South Africa’s Nedbank on Tuesday said that Ecobank
Transnational Incorporation (ETI) remains vital to its expansion elsewhere on
the African continent despite booking a $293 million write-down on the value of
its stake in the sub-Saharan lender. Ecobank has operations in nearly 40
countries outside its home market. Nedbank Chief Executive, Mike Brown, told
reporters ““It’s obvious that we would be disappointed. But we still, however,
remain optimistic on the long-term growth prospects in the rest of Africa.”
ETI’s operations in Central and West Africa are exposed
to some economies that have been pressured by the commodity price slide and
unfavourable currency swings since Nedbank bought a 20 per cent stake for $500
million in 2014.
Brown forecast another tough year for Ecobank, which
makes the bulk of its earnings in Nigeria, before improving in 2018 and beyond.
Nigeria, Africa’s biggest economy, has been hit by a currency crisis and its
first recession in 25 years following the slide in oil prices since the middle
of 2014.
Nedbank, a subsidiary of Anglo-South African
conglomerate, Old Mutual, said its diluted headline earnings per share rose 4.8
per cent to 2,350 cents in 2016, the slowest pace of growth since 2009 when its
EPS fell by nearly a third. Headline EPS is the main measure of profit in South
Africa as it strips out certain one-off items.
Nedbank also said its results were affected by slack
demand for loans as slowing economic growth and higher interest rates hit
consumption and investment spending across Africa.
Brown forecast at least 7 per cent growth in 2017 annual
headline EPS, saying a peak in interest rate cycle in South Africa would lift
demand or loans.
Old Mutual is in the middle of an overhaul in which it
will carve itself into four parts and cut its 54 per cent stake in Nedbank to a
minority holding to simplify its structure.
Nedbank competes with Standard Bank, FirstRand, Barclays
Africa and Capitec.
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