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Trading day – Nedbank reports positive performance

In a pre-close investor update for the 10 months ended October, Nedbank said the company is performing in line with guidance.

Net interest income (NII) grew by low double digits, supported by an increase in average interest-earning banking assets.

The credit loss ratio is within the 0.8% to 1% guidance provided for the full year 2022.

The Australian central bank has raised rates to a 10-year high of 3.1%, as the country unexpectedly recorded its first current account deficit in 3 years.

Apple supplier Foxconn reported a huge slump in revenue after unrest at the largest iPhone factory in Zhengzhou, China.

Meanwhile, PepsiCo is planning to cut hundreds of its US corporate jobs.

US markets are down, with the S&P 500 closing 1.8% lower and the Nasdaq declining 1.9%.

The Nikkei 225 is muted in early morning trade, increasing by 0.3%, while the Hang Seng index slumped 1.2%.

Nedbank reported positive performance in a pre-close investor update for the past 10 months. Their performance is in line with guidance, and they are on track to beat 2019 earnings.

Here is the biggest news of the day.

  • Australian central bank raises rates to 10-year high as the country unexpectedly records its first current account deficit in 3 years. The Reserve Bank of Australia (RBA) lifted its cash rate by 0.25% this morning to 3.1%. That brings its cumulative rate hikes to 3% since May, and the bank projects that more increases will be needed. The country’s current account also fell into deficit for the first time in three years as robust domestic demand sucked in imports and miners paid more dividends abroad. Data from the Australian Bureau of Statistics showed that the current account had slid to a deficit of A$2.3 billion in the July-September quarter. That was down from a surplus of A$14.7 billion in the previous quarter and far from forecasts for a A$6.2 billion surplus.
  • iPhone maker Foxconn reported a slump in revenue after unrest at the largest iPhone factory in Zhengzhou, China. Foxconn said November revenue totalled 551.1 billion new Taiwan dollars (US$18.05 billion), down more than 29% from October and over 11% lower year-over-year. Foxconn said the fall was due to “production gradually entering off-peak seasonality and a portion of shipments being impacted by the epidemic in Zhengzhou.” The company gave no further details.
  • PepsiCo plans to cut hundreds of its US corporate jobs. The layoffs will affect employees of its food and beverage businesses in Chicago; Plano, Texas; and Purchase, New York, according to the Wall Street Journal. The company’s beverage unit is expected to be hit harder by the cuts because the snacks unit already shrank its workforce through a voluntary retirement program. Pepsi employs around 309 000 people worldwide, with 40% of those jobs located in the US. Several food and beverage companies have also cut jobs, including Beyond Meat, Impossible Foods, and PepsiCo’s main rival Coca-Cola.
  • Nedbank reported a positive performance. In a pre-close investor update for the 10 months ended October, Nedbank noted that the company is performing in line with the guidance given in August. Net interest income (NII) grew by low double digits, supported by an increase in average interest-earning banking assets. The credit loss ratio is within the 0.8% to 1% guidance provided for the full year 2022. Non-interest revenue (NIR) grew by high single digits. Due to delays in the closure of renewable energy deals, there is a risk of Nedbank missing guidance for NIR. The group’s JAWS ratio (revenue growth, including associate income, less cost growth) is expected to remain positive for FY22. The bank is on track to beat the 2019 level of earnings and is focused on achieving a return on equity (ROE) above the 2019 level of 15% by the end of 2023. The longer-term goal is over 18%.

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