Nedbank as you know it is changing

Nedbank will undergo a major restructuring on the back of an improved financial performance in 2024.

This will see the group split its Retail and Business Banking (RBB) and Nedbank Wealth clusters into new segments, including:

• Personal and Private Banking (PPB)
• Business and Commercial Banking (BCB)
• Corporate Investment Banking

The restructuring will move various business segments around, with RBB also now including Nedbank Insurance and Nedbank Wealth Management.

It said the bank is looking to upsell clients and is taking a much more ‘client-centric’ approach to remain competitive in the banking space.

Nedbank CEO Jason Quinn said that the operating environment in South Africa remained challenging in 2024, with GDP growth expectations of just 0.5% for the year.

The first six months were particularly challenging due to geopolitical uncertainty, high interest rates, and general uncertainty ahead of South Africa’s national election.

However, a peaceful and fair election outcome and the swift creation of the government of national unity (GNU) brought optimism to financial markets.

This results in lower bond yields, stronger equity markets, an improved rand, and better credit default swap yields.

The environment improved gradually in Q4, with lower inflation allowing the South African Reserve Bank to cut interest rates by 50 basis points, leading to improved business confidence.

However, Quinn noted that household credit growth continued to slow to 3,0% by the end of the year, while corporate credit growth increased by 5,4%.

He said that this remains relatively volatile and is not yet reflective of a material improvement in fixed-investment activity.

Nevertheless, the group delivered an improved financial performance as headline earnings increased by 8% to R16.9 billion, while the group’s ROE improved from 15.1% to 15.8%.

Quinn said that good non-interest revenue, lower impairment charges and targeted expense management underpinned headline earnings growth.

This offset muted NII growth, given slower loan growth and margin pressure.

With balance sheet metrics remaining strong, the group declared a final dividend of 1,104 cents per share, an increase of 8%.

The group’s full-year dividend per share increased by 10% from the prior year to 2,075 cents per share.

Restructure

In a bid to compete more effectively in the market, the bank is embarking on an organisational restructuring of its Retail and Business Banking (RBB) and Nedbank Wealth clusters.

The group said that the evolving organisational design is more focused on “client centricity.”

The new group structure will lead to the creation of the Personal and Private Banking (PPB), an individual/non-juristic focused cluster.

It will provide a full suite of products to individuals across its youth, entry-level, mass, middle, affluent and high-net-worth segments.

The reorganisation will also see the creation of Business and Commercial Banking (BCB), a juristic-focused cluster that will cover SMES, Commercial and Mid-corp clients.

The group said that BCB seeks to unlock accelerated growth opportunities via new compelling value propositions.

As per the reorganisation, Nedbank Insurance and Nedbank Wealth Management will be incorporated into PPB as the group looks to upsell to its existing clients.

The Asset Management business will also move into Corporate Investment Banking and will focus on building out its product offerings and improving business origination with a new client-centric model.

Nedbank Wealth will also no longer exist as a stand-alone cluster. These changes will become effective on 1 July 2025.

“For clients, the reorganisation represents a transformative leap forward in how they will
experience Nedbank, said Quinn.

“By unifying our personal and juristic business segments into distinct, focused clusters, we will be able to offer more seamless and integrated banking experiences.”

“Clients will benefit from enhanced client service, more tailored business solutions from BCB, greater access to financial expertise in PPB and increased investment and innovation in product offerings enabled by efficiencies and accelerated growth.”

Outlook

Looking ahead, Nedbank says it remains optimistic and expects the economic environment in South Africa to improve off a low 2024 base despite the risks of a possible trade war.

South Africa’s GDP is expected to increase by 1.4% in 2025, while inflation remains well within the SARB’s target range of 3% to 6%.

The South African prime lending rate is also expected to drop by a further 50 basis points in 2025, reaching 10.75%.

Corporate lending should also pick up, but growth in household lending is expected to remain muted, only picking up in the second half of the year. However, risks are pointed to the downside.