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South African banking group, Nedbank, has revealed that its first-half profit could face a decline as severe as 72%. The profit warning follows Standard Bank’s financial report, with Africa’s biggest bank noting a 44% decline in profits over the first-half of 2020. Absa is expected to release its results on August 24, expecting profit declines as steep as 85%. – Jarryd Neves
Nedbank sees first-half profit falling as much as 72% on virus
By Roxanne Henderson
(Bloomberg) – Nedbank Group Ltd. warned that adjusted earnings per share in the six months through June could fall as much as 72% on sharply higher impairments amid the fallout from the Covid-19 pandemic.
The credit-loss ratio deteriorated to 1,9%, above the 1,5% level it reached during the global financial crisis, and compared with 0,8% at the end of 2019, the Johannesburg-based lender said in a statement on Thursday. It also made a R750-million impairment against the carrying value of its investment in pan-African lender Ecobank Transnational Inc.
Stronger growth in trading income helped offset some of these impacts and transactional activity improved as South Africa eased restrictions to contain the spread of the coronavirus.
Standard Bank Group Ltd. reported a 44% drop in earnings earlier on Thursday, while Absa Group Ltd., which is scheduled to report on August 24th, expects its profit to decline as much as 85%. FirstRand Ltd. said earnings excluding accounting adjustments probably fell as much as 45% in the 12 months through June.
The country’s lenders are also contending with a South African economy that has not expanded since the second quarter of 2019 and that has seen the jobless rate rise to 30.1%. Additional pressure as a result of the coronavirus-related restrictions has hurt businesses and customers have cut back on spending.
Nedbank remains profitable with strong capital and liquidity ratios, complying with regulatory requirements, it said. At the end of June it had also restructured loans for more than 375,000 customers, amounting to R119-billion.
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