The Nedbank Africa Regions (NAR) business delivered a good set of results, driven by a good performance from its Economically Targeted Investments (ETI) and a solid rebound from the SADC operations. Headline Earnings (HE) increased by greater than 100% to N$594 million, which is significantly higher than the N$12 million reported in 2020, with Return on Equity (ROE) improving to 9.3% from 0.2% in 2020. The performance reflects the impact of significantly lower impairments, an increase in Net Interest Income (NII) of 14% to N$1.4 billion and a strong recovery in associate income from ETI, with related HE increasing to N$523 million (2020: N$153 million).
Dr Terence Sibiya, NAR Managing Executive said: “I am pleased that the business across SADC has improved in key client metrics, especially in client experience. We are #1 in NPS (Net Promotor Score) in Namibia and Mozambique. We have the highest loyalty scores in three of our markets (Eswatini, Namibia and Zimbabwe), and we are also in the top two in brand sentiment scores in four of the markets (Lesotho, Mozambique, Namibia and Zimbabwe) we operate in”.
“We grew our digitally active clients, who now make up 54% of our active retail client base. We also significantly grew transactional volumes on our apps, online banking and prepaid value-added services (PVAS): Nedbank Money App (Africa) has proven to be the channel of choice for our clients, with payment and transfer volumes up 35% year-on-year, and value-added services (airtime, data, prepaid electricity, etc) up 26% year-on-year”.
Nedbank Group performance
The Nedbank Group also delivered a strong financial performance for the year ended 31 December 2021 as headline earnings increased by 115% to N$11.7 billion, although remaining 7% below 2019 levels. Headline earnings’ growth was driven by significantly lower impairments, a higher net interest margin, a recovery in non-interest revenue growth, disciplined expense management and a stronger financial performance from the group’s associate investment in ETI. Pre-provisioning operating profit increased by 9%.
Nedbank CE Mike Brown said: “The operating environment was more supportive for Nedbank and its clients during the period under review. The South African economy bounced back faster than most forecasters expected from the low base of 2020. In the third quarter, the negative impacts of a prolonged third wave of Covid-19 infections, tighter lockdown restrictions, the July civil unrest in parts of the country and frequent power outages weighed heavily on economic activity, but trading conditions improved in the last quarter of 2021”.
“The importance of accelerating structural reforms and energy supply security cannot be over-emphasised, and they remain key to unlocking faster economic growth and job creation in SA over the medium-to-longer term”.
“The past two years have been unprecedented and extraordinarily difficult for our clients and employees. Thank you to all our Nedbank employees for remaining resilient throughout the Covid-19 crisis. We extend our heartfelt condolences to the families, friends and communities of employees and clients who have lost their loved ones during this time,” Brown said.
During 2021, the group’s balance sheet continued to strengthen as it closed out the resilience phase of its strategic response to the Covid-19 pandemic. CET1 and tier 1 capital ratios of 12,8% and 14,3%, respectively improved on the prior period, and are now above the pre-Covid 19 levels of 11.5% and 12.8%, respectively (December 2019). These ratios are also well above the South African Reserve Bank (SARB) minimum requirements, and above the top end of the group’s board-approved target ranges.
Brown said: “Our balance sheet capital strength enables us to support future client growth as well as declare a final dividend of 758 cents at 1.75 times cover (pay-out ratio of 57%)”.