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Apr 19, 2006:
WHEN dominant Cape property financing forces – Cape of Good Hope Bank and BoE – were bundled into Nedbank, a few pundits wondered whether the larger banking group would retain its influence in Cape Town and surrounds.
Some believed the 'personal touch' that characterised both the Cape of Good Hope and BoE operations would be lost within a bigger banking organisation.
Nedbank Corporate Property Finance's Timothy Irvine, however, pointed out: "We have a strong regional base, with a suitably empowered credit committee, which regionally gives us an ability to approve loans up to R150 million in the Cape."
Information released at a recent briefing show that Nedbank holds a solid 31.4% market share of the property finance market in the Western Cape.
It seems the collective market share has dropped from the initial merger stage, but this is understandable especially as Nedbank's risk profile would not have wanted too big a property exposure.
Still, Nedbank holds the dominant share of the market, focusing on commercial and industrial property finance and also taking up minority stakes in property transactions.
Of Nedbank Corporate Property Finance's R880 million profit in 2005, a whopping R294 million (33%) was sourced from the Western Cape operations.
Irvine said Nedbank held a lending book topping R8 billion in the Western Cape, approving R5.3 billion loans in 2005 compared with R3.1 billion in 2004. About 55% of the loan approvals related to development loan finance.
He also pointed out that the quality of Nedbank's lending book was the best it had ever been with arrears sitting at a minuscule 0.11% of the lending book.
The most significant deals for Nedbank during 2005 were CapeGate, Century City (Island Club, The Estuaries, Knightsbridge, Oasis and Colosseum), Dockside, Wembley Square, Horizon Bay, Black River Park and the Muizenberg redevelopment.
Irvine said Nedbank's focus for 2006 would be to retain a dominant market share in the Western Cape by remaining involved in development opportunities both as financier and equity partner as well as growing the conventional loan book through continued responsible lending.
