Renee Bonorchis
NEDBANK Group was not considering a special dividend, preferring to seek expansion in the continent’s East and sub-Saharan regions, the local lender with a 20 percent stake in a West African bank, said.
Even with capital adequacy ratios above regulatory requirements, “we’re not contemplating a special dividend”, Mike Brown, the chief executive of the bank, said this week. “Our preferred use of surplus cash is for organic growth and strategic acquisitions. In southern and east Africa we want to build the Nedbank brand.”
Nedbank operates in Swaziland, Lesotho, Namibia, Zimbabwe and Malawi and bought a stake in a Mozambican lender earlier this year. It gained a 20 percent stake in Togo’s Ecobank Transnational, Africa’s most geographically diverse lender, on October 2.
Nedbank’s parent company, Old Mutual, is also targeting East Africa, buying micro lender Faulu Kenya last year as that economy grows more than 5 percent a year.
While the lender’s primary focus will be on bedding down this year’s acquisitions, “we will continue to look at where there are sensible opportunities to expand Nedbank”, Brown said.
“We will reduce our dividend cover to the middle of our target levels, which is between 1.75 to 2.25, so there is still scope to grow dividends faster than earnings.”
Nedbank’s common equity tier 1 capital adequacy ratio, which is a measure of how much money a bank is holding against its liabilities, is estimated by the lender to be 11.3 percent after the Ecobank transaction.
That’s above the 5.5 percent regulatory minimum and within Nedbank’s own target range. – Bloomberg