| Fri 4 May 2012, 8:01 | | OML - Old Mutual Plc - Nedbank Group - First Quarter 2012 Trading Update |
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OML
OLOML
OML - Old Mutual Plc - Nedbank Group - First Quarter 2012 Trading Update
OLD MUTUAL PLC
ISIN CODE: GB00B77J0862
JSE SHARE CODE:OML
NSX SHARE CODE:OLM
ISSUER CODE: OLOML
Ref 35/12
4 May 2012
Old Mutual plc
Nedbank Group - First Quarter 2012 Trading Update
Nedbank Group Limited ("Nedbank Group"), the majority-owned South African
banking subsidiary of Old Mutual plc, released its first quarter trading update
today, 4 May 2012.
The following is the full text of Nedbank Group`s announcement:
""Nedbank Group performed strongly in the first quarter of 2012. It was
particularly pleasing to see continued progress in the strategic focus areas of
NIR growth and repositioning Nedbank Retail, building on the momentum created in
2011.
Overall, Nedbank Group remains on track to achieve its medium to long term
earnings growth target in 2012, while continuing to deliver on its commitments
to all stakeholders."
Mike Brown
Chief Executive
OPERATING ENVIRONMENT
The global economy and business sentiment improved during the first quarter of
2012, assisted by stronger economic performance in the US and more definitive
intervention by the European Central Bank in the stabilisation of the Eurozone
economy and banks. Domestic conditions also improved, with manufacturing growth
showing signs of recovery and retail spending remaining strong, supported by low
interest rates and increased levels of household disposable income.
OPERATIONAL PERFORMANCE
Net interest income grew 11,5% to R4 774m (Q1 2011: R4 283m) underpinned by
steady growth in average interest-earning banking assets of 7,2%.
The net interest margin increased to 3,53% from the comparative period (Q1 2011:
3,42%) as well as from the full year 2011 (December 2011: 3,46%) supported by
asset mix changes, repricing benefits and the impact of positive endowment from
higher capital levels.
The credit loss ratio continued to improve to 1,09% (Q1 2011: 1,15%),
benefitting from a reduction in impairments in Nedbank Retail.
Non-interest revenue (NIR) increased by 14,9% to R4 058m (Q1 2011: R3 531m)
primarily driven by:
* Good growth in commission and fee income of 17,0% from increases in
transactional and lending volumes, primary client gains, below inflation
price increases and deepening cross-sell with existing clients;
* Excellent growth in insurance income of 45,0% from increased sales and a
positive claims experience; and
* Trading income which grew 5,9%, led by an improved trading performance in
the Global Markets division.
The group`s NIR-to-expenses ratio continued to improve from the levels achieved
in 2011 led by strong NIR growth and judicious management of expenses, whilst
investing for growth.
Total assets increased from December 2011 by 9,0% (annualised) to R662,7bn
(December 2011: R648bn). Advances grew 7,8% (annualised) to R505,6bn (December
2011: R496bn) mostly from retail advances boosted by stronger growth in
corporate advances that continued into the first quarter of 2012. Deposits
increased 2,5% (annualised) to R524,4bn (December 2011: R521bn) as growth in
call and term, as well as fixed and cash management deposits were largely offset
by a reduction in negotiable certificate of deposits (NCDs) given the structural
changes in the collective investments industry and slightly lower balances in
current and savings accounts.
The group implemented Basel II.5 capital criteria with effect from 1 January
2012. In line with the pro-forma ratio disclosed to the market, the 2011 year-
end core tier 1 ratio decreased by approximately 50 basis points to 10,5%.
However, strong organic earnings growth during the first quarter resulted in the
core tier 1 ratio strengthening to 10,7% at 31 March 2012. Capital ratios are
anticipated to increase during 2012 as a result of further risk weighted asset
optimisation initiatives and earnings growth.
The draft South African regulations incorporating the impact of Basel III were
recently issued for industry review and comment. The implications of these
regulations are currently being assessed. Overall the Group remains in a strong
position to meet the draft capital requirements.
Q1 2012 FY 2011 FY 2011 Internal
ratio ratio ratio target range
(Basel II.5) (Pro-forma (Basel II) (Basel II)
Basel II.5)
Core Tier 1 10,7% 10,5% 11,0% 7,5% to 9,0%
ratio
Tier 1 ratio 12,2% 12,0% 12,6% 8,5% to
10,0%
Total capital 14,6% 14,6% 15,3% 11,5% to
ratio 13,0%
(Ratios include unappropriated profits)
Further details will be available in the group`s 31 March 2012 Pillar 3 Report
released on 4 May 2012 and published on the group`s website at
www.nedbankgroup.co.za.
The group continued to make steady progress towards lengthening its funding
ratio and increasing the surplus liquidity buffer. During the quarter, senior
unsecured debt of R1,7 billion was issued and both the Nedbank Retail Savings
Bond and JustInvest products showed good growth.
PROSPECTS
The global economic environment is likely to remain uncertain over the remainder
of 2012. Structural issues in many developed northern hemisphere countries still
need to be resolved and many emerging market economies are finding it
increasingly challenging to maintain high growth rates in the absence of
stronger external demand. This may hamper global growth in the medium term.
Locally, although inflation declined marginally in March 2012, rising commodity
prices and particularly higher oil prices continue to pose inflationary
pressures and may prompt the Reserve Bank to hike interest rates later in the
year. GDP growth for South Africa is currently forecast at 2,7% in 2012
following 3,1% growth in 2011.
The group`s earnings guidance for 2012 communicated at the time of the 2011
results announcement remains unchanged.
Shareholders are reminded that this outlook and the figures mentioned in the
"operational performance" section 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 that, by their nature, involve risk and uncertainty because they
relate to events and depend on circumstances that may or may not 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; as
well as competitive and regulatory factors. By consequence, all forward-looking
statements have not been reviewed or reported on by the group`s auditors.
Sandton
4 May 2012"
Enquiries
External Communications / Investor Relations
Patrick Bowes +44 (0)20 7002
7440
Kelly de Kock +27 (0)21 509 8709
Media
William Baldwin- +44 (0)20 7002
Charles 7133
Sponsor:
Merrill Lynch SA (Pty) Limited
Notes to Editors
Old Mutual
Old Mutual 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 12 million
customers in Africa, the Americas, Asia and Europe. Old Mutual has been listed
on the London and Johannesburg Stock Exchanges, among others, since 1999.
In the year ended 31 December 2011, the Group reported adjusted operating profit
before tax of GBP1.5 billion (on an IFRS basis) and had GBP267 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: 04/05/2012 08:01:01 Produced by the JSE SENS Department.
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