← Back to Investments

NEDBANK GROUP LIMITED

NED JSE Listed

Investment Analysis: Nedbank Group Limited (JSE: NED)

Date: 9 January 2026 Share Price: ~R277.91 (27,791c) Analyst Role: Senior Equity Analyst, JSE

Step 1: Data Gathering & Source Verification

I have reviewed the most recent financial disclosures and SENS announcements, noting the strategic shift under the new CEO, Jason Quinn, particularly regarding the African footprint.

  • Interim Results: Reviewed the Unaudited Condensed Consolidated Interim Financial Results for the six months ended 30 June 2025 (Released 5 August 2025).
  • Annual Financial Statements: Reviewed the Audited Consolidated Annual Financial Statements for the year ended 31 December 2024 (Released 4 March 2025).
  • SENS Activity (L12M): Key announcements include the disposal of the Ecobank (ETI) stake (August 2025), changes to the board, and the Pillar 3 Risk & Capital Management reports.

Data Sources:

  • Interim Results (June 2025): https://group.nedbank.co.za/content/dam/group/pdf/20_financial-results/2025/interim-results/2025-interim-results-booklet-double-page-nedbank.pdf
  • SENS (Ecobank Disposal): https://www.sharedata.co.za/v2/Scripts/News.aspx?c=NED&x=JSE (Ref: SENS announcement dated 15 August 2025 regarding ETI disposal)

Step 2: Metric Extraction

| Metric | Value | Notes | | --- | --- | --- | | Market Cap | ~R132.4 Billion | Solidly positioned as the fourth-largest banking group by value on the JSE. | | Dividend Yield (L12M) | ~7.7% | Attractive. Calculated on a trailing basis: Final 2024 (1,104c) + Interim 2025 (1,028c) = Total 2,132c. Payout ratio remains consistent at ~57%. | | Liquidity Check | Highly Liquid | Average daily value traded consistently exceeds R300m. No liquidity risk for standard position sizes. | | P/E Ratio | ~7.4x | Undemanding. Trading below its historic average and slightly cheaper than peers like FirstRand (~10-11x). Based on trailing 12-month HEPS. | | Net Asset Value (NAV) | 24,522 cents | As at 30 June 2025. The stock trades at a moderate premium to book (~1.13x P/B), reflecting a Return on Equity (ROE) of 15.2%, which is slowly converging toward the 17% target. |

Step 3: Operational & Strategic Analysis

Business Overview Nedbank is a diversified wholesale and retail bank. Historically known for its strength in corporate and investment banking (CIB), it has aggressively expanded its retail presence through the "Manage Evolution" technology strategy.

  • Primary Shifts: Under CEO Jason Quinn (appointed mid-2024), the bank has executed a "strategic reset" regarding its African footprint, most notably moving to sell its stake in Ecobank Transnational Inc (ETI) to focus on SADC regions where it has direct control.

Performance Trend

  • Revenue: Resilient but Slow. H1 2025 revenue grew by 4%, dampened by muted Net Interest Income (NII) growth.
  • Earnings: Modest Growth. Headline Earnings (HE) grew 6% to R8.4bn (H1 2025). The bank successfully managed expenses and saw an improvement in impairment charges (Credit Loss Ratio improved to 81 bps from 104 bps).
  • Digital: The Avo super app and Money App continue to show double-digit volume growth, crucial for defending retail market share against Capitec and Standard Bank.

Sector Context

  • Interest Rate Cycle: South Africa entered a cutting cycle in late 2025 (25bps cut in July 2025). While this compresses margins (endowment effect), it is net positive for Nedbank as it reduces credit impairments and stimulates loan growth in their wholesale division.
  • Political Sentiment: The stability of the Government of National Unity (GNU) since 2024 has reduced the sovereign risk premium, aiding banking valuations generally.

Step 4: The Verdict

Bull Case (Why Buy): The "Quinn" Pivot & Capital Unlock. The decision to dispose of the volatile Ecobank (ETI) stake is a major catalyst. It removes a long-standing drag on ROE and volatility. If the exit is clean, it could release significant capital for share buybacks or special dividends. Furthermore, the bank's valuation (7.4x P/E) is too cheap for an entity delivering 15%+ ROE in an improving economic cycle.

Bear Case (Why Sell): Wholesale Dependence. Nedbank remains heavily exposed to the corporate/wholesale market. If the South African infrastructure turnaround (logistics/energy) stalls, Nedbank's loan book growth will hit a ceiling faster than its retail-focused peers like Capitec. There is also execution risk in the final stages of their technology platform consolidation.

Fair Value Estimate: R305.00 - R320.00 Implies a target P/B of ~1.25x and a P/E re-rating to ~8.5x.

Final Rating: BUY The combination of a 7.7% yield and the specific catalyst of the ETI disposal makes this a compelling total return story for 2026. The discount to FirstRand is too wide.

AI Generated Analysis Last Updated: 2026-01-14