Unaudited condensed consolidated interim financial results for the 6 months ended 30 June 2020 and trading statement
NEDBANK GROUP LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1966/010630/06
JSE share code: NED
NSX share code: NBK
JSE alpha code: NEDI
(Nedbank Group' or 'the group)
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL RESULTS FOR THE SIX
MONTHS ENDED 30 JUNE 2020 AND TRADING STATEMENT
In a period of unprecedented health, economic and social challenges that
have impacted our staff and our clients, Nedbank Group remained profitable
and open for business, with capital and liquidity ratios within board-
approved targets and well above all prudential requirements.
The Covid-19 pandemic has had a material impact on individuals, families,
businesses, societies and countries in what is becoming known as the Great
Lockdown Crisis (GLC). Unfortunately, as a result of consistently weak
economic growth and an unsustainable fiscal position, the SA economy
entered this crisis in a more challenging position than it did entering the
Global Financial Crisis (GFC). The impact of the pandemic and the GLC has
resulted in a revision of our 2020 SA GDP growth forecast to a contraction
of 7,0%, with the second quarter expected to be most impacted and the Q2
GDP in SA forecast expected to decrease by more than 40%. By contrast, SA
banks are in a more resilient position than they were during the GFC, with
loan growth going into the GLC being more prudent, impairment coverage
ratios being higher, funding tenor being longer and capital levels being
stronger than they were during the GFC.
At Nedbank our primary focus since the crisis started has been on
resilience: ensuring the health and safety of our staff and clients;
invoking business continuity plans; ensuring IT systems stability;
supporting our clients in managing their finances through this very
difficult period; and managing liquidity, credit risk, capital and
discretionary costs closely. We have provided payment relief to our
qualifying clients in good standing on R119bn of loans under PA D3/2020,
reduced various fees, and launched digital innovations to assist our
clients during the lockdown, including the Avo app and Tap on Phone
payments functionality. Throughout the crisis we have maintained a strong
balance sheet, evident in a tier 1 capital ratio of 11,7% and CET1 ratio
of 10,6% at 30 June 2020, as well as a strong liquidity profile. Both
ratios are above board-approved minimum targets and well above all
regulatory requirements. The Covid-19 health crisis morphed quickly into an
economic crisis and is currently escalating to become a social crisis due
to, among other things, increases in already unacceptable levels of
unemployment. As Nedbank, we are committed to making a difference in this
difficult environment and deliver on our purpose to use our financial
expertise to do good for our clients and society.
Nedbank Group’s HE in the six months to 30 June 2020 declined by 69% to
R2,1bn, impacted by a significant increase in the impairment charge,
including a provision build from forward-looking IFRS-9 macro-model
adjustments and judgemental overlays for anticipated Covid-19-related
impacts and expected job losses, in total amounting to R2,9bn. In addition,
H1 was impacted by the effect of lower interest rates on endowment income
(NII) and a decrease in NIR as a result of lower client transactional
activity in Q2 2020 and negative revaluations to unrealised private-equity
investments driven by lower listed market prices and increases in
cost of equity. Expenses were well managed and declined on the prior
Forecasting in the current environment is complex and estimates are subject
to a much higher level of forecast risk than usual, but we are hopeful that
the worst impacts of Covid-19 and the GLC are behind us and that
impairments in the second half will be lower than in the first half and
client activity will continue to increase off a low base. Our focus in the
second half of 2020 will remain on resilience as we reintegrate business
functions in a phased manner, including delivering market-leading client
experiences and innovative digital solutions, supporting our clients, and
optimising on costs, while managing credit risks and maintaining resilient
capital and liquidity ratios and remaining on high alert for subsequent
waves of infection.
We thank our 29 000 dedicated staffmembers who have been observing the
Covid-19 health protocols and supporting our clients and the economy during
this difficult period. We also extend our deepest condolences to the
families and friends of the five Nedbank staffmembers who have passed away
as a result of Covid-19 and related illnesses.
- Headline earnings R2 114m, down by 69,2% (June 2019: R6 870m)
- Revenue R27 189m, down by 1,8% (June 2019: R27 693m)
- Credit loss ratio 194 bps (June 2019: 70 bps)
- Expenses R15 391m, down by 1,1% (June 2019: R15 565m)
- Cost-to-income ratio 56,4% (June 2019: 55,4%)
- Diluted headline earnings per share 434 cents, down by 69,2% (June
1 411 cents)
- Headline earnings per share 438 cents, down by 69,5% (June 2019: 1
- Basic earnings per share 270 cents, down by 81,0% (June 2019: 1 419
- No interim dividend declared, down by 100% (June 2019: 720 cents)
- Net asset value per share 18 075 cents, up by 1,6%(June 2019: 17 794
- Common-equity tier 1 ratio 10,6% (June 2019: 11,3%)
This short-form announcement is the responsibility of the directors. It is
only a summary of the information contained in the full announcement and
does not contain full or complete details. Any investment decision should
be based on the full announcement, which can be accessed from Wednesday, 26
August 2020, using the following JSE link:
Alternatively, the full announcement is available on our website at
The full announcement is available for inspection at Nedbank Group's
registered office on weekdays from 09:00 to 16:00 by appointment only in
accordance with Covid-19 restrictions, and copies thereof may be requested
free of charge from Nedbank Investor Relations at NedgroupIR@Nedbank.co.za.
As advised in the SENS announcement released on 20 August 2020, notice is
hereby given that no interim dividend has been declared. This is in line
with G4/2020 released by the PA on 6 April 2020, notwithstanding the
group’s strong liquidity and capital positions. The board will give due
consideration to this guidance note in future dividend cycles.
Full-year headline earnings per share (‘HEPS’) and earnings per share
(‘EPS’) for the 12-month period ending 31 December 2020 are expected to
decline by more than 20% when compared to the 12-month period ended 31
December 2019 (HEPS: 2 605 cents, EPS: 2 500 cents).
A further trading statement will be issued to provide specific guidance
once there is reasonable certainty regarding the extent of the decline and
the relevant HEPS and EPS ranges.
Shareholders are advised that the information in this trading statement has
not been reviewed or reported on by the group’s auditors.
For and on behalf of the board
Vassi Naidoo Mike Brown
Chairman Chief Executive
26 August 2020
V Naidoo (Chairman), MWT Brown* (Chief Executive), HR Brody, BA Dames, NP
Dongwana, EM Kruger, RAG Leith, L Makalima, PM Makwana**, Prof T Marwala,
Dr MA Matooane, RK Morathi* (Chief Financial Officer), MC Nkuhlu* (Chief
Operating Officer), S Subramoney, IG Williamson.
* Executive ** Lead independent director
Nedbank 135 Rivonia Campus, 135 Rivonia Road, Sandown, Sandton, 2196.
PO Box 1144, Johannesburg, 2000.
Sponsors in SA
Merrill Lynch SA Proprietary Limited, Nedbank CIB
Sponsor in Namibia
Old Mutual Investment Services (Namibia) (Proprietary) Limited
Company Secretary: J Katzin
Transfer secretaries in SA
Link Market Services South Africa Proprietary Limited, 19 Ameshoff Street,
Braamfontein, Johannesburg, 2001, SA.
PO Box 4844, Marshalltown, 2000, SA.
Transfer secretaries in Namibia
Transfer Secretaries (Proprietary) Limited, Robert Mugabe Avenue No 4,
PO Box 2401, Windhoek, Namibia.
Date: 26-08-2020 07:05:00
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