbank Group delivered a strong first half performance of 2024 ending June 2024 as Headlines Earnings (HE) increased by eight percent to M7.9 billion in a difficult operating environment.
Return on equity increased to 15.0 percent during the same period.
The group on Tuesday this week said the increase in the HE was underpinned by good non-interest revenue (NIR) growth, a lower impairment charge and targeted expense management, partially offset by muted net interest income (NII) growth and lower associate income.
According to Nedbank Chief Executive Jason Quinn, the operating environment in the first half of 2024 was challenging as economic activity remained weak.
Quinn said in addition to geopolitical uncertainty, persistent inflation, high interest rates and uncertainty ahead of the national elections in South Africa impacted domestic activity negatively.
“We remain cautiously optimistic around the potential benefits associated with SA’s Government of National Unity and expect better macroeconomic conditions in the second half of 2024 and into the medium-to-long term.
“While trading conditions improved noticeably as some of the most pressing structural constraints on the economy eased as a result of stabilised electricity supply, progress in resolving some of the other infrastructure constraints remained limited.
“Our relatively strong financial performance in H1 2024, including the progress made in executing on our strategy and better economic prospects, give us confidence in making progress towards our medium-term targets and our aim to increase our ROE to 17 percent by 2025 and above 18 percent in the long term,” Quinn noted.
Presenting the results on Tuesday, Nedbank Africa Regions (NAR) managing executive, Terence Sibiya said NAR’s business remains in really good shape and is poised to grow further.
Sibiya said if H1 2023 once-offs and foreign currency base effect are excluded, earnings for the NAR business would have been up by 10 percent.
He mentioned some highlights in the SADC operations, including them growing their overall number of clients by nine percent of which 40 percent are main-banked clients.
“This month, we are celebrating the first anniversary of the launch of the Avo SuperShop in Namibia. Pleasingly, we are continuing to grow our registered users, with now over 3,000 products from 19 merchants on offer.
“In Lesotho, we collaborated with Nedbank Commercial Banking to launch Zaca, which is a new remittance solution between South Africa and Lesotho,” Sibiya indicated.
He also noted that they won several awards including Most Innovative Bank Mozambique by Region 2024 for Africa, at the Global Finance Awards: Best Digital Bank Mozambique 2024, by Global Banking & Finance Review and Best Mobile Banking Application Lesotho 2024, by Global Brands Magazine.
The group also stated that their world-class technology platform, delivered through their Managed Evolution (ME) programme, has now reached 95 percent completion.
“This has supported ongoing strong growth in digital- related metrics; client satisfaction scores at the top end of the South African banking peer group; good main-banked client growth; higher levels of cross-sell; market share gains in areas that create most value, including retail deposits, home loans, vehicle finance and overdrafts; and efficiency gains as we delivered on our Target Operating Model (TOM) 2.0 target of M2.5 billion.
“As we finalise the ME programe, our focus shifts to commercialising our technology platform to simplify and rationalise our product range, make banking easier and more affordable for our clients by migrating existing accounts onto new products,” it pointed out.
The group prided that it is continuing to invest in world class technology to ensure Nedbank leads in digital and experience through its technology convergence programme, NAR harmonization. This means all Nedbank clients from Maseru to Bloemfontein, or Mbabane to Mbombela, or Windhoek to Cape Town will have the same product and client experience, allowing for a few country nuances.
Nedbank clients will soon have the best digital experience and service in all its markets too, it further announced, adding that Nedbank Money app active clients increased to 2.6 million in H1 2024, up by 16 percent.
Transaction volumes on the Money app increased by 13 percent year-over-year (yoy) while transaction values increased by 19 percent.
Revenue from value-added services grew by 28 percent yoy across prepaid data, voucher, and electricity purchases, and the sending of money to cellphones.
The Nedbank Money app (Africa) reported a 19 percent yoy increase in app users.
Nedbank said global growth is expected to improve modestly during the remainder of this year, before gaining slightly stronger momentum throughout 2025.
The International Monetary Funda forecasts world growth at a steady 3.2 percent for 2024, strengthening marginally to 3.3 percent in 2025.
