| Mon 14 Jul 2008, 16:09 | | NED - Nedbank Group - Press release: Fitch affirms Nedbank`s ratings |
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NED
NED
NED - Nedbank Group - Press release: Fitch affirms Nedbank`s ratings
NEDBANK GROUP LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1966/010630/06
JSE share code: NED
NSX share code: NBK
ISIN: ZAE000004875
("Nedbank Group")
PRESS RELEASE: FITCH AFFIRMS NEDBANK`S RATINGS
Fitch Ratings-Johannesburg/London-11 July 2008: Fitch Ratings has today affirmed
the ratings of Nedbank Group Limited (Nedbank Group) and its 100%-owned
subsidiary, Nedbank Limited (Nedbank), at Long-term Issuer Default Rating (IDR)
`BBB` and `BBB+`, respectively. The full list of the ratings is attached below.
The ratings of Nedbank Group and Nedbank reflect the bank`s well-established
domestic franchise and improved financial performance indicators. The ratings
also consider the increasingly challenging domestic environment and the
resultant weakening of the bank`s asset quality.
Nedbank reported strong earnings growth during 2007 as a result of improved net
interest income and control over operating cost increases. However, given the
expected slowdown in economic conditions for South Africa during 2008 and the
impact of several interest rate hikes affecting the consumer`s appetite for and
ability to repay debt, Fitch believes Nedbank`s medium-term growth targets for
2008 are unlikely to be realised. This was confirmed by management`s indication
of lower than anticipated growth in the March 2008 trading update.
At end-2007, Nedbank`s non-performing loan (NPL) ratio deteriorated to 3% from
2.7% at end-2006, as a result of a 38% increase in the absolute amount of NPLs.
Fitch notes that, excluding the write-offs, NPLs increased 59% yoy. The agency
considers Nedbank`s coverage ratio of 57% at end-2007 (end-2006: 67%) to be low.
Interest rate risk and foreign-exchange risk are low and appear well managed.
Liquidity risk within Nedbank is mitigated by a stable deposit base, reflecting
its franchise. At end-2007, Nedbank Group`s Basel I Tier 1 capital adequacy
ratio of 8.3% (end-2006: 8.3%) was lower than its peers`. Fitch considers
capital to be tightly managed within Nedbank and that more capital may be
required, given the tightening economic conditions in South Africa.
Nedbank Group is South Africa`s fourth-largest banking group. Nedbank is the
group`s primary operating subsidiary and comprises three core business clusters
- Nedbank Corporate, Nedbank Retail and Nedbank Capital - as well as its 50.1%
subsidiary, Imperial Bank Limited. The group is 53.2%-owned by Old Mutual Plc
and its associate companies.
NEDBANK GROUP
Long-term foreign currency IDR: affirmed at `BBB`, Outlook Stable
Long-term local currency IDR: affirmed at `BBB`, Outlook Stable
Short-term foreign currency IDR: affirmed at `F3`
National Long-term Rating: affirmed at `AA-(AA minus)(zaf)`, Outlook Stable
National Short-term Rating: affirmed at `F1+(zaf)`
Individual Rating: affirmed at `B/C`
Support Rating: affirmed at `2`
NEDBANK
Long-term foreign currency IDR: affirmed at `BBB+`, Outlook Stable
Long-term local currency IDR: affirmed at `BBB+`, Outlook Stable
Short-term foreign currency IDR: affirmed at `F2`
National Long-term Rating: affirmed at `AA(zaf)`, Outlook Stable
National Short-term Rating: affirmed at `F1+(zaf)`
Individual Rating: affirmed at `B/C`
Support Rating: affirmed at `2`
Contact: Denzil de Bie, Anthony Walker, Johannesburg, +27 11 380 0900.
Fitch`s National ratings provide a relative measure of creditworthiness for
rated entities in countries with relatively low international sovereign ratings
and where there is demand for such ratings. The best risk within a country is
rated `AAA` and other credits are rated only relative to this risk. National
ratings are designed for use mainly by local investors in local markets and are
signified by the addition of an identifier for the country concerned, such as
`AAA(zaf)` for National ratings in Africa. Specific letter grades are not
therefore internationally comparable.
Fitch`s rating definitions and the terms of use of such ratings are available on
the agency`s public site, www.fitchratings.com. Published ratings, criteria and
methodologies are available from this site, at all times. Fitch`s code of
conduct, confidentiality, conflicts of interest, affiliate firewall, compliance
and other relevant policies and procedures are also available from the `Code of
Conduct` section of this site.
Date: 14/07/2008 16:09:01 Produced by the JSE SENS Department.
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