One of South Africa’s largest lenders Nedbank Ltd said on Friday its profit for the year ended December 31 could drop by almost 60% due to the impact of the pandemic.
It expects 2020 headline earnings per share (HEPS), the main profit measure in South Africa, of between R10.42 ($0.6801) and R11.72, down 55%-60% from a year earlier.
Banks in South Africa are typically well-capitalised, adequately meeting the central bank’s reserve requirements, but provisioning for bad debts soared to near a decade high last year due to the Covid-19 pandemic.
Nonetheless, the South African banking share index is up more then 60% since the stock market crash on March 14, driven largely by optimism about an economic recovery in the country.
The improving economic backdrop prompted the South African Reserve Bank to ease its stance on dividends last month, after the regulator last April advised halting payments.
Nedbank did not say if it would pay a dividend, but said the bank’s financial position was sound. It is due to announce full year results on March 17.
“Through these difficult times, the group balance sheet remains liquid and well capitalised at levels above board-approved minimum targets and well above the minimum regulatory requirements,” the lender said.