Nedbank Eswatini headline earnings up by 10%
MBABANE – Despite a challenging financial environment, Nedbank Eswatini managed to deliver a strong financial performance in the year ended December 31, 2023.
Yesterday, the bank released its end of year financial results indicating that the bank managed to deliver headline earnings of E178 million, an increase of 10 per cent compared to 2022, and a return on equity (ROE) of 17 per cent up 100 basis points.
When delivering the financials. Managing Director Fikile Nkosi said net interest income grew 26 per cent, driven by the mentioned interest rate increases, as well as marginal growth in their interest earning assets, while the charge for deposits was lower than expected due to muted growth in that line.
She reported that their nominal interest rate (NIR) was down 1 per cent, worth noting was that there was approximately E14 million in revaluation gains on equity and property investments held included in 2022, with the comparative number being E1.9 million in 2023.
Nkosi said a normalised performance on this line was 6 per cent up year on year. “Our expenses grew by 6 per cent, which is above our recorded inflation of 5.02 per cent for 2023, resulting in an efficiency ratio of 52 per cent,” said the MD.
She highlighted that their business had invested in technologies that were positioned to unlock value. She said as such they have seen their clients using the latest digital banking platforms. “We are on a digital journey and have seen the growth in the digital active base from 45 to 64 per cent and we also observed a 25 per cent increase in send money volumes,” said the MD.
Nkosi mentioned that innovation remained an important aspect of their growth, as they managed to provide digital and other solutions to clients, including the USD CFC interest earning accounts, Floating term deposits as well as negotiable certificates of deposits which were speared headed by the bank’s treasury department.
She said on the balance sheet side, their assets grew 5 per cent. “We are intentionally looking to tilt our portfolio to maximise profitability and diversify our earnings portfolio,” she said.
Property
The MD added that they have seen an appetite in the market for asset based finance, personal loans, as well as commercial property which are all up year on year.
She noted that the conversion rates on deposits were lower than they expected. She stated that they closed with a capital adequacy ratio (CAR) of 18.4 per cent. She noted that the sectors that appeared to be growing were the manufacturing, franchise business as well as construction.
Nkosi said Nedbank Eswatini remained a purpose-led business. She said the sales engine made up of retail, wholesale banking and treasury have all contributed positively to the 2023 performance. She added that as a bank they continued to support the government’s goals as outlined in the national budget for capital funding, relating to national infrastructure projects.
She mentioned that as Nedbank Eswatini, they have continued to support the communities they live and work in, by disbursing E1.2m in corporate social investment (CSI) initiatives.
Earlier this month, the Nedbank Group reported to have achieved all of its targets in the 2023 financial year and reported headline earnings growth of 11 per cent to E15.7 billion.
This was despite difficult operating environment faced in the different countries where the bank operated including Eswatini. It was underpinned by 12 per cent revenue growth and solid expense management and was partially offset by a 30 per cent increase in the impairment charge.
However, this impairment charge is reduced from the 57 per cent increase in this charge reported in first half (H1) of 2023.
As a result, the group’s credit loss ratio improved from 121 basis points in H1 2023 to 96 basis points in H2 2023 and, therefore, reached 109 basis points for the full year.
Nedbank CE Mike Brown said a highlight of the year was achieving all the group’s post-COVID -19 targets for 2023 announced in March 2021. “Two of these targets were already achieved in 2022 – exceeding the 2019 diluted headline earnings per share (DHEPS) of 2 565 cents and ranking number one on Net Promoter Score (NPS).