Nedbank headline earnings show a decline of 1.6%

WEAK ECONOMY ‘ AFFECTS ’ RESULTS

NEDBANK’S retail division saw negative growth of 1.6% in the institution’s annual results announced yesterday.

South Africa ’ s fourth largest bank ’ s headline earnings per share sunk by negative 1.6% to R2.5-billion compared to last year ’ s growth of 22% to R2.5-million.

Headline earnings is a company ’ s income based on the core business activities, including operational and capital investment while excluding income relating to staff reductions and sale of assets.

The negative growth could be linked to the bank ’ s impairments, which rose by 7% to R5.7-billion.

Nedbank could implement measures to ensure that its flagship division does not suffer another setback.

Executive director of Antswisa Management Group, Miyelani Mkhabela, said the weak economic environment was affecting Nedbank.

“Nedbank should focus on struc- turing their loans to ensure that consumers are able to repay them.

“However, if Nedbank retail aggressively targets the unsecured loan market, the bank ’ s fingers will be burnt as impairments will grow,” said Mkhabela.

The highlights of the annual results were that the bank created close to 600 jobs and Nedbank capital ’ s headline earnings per share displayed a growth of 20.6% to R1-billion.

Nedbank corporate ’ s headline earnings per share grew by 23.6% to R2.2-billion, Nedbank wealth 25.3% to R900-million.

The bank ’ s headline earnings increased by 15.9% to R8.7-billion.

The operating expenses grew by 9.2% to R22-billion from last year ’ s R20-billion. Profit for the year increased by 15% to R9-billion.

“Nedbank ’ s 2012 and 2013 strategy gave more strength to the group and yielded positive results as they have added 334 additional ATMs and 28 branches of the future outlets to increase its accessibility to their growing market share,” said Mkhabela.

Nedbank chief executive Mike Brown said that the bank delivered a strong performance.

“In a challenging environment the group delivered a strong performance across a broad front, which resulted in improvements in both return on assets and return on equity, ” Brown said.

“Our historic focus on growing our transactional banking franchise, selective advances growth and prudent impairment methodologies, combined with our positive exposure to increased endowment, should position Nedbank favourably in an environment of rising interest rates.”

He said for the year ahead the bank expected organic growth in diluted headline earnings per share to be stronger than the growth in nominal gross domestic product.