Ned­bank ex­pects Ecobank to re­cover de­spite losses

The Star Early Edition - - BUSINESS REPORT - Sandile Mchunu

NED­BANK chief ex­ec­u­tive Mike Brown said yes­ter­day that the group ex­pected Ecobank (ETI) to de­liver the re­sults in the fu­ture af­ter in­cur­ring losses dur­ing the six months to the end to June.

The Old Mu­tual-owned lender re­ported losses yes­ter­day af­ter Ecobank dragged head­line earn­ings down 2.9 per­cent to R5.27bn.

Ecobank’s loss amounted to R1.16bn.

“We are dis­ap­pointed with the per­for­mance of Ecobank and we made that clear in the Ecobank’s re­sults in April. But are pleased that its out­look is look­ing much bet­ter than be­fore,” Brown said.

Ned­bank owns about 16 per­cent of Ecobank,the op­er­a­tions of which across West Africa have been hurt by lower com­mod­ity prices and un­favourable cur­rency swings.

Ned­bank-man­aged op­er­a­tions pro­duced head­line earn­ings growth of 6.7 per­cent to R6.43bn for the six months to end June, driven by slower rev­enue growth, re­duced im­pair­ments and good cost man­age­ment.

The group’s man­aged op­er­a­tions amounted to R6.03bn last year.

Richard Has­son, a fund man­ager at Elec­tus Fund Man­agers, said Ned­bank re­sults were in line with ex­pec­ta­tions.

He said man­aged op­er­a­tions showed a rea­son­able per­for­mance in a tough do­mes­tic growth en­vi­ron­ment, grow­ing earn­ings 7 per­cent, with lower credit im­pair­ments a key driver of this growth.

“Off­set­ting this was the poor per­for­mance from their as­so­ci­ate in­vest­ment in ETI which re­ported a loss of R1bn in the pe­riod, lead­ing to an over­all de­cline in re­ported earn­ings of 3 per­cent,” Has­son said, adding that op­er­a­tions out­side South Africa proved ex­tremely chal­leng­ing for the lender.

Ned­bank said that de­spite all the trou­bles, Ecobank re­mained a strate­gic in­vest­ment which pro­vided clients with a pan-African trans­ac­tional bank­ing net­work across 39 coun­tries and ac­cess to deal flow in Cen­tral and West Africa.

Jor­dan Weir, an eq­ui­ties trader at BayHill Cap­i­tal, said the re­sults were a mixed bag with head­line earn­ings miss­ing ex­pec­ta­tions. “They were on the down­side due to a weaker set of re­sults by Ned­bank’s African as­so­ci­ate, Ecobank, for the first half of the year,” Weir said. “But the in­terim div­i­dend was raised by 7 per­cent, against an ex­pected in­crease of 2.1 per­cent, and re­turn on eq­uity fig­ures came in more favourably.” he said. Africa had also proven to be an ex­tremely tough and risky en­vi­ron­ment for any business to op­er­ate in.

Ned­bank saw its di­luted head­line earn­ings per share (Dheps) de­clin­ing by 3.7 per­cent to 1 078 cents a share, down from 1 119c as com­pared to the same pe­riod last year. The board de­clared a 7 per­cent in­crease in in­terim div­i­dend per share to 610c for the pe­riod. page 19

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