Nedbank’s financial performance demonstrates resilience amid complex and difficult external environment
Nedbank Namibia on Tuesday delivered strong headline earnings growth of 35% for the financial year ended 31 December 2022, driven by higher interest rates as well as growth in the group’s non-interest income, combined with good cost management.
The group said it continued to make good progress on its strategic value drivers of growth, productivity, and management of risk and capital.
“A continuation of the good strategic and operational delivery experienced in 2022 should support strong growth for the 2023 financial year. Our clients continue to embrace digital transactions and we recorded 46% digitally active customers at the end of December. The Nedbank Namibia Holdings Group continues to invest in new technology and processes to become more agile and efficient and to respond better to our customers’ needs. We do not plan to reduce our branch network but to adapt to meeting both digital and physical needs of our clients and to provide more contact points for our customers’ convenience,” said Martha Murorua, Managing Director of Nedbank Namibia.
Growth trends across net interest income (NII) (+7%), non-interest revenue (NIR) (+28%), and client growth (+8%) improved from the prior years. The increase in NII was driven by increased interest rates as well as by maintaining a strong balance sheet capital plus liquidity position. Solid growth from NIR was driven by continued recovery in client activity and increased client demand.
Nedbank Namibia also had good outcomes from forex and equity trading. A total income of N$1,2 billion was recorded for the year—an increase of 13% from the prior year. Profit after tax increased by 35% to N$275 million.
Operating expenses of which 48% includes staff costs, were in line with the average inflation rate for the year. This reflects a solid operating performance, with a focus on efficiencies. “It is noticeable that the expenses incurred in fulfilling the operational mandates of the Bank are overwhelmingly in favour of improving the lives and livelihoods of Namibians over a broad spectrum of our society, including staff, families, businesses, and society.
The year saw earnings, excluding impairments, showing growth of 18%, indicating that impairments did not impact the financial results significantly for this financial period. The group’s return on equity (ROE) increased to 10% (December 2021: 8%).
NedNamibia Holdings holds N$2 billion Common Equity Tier 1 (CET 1) capital, as the group remains appropriately conservative in an uncertain external environment. The strong momentum in the second half of 2022 likely pushed the economic growth rate to its highest level in seven years, buoyed by supportive global demand and higher domestic output.
Nedbank Namibia recognises that corporates carry the responsibility of having an authentic response to environmental, social, and governance (ESG) matters with a genuine ambition to be an effective catalytic agent of positive change in our society. Being effective is possible only with a clearly defined purpose. “For Nedbank, that means using our financial expertise to do good for all our stakeholders and using the sustainable development goals as guidance for investing in new markets and meeting unmet client needs,” concluded Murorua.