Nedbank H1 profit down, lowers FY earnings outlook
hr01 hr02
Ads
Business in Africa
 
 

 

 

Email this article Print this page
Nedbank H1 profit down, lowers FY earnings outlook UPDATED 05 Aug 2009 | 10:06  
Nedbank H1 profit down, lowers FY earnings outlook

By Serena Chaudhry

JOHANNESBURG (Reuters) - South Africa's fourth-biggest bank Nedbank lowered its 2009 earnings outlook on Wednesday after reporting a slide in first-half profit, as bad debts surged at its corporate and retail units.

Nedbank, the second of South Africa's big four banks to report results, said diluted headline earnings per share for the six months to end June fell 34.1 percent to 474 cents, in line with its own forecast of a fall of between 32 and 37 percent.

Its shares initially fell 1.4 percent and traded 0.03 percent lower at 110 rand by 0843 GMT, lagging a slightly positive JSE banking index.

"The retail earnings just imploded ... showing how sensitive this business is to bad debts," one Johannesburg-based banking analyst said. "So bad debts are denting their performance more easily than the other banks."

Nedbank's retail unit posted a 93.5 percent drop in headline earnings to 47 million rand, while at its corporate unit headline earnings dipped 11.3 percent to 685 million rand.

The bank, majority-owned by insurer Old Mutual Plc, said the impairment charge on loans and advances stood at 3.43 billion rand compared with 1.9 billion a year ago. Old Mutual separately posted a bigger than expected profit drop.

POSITIVE IMPACT

"A reversal in the impairment trend is anticipated to begin to impact bank earnings growth positively only in the next 12 to 18 months," Nedbank said in a statement.

Chief Executive Tom Boardman later said impairments at the group's retail business had peaked, though corporate impairments would continue to rise into 2010.

South Africa is battling its first recession in 17 years and local banks have taken a knock from rising defaults in their corporate and retail businesses.

Rival bank Absa Group Ltd, the country's biggest mortgage lender, reported a 39 percent slide in first-half EPS on Monday and said defaults in the period more than doubled.

Nedbank revised its outlook for the full year, forecasting an 18 to 38 percent drop to 1,401 cents in diluted headline EPS, compared with a previous forecast for a 20 percent drop.

"The guidance for the full year is slightly lower than what we are forecasting at the moment and it looks like the outlook has deteriorated," a Johannesburg-based banking analyst said.

Nedbank said it would pay an interim dividend of 210 cents per share, compared with 310 cents in the year-ago period.

Boardman said the company was looking at acquisitions elsewhere in Africa which should be finalised from 2010 onwards.

SHARE THIS ARTICLE

Add a Bookmark Google   Post this Story to FaceBook Facebook

No comments have been posted about this Story

COMMENTS ON THIS STORY

Full Name:
E-Mail:
Rating: out of 5
Comment:
Related Articles

Old Mutual profit drops, earnings lifted by US bonds

Mauritius 09 H1 tourism arrivals fall 9.3 pct

Kenya's Athi River H1 09 pretax profit up 16 pct

Old Mutual profit drops, US unit needs more cash

Mondi swings to H1 loss, price drops weigh

Anglo H1 drops, sees $1 bln cost savings in 2009

Liberty sees H1 headline loss, shares fall

Kenya Commercial Bank H1 pretax profit up 4 pct

Foschini eyes high single digit profit growth

Stronger rand to hit S.Africa gold producers' profits

Keep logged onto www.moneybiz.co.za oremail [email protected] for further information, or perhaps suggest a topic weshould tackle.