NEDBANK Group says Zimbabwe will continue to play a major role in the overall expansion of Nedbank Africa Regions (NAR) business because of its expanding dollar book.
The NAR business has operations in Eswatini, Lesotho, Mozambique, Namibia, and Zimbabwe as well as representative offices in Ghana and Kenya.
“Zimbabwe will continue to be a significant contributor to the overall growth of NAR and should the dollar book continue to grow, we will gain the benefit of the net foreign income,” Nedbank Group managing executive, Nedbank Africa Regions, Terence Sibiya said on Tuesday during a media briefing of the results for the financial year ended December 31, 2023.
“If the functional currency does become the US dollar, inflation should come down and we should see that volatility will become solid at some point if located for higher inflation. For Zimbabwe, our rhythm is to sustain this growth in the medium to the long term.”
The group delivered a strong financial performance for the 12 months to December 31, 2023 compared with the 12-month prior period as headline earnings (HE) increased 11% to R15,7 billion.
In a difficult economic environment, this growth in HE was enabled by a strong operational performance as pre-provisioning operating profit increased by 15%, underpinned by 12% revenue growth including associate income and prudent expense management, partially offset by a 30% increase in the impairment charge, which reduced from the 57% increase in this charge reported in the first half of 2023.
The bank said the diversification benefit across its portfolio of businesses was evident in very strong growth in HE from NAR, albeit off a low base, alongside solid performances with increases in both HE and return on equity from Nedbank Corporate and Investment Banking, Nedbank Retail and Business Banking and Nedbank Wealth.
“So, I believe that from our perspective, these results can be sustainable once, of course, there will be headwinds and headwinds remain in Zimbabwe,” Sibiya said.
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“We are eagerly waiting to see what will happen in terms of what the functional currency will be and we are eagerly awaiting the MPC (Monetary Policy Statement) and that has an impact somewhat on how we then continue to co-direct business.”
Despite the fact that most of the group's clients were now borrowing in greenback in the market, Sibiya said the group eagerly awaited to see what will happen in terms of what the functional currency will be.
