(Bloomberg) -- South Africa investors should expect the nation’s embattled ruling party to retain power in the May 29 election, which would keep its policies in play even if it doesn’t win an outright majority, the head of Nedbank Group Ltd. said. 

According to outgoing Nedbank Chief Executive Officer Mike Brown, investors are likely to be patient as they await the outcomes of polls in more than 60 countries worldwide this year, including in the lender’s home market of South Africa, where the African National Congress has had a majority for 30 years since the advent of democracy in 1994.

“What every single poll tells you is that the ANC is likely to be — by far — the largest party in parliament — they may be just below 50% or just above 50%. And that means largely existing policies are likely to remain intact,” Brown said in an interview with Bloomberg Television’s Jennifer Zabasajja. 

The ANC won plaudits during the the first half of its rule for growing the economy and expanding access to running water, electricity and welfare grants. Its performance deteriorated markedly during President Jacob Zuma’s almost nine-year tenure, which was marred by a succession of corruption scandals, inappropriate appointments, and policy missteps.  

Zuma stepped down in early 2018, but his successor, Cyril Ramaphosa, has struggled to overcome chronic electricity shortages, logistics constraints and rampant graft. A series of opinion polls show support for the party slipping below 50%, meaning it would have to enter into a coalition with one or more rivals to continue governing. 

Policy Concern

The lack of change will be a double-edged sword, because it means policy continuity on much-needed reforms but also no change on unpopular initiatives mooted by the state, such as a controversial national health-insurance plan.  

“Some policies — certainly for business — are a concern,” Brown said, adding that the private sector sees the NHI as “unconstitutional, unaffordable and unimplementable.” Conversely, he said the work toward resolving the energy crisis — which includes enabling generation by the private sector — is “absolutely foundational” to addressing the problem.

The South African economy probably expanded 0.5% in 2023, with growth set to increase to between 1% in 2024, constrained by continuing power cuts and deteriorating rail and port services, according to Nedbank. The subdued environment is likely to hamper private-sector credit growth, which the lender sees muted at around 5%. 

Brown said South African inflation “has firmly peaked,” and that the lender expects 75 basis points of interest-rate cuts in the second half of 2024, “which should help consumer confidence and improve debt-service capabilities.”

Lower interest rates will help boost the credit environment, and allow Nedbank to reduce its credit-loss ratio toward its target range of 60 to 100 basis points in 2024, compared with 109 basis points in the year to December, he said.

Nedbank’s profit attritable to shareholders rose 7.1% to 15.3 billion rand ($803.4 million) in the year to Dec. 31, as interest income climbed 14%, the Johannesburg-based company said in a statement. 

The bank declared a final dividend of 10.22 rand per share, surpassing analyst estimates. Its stock climbed as much as 4.6% — the most since Dec. 14 — before paring gains to 4.2% by 10:39 a.m. in Johannesburg. 

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