11th May 2015 06:47
LONDON (Alliance News) - Nedbank, the South African bank 52%-owned by FTSE 100 financial services group Old Mutual PLC, reported higher first-quarter net interest income and non-interest revenue as it deals with tough conditions in South Africa.
In a statement, Nedbank said its net interest income increased to ZAR5.81 billion in the three months ended March 31, compared with ZAR5.57 billion in the corresponding quarter of the prior year. Its net interest margin deteriorated to 3.41% from 3.57%, as Nedbank held higher levels of low-yielding high-quality liquid assets due to regulatory requirements and as a result of the effects of funding its shareholding of about 20% in Ecobank Transnational Inc.
Its credit loss ratio improved to 80 basis points from 89 basis points. Nedbank said that was at the "low end" of its through-the-cycle target range.
"This is reflective of the mix changes in our advances book, good collections and continued improvements in retail impairments, and consistent performance in wholesale impairments," Nedbank said.
Non-interest revenue increased to ZAR5.32 billion from ZAR4.51 billion, due to higher commission and fee income, trading income growth, private equity income and the result of fair value gains instead of losses, which more than offset lower insurance income.
Chief Executive Mike Brown said Nedbank's performance in the first quarter of 2015 was strong against a tough backdrop, as it faces pressures in South Africa.
"Economic conditions in South Africa remained weak in the first quarter as the benefits of lower oil prices and benign interest rates were largely offset by electricity supply constraints, negatively impacting business confidence," Brown said.
The CEO said the company still expects organic growth in diluted headline earnings per share in 2015 to be above nominal gross domestic product growth.
Nedbank expects GDP growth of 2.2% in South Africa in 2015, with "risk remaining on the downside", and said interest rates are currently expected to increase by 25 basis points in the last quarter of the year.
By Samuel Agini; [email protected]; @samuelagini
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
Old Mutual PLC