Nedbank shoots the lights out with return to pre-pandemic profits

Nedbank’s headline earnings increased 27% to R6.7-billion, driven by strong revenue growth and a well-managed expense base. 

Nedbank chief executive Mike Brown said the group’s performance in the first half of 2022 reflects improvements across all key metrics in a complex and difficult operating environment. 

The group’s balance sheet remained very strong despite a challenging second quarter, which saw local economic activity disrupted by the floods in KwaZulu-Natal, rolling blackouts, weaker global demand, escalating inflation and a faster-than-expected rise in interest rates. 

“Electricity supply is a binding constraint on economic growth and job creation, and urgent implementation of the Energy Action Plan is needed,” Brown said.

During the past six months, Nedbank continued to make good progress on its strategic value drivers of growth, productivity and risk and capital management. Levels of productivity improved – evident in the cost-to-income ratio declining to 56.2% and a 17% increase in pre-provisioning operating profit.

Brown said the company’s improved productivity is largely due to a managed evolution technology strategy that has enabled continued double-digit growth in the more cost-effective digital channels, propelling the number of digitally active retail clients 10% to 2.4-million, up 60% since the first half of 2019. 

It is also largely responsible for savings of R1.2-billion to date, while the bank says flexible work practices have enabled ongoing cost savings. Project Imagine has resulted in a reduction of 69,000m² in branch space from 2014 levels, while the actual number of branches declined by eight this year, bringing the total number of branches to 419.

The bank has reduced the number of campus or office sites from 31 to 24 over the past four years, and plans to reduce further to a target of 19.