Nedbank’s headline earnings for the first quarter of its current financial year were up 82,9% to R1,026-billion, the banking group said on Thursday.
Assuming economic conditions remain constant, it said, the group expects headline earnings for the six months to June 30 2006 to be between 33% and 53% higher than the R1,398-billion reported for the six months to June 30 2005.
Headline earnings per share are anticipated to be between 30% and 50% greater than the 354 cents per share reported for June 2005.
Based on the forecast range of headline earnings per share and the net capital profits from non-core asset sales, basic earnings per share for the six months to June 2006 is estimated to be between 45% and 65% higher than the 356 cents per share reported for June 2005, the group added.
It said all operating divisions recorded strong revenue growth over the corresponding period in 2005, reflecting the benefits of operational efficiencies achieved over the past two years and the buoyant economic environment.
Attributable income grew by 124,4% from R566-million in the corresponding period in 2005 to R1,270-billion for the three months ended March 31 2006.
The group’s return on average ordinary shareholders’ equity (ROE) continued to improve, increasing from 12,1% for the three months to March 31 2005 to 18% for the period ended March 31 2006, boosted primarily by strong revenue growth.
Tom Boardman, chief executive, said: “We are very pleased with the headline earnings growth of 82,9%, with good growth in income across all of the operating divisions.
“However, shareholders should note that this strong revenue growth and the associated higher ROE are not necessarily sustainable for the full year as the listed property private equity revaluations in Nedbank Corporate, the robust equity trading results and some large transactions within Nedbank Capital are not all currently expected to be of a recurring nature.
“Items that could be considered to be of a non-recurring nature amounted to approximately R150-million (pre-taxation) for the quarter.
“The group remains committed to meeting its targets of a ROE of 20% and an efficiency ratio of 55% for the 2007 financial year,” he added.
The group continues to be well-capitalised, with the tier-one group capital adequacy and total group capital adequacy ratios remaining above the 9,4% and 12,9% respectively reported for December 2005. No further share buybacks were undertaken during the period.
The group successfully issued a bond of R1,5-billion on April 19 2006 at a rate of 70 basis points above the R153, which was 1,7 times oversubscribed. The bond, which qualifies as regulatory tier-two capital, was issued to pre-finance a portion of the NED1 issue, which Nedbank intends to call on the call date of September 20 2006, subject to prior written approval by the Registrar of Banks, and to balance the levels of debt and equity in regulatory capital as part of the bank’s long-term capital management programme. — I-Net Bridge