Senior Business Reporter
The Nedbank Group, says it continues to see Zimbabwe as a key market despite currently obtaining challenges that include resurgent inflation and operating cost pressures.
The South African financial services group has a presence in the country’s financial industry through Nedbank Zimbabwe. The bank also has a footprint in other regional markets.
Dr Terence Sibiya, the managing executive of Nedbank Africa Regions, during an online media briefing, said the short to medium and long-term outlook for Zimbabwe remained robust.
“Although there are some immediate challenges such as hyperinflation and some runaway costs, as management we have interventions that we put in place in order to retain our market share and grow our financial services business in Zimbabwe,” he said.
He said that there were various sectors of the economy that present opportunities such as infrastructure, energy, agro-processing, tobacco processing and mining.
“For the long term, we believe these sectors will contribute significantly to overall recovery of the Zimbabwean economy and we would want to play a key role in that,” he said.
Dr Sibiya said that Zimbabwe has made significant strides in the migration from traditional banking models to digital enabled ecosystems compared to other regional countries.
He said that the banks’ digital journey still presented an opportunity to migrate customers from traditzional banking to more digital enabled platforms and have seen accounts growing in that regard.
“In the SADC region, we would like to keep on paying attention to the market as we see the transaction volumes continuing to grow,” said Dr Sibiya.
According to the group’s interim results for the six months ended June 2022, the group achieved a strong performance across all key metrics despite the difficult operating environment.
The group delivered revenue growth of 11 percent to R30,5 billion while headline earnings increased by 27 percent to R6.7 billion. Return on equity (ROE) increased to 13.6 percent, up from 11.7 percent a year ago.
Headline earnings per share of R13,70 climbed 26 percent. An interim dividend declaration of 783 cents per share was declared.
Dr Sibiya said that Nedbank Africa Region’s overall earnings grew by more than 100 percent to R574 million which is up from R182 million in the prior year last year.
He said that the great result is mainly attributable to two key components which are an improved business in the SADC region, with Zimbabwe contributing extremely well.
Meanwhile, he noted that given the significant inflationary pressures in Zimbabwe, the net monetary loss increased by more than 100 percent to R277 million from R40 million loss in 2021, which contributed to a Headline Earning loss of R110 million.
However, as the Zimbabwean dollar depreciated against the US dollar by 332 percent and against the South African rand by 276 percent, a R360 million foreign exchange gain on Nedbank Zimbabwe’s foreign currency holdings was recognised in net interest revenue.
Dr Sibongile Moyo, Nedbank Zimbabwe’s managing director, said the local Bank registered a good first half performance despite the headwinds on several policy issues and constraints within the operating environment.
She said that the improved cliental transactional volumes in the banking transaction space buoyed the bank’s performance.
“Most recently the improved interest rate resulted in increased net interest income and also given our investments in Treasury Bills.
“However, we are yet to see if the increased interest rate will improve credit quality and performance in the second half of the year,” she said.
Dr Moyo said that the two week suspension on lending by the Reserve Bank of Zimbabwe (RBZ) sent shockwaves in the market, and the shareholders were concerned and this reduced momentum in lending.
She said that the bank will continue supporting sectors such as mining, manufacturing, primary agriculture, green energy financing and support while also looking at the sector’s supply chains.