Nedbank CEO on COVID-19 impact & the need for swift reforms to rescue SA’s economy

Amid the ongoing COVID-19 crisis, banks across the globe are facing unprecedented challenges that are impacting their financial performance. Nedbank, one of South Africa's leading financial institutions, recently reported a significant decline in interim earnings, highlighting the profound impact of the pandemic on the banking sector. In an exclusive interview with CNBC Africa, Nedbank CEO Mike Brown shed light on the strategies being implemented to navigate these turbulent times and ensure the bank's resilience for the future. Brown emphasized that the primary focus for Nedbank has been the health and safety of its staff amidst the pandemic. With stringent COVID-19 protocols in place, the bank has seen a decrease in infections among its workforce, although the loss of five employees to the virus has been a tragic consequence. Supporting customers facing financial distress has also been a top priority, with over 375,000 accounts restructured and fee concessions provided to alleviate the burden on clients. Additionally, ensuring the bank's operational continuity has been paramount, with robust IT systems maintaining nearly 100% uptime. Despite the challenges faced, Brown acknowledged the disappointing 70% decline in first-half earnings and the projected 20% drop for the year. Of particular concern is the increased credit impairment ratio, reflecting the mounting bad debts and provisions necessitated by the economic fallout of the pandemic. The hardest-hit sectors, such as airlines, tourism, and entertainment, have seen a significant impact, with employees in these industries bearing the brunt of the crisis. Looking ahead, Brown underscored the importance of resilience and growth in the face of adversity. He highlighted the bank's commitment to supporting its staff and customers, with a focus on digital acceleration and innovative solutions to weather the storm. The acceleration of digital sales, from 18% to 53% in six months, demonstrates Nedbank's proactive approach to adapting to the changing landscape. In terms of government intervention, Brown commended the swift action taken to implement a 500 billion-rand stimulus package but emphasized the critical need for structural reforms to drive economic growth. Urging progress on reforms before the medium-term budget statement, Brown stressed the importance of addressing the country's mounting debt and embarking on initiatives that will propel South Africa towards a sustainable recovery. As Nedbank and other financial institutions navigate the uncertainties of the COVID-19 era, the resilience, adaptability, and strategic vision displayed by industry leaders like Mike Brown will be instrumental in shaping the path to economic recovery and ensuring a stable future for South Africa's banking sector.