- Bank setting aside assets to comply with Basel III rules
- Lender cuts forecast for growth in South African economy
Nedbank Group Ltd., the South African lender controlled by Old Mutual Plc, said the profit margin it makes on loans narrowed as the bank set aside more assets to meet regulatory requirements and its funding costs rose.
The net interest margin declined to 3.32 percent in the nine months through September compared with 3.53 percent a year earlier, the Johannesburg-based lender said in a statement on Monday. The margin was 3.36 percent in the second quarter.
Profit margins at all of South Africa’s four largest lenders have dropped in the past year amid a slowdown in the domestic economy and as they implement Basel III rules that require them to hold increasing levels of high-quality liquid assets. Nedbank, the fourth-largest lender, is seekingmore corporate and government clients to counter an expected increase in consumer bad debts as interest rates and inflation rise.
Nedbank declined 1.6 percent to 226.75 rand as of 10:05 a.m. in Johannesburg trading, the biggest drop among South African lenders.
The bank cut its projection of growth in the South African economy to 1.4 percent from 2 percent and said the central bank is forecast to increase interest rates by a further 25 basis points this month. It retained its 2015 profit estimate for “organic growth in diluted headline earnings per share in 2015 to be greater than nominal gross domestic product growth.”
Net interest income rose 3.7 percent to 17 billion rand ($1.2 billion) and non-interest revenue climbed 7.6 percent to 15.6 billion rand, Nedbank said. The credit-loss ratio improved marginally to 0.76 percent from 0.77 percent in September last year.