Big-four bank Nedbank has scored some digital wins, while delivering a strong financial performance for the 12 months to 31 December, as headline earnings increased by 20% to R14 billion.
This emerged when the bank today announced its financial results for the period, saying headline earnings were driven by strong double-digit revenue growth, a slightly higher credit loss ratio and a well-managed expense base.
On the back of strong earnings growth and capital and liquidity positions, the group declared a final dividend of 866c per share, up by 14% (December 2021: 758c per share), bringing the total dividend for 2022 to 1 649c per share, up 38%, both at record levels for the group.
On the digital front, Nedbank says its strategy to build a modern, modular and agile technology platform has reached 91% completion of the IT build. This enables continued double-digit growth in digital metrics, client satisfaction scores at the top-end of the South African banking peer group, higher levels of cross-sell, main-banked client gains, market share gains in household deposits, as well as improved efficiencies evidenced by cumulative operating model cost savings of R1.5 billion.
In 2022, main-banked clients in retail grew by 6% to 3.24 million, says Nedbank.
It adds that corporate and investment banking gained 25 new primary clients in the period. In Nedbank Africa regions (NAR), total clients increased by 7% to over 360 000, of which around 162 000 are main-banked clients.
“Our digital initiatives helped us to increase the number of digitally active retail clients in SA by 13% to 2.6 million. This now represents 68% of retail main-banked clients (2021: 64% and 2019: 49%),” says Mike Brown, Nedbank CEO.
According to Nedbank, retail digital transaction volumes in SA increased by 18% (up 76% since 2019) and transaction values by 16% (up 40% since 2019).
It notes that digitally active clients across the NAR business grew by 18% and now represents 57% of its total active client base.
Nedbank Money app clients reached the key milestone of two million active clients, up by 23%.
The bank points out that transaction volumes on its Money app increased by 34% (up by 253% since 2019) and transaction values increased by 27% (up by 233% since 2019).
“The outcome of our digital innovations was evident in higher levels of client satisfaction, with Nedbank ranked number one in Net Promoter Score among South African banks in the Kantor survey that was conducted among SA consumers, reaching our 2023 target a year earlier than expected,” Brown says.
The Avo super app, which enables clients to buy products and services online and have them delivered to their home, with seamless secure payments, has since its launch in app stores in June 2020, signed up more than two million users, up 1.9 times year-on-year, says Nedbank.
At the end of 2022, it notes, more than 20 000 businesses, up 15%, were registered to offer their products and services on this e-commerce platform.
It adds that Avo Auto, a virtual vehicle mall launched in 2021, now hosts over 200 accredited dealers, with more than 8 000 vehicles available on the platform.
The cost of load-shedding
Meanwhile, the financial institution points out the higher levels of electricity outages in the second half of the year had a limited impact on Nedbank’s own operations, but had a material negative impact on many clients.
“Generator run-time in our own operations, including offices and branches, increased by over 200% and diesel-related expenses were up just over 100% to R59 million in 2022,” says Brown.
“Load-shedding had no material impact on our ATMs, branches and point-of-sale devices, as we leveraged our wide coverage of sustainable backup power solutions. While our physical points of presence remained largely unaffected, call centre and digital channels have seen an increase in utilisation.”
Brown states load-shedding has increasingly become a catalyst for renewable- and embedded-energy investments to support SA’s Just Energy Transition, and for individuals and companies to reduce their exposure to Eskom.
“This is creating a strong runway for bank advances growth in this sector. However, electricity outages adversely impact business and consumer confidence, and, as a result, GDP growth will be negatively impacted in 2023 and beyond.
“From a credit quality perspective, we have not seen a material impact on impairments or credit loss ratios in 2022 yet, but we are becoming concerned, as risks take time to emerge.”
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