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Biggest African Banks Surge After Nedbank Raises Profit Forecast - BLOOMBERG
- Standard Bank, FirstRand lead sector gains in Johannesburg
- South African banks set to gain from recovery, rate hikes
An index of South African bank stocks rallied after Nedbank Group Ltd. upgraded its full-year profit expectations, fueling bullish earnings expectations for the sector.
The industry gauge climbed as much as 3.4% in Johannesburg to the highest since July 2019. FirstRand Ltd. and Standard Bank Group Ltd., Africa’s two largest lenders, contributed most to the advance.
Nedbank said on Monday that business in the final few months of 2021 was stronger than expected as conditions for its customers continued to improve, and it further increased projections for higher profits made in December. Lenders are set to benefit as the continent’s most-industrialized economy emerges from the pandemic and the central bank raises interest rates to counter inflation risks.
“The sector remains in a recovery mode after the aggressive earnings declines caused by Covid-19 as well as the negative impact of interest rate cuts over the past few years,” said Peter Takaendesa, head of equities at Mergence Investment Managers in Cape Town. “Banks, insurers and hospitals are among the key domestic sectors that have lagged the recovery from the Covid-19 impact.”
Standard Bank soared as much as 5.8% to the highest since February 2020, while FirstRand gained 3.6% to the highest since December 2019. Nedbank jumped as much as 7.4% after saying it expects headline earnings per share, which excludes some one-time items, to more than double.
