13th May 2014 08:54
LONDON (Alliance News) - Old Mutual PLC's majority-owned South African banking subsidiary, Nedbank Group Ltd, Tuesday reported first-quarter growth in net interest income and non-interest revenue.
Net interest income rose to ZAR5.57 billion in the three months ended March 31, compared with ZAR5.12 billion for the corresponding period a year earlier, as average interest-earning banking assets grew. First-quarter net interest margin fell to 3.57%, from 3.62%.
Nedbank said its credit loss ratio improved "more than expected" to 0.89%, from 1.22%, stating that the improvement reflects the "quality" of the advances portfolio and more conservative credit-lending policies implemented in the second half of 2012. There were no large wholesale defaults, while retail impairments improved during the period, Nedbank said.
Non-interest revenue increased to ZAR4.51 billion from ZAR4.39 billion, driven by commission and fees income growth through net client acquisitions and cross sell, as well as trading income growth driven largely by client flows, offsetting decreases in insurance income and private equity income.
Nedbank Chief Executive Mike Brown said "good progress" is being made despite a number of challenges.
"Globally the first quarter of the year was marked by macro-economic concerns in many emerging markets. In South Africa, the economy was impacted by protracted and ongoing strikes in the platinum mining sector. The weaker rand and increasing inflationary pressures resulted in a 50 basis point increase in interest rates in January," Chief Executive Mike Brown said in a statement.
"Our financial guidance for 2014, including for organic growth in diluted headline earnings per share to be greater than the growth in nominal GDP, remains unchanged," Brown added.
Nedbank said the outlook for the balance of the year remains "challenging."
In addition, Nedbank said "steady progress" is being made on the acquisition of its initial shareholding of 36.4% of Banco Unico.
Regulatory approvals have been received from the Mozambican and South African Banking regulators as well as from the Mozambican Investment Ministry and the South African Exchange Control division of the South African Reserve Bank, Nedbank said.
The administrative process is being finalised and financial closure of the transaction is expected to take place in June 2014, according to the South African bank.
Nedbank's acquisition of the initial shareholding, disclosed to the market last May, marked its entrance to the Mozambican banking market.
Old Mutual, which holds a 52% stake in Nedbank, is itself due to issue a first-quarter update on Thursday.
In 2013, Nedbank, which is one of Old Mutual's five core operations, reported a GBP797.0 million adjusted operating profit. Old Mutual reported a GBP1.61 billion adjusted operating profit. The results are adjusted to reflect the long-term performance of the group, according to Old Mutual.
Old Mutual shares were Tuesday quoted at 208.20 pence, up 0.6%.
By Samuel Agini; [email protected]; @samuelagini
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