Traditional banking fees in southern Africa, which some believe are the highest in the world, are expected to plateau and eventually reduce given the escalating migration of bank customers to digital channels.
This is according to Nedbank Namibia Managing Director Martha Murorua, who yesterday told New Era it is unlikely banks will consider increasing their banking fees in light of the current operating environment, where traditional brick and mortar options are being replaced by less costly digital options.
Speaking during a virtual conference on Nedbank’s latest financial results, Murorua noted that banking fees are usually kept at a minimum and are only subject to an inflationary increase.
Adding that Nedbank’s banking fees are the cheapest in the Namibian market, Murorua pointed out that many of Nedbank’s digital channels are actually free.
Nedbank Namibia’s financial results for the year ended 31 December 2020 showed negative growth of just over 64%, which saw the bank lose more than N$200 million in profit, compared to the previous year.
The latest results indicate Nedbank Namibia’s profit level for 2020 stood at about N$117 million, compared to more than N$330 million the previous year.
The annual financial statements also show a significant reduction in net interest income, where slightly over N$116 million was lost, registering negative growth of more than 13%.
Meanwhile, Nedbank Namibia’s impairments of advances increased by N$137 million to N$246 million from N$108 million the previous year.
Murorua confirmed the huge increase in impairments is attributed to the recessionary environment, which has been exacerbated by reduced economic activity as a result of the Covid-19 pandemic.
Meanwhile, the results revealed that over 1 500 Nedbank Namibia clients asked for payment holidays, restructuring and overdraft assistance to the tune of N$2.1 billion.
Moreover, Nedbank Namibia’s parent company in South Africa, the Nedbank Group, improved their financial performance in the second half of 2020, as headline earnings declined by 56.5%, compared to a decline of 69.2% in the first half of 2020.
The Group’s headline earnings for the year were affected by higher impairments and lower revenues; the latter is mainly due to lower levels of client activity and the impact of lower interest rates on endowment income.
Commenting on the latest results, Nedbank Group CEO Mike Brown said the group had demonstrated strong levels of resilience in a difficult economic environment and was able to provide significant levels of cashflow support to clients who were negatively impacted by the Covid lockdowns, while remaining well-capitalised, liquid and profitable, albeit at levels lower than in the prior year.
“Our primary focus has been on the health and safety of our stakeholders, including employees and clients, as well as on helping our clients in good standing to navigate the financial challenges that arose in their business and personal finances. We thank all our committed Nedbank employees for remaining resilient during an extraordinarily difficult time,” said Brown.
“Ultimately, the pace of the domestic economic recovery will depend on how quickly SA can achieve population immunity as the phased Covid-19 vaccine rollout races against new and more contagious variants of the virus. Simply put, in 2021 vaccination is the best economic policy. The outlook for the SA economy is nevertheless more promising, with the recovery supported by firmer consumer spending, the rebuilding of domestic inventories and stronger commodity prices and export growth, particularly during the second half of the year,” Brown concluded.
– ebrandt@nepc.com.na