Economic environment and market conditions
The 2024 operating environment remained challenging, with weak economic activity. SA’s GDP growth expectations dropped to 0.5%, down from 0.7% in 2023. The first six months proved especially difficult due to geopolitical uncertainty and high interest rates. Moreover, general uncertainty ahead of SA’s national election added further pressure. These factors are reflected in the Nedbank Group Annual Results, highlighting the impact on financial performance and market conditions.
A peaceful and fair election outcome, along with a swift government formation, brought cautious optimism to financial markets. As a result, bond yields dropped, equity markets strengthened and the rand gained value. Meanwhile, credit default swap spreads also improved.
Gradually, the environment improved into the fourth quarter of the year. Consequently, inflation declined further toward the SARB target range’s lower end, reaching its lowest level since Covid-19. In response, the MPC cut interest rates by a cumulative 50 bps. At the same time, business confidence showed notable improvement.
Household credit growth slowed to 3.0% by year-end. Meanwhile, corporate credit growth rose to 5.4% but remained volatile. However, this increase did not yet indicate a material improvement in fixed-investment activity.
Financial performance and shareholder returns
In this context, the Nedbank Group Annual Results achieved stronger financial performance as headline earnings rose by 8% to R16.9bn. Meanwhile, the group’s ROE improved to 15.8%, up from 15.1% in the prior period. This increase reflected steady progress toward our ROE targets.
HE growth resulted from good NIR growth, a lower impairment charge and targeted expense management. These factors offset muted NII growth caused by slower loan growth and margin pressure.
DHEPS grew by 11%, benefiting from the share buy-back executed in 2023. Additionally, balance sheet metrics remained strong, supporting the declaration of a final dividend. This dividend rose by 8% to 1,104 cents per share at a 57% payout ratio.
Strategic achievements and digital transformation
From a strategy perspective, Nedbank completed its Managed Evolution IT transformation in 2024, delivering a refreshed modern technology platform. This platform, combined with enhanced digital capabilities, drove strong digital growth and market-leading client satisfaction. Moreover, it contributed to solid main-banked client gains and higher levels of cross-sell.
Under strategic portfolio tilt, Nedbank gained market share in home loans, vehicle finance, wholesale term-lending and retail deposits. Additionally, the group created wider positive impacts through approximately R183bn in sustainable development finance. This lending aligned with the United Nations Sustainable Development Goals.
Renewable energy exposures increased by 32%, reaching almost R40bn. Furthermore, Nedbank secured significant renewable energy mandates in Q4 2024, reinforcing its leadership in this space. As a result, The Banker magazine named Nedbank SA Bank of the Year.
Operational efficiencies and organisational restructure
Our Target Operating Model 2.0 programme has ended, delivering cumulative cost benefits of R3bn. These savings came from headcount reduction, real estate floor space savings and back-office optimisation. As a result, the RBB Cluster became more client-focused.
Under our new Transform agenda, introduced in 2024, we expanded into new growth areas. Our focus now includes extracting commercial value from technology investments and leveraging data and AI. Additionally, we prioritise optimising end-to-end processes through Nedbank Intelligent Hyper Automation and modernising payments.
We also aim to cross-sell insurance products to the Nedbank client base and diversify into East Africa by using our CIB capabilities. Furthermore, we launched a dedicated offering to transform how mid-sized corporates access financial solutions. At the same time, we are building out our corporate transactional franchise.
To enhance strategy execution and improve market competitiveness, we restructured our RBB and Nedbank Wealth clusters. This new client-centric design will create Personal and Private Banking (PPB) for individuals and Business and Commercial Banking (BCB) for juristic entities. We are excited about the opportunities this will unlock and look forward to sharing our progress.
Outlook and future growth prospects
Looking ahead, we remain cautiously optimistic about South Africa’s economic outlook. We expect conditions to improve from a low 2024 base. However, risks from global geopolitics and trade wars persist.
SA’s GDP is forecast to grow by 1.4% in 2025. Meanwhile, inflation should remain within the SARB target range of 3% to 6%. Additionally, the South African prime lending rate is expected to decline by 50 bps, reaching 10.75%. Corporate lending should increase, but household lending growth is likely to remain muted.
Our improved 2024 Nedbank Group Annual Results performance, along with strategic execution and better economic prospects, strengthens our confidence. We aim to increase ROE to above 16% in 2025, greater than 17% in the medium term, and above 18% in the long term.
Nedbank stands on strong foundations built through fortress capital and liquidity levels. Moreover, we promote a strong, vibrant culture with a focus on diversity, equity and inclusion. Our leading ESG credentials and significant technology investments create exciting prospects for the group.
Appreciation and commitment to stakeholders
I would like to express my gratitude to all Nedbankers for their commitment and unwavering support this past year. Thank you to our 7,6 million retail and wholesale clients who have entrusted Nedbank with serving their financial needs. We appreciate the support of the investment community, regulators and our other stakeholders. As Nedbank, we will continue to play our role in society as we fulfil our purpose of using our financial expertise to do good.
– Jason Quinn, Chief Executive, 4 March 2025
