Nedbank Group (NED) H2 2025 earnings summary

Executive summary

• 2025 was a transformative year marked by strategic reorganization, acquisitions of iKhokha and Eqstra, the sale of a 21% stake in ETI, and a pending acquisition of a controlling interest in NCBA Group in East Africa.

• Financial performance was resilient and slightly ahead of guidance, with headline earnings up 2%, diluted HEPS up 3%, and ROE at 15.4%, above cost of equity.

• Strong balance sheet maintained, with a CET1 ratio of 12.9%, a final dividend of ZAR 11.04 per share, and a ZAR 2.4 billion share buyback.

• Operating environment improved, with GDP growth at 1.4%, robust loan and deposit growth, and positive market sentiment following South Africa's removal from the FATF gray list and S&P's upgrade.

• Concluded a ZAR 600 million Transnet settlement to avoid litigation and support infrastructure investment.

Financial highlights

• Headline earnings increased by 2% to ZAR 17.2 billion, diluted HEPS up 3% to 3628 cents, and ROE at 15.4% (above COE of 14.6%).

• Gross advances grew 6% to ZAR 997 billion, deposits up 11% to ZAR 1,306 billion, and NAV per share increased 4% to ZAR 250.

• Cost-to-income ratio increased to 57.8%; credit loss ratio improved to 68 bps (from 87 bps in 2024).

• Basic EPS decreased by 53% due to the ETI disposal.

• Total dividend for the year was ZAR 21.32 per share (7% yield); NII up 3% despite NIM compression; NIR up 4%.

Outlook and guidance

• NII and NIR growth expected at mid-single digits for 2026, driven by advances growth; NIM to contract slightly.

• Credit loss ratio guided to mid-70 bps, below midpoint of target range.

• ROE target above 15% for 2026, aiming for 17% medium-term; cost-to-income ratio target of 54%.

• No further earnings from ETI; NCBA acquisition expected to close Q3 2026.

• Medium-term DHEPS growth target is CPI + GDP + 3%.