Nedbank Lesotho posts impressive interim results

RETHABILE MOHONO

MASERU – In a bold move that showcases its resilience and strategic foresight, Nedbank Lesotho has reported impressive interim results for the six-month period ending June 2024, marking a significant milestone with an 11.5 percent increase in dividends.

As one of South Africa’s leading financial services giants, Nedbank Group has cemented its position not only domestically but across the Southern African Development Community (SADC) region, with subsidiaries in Eswatini, Lesotho, Mozambique, Namibia, and Zimbabwe, alongside international offices in Ghana, Kenya, and beyond.

This week’s financial report, highlighting the six-month performance up to June 30, 2024, reveals a robust growth trajectory. Headline earnings (HE) surged by eight percent to R7.9 billion, while the return on equity (ROE) climbed to 15.0 percent, reflecting the group’s strategic acumen in navigating a challenging economic environment.

Chief Executive Officer Jason Quinn attributed this success to the company’s focus on expanding non-interest revenue (NIR), stringent expense management, and a reduction in impairment charges, even as net interest income (NII) growth remained tepid and income from associates declined.

“The operating environment in the first half of 2024 was challenging as economic activity remained weak,” he said, pointing to geopolitical uncertainty, persistent inflation, high interest rates, and pre-election jitters in South Africa as key factors that dampened domestic performance.

Despite these hurdles, Quinn expressed cautious optimism about the future. “We remain cautiously optimistic around the potential benefits associated with South Africa’s Government of National Unity and expect better macroeconomic conditions in the second half of 2024 and into the medium-to-long term.”

The stabilisation of the electricity supply has eased some structural constraints, but Quinn noted that progress on other infrastructural issues has been sluggish.

Looking ahead, Nedbank is confident in its ability to reach its medium-term targets, with aspirations to boost ROE to 17 percent by 2025 and over 18 percent in the long term. This confidence is underpinned by a strong financial foundation, as evidenced by the impressive growth in headline earnings per share (HEPS) by 11 percent to 1,699 cents, diluted HEPS (DHEPS) by 12 percent to 1,650 cents, and basic earnings per share (EPS) by 12 percent to 1,700 cents.

The completion of a R5 billion capital optimisation initiative in H1 2023 has further bolstered the company’s EPS growth.

Nedbank’s balance sheet remains robust, with CET1 and tier 1 capital ratios of 13.3 percent and 14.7 percent respectively, comfortably exceeding board-approved target ranges and South African Reserve Bank (SARB) minimum requirements.

Buoyed by this performance and a strong capital and liquidity position, the bank declared an interim dividend of 971 cents per share, a notable 11.5 percent increase.

On a local note, Nedbank Lesotho has been making waves with its innovative approach to financial services. Last week, the bank launched the Nedbank Zaca International Transfer service, enabling clients to send money instantly from South Africa to Lesotho via mobile phones.

This service is a game-changer, addressing the long-standing issue of queues at month-end as people wait to collect remittances from South Africa.

It also expands the functionality of the existing Nedbank Mobi Money service, making it easier for Basotho to manage their finances through mobile devices. The bank’s mobile wallet, introduced in 2022, has continued to gain traction, particularly among the traditionally unbanked population.

The recent enhancements to the Nedbank Mobi Money service stem from a strategic collaboration with the local firm, Teenaar, further solidifying Nedbank’s commitment to innovation and customer-centric solutions.