Leemisa Thuseho
THE NEDBANK Group has achieved a record profit of M16.9 billion, marking an 8% increase in headline earnings from the previous reporting period.
Headline earnings refer to a method of reporting corporate earnings based entirely on operational, trading, and capital investment activities achieved during the previous period. Excluded from the headline earnings figure are profits or losses associated with the sale or termination of discontinued operations, fixed assets or related businesses, or from any permanent devaluation or write-off of their values.
According to the group’s financial results for the year ended 31 December 2024, released on Tuesday, the growth was driven by strong non-interest revenue (NIR) growth, a reduced impairment charge, and strict cost controls.
The results further indicated that diluted headline earnings per share increased by 11%, while the group’s return on equity (ROE) strengthened to 15.8%, up from 15.1% in the prior period. This reflects steady progress towards the group’s ROE targets.
Balance sheet metrics remained strong, enabling the declaration of a final dividend of 1,104 cents per share, up 8%, at a payout ratio of 57%.
Nedbank Group Chief Executive Officer, Jason Quinn, said despite a challenging economic environment, the bank achieved significant strategic milestones.
“A key highlight of 2024 was the fundamental completion of our Managed Evolution IT transformation, which has delivered a refreshed and modern technology platform,” Mr Quinn said in a statement.
“This platform, along with our enhanced digital capabilities, supported ongoing strong digital growth, market-leading client satisfaction metrics, solid main-banked client gains, and higher levels of cross-sell.”
He said they had achieved market share gains in key areas such as home loans, vehicle finance, wholesale term-lending and retail deposits.
“We also continued to make strides in creating positive impacts through M183 billion of lending that supports sustainable development finance, aligned with the United Nations Sustainable Development Goals. The increase in renewable energy exposures of 32% to almost M40bn, and Nedbank being awarded significant renewable energy mandates in Q4 2024, reinforce our leadership in this space.”
These achievements contributed to Nedbank being named South Africa’s Bank of the Year by The Banker magazine.
“The group’s Net Annualized Return (NAR) was impacted by several factors, particularly non-repeatable one-off items. NAR headline earnings excluding the Employment Tax Incentive (ETI) reversal of M175 million and Zimbabwe foreign market exchange effects rose by 14% to M1.619 billion. However, including these impacts, headline earnings declined by 14%.”
Southern African Development Community (SADC) headline earnings, excluding forex gains, increased by 60%, but including these effects, declined by 12.1%. Net interest income (NII) grew by 11% to M2.69 billion, while net interest margin (NIM) increased slightly to 7.87% from 7.82% in 2023. Average loans and advances recorded a marginal 1% increase. NIR for the cluster decreased by 5% to M1.757 billion. Impairments increased by 25% to M315 million, mainly due to higher charges in Mozambique and Namibia.
The bank saw notable achievements in digital banking. Retail digital transaction volumes and values grew by 12%. Digitally active retail clients increased by 7% to 3.1 million, representing 70% of retail main-banked clients. Digitally active clients across the NAR business rose from 64% to 72%. Active Nedbank Money app users increased by 14% to 2.7 million in 2024. Transaction volumes increased by 16%, while transaction values grew by 21%.
Looking ahead, Nedbank remains cautiously optimistic about South Africa’s economic outlook, expecting improvements from a low 2024 base. However, global geopolitical risks and trade tensions remain concerns. Quinn stated that improved financial performance in 2024, along with progress in executing their strategy, the new transformation agenda, and better economic prospects, gives the bank confidence to increase its ROE to above 16% in 2025, over 17% in the medium term, and above 18% in the longer term.
“In a bid to remain competitive, the bank is embarking on an organisational restructuring of its Retail and Business Banking (RBB) and Nedbank Wealth clusters.”
Speaking during a virtual press conference with Lesotho’s media, also on Tuesday, Group Managing Executive: Nedbank Africa Regions (NAR), Dr.Terence Sibiya, said the restructuring aimed to take a more client-centric approach.
Under the new structure, Retail and Business Banking (RBB) and Nedbank Wealth clusters will be split into new segments, including Personal and Private Banking (PPB), Business and Commercial Banking (BCB), and Corporate Investment Banking.
“The reorganisation will also see the creation of Business and Commercial Banking (BCB), a juristic-focused cluster, that will cover the spectrum of SME, Commercial and Mid-corp clients to unlock accelerated growth opportunities through new compelling value propositions while elevating this business to a group executive level,” Dr Sibiya said.
The publication of Nedbank Lesotho’s specific results remains separate from the group’s overall results, as they continue undergoing due governance processes in the country.
However, Mosa Seephephe, Chief Financial Officer at Nedbank Lesotho, acknowledged the challenging economic landscape.
“Lesotho is not immune to the tough economic environment and has also experienced significant industry transitions, particularly with Common Monetary Area (CMA) enhancements from Lesotho’s perspective,” Ms Seephephe said.