Renee Bonorchis
NEDBANK Group, the South African lender controlled by Old Mutual, said full-year profit gained 14 percent after credit losses declined and customers repaid loans.
Net income rose to R9.8 billion, from R8.6bn in 2013, the company said yesterday. Earnings per share excluding one-time items climbed 13 percent to R21.27, beating the R20.42 median estimate of 14 analysts surveyed by Bloomberg.
Nedbank, the country’s fourth-largest lender by assets, has expanded into Mozambique and last year took a 20 percent stake in Ecobank Transnational, Africa’s most geographically diverse lender. For the past five years it has increased its focus on consumer banking to draw in more customers and boost fees from transactions.
“It’s a low-quality marginal beat,” Greg Saffy, head of Cast Iron Capital, said. “The headline number appears reasonable, it was driven by a better-than-expected bad debts charge. Non-interest revenue growth of 4 percent to 5 percent is disappointing.”
Shares fell 0.36 percent to close at R256 yesterday.
“In June, our non-interest revenue (NIR) was negative because we didn’t have any price increases and slowed the growth rate on personal loans, but in the second half NIR was up over 10 percent, which is strong,” chief executive Mike Brown said. “We finished 2014 ahead of our internal targets, so you can expect to see the appropriate increases and incentives.”
Nedbank said it would repurchase 1.8 percent of its stock in March as a decade-old arrangement that transferred ownership to black shareholders matures. The 8.92 million shares would be bought with more than R8 million in cash, it said. After the repurchase, it would issue 738 207 shares at a price of R239.77 per share to a community trust made up of black investors for R177m.
“Nedbank group’s strong financial performance has created huge value to the black economic empowerment beneficiaries,” Adrian Cloete, money manager at PSG Wealth, said. “Nedbank has benefited its BEE stakeholders by an estimated R8.2bn, based on current market prices.”
While Nedbank will continue in 2015 to look for acquisitions in east and southern Africa, there are no imminent deals, Brown said. – Bloomberg