Nedbank Group (NED) H1 2024 earnings summary

Executive summary

• Delivered strong H1 2024 financial performance, with headline earnings up 8% to R7.9bn, diluted HEPS up 12%, and ROE rising to 15%, driven by lower impairments, robust NIR growth, and disciplined expense management.

• Interim dividend increased by 11.5% to 971 cents per share, with a 57% payout ratio.

• Maintained a strong balance sheet, with CET1 ratio at 13.3% and NAV per share up 2% to 23,097 cents.

• Seamless CEO transition, with continued focus on strategic growth, digital innovation, and sustainability leadership.

• Operating environment remained challenging due to high rates and inflation, but post-election optimism improved sentiment.

Financial highlights

• Headline earnings up 8% to R7.9bn; diluted HEPS up 12% to 1,650 cents; ROE at 15.0% (H1 2023: 14.2%).

• Net interest income rose 2% despite NIM compression to 4.13%; non-interest revenue up 7% (9.5% excluding Zimbabwe FX and Eqstra).

• Impairment charge down 12% to R4.7bn; credit loss ratio improved to 104 bps, near the top end of the 60–100 bps target range.

• Expenses increased 8.5% (7.9% excluding Eqstra), with cost-to-income ratio at 55.3%.

• Gross banking advances grew 4% to R913bn; deposits up 3% to R1,120bn.

Outlook and guidance

• Cautiously optimistic for H2 2024, with GDP growth forecast at 0.9% and inflation easing.

• NII growth for FY 2024 revised to below mid-single digits; NIR and expense growth expected at upper single digits.

• Credit loss ratio expected to remain in the top half of the 60–100 bps range; CET1 ratio to stay above target.

• Dividend payout to remain at the top end of the 57% range; medium-term ROE target of 17% by 2025 and above 18% long term.

• Cost-to-income ratio targeted towards 52% medium term, with continued main-banked client gains.