to the strength and growth of its
domestic franchise. Ecobank has
a presence in 36 countries across
the African continent covering large
and fast-growing markets such as
Nigeria and Angola, and is therefore
a bank well positioned for longterm growth.
The contribution from the rest
of Africa to Nedbank’s current
earnings base does not tell the full
story and neither does the current
valuation reflect this potential.
QUALITY FRANCHISE AT A
DISCOUNT TO INTRINSIC
VALUE
The last 10 years have been
transformational for Nedbank. The
franchise has been strengthened
to compete effectively and has
been positioned conservatively to
protect shareholder value in an
uncertain operating environment.
The business today not only has
the ability to defend the current
earnings base, but will also be able
to grow its earnings by leveraging
those divisions currently punching
below their weight.
Mike Brown, CEO Nedbank
14
ISSUE 6 – SEPTEMBER 2015
In deriving our intrinsic value for
Nedbank, we captured these growth
opportunities into our assessment
of normal earnings before applying
a multiple commensurate with a
franchise of this quality. The result
is an intrinsic value in excess of
the current share price with an
adequate margin of safety. This
enables us to have Nedbank
as a meaningful holding across
our portfolios. ■