This article first appeared on GuruFocus .
-
Diluted HEPS Growth:3% growth, slightly ahead of guidance.
-
Return on Equity (ROE):15.4%, above the cost of equity of 14.6% but declined from 15.8% in the prior year.
-
Final Dividend:ZAR11.4 per share.
-
Share Buyback Program:ZAR2.4 billion completed at around ZAR229 per share.
-
CET1 Ratio:12.9%, above the revised board target range of 11% to 12.5%.
-
Private Sector Loans and Advances Growth:7.8%.
-
Corporate Credit Growth:Improved to above 10%.
-
Capital Expenditure Project Listing Increase:Over 230% compared to 2024.
-
Headline Earnings Increase:2%, excluding once-off settlement, increased by 4%.
-
Basic Earnings Per Share:Decreased by 53% due to the disposal of ETI shareholding.
-
Gross Banking Advances Growth:6%.
-
Deposit Balances Growth:11%.
-
Net Asset Value Per Share:Around ZAR250, increased by 4% year-on-year.
-
Total Dividend for the Year:ZAR21.32 per share, with a dividend yield of around 7%.
-
Net Interest Income Growth:3%.
-
Noninterest Revenue Growth:4%.
-
Impairment Charge Improvement:18% decrease.
-
Credit Loss Ratio:Improved to 68 basis points.
-
Stage 1 Loans Increase:10%.
-
Stage 2 and Stage 3 Loans Reduction:5% and 2%, respectively.
-
Total ECL Coverage:Decreased to 2.96% from 3.32%.
-
Underlying Expense Growth:5%.
-
ETI Disposal Proceeds:ZAR1.6 billion.
-
Cluster Performance - CIB ROE:21.4%.
-
Cluster Performance - BCB ROE:20.8%.
-
Cluster Performance - PPB ROE:15.6%.
-
Cluster Performance - Nedbank Africa Regions ROE:20.5%.
Release Date: March 03, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
-
Nedbank Group Ltd ( NDBKY ) maintained a strong balance sheet with a CET1 ratio of 12.9%, above the revised board target range.
-
The company declared a final dividend of ZAR11.4 per share and completed a ZAR2.4 billion share buyback program at attractive share price levels.
-
Nedbank Group Ltd ( NDBKY ) saw underlying growth across almost all businesses and clusters, particularly in the second half of the year.
-
The strategic reorganization aimed at enhancing client focus and driving revenue growth was swiftly implemented, impacting over 16,000 colleagues.
-
The acquisition of iKhokha and the planned acquisition of a controlling interest in NCBA Group are expected to strengthen the company's competitive positioning and expand its presence in East Africa.
Negative Points
-
The company's return on equity (ROE) of 15.4% was above the cost of equity but declined from the previous year's 15.8%.
-
Headline earnings increased by only 2%, with diluted HEPS growing by 3%, which was considered unsatisfactory.
-
The sale of ETI resulted in a significant negative impact on net asset value (NAV) and a 53% decrease in basic earnings per share.
-
Nedbank Group Ltd ( NDBKY ) experienced pressure on margins due to lower interest rates, with a 24 basis point decline in net interest margin.
-
The company faced challenges in executing its CIB pipeline, with delayed deal closures impacting non-interest revenue growth.
Q & A Highlights
Q: How are recent developments in the Middle East impacting Nedbank Group's short-term outlook? A: Jason Quinn, CEO, stated that it is premature to revise the short-term outlook due to uncertainties surrounding the Middle East conflict. The potential impact on oil prices is being monitored, but no changes to the outlook are planned at this time.
Q: What are Nedbank's loan growth expectations for Retail, Business Banking, and Corporate Banking in the second half of 2026? A: Jason Quinn, CEO, mentioned that the bank has strong conviction in the momentum of its lending businesses, particularly in mortgages and autos. Business and Commercial Banking (BCB) and Corporate and Investment Banking (CIB) are expected to execute their pipelines into 2026, with growth anticipated to be linear throughout the year.
Q: Can you provide more details on the competitive environment in the corporate credit market and the reasons for lower market share in corporate credits? A: Jason Quinn, CEO, explained that the CIB business operates at the pace of its clients. Delays in deal closures are due to external factors, but the bank has strong capabilities and appetite to support client growth. The expectation is that delayed deals, particularly in renewables, will execute in 2026.
Q: What is driving the additional cost optimization plans, and what is the expected timeframe? A: Jason Quinn, CEO, highlighted that the focus is on productivity improvements through organizational design and technology enablement, including AI. The goal is to enhance efficiency and minimize duplications, with the initiative expected to deliver over three years.
Q: How should we think about the credit loss ratio (CLR) in the medium-term targets? A: Michael Davis, CFO, indicated that the CLR is expected to be in the mid-70s for 2026, with an increase in BCB and mortgage credit losses. The medium-term target is to maintain CLR around the middle of the 60-100 basis points range, balancing risk and loan growth.
Q: What underpins the 18% ROE target in Personal and Private Banking (PPB)? A: Jason Quinn, CEO, stated that the target is driven by a revenue-led strategy, improved credit loss ratios, and productivity gains. The focus is on enhancing efficiency and leveraging growth opportunities to achieve the target.
Q: Can you unpack the NIR growth guidance and the contribution from recent acquisitions like iKhokha? A: Jason Quinn, CEO, noted that a large portion of NIR growth is expected to be organic, with iKhokha contributing from December. The bank anticipates strong growth in fees and commissions, particularly in CIB and PPB, driven by deal closures and transactional volumes.
Q: What is the expected capital impact of the NCBA transaction? A: Michael Davis, CFO, estimated that the NCBA acquisition would reduce the CET1 ratio by 30 to 40 basis points. The transaction is expected to close in the third quarter of 2026, with further details to be provided closer to execution.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
