Banking struggles: Nedbank sees asset growth expanding more slowly than SA GDP

By Vernon Wessels

(Bloomberg) – Nedbank Group Ltd. forecast that interest-earning banking assets will increase at a rate below that of nominal growth in South Africa’s gross domestic product, after earlier predicting it will be in line with the economy’s expansion.

Mike Brown, Nedbank CEO — Nedbank CEO Mike Brown speaks during an interview at the 2016 Bloomberg Africa Business and Economic Summit in Cape Town. Photographer: Waldo Swiegers/Bloomberg

The lender’s credit-loss ratio, which rose 6 basis points to 53 basis points, will also increase slightly above the level achieved in 2017 although it will remain below its 60-100 basis-point target range, Johannesburg-based Nedbank said in a statement on Tuesday.

First-half earnings per share excluding one-time items rose 26 percent to 13.61 rand, boosted by rising profit at Ecobank Transnational Inc., the Lome, Togo-based lender in which Nedbank owns a 20 percent stake. South Africa’s central bank expects GDP to expand 1.2 percent in 2018.

“Slow revenue growth and a gradual increase in impairments were offset by good cost management,” Nedbank Chief Executive Officer Mike Brown said in the statement. Total assets exceeded R1 trillion ($75 billion) for the first time.

Nedbank’s stock has gained 3.2 percent this year, the best performer in the six-member FTSE/JSE Africa Banks Index, which is down 2.6 percent.