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Nedbank opposes change to Section 25 of the Constitution

But strongly supports the need for land reform.
Nedbank Group CE Mike Brown. Photographer: Waldo Swiegers/Bloomberg

South Africa is in the early stages of a complex political and institutional turnaround, which needs to lead to structural reforms and more policy certainty – particularly around land reform, the mining charter and key state-owned enterprises.

“If that is able to be delivered, you then get better confidence, then you get investment, then you get growth and then you get jobs,” Nedbank Group chief executive Mike Brown said following the bank’s interim results presentation on Tuesday.

Source: Nedbank Group Interim Results

Headline earnings rose 27% to R6.7 billion in the six months to end-June, boosted by the turnaround its associate Ecobank Transnational Incorporated (ETI) achieved (watch the video interview with COO Mfundo Nkuhlu below). However, managed operations – effectively everything besides the ETI business – only grew 2% to R6.6 billion in what Nedbank referred to as a “challenging and volatile domestic macroeconomic environment”.

This echoes the sentiment expressed by Absa Group financial director Jason Quinn on Monday. Absa reported a 3% increase in interim normalised headline earnings to R8 billion. “Our performance … should be considered against the tough macro backdrop in South Africa.”

Nedbank has lowered its GDP growth expectations for 2018 to 1% from an earlier 1.6%, largely due to policy uncertainty.

“It does seem likely that that will remain until at least the elections, probably even after the elections, but if we do want higher levels of economic growth and job creation we simply have no choice but to conclude on these matters,” says Brown. “Otherwise the economy will continue to muddle along, and we should not be surprised with that as an outcome.”

Nedbank has been an active participant in the land reform process and has made formal written submissions to Parliament – both individually and as part of the Banking Association of South Africa. It has also asked for permission to make a verbal presentation in Parliament and is waiting for feedback on the request.

The ANC last week announced its intention to amend Section 25 of the Constitution to expropriate land without compensation.

Brown said while Nedbank strongly endorses the need for land reform, it doesn’t believe that Section 25 needs to change. A proper interpretation of Section 25 as it is currently drafted already allows for expropriation without compensation in certain instances.

“We need to wait for the Parliamentary process to complete, but to the extent that the Parliamentary process does suggest changes, what will be absolutely vital is the precise and specific wording of those changes.”

If these potential changes clarify the current intention of the constitution, people will regard it as a good outcome that provides more certainty, but if the changes result in more uncertainty as to when land can be expropriated without compensation, the country will be in a very difficult period with regard to economic growth and job creation, says Brown.

“The foundation of any society and any financial system is the ability for people to own assets.”

At this point it is impossible to do any meaningful calculations about the bank’s exposure to land that could be expropriated, as there is too much uncertainty.

“We really need to get through this process really quickly to provide certainty, otherwise the increased levels of investment and growth will just simply not materialise,” says Brown.

The future is digital

Nedbank’s total assets exceeded R1 trillion for the first time during the interim period. Total banking customers surpassed eight million.

Despite new entrants like Discovery, Bank Zero and TymeDigital coming to market, Nedbank still believes it can grow its customer numbers on the back of improvements in its value proposition – primarily in the digital space.

The Nedbank Money App saw a big overhaul in November 2017 and has been downloaded more than a million times. It now has more than 450 000 active users. During the first six months of 2018 it added 42 new services to the app, with plans to add more.

The bank plans to launch “Faceless Fica” during the second half of 2018, giving clients the ability to open a current account from their couch, while its rewards programme Greenbacks will also see changes in the coming months.



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For most people, it is the bank manager who forces them to stop their bad behavior. This pathetic and criminally inept government will not change its ways, unless they are forced to do so by their “bankers”. The time is long overdue for the financiers of this government to draw the line in the sand. The financial institutions that buy government bonds and SOE bonds are using our savings to support a criminal enterprise. The people who are abused and extorted by this government are the same ones who support the government with their pension savings.

We should stop dealing with institutions that use our savings to support this criminal regime. We don’t want to be part of this criminal enterprise they call the ANC government. We do’t want to finance the criminality any longer.

The problem is they have monopolies like Eskom and the likes that we need to keep the country going. Crazy how they worry about competition regarding company’s but they can monopolise like they want…

Big thumbs up to Nedbank and Mike Brown. Takes a lot of courage to do this. Remember the campaign by the EFF and some sections of the ANC against ABSA?

Big business gets a backbone. Wow, this is even more positive than citizens seeing the back of Jacob Zuma. Business has a duty to put a errant and corrupt government in its place and I can only hope more will follow.

Anyone interested in some free marketing?

This is just another bag filled with hot air.

End of comments.



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