Ecobank drags on Nedbank earnings growth, says Old Mutual

Old Mutual’s majority-owned South African banking subsidiary Nedbank released its interim results for the six months ended 30 June on Monday, with headline earnings growth of 2% to ZAR 5.427bn (£294.56m).

The FTSE 100 firm said that excluding Ecobank Transnational Incorporated (ETI), headline earnings growth was 20.1%.

Diluted headline earnings per share increased 1.6% to 1,119 cents, and excluding ETI, diluted headline earnings per share grew 19.7%.

Nedbank’s ongoing selective origination and collections focus lead to a high-quality advances book, its board reported, and credit losses remaining below expectations at 67 bps

The return on equity for the period, excluding goodwill, was 15.7%, and 18.4% excluding ETI.

Nedbank’s common-equity tier 1 ratio increased to 11.6%, while its net asset value per share wa up by 9.7%

The company’s board declared an interim dividend per share up 6.1% to 570 cents.

“Nedbank Group's managed operations, excluding ETI, produced a very strong performance for the first six months of the year,” said chief executive Mark Brown.

“Headline earnings growth was underpinned by strong revenue generation and an improved credit loss ratio of 67 basis points, while strengthening our portfolio impairment coverage ratios.”

Brown said Nedbank’s focus on growing our transactional banking franchise continued to unlock benefits.

“The integration of our CIB Cluster last year resulted in an enhanced client offering, which increased cross-sell activities.

“Our RBB Cluster made good progress in gaining clients through its innovative digital and other offerings, resulting in an increase of 7,3% in main-banked clients and an increase in the ROE from 15,9% to 18,3%,” Brown explained.

“Our Wealth Cluster grew earnings strongly, with good performances from Private Wealth, Asset Management and Insurance.”

Brown said Nedbank’s guidance for organic growth in diluted headline earnings per share for 2016 remains unchanged.

“We continue to expect positive growth in this metric, albeit that in the current economic environment this is expected to be lower than the growth we achieved in 2015 and below our medium-to-long-term target of the consumer price index plus GDP growth plus 5%.”