| Wed 2 Nov 2011, 9:00 | | OML - Old Mutual plc - Nedbank Group Limited - Third quarter 2011 |
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OML
OLOML
OML - Old Mutual plc - Nedbank Group Limited - Third quarter 2011
trading update
OLD MUTUAL plc
Issuer code: OLOML
JSE Share code: OML
NSX share code: OLM
ISIN: GB0007389926
Ref 173/11
2 November 2011
Old Mutual plc
Nedbank Group Limited - Third Quarter 2011 Trading Update
Old Mutual plc announces that its majority owned South African banking
subsidiary Nedbank Group Limited ("Nedbank Group") released its third
quarter trading update today, 2 November 2011. The full Nedbank Group
third quarter trading update can be found on the company`s website
www.nedbankgroup.co.za.
The following is the full text of Nedbank Group`s announcement:
"NEDBANK GROUP - THIRD QUARTER 2011 TRADING UPDATE
"The growth outlook for South Africa has become less certain given the
potential for contagion from the northern hemisphere sovereign debt
crisis with many countries starting to report slower growth.
Despite the uncertain trading conditions Nedbank Group continues to make
good progress in growing its franchise and remains well placed to
deliver diluted headline earnings per share growth for the year in
excess of its medium-to-long term target."
Mike Brown
Chief Executive
OPERATING ENVIRONMENT
The operating environment in South Africa remained tough during the
third quarter as northern hemisphere sovereign debt difficulties reduced
confidence globally.
Domestic credit demand remains subdued with producers and consumers
adopting a cautious approach. Household spending was mainly supported by
personal income gains. Corporates are still maintaining surplus
liquidity and although wholesale credit extension recently outpaced that
of households, these tend to be specific large deals and consequently
less predictable.
Domestic public sector spending on infrastructure remains positive and
will support the economy to grow in the short term while improving the
economy`s long-term capacity to perform.
OPERATIONAL PERFORMANCE
The group continues to deliver on its key strategic initiative of
growing non-interest revenue (NIR), whilst good progress continues in
the repositioning of Nedbank Retail and the group`s portfolio tilt
towards more economically attractive activities, including those in the
rest of Africa.
Net interest income (NII) grew by 8,9% to R13 299 million for the nine
months ended 30 September 2011 ("the period") (Q3 2010: R12 214
million). The net interest margin increased to 3,45% for the period from
3,43% for the six months ended June 2011 (Q3 2010: 3,32%). Overall
margins continued to improve through gains in asset repricing and
benefits from changes in the mix of advances, together with a lower cost
of term liquidity. These benefits were partially offset by negative
endowment due to lower average interest rates, the cost of holding
higher liquidity buffers and lengthening the group`s funding profile.
The group`s credit loss ratio improved to 1,13% for the period from
1,21% for the six months to June 2011 (Q3 2010: 1,36%) whilst
maintaining appropriate coverage ratios and increasing portfolio
impairments. Nedbank Retail`s credit loss ratio remains the largest
contributor to this improvement.
NIR increased by 15,6% to R10 885 million (Q3 2010: R9 413 million) with
strong growth in fee and commission income of 15,9%. This positive
growth trend was achieved as a result of transactional volume growth
from primary client and continued focus on cross-selling products and
services. Trading income decreased by 3,0% in a volatile global
environment. Private equity income benefited from improved market
valuations off a low base. Fair value adjustments for the period
improved as a result of a reduced loss of R51 million (Q3 2010 R207
million loss) as credit spreads from the group`s own subordinated debt
continued to narrow.
Expenses remain controlled in line with the group`s intent of
maintaining a positive NIR-to-expense `jaws` ratio whilst continuing to
invest for growth.
Total assets increased by an annualised 7,5% to R642,7 billion. Advances
grew by 3,3% (annualised) to R487,0 billion. This rate of growth
reflects the portfolio tilt strategy of growing selected advances
categories that are considered more economically attractive. The
wholesale sector continued to experience early repayments as well as
delayed take-up of approved credit applications.
Deposits increased 6,4% (annualised) to R513,9 billion, benefiting from
growth in fixed and term deposit levels as a result of surplus liquidity
in the wholesale sector. The group`s long term funding ratio and liquid
asset buffers remained at similar levels to prior periods.
The group`s capital ratios remain well above current Basel II and
anticipated Basel III regulatory minima. The core tier 1 ratio of 10,8%
(June 2010: 10,7%) showed further strengthening as a result of
profitability and reasonably low growth in risk weighted assets, offset
by the payment of the interim ordinary dividend in September 2011.
Basel II Q3 2011 Internal target Regulatory
capital ratio range minimum
adequacy ratios
Core Tier 1 10,8% 7,5% to 9,0% 5,25%
Tier 1 12,5% 8,5% to 10,0% 7,00%
Total 15,3% 11,5% to 13,0% 9,75%
Ratios calculated including unappropriated profits
PROSPECTS
The South African economic climate is expected to remain subdued. The
group`s GDP growth forecast for 2011 is marginally above 3% and interest
rates are currently anticipated to remain unchanged until the second
half of 2012. Continued global economic weakness could increase
prospects of further interest rate reductions.
Nedbank Group remains in a good position to deliver solid earnings
growth, notwithstanding the stronger performance in the second half of
2010. Although management remains cautious, the guidance for Nedbank
Group`s financial performance in 2011 given at the half year remains
unchanged.
Shareholders are advised that these forecasts and the figures stated in
this trading update have not been reviewed or reported on by the group`s
auditors.
FORWARD-LOOKING STATEMENT
This announcement contains certain forward-looking statements with
respect to the financial condition and results of operations of Nedbank
Group and its group companies, which by their nature involve risk and
uncertainty because they relate to events and depend on circumstances
that may occur in the future. Factors that could cause actual results to
differ materially from those in the forward-looking statements include,
but are not limited to, global, national and regional economic
conditions, levels of securities markets, interest rates, credit or
other risks of lending and investment activities, together with
competitive and regulatory factors.
Sandton
2 November 2011"
Enquiries
External Communications
Patrick Bowes UK +44 (0)20 7002 7440
Investor Relations
Kelly de Kock SA +27 (0)21 509 8709
Media
William Baldwin-Charles +44 (0)20 7002 7133
+44 (0)7834 524 833
Notes to Editors
Old Mutual
Old Mutual plc is an international long-term savings, protection and
investment Group. Originating in South Africa in 1845, the Group
provides life assurance, asset management, banking and general insurance
to more than 15 million customers in Europe, the Americas, Africa and
Asia. Old Mutual plc is listed on the London Stock Exchange and the
Johannesburg Stock Exchange, among others.
In the year ended 31 December 2010, the Group reported adjusted
operating profit before tax of GBP1.5 billion (on an IFRS basis) and had
GBP309 billion of funds under management, from core operations.
For further information on Old Mutual plc, please visit the corporate
website at www.oldmutual.com
Date: 02/11/2011 09:00:02 Produced by the JSE SENS Department.
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