Nedbank backs Zim productive sector

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Nedbank

By Taurai Mangudhla
Johannesburg Stock Exchange (JSE)-listed regional banking group Nedbank has pledged support to Zimbabwe’s productive sectors through lending into the future despite rising inflation and prevailing exchange rate risks in the southern African economy.

Nedbank Zimbabwe managing director Sibongile Moyo said while some financial services players predicted a slowdown in lending in Zimbabwe on account of a myriad of macroeconomic challenges including inflation and exchange rate risks, her bank would back productive sectors through prudential lending and create a healthy lending mix in the
market.

She was speaking to NewsDay during a virtual interview on Wednesday.

“In terms of lending, we will still be looking to lend to support the productive sectors, our businesses and clients within the limits of good risk and credit granting. We will not be slowing down, but note the significant increase in non-interest income given the market dynamics,” Moyo said.

“Over the last two years, we have seen a larger contribution of non-interest income which is transaction income, compared to lending income across the market and the region. I think this trend will carry on because we are finding that a lot of the retail market space, a lot of transaction banking, is generating significant revenue.

“In Zimbabwe in particular because of the exchange rate fluctuations, we see a lot of noninterest income coming from foreign currency revaluations and gains so what might look like the reduced influence of lending is mainly because of the increase in non-interest income revenue lines given the dynamics in the market.”

The Nedbank group reported a 115% growth in headline earnings growth during the review period to R11,7 billion on account of significantly lower impairments, a higher net interest margin and recovery in non-interest revenue growth.

Disciplined expense management and a stronger financial performance from Ecobank Transnational Incorporated, a Nedbank associate, contributed to strong financial
performance.

“The operating environment (in South Africa) was more supportive for Nedbank and its clients during the period under review. The South African economy bounced back faster than most forecasters expected from the low base of 2020,” group CEO, Mike Brown
said.

“The importance of accelerating structural reforms and energy supply security cannot be over-emphasised and they remain key to unlocking faster economic growth and job creation in South Africa over the medium-to-longer term,” Brown said in the statement.

Headline earnings at the pan-African lender climbed by 115% to R11,7 billion on account of lower impairments.

Nedbank’s strong performance was also underpinned by a strong recovery in non-interest revenue.

Brown also attributed Nedbank’s growth to “supportive” economic conditions in South Africa.

“The operating environment was more supportive for Nedbank and its clients during the period under review,” Brown said in a commentary to the financial statements.

“The South African economy bounced back faster than most forecasters expected from the low base of 2020,” Brown said.

“In the third quarter the negative impacts of a prolonged third wave of COVID-19 infections, tighter lockdown restrictions, the July civil unrest in parts of the country and frequent power outages weighed heavily on economic activity but trading conditions improved in the last quarter of 2021.

“The importance of accelerating structural reforms and energy supply security cannot be over-emphasised and they remain key to unlocking faster economic growth and job creation in SA over the medium-to-long term,” Brown added.

The firm said pre-provisioning operating profit increased by 9%.

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