2010 Annual report - Nedbank Group Limited

INTRODUCTIONThe year 2010 ushered in with it hope thatthe world’s economies would steadilyrecover from the global economic crisis.Throughout the year, market conditions wereunsteady, showing that the projected economicrecovery had not brought solid confidence back tothe market.The teetering world economic recovery reflectedthe need to ensure that businesses are operated ina sustainable manner that ensures their long -termprofitability instead of the pursuit of short-termgain. As the world hoped for accelerated recovery,most of its regions were beset by a variety ofchallenges, such as the sovereign debt crisis inEurope.In Swaziland we have faced additional challengesand have been adversely affected by the globalfinancial crisis. While this resulted in a compressedexport market, the country has also experienceda significant decline in SACU revenue. A combinationof these factors has brought about thecurrent fiscal challenges. The country is relying onthe Fiscal Adjustment Roadmap and the PovertyReduction Strategy Action Programme to bringabout some economic stability in the mediumterm.ECONOMY AND BANKINGENVIRONMENTThe banking sector managed to operate competitivelyin a challenging economic environment,reflecting resilient performance and mirroring theupward recovery as experienced by the bankingindustry throughout the world.Despite the unfavourable macroeconomics, demandfor credit was sustained. The Central Bank ofSwaziland decreased the repo rate by 150 basispoints, which appears to have boosted sustaineddemand for credit. The positive performanceby the banking sector in 2010 is likely to comeunder increased pressure in 2011 due to the fiscalchallenges that the country is currently experiencing.THE INTRODUCTION OF THE FINANCIAL SERVICES REGULATORYAUTHORITY ACT AND THE SECURITIES ACT ARE A WELCOMEDEVELOPMENT FOR THE ECONOMY AS THEY INTRODUCE THELONG-AWAITED REGULATORY FRAMEWORK FOR NON-BANKFINANCIAL SERVICES.13Nedbank (Swaziland) Limited Annual Report 2010