Lender Nedbank Group said yesterday its interim profit had increased by more than a quarter, as the economy regained momentum despite challenges, sending its shares up 3.5 percent in early trading.
Headline earnings per share, the main measure of corporate profit in South Africa, was at R13.70 for the six months to June 30, compared with R10.84 a year earlier. The bank announced an interim dividend of R7.83 per share.
South African lenders have rebounded from Covid-19 lows sooner than expected but are seen treading a fine line between high local unemployment worsened by rising inflation and a higher interest rate regime that is a positive for banks but increases risks of loans going sour.
"I think that our balance sheet is in very good shape to withstand the effects of bad debt from rising interest rates," the bank's chief executive, Mike Brown, told Reuters in an interview.
"As a consequence, we think there's a net positive for the bottom line in that environment."
Nedbank, which posted an 11 percent jump in revenue, expects inflation to peak in the third quarter at around 7.8 percent. Brown said the bank was on track to exceed its 2019 profit figures by the end of 2022, a year ahead of schedule.
The lender has two main divisions that contribute the most to its profits - commercial and investment banking, as well as retail and business banking.
The growth in these segments would be primarily driven by growth in energy and infrastructure lending and by digital initiatives that would bring down costs and increase efficiencies, Brown said.
"Anything to do with renewable energy and embedded energy generation (small-scale solar generation)... we certainly see that segment as a multi-year growth opportunity for the bank," he said.
The lender said its Nedbank Money app continued to be rated highly on the Apple and Google app stores, with lifetime store client ratings exceeding 4 (out of five). The app was actively used by 1.8 million clients, up by 13 percent year on year and 167 percent since first half 2019.
Nedbank said its digital ecosystem Avo - a one-stop super app which has been in app stores since June 2020 and enables clients to buy essential products and services online and have them delivered to their home - had signed up more than 1.5 million users, up 4.6 times year on year. Over 24 000 businesses are registered and offering their products and services on the e-commerce platform, a 37 percent year on year increase.
- Additional reporting by Philippa Larkin
BUSINESS REPORT / REUTERS