Plan to review annual earnings

THE NEDBANK Group, the South African lender controlled by Old Mutual, plans to review its guidance for full-year earnings after the country’s credit-rating was cut to junk. “In view of the volatile socio-political outlook and the weaker than expected macro-economic environment, we anticipate reduced levels of business and consumer confidence,” the Johannesburg-based bank said yesterday. “Overall client activity and revenue growth were slower than expected” in the first quarter, and the bank will provide an update to its outlook in August, it said. South Africa’s biggest bank stocks have slumped this year in the wake of President Jacob Zuma’s decision to fire former finance minister Pravin Gordhan, which resulted in two downgrades to the country’s foreign-currency debt to below investment grade. Nedbank has also been impacted by losses at Togobased Ecobank Transnational, which is 20 percent-owned by the South African lender. Nedbank’s share of Ecobank’s attributable loss of $427 million (R5.6 billion) for the fourth quarter was about R1.2bn in the company’s first quarter, the lender said. Ecobank reported first-quarter net income of $51m in April and Nedbank’s share of that is estimated at R144m, which will be accounted for in the second quarter, according to the statement. Nedbank’s net interest income grew at mid-single digit levels and the net interest margin for the first quarter widened due to higher average interest rates and higher capital and transactional deposit levels, the lender said. The credit-loss ratio improved, supported by a drop off in impairments in its corporate and investment banking and retail and business banking units. – Bloomberg