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Nedbank CFO Mike Davis says the bank is positioned to grow in commercial property finance after its corporate and investment banking division gained steam in the six months ended June 2026, thanks to higher loans and advances.
“We’ve got the number one dominant position in commercial property finance. We over-indexed to, effectively, renewables, infrastructure, mining and commodity-based lending, and what’s exciting for that particular business is that the infrastructure investment curve is ahead of us in terms of South Africa needing to deploy large amounts of capital into, effectively, road, rail, port and energy,” Davis said in an interview with Business Times following the bank’s interim results presentation.
Nedbank, which announced the retirement of group COO Wiseman Nkuhlu this week, is benefiting from an organisational restructure undertaken a year ago in which it broke up its retail and business banking division into personal and private banking and business and commercial banking.
The restructure brought wealth management and insurance into the personal and private banking business. “The benefit of that is we now service all individuals, all the way from entry-level youth, middle market and high-net-worth private clients, all in one particular business,” Davis said.
As a result of the restructure, there had been balance sheet growth and higher levels of client acquisition, he added.
In the six months ended June, Nedbank’s private and personal banking was dented by impairments because of the erosion of household buying power on higher fuel prices following the closure of the Strait of Hormuz.
The challenging economic environment and softer collections led to a 13% impairment rate in private and personal banking across home loans, credit and personal loans. While impairments in the motor vehicle finance business continued to trend down, they trended down at a slower rate.
Davis said higher dollar oil prices due to the US-Iran war quickly translated into higher fuel prices and, therefore, transport and import inflation.
“You’ve seen effectively a very different quarter two versus the expectations at the beginning of the year, and that’s translated quite quickly into the real disposable income of our consumer clients, and as a result that’s translated into higher levels of impairments and higher levels of defaults, reflecting, effectively, high levels of impairments in our personal and private banking business,” he said.
He expects an end to the geopolitical tensions in the second half of the year, with the dollar price of oil expected to trend down towards the end of 2026 and, as a result, inflation likely to average around 4%, away from the 3% South African Reserve Bank target range.
“So we are expecting a better second half than first half through the momentum we’ve seen in the first half building into the second half. We are obviously doing a lot with regard to supporting our clients to the extent that it is appropriate to effectively, for example, restructure existing facilities.”
The group’s headline earnings for the six months to June 30 were flat at R8.4bn, outperforming expectations at the start of the year.
Nedbank is looking to grow in the rest of Africa following the proposed 66% acquisition of NCBA, a leading East African financial services group based in Kenya with businesses in Rwanda, Uganda and Tanzania, and digital businesses in Ivory Coast and Ghana.
Davis said Nedbank is confident the deal will close this year, giving the bank access to the East African market and possibly flows into Asia.
“We like East Africa. If you look at the growth rates in East Africa versus South Africa, they are a lot higher. We’re choosing to buy businesses across the continent; you need to be comfortable, you know, given the jurisdiction in which you are purchasing a business, and we’re very confident in the political, regulatory, tax, judiciary [systems] within East Africa, particularly Kenya,” he said.
Nedbank’s highlights included the formation of a dedicated SME segment for clients with annual turnovers of R5m to R30m, strengthening the group’s focus on a key growth market.
The SME segment positions Nedbank to support SME growth, capture emerging market opportunities and drive sustainable market share expansion, while its iKhokha partnership strengthened its position in the SME market.
In terms of brick-and-mortar presence, Davis said the group will continue to evaluate points of presence depending on client preference.
“To the extent that more of our clients, as you’re seeing in the data and statistics we’ve published … are choosing to engage in bank products and services through either our Money app, the Nedbank Private Wealth app, or effectively through the Nedbank Business Hub, that will dictate or determine whether branches are relevant as points of presence or not. So it really is driven by client behaviour.“
Business Times
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