South Africa's Nedbank's profits hold steady despite pressure from non-performing loans.
Written by Ziad Abdel Fattah:
The group announced“Nedbank”South Africa's ETF reported on Tuesday that its main profits remained stable during the first half of the year, exceeding expectations set at the beginning of the year, supported by strong income growth despite higher impairment provisions.
The group recorded headline profits of 8.4 billion rand (about $509 million) during the six months ending June 30, compared with 8.3 billion rand during the same period last year.
Net interest income rose by 4% to R22 billion, while non-interest income jumped by 10% to R16.2 billion, supported by notable growth in commissions and fees along with the strong performance of the core insurance sector.
Conversely, impairment provisions increased by 26% to R4.8 billion, as a result of increased pressure on the retail and private banking sectors by 13%, along with increased activity in the corporate and business sectors from a low base.
The credit loss ratio, which measures non-performing loans as a percentage of total loans, also rose to 95 basis points compared to 81 basis points last year, reflecting continued credit challenges.
The group approved an interim cash dividend of 10.52 rand per share, signaling management's confidence in the strength of its financial performance despite the challenges. The exchange rate is approximately 16.50 rand to the dollar.
In a move reflecting Pretoria's desire to contain escalating tensions with Accra, South Africa dispatched its Minister of International Relations and Cooperation, Ronald Lamola, as a special envoy of President Cyril Ramaphosa to Ghana.
The move comes in an attempt to restore warmth to bilateral relations after Ramaphosa's official visit was postponed due to escalating xenophobic attacks within South Africa.
Messages of reassurance between Pretoria and Accra
Ghanaian President John Dramani Mahama confirmed that talks with the South African envoy addressed growing concerns about the targeting of foreigners, particularly African investors and traders.
He stressed that his country is not hostile to South Africa, but believes that the repetition of these attacks necessitates serious action to address their political and economic repercussions.
