Despite reduced levels of electricity outages (load shedding) and some easing of transportation bottlenecks in South Africa, the operating environment remained challenging during the first four months of 2024.
Economic activity was generally weak, affected by geopolitical uncertainty, high interest rates, and high inflation, the bank said. Household finances were under pressure due to contracting real incomes and muted job prospects, while corporate activity also suffered in the uncertain political and economic climate.
Jason Quinn, the chief executive designate, joined the group on May 22, 2024, and will officially assume the role of CE upon Mike Brown's planned retirement at the conclusion of the group's annual general meeting on May 31, 2024.
To ensure a smooth transition, Brown will continue with Nedbank for an additional three months as a senior advisor, providing support to Jason during the handover period.
Economic Outlook
Economic activity is expected to remain weak but should gradually improve in the second half of the year as inflation continues to decline, the lender said.
This could potentially allow the SARB's Monetary Policy Committee (MPC) to start cutting interest rates.
Consequently, the Nedbank Group Economic Unit has revised its 2024 GDP growth forecast for South Africa from 1.0% to 0.9%.
Inflation is expected to end the year at around 4.7%, with forecasts predicting two interest rate cuts of 25 basis points each in the final four months of 2024, resulting in a prime interest rate of 11.25%.
Impact on Clients and Banks
Nedbank said that the difficult macroeconomic environment has continued to strain consumers and slowed credit and transactional revenue growth across both wholesale and retail portfolios.
For the first four months ending 30 April 2024, Nedbank Group reported mid-single-digit headline earnings growth compared to the same period in 2023.
This was supported by strong growth in Retail and Business Banking (RBB) from a low base and solid growth in Corporate and Investment Banking (CIB), partially offset by declines in Nedbank Wealth and Nedbank African Regions (NAR).
Net Interest Income (NII) growth for the period was just below mid-single digits, driven by moderate growth in average interest-earning banking assets and a slight increase in the net interest margin (NIM).
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