Robust 2021 for Nedbank
Headline earnings surge 115% to R11.7bn, but remain 7% below 2019 levels. YEAR-END DIVIDEND: GROUP SAYS IT WILL PAY 1 191 CENTS PER SHARE
South Africa’s economic rebound in 2021 has resulted in banking group Nedbank reporting a robust full-year financial performance yesterday. It became the latest bank to confirm the payout of a final dividend for its year ended 31 December, 2021. This follows the broader Covid financial fallout in 2020, which saw banks being allowed to withhold dividends and bolster balance sheets.
The group declared a final dividend of 758 cents per share, up more than 100% compared to full year 2020 when no dividends were declared. Its full-year dividend per share is 1 191 cents.
The bank’s net asset value per share for the year was up 11.4%, to 20 493 cents (2020: 18 391 cents). Revenue was up 6.1% to R57.5 billion (2020: R54.2 billion).
The group’s full-year headline earnings per share – the key profit measure for SA corporates – came in at 2 410 cents, which represents a robust increase of 114% over FY2020 (1 126 cents). Its cost-to-income ratio improved to 57.7% (2020: 58.1%).
“Nedbank Group’s financial performance for 2021 reflects a strong rebound off a low 2020 base,” chief executive Mike Brown
notes in a Sens statement.
“Headline earnings in 2021 increased by 115% to R11.7 billion, but remains 7% below 2019 levels.
“The operating environment in 2021 was more supportive... The South African economy performed better than we expected at the start of the year, resulting in upward revisions of gross domestic product [GDP] growth to 4.9%.
“Off the low base in 2020, the rebound in economic growth was underpinned by higher commodity prices, lower levels of lockdown restrictions and some positive developments on key reforms in SA.
“The low interest rate environment supported demand for retail credit and transactional activity increased as lockdown levels eased.
“Demand for corporate credit remained muted, particularly in the first half... Encouragingly, demand for corporate credit saw a recovery in the second half,” he adds. However, in the third quarter, the negative impacts of a prolonged third wave of Covid, tighter lockdown restrictions, the July civil unrest and frequent power outages weighed heavily on economic activity.
“Key balance sheet metrics have all strengthened to above pre-Covid crisis levels. Capital and liquidity ratios increased.
“The strong financial performance was supported by ongoing strategic delivery.
“Our Managed Evolution technology journey to create a modern, modular and digital IT stack is at 85% completion.
“The benefits of this are evident in most of our digital metrics showing double-digit growth, as well as target operating model benefits of R967 million being realised, as we move forward towards our target of R2.5 billion by the end of 2023,” he adds.
Brown says Nedbank also recorded the largest retail mainbanked market share gain among the large South African banks.
Performance reflects strong rebound off a low base