Old Mutual PLC (OML) - Nedbank Group - Third Quarter 2012 Trading Update
RNS Number : 6758P
Old Mutual PLC
29 October 2012
29 October 2012
Old Mutual plc
Nedbank Group - Third Quarter 2012 Trading Update
Nedbank Group Limited ("Nedbank Group"), the majority-owned South African
banking subsidiary of Old Mutual plc, released their third quarter 2012
trading update today, 29 October 2012.
The following is the full text of Nedbank Group's announcement:
""Against the background of a slowdown in global economic growth and an
increasingly challenging economic environment in South Africa, Nedbank has
continued to focus on delivering on its key strategic focus areas.
Our balance sheet remains well capitalised and liquid, and we are delivering
sustainable value to all our stakeholders comprising staff, clients,
shareholders, regulators and communities. In this regard we fully support
initiatives to ensure responsible lending by all service providers in the
unsecured lending market.
Importantly, the group is still on track to achieve its earnings growth target
in 2012, notwithstanding the more challenging economic environment".
The global economic slowdown continued into the third quarter of 2012 with the
Eurozone facing significant economic challenges. Furthermore, most emerging
markets, including South Africa (SA), experienced slower growth as exports
came under pressure.
Domestically, the unexpected 50 basis point reduction in interest rates in
July 2012 provided some relief to consumers, although private sector credit
demand remained low. Fixed investment continues to be delayed in light of
worsening economic prospects and uncertainty, further exacerbated by the
strikes taking place across a number of vital sectors of the SA economy. The
downgrade of SA's sovereign debt ratings and the foreign currency deposit
ratings of the five largest SA banks by credit rating agencies, Moody's
Investor Services and Standard & Poor's, highlighted the growing concerns
around the deteriorating macro environment in SA.
Net interest income for the nine months ended 30 September 2012 ("the period")
grew by 9,2% to R14 523m (Q3 2011: R13 299m). The net interest margin of 3,50%
(Q3 2011: 3,45%) improved as a result of continued benefits from mix change
towards higher yielding assets and improved risk-adjusted pricing. This was
partly offset by the cost of enhancing the group's liquidity profile in line
with the impending requirements of Basel III and the effect of lower endowment
income from the reduction in interest rates in July.
Ongoing improvements in the level of impairments contributed to the lower
credit loss ratio of 1,03% (Q3 2011: 1,13%). The group continues with regular
reviews of all industry sectors, including mining, and remains satisfied with
the mix, performance and levels of impairments on these portfolios.
Non-Interest Revenue increased by 13,9% to R12 403m (Q3 2011: R10 885m). The
increase was largely driven by growth in fee and commission income of 12,7%,
insurance income of 27,1% and trading income of 28,3%. Negative fair value
adjustments of R228m (Q3 2011: R12m profit) were recorded in the hedged
Total advances grew 6,8% (annualised on December 2011) to R521bn. Excluding
trading advances, banking advances growth was 3,4%. Deposits increased 8,6%
(annualised) to R555bn as the group maintained a strong focus on building and
enhancing its deposit base.
On 1 August 2012 the group obtained approval from the South African Reserve
Bank (SARB) to include the MFC vehicle financing book in the use of its
existing Advanced Internal Ratings based credit approach. This along with good
earnings growth, partly offset by the distribution of the interim dividend in
September 2012,contributed to an improved Core Tier 1 ratio of 10,7%.
Q3 2012 ratio Jun 2012 Internal target Regulatory
(Basel II.5) ratio
(Basel II) (Basel II)
Core Tier 1 10,7% 10,6% 7,5% to 9,0% 5,25%
Tier 1 ratio 12,2% 12,1% 8,5% to 10,0% 7,00%
Total capital 14,3% 14,4% 11,5% to 13,0% 9,50%
Ratios calculated including unappropriated profits
The SARB issued a guidance note on the prescribed Basel III minimum required
capital levels for SA banks on 15 October 2012. The group remains in a strong
position to meet the new capital requirements and will communicate its revised
internal target capital ratios incorporating the new Basel III capital levels
to the market at the release of the 2012 annual results.
The SA economy is slowing as reflected in the group's revised gross domestic
product (GDP) growth forecast for 2012 of 2,5%. Interest rates are currently
anticipated to remain unchanged for the remainder of 2012, but further
economic weakness either globally or domestically could increase the
probability of further rate cuts.
Given the prevailing economic slowdown and uncertainty combined with the
effects of wage related strike actions, the group remains cautious on its
outlook. However, the strength of the Nedbank franchise together with the
momentum built in the first nine months of the year allows the group to
re-affirm its previous financial guidance to achieve its medium-to-long-term
diluted headline earning per share growth target (being, greater than or equal
to GDP plus consumer price index plus 5%) in 2012.
Shareholders are advised that these forecasts and the figures stated in this
trading update have not been reviewed or reported on by the group's auditors.
This announcement contains certain forward-looking statements with respect to
the financial condition and results of operations of Nedbank Group and its
group companies, which by their nature involve risk and uncertainty because
they relate to events and depend on circumstances that may occur in the
future. Factors that could cause actual results to differ materially from
those in the forward-looking statements include, but are not limited to,
global, national and regional economic conditions, levels of securities
markets, interest rates, credit or other risks of lending and investment
activities, together with competitive and regulatory factors.
29 October 2012"
Patrick Bowes UK +44 (0)20 7002 7440
Kelly de Kock SA +27 (0)21 509 8709
William Baldwin-Charles +44 (0)20 7002 7133
+44 (0)7834 524 833
Notes to Editors
Old Mutual is an international long-term savings, protection and investment
Group. Originating in South Africa in 1845, the Group provides life
assurance, asset management, banking and general insurance to more than 12
million customers in Africa, the Americas, Asia and Europe. Old Mutual has
been listed on the London and Johannesburg Stock Exchanges, among others,
In the year ended 31 December 2011, the Group reported adjusted operating
profit before tax of £1.5 billion (on an IFRS basis) and had £267 billion of
funds under management from core operations.
For further information on Old Mutual plc, please visit the corporate website
This information is provided by RNS
The company news service from the London Stock Exchange
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