Nedbank’s first-half earnings at its main domestic operations flattened, which the South African bank attributes to the difficult economic trajectory the country is passing through. Its corporate and retail clients defaulted on their debts mainly on account of the bank’s large exposure in the construction sector, which is down the drain in the present economic milieu.
The headline earnings of the bank at its retail and business banking and corporate and investment banking rose by just 0.3% and 0.1% respectively. The fallout of the deceleration in the economic growth is not holding back any turnaround in the short and medium term. The economic growth forecast for 2019 is expected to fall from 1.3% to between 0.5% and 0.7%.
However, Nedbank’s performance was bolstered by its businesses elsewhere in Africa. The headline earnings from international operations (mostly in other African countries) grew by 19.6%, helping the bank to lift headline earnings per share ( the main profit gauge in South Africa) by 3.5% to 1,435 cents ($0.9687). A number of South African lenders have looked outside South Africa for growth after their home market has faltered. Its West African associate Ecobank, has contributed R264 million to headline earnings.Nedbank holds a 21% in the Togo-based Eco bankbank. However, Ecobank’s share prices had taken a beating in the Nigerian stock exchange shaving off 21.4% of the share value.
