The South Africa-headquartered Nedbank Group, which has operations in Zimbabwe, says it expects to resume dividend payments this year after scrapping payouts for 2020.
In a statement yesterday, the financial institution said it was likely to enjoy a profit boost this year.
The lender also set a target to improve return on equity in the medium term to levels better than the 15% achieved in 2019, and sees earnings growth of more than 20% in the first half of 2021.
The company opted to “retain capital for both potential growth opportunities but also for potential further risks in the virus,” chief executive Mike Brown said.
If the backdrop turns more sour, “we always retain the opportunity to return that capital to shareholders at a later stage,” he said.
Headline earnings for the year to December fell 57% to R5,4 billion (US$307 million) after raising impairments to navigate the weak operating environment caused by the COVID-19 pandemic. Revenue was down 3,5% to R54,2 billion. Nedbank and Absa are opting to preserve capital even after the South African regulator relaxed guidance on dividends and bonuses and other banks declared payouts.
While the country has recovered from a fierce resurgence in the coronavirus outbreak late last year, the regulator still warned lenders to spend capital prudently as the country is likely to face further spikes in infections. -Bloomberg