South Africa’s top five lender, Nedbank Group, warned that its bad debts would remain high for the rest of the year and may fail its 2025 financial projections.

However, shares rose 2.5% in early trading, and CEO Mike Brown forecasted a decline in problematic loans from the first half.

The bank’s well-capitalized, cautious lending, and powerful drivers of the struggling economy are facing defaults among sensitive retail and small company customers.

Asset impairment rose 57% to 5.3 billion rand, and its credit loss ratio reached 121 basis points.

Brown expects to reduce CLR in the second half of the year but still finish above 100 basis points.

This could damage its medium-term 2025 return on equity objective of more than 17%.