Nedbank still a solid banking stock pick
The bank has set up a vehicle to absorb Ecobank’s bad debts in Nigeria — effectively a recapitalisation
Most of Nedbank’s key numbers look stronger than those reported in the Barclays Africa interims. While Barclays Africa had a 1% decline in revenue, Nedbank’s was up 3.7%. The return on equity (ROE) from managed operations for the green bank in the six months to June was 18.9% compared with 16.8% for Barclays Africa. Absa’s retail and business banking (RBB) in SA might still be substantially bigger than the competing business in Nedbank, but it is in decline, with earnings falling 9% to R4.2bn while Nedbank’s increased by 7% to R2.5bn. And Nedbank will benefit from its managed separation from Old Mutual, which will increase the free float of the bank by about R30bn. Old Mutual’s shareholding will fall from 53% to about 20%. Nedbank CEO Mike Brown says the life office will retain an appropriate strategic minority holding in the bank to bolster the current commercial relationship. Not that it has been as successful as, say, the Standard Bank/Liberty relationship — the two green teams c...
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