Nedbank has seen "materially higher" earnings for the four months to end April, compared to the same period last year, the bank said in a trading update.
While its corporate banking unit has seen a "moderate" appetite for loans, retail demand remained very strong thanks to 30-year low interest rates.
There has also been as an increase in unsecured lending volumes, notwithstanding lower loan approval rates.
Net interest income growth for the past four months increased by low single digits when compared to the prior period, as the decline in overall loan growth was more than offset by an increase in the group’s net interest margin increased. This was ahead of management's expectations.
The "substantial" decline in bad debts and impairments also surprised. The group’s credit loss ratio is now below the bottom end of the 110 bps to 130 bps guidance provided for the full year 2021. "(This) is well below management expectations for the period," Nedbank said.
The company says that sales via its points of sale devices and digital channels in the four months to 30 April were 22% higher compared to the same time last year.
It expects that its headline earnings will be at least 20% stronger in the six months to end June, compared to the same period in 2020.
The group will resume dividend payments when it reports its interim results in August.