Nedbank Eswatini headline earnings up 18 %

MBABANE - Nedbank Eswatini Limited’s headline earnings for 2022 were E161.7 million, up from E136 million in 2021.

This was revealed by Nedbank Eswatini in their financial results for the year ending December 31, 2022.

Nedbank also mentioned that a dividend of 406 cents per share was declared, totaling E100 million for the financial year ended December 31, 2022, and payable to shareholders registered in the books of the company at the close of business on May 12, 2023.

They said the dividend would be paid to the shareholders on May 31, 2023. In declaring the dividend, all liquidity, solvency and capital requirements were adhered to. During 2022, the bank’s net interest income improved by 13 per cent, while its underlying asset loans and advances only increased by 2.2 per cent.

Rates

The bank’s income from lending benefited from the cumulative 275 basis point rise in interest rates. The impairment charge for the year increased to E31.1 million (2021: E17.9 million). Most of the clients that were previously impacted by COVID-19 have recovered and their accounts have been regularised. However, the bank said business activity within the small and medium enterprises

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(SME) sector and hospitality industry continued to remain subdued and thus negatively impacted their level of impairments in the year under review. The bank said it continued to pursue the model of migrating its customers onto digital platforms, thus increasing non-interest revenue by six per cent to E202.4 million from E190.8 million in 2021.

“There has been consistent growth in clients making use of the platforms offered by the bank’s suite of digital products,” they said.

Nedbank added that operating expenditure at E298.4 million increased by 9.2 per cent from E273.3 million in 2021. The bank’s expenditures include investments in the enablement of its digital platforms as part of its current strategic initiatives. They said the capital adequacy ratio was 18.04 per cent as of December 31, 2022, which was above the regulatory requirement of eight per cent.

“An improvement has been recorded against the prior year due to the decline in exposures with no asset backing, such as overnight loans. Capital and reserves totaled E992 million (2021: E942 million). The bank’s capital adequacy ratio has been computed according to Basel I reporting principles as adopted by the Central Bank of Eswatini (CBE),” added the bank. Nedbank’s Managing Director Fikile Nkosi added that Nedbank’s growth strategy continued to focus on sustainable revenue expansion through investing in digital and other infrastructure that would enable clients to transact with ease and automate its processes to allow for a better customer experience. Eswatini’s economy remained resilient in 2022, despite tough conditions locally and abroad.

Supply

A recovery from COVID-19 and the normalisation of global supply chains aided the growth. However, domestic socio-political challenges as well as inflation exacerbated by the Russia-Ukraine war all hindered economic output.

The CBE adopted a contractionary monetary policy stance in 2022, raising interest rates by a cumulative 275 basis points in response to inflationary pressures. Interest rates are expected to continue on an upward trend in the first half of 2023. Nedbank said the country’s road to recovery and plans to return to its pre-COVID-19 growth path would face headwinds in the form of high inflation and the spill over effects from the Russia-Ukraine war. The forecasted GDP growth rate is estimated at one per cent for 2023.