Nedbank expects earnings to slide 60% as it weathers Covid storm
DURBAN - NEDBANK expects its full-year earnings to decline by as much as 60 percent as it continues to feel the impact of the Covid-19 outbreak in its operations.
In a second trading update released on Friday, the group said it forecast its headline earnings per share (Heps) for the year to end December to decline 55 to 60 percent (1 042 cents to 1 172c a share, down from 2605c) last year.
Its basic earnings per share (Eps) is expected to fall by between 69 and 74 percent, to between 650c and 775c compared with last year’s Eps of 2500c.
“The larger decline in basic Eps compared to Heps can be attributed to the R750m impairment of the group’s investment in Ecobank Transnational Incorporated (ETI) as disclosed in our first half 2020 results and accounting for our share of ETI’s impairment of their own goodwill as announced in their nine-month 2020 results in November of R528m, as well as impairments relating to Nedbank’s own goodwill as a result of lower value-in-use calculations as a result of a weak operating environment given the impact of Covid-19 of R345m,” the bank said.
Nedbank expected its Heps and Eps to decline by more than 20 percent in the first trading update released on December 2. It reported an increase of 202 percent in impairment charges to R7.68 billion in its results for the six months to end June 2020.
Nedbank said the second wave of the Covid-19 pandemic since December had proved worse than the first wave. The lender added it continued to be vigilant and remained on high alert while observing Covid-19 health protocols.
“As a purpose-led organisation, our primary focus remains on ensuring the health and safety of our stakeholders, including staff and clients, and serving and supporting clients in good standing in managing their finances through this difficult period and in so doing providing support to the economy,” the group said.
Nedbank said it remained resilient and prepared to respond and manage the emerging risks as well as monitoring the impact of lockdown restriction on its clients and the economy as it navigates the challenges of the pandemic. The group welcomed the easing of the lockdown to level 1 on March 1.
“Through these difficult times, the group balance sheet remains liquid and well capitalised at levels above board-approved minimum targets and well above the minimum regulatory requirements,” the group said.
Nedbank expects to release its fullyear results on March 17.
Its share price rose 0.86 percent to R138.26 on Friday.