Nedbank Group Stock Earnings Reports

Key points for investors:

- Strategy and M&A: Nedbank executed a major strategic reorganisation (new cluster structure: Personal & Private Banking; Business & Commercial Banking), completed the acquisitions of iKhokha and Eqstra integration, disposed of its 21% ETI shareholding for $100m, settled the Transnet claim for ZAR600m, and announced an intended acquisition of ~66% of NCBA (East Africa) via a mix of shares and cash (transaction valued ~ZAR13.9bn). NCBA execution remains subject to regulatory approvals and is expected by Q3 2026.

- Financial performance (FY2025): Headline earnings up 2%, diluted HEPS +3% (viewed as disappointing by management), ROE 15.4% (above cost of equity 14.6% but down vs prior year), CET1 at 12.9% (above board target range), gross advances +6%, deposits +11%. Completed a ZAR2.4bn share buyback and declared a final dividend (total dividend ZAR21.32 per share). Credit loss ratio improved to 68 bps.

- Guidance and outlook (FY2026 / medium term): 2026 guidance: net interest income (NII) growth mid-single digits; NIM to contract slightly; credit loss ratio mid-70s bps (midpoint guidance ~75 bps); non-interest revenue (NIR) upper single digits; expenses below mid-single digits; capital to be managed within a revised CET1 target range of 11.0%–12.5% by year-end; dividend cover target 1.75–2.25x. Medium-term targets: ROE ~17% and cost-to-income ratio ~54%. Management expects improving lending and fee momentum, with the loss of ETI associate income impacting 2026 but offset over time by strategic initiatives and acquisitions.

- Positives: improving H2 momentum across clusters; strong digital adoption and client growth (Group clients +7% to 8m); sustainable finance exposures reached ZAR207bn (~21% of loans); productivity initiatives identified >ZAR1.5bn to be realised over ~3 years; balance sheet and liquidity remain strong.

- Risks / headwinds: geopolitical uncertainty (Middle East) could affect oil/markets and rates; margin (endowment) pressure from lower rates; delayed CIB deal drawdowns (some deal execution moved into 2026); loss of recurring ETI earnings; NCBA acquisition will consume capital (estimated CET1 impact).