Nedbank concludes Ecobank disposal and sets focus on East Africa and Sadc

Nedbank has concluded the sale of its shareholding in Ecobank Transnational Incorporated (ETI) and expects the disposal to affect its full-year earnings per share but not HEPS.

In August Nedbank announced it had sold its 21.2% shareholding in ETI for $100m (about R1.7bn) to Bosquet Investments. The transaction has now received all the necessary regulatory approvals and was completed on Wednesday, it said in a statement.

The disposal represents a reset of Nedbank’s strategy in the broader African continent with a clear focus on the Southern African Development Community (Sadc) and East Africa regions in businesses Nedbank Group owns and controls.

In terms of IFRS accounting standards, the cumulative foreign exchange losses and fair value adjustments of approximately a net R7bn loss related to the equity accounting treatment of the group’s interest in ETI over time, previously recognised via other comprehensive income (OCI), are required to be recycled to profit or loss in the current reporting period, it said.

Consequently, for the year ending December, it expects basic earnings per share will decrease by at least 20% to 2,888c.

The recycling of the forex losses and fair value adjustments recognised via OCI has no effect on HEPS or the net asset value per share, it added.

The group said it is on track to deliver underlying diluted HEPS growth of flat to low single digits and a return on equity of 15% or higher for the 2025 financial year, excluding the effect of the one-off R600m commercial settlement with Transnet, it said.

Business Day reported previously that Nedbank’s divestment of its Ecobank stake, which was acquired for $500m (or about R9bn now), comes after a decade that delivered R400m in dividends against R6.9bn unrealised losses and a $293m impairment.

ETI’s annual report for the year ended December 2024 shows the group was valued at about $447m, less than Nedbank paid for its minority stake, highlighting how far down the rabbit hole the company’s fortunes have gone over the past decade.

Nedbank had little room to negotiate the selling price, as its investment in ETI had a carrying value of R1.8bn and a market value of R1.9bn at the end of June.

A Nedbank spokesperson told Business Day that material conditions were completely different when the investment decision was made.

“The initial transaction, which was concluded more than a decade ago, was done on the back of a very different outlook for the economies in West Africa, and in particular Nigeria,” the spokesperson said.

Nedbank has now set its sights on the fast-growing East Africa market and the Sadc region — markets forecast to outpace South Africa’s growth — having already snapped up fintech outfit iKhokha for R1.6bn to bolster its small and medium enterprise and mid-corporate lending.

In November, Nedbank said it would pay Transnet R600m to avoid a protracted legal fight over allegations that the bank acted improperly in interest-rate swap deals concluded more than a decade ago.

The settlement was entered into by Nedbank without admitting liability.

Transnet had long insisted that the bank was responsible for losses suffered in the transactions that ultimately enriched Gupta-linked Regiments Capital.

With Kabelo Khumalo