Nedbank Group (NED) Trading update summary

Operating environment

• Global economic growth slowed in H1 2026 due to geopolitical tensions and trade disruptions, with inflation accelerating from higher energy and commodity prices.

• South Africa's economic outlook improved, supported by fiscal reforms and credit rating upgrades, but GDP growth for 2026 was revised down to 1.3%.

• Local inflation rose from 3% in February to 4.5% in May, prompting a 25 bps interest rate hike; inflation is expected to peak at 4.6% in June before easing.

Financial and trading update

• Headline earnings for the first five months of 2026 were broadly in line with expectations, with diluted HEPS growth expected to slightly outpace HE growth due to share buybacks.

• Net interest income grew at low to mid-single digits, supported by asset growth but offset by lower net interest margin from prior rate cuts.

• Non-interest revenue grew at upper single digits, driven by insurance, trading, and fee income, especially in CIB and BCB.

• Expenses were tightly managed, growing below mid-single digits, with continued focus on cost control.

• Credit loss ratio increased to the upper half of the target range, with higher impairments in PPB and a single client impact in BCB; CIB’s credit quality remained strong.

Segment performance

• CIB delivered strong results with healthy balance sheet growth, low impairments, and robust fee and trading income.

• BCB’s performance was affected by a one-off impairment, but underlying fundamentals were solid with better loan and NIR growth.

• PPB earnings were pressured by lower endowment income and higher impairments, despite strong insurance and fee income.

• SADC operations saw strong earnings growth from a low base.