(Bloomberg) -- Nedbank Group Ltd. is weighing acquisitions and share buybacks to deploy part of its 45.3 billion rand ($2.4 billion) cash pile, Chief Executive Officer Jason Quinn said.
The South African lender last year spent 5 billion rand on share repurchases and acquired Eqstra Investment Holdings Ltd. Nedbank’s Common Equity Tier 1 capital ratio — a key measure of financial strength — remained at 13.3% as of June, above the 12% target set by the board. The comfortable risk buffers will help the bank expand, Quinn said.
“We’d like to capture some more growth in South Africa to be honest, and then steadily you know as opportunities emerge across the continent we would like to diversify our portfolio more,” Quinn said in a Bloomberg Television interview with Tom Mackenzie. “That’ll take some time though because entry points are scarce.”
The lender plans to use part of the 12 billion rand of excess capital sitting on its books for the proposed share repurchases, with the total buyback amount dependent on the market.
“We have all the necessary approvals in place to execute a share buyback, depending on market conditions,” Quinn said in the interview.
Net income at the Johannesburg-based lender rose 8% in the first half, with weak economic activity before South Africa’s general elections constraining corporate and household activity. Nedbank expects earnings growth to accelerate as Africa’s most-industrialized economy recovers, and slowing inflation spurs a reduction in borrowing costs.
The lender’s shares climbed as much as 3.5% earlier Tuesday before paring back gains to 2.6% at 12:13 p.m. in Johannesburg. The stock is up 27% this year, compared with a 10% increase for the FTSE/JSE Africa banks index.
(Updates with share-buyback plans in fourth paragraph.)
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