Nedbank first-half earnings up 45%

JOHANNESBURG – South Africa’s Nedbank posted a 44,5 per cent rise in first half headline earnings per share and predicted an even bigger full-year hike as a recovery plan designed to turn the group around kicked in.

Earnings per share jumped to 354 cents from 245 cents a year before, Nedbank said yesterday in line with its projections. It said it expected full-year headline earnings to rise 58-78 per cent from 2004’s 1,74 billion rand, adjusted for new IFRS accounting standards.”The improved performance for the six months (to end-June) was driven mainly by the continued realisation of benefits from the recovery programme, which are reflected in the growth in operating income and the containment of expenses”, Nedbank said.Net interest income at Nedbank, majority-owned by South Africa’s biggest insurer Old Mutual, rose 21,2 per cent to 4,02 billion rand.The group said it would pay an interim dividend of 105 cents per share, up 139 per cent from a year before.Headline earnings from the group’s retail banking operations increased 105,1 per cent to 439 million rand, while its Nedbank Capital investment banking division lifted headline earnings 25,9 per cent to 447 million rand.Nedbank, South Africa’s fourth-biggest banking group by assets, said results were further helped by a weaker South African rand, which led to a foreign currency translation gain of 165 million rand against a 98 million rand loss for the first six months of 2004.It told shareholders last month that it expected first-half headline EPS, which excludes non-trading, capital and certain extraordinary items, to be 40 per cent to 50 per cent higher than the same period a year ago.RECOVERY PLAN The banking group last year launched a three-year recovery programme, aimed at turning its business around after a host of problems — including wrong interest rate calls — which slashed profits and triggered a multi-billion rand cash call last year.Nedbank Chief Executive Officer Tom Boardman said the benefits of the turnaround plan could be seen in the group’s results, noting that one of the company’s key aims was to maintain market share from the second half of the year.”There has been a slowdown in the rate that the group has been losing market share, particularly in Nedbank Retail.We expect market shares to stabilise in the second half of the year,” Boardman said in a statement.Analysts said the well-flagged results were in line with expectations.”The trend is extremely positive and the clean-up which they instituted last year is unquestionably having an effect.There are very little of the non-headline adjustments which were so beloved by previous Nedbank management,” one Johannesburg-based analyst said.Expenses at the group, previously criticised as too high by investors and analysts, shrank 3,9 per cent to 5,31 billion rand.-Nampa-ReutersIt said it expected full-year headline earnings to rise 58-78 per cent from 2004’s 1,74 billion rand, adjusted for new IFRS accounting standards.”The improved performance for the six months (to end-June) was driven mainly by the continued realisation of benefits from the recovery programme, which are reflected in the growth in operating income and the containment of expenses”, Nedbank said.Net interest income at Nedbank, majority-owned by South Africa’s biggest insurer Old Mutual, rose 21,2 per cent to 4,02 billion rand.The group said it would pay an interim dividend of 105 cents per share, up 139 per cent from a year before.Headline earnings from the group’s retail banking operations increased 105,1 per cent to 439 million rand, while its Nedbank Capital investment banking division lifted headline earnings 25,9 per cent to 447 million rand.Nedbank, South Africa’s fourth-biggest banking group by assets, said results were further helped by a weaker South African rand, which led to a foreign currency translation gain of 165 million rand against a 98 million rand loss for the first six months of 2004.It told shareholders last month that it expected first-half headline EPS, which excludes non-trading, capital and certain extraordinary items, to be 40 per cent to 50 per cent higher than the same period a year ago.RECOVERY PLAN The banking group last year launched a three-year recovery programme, aimed at turning its business around after a host of problems — including wrong interest rate calls — which slashed profits and triggered a multi-billion rand cash call last year.Nedbank Chief Executive Officer Tom Boardman said the benefits of the turnaround plan could be seen in the group’s results, noting that one of the company’s key aims was to maintain market share from the second half of the year.”There has been a slowdown in the rate that the group has been losing market share, particularly in Nedbank Retail.We expect market shares to stabilise in the second half of the year,” Boardman said in a statement.Analysts said the well-flagged results were in line with expectations.”The trend is extremely positive and the clean-up which they instituted last year is unquestionably having an effect.There are very little of the non-headline adjustments which were so beloved by previous Nedbank management,” one Johannesburg-based analyst said.Expenses at the group, previously criticised as too high by investors and analysts, shrank 3,9 per cent to 5,31 billion rand.-Nampa-Reuters