Nedbank heads for 8-month high on profit increase

Bloomberg

Nedbank Group Ltd., the South African lender controlled by Old Mutual Plc, headed for the highest level in eight months after first-half profit rose, beating analyst estimates that had predicted a decline.
The shares jumped as much as 7.5 percent on Monday before paring gains, leading returns on the seven-member FTSE/JSE Africa Banks Index. First-half earnings per share excluding one-time items climbed to 11.19 rand from 11.01 rand a year earlier as bad-loan impairments improved. That compared with the 10.67 rand median of three analysts surveyed by Bloomberg.
“Nedbank produced a surprisingly strong set of results, with a solid set of numbers from South Africa,” said Neelash Hansjee, a banks analyst at Old Mutual’s investment-management unit. “The credit quality improved in a tough environment while revenue performance was very reasonable. Expectations were low heading into this result.”
The lender and its peers are struggling against a South African economy heading toward a recession and a potential credit-rating downgrade of the country’s debt to junk by the end of the year. While Barclays Africa Group Ltd. last week reported a 46 percent surge in impairments in the first six months of this year, Nedbank’s bad-debt charges decreased by 4.2 percent.
Nedbank advanced 6.9 percent to 212.74 rand as of 11:09 a.m. in Johannesburg, the highest on a closing basis since Dec. 1. More than 871,000 shares changed hands, 79 percent of the three-month daily average.