Bad debts falling, says Nedbank
Bad debts were on the wane, according to Nedbank which today disappointed analysts with lower-than-expected interim earnings, but promised less impairments in its business units in the future.
This was after reporting a quarter-on-quarter marginal improvement in its credit loss ratio – the percentage of bad debt or impairments relative to its loans and advances.
Nedbank was the second of South Africa’s big four banks to report this week, following Absa on Monday. Nedbank’s headline earnings decreased by 32.4% from R2.9bn to R1.9bn for the six months to June 2009, with diluted headline earnings per share down 34.1% to 474c.
Analysts had been expecting nearer to 494c a share. The counter was trading down 26c (0.2%) to 10 977c in comparison to the broader financial services sector, which was up 1.2%.
The credit loss ratio has improved to 1.57% from 1.67% in the last quarter, a sign that perhaps bad debts were being reined in. Nedbank has a predominantly domestic focus and is regarded as a proxy for the South African consumer environment.
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