South African investors should expect the country's beleaguered ruling party to remain in power in the May 29 election, the head of Nedbank Group said, adding that even if it doesn't win a majority, it will change its policies. said it would be maintained.
Investors are likely to be patiently awaiting the results of polls in more than 60 countries around the world this year, some of which are home to financial institutions, according to outgoing Nedbank chief executive Mike Brown. It also includes the South African market, where the African National Congress holds meetings. It has maintained a majority for 30 years since the emergence of democracy in 1994.
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“Every opinion poll shows that the ANC is likely to be – by far – the largest party in parliament, with just under 50% of the vote, or just over 50%. That means most of the existing policies are likely to remain in place,” Brown said in an interview with Bloomberg TV's Jennifer Zavasaja.
During the first half of its rule, the ANC won praise for economic growth and expanded access to water, electricity and welfare subsidies. President Jacob Zuma's nearly nine-year term in office saw a string of corruption scandals, bad appointments and policy missteps severely undermine his performance.
Zuma resigned in early 2018, but his successor, Cyril Ramaphosa, has struggled to overcome chronic power shortages, logistics constraints and rampant corruption. A series of opinion polls has shown the party's approval rating below 50%, meaning it will need to form a coalition with one or more rivals to remain in power.
policy concerns
Lack of change will be a double-edged sword. That means continuing policy on much-needed reforms, but leaving unpopular national initiatives, such as the controversial National Health Insurance Plan, unchanged. It is.
“Some of the policies are certainly a concern for businesses,” Brown said, adding that the private sector views national health insurance as “unconstitutional, unaffordable and unworkable.” On the contrary, he said efforts to resolve the energy crisis, including enabling the private sector to generate electricity, were “absolutely fundamental” to addressing the problem.
South Africa's economy is likely to grow by 0.5% in 2023, according to Nedbank, and between 1% in 2024, although continued power outages and deteriorating rail and port services will dampen growth rates. That's what it means. The weak environment is likely to hamper private sector credit growth, with lenders expecting growth to remain at around 5%.
Brown said inflation in South Africa had “certainly peaked” and that financial institutions expected a 75 basis point interest rate cut in the second half of 2024, “which will help consumer confidence and strengthen the ability to repay debt.” It should improve.”
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He said lower interest rates had helped improve the credit environment, with Nedbank increasing credit growth from 109 basis points (bp) in the year to December to its target range of 60-100 bps in 2024. He said it would be possible to reduce the loss rate.
Johannesburg-based Nedbank said in a statement that profit attributable to shareholders rose 7.1% to R15.3 billion ($803.4 million) in the year to December 31, driven by a 14% increase in interest income. It was announced that.
The bank announced a final dividend of R10.22 per share, which was higher than analysts expected. The company's share price rose as much as 4.6%, its highest since Dec. 14, but rose to 4.2% by 10:39 a.m. in Johannesburg.
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