| Fri 12 Nov 2004, 11:26 | | Nedcor to concentrate on lost market share next ye |
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Nedcor to concentrate on lost market share next year
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Group must finalise assimilation of BoE
Financial Services Editor
NEDCOR will be in a position to fully address its lost market share only next year, once it has finalised the assimilation of BoE into the group and its strategic recovery programme has progressed further.
Addressing the market on its performance for the first nine months of the year yesterday, Nedcor said most of the risks the bank faced had been addressed and it could now focus more of its attention externally.
CEO Tom Boardman said while the group had held on to market share in corporate and business banking, its share of the home loan and credit card markets had fallen in the first half of the year.
`You always lose ground when you go through something like this,` he said.
Boardman said the group`s credit card and home loan divisions had been refocused into single divisions with clearer accountability.
`We have materially strengthened the client-facing parts of the bank ,` the Nedcor boss said.
He said turnaround time was the primary problem at its home loan division. `That`s improved, but I think it`s too early to see the results of our action plan.`
Nedcor said headline earnings for the year to December would be up to 15% higher, but due to its R5,4bn recapitalisation earlier in the year, headline earnings a share would be 6% to 19% lower. It said if the rand remained stable for the rest of the year, attributable earnings would come in at between 315c and 377c a share, following last year`s loss of 546c a share. Its cost-to-income ratio had improved to 71,1% and was expected to reach 55% in 2007.
Shares in Nedcor climbed as high as R74,50 following the update, before retracing slightly to close 5,4% up at R73,25. The banks index rose 0,1%.
Ross Jenvey, banks analyst at Andisa Securities, said he was surprised at the market`s reaction.
`There`s nothing new in these forecasts,` Jenvey said. `They are revealing that Nedcor is in the process of getting things back into shape. But it`s going to take them a long time to turn this around. In the meantime, the other banks are charging ahead in a very bank-friendly environment.`
Kokkie Kooyman, portfolio manager of the Sanlam Global Financial Fund, said although he was surprised at the strong rise in Nedcor`s share price yesterday, the group was positive that it would meet the targets it had set itself.
`They seem quite confident that they will achieve a 20% return on ordinary share holders funds for 2007,` Boardman said.
He said fund managers might also have been underweight in Nedcor shares and might have corrected their positions, pushing the counter higher.
Nedcor said the BoE merger was almost complete, with the migration of NBS branch clients to the Nedbank and Peoples Bank systems last month.
`I am pleased that we have delivered on the merger so we can now focus on other things,` Boardman said.
