Nedbank hungry for acquisitions

Nedbank is weighing acquisitions and share buybacks to deploy part of its R45.3 billion cash pile, CEO Jason Quinn said.

Last year, the South African lender spent R5 billion on share repurchases and acquired Eqstra Investment Holdings.

Nedbank’s Common Equity Tier 1 capital ratio — a key measure of financial strength — remained at 13.3% as of June, above the 12% target set by the board. The comfortable risk buffers will help the bank expand, Quinn said.

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“To be honest, we’d like to capture some more growth in South Africa, and then steadily, you know, as opportunities emerge across the continent, we would like to diversify our portfolio more,” Quinn said in a Bloomberg Television interview with Tom Mackenzie. That’ll take some time, though, because entry points are scarce.”

The lender plans to use part of the R12 billion of excess capital sitting on its books for the proposed share repurchases, with the total buyback amount dependent on the market.

“We have all the necessary approvals in place to execute a share buyback, depending on market conditions,” Quinn said in the interview.

Net income at the Johannesburg-based lender rose 8% in the first half, with weak economic activity before South Africa’s general elections constraining corporate and household activity.

Nedbank expects earnings growth to accelerate as Africa’s most-industrialized economy recovers, and slowing inflation spurs a reduction in borrowing costs.

The lender’s shares climbed as much as 3.5% earlier Tuesday before paring back gains to 2.6% at 12:13 p.m. in Johannesburg. The stock is up 27% this year, compared with a 10% increase for the FTSE/JSE Africa banks index.