By Adelaide Changole.
Nedbank Group said first-half profit rose marginally as loan growth improved, fee income increased and the South African lender kept a lid on expenses.
Headline earnings climbed 0.1% to R8.41 billion ($510 million) in the six months through June, it said in a statement. Its first-half performance, along with an interim dividend of R10.52, was the highest on record.
While the headline numbers were “flat”, underlying earnings growth was strong after stripping out about R1 billion generated by its investment in Ecobank Transnational in the first half of last year, Nedbank chief executive officer Jason Quinn said.
“If you exclude that base effect, our diluted headline earnings per share was up around about 15%, which I thought was really good,” while revenue “grew nicely,” he said in an interview on Bloomberg Television. Nedbank sold its stake in Ecobank in the second half of last year.
Nedbank’s corporate and investment banking grew advances by 8% in the period, while its business and commercial banking unit, which manages smaller enterprises, posted a 6% increase in lending growth, compared to a 2% decline last year.
South African banks have been turning to corporate lending to mitigate against weakness in the retail space and challenges from a sluggish local economy and escalating global trade frictions have squeezed incomes.
Profit growth was supported by a 4% increase in net interest income and a 10% gain in fees and commissions, which offset a 3% increase in operating expenses. A 26% surge in impairments lifted the bank’s credit loss ratio to 95 basis points — near the top of the board-approved target of 60 basis points to 100 basis points.
Nedbank downgraded its 2026 gross domestic product growth forecast for South Africa to 1.3% from 1.5%, citing a contraction in domestic demand, a relapse in fixed investment and a slowdown in household spending.
Improvements in structural reforms by the government may help the economy expand by 1.9% in the next two years, with 2.5% possible by 2030, creating opportunities for significant infrastructure development with it, Quinn said.
“There is a R1.1 trillion opportunity of infrastructure investment, and we are really well positioned as Nedbank to participate because we are the infrastructure finance bank in South Africa,” he said.
The lender expects interest-income growth to continue to improve to about 7% for the full year, though risks remain tilted to the downside. It also sees underlying growth momentum across its businesses continuing into the full year, which will support an improvement in headline earnings growth for the 12 months, Quinn said.
Return on equity is expected to remain above 15% in 2026.
“In the medium term, we remain focused on delivering an ROE of around 17% in 2028, underpinned by stronger revenue growth and continued operational efficiency gains,” the bank said in an earlier statement.
Meanwhile, the lender is gearing up its expansion into East Africa, with plans to get regulatory approval for its acquisition of a majority stake in Kenyan lender NCBA Group Plc in the third quarter and expects to complete the transaction in the following three-month period.
“The combination of our businesses, I think, creates a really strong proposition for collaboration between the two businesses, “Quinn said. “Nedbank will bring corporate and investment banking-type activities into Kenya through NCBA, and then NCBA has incredible digital platforms which we think are scalable and transportable into different markets, so I am really looking forward to consummating that transaction.”