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Unaudited condensed consolidated interim financial results for the six months ended 30 June 2021, 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
ISIN: ZAE000004875
JSE alpha code: NEDI
('Nedbank Group' or 'the group')
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL RESULTS FOR THE SIX
MONTHS ENDED 30 JUNE 2021 AND TRADING STATEMENT
Strong performance in H1 2021
Operating conditions in the first half of 2021 were better than we expected
at the start of the year. This was evident in upward revisions to GDP
growth, vaccine rollouts gathering pace and positive developments on key
reforms in SA. A 53-year low in interest rates supported robust demand for
retail credit, while transactional activity increased off a low base and
benefited from ongoing strong digital growth. Against this progress, demand
for corporate loans remained muted and excess cash was used to repay debt,
particularly in the commodity sector. The third wave of Covid-19 infections
in SA led to the government imposing stricter adjusted level 4 lockdowns
towards the end of June. More recently, civil unrest in parts of Gauteng
and KwaZulu-Natal is expected to negatively impact economic growth, with
damage to physical assets, temporary interruptions of supply chains and
many people left without an income. Law and order and the protection of
citizens and their assets are foundations for democracy, investment and
economic activity, and it is important that steps are urgently put in place
to prevent any recurrence and that those responsible are held accountable.
It has been encouraging to see images of a united SA replace images of
unrest and violence. Thousands of South Africans joined clean-up efforts,
distributed food to communities in need, and generally spread a message of
positivity and togetherness. Nedbank has joined these efforts and has
positioned our support in a manner that will maximise the value we can
provide to the country, in line with our purpose: to use our financial
expertise to do good.
The Nedbank Group’s financial performance in the first half of 2021
reflects a strong financial recovery off a low base, and key resilience
metrics have all strengthened to above pre-crisis levels. Capital and
liquidity ratios increased as reflected in our tier 1 capital ratio of
13,6% (Dec 2020: 12,1%), CET1 ratio of 12,2% (Dec 2020: 10,9%), average
second-quarter LCR of 131% (Dec 2020: 126%) and NSFR of 114% (Dec 2020:
113%). Overall impairment coverage improved to multi-year highs of 3,41%
(Dec 2020: 3,25%) and we increased our judgemental Covid-19 and
macroeconomic overlays to R4,5bn (Dec 2020: R3,9bn).
We remain well prepared to manage risks associated with the impact of the
third wave of Covid-19 infections, which appears to have passed its peak,
the effect of the higher-than-expected lockdown restrictions during the
third wave of infections and helping our clients deal with the residual
impact of recent civil unrest in parts of SA.
Nedbank Group’s HE in H1 2021 increased by 148% on H1 2020 to R5,3bn, but
remains 24% below H1 2019 levels. HE growth benefited from significantly
lower impairments, higher net interest margin and disciplined expense
management. Underlying NIR was strong, due mainly to higher levels of
client activity and strong insurance income, but this growth was negatively
impacted by a high H1 2020 trading revenue base and an unwind of the prior-
year fair-value gains. Key drivers of shareholder value creation also
showed positive trends, with net asset value per share up 8% yoy, the
group’s ROE increasing to 11,7% (H1 2020: 4,8%) and our resumption of
dividend payments, declaring an interim dividend of 433 cents per share.
Forecasting remains difficult in a volatile environment, but after lifting
2021 GDP forecasts to 5,0%, we currently expect the country's GDP to
increase by 4,2% in 2021, taking into account the estimated 0,4% impact of
recent civil unrest in addition to the 0,4% impact from the move to
adjusted level 4 lockdown. Given progress on our strategy and the group’s
financial performance in H1 2021, our current guidance on financial
performance for the full-year 2021 is to grow HEPS and EPS by more than
20%. Our medium-term targets* remain unchanged, as we aim to exceed our
2019 diluted HEPS level of 2 565 cents, achieve an ROE greater than the
2019 ROE level of 15%, reduce our cost-to-income ratio to below 54%, and
rank number one on the NPS among South African banks by end 2023.
We thank all our committed Nedbank employees for remaining resilient during
an extraordinarily difficult time, and for continuing to follow the Covid-
19 health protocols while diligently supporting our clients and the economy
throughout the Covid-19 crisis as well as the recent unrest in KwaZulu-
Natal and parts of Gauteng. We extend our deepest condolences to the
families, friends and communities of employees and clients who have lost
their loved ones during this time.
Mike Brown
Chief Executive
* These targets are not profit forecasts and have not been reviewed or
reported on by the group’s joint auditors.
FINANCIAL HIGHLIGHTS
- Headline earnings R5 251m, up 148% (June 2020: R2 114m)
- Revenue R27 602m, up 2% (June 2020: R27 189m)
- Credit loss ratio 85bps (June 2020: 187 bps)
- Total operating expenses R16 355m, up 6% (June 2020: R15 391m)
- Cost-to-income ratio 58,5% (June 2020: 56,4%)
- Diluted headline earnings per share 1 067 cents, up 146% (June 2020:
434 cents)
- Headline earnings per share 1 084 cents, up 147% (June 2020: 438
cents)
- Basic earnings per share 1 081 cents, up 300% (June 2020: 270 cents)
- Interim dividend declared of 433 cents per share (June 2020: no
interim dividend declared)
- Net asset value per share 19 439 cents, up 8% (June 2020:
18 075 cents)
- Common-equity tier 1 ratio 12,2% (June 2020: 10,6%)
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, 11
August 2021, using the following JSE link:
https://senspdf.jse.co.za/documents/2021/jse/isse/NED/ie2021.pdf
Alternatively, the full announcement is available on our website at
https://www.nedbank.co.za/content/nedbank/desktop/gt/en/investor-relations/information-
hub/financial-results/2021.html
The full announcement is available for inspection at Nedbank Group's
registered office on weekdays from 09:00 to 16:00, and copies thereof may
be requested free of charge from Nedbank Investor Relations at
NedgroupIR@Nedbank.co.za.
INTERIM DIVIDEND DECLARATION
Notice is hereby given that an interim dividend of 433 cents per ordinary
share has been declared, payable to shareholders for the six months ended
30 June 2021. The dividend has been declared out of income reserves.
The dividend will be subject to a dividend withholding tax rate of 20%
(applicable in SA) or 86,6 cents per ordinary share, resulting in a net
dividend of 346,4 cents per ordinary share, unless the shareholder is
exempt from paying dividend tax or is entitled to a reduced rate in terms
of an applicable double-tax agreement. Nedbank Group’s tax reference number
is 9375/082/71/7 and the number of ordinary shares in issue at the date of
declaration is 508 870 678.
In accordance with the provisions of Strate, the electronic settlement and
custody system used by the JSE, the relevant dates for the dividend are as
follows:
Event Date
Event Date
Last day to trade (cum dividend) Tuesday, 14 September 2021
Shares commence trading (ex dividend) Wednesday, 15 September 2021
Record date (date shareholders recorded Friday, 17 September 2021
in books)
Payment date Monday, 20 September 2021
Share certificates may not be dematerialised or rematerialised between
Wednesday, 15 September 2021 and Friday, 17 September 2021, both days
inclusive.
Where applicable, dividends in respect of certificated shares will be
transferred electronically to shareholders’ bank accounts on the payment
date. The acceptance/collection of cheques has ceased, effective from 31
December 2020. In the absence of specific mandates, the dividend will be
withheld until such time that shareholders provide their banking
information. Holders of dematerialised shares will have their accounts
credited at their participant or broker on Monday, 20 September 2021.
TRADING STATEMENT
Full-year HEPS and basic EPS are expected to increase by more than 20%
(HEPS greater than 1 351,2 cents and basic EPS greater than 860,4 cents)
when compared with those in the 12-month period ended 31 December 2020
(HEPS: 1 126 cents, basic EPS: 717 cents). A further trading statement will
be issued to provide more specific guidance when there is reasonable
certainty about the extent of the increase and the relevant HEPS and basic
EPS ranges.
Shareholders are advised that the information in this trading statement has
not been reviewed or reported on by the group’s joint auditors.
For and on behalf of the board
Mpho Makwana Mike Brown
Acting Chairperson Chief Executive
11 August 2021
Directors
V Naidoo (Chairperson), PM Makwana* (Acting Chairperson), MWT Brown**
(Chief Executive), HR Brody, BA Dames, MH Davis** (Chief Financial
Officer), NP Dongwana, EM Kruger, RAG Leith, L Makalima, Prof T Marwala, Dr
MA Matooane, MC Nkuhlu** (Chief Operating Officer), S Subramoney.
* Lead Independent Director ** Executive
Registered office
Nedbank 135 Rivonia Campus, 135 Rivonia Road, Sandown, Sandton, 2196.
PO Box 1144, Johannesburg, 2000.
nedbankgroup.co.za
Sponsors in SA
Nedbank Corporate and Investment Banking, a division of Nedbank Limited
Merrill Lynch South Africa (Pty) Limited, t/a BofA Securities
Sponsor in Namibia
Old Mutual Investment Services (Namibia) (Proprietary) Limited
Group Company Secretary: J Katzin
Transfer secretaries in SA
JSE Investor Services (Pty) 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,
Windhoek, Namibia.
PO Box 2401, Windhoek, Namibia.
Date: 11-08-2021 07:05:00
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