Nedbank Release Their Numbers for 2020
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Nedbank made good strategic and operational progress and delivered solid underlying growth in advances (+7%), deposits (+9,5%) and assets under management (+11%) for the year ending 31 December 2019 in a difficult macroeconomic environment. Headline earnings, which declined 7,3% to R12,5 billion, were impacted by the effect of the challenging macroeconomic environment on clients as well as a number of additional items that arose in the second half.
Nedbank CE Mike Brown said SA’s economic growth in 2019 at an estimated 0,3% was much slower than initially expected due to severe and frequent power outages, the unsustainable fiscal trajectory and ongoing policy uncertainty combined with a deteriorating global outlook.
“Under these difficult domestic conditions, company profits and household finances deteriorated during the year. Nedbank headline earnings (HE) were also impacted by some additional items in the second half of the year, including accounting for hyperinflation and legacy debt impairments in Zimbabwe (R186m HE impact) and an option that will increase our shareholding in Banco Único (R140m HE impact) from 50% plus one share to approximately 87,5% (subject to regulatory approval),” Brown says.
“In addition to these, the revaluing of a number of private equity investments as the underlying investee company performance was weaker and public market multiples declined (R238m HE impact), and the increase in the credit loss ratio from below the bottom end to just above the midpoint of our target range of 60 to 100 bps as a result of increased impairments raised on certain existing CIB watchlist clients, cyclical increases in Retail and Business Banking and an increase in the central impairment, all weighed on headline earnings,” said Brown.
Nedbank CE Mike Brown said SA’s economic growth in 2019 at an estimated 0,3% was much slower than initially expected due to severe and frequent power outages, the unsustainable fiscal trajectory and ongoing policy uncertainty combined with a deteriorating global outlook.
“Under these difficult domestic conditions, company profits and household finances deteriorated during the year. Nedbank headline earnings (HE) were also impacted by some additional items in the second half of the year, including accounting for hyperinflation and legacy debt impairments in Zimbabwe (R186m HE impact) and an option that will increase our shareholding in Banco Único (R140m HE impact) from 50% plus one share to approximately 87,5% (subject to regulatory approval),” Brown says.
“In addition to these, the revaluing of a number of private equity investments as the underlying investee company performance was weaker and public market multiples declined (R238m HE impact), and the increase in the credit loss ratio from below the bottom end to just above the midpoint of our target range of 60 to 100 bps as a result of increased impairments raised on certain existing CIB watchlist clients, cyclical increases in Retail and Business Banking and an increase in the central impairment, all weighed on headline earnings,” said Brown.
