HARARE – The NedBank Group says it managed to reduce the net monetary loss from Zimbabwe by 33 percent after the group reconfigured its local banking unit’s balance sheet in the year ended 31 December 2021.
Terence Sibiya, the managing executive of Nedbank Africa Regions in an online media briefing said Nedbank Zimbabwe now has a stronger capital position having fulfilled the regulatory minimum capital requirements of US$30 million.
“From a Zimbabwean perspective, we reported a lower net monetary loss as we reconfigured the balance sheet and we were able to manage the prevailing environment that we are operating in.
“So the net monetary loss went down to from a loss of R205 million in 2020 to just under R138 million in the year under review which is about 33 percent improvement and this drops right to the bottom line and having a net positive effect of around R62 million on Headline earnings,” he said.
Mr Sibiya said while it now has an improving position it is difficult to ascertain the time frame to break even on the monetary loss, given the operating environment.
“What we can say is that we now have a stronger capital position having fulfilled our minimum capital requirements of US$30 million. This will then strengthen the growth of the business which will help us absorb the impact of hyperinflation and by extension reduce the net monetary loss,” he said.
He added that the loss was straining in the right direction and from a much stronger capital position, the Group aims to continue growing the book organically and at the same time be able to absorb any shocks that hyperinflation may have caused in the past.
Ms Sibongile Moyo, Nedbank Zimbabwe’s managing director said due to the nature of the bank’s balance sheet which is predominantly in monetary assets, the net monetary loss will always be on the balance sheet.
“Looking at our balance sheet, we do not have a huge concentration in fixed assets like property, hence we will have some monetary loss, but what is good is the downward trend and that even if it is at some level, the Bank is able to post very positive profitability,” she said.
According to Ms Sibiya, Zimbabwe is a key market for Nedbank and the group has constantly observed the changing economic climate.
He said there are some difficult trading conditions in the market and at the same time there are some green shoots and elements of improvement with some signals coming from the IMF, World Bank that continuously review the economic situation in Zimbabwe.
“So from a broader perspective, Zimbabwe is a top performer within the region. But obviously, when we consolidate it to the group, it does not seem that, but in terms of regional business it is contributing significantly to the regional Headline earnings and balance sheet,” Sibiya said.
He noted that Zimbabwe plays a critical role in group performance alongside Namibia and Mozambique.
Ms Sibiya said the bank, despite the difficulties, will not slow down on the lending mix, but will move to diversify the book.
Mr Moyo indicated that in general, over the last two years, there has been a larger contribution of non-interest income compared to lending income.
She said this trend will carry on across the region, not only in Zimbabwe, because the Banks are finding out that a lot of the retail space through transacting banking is generating a lot of significant revenue.
“In Zimbabwe, because of the exchange rate fluctuations we see a lot of non-interest income coming from foreign currency revaluations and gains.
“So what might look like reduced influence of lending is mainly because of the increase in non-interest-income revenue lines because of the dynamics in the market,” she said.
She added that in terms of blending, especially on lending, the Bank will still be lending to particularly productive sectors and support the Bank’s retail businesses as well as support clients within the limit of good risk and credit granting.
Meanwhile, in terms of overall group performance, Nedbank said it delivered a strong financial performance for the year under review with headline earnings up by 115 percent to R11,7 billion from the prior period.
Headline earnings growth was driven by significantly lower impairments, a higher net interest margin, a recovery in non-interest revenue growth, disciplined expense management and a stronger financial performance from the group’s associate investment in Ecobank Transnational Incorporated (ETI).
The group declared a final dividend per share of 758 cents, having not declared a dividend in 2020. The full-year dividend per share was 1,191 cents.
Nedbank chief executive Mike Brown said that the operating environment in 2021 was more supportive for Nedbank and its clients as the local economy in South Africa bounced back faster than most forecasters expected.