Nedbank earnings down 6.3% in tough domestic environment

JOHANNESBURG – Banking group Nedbank on Tuesday reported a 6.3 percent drop in diluted headline earnings per share to R25.65 in the year to December 31, citing difficult domestic conditions.

South Africa’s economic growth in 2019 — which the National Treasury has estimated at just 0.3 percent — was slower than expected mainly due to severe and frequent power outages, an unsustainable fiscal trajectory and ongoing policy uncertainty, combined with a deteriorating global outlook, Nedbank chief executive Mike Brown noted.

“Under these difficult domestic conditions, company profits and household finances deteriorated during the year, resulting in subdued credit demand, lower transactional volume growth and rising defaults in the South Africa banking industry,” he said.

“In this environment Nedbank Group’s financial performance was below expectations.”

He said headline earnings were also impacted by additional items in the second half of the year, including hyperinflation in Zimbabwe and the raising of impairments against recoverability of recognised inter-company legacy debt.