The ‘new’ Nedbank takes shape

Over the past financial year, Nedbank has undergone a quiet revolution, with the company restructuring several of its operating units, disposing of its stake in West African lender Ecobank, and snapping up iKhoka. 

This is now going one step further, with the bank set to acquire a 66% stake in East African giant NCBA, which Standard Bank was also supposedly eyeing. 

The acquisition of NCBA marks a step change in the bank’s African expansion, with it focusing on businesses it can control and that are predominantly exposed to East Africa and the Southern African Development Community. 

However, these significant changes have come with some financial implications for the bank in its financial results for 2025. 

Headline earnings for the year showed slow growth of 2% to R17.2 billion, with a marginal decline in return on equity to 15.4%. This remains above Nedbank’s cost of equity, but is lower than its larger peers, Standard Bank and FirstRand. 

The headline earnings metric strips out the impact of the disposal of Nedbank’s stake in Ecobank and a once-off settlement with Transnet. 

These factors negatively impacted Nedbank’s profitability, with it losing the associate income from Ecobank and having to pay Transent R600 million to resolve legal disputes regarding interest rate swap transactions from 2015-2016. 

As a result of this and the slow revenue growth, Nedbank’s profit after tax was nearly cut in half to R9.4 billion. 

However, the bank said this is likely to be a case of short-term pain with long-term gain for the bank, with its operational changes bearing fruit. 

Nedbank restructured its Retail and Business Banking unit to create a Personal and Private Banking (PPB) business, with a separate Business and Commercial Banking (BCB) unit. 

This enables greater focus from each division and mimics the structure of many of South Africa’s other banking groups. 

CEO Jason Quinn explained that this change is already bearing fruit, with the PPB business seeing 9% growth in active clients, an improvement in the cross-sell ratio to above two products per client, and strong lending and insurance growth. 

The BCB unit has been boosted by the acquisition of iKhoka and Eqstra, with initial signs of success including accelerated loan payouts in the second half of the year and a strong pipeline for 2026, Quinn said. 

“Our strategic value unlocks, which focus on driving faster revenue growth and enhancing productivity, are making good progress,” Quinn said.

Digital volumes and values grew strongly as clients continue to shift towards online channels, with PPB volumes and values up by 10% and 16%, respectively. 

In Nedbank Africa Regions, digitally active retail clients made up 70% of NAR’s total active client base, which resulted in the achievement of NAR’s 2025 target. 

Active Nedbank Money app clients increased by 14% to 3 million, supporting a 15% increase in transaction values. App users in Africa reported an 18% increase in app usage.

Crucially, Nedbank’s Corporate and Investment Banking (CIB) division, which makes up nearly half of the bank’s headline earnings, continues to grow strongly. 

Its average advances grew by 5% and deposits surged by 17%. However, the impact of lower interest rates and a shift to lower-risk sectors resulted in its profitability coming under pressure. 

The CIB unit grew its headline earnings by 2% ro R7.9 billion, with a return on equity of 21.4%. 

Nedbank is bullish on the future, with it noting that South Africa’s economic growth prospects are the best in years. Crucially, fixed investment is beginning to recover, benefitting its CIB division and banking activity more generally. 

In 2026, we expect that strong underlying growth momentum across all our businesses will be partially offset by the normalisation of wholesale impairments off a low 2025 base, endowment pressure from lower interest rates and associate income from ETI that will not repeat,” Quinn said. 

“As a result, ROE for 2026 is likely to be above 15%, heading towards 2025 levels, and above an improved COE of 14%. We expect ROE to build in the medium term to around 17%, supported by stronger revenue growth and a well-managed expense base.”