Non-interest revenue growth lifts Nedbank's first-half profit

AFRICAN STOCKS AND FINANCEAugust 7, 2024 at 11:05 AM UTC

TLDR

Nedbank reports 8% earnings growth to R7.9 billion in June, with slowed growth in loan book and interest income.
Jason Quinn, former Absa finance director, leads Nedbank following retirement of longtime CEO Mike Brown.
Group benefited from lower provisions for bad debt and strong growth in trading and fee income.

Nedbank kicked off the big banks’ reporting season on Tuesday, posting an 8% earnings growth to R7.9 billion ($431 million) for the six months ending in June. Noninterest revenue (NIR) increased by 7% to 14.4 billion rand, slightly ahead of the group’s full-year guidance of above mid-single-digit growth.

The growth in its loan book and interest income slowed to a low-single-digit level. However, the group benefited from lower provisions for bad debt and strong growth in its trading and fee income.

This marks the first set of results presented by Jason Quinn, a former Absa finance director and acting CEO, who was appointed to lead Nedbank following the retirement of its long-time CEO, Mike Brown, in May.

Key Takeaways

Nedbank has upwardly revised its full-year forecast for non-interest revenue (NIR), with Quinn expressing optimism that South Africa’s new national unity government will spur cautious optimism in financial markets and potentially lead to increased corporate spending. The bank now expects NIR growth for 2024 to be in the upper single digits, driven by ongoing corporate deals and the acquisition of the fleet management business Eqstra. The CEO is betting on an improving South African economy as inflationary pressures ease and the central bank is anticipated to begin cutting interest rates in September for the first time since July 2020. This positive outlook is expected to benefit Nedbank’s performance in the coming months.

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