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Johannesburg - Nedbank Group [JSE:NED] boosted headline earnings by 14.6% to R4.9bn for the year ended December 2010.
This translated into diluted headline earnings per share of 1 069 cents, an 8.7% increase on the 983c earned the previous year.
The group declared a full-year dividend of 480c/share, an increase of 9.1%.
The group recorded strong non-interest revenue growth of 11% to R13.2bn.
Commenting on the results, Nedbank group CEO Mike Brown said: "2010 saw our headline earnings grow for the first time since 2007, ending the year marginally above our expectations as set out in the third-quarter trading update.
"Earnings momentum built during the year, with earnings in the second half up strongly on the first half. These results were driven by improving economic conditions and the group's strategic focus on growing non-interest revenue.
"Our wholesale businesses remained resilient and the performance of Nedbank Retail improved as impairments decreased and we began to realise the benefits of the Imperial Bank acquisition. Nedbank Wealth grew strongly following the integration of the former joint ventures and pleasing growth in new business.
"While the global economic recovery remains fragile, we believe the worst of the cycle is behind us and expect continued earnings growth in 2011."
Brown said Nedbank's liquidity position remains sound.
He said the group - one of South Africa's so-called big four banks - continued to focus on diversifying its funding base, lengthening its funding profile and maintaining appropriate liquidity buffers.
During 2010, Nedbank Group increased its long-term funding ratio from increased capital market issuances under a R6.23bn domestic medium-term note programme, and also increased the duration in the money market book.
"The group's liquidity position is further supported by a strong loan-to-deposit ratio of 97% and a low reliance on interbank and foreign currency funding. Nedbank Group is able to leverage off its favourable retail, commercial and wholesale deposit mix, which compares well with domestic industry averages," Brown said.
He believes that the impact of the new capital requirements of Basel III will be "manageable".
"The majority of the Basel III proposals have recently been finalised, although some significant aspects remain to be completed in 2011. In South Africa the details of exactly how Basel III will be adopted will be determined by the Sarb, (SA Reserve Bank)" he said.
"For Nedbank Group the impact of the new capital requirements is expected to be manageable. On a Basel III pro forma basis for 2010, the group is in a position to absorb the Basel III capital implications with all capital ratios still remaining above the top end of current internal target ranges.
"These should improve further by the end of 2013 from projected earnings, continuing capital and risk-weighted asset optimisation, and the impact of the group's active portfolio management strategy," Brown said.
Once Basel III was finalised, he said, Nedbank Group would review its target capital ratios.
"In respect of the two proposed liquidity ratios, the liquidity coverage ratio for implementation in 2015 and the 'net stable funding ratio' (NSFR) for implementation in 2018, the impact of compliance by the SA banking industry would be punitive if implemented as they currently stand, particularly the NSFR in the light of structural constraints within the SA financial market.
"This is the case for many emerging-market jurisdictions around the world, and the negative effect on economic growth and employment would be significant.
"The group anticipates that a pragmatic approach on this issue will be applied prior to the finalisation in 2018," he said.
This translated into diluted headline earnings per share of 1 069 cents, an 8.7% increase on the 983c earned the previous year.
The group declared a full-year dividend of 480c/share, an increase of 9.1%.
The group recorded strong non-interest revenue growth of 11% to R13.2bn.
Commenting on the results, Nedbank group CEO Mike Brown said: "2010 saw our headline earnings grow for the first time since 2007, ending the year marginally above our expectations as set out in the third-quarter trading update.
"Earnings momentum built during the year, with earnings in the second half up strongly on the first half. These results were driven by improving economic conditions and the group's strategic focus on growing non-interest revenue.
"Our wholesale businesses remained resilient and the performance of Nedbank Retail improved as impairments decreased and we began to realise the benefits of the Imperial Bank acquisition. Nedbank Wealth grew strongly following the integration of the former joint ventures and pleasing growth in new business.
"While the global economic recovery remains fragile, we believe the worst of the cycle is behind us and expect continued earnings growth in 2011."
Brown said Nedbank's liquidity position remains sound.
He said the group - one of South Africa's so-called big four banks - continued to focus on diversifying its funding base, lengthening its funding profile and maintaining appropriate liquidity buffers.
During 2010, Nedbank Group increased its long-term funding ratio from increased capital market issuances under a R6.23bn domestic medium-term note programme, and also increased the duration in the money market book.
"The group's liquidity position is further supported by a strong loan-to-deposit ratio of 97% and a low reliance on interbank and foreign currency funding. Nedbank Group is able to leverage off its favourable retail, commercial and wholesale deposit mix, which compares well with domestic industry averages," Brown said.
He believes that the impact of the new capital requirements of Basel III will be "manageable".
"The majority of the Basel III proposals have recently been finalised, although some significant aspects remain to be completed in 2011. In South Africa the details of exactly how Basel III will be adopted will be determined by the Sarb, (SA Reserve Bank)" he said.
"For Nedbank Group the impact of the new capital requirements is expected to be manageable. On a Basel III pro forma basis for 2010, the group is in a position to absorb the Basel III capital implications with all capital ratios still remaining above the top end of current internal target ranges.
"These should improve further by the end of 2013 from projected earnings, continuing capital and risk-weighted asset optimisation, and the impact of the group's active portfolio management strategy," Brown said.
Once Basel III was finalised, he said, Nedbank Group would review its target capital ratios.
"In respect of the two proposed liquidity ratios, the liquidity coverage ratio for implementation in 2015 and the 'net stable funding ratio' (NSFR) for implementation in 2018, the impact of compliance by the SA banking industry would be punitive if implemented as they currently stand, particularly the NSFR in the light of structural constraints within the SA financial market.
"This is the case for many emerging-market jurisdictions around the world, and the negative effect on economic growth and employment would be significant.
"The group anticipates that a pragmatic approach on this issue will be applied prior to the finalisation in 2018," he said.
