News
Nedbank’s headline earnings slump
Published
3 years agoon
By
The Post
JOHANNESBURG-THE Covid-19 pandemic has hit Nedbank hard with the bank’s headline earnings declining by 69.2 percent to M2.1 billion from the end of March this year.
In a statement, Nedbank’s CEO Mike Brown said the decline was driven by a significant increase in impairments, including M2.9 billion related to IFRS-9 macro-model adjustments and judgmental overlays for estimated Covid-19 related impacts and expected future job losses.
Brown described the period as one which presented “unprecedented health, economic and social challenges that have had a material impact on individuals, families, businesses, societies and countries”.
“In particular our thoughts and prayers are with the families and friends of five Nedbankers who lost their lives as a result of Covid-19 related illnesses,” Brown said.
Nedbank’s primary focus, he said, was on remaining resilient and ensuring the health and safety of staff and clients.
Brown said while operating under lockdown they provided payment relief for over 375 000 clients amounting to M119 billion of loans and reduced various client fees amounting to M104 million.
“We launched digital innovations using foundations from our managed evolution technology roll-out to assist clients during the lockdown, including launching the Avo app and Tap on Phone payments functionality,” he said.
“Importantly, these capabilities enabled digital sales to increase from 18 percent to 53 percent.”
Avo is a one-stop super app enabling clients to buy essential products and services online and have them delivered to their home.
Since its launch in app stores on June 19, Avo is said to have signed up more than 750 businesses offering their products and services on this e-commerce platform.
The tap-on-phone functionality allows all merchants and business owners to convert their cellphones into payment acceptance devices in order to meet the needs of customers who are increasingly looking for contactless ways to pay.
This tap-on-phone functionality is a first for Africa, and Nedbank is currently the only bank to offer this facility.
Nedbank maintained a strong balance sheet, evident in a tier 1 capital ratio of 11.7 percent and CET1 ratio of 10.6 percent at June 30, as well as a strong liquidity profile.
Brown said while it is disappointing to report large reductions in ROE and headline earnings, “we consider this as a resilient outcome in extraordinarily difficult circumstances where there was less focus on profitability in its own right, other than as a buffer against capital”.
Impairments increased significantly, driven by the impact of Covid-19 on consumers and businesses, and the deteriorating macroeconomic environment in South Africa.
The group’s impairment charge increased 202 percent to M7.6 billion and the credit loss ratio was up from 70 bps to 194 bps.
The increase was driven by a M2.9 billion charge for Covid-19 related judgmental overlays and IFRS 9 forward-looking macro-model adjustments, as well as the 42 percent increase in stage 3 advances as clients increasingly came under pressure.
During the period, the group provided payment relief across the portfolio.
The support included M30.5 billion for clients in Corporate & Investment Banking, M78.4 billion in Retail & Business Banking, M7.1 billion in Wealth and M2.6 billion in Africa Regions.
In addition, Nedbank received applications from its clients for the SARB/NT loan guarantee scheme amounting to a total of M3 billion of which M1 billion has already been approved.
Expenses declined by 1.1 percent to M15.3 billion as discretionary spend was well managed, incentives declined, and optimisation initiatives continued, despite increased levels of Covid-19 related spend.
The outlook for the South African economy remains weak. Household finances are forecast to remain under pressure in the second half of the year.
Unemployment is expected to rise sharply over the next two quarters and is unlikely to recover quickly, the statement reads.
It says some improvement is expected later in the year, which, coupled with record low interest rates, is forecast to provide some support to consumers, reducing debt service costs and freeing up disposable income for discretionary spending.
However, the bank says, the recovery is expected to be weak and too late to prevent a sharp contraction in real GDP over the year as a whole with our forecasts being for GDP in 2020 to decline by seven percent with Q2 GDP declining over 40 percent.
Brown said “this time last year I said South Africa was fast running out of time and money”.
Brown says forecasting in the current environment is complex.
“Looking forward, the environment for our staff, clients and other stakeholders, as well as the world of financial services and banking, is likely to be materially different after the Covid-19 pandemic,” he said.
“While forecast risk in this environment is high, given the R2.9bn of forward-looking provision build in the first half, we hope that the credit loss ratio in the second half will be lower than the first half.”
He said they will seek to identify opportunities to create new streams of revenue, enhance operations and optimise the structure of the businesses as they continue their successful digital journey that has led to improvements in client satisfaction metrics.
“As Nedbank, we are committed to making a difference in this difficult environment and deliver on our purpose to use our financial expertise to do good for our clients and society.”
Staff Reporter
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A local lawyer, Advocate Molefi Makase, is in soup after he flew into a rage, insulting his wife and smashing her phone at a police station.
It was not possible to establish why Adv Makase was so mad at his wife. He is now expected to appear before the Tšifa-li-Mali Magistrate’s Court on Tuesday.
Earlier on Tuesday, he was released from custody on free bail on condition that he attends remands.
Magistrate Mpotla Koaesa granted Advocate Makase bail after his lawyer, Advocate Kefuoe Machaile, pleaded that he had to appear for his clients in the Court of Appeal.
Advocate Makase is facing two charges of breaching peace and malicious damage to property.
According to the charge sheet, on October 5, 2023, within the precincts of the Leribe Police Station, Advocate Makase allegedly used obscene, threatening, or insulting language or behaviour, or acted with an intent to incite a breach of the peace.
The prosecution alleges that the lawyer shouted at his wife, ’Mamahao Makase, and damaged her Huawei Y5P cell phone “with an intention to cause harm” right at police station.
During his initial appearance before Magistrate Koaesa, Advocate Makase expressed remorse for his actions and sought the court’s leniency, pleading for bail due to an impending appearance in the Court of Appeal.
His lawyer, Advocate Machaile, informed the court that an arrangement had been made with the police to secure his release the following day, as he had spent a night in detention.
Advocate Machaile recounted his efforts to persuade the police to release him on the day of his arrest.
He noted that the police had assured them of his release the following day, which indeed came to fruition.
Following his release, he was instructed to present himself before the court, which he dutifully complied with.
Advocate Machaile underscored Advocate Makase’s standing as a recognised legal practitioner in the court.
Notably, he was scheduled to appear in the Court of Appeal but had to reschedule his commitment later in the day to accommodate his court appearance.
Advocate Machaile asserted that Advocate Makase presented no flight risk, as he resides in Hlotse with his family and has no motive to evade his legal obligations.
He respectfully petitioned the court for his release on bail, emphasising that he had demonstrated his ability to adhere to the court’s conditions.
The Crown Counsel, Advocate Taelo Sello, expressed no objection to the bail application, acknowledging that the accused had a forthcoming matter in the Court of Appeal.
Consequently, the court granted Advocate Makase bail without any financial conditions, with the stipulation that he must not tamper with state witnesses and must fully participate in the trial process until its conclusion.
’Malimpho Majoro

THREE elderly women were all stabbed to death with a spear during a deadly night after they were accused of being witches.
Three suspects, all from Ha-Kholoko village in Roma, appeared in the High Court this week facing a charge of murder.
They are Jakobo Mofolo, Oele Poto, and Pakiso Lehoko.
They accused the elderly women of bewitching one of Poto’s relative who had died.
The stunning details of the murder was unravelled in court this week, thanks to Tlhaba Bochabela, 32, who is the crown witness.
Bochabela told High Court judge, Justice ’Mabatšoeneng Hlaele, last week that he had been invited to become part of the murder group but chickened out at the last minute.
Bochabela said in March 2020, he was invited by Rethabile Poto to come to his house in the evening.
He said when he went there, he found Mofolo, Poto, and Lehoko already at the house. There were two other men who he did not identify.
“I was told that the very same night we were going to do some task, we were going to kill some people,” Bochabela told Justice Hlaele.
He said he asked which people were going to be killed and was told that they were ’Malekhooa Maeka, ’Mathlokomelo Poto, ’Mampolokeng Masasa.
They said the three women had successfully bewitched Rethabile Poto’s uncle leading to his death.
Bochabela said after he was told of this plot, he agreed to implement it but requested that he be allowed to go to his house to fetch his weapon.
He said Lehoko was however suspicious that he was withdrawing from the plot and mockingly said “let this woman go and sleep, we can see that he is afraid and is running away”.
Bochabela said the only person he told the truth to, that he was indeed going to his home to sleep instead of going to murder the three elderly women was Mofolo who also told him that he was leaving too.
He said he told Mofolo that he felt uncomfortable with the murder plan.
Bochabela said he left and when he arrived at his place he told his wife all about the meeting and the plot to kill the women.
He said his wife commended him for his decision to pull out.
“I told my wife to lock the door and not respond to anyone that would come knocking looking for me,” Bochabela said.
He said later in the night, Rethabile Poto arrived at his place and called him out but they did not respond until he left.
Bochabela said in the morning they discovered that indeed the men had carried out their mission.
The village chief of Ha-Kholoko, Chief Thabang Lehoko, told Justice Hlaele that it was between 11 pm and 12 midnight when he received a phone call from one Pakiso Maseka who is a neighbour to one of the murdered women.
Chief Lehoko said Maseka told him to rush to ’Mampolokeng Masasa’s place to see what evil had been done to her.
“I rushed to Masasa’s place and on arrival I found Pakiso in the company of Moitheri Masasa,” Chief Lehoko said.
He said he found the old lady on the bed, naked with her legs spread wide.
“I was embarrassed by the sight of the old lady in that state, naked and covered in blood,” the chief said.
He said he went out and asked Maseka what had happened but Maseka referred him to Moitheri Masasa.
Chief Lehoko said Masasa told him that there were people with spears who had threatened to kill him if he came out of the house.
He said Maseka said he knew that Masasa’s neighbour, ’Malekhooa Maeka, was a light sleeper and she could have heard something.
The chief then sent one Patrick Lehoko to Maeka’s house to check if she had heard anything but Patrick came back saying Maeka was not at her house.
“I immediately stood up and went to ’Malekhooa’s place,” Chief Lehoko said.
He said when he arrived, he knocked at her door but there was no response so he kicked the door open, went in and called out ’Malekhooa Maeka by name.
Chief Lehoko said he then lit his phone and saw her lying in bed covered in blankets.
He said he then went closer to her and shook her but she was heavy.
Chief Lehoko said he tried to shake her again one last time while still calling her out but he touched blood.
He said he immediately left and went back to tell others that Maeka seemed to be dead too.
“I decided to go and buy airtime from the nearest shop which I had passed through near ’Matlhokomelo Poto’s home.”
He said on his way he met one Sebata Poto who asked him who he was.
Chief Lehoko said he only replied by telling him that the two women, Masasa and Maeka, had been murdered.
He said Sebata Poto told him that “’Matlhokomelo has been stabbed with a spear too”.
Chief Lehoko said he rushed to ’Matlhokomelo Poto’s house where he found her seated in the middle of the house supported by her children with blood oozing from her chest, gasping for air.
“I stepped out and went to get airtime, but I found her dead when I returned from the shop,” the chief said.
The case continues.
Tholoana Lesenya

THE opposition is launching a nasty fightback after Prime Minister Sam Matekane defanged their no-confidence motion by roping in new partners to firm up his government.
Matekane’s surprise deal with the Basotho Action Party (BAP) has trimmed the opposition’s support in parliament and thrown their motion into doubt.
But the opposition has now filed another motion that seeks to get Matekane and his MPs disqualified from parliament on account that they were elected when they had business interests with the government.
The motion is based on section 59 of the constitution which disqualifies a person from being sworn-in as an MP if they have “any such interest in any such government contract as may be so prescribed”.
Section 59 (6) describes a government contract as “any contract made with the Government of Lesotho or with a department of that Government or with an officer of that Government contracting as such”.
Prime Minister Matekane’s Matekane Group of Companies (MGC) has a history of winning road construction tenders. Other Revolution for Prosperity (RFP) MPs, most of whom were in business, had had business dealings with the government.
It is however not clear if the MPs were still doing business with the government at the time of their swearing-in.
Matekane’s MGC Park is housing the Independent Electoral Commission (IEC), which is a government institution established by the constitution, getting its funds from the consolidated funds.
The motion was brought by the Popular Front for Democracy (PFD) leader Lekhetho Rakuoane who is a key figure in the opposition’s bid to topple Matekane.
The motion appears to be a long shot but should be taken in the context of a political game that has become nasty.
Advocate Rakuoane said the IEC’s tenancy at the MGC is one of their targets.
“The IEC is one of the government departments,” Rakuoane said.
“It is currently unethical that it has hired the prime minister’s building.”
“But after the motion, he will have to cut ties with the IEC or he will be kicked out of parliament.”
The Democratic Congress (DC) leader, Mathibeli Mokhothu, said although the IEC is an independent body, it can still be regarded as part of the government because it gets its funding from the consolidated fund.
The Basotho Covenant Movement (BCM)’s Reverend Tšepo Lipholo, who seconded the motion, said the Matekane-led government “is dominated by tenderpreneurs who have been doing business with the government since a long time ago”.
“Now they have joined politics, they must not do business with the government,” Lipholo said.
He said some of the MPs in the ruling parties are still doing business with the government despite their promises before the election to stop doing that.
“Those who will not abide by the law should be disqualified as MPs,” Lipholo said.
“Basotho’s small businesses are collapsing day-by-day, yet people who are in power continue to take tenders for themselves.”
He applauded the Abia constituency MP Thuso Makhalanyane, who was recently expelled from Matekane’s RFP for rebellion because he withdrew his car from government engagement after he was sworn in as an MP.
“He set a good example by withdrawing his vehicle where it was hired by the government,” Lipholo said.
Rakuoane said during the past 30 years after Lesotho’s return to democratic rule, section 59 of the constitution has not been attended to even when it was clear that some MPs had business dealings with the government.
“This section stops you from entering parliament when doing business with the government. Those who are already members will have to leave,” he said.
Rakuoane said they are waiting for Speaker Tlohang Sekhamane to sign the motion so that the parliament business committee can set a date for its debate.
“The law will also serve to assist ordinary Basotho businesses as they will not compete with the executive,” he said.
“There are many Basotho businesses in business these MPs are in. They must get those tenders instead.”
The new motion comes barely a week after a court application aimed at disqualifying Mokhothu.
The government-sponsored application sought the Constitutional Court to declare Mokhothu unfit to be prime minister because he was convicted of fraud in 2007.
Mokhothu has been suggested as Matekane’s replacement should the motion of no confidence pass in parliament.
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