THE Nedbank group delivered a strong financial performance during the year ended 31 December 2021 posting a 115 percent headline (operating) earnings to M11, 7 billion.
The group revealed in a statement yesterday that factors that influenced the massive headline earnings growth included lower impairments (losses); a higher net interest margin; recovery in non-interest revenue growth; and disciplined expense management among others.
“The operating environment was more supportive for Nedbank and its clients during the period under review,” Nedbank group chief executive, Mike Brown, said.
“The South African economy bounced back faster than most forecasters expected from the low base of 2020. In the third quarter, the negative impacts of a prolonged third wave of Covid-19 infections, tighter lockdown restrictions, the July civil unrest in parts of the country and frequent power outages weighed heavily on economic activity but trading conditions improved in the last quarter of 2021.
“The importance of accelerating structural reforms and energy supply security cannot be over emphasised and they remain key to unlocking faster economic growth and job creation in SA over the medium-to-longer term.”
Mr Brown said the past two years had been unprecedented and extraordinarily difficult for their clients and employees.
“Thank you to all our Nedbank employees for remaining resilient throughout the Covid-19 crisis. We extend our heartfelt condolences to the families, friends and communities of employees and clients who have lost their loved ones during this time,” Mr Brown said.
The group said its balance sheet continued to strengthen as it closed out the resilience phase of its strategic response to the Covid-19 pandemic during 2021.
“Common equity tier 1 (CET1) and tier 1 capital ratios of 12, 8 percent and 14, 3 percent, respectively improved on the prior period and were now above the pre-Covid-19 levels of 11, 5 percent and 12, 8 percent, respectively,” the group said.
Mr Brown said: “Our balance sheet capital strength enables us to support future client growth as well as declare a final dividend of 758 cents at 1, 75 times cover (pay-out ratio of 57 percent)”.
The group also attributed its financial performance to the good implementation of its strategy.
The strategy is being delivered through delivering innovative market-leading client solutions; engaging in ongoing disruptive market activities (underpinned by digital leadership) and focusing on areas that create value (strategic portfolio tilt). It is also being delivered by driving efficient execution (including target operating model enhancements) and creating positive impacts, including delivering on our purpose of using our financial expertise to do good.
“Underpinning this is the Managed Evolution strategy and technology transformation programme to build a modern, modular and digital information technology stack that has reached 85 percent completion and helped deliver a number of wins over the past year:
- Digital initiatives helped to increase the number of digitally active Nedbank retail clients in SA by 11 percent to 2, 3 million (December 2020: 2,1 million). This now represents 64 percent of main-banked clients (2020: 57 percent and 2019: 49 percent).
- The Nedbank Money app, which makes banking more convenient for retail clients, continues to be rated highly on the Apple and Google app stores, with an average client rating of 4, 4 (out of five). It is actively used by 1, 6 million clients, up by 38 percent (2020: 1, 2 million). Transaction volumes on the Nedbank Money app increased by 54 percent and transaction values increased by 72 percent when compared to full-year 2020.
- Simplified digital client onboarding platforms for individual and juristic (business) clients continue to mature and expand, enabling clients to open FICA-compliant accounts remotely through our employee-assisted and self-service digital channels, by providing a seamless omnichannel experience. The digitising of product sales to individuals currently includes six of Nedbank’s top retail products; transactional products, personal loans, card issuing, home loans, investments and overdrafts, as well as more than 170 services.
- Since its launch in June 2020, Avo (Nedbank’s super app) signed up more than 675 000 consumers (4, 7 times growth year on year) by December 2021, along with over 20 250 businesses registering and offering their products and services on this e-commerce platform. Product orders continue to grow exponentially, with 3 times year on year growth of gross merchandise value. At the start of March 2022, Avo exceeded 1 million clients,” the Nedbank statement said.