Nedbank ready for ‘Ramos war’
NEDBANK CEO Mike Brown is not worried about Barclays Africa CEO Maria Ramos’s vow to fight harder in the battle for customers lost to Nedbank and other lenders.
And Ingrid Johnson, Nedbank’s head of retail and business banking, said that, besides being used to dealing with competitive peers, she was “delighted that we have lots of growth and momentum because of the four years of effort”.
Johnson’s strategies have been instrumental in the battle for customers.
The confidence of Brown and Johnson stems from their having grown numbers to 6.4 million from 4.2 million in 2009, largely at the expense of Barclays Africa.
When Ramos took over as the boss of Barclays Africa in 2009, customer numbers were registered at 11.4 million. But two weeks ago, the group reported that it had managed to keep customer numbers in South Africa stable at 9.25 million.
This week, Nedbank reported a 17.2% return on equity (RoE) from 16.4% in the previous year. Barclays Africa’s RoE rose to 15.5% from 14.1%.
Nedbank recorded a 14.9% rise in headline earnings a share to 1 884c while Barclays Africa’s was up 14% to 1 397c.
Both dished out hefty dividends to shareholders. Barclays Africa increased the dividend payout 20% to 820c, despite having paid out R11.6-billion in a special dividend during the financial year.
Nedbank paid a dividend of 895c even though its dividend increase was 19%.
What does trouble Brown and Johnson is the knock-on effect of interest-rate hikes on highly indebted consumers.
Interest-rate hikes may result in increased bad debt among banks that played aggressively in this market.
And what may add fuel to the imminent fire is the fact that lenders have turned their backs on consumers who may want to refinance their debts. “This probably keeps most of us awake at night,” Brown said.
However, the group is well positioned for the interest-rate cycle, according to Brown.
Nedbank was one of the first banks to step out of the personal loans business and increased provisioning significantly.
First National Bank (FNB) and Standard Bank were among the most aggressive players in the unsecured-loans market. They publish their results on Tuesday and Wednesday.
FirstRand, FNB’s parent company, expects first-half earnings to be as much as 26% higher because it has gained more retail banking customers.