Nedbank Group Ltd (JSE: NED), a prominent player in the South African financial landscape, has unveiled its annual 2023 results, painting a picture of resilience and growth amidst a challenging economic backdrop.
With revenue surging by an impressive 12% to R70,628 million, the bank navigated through headwinds adeptly. This remarkable growth was chiefly attributed to the buoyant interest rate environment, propelling net interest income (NII) to a 14% increase, reaching R41,470 million. Factors such as a 7% expansion in average interest-earning banking assets (AIEBA) and a 3% growth in actual gross banking advances bolstered this uptick.
However, it wasn’t just interest income that drove Nedbank’s success story. Non-interest revenue (NIR) also made significant strides, climbing 6% to R27,709 million, fuelled by robust growth in commissions and fees. Trading income followed suit, ascending by 3% to R4,299 million, further underlining the bank’s diverse revenue streams. Notably, a surge in digitally active retail users, up by 11% to 2.9 million, signalled a strong client-driven growth trajectory.
Yet, amidst these triumphs, challenges loomed large. Outgoing CEO Mike Brown cited a weaker global economy, record load-shedding, and elevated inflation and interest rates as formidable obstacles. These factors exerted pressure on consumer finances, dampening business confidence and investment appetite across the Group’s operational sphere. As Nedbank continues to navigate these turbulent waters, its ability to adapt and innovate remains key to sustaining its upward trajectory in the ever-evolving financial landscape.
Technical
Nedbank’s price action reflects a compelling narrative of market dynamics and investor sentiment. The current uptrend in the share price has been substantiated by the formation of an ascending channel pattern, coupled with a crossover above the 100-day moving average. This pattern indicates a bullish trajectory, further reinforced by optimistic buying activity following positive earnings results.
Resistance initially emerged at the R230.20 per share level, coinciding with the channel’s upper boundary and overbought RSI conditions. Despite this, a temporary selloff retreated to the R215.41 per share level, where buying pressure reemerged. This level, now acting as a support, underscores market confidence in Nedbank’s fundamentals.
Looking ahead, sustained upside momentum could see a retest of the R230.20 per share resistance. Conversely, a downturn may find support at the R215.41 per share level, potentially halting further downside progress.
Summary
Nedbank’s resilience amid economic challenges, highlighted by a 12% revenue surge, underscores its adaptability. With technical analysis indicating an uptrend, key levels at R230.20 and R215.41 per share offer insights for investors. Amidst uncertainties, Nedbank’s innovation and market understanding remain crucial for sustained growth.
Sources: Nedbank Group Ltd, BusinessDay, MoneyWeb, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
Disclaimer: Trive South Africa (Pty) Ltd (hereinafter referred to as “Trive SA”), with registration number 2005/011130/07, is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act, 37 of 2002. Trive SA is authorised and regulated by the South African Financial Sector Conduct Authority (FSCA) and holds FSP number 27231. Trive Financial Services Ltd (hereinafter referred to as “Trive MU”) holds an Investment Dealer (Full-Service Dealer, excluding Underwriting) Licence with licence number GB21026295 pursuant to section 29 of the Securities Act 2005, Rule 4 of the Securities Rules 2007, and the Financial Services Rules 2008. Trive MU is authorized and regulated by the Mauritius Financial Services Commission (FSC) and holds Global Business Licence number GB21026295 under Section 72(6) of the Financial Services Act. Trive SA and Trive MU are collectively known and referred to as “Trive Africa”.
Market and economic conditions are subject to sudden change which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. Trive Africa and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered. Please consider the risks involved before you trade or invest. All trades on the Trive Africa platform are subject to the legal terms and conditions to which you agree to be bound. Brand Logos are owned by the respective companies and not by Trive Africa. The use of a company’s brand logo does not represent an endorsement of Trive Africa by the company, nor an endorsement of the company by Trive Africa, nor does it necessarily imply any contractual relationship. Images are for illustrative purposes only and past performance is not necessarily an indication of future performance. No services are offered to stateless persons, persons under the age of 18 years, persons and/or residents of sanctioned countries or any other jurisdiction where the distribution of leveraged instruments is prohibited, and citizens of any state or country where it may be against the law of that country to trade with a South African and/or Mauritius based company and/or where the services are not made available by Trive Africa to hold an account with us. In any case, above all, it is your responsibility to avoid contravening any legislation in the country from where you are at the time.
CFDs and other margin products are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. See our full Risk Disclosure and Terms of Business for further details. Some or all of the services and products are not offered to citizens or residents of certain jurisdictions where international sanctions or local regulatory requirements restrict or prohibit them.
