Nedbank [JSE: NED] has seen its profit fall by more than 7% due to rising bad debts and weaker demand for loans amid “recessionary-like conditions”.
The company reported lower headline earnings of R12.5 billion for the year to end-December. In early trading on Tuesday, its share price was down more than 2% at around R171.24.
The bank said its financial performance was “below expectations”, blaming it on load shedding and a deterioration in company profits and household finances, which resulted in subdued credit demand, slower growth in bank transactions and rising defaults.
Its credit loss ratio (total losses on loans and advances, divided by the total average loans and advances) increased from 53 basis points a year ago to 82 basis points.
Still, credit advances grew by 7.2%, while deposits with Nedbank increased by 9.5% over the past year.
Its revenue rose by 2.5% to R56 billion, but its expenses grew by only 1.7% to R32 billion. Its final dividend per share was 695c, which is 3.5% lower a year ago.
Nedbank is downbeat on its expectations for the current year, expecting that local economy will only grow by 0.7% this year.