* Non-interest revenue up 12 pct
* Net interest income up 7.8 pct
* Shares up 4 pct
By Helen Nyambura-Mwaura
JOHANNESBURG, Feb 24 Weak economic activity is
expected to depress earnings this year at Nedbank,
South Africa's fourth-largest banking group, after it posted a
better than expected 15 percent rise in 2013 profit.
The bank said it saw earnings growth equal to South Africa's
gross domestic product (GDP) growth plus inflation. Its
medium-term target is for profit to grow by 5 percentage points
quicker than GDP plus inflation.
South Africa is one of several emerging markets that have
been badly hit by uncertainties in the global economy. Their
problems are compounded by a shift in investment flows to
developed markets and rising global interest rates.
"One needs to be acutely aware of those conditions and
recognise that growth may slow in terms of earnings performance,
particularly off a strong base," Graham Dempster, Nedbank's
chief operating officer, told Reuters.
The bank, majority owned by insurer Old Mutual
, said 2013 earnings grew 15 percent after strong
revenue growth and a slower pace in the growth of credit costs.
Its credit loss ratio, the proportion of bad debt costs to
total loans, came in at 1.06 percent, in line with the previous
year but much lower than 1.31 percent at the half-year mark,
when it took a 183 million rand impairment and increased
personal loan provisions.
Impairment charges were up 7 percent to 5.565 billion rand.
Nedbank increased its coverage ratio for total impairments to
65.6 percent from 56.4 percent a year earlier.
"They seem to be making a statement that they see tough
times ahead, but you can understand, with interest rates
starting to rise," said Martin Lentsoane, managing director at
brokerage Lehumo Capital.
STRONG REVENUE GROWTH
Dempster said Nedbank was still keen to exercise a right to
acquire a 20 percent stake in Ecobank before November,
after a $285 million loan to the pan-Africa lender.
The Togo-based lender's reputation has suffered in recent
months after its suspended finance director said she had been
pressured to mis-state 2012 financial results.
Last year, Nedbank increased its African footprint to seven
countries after taking up a 36.4 percent share of Mozambique's
sixth-largest lender Banco Unico for $24.4 million.
Nedbank said net interest income, a measure of earnings from
lending, rose 7.8 percent to 21.22 billion rand ($1.9 billion)
partly due to strong loan growth in investment banking and other
A focus on boosting income from charges such as fees and
commissions also paid off in 2013, sending non-interest revenue
up nearly 12 percent to 19.36 billion rand.
Diluted headline earnings per share were 1,829 cents for the
year, up from a restated 1,590 cents a year earlier. A Thomson
Reuters SmartEstimate had forecast earnings of 1,783 cents per
The lender will pay a full-year dividend of 895 cents a
share, up 19 percent from a year earlier and higher than
analysts' expectations of 878 cents per share.
Bigger rival Barclays Africa Group has reported a
14 percent increase in full-year earnings after cutting bad debt
Nedbank shares had gained 3.8 percent by 1148 GMT. They are
up 0.4 percent so far this year while Johannesburg's banking
index is down more than 4 percent.
($1 = 10.9455 South African rand)
(Editing by Tom Pfeiffer)