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Nedcor Limited - Trading Update
Release Date: 13/05/2004 12:39:01 Code(s): NED
Nedcor Limited - Trading Update
NEDCOR LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1966/010630/06
JSE share code: NED
ISIN code: ZAE000004875
("Nedcor" or "the group")
NEDCOR LIMITED - TRADING UPDATE
Nedcor"s trading performance in the three months to 31 March 2004 has been in
line with both management"s forecasts and the financial objectives of the group.
The directors are confident that the strategic recovery programme implemented
earlier this year is starting to have the desired impact on the group"s
performance.
Net interest income (NII) has increased by 11,7% over the corresponding quarter
in 2003 to R1,8 billion. The interest margin has improved slightly due mainly to
the downward re-pricing of a large portion of the group"s term liabilities and
the mix of revenue in the trading portfolio. Most of the expensive short-dated
liabilities have now matured and an active hedging programme has been
implemented for new fixed rate liabilities which will reduce the interest rate
risk for the bank.
Non-interest revenue (NIR) declined by 8,7% from R1,8 billion in 2003 to R1,6
billion in 2004. Trading income is below forecasts owing to the prevailing
market conditions and the mix of revenue within the trading portfolio.
There has been no major impact of foreign currency translation gains or losses
to date. As the group holds excess levels of capital in its offshore operations,
R630 million of foreign capital was repatriated in April 2004 from the
redemption of the preference shares of one of its international subsidiaries.
This has reduced the foreign exchange volatility risk.
Advances have remained flat since December 2003 as the group continues to
refocus its asset book.
The regulator has indicated that it proposes to increase the tier 1 capital
requirement for banks to 7,5% in the future. Following the capital inflow from
the proceeds of the rights issue, the group expects to meet its tier 1 capital
ratio objectives and to meet the proposed regulatory minimums by the year-end.
The rights issue, which closed on 7 May, was successfully concluded.
Shareholders in Nedcor subscribed for 130 134 855 rights shares, equivalent to
113,67% of the total number of rights shares offered in terms of the rights
issue. The applications included: 113 323 369 rights shares, being 98,99% of
the rights shares and 16 811 486 excess applications. The 113 323 369 rights
shares were allocated to shareholders in respect of rights entitlements
subscribed for and the balance of the 1 157 641 rights shares available were
allocated on an equitable basis to Nedcor shareholders who made excess
applications.
A key element of the strategic recovery programme is to aggressively reduce all
expenses. As part of this exercise, the group has embarked on a retrenchment
programme. In the first quarter the headcount reduced by 399. Since the end of
March, voluntary retrenchment procedures have been concluded with a further 1
343 staff who will be leaving the group over the next eight months.
One-off costs, relating mainly to the payment of retrenchment benefits, are
expected to neutralise the benefits of the cost reduction programme in the short
term. The full benefits of the programme are likely to emerge in 2005.
Dividend policy
The directors would like to reiterate that the group"s dividend policy has been
amended for 2004 onwards and will in future be based on between 3,0 and 3,5
times cover at the headline earnings level.
For further information contact:
Tier 1 Investor Relations
Tel: +27 (0)21 702-3102
Sandton
13 May 2004
Sponsors to Nedcor:
Merrill Lynch South Africa (Pty) Limited
Nedbank Capital
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