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S.Africa’s Nedbank restores dividend after profit soars 147%

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JOHANNESBURG, Aug 11 (Reuters) – South African lender Nedbank NEDJ.Jreported a jump of 147% in its half-year profit on Wednesday and reinstated its dividend by declaring an interim payout of 433 cents.

The lender was one among the country’s top two lenders to hold off on resuming shareholder payouts after suspending them following guidance from the central bank during the COVID-19 crisis in 2020.

Nedbank said the resumption of its dividend was one of the key drivers of shareholder value creation.

“The Nedbank Group’s financial performance in the first half of 2021 reflects a strong financial recovery off a low base, and key resilience metrics have all strengthened to above pre-crisis levels,” Chief Executive Mike Brown said in a statement, pointing to higher capital and liquidity levels.

The bank had already said last week its profits for the six months to June 30 would rise by up to 150%.

That was mainly due to a significant drop in bad debt charges, incurred by all of the country’s biggest lenders as their customers struggled to meet their obligations amid strict national lockdowns.

While Nedbank registered a drop in bad debts, it increased provisions by 891 million rand ($60.16 million) to cover potential losses on loans to clients in corporate and investment banks, and account for possible credit risks from the ending of a government-backed loan scheme as well as South Africa’s latest COVID-19 lockdown restrictions.

The bank said its headline earnings per share – the main profit measure in South Africa – for the six months to June 30 stood at 1,084 cents, compared to the 438 cents it reported a year earlier.

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