OLD MU­TUAL'S DIPLO­MATIC DI­VORCE

Mike Brown

The Africa Report - - TOP 200 BANKS - Chief ex­ec­u­tive, Ned­bank (#5) M.K.

The an­nounce­ment of a “man­aged sep­a­ra­tion” of Old Mu­tual's global and emerg­ing-mar­ket as­sets fi­nally brings some clar­ity for Ned­bank, which has lived with un­cer­tainty over the in­ten­tions of Old Mu­tual South Africa for sev­eral years. Old Mu­tual, which owns 54% of Ned­bank, will, af­ter next year's list­ing of a new South African hold­ing com­pany, dis­trib­ute the ma­jor­ity of its Ned­bank shares to Old Mu­tual share­hold­ers. Ned­bank is fully sup­port­ive of Old Mu­tual's plans, chief ex­ec­u­tive Mike Brown tells The Africa Re­port. “It is ab­so­lutely busi­ness as usual. There are no im­pli­ca­tions for strat­egy, op­er­a­tions, staff and cus­tomers. We have never in­te­grated our sys­tems, prod­ucts or cus­tomers,” he says. Ned­bank's 2016 re­sults and a first-quar­ter 2017 up­date warn of tough times ahead. Nev­er­the­less, its fi­nan­cial re­sults re­flect Ned­bank's abil­ity to with­stand the head­winds, with some cush­ion from its whole­sale busi­nesses. In 2016, Ned­bank lifted head­line earn­ings by 5.9%, an in­crease that would have been 16.2% if one ex­cluded the im­pact of the losses from Ecobank Transna­tional In­cor­po­rated (ETI, #16). Ned­bank had taken a 20% stake in ETI to ben­e­fit from its lo­cal knowl­edge in Cen­tral and West African mar­kets. It is clear, Brown says, that the ETI in­vest­ment has been dis­ap­point­ing, “driven pre­dom­i­nantly by ETI'S Nige­ria op­er­a­tions, which have been af­fected by the oil price and re­ces­sion and weak credit risk man­age­ment.” Ex­clud­ing the Ecobank drag, the group has fared well. “I think the key thing in an en­vi­ron­ment like this is the way we have been man­ag­ing in the last three to four years in prepa­ra­tion for tougher times. We have been in­creas­ing cap­i­tal and liq­uid­ity lev­els. We have in­creased lev­els of high-qual­ity liq­uid as­sets and the term and du­ra­tion of our fund­ing book, and ap­plied ap­pro­pri­ate dis­ci­plines in credit grant­ing.” Brown con­cludes: “Rev­enue growth is more chal­leng­ing in a low-growth en­vi­ron­ment, but we con­tinue to see bet­ter-thanex­pected credit losses as a re­sult of his­toric credit grant­ing de­ci­sions, and this has stood us in good stead.” In­ter­view by

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