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DURBAN - Nedbank, which concluded its managed separation from Old Mutual in October last year, reported that for the year to end December its total assets exceeding R1trillion for the first time despite a subdued economy, which in the period was in a technical recession.

The bank yesterday posted a 14.5 percent increase in headline earnings to R13.5billion with Return on Equity (RoE), excluding goodwill, improving from 16.4 percent to 17.9 percent. The group said the results were boosted by a turnaround in its share of associate income from Ecobank Transnational Incorporated (ETI).

ETI reported a profit of R375million during the period, from last year's loss of R975m.

Chief executive Mike Brown said 2018 was a year of achievement across a broad front in challenging banking conditions. “We were faced with a technical recession in South Africa in the first half of last year and the increasing reality that our country is still at the early stages of a political and institutional turnaround.

“Despite subdued economic conditions across credit and transactional banking, managed operations, excluding ETI, delivered positive earnings growth with slightly faster growth in the second half,” Brown said.

The group reported a 6percent increase in revenue to R54.8bn. Diluted headline earnings per share increased by 13.7percent to 2736 cents a share and the group declared a final dividend of 720c, taking the full year dividend to 1415c, an increase of 10.1percent.

Chief financial officer Raisibe Morathi said strong growth in client deposits, lower impairments, as well as transactional revenue growth, helped ETI deliver seven quarters of profit. “The Rest of Africa business performed well in 2018 and delivered RoE of 10.3percent for 2018,” Morathi said.

Corporate and Investment Banking grew its headline earnings by 6.3percent to R6.7bn, while delivering an attractive RoE of 20percent. The group said the headline earnings growth was underpinned by a very strong 18.9percent growth in Non-Interest revenue. However, the group said growth in banking advances was slow but increased in the latter part of the year.

The Retail and Business Banking (RBB) achieved a smaller growth with headline earnings increasing by 1.5 percent to R5.4bn, with RoE at 18.9percent. RBB was impacted by IFRS changes and on a like-for-like basis headline earnings grew 6.4 percent. 

The wealth business was up by 6.1 percent to R1.1bn and Rest of Africa by more than 100 percent to R702m. Looking ahead, Brown said while President Cyril Ramaphosa’s efforts to revive foreign direct investment should bear some fruit over the medium-to-longer term, Nedbank expects only a slight increase in fixed investment and gross domestic product growth in 2019.

“We expect more favourable trading conditions in 2019, but much still needs to be done to support the higher investment and higher growth that South Africa so desperately needs. Key impediments to higher growth include certainty on reliable and affordable electricity supply and delivering policy certainty, particularly on the intended scale and scope of land expropriation without compensation,” he said.

Nedbank shares closed 0.22 percent higher at R272 on the JSE yesterday.