Nedbank maintains its position as Commercial Property Finance Market Leader
Grant Rothman, Head of Finance at Nedbank Corporate Property Finance.
Quality book and client focus provides foundation for Nedbank Corporate Property Finance retention of market leadership.
The performance of Nedbank Corporate Property Finance as announced in the Nedbank Group’s interim financial results shows that the business has maintained its market leadership position despite the lingering challenges of the economic downturn.
The business’ results for the first half of 2012 showed an increase in headline earnings of 10,8% year on year.
In addition, Nedbank Corporate Property Finance’s (NCPF) improved impairment position, pleasing returns on listed property investments and more effective cost management saw the business delivering a Return on Equity of over 20% for the first six months of the current year.
According to Grant Rothman, Head of Finance: Nedbank Corporate Property Finance, the ability of the business to deliver positive performance against the challenging economic backdrop is primarily a result of its highly client-centric approach, it’s proven understanding of the market and its focus on financing quality assets in appropriate locations.
“The success of NCPF is built on a strategy of selective origination based on in-depthmarket understanding and close client partnerships,” he explains, “and as a long-term lending business, we use our experience in economic cycles to avoid the temptation to give in to panic and chase short term targets.”
However, Rothman agrees that growth in the loan books of most property finance businesses is likely to remain subdued for the rest of 2012, and emphasises that NCPF, whilst looking for opportunities for doing business, will maintain focus on the key risk fundamentals.
And the latest set of interim results from NCPF attests to the prudence of this calm and calculated business approach. The organisation’s focus on internal housekeeping has undoubtedly contributed significantly to its financial success during challenging economic times when revenue growth is limited, with its cost to income ratio of 30% for the first half of 2012 attesting to the effectiveness of its recent expense management efforts.
On the subject of the immediate future for the South African property markets, Rothman cautions that participants and stakeholders should be cautiously optimistic regarding and improvement in conditions anytime soon.
“The fact that the property cycle typically lags the business cycle by up to 18 months means that despite some signs of a muted economic recovery, property businesses should expect continued challenges,” he contends, “and these are likely to take the form of limited new business opportunities, instalment problems due to constrained cashflows, continued high levels of vacancies and declining asset values.”
Despite these challenges, Rothman remains upbeat about the long-term future of the SA property market and about the leading role that NCPF will continue to play in it.
“While the remainder of 2012 is set to be a difficult year, NCPF will continue to focus on its core strengths,” he concludes, “and by maintaining our level headed business approach and continuing to deepen the many excellent relationships we have with our quality clients, we are confident of our ability to repeat our strong performance in the second half of the year, maintaining our quality book irrespective of the market volatility we may encounter.”
