Nedbank trading update: Tough 2025 but recovery ahead as SA outlook brightens

Key topics:Nedbank weathers tough 2025, eyes stronger 2026 outlookCredit quality improves, impairment charges below target rangeStrategic moves include iKhokha acquisition, share buybacks.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..BizNews Reporter.Nedbank Group delivered a resilient performance for the ten months ending 31 October 2025, navigating a "difficult" domestic operating environment while positioning itself to capitalise on a rapidly improving macroeconomic outlook for South Africa.In a voluntary trading update released today, the Green Bank highlighted that while 2025 has been characterised by muted transactional activity and delayed capital investment, the tide appears to be turning. Nedbank cited a confluence of positive structural shifts—including South Africa’s removal from the Financial Action Task Force (FATF) grey list and a credit rating upgrade from S&P—as key drivers of a more optimistic outlook for 2026.Navigating the headwindsManagement described the operating environment in the second half of 2025 as challenging. Geopolitical uncertainty, particularly regarding the impact of US tariffs, alongside modest local economic growth, led corporate South Africa to pause capital expenditure..Read more:.FirstRand’s ambitious expansion plans: Africa’s largest bank eyes strategic acquisitions beyond borders.However, the bank noted that the mood is shifting. Subdued inflation has opened the door for interest rate cuts, which Nedbank expects will spark a "convincing recovery" in household credit demand. Furthermore, the successful hosting of the G20 Summit in Johannesburg has bolstered the country's diplomatic and organisational credentials, thereby improving business sentiment..Financial performance and the Transnet settlementDespite the headwinds, Nedbank’s financial performance remained in line with management expectations. The group reported headline earnings growth driven by higher net interest income (NII) and non-interest revenue (NIR), coupled with strict cost management.A significant footnote to the financial update is the R600 million one-off expense related to a commercial settlement with Transnet, which is housed within the Corporate and Investment Banking (CIB) division. Excluding this settlement, the group remains on track to deliver underlying Diluted Headline Earnings Per Share (DHEPS) growth of flat to low single digits and a Return on Equity (ROE) of 15% or higher for the full 2025 financial year.Credit quality shinesPerhaps the most pleasing metric for investors is the bank’s credit quality. Despite the economic strain on consumers, Nedbank’s impairment charge improved ahead of expectations. The credit loss ratio (CLR)—a key measure of bad debt—dropped below the midpoint of the group’s target range of 60 to 100 basis points.The Personal and Private Banking (PPB) division saw advances grow in the mid-to-upper single digits, supported by strong front-book growth in secured lending. Conversely, while CIB has a strong pipeline of deals, many drawdowns have been pushed out to 2026 due to the uncertain environment.Strategic shifts and capital allocationNedbank continues to refine its structure and footprint. The bank confirmed the completion of its acquisition of fintech innovator iKhokha, effective 1 December 2025, signalling a continued push into the digital payments space. Meanwhile, the disposal of its stake in Ecobank Transnational Incorporated (ETI) awaits final regulatory approval, with no further associate income expected from ETI in the second half of the year.Shareholders will also take comfort in the bank's robust capital position. The group’s Common Equity Tier 1 (CET1) ratio remains above the upper end of its 11%-12% target range. This capital strength allowed Nedbank to repurchase and cancel R2.4 billion worth of shares in 2025 at an average price of R229.53—a discount to the bank’s net asset value.OutlookWhile the 2025 financial year reflects a "grind" against economic headwinds, Nedbank’s update suggests the worst may be in the rearview mirror. With business confidence hitting 12-month highs and structural economic reforms gaining traction, the bank appears poised to pivot from defence to growth as it heads into 2026.

Nedbank trading update: Tough 2025 but recovery ahead as SA outlook brightens

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