Repo rate cuts cost Nedbank N$104 million
Due to the reduction in the repo rate of 275 basis points since February 2020, Nedbank Namibia’s net interest income decreased by 13.61% (N$104 million) to N$740.4 million in the financial period ended December 2020.
This was announced by Nedbank in a statement of their condensed results. The bank’s impairment charge for the year amounted to N$246.5 million. As a result, the annualised credit loss ratio has increased to 2.05% compared to 0.96% for 2019.
The significant increase in impairments is due to the widespread effect of the Namibia economy in recession, impacting the ability of consumers and businesses to repay existing debt.
Contributing to the increase in impairments is the weak outlook for the Namibian economy for the foreseeable future, compounded by the Covid pandemic, extending the expected economic recovery to beyond what was initially projected in 2019.
Nedbank does, however, not foresee the same level of impairment in the short term.
Nedbank Namibia’s non-interest revenue has shown a 0.42% increase from the prior year despite the outbreak of Covid-19 and the national lock down that followed.
Taking into account our continued investment in our brand and investment in technology and innovation platforms, operating expenses were well controlled at 5.06% increase compared to 2019. Operating expenses represented 69.28% of total income compared to 59.31% in 2019.
At group level, NedNamibia Holdings’ profit after tax decreased by 64.37% to N$117.1 million for the financial year as a result of the Covid pandemic and the subsequent reduction in the repo rate, negatively impacting net interest income and impairments. This translates to earnings per ordinary share of 166 cents, which represents a 64.45% decrease from 2019.
The group has remained well capitalized and maintained a strong financial and liquidity position.
Nedbank Namibia will release its full results on Monday, 29 March 2021.
