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Nedbank Profit Rises 18% on Bad Debt Drop, Interest Income

Aug. 5 (Bloomberg) -- Nedbank Group Ltd., the South African bank controlled by Old Mutual Plc, said first-half profit rose 18 percent after bad debts declined and net interest income increased.

Net income climbed to 4.6 billion rand ($431 million) from 3.91 billion rand a year earlier, the Johannesburg-based lender said in a statement today. Earnings per share excluding one-time items rose 16 percent to 9.65 rand, as impairments declined by almost 30 percent.

Earnings were above expectations as was the “sharp non-performing loan decline in retail, especially personal loans and mortgages,” Patrice Rassou, head of equities at Sanlam Investment Management, said in an e-mailed response to questions. There was “good growth in client numbers too and investment banking.”

Nedbank, South Africa’s fourth-largest lender by assets, is seeking growth in the rest of the continent through an alliance with Togo-based Ecobank Transnational Inc. and the acquisition of a stake in Banco Unico in Mozambique.

The lender expects to make a decision on whether to take up its rights to a 20 percent stake in Ecobank by Nov. 25, Chief Executive Officer Mike Brown said today by phone from Johannesburg. Nedbank will also contractually increase its stake in Banco Unico to as much as 70 percent within three years, up from 36.4 percent now, he said.

Nedbank rose 0.6 percent to 239.33 rand as of 11:55 a.m. in Johannesburg trading.

“In a volatile and slowing economic environment our full-year guidance for growth in organic diluted headline earnings per share of greater than the growth in nominal gross domestic product remains unchanged,” the bank said.

Nedbank has until the end of November to convert the $285 million loan it made to Ecobank in 2011 into an equity holding and then increase the stake to as much as 20 percent.

The bank proposed a first-half dividend of 4.60 rand.

To contact the reporter on this story: Renee Bonorchis in Johannesburg at rbonorchis@bloomberg.net

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net John Bowker

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