JOHANNESBURG – South Africa’s Nedbank booked a $293 million writedown on the value of its west African associate Ecobank on Tuesday, and reported its slowest growth in annual profit since 2009.
Ecobank’s operations in central and west Africa have been exposed to economies pressured by the sharp slide in commodity prices and unfavourable currency swings. The writedown reduces Ecobank’s carrying value to 4 billion rand ($308 million) from 7.8 billion rand, Nedbank said.
Nedbank, however, said Ecobank Transnational Inc (ETI) remained vital to its expansion elsewhere on the continent, as it operates in nearly 40 countries outside its home market. “Conditions in the key markets in which ETI operates are currently expected to remain difficult in 2017, before improving in 2018 and beyond,” Nedbank said.
Nedbank, a unit of Anglo-South African financial conglomerate Old Mutual, is South Africa’s fourth-biggest lender and vies with Standard Bank , FirstRand Barclays Africa and Capitec. It owns about 20 percent of Ecobank.
Nedbank said its diluted headline earnings per share (EPS) totalled 2,350 cents in the year ended December 2016, versus 2,242 cents a year earlier.
Headline EPS is the main measure of profit in South Africa as it strips out certain one-off items.
Nedbank also said results were affected by slack demand for loans as slowing economic growth and higher interest rates hit consumption and investment spending.
Old Mutual is in the middle of a strategic overhaul that will include carving itself into four parts and cutting its 54 percent stake in Nedbank to a minority holding to slim down its complicated structure. ($1 = 12.9811 rand)