Nedbank expects more bad loans but within full-year guidance

JOHANNESBURG, Oct 29 (Reuters)Nedbank Group NEDJ.J said on Thursday growth in bad loans for the nine months to Sept. 30 was high but within the bank’s full-year guidance, as it forecast that the negative impact of the coronavirus crisis would persist in the coming quarters.

“The negative impact of these (coronavirus and lockdown) on the group’s client base remains evident and is expected to continue for some time,” the bank said in a voluntary trading update.

Bank industry executives have said that bad loans spurred by the coronavirus and the country’s lockdown have set South African banks’ profits back by more than a decade.

Nedbank, one of the country’s top four lenders, said its impairment growth was lower than the 202% it reported in the first half of 2020, supporting a credit loss ratio within its full-year guidance of 150 basis points to 185 basis points.

The credit loss ratio is used to show what proportion of loans are at risk.

The bank said there had been an improvement in financial performance in the third quarter with volumes in retail loan applications, such as home loans and car loans, showing full recovery to above pre-lockdown levels.

It reiterated that its full-year headline earnings per share (HEPS) will decline by more than 20% as compared with a year earlier. HEPS is the main profit measure in South Africa.

(Reporting by Promit Mukherjee. Editing by Jane Merriman)

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