Nedbank Group CEO Jason Quinn says South Africa’s economic outlook remains encouraging despite global volatility, geopolitical tensions and rising inflationary pressures.
Speaking as the bank released its first-half 2026 financial results, Quinn said the conflict between the United States and Iran, along with the closure of the Strait of Hormuz, had placed additional pressure on the global economy.
These developments contributed to higher inflation in South Africa and other markets and prompted a more hawkish approach to monetary policy.
South Africa’s economic performance during the period was mixed. Real GDP growth in the first quarter exceeded expectations, while rising fuel prices pushed consumer inflation to 5% in June.
The South African Reserve Bank also increased the repo rate by 25 basis points in May, taking the prime lending rate to 10.5%.
Quinn said credit growth had strengthened moderately, with corporate lending accelerating from a low base. Household credit growth also improved slightly, although affordability pressures continued to constrain consumers.
Despite these challenges, Quinn said South Africa retained several positive economic fundamentals, including what he described as a more credible fiscal trajectory, progress on structural reforms and recent credit rating upgrades.
“Many of the country’s positive prospects as an attractive investment destination remain intact despite global uncertainties and the conflict in the Middle East,” Quinn said.
Nedbank reported headline earnings of R8.4 billion for the first half of 2026, unchanged from the same period a year earlier. However, Quinn said the performance was ahead of expectations at the beginning of the year.
The bank benefited from stronger net interest income growth, robust non-interest revenue and disciplined expense management. These gains were offset by a higher impairment charge and the non-recognition of associate income from Ecobank Transnational Incorporated following its sale in 2025.
Excluding the impact of Ecobank, headline earnings increased by 12%, reflecting stronger underlying operational performance.
Nedbank's return on equity stood at 15%, slightly below the 15.2% recorded in the first half of 2025, but above its 14% cost of equity.
The group declared an interim dividend of 1,052 cents per share, supported by a strong balance sheet.
Nedbank also continued with a restructuring programme launched in 2025 aimed at becoming more client-focused, unlocking growth and cross-selling opportunities, diversifying revenue and improving productivity.
Quinn said the benefits of the strategy had become increasingly visible across the bank’s business clusters during the first half of 2026.
The group has also begun realising early synergies from its acquisitions of iKhokha and Eqstra, while making progress towards acquiring a majority stake in Kenya-based NCBA.
Looking ahead, Nedbank expects South Africa’s economic growth to improve modestly to around 1.3% in 2026 and 1.4% in 2027, supported by resilient consumer spending.
However, weak business confidence, subdued fixed investment and risks linked to global energy prices are expected to limit the pace of growth.
With inflation forecast to remain above the Reserve Bank’s 3% target, averaging around 4% in 2026, Nedbank expects the SARB to raise interest rates by a further 25 basis points in September. Rates are then expected to decline gradually during 2027.
Quinn said banking conditions should improve gradually, with credit growth expected to remain positive and reach about 7% by the end of the year, although downside risks remain.
“We expect the underlying growth momentum across all our businesses to continue in H2 2026, supporting an improvement in HE growth from the flat outcome reported in the first half,” he said.
Nedbank expects its return on equity to exceed 15% in 2026, moving closer to 2025 levels. In the medium term, the group is targeting an ROE of around 17% by 2028, driven by revenue growth and improved efficiency.