Nedbank has projected solid credit growth in 2026, supported by early signs of improvement in South Africa’s economic outlook. Speaking during the release of the bank’s 2025 financial year results, Nedbank Group CEO Jason Quinn said the outlook for 2026 is noticeably more positive, with several economic indicators pointing toward stronger activity.
Quinn noted that consumer spending is expected to be a major catalyst for growth in the coming year, largely driven by lower interest rates, which tend to boost borrower confidence and stimulate demand for credit. He added that inflation is anticipated to remain close to the South African Reserve Bank’s revised 3% target toward the latter part of 2026, thanks to a combination of a stable rand, subdued global oil prices, reduced supply-side disruptions, and lower inflation expectations.
According to Quinn, interest rates could be cut by a further 50 basis points, which would lower the repo rate to 6.25% by year‑end 2026, with a reasonable likelihood of rates remaining at that level for an extended period. This more favourable interest rate environment is expected to support robust credit growth, with the bank forecasting lending expansion of around 7.7% for the year.
2025: A Transformational Year for Nedbank
Reflecting on the previous year, Quinn described 2025 as transformational for Nedbank, marked by numerous strategic milestones. These included:
- The restructuring of both the Retail and Business Banking (RBB) division and the Nedbank Wealth cluster
- The sale of the group’s shareholding in Ecobank Transnational Incorporated (ETI)
- The acquisition of fintech firm iKhoka, signaling stronger participation in digital payments
- A recent offer to acquire a 66% stake in NCBA Group, expanding Nedbank’s regional footprint
However, Quinn acknowledged that 2025 unfolded against a backdrop of significant uncertainty, including geopolitical conflicts and concerns surrounding potential U.S. tariff changes. Despite these pressures, South Africa registered encouraging improvements in several areas.
He noted that structural reforms brought greater stability to the country’s energy and transport logistics systems, improving operating conditions for private enterprises. As the local economy recovered and business confidence strengthened, corporate credit demand increased sharply, recovering from a subdued base in the prior year.
On the household front, lower inflation and easing interest rates toward the end of 2025 helped lift consumer sentiment, leading to a noticeable rebound in demand for retail credit.
Financial Performance
Nedbank’s overall financial results for 2025 were significantly influenced by the group’s decision to sell its stake in ETI, which reduced associate income for the second half of the year.
Key financial metrics included:
- Headline earnings increasing by 2% to R17.2 billion
- Return on equity (ROE) at 15.4%, compared to 15.8% in 2024
- A higher expense base, partly due to a once‑off settlement with Transnet
- Basic earnings per share (EPS) declining by 53% to 1,681 cents, consistent with Nedbank’s earlier guidance that the ETI sale would materially impact basic earnings
The bank reiterated its expectation that basic EPS will fall between 52% and 55%, landing between 1,625 and 1,733 cents per share. Importantly, Nedbank clarified that the recycling of cumulative foreign exchange and fair‑value losses through Other Comprehensive Income (OCI) does not affect headline or diluted headline EPS.
Despite these one‑off impacts, the group emphasized that its balance sheet remains resilient, enabling it to declare a final dividend of 1,104 cents per share.
Outlook for 2026 and Beyond
Looking ahead, Nedbank expects strong underlying momentum across all its business units. However, some of this progress will be moderated by:
- A normalisation of wholesale impairments, which had been unusually low in 2025
- Reduced income due to lower interest rates
- The non‑recurrence of earnings previously contributed by ETI
Still, the bank is confident that ROE in 2026 will exceed 15%, moving closer to 2025 levels and remaining firmly above its revised cost of equity (COE) of 14%. Over the medium term, Nedbank expects ROE to rise further to around 17%, supported by stronger revenue growth and disciplined expense management.
| Metric | 2025 | 2024 | % Change |
|---|---|---|---|
| Headline earnings (Rm) | 17 200 | 16 934 | +2% |
| Revenue (Rm) | 73 924 | 71 721 | +3% |
| Credit loss ratio (bps) | 68 | 87 | – |
| Expenses (Rm) | 43 395 | 40 577 | +7% |
| Cost-to-income ratio (%) | 57.8% | 55.6% | – |
| Diluted headline earnings per share (cents) | 3 628 | 3 538 | +3% |
| Headline earnings per share (cents) | 3 706 | 3 631 | +2% |
| Basic earnings per share (cents) | 1 681 | 3 610 | –53% |
| Final dividend per share (cents) | 1 104 | 1 104 | 0% |
| Full-year dividend per share (cents) | 2 132 | 2 075 | +3% |
| Net asset value per share (cents) | 24 956 | 24 039 | +4% |
| Common-equity tier 1 ratio (%) | 12.9% | 13.3% | – |
