Nedbank’s FY HEPS rise 20%

Nedbank Group has released its annual results, showcasing a remarkable 20% increase in headline earnings per share, reaching R14 billion. Despite facing difficulties in South Africa and other markets, the bank has managed to deliver strong profits. Mike Brown, the CEO of Nedbank Group, highlighted the challenging global landscape, including the impact of Russia's war in Ukraine, inflation, interest rates, and slower global growth. Domestically, the energy, logistics, and water industries faced significant setbacks. Despite these challenges, Nedbank Group focused on what they could control in 2022, resulting in a noteworthy earnings growth and a record level achieved. The return on equity stood at 14%, reflecting improvement year on year, but still falling short of pre-COVID levels. The bank's common equity tier one ratio indicated a robust balance sheet, leading to a high dividend payout and the announcement of a share buyback program. Looking beyond South Africa, the discussion shifted to the impacts of the sovereign debt crisis in Ghana and the contested election results in Nigeria. While sovereigns with dollar-denominated debt face challenges amid rising dollar interest rates, Nedbank Group's exposure to Ghana is through its 20% stake in ETI, leading to an estimated reduction in associate income due to the Ghanaian issues. Despite external challenges, the bank remains resilient and focused on managing its exposures and investments. Sustainable financing and the energy sector were also key topics of conversation. Nedbank Group revealed an exposure of R123 billion to sustainable financing, with significant investments directed toward energy crisis resolution. The bank sees opportunities in embedded or commercial industrial energy generation, reflecting a long-term commitment to supporting clients' climate goals. The demand for financing in the energy sector remains strong, offset by cautiousness in other industries awaiting improved energy security. Discussing the bank's role in driving energy security and sustainable financing, Mike Brown emphasized the bank's efforts in collaborating with partners to offer solar rooftop products and engage with National Treasury to repurpose COVID recovery schemes. As the government emphasizes the crucial role of banks in enhancing energy security, Nedbank Group is committed to contributing to sustainable solutions and supporting small businesses and households. The recent cabinet reshuffle in South Africa was also a topic of discussion, with Mike Brown expressing concerns about the urgent need for leadership to tackle pressing challenges. While the revamped cabinet aims for greater delivery and energy crisis resolution, the effectiveness of these measures remains to be seen. The appointment of new board members at Nedbank Group, including the potential new chair Daniel Menele, reflects the bank's commitment to governance and expertise. Daniel Menele's extensive banking experience and involvement in climate change initiatives align well with Nedbank's strategic goals, garnering positive feedback from shareholders. Nedbank Group continues to navigate a complex economic landscape, prioritizing resilience, sustainable financing, and strategic leadership to drive growth and value for shareholders.