Nedbank is the latest bank to flag rising credit impairments in South Africa as load shedding, interest rates and inflation keep households on the edge.
Finance group Nedbank has flagged a massive increase in credit impairments in the first half of the year, emanating largely from its consumer retail banking segment.
The bank said that this is reflective of the challenging economic environment in South Africa, which ended up being more daunting than initially forecast. Nedbank warned that things don’t look much better for the remainder of the year either. The group still maintains a reasonably bearish outlook on key economic indicators, anticipating low growth and elevated inflation levels. However, more positively, it does not see any more interest rate hikes.
Earlier this week, Standard Bank also flagged a significant rise in credit impairments in its operations, noting that these have already risen 50% in the first five months of the year. In its annual financial results for the year ending February 2023, Capitec also noted that its total net credit impairment charges on gross loans and advances grew by 80% to R6.4 billion .Despite the hit from credit impairments, Nedbank still recorded a solid set of results in the six-month period.
“While it should never have happened, load-shedding has increasingly become a catalyst for renewable- and embedded-energy investments to support both SA’s Just Energy Transition and for individuals and companies to reduce costs and reduce their dependency on electricity supply from Eskom,” said Nedbank chief executive, Mike Brown.
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