ONE of the country’s leading commercial banks, Nedbank, has posted an impressive first half year financial performance and profitability with $325 million in inflation adjusted income, substantial growth in loans and assets.
In its results released on Tuesday, the bank said loans and advances grew by 37 percent to $2,308 billion during the six months ended June 30, 2021 from $1,684 billion recorded in the comparable period as the bank extended credit to support industry.
This is against a current trend in the sector where most financial institutions have adopted a cautious approach to lending with the average prudential liquidity ratio remaining high at around 70 percent.
Sibongile Moyo, the bank’s managing director, said net interest income grew by 119 percent over the comparative period on the back of increased loans and advances as well as an upward review of minimum lending rate by the bank in April 2021.
“Loans and advances grew by 37 percent (65 percent growth in historical terms) as the bank sought to extend credit to support industry,” Moyo said. “Management continues to focus on optimising the statement of financial position by deploying deposits in quality earning assets and through hedging strategies to preserve capital.”
The financial institution recorded a profit after tax of $227,7 million during the half year and total comprehensive income of $325.1 million.
Operating income for the period was $1,662 billion buoyed by a 108 percent increase in non-funded income from digital channels including point of sale acquiring and a 97 percent increase in fees, commissions, trading and dealing income.
Nedbank’s total revenue decreased by 17 percent due to a 92 percent reduction in unrealised foreign exchange gains which contributed 64 percent of total revenue in the prior year.
Moyo said revenue from customer transactions grew by 101 percent compensating the reduction in unrealized foreign exchange gains due to relative stability in the local currency interbank exchange rate over the comparative period.
The bank’s total expenses decreased by four percent to $1.328 billion during the half year due to the decrease in the monetary loss charge as the year-on-year inflation rate slowed down.
Cost to income ratio closed the period at 80 percent compared to 69 percent in the comparative period.
Nedbank’s statement of financial position grew by 17 percent with total assets closing at $20 billion at June 20, 2021 compared to the prior period position of $17,14 billion.
Deposits closed the period at $13.1 billion representing a 4.7 percent decrease from the comparable period position.
During the period under review, Nedbank’s shareholder equity grew to US$23 million equivalent in local currency up from US$17 million in December 2020 with capital adequacy ratio of 21.81 percent.
Nedbank’s liquidity ratio stood at 108 percent during the half year against a prudential minimum of 30 percent with return on equity of 46 percent.
Moyo said non-performing loans ratios were effectively managed at 0,52 percent.