Africa Digest News

Nedbank has projected solid credit growth for 2026, anticipating an acceleration driven by early improvements in South Africa’s economic outlook.

During the release of the bank’s 2025 financial year results on 24 February 2026, Group CEO Jason Quinn described the macroeconomic environment as noticeably more positive, with consumer spending expected to act as a major catalyst due to lower interest rates boosting borrower confidence.

Quinn highlighted that inflation is anticipated to approach the South African Reserve Bank’s revised 3% target by late 2026, supported by a stable rand, subdued global oil prices, reduced supply-side disruptions, and lower inflation expectations.

Interest rates could be cut by a further 50 basis points, lowering the repo rate to 6.25% by year-end 2026, with a reasonable likelihood of stability at that level. In this environment, Nedbank expects credit growth of around 7.7%.

Macroeconomic Drivers Supporting Credit Growth

The bank’s outlook is underpinned by several converging factors:

• Monetary Policy Easing: Cumulative interest rate reductions since late 2024 have already improved household affordability, with further cuts expected to stimulate discretionary spending and borrowing.
• Inflation Moderation: Progress toward the 3% target reduces pressure on real incomes and supports a more predictable cost environment for businesses and consumers.
• Improved Business Confidence: Stabilisation in energy supply and transport logistics has enhanced operational reliability, encouraging corporate investment and credit uptake.
• Household Sentiment Recovery: Lower inflation and easing interest rates have contributed to a rebound in retail credit demand, particularly in personal loans and vehicle finance.

These conditions create a favourable backdrop for Nedbank to benefit from increased lending volumes across retail, business, and corporate segments.

READ ALSO:How Nedbank Group Secured Approval to Acquire a Majority Stake in NCBA Group

Strategic Positioning and 2025 Milestones

Nedbank described 2025 as a transformational year, marked by deliberate actions to strengthen its franchise and prepare for higher credit demand:

• Restructuring of the Retail and Business Banking (RBB) division and Nedbank Wealth cluster to improve efficiency and customer focus.
• Sale of the group’s shareholding in Ecobank Transnational Incorporated (ETI), enabling capital reallocation toward higher-growth opportunities.
• Acquisition of fintech firm iKhoka to enhance digital payments capabilities and support seamless client experiences.
• Offer to acquire a 66% stake in NCBA Group, providing strategic entry into East Africa and diversification beyond Southern Africa.

These initiatives have positioned Nedbank to capture rising credit demand with greater operational agility, digital capability, and geographic reach.

Financial Performance in 2025

The 2025 financial year results provide a stable base for the projected 2026 growth:

• Headline earnings increased 2% to R17.2 billion.
• Return on equity (ROE) stood at 15.4% (2024: 15.8%).
• Basic earnings per share (EPS) declined 53% to 1,681 cents, consistent with guidance and impacted by the ETI sale.
• A final dividend of 1,104 cents per share was declared.

Despite a higher expense base due to a one-off settlement with Transnet, the results reflect disciplined execution and resilience amid challenging conditions.

Nedbank expects ROE to exceed 15% in 2026, approaching 2025 levels and remaining above its revised cost of equity (COE) of 14%.

Medium-term ROE is projected to rise to around 17%, supported by stronger revenue growth and expense discipline, though moderated by normalisation of wholesale impairments, reduced income from lower rates, and the absence of prior ETI earnings.

Looking Ahead

Nedbank is well positioned to capitalise on stronger credit demand in 2026 through a combination of favourable macroeconomic tailwinds, strategic restructuring, targeted acquisitions, and disciplined financial management.

The projected 7.7% credit growth reflects expectations of improved consumer and corporate borrowing underpinned by lower interest rates, moderating inflation, and enhanced business confidence.

The bank’s 2025 performance and forward-looking guidance demonstrate a clear trajectory toward higher returns and sustainable growth in a recovering economic environment.

For the most current financial details and strategic updates, refer to official announcements from Nedbank Group or the Johannesburg Stock Exchange.

Nedbank Overview

Nedbank Group Limited is a major financial institution based in South Africa, offering retail, business, and corporate banking services.

Nedbank Online Banking allows customers to manage accounts, transfer funds, pay bills, and access statements via the web. The Nedbank app provides similar services on mobile devices.

A Nedbank online application enables customers to apply digitally for accounts, loans, and credit products.

Nedbank ID is the secure login profile used to access Nedbank’s digital platforms.

Nedbank Money refers broadly to the bank’s financial products and services, including transactional accounts, savings, loans, and investment solutions.

Ronnie Paul is a seasoned writer and analyst with a prolific portfolio of over 1,000 published articles, specialising in fintech, cryptocurrency, climate change, and digital finance at Africa Digest News.