Nedbank, which unveiled a strategic reorganisation on Tuesday, delivered a "positive" performance for the year ended December 31, 2024 and "slightly ahead of expectations", analysts said on Tuesday.
To drive future growth, Nedbank unveiled a reorganisation of its Retail and Business Banking and Nedbank Wealth clusters, effective July1, 2025. This creates Personal and Private Banking (PPB), serving individual clients from youth to high-net-worth segments, and Business and Commercial Banking, targeting SMEs to mid-tier corporates. Nedbank Insurance and Wealth Management will integrate into PPB to boost cross-sell opportunities, while Asset Management shifts to Corporate Investment Banking to expand product offerings. The standalone Nedbank Wealth cluster will end.
Executive leadership changes were also announced on Tuesday concurrent with the strategic reorganisation of the group's Retail and Business Banking and Nedbank Wealth clusters.
Iolanda Ruggiero, the managing executive of Nedbank Wealth, will retire on March 31, 2025 after 23 years, having led wealth and insurance businesses since 2015. Daleen du Toit, the group chief compliance officer (CCO) since 2022, will retire on May 16, 2025 after a decade with the bank. Nomonde Hlongwa, an attorney with 18 years in financial services and currently CCO for Standard Bank’s Business and Commercial Banking, will succeed du Toit as CCO effective April 16, 2025, joining the Group Exco.
The bank’s new Transform agenda, launched as part of its 2024 strategy refresh, targets growth in untapped areas. It builds on the completion of the Target Operating Model 2.0, which delivered R3 billion in cost savings through headcount cuts and back-office optimisation. The agenda focuses on leveraging technology investments, including data and AI, to extract commercial value, alongside optimising end-to-end processes via Nedbank Intelligent Hyper Automation.
The bank delivered an 8% rise in headline earnings to R16.9 billion with the return on equity (RoE) has increased to 15.8%
Nedbank CEO Jason Quinn said, “We anticipate substantial benefits for all our stakeholders. Employees will be more empowered as we break down structural barriers to collaboration, create increased focus and align incentives across the organisation.”
Diluted headline earnings per share rose 11% to R35.38 from R31.99 in 2023, driven by strong non-interest revenue growth, a lower impairment charge, and tight expense control, despite muted net interest income growth from margin pressure and slower loan expansion. Net asset value (NAV) per share of 24 039 cents increased by 4%. The credit loss ratio has improved to 87 basis points from 109 basis points, reflecting solid risk management.
Nedbank declared a final dividend of R11.04 per share, up 8% from R10.22, at a 57% payout ratio, with full-year dividends reaching R20.75, a 10% rise from R18.93.
Quinn said Nedbank's improved financial performance in 2024 - together with the progress made in executing on its strategy, its new transform agenda and better economic prospects "gives us confidence that we will continue to make progress to increase our ROE to greater than 16% in 2025, greater than 17% in the medium term and above 18% in the longer term".
Analysts feedback:
Radebe Sipamla, a senior investment analyst at Mergence Investment Managers, said, "The results were quite pleasing and driven largely by an improved impairment experience (2024 credit loss ratio of 0.87% vs 1.09% in 2023) as management actions to drive improved credit losses are bearing fruit. Strong non-interest revenue growth was also supportive of the performance."
However, he said despite earnings increasing by 11%, the NAV per share only increased by 4% reflecting that the earnings growing did not translate into meaningful growth in the value of the business.
"It must also be remembered that Nedbank management had implemented a share buyback program from 2023 and the benefits of the buyback plus high quality earnings growth should have translated into strong NAV growth," Sipamla said.
In terms of the reorganisation of Nedbank’s structure Sipamla said this is effectively a move of back to the future and Nedbank has tinkered with its reporting structures over different CEO tenures and "this is no different so it should not have a material impact".
"However, we would prefer that the group retains Iolanda Ruggiero in an advisory role indefinitely as she was a great leader of the Wealth/Insurance business and she has an intricate understanding of the space with immense institutional memory that will be invaluable to the new leadership of the division," Sipamla added.
Out on SENS 🏦 | NED |
• Nedbank's FY24 headline earnings per share (HEPS) rose 10% to 3,631 cents, exceeding the Bloomberg consensus of 3,471 cents. (Diluted HEPS +11% to 3,538c)
• Revenue was up 4% to R72.2 bn, driven by non-interest revenue & lower loan impairments. NII… pic.twitter.com/1IawkMbYbX
Liam Hechter, a fund manager at Anchor Capital, said, "The results were solid, with diluted headline earnings growing 11%, which was slightly ahead of estimates.
"The most positive aspect of the result for us was on the guidance of RoE going forward, which they have guided to increasing above 16% next year with a long term target of 18%. While we see these targets as ambitious we think they will be well received by investors. Another positive aspect in the results was around the credit impairment charge which came in well below our estimates (good for the income statement), which bodes well for the rest of the sector in South Africa," Hechter added.
Discovery's share price was up 2.3% at R291.82 at 3.37pm on Tuesday on the JSE.
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