Nedbank CEO calls on govt to push structural reforms as banks suffer

NEDBANK CEO Mike Brown has called on government to show “material progress” in implementing structural reforms in the upcoming medium-term budget statement, as banks and other businesses continue to report massive declines in profits under the nationwide lockdown.

Brown reminded investors during the bank’s financial results on Wednesday that this time last year he warned the country was “fast running out of time and money”.

He said on Wednesday that the impact of COVID-19, alongside a lack of progress in implementing structural reforms, had accelerated South Africa’s unsustainable trajectory.

“Urgent action on growth enhancing structural reforms and reducing policy uncertainty is required to boost confidence, investment and growth and, therefore, reduce the impact of the crisis on already unacceptably high unemployment levels. It is vital that medium-term budget statement shows material progress on these matters,” wrote Brown in a statement.

The Medium-Term Budget Statement is generally delivered in the second half of October.

All banks that have published financial results for the first six months of 2020 so far have recorded increases in credit impairments.

Nedbank’s credit impairment growth came in between that of Standard Bank and Absa, increasing by 202% to R7,67 billion. In comparison, Absa’s credit impairment charge rose 297% to R14,7 billion while Standard Bank booked R11,3 billion, a 166% increase compared to June 2019.

The absolute value of Nedbank’s credit impairment charge reflects its smaller loan book size relative to Standard Bank and Absa.