Cape Town – Nedbank on Thursday told shareholders it was in “very good shape ... and well prepared to deal with the volatility that a sovereign downgrade to sub-investment grade brings”.
The bank issued a statement after announcements from international ratings agencies about the downgrading of South Africa’s credit ratings in the wake of last week’s late-night cabinet reshuffle.
After last Thursday’s reshuffle initiated by President Jacob Zuma, which included the axing of Pravin Gordhan, the country’s respected finance minister, and his deputy Mcebisi Jonas, S&P Global downgraded South Africa’s sovereign credit rating to below investment grade and Moody’s put the country on review for downgrade.
Thursday's statement from Nedbank noted that South African banks' ratings were constrained by the sovereign credit rating and any changes to sovereign ratings were automatically reflected in the bank's ratings.
The statement emphasised that the changes reflected assessments of the country and banking industry as a whole and were not specific to Nedbank.
Nedbank added that Standard & Poor’s had noted that South African banks had been performing resiliently amid slow economic growth and political wrangling.
Read also: S&P downgrades SA banks
Nedbank Group’s chief executive officer, Mike Brown, said: “Despite the downgrade, we must remember that Nedbank is operating in a South African banking system that is sound and well-capitalised".
He said the bank’s financial results in February “showed that Nedbank is in very good shape and we are well prepared to deal with the volatility that a sovereign downgrade to sub-investment grade brings”.
“We have the strategies, people and balance sheet strength to work our way through the difficult environment in South Africa,” Brown added.