HomeBusinessNedbank reduces Zim monetary losses

Nedbank reduces Zim monetary losses

BY TATIRA ZWINOIRA

SOUTH African banking outfit, Nedbank Group said on Tuesday monetary losses at its Zimbabwe operation declined to R40 million during the half year ended June 30, 2021, after ending at R47 million during the comparable period in 2020.

The Zimbabwe dollar has been depreciating against major currencies in the past few months, and companies have been reporting significant monetary losses.

“Given the further depreciation of the Zimbabwean dollar, the R40 million monetary loss was lower year-on-year (H1 2020: R47 million loss), which had a net effect on HE (headline earnings) R19 million (H1 2020: R28 million),” the Nedbank Group said in financial statements for the half year ended June 30, 2021.

As a result of the loss, the Nedbank Group reported a 9% increase in overall expenses to R1 167 million, but said this would improve if the Zimbabwe operation was excluded.

“With Zimbabwe excluded, expenses decreased by 2%, underpinned by the good management of overall costs, including lower fees and insurance as well as occupation and accommodation costs,” the group said.

“The business’s cost-to-income ratio increased marginally to 74,9% from 74,8% in the prior period. Headcount increased marginally to 2 343 (2020: 2 332) as we worked to manage costs, but at the same time filling key vacancies.”

Nedbank said the HE of the Nedbank Africa Regions (NAR) business increased to R182 million from a loss of R24 million in the first half of last year, resulting in a return on equity (ROE) of 5,8%.

“Our Sadc subsidiaries generated a headline loss of R11,4 million and ROE of -0,4% in H1 2020,” the group said.

“The loss was driven mainly by lower NIR (non-interest revenue) due to subdued economic activity, and continued hyperinflation in Zimbabwe.

“This was offset by significantly lower impairments.”

Nedbank reported a jump of 147% in its half-year profit on and reinstated its dividend by declaring an interim pay-out of 433 cents.

The lender was one among the country’s top two lenders to hold off on resuming shareholder pay-outs after suspending them following guidance from the central bank during the Covid-19 crisis in 2020.

Nedbank said the resumption of its dividend was one of the key drivers of shareholder value creation.

“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,” chief executive Mike Brown said.

*Additional Reporting by Reuters

 

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