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Nedbank share price: What to expect from full year results

In this article we look at Nedbank's recent trading update, broker ratings, price targets and estimates ahead of the FY20 results

Nedbank earnings date

The Nedbank Group Ltd results release date is scheduled for the 17th of March 2021. The scheduled results will cover the groups fourth quarter and full year earnings.

Nedbank results preview: What to expect?

As noted with sector peers Absa Bank Limited, Standard Bank Group Ltd and FirstRand Ltd (in their recent results), Nedbank is likely to see a drop in earnings largely attributable to rising credit impairments and provisions in FY20. The group has already guided that it expects headline earnings per share for the full year to have declined by between 55% And 60%. South Africa’s major banks, are reflecting the impact of the ongoing pandemic on what was already a fragile domestic economy.

A consensus of estimates from Refinitiv data arrive at the following in terms of the upcoming Nedbank results:

  • FY20 revenue 52,514m (+4.95% y/y)
  • FY20 earnings per share of R11.26 (-58.92% y/y)

With the sharp drop in earnings expected, it is likely that the company will continue to retain earnings and choose not to pay a full year dividend.

How to trade Nedbank Full Year results

The below graphic highlights a long-term institutional view and consensus price estimate on the Nedbank share price ahead of the full year earnings release.

A Refinitiv Data poll of 10 analysts maintain a long-term average rating of ‘buy’ for Nedbank (as of the 15th of March 2021). The long term target price (a mean of Refinitiv estimates) shows a fair value of R150.90 for Nedbank, suggesting that the current share price (as of 15th March 2021) to be at roughly a 4% discount to this longer term valuation.

Nedbank share price: technical analysis

The share price of Nedbank remains in a firm uptrend. In the short term however, the bank has moved into overbought territory whilst at historical resistance (14440).

Our preference is to await a pullback from overbought territory to find long entry. In the event of a pullback, we would look for a bullish reversal closer to trendline support at roughly 12980, targeting a retest of the short term high. Should no pullback or correction ensue from current levels, and instead a confirmed break above the 14440 resistance level occur, we would continue to wait for a pullback after the share price had made new short term highs.

In Summary

  • FY20 results scheduled for 17 March
  • Credit impairments and provisions expected to weigh on results
  • Full year EPS and HEPS to be more than 55% lower than in the previous year
  • Long term broker rating consensus of Buy
  • Long term broker mean of Nedbank share price targets R150.90
  • A technical view of Nedbank’s share price shows the long term trend to be up, although overbought in the near term (waiting for buyable pullback)

This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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