Nedbank will play to its strengths in Kenya as part of a renewed African strategy that has seen it pull the plug on its West African interest, after making the investment 10 years ago, says CEO Jason Quinn.
Nedbank announced the board had given the green light to pull out of its 21% shareholding in Ecobank Transnational Incorporated, a partnership entered into a decade ago that paved the way for clients to access more than 2,000 branches in 39 countries.
Speaking to Business Times after the release of the group’s results for the half-year ended June, Quinn said the sale of the bank’s stake in Ecobank will see it focusing on its business in Kenya, Southern Africa and parts of East Africa.
I think we’re really good at corporate and investment banking, and we’re really good in infrastructure finance and project finance, in sectors of energy and resources, and then things like fixed income, currencies and even commercial property. We will go into areas where we are strong
— Jason Quinn, Nedbank CEO
“We would like to grow our share in South Africa, also in Namibia, Mozambique, East Africa and [particular] Kenya over time. Kenya is a buoyant market; we are going to play to our strengths, we are not going to be all things to all people as we start,” said Quinn.
“I think we’re really good at corporate and investment banking, and we’re really good in infrastructure finance and project finance, in sectors of energy and resources, and then things like fixed income, currencies and even commercial property. We will go into areas where we are strong.”
Nedbank has also finalised the restructuring of its retail and business banking and wealth clusters into more focused “client-centred divisions”, he said.
Quinn, who became CEO a year ago after serving as financial director at competitor Absa, said he had achieved his target to realign strategy and focus on succession and transformation. He said the appointment of Nomonde Hlongwa, previously of Standard Bank, as chief compliance officer, and the poaching of Andiswa Bata from FirstRand to head the group’s business and commercial banking reflected the bank’s commitment to succession planning.
“It’s been a busy year. You can see the strategic clarity on Ecobank, and the reorganisation that will pivot our company into the future. You see the focus on people and transformation, and those are the things I am proud of. We still have a lot to do. Reorganising doesn’t make our company more profitable immediately, but the culture and all the work we are doing around that — to play to win, to be one big bank — I think, is going pretty well,” he said.
Result highlights for the half-year included a lower credit loss ratio at 81 basis points (bps) from 104bps as the group benefited from lower interest rates. It recorded an 18% fall in impairments to R3.8bn as macro-economic conditions improved. Its instant payment platform, Payshap, recorded more than 250% growth in volumes.
Quinn said this showed Nedbank was a leader in digital adoption. “When you look at Payshap, we cut the prices to the bone to R1 a transaction, and we saw volumes grow 2.5 times, not incrementally. This shows me we are making progress in our digital strategies,” he said.
Keagan Higgins, investment analyst at Anchor Capital, said that the planned exit of Ecobank was the right strategy and has probably been a long time coming. He noted that the original investment cost Nedbank R6.3bn, and its carrying value had steadily eroded to R1.8bn. “As is the case in investing, even well thought out plans can go awry through little fault of your owm,” he said.
“In Nedbank’s case, the Nigerian economy has not performed as well as they originally thought; they have not derived the synergies that they thought they could, and this same experience is not just limited to Nedbank alone. We have seen other South African corporates pulling back from their ventures into Africa.”
However, the Nedbank share price has traded lower since the results were announced. Higgins said the market reacted negatively to the 2025 outlook, which management revised downwards to low-single digit earnings growth.
“Full year guidance is now below current estimates. On the other hand, this set of results has allowed management to reset market expectations as they reposition the business going forward.”
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