Fidelity bank banner NewsExpress advert
Bad Ecobank loans still haunt South African bank

By News Express on 01/03/2017

Share on facebook Yahoo mail icon Gmail icon Share on Google+

Views: 992


 

The ghost of bad loans past at Ecobank Transnational Incorporated (ETI) is still haunting Nedbank, which has reported headline earnings growth substantially lower because of its holding in the West African bank.

Nedbank said on Tuesday it had grown earnings 16.2% to R11.8bn for the year to December. Including ETI, Nedbank’s earnings rose only 5.9% to R11.5bn, due to a R676m loss at ETI in the fourth quarter of 2015. Nedbank accounts for its 21.2% share of ETI’s earnings a quarter in arrears.

In 2015, ETI made provision for impairment losses after a strategic overhaul of its processes and portfolios, resulting in bad-debt charges of $357m and a $199m loss in the fourth quarter. Nedbank’s share of these charges was about $40m.

ETI has since turned the corner, reporting pretax profit of $281m in the nine months to September 2016, translating into income of R551m for Nedbank.

Offset against the previous R676m loss and R249m in funding costs, ETI brought in total headline losses of R374m for the bank.

“ETI was affected by short-term challenges in Nigeria,” said Nedbank CEO Mike Brown. The West African bank was a long-term investment, he said.

Adrian Cloete, portfolio manager at PSG Wealth, agreed.

“The impact of ETI’s [2015 fourth-quarter] losses is behind them now, and ETI does give Nedbank a low-risk way of participating in the long-term growth prospects of the West and Central African region.”

Nedbank’s total loans and advances rose 3.7% to R707.1bn at the end of December, compared with growth of 11.2% the previous year.

“Loan growth is slow because economic growth is weak,” Brown said.

“Average loans during the year grew by about 7%, and this was mainly due to weak growth in the South African economy and South African consumers being under pressure.”

The industry, as a whole, reported growth of about 5% in credit extensions to private households by the end of November 2016.

Despite pressure on consumers, Nedbank reduced credit losses to 0.68% of gross loans and advances, compared with 0.77% previously and marking a change from rival Barclays Africa, which reported last week that its credit losses had risen to 1.08% from 0.92%.

Brown attributed the better performance to two factors.

“Nedbank has an exposure of about 52.8% to corporate clients and 42% retail, while at Absa it’s the other way round.”

Absa, Barclays Africa’s South African arm, has a 52% exposure to retail customers, with its corporate and investment bank contributing just 31.8%.

Nedbank’s corporate and business banking unit has won large clients, including two large municipalities and a parastatal entity. “We got a bigger share of their banking,” Brown said.

The second factor, which Brown credits for the reduction in the bank’s credit losses, is its efforts, during the 2014 to 2015 financial years, to improve its credit book. “We lent less to retail customers. Credit losses today are a result of a higher-quality customer base.”

Brown does not expect the trend in credit losses to continue. He expects it to rise slightly, yet remaining below 0.8% due to SA’s current credit cycle. (BD SA)

Source News Express

Posted 01/03/2017 8:26:56 PM

 

Share on facebook Yahoo mail icon Gmail icon Share on Google+


 

CLASSIFIED ADS

REVEALED: 3 natural ways to get stronger erections, last 25 minutes on bed, and increase manhood size without using drugs. Also, Natural Prostrate Enlargement Remedy.. Get In HERE...

 

You may also like...
U.S. citizen arrested in Zimbabwe over negative Mugabe...

Ondo: APC Governors apologise

Rescued woman recounts ordeal in Boko Haram’s den,...

Okowa seeks speedy justice delivery as Delta begins...

Assets declaration: Group accuses Patience Jonathan of daring...

INEC accused of PLOT TO KILL APGA

Funny coincidence as Queen Elizabeth hosts Nigeria’s High...

N50bn allegedly diverted from National Assembly allocation

UBA shareholders approve N22.23bn dividend for 2017

19 parties throw weight behind Saraki, say he...

Children worry about poor education, violence, and terrorism;...

Nigeria draws Tunisia, Guinea, Niger Republic in 2016...

 

Latest News Islamic State terrorists sneaking into Nigeria: Report 1,500 Nigerians jailed in Italy Cholera kills 19 in Niger, 65 hospitalised Shell tasks contractors over safety, rewards champions Wike swears in 23 new council chairmen How Nigerian advertisers waste billions of naira on celebrity endorsements — Study Saraki leads Senate delegation on visit to Russian Parliament 2019: Ekweremadu alleges APC onslaught against PDP leaders Atiku, Tinubu meet at Akure Airport •Atiku visits Fayose, canvasses support for PDP candidate as nationwide consultations gather speed NSCDC declares war against pipeline vandals FG plans artificial insemination of cows for quality milk production World Cup 2018: England beat Tunisia 2-1

 

Most Read Nigerian female sex addict opens up, says ‘I like it with both men and women’ (351,819 views) NUDE PHOTO OF OMOTOLA JALADE-EKEINDE surfaces online (350,969 views) Shameless Genevieve Nnaji exposes breasts in public (279,780 views) Finally named: The full list of friends of Nigerian female sex addict who prowled Facebook (229,729 views) Igbo scholar disgraces Femi Fani-Kayode •Demolishes claims on Igbo/Yoruba history with facts and figures (208,826 views) OLUMBA OLUMBA OBU (the one who called himself God) IS DEAD (208,372 views) Breaking News: POPULAR REVEREND CONVERTS TO ISLAM in Kaduna (Nigeria) (181,517 views) OBJ’s son reported dead in Lagos plane crash •Names of more victims emerge (163,586 views) THE FINAL DISGRACE: Igbo scholar unleashes more facts about Igbo/Yoruba history, finishes off Femi Fani-Kayode with second article (153,689 views) My wasted years in Olumba Olumba Obu’s Evil Brotherhood (148,303 views) Lagos plane crash: Journalist releases victims’ names (143,626 views) Gunmen kill ASP, 2 other police officers in vain bid to kidnap Rivers PDP chieftain (135,481 views)

 

Categories Advertorials (3) African Press Organisation (81) Art & Literature (50) Business & Economy (3,246) Business Verdict (44) Columnists (868) Complaints & Requests (94) Enterprise & Opportunities (207) Entertainment (504) Features (606) Global Business Monitor (282) International (2,035) Interview (153) Live Commentary (28) Love Matters (123) News (36,295) Opinion (1,003) Pidgin (10) Politics (5,278) Religion (770) Sports (1,550) Stock Watch (30) AMA & Al Jazeera Global Update

 

CBN banner

Firstmobile banner

 

 

NEWS EXPRESS TV

Portugal v Spain 2018

 

APO Group Partner

 

 

CLASSIFIED ADS

GOCOP Accredited Member

GOCOP Accredited member

 

 

Africa Media Agency and Al Jazeera

Advertisement