Nedbank Group Limited has declared a final dividend of N$8,66 per share for the 2022 financial year, and will also embark on a share buyback scheme to the tune of N$5 billion.
Nedbank Namibia Holdings on the other hand appears to be struggling, though still clocking positive indicators.
The group, and the Namibian operations, released their 2022 financial accounts yesterday, which paint a similar, yet different picture.
At group level, the Johannesburg Stock Exchange-listed financial group, with operations stretching all over Africa, reported a profit of N$15 billion, from an asset base of N$1,2 trillion.
This had a return on equity edging up to 14%, and a 1,1% return on assets – all improvements from 12,5% and 0,98% recorded last year, respectively.
Terence Sibiya, the group’s executive for Africa, said the banking dominated group is looking to build an agile technology platform that will enhance client satisfaction, while pushing down costs which have over the years wrestled with the green group.
Cost to income ratio at group level was recorded at 56,5%, down from the 57% reported for 2021.
Sibiya said the group is doing reasonably well, hence its decision to declare and pay out a record full year dividend of N$16,49 per share.
Last year, the full year dividend was N$11,91.
This will also be boosted by the share buyback scheme, which Sibiya said was already approved by the board of directors and regulators.
Banking backed financial institutions are holding much liquidity, and with low private credit extension in most economies, they are forced to redistribute this in special dividends and buybacks.
Last year, Capricorn Group Limited announced a share buyback, and recently, FirstRand Namibia also declared a special dividend of N$1,86 per share.
On the local front, Nedbank Namibia posted a profit of N$275 million, 35% up from N$207 million recorded in 2021.
This was earned from an asset base of N$22,1 billion, made up largely by a N$10,3 billion loan book.
Net interest income was posted at N$783 million, 7% up from N$735 million, which is largely due to the increased repo rate.
Non-interest income shot up quite steeply to N$429 million, from N$336 million recorded in 2021.
The financial accounts for Nedbank Namibia show that return on equity was at 10%, while returns on assets hovered around 1,2%.
Speaking at the results presentation, Nedbank Namibia managing director Martha Murorua said the results were achieved in a complex and difficult external environment.
This difficult environment sank the loan book by N$370 million, while reporting a non-performing ratio of 9%.
She said the non-performing loans (NPLs) are mostly high because Nedbank Namibia’s loan book is largely concentrated in residential mortgages (about N$5 billion), and because the bank does not believe in repossessing houses, the ratio remains elevated.
It will, however, come down to about 7% by the end of the year, she said, citing positive payment arrangements made with clients.
The headache of high NPLs is matched with a high cost to income ratio, which was recorded at 66% from 68% in 2021.
Like the FirstRand Namibia Group, Nedbank Namibia’s impairment has now also dipped below N$100 million to N$94,9 million – which could be considered still high when mirrored over the loan book.
Murorua said her team and the central bank had a meeting recently to discuss the NPLs, which are way above the industry average of 5,7%.
Nedbank Namibia Holdings holds N$2,3 billion of required capital and will remain “appropriately conservative in an uncertain external environment”, reads its results commentary.
Credit extended to the private sector has been limping over recent months, as commercial banks hold back cash, or pump it into government securities.
Murorua said Nedbank has not yet started distributing loans under the relaunched small and medium enterprise loan scheme launched by the Bank of Namibia, as it is busy training staff.
She, however, said Nedbank launched an invoice discounting offering, although the uptake at corporate investment banking was limited.
“We will shift that offering now to business banking as only five companies showed interest in the offering, and two secured funding. It makes more sense at business banking,” she said.
Murorua said the bank has over 105 000 clients and only 46% are digitally active, adding that the bank is hard at work to ensure that at least 50% of its clientele becomes digitally active.
“[We will] continue to invest in new technology and processes in order to become more agile and efficient and to better respond to our customer needs. We do not plan to reduce our branch network but to adapt to meeting both the digital and physical needs of our clients and to provide more contact points for our customers’ convenience,” said Murorua.
She said while all the other banks have issued green and sustainability bonds – Nedbank Namibia intends not to issue such, as they momentarily have capital that they still need to disburse in the economy, and are busy funding renewable energy projects too, which are mainly the targets of these bonds.
At the group level, Nedbank has issued both green and sustainability bonds.
Credit – Taken from – https://www.namibian.com.na/120511/read/Nedbanks-local-green-shade-lightens
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