SENS-AI
NED Results Bullish

NEDBANK GROUP LIMITED - Results for the year ended 31 December 2025 and Cash Dividend Declaration

Nedbank Group Limited
Full analysis

What this filing means

Nedbank delivered a 3% increase in diluted HEPS and record client growth, but results were marred by a 53% drop in basic EPS and a pivot toward a high-stakes R13.9bn East African acquisition.

Nedbank made a small profit increase in its core operations and reached 8 million customers, which is a big milestone. However, its total earnings dropped significantly because of a one-time legal payment to Transnet and the sale of its stake in a pan-African bank. Now, they plan to spend R13.9bn to buy a large bank in East Africa to try and grow faster there.

Bull case

  • Strategic repositioning through the 100% acquisition of fintech iKhokha and the R13.9bn intention to acquire NCBA Group plc to focus on SADC and East African growth.
  • Solid headline earnings growth of 2% to R17.2bn with diluted HEPS up 3%, supported by improved credit impairments (CLR improved to 68 bps from 87 bps).
  • Strong operational momentum with total clients reaching a record 8 million and market share gains in home loans, vehicle finance, and retail deposits.
  • Positive 2026 guidance with ROE expected to remain above 15% and build toward 17% in the medium term, supported by anticipated 1.5% SA GDP growth.

Bear case

  • Deteriorating operational efficiency as expenses (up 7%) outpaced revenue growth (up 3%), pushing the cost-to-income ratio to 57.8%.
  • Basic EPS plummeted 53% to 1,681 cents, driven by a once-off settlement with Transnet and the loss of associate income following the ETI disposal.
  • Stagnant final dividend per share of 1,104 cents suggests management caution regarding near-term cash flow and the 2026 interest rate 'endowment' pressure.
  • High execution risk associated with the R13.9bn East African expansion into NCBA Group following the exit from the broader ETI pan-African alliance.
View original SENS announcement

AI-generated summary by SENS-AI, based on the original JSE SENS filing.

SENS-AI conclusion

Nedbank's 2025 results show a bank in the midst of a significant strategic pivot, trading off the stability of its ETI stake for a R13.9bn aggressive entry into East Africa via NCBA. While core operational momentum is positive with record client numbers and improved credit losses, the deterioration in the cost-to-income ratio and the massive divergence between HEPS (+3%) and Basic EPS (-53%) due to the Transnet settlement warrant a cautious stance. Signal-to-Price Note: The price is down 2.19% despite the 'transformative' narrative, likely a 'Sell the Fact' event as the stock had rallied 16% in the 30 days leading up to the announcement.

Neutral. The core performance is stable, but the NCBA acquisition adds execution risk. Maintain positions but wait for clarity on the East African integration before adding.

Decision framework

Current stance: Neutral

Key drivers

  • Strategic repositioning through the 100% acquisition of fintech iKhokha and the R13.9bn intention to acquire NCBA Group plc to focus on SADC and East African growth.
  • Solid headline earnings growth of 2% to R17.2bn with diluted HEPS up 3%, supported by improved credit impairments (CLR improved to 68 bps from 87 bps).
  • Strong operational momentum with total clients reaching a record 8 million and market share gains in home loans, vehicle finance, and retail deposits.

Key risks

  • Deteriorating operational efficiency as expenses (up 7%) outpaced revenue growth (up 3%), pushing the cost-to-income ratio to 57.8%.
  • Basic EPS plummeted 53% to 1,681 cents, driven by a once-off settlement with Transnet and the loss of associate income following the ETI disposal.
  • Stagnant final dividend per share of 1,104 cents suggests management caution regarding near-term cash flow and the 2026 interest rate 'endowment' pressure.

What would change the view

  • Guidance and cash-flow quality both improve materially from current baseline.
  • Subsequent filings remove current uncertainty and confirm durable execution.
  • Market structure/positioning shifts enough to support a directional thesis.

Evidence from the filing

  • Strategic repositioning through fintech and East African expansion

    “We also finalised the acquisition of 100% of fintech company iKhokha to enhance our strategy and fast-track our support for SMEs through digital innovation and inclusive financial services... in Q1 2026 we announced our intention to acquire a controlling interest in NCBA Group plc, a leading financial services institution in East Africa, for an estimated total consideration of R13.9bn.”

  • Growth in diluted HEPS and dividends

    “Nedbank Group's diluted headline earnings per share (HEPS) increased by 3%, headline earnings (HE) increased by 2% to R17.2bn... Full-year dividend per share of 2 132 cents, up by 3% from the prior year (2024: 2 075 cents).”

  • Deterioration in operational efficiency

    “Expenses of R43 395m, up by 7% (2024: R40 577m). ... Cost-to-income ratio of 57.8% (2024: 55.6%).”

  • Sharp decline in Basic EPS

    “Basic earnings per share of 1 681 cents, down by 53% (2024: 3 610 cents). ... we reported a higher expense base given a once-off settlement with Transnet.”
Category
Results
Published
Mar 3, 2026

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