Nedbank Group has reported significant growth in its Zimbabwean loan book, primarily driven by the US dollar denominated loans supporting key productive sectors, mainly exporters.
The South African banking group operates in Zimbabwe through Nedbank Zimbabwe, which falls under the Nedbank Africa Regions (NAR) cluster.
During a press briefing, Dr. Sibongile Moyo, Nedbank’s managing director of Nedbank Africa Regions, revealed that the loan book doubled from June 2023 to December 2023, representing a 100% increase, and further grew by 26% from December 2023 to June 2024.
The growth is largely attributed to the US dollar-denominated loans, enabled by legal provisions allowing continuous lending and collecting loan repayments in US dollars until December 31, 2030. Dr. Moyo emphasized the group’s preference for increased use of local currency but acknowledged the legal provisions enabling the multi-currency environment.
A significant portion of the lending book is dedicated to exporters, who are natural generators of US dollars. The lending environment has been stable, mainly due to the US dollar’s stability during the rapid depreciation of the previous local currency (Zimbabwe dollar).
However, with the recent introduction of a more stable reserve-backed currency, the group may see increased borrowing in local currency in the future. Dr. Moyo noted that US dollar liquidity is limited, reflecting the shortage of dollars in the market. As a result, the marginal cost of lending in US dollars will become higher, impacting the group’s ability to lend more.
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Regarding the group’s financials, Mr. Jason Quinn, the chief executive, reported a relatively strong financial performance, with headline earnings increasing by 8% year-on-year to R7.9 billion. The growth was underpinned by good non-interest revenue growth, a lower impairment charge, and tight cost control.
The group’s return on equity improved to 15.0% from 14.2% in the prior period, while diluted headline earnings per share increased by 12%, benefiting from the R5 billion capital optimization program.
Nedbank Group’s Zimbabwean loan book has experienced significant growth, primarily driven by US dollar-denominated loans supporting key productive sectors. The group is optimistic about the future, with potential increased borrowing in local currency and a strong financial performance.
Challenges remain, including limited US dollar liquidity and the need for further injections to address the accumulated pipeline of forex requirements