Nedbank still bullish about Zim prospects
South Africa’s Nedbank Group says its long-term prospects for Zimbabwe remain largely intact, indicating challenges faced by the country are not unique to the group.
The South African financial services group operates in Zimbabwe through Nedbank Zimbabwe and has operations across the Southern Africa Development Community (SADC) and East Africa. In its financial performance update for the six months to June 30, 2023, the group said its Zimbabwean business continues to perform well and is an integral part of its portfolio.
“The challenges faced in Zimbabwe are not unique to Nedbank, as this is a macro-economic issue affecting all businesses operating in that country. Nedbank has operated in Zimbabwe since 1999, and as we stand, Nedbank’s long-term prospects in Zimbabwe remain.
“We have in place management actions that help us navigate and continue to operate profitably in the Zimbabwe market,” Nedbank said in a statement.
“The group said inflationary pressures and foreign currency movements in Zimbabwe did have a material impact on Nedbank Group’s net asset value (NAV) in the first half of 2023.
“Fortunately for the group, Nedbank Zimbabwe’s balance sheet is to some extent hedged against hyperinflation and currency devaluation through a US dollar denominated open position, resulting in foreign currency gains of R665 million, offset by a net monetary loss of R288 million,” the group said.
“We have in place management actions that help us navigate and continue to operate profitably in the Zimbabwe market,” the company said.
The International Monetary Fund (IMF) expects sub-Saharan Africa to grow by a softer 3,5 percent in 2023, down from 3,9 percent in 2022, before accelerating to 4,1 percent in 2024.
Dr Terence Sibiya, Nedbank Group managing executive, Africa Regions, said the Nedbank Africa Regions (NAR) cluster delivered a stellar performance achieved because of improved performances from the SADC operations and strong earnings.
The NAR business has operations in Eswatini, Lesotho, Mozambique, Namibia, and Zimbabwe, as well as representative offices in Ghana and Kenya.
Nedbank Group also has a 21,2 percent shareholding in Ecobank Transnational Incorporated (ETI), which is a leading private pan-African banking group present in 35 sub-Saharan African countries.
The Nedbank Group headline earnings for the half-year period increased by 10 percent to R7,3 billion in a challenging operating environment, and the return on equity (ROE) increased to 14.2 percent.
“The increase in HE was underpinned by strong revenue growth, including associate income, of 14 percent and good expense management, enabling pre-provisioning operating profit growth of 22 percent.”
“This was partially offset by a 57 percent increase in the impairment charge, particularly in the retail consumer banking segment in South Africa,” said Nedbank chief executive Mike Brown.
He said the operating environment in the first half was much more challenging than we had initially forecast.
“In addition to a weak global economy and lower commodity prices, domestic economic activity continued to be negatively impacted by very high levels of load-shedding, logistical constraints, higher-than-expected levels of inflation, and, as a result, higher-than-expected increases in interest rates,” he said.
-herald
