FNB reports strong growth: profits up 11%

FirstRand on Tuesday reported a 7% rise in profit for the interim period ended December 2017, to R12.7 billion, led by a strong performance from First National Bank (FNB).

Net income from operations climbed 7% to R17.4 billion, while headline earnings per share grew by 6% to 224.2 cents per share, the group said.

The bank’s directors declared a gross cash dividend of 130 cents per ordinary share.

FirstRand’s portfolio of businesses comprises FNB, RMB, WesBank and Ashburton Investments, and provides a universal set of transactional, lending, investment and insurance products and services.

FNB, the group’s biggest earner, grew its pre-tax profits 11% to R10.4 billion on the back of a strong performance from its South African business, which grew pre-tax profits 12% (R9.9 billion), while the rest of Africa portfolio remained under pressure, down 5% compared to a 29% decline in December 2016.

“FNB’s results reflect another strong operating performance from its domestic business driven by good non-interest revenue (NIR) growth on the back of ongoing customer gains and increased transactional volumes, and high quality net interest income (NII) growth, particularly from deposit generation,” the group said.

It said that its customer base climbed to 7.8 million in the period.

Profits from FNB’s retail business surged 21%, while the bank’s commercial business units produced profit growth of 13%. “The results were robust given modest advances growth,” it said.

Jacques Celliers, FNB CEO, said: “The excellent results reflect the strong momentum we’ve created over the last few years. Our cross-sell and upsell strategy was supported by very strong new-to-bank sales performance across all key channels.”

“The technology and data driven platform evolution amongst others has seen significant adoption by our customers, particularly the FNB App that experienced continued growth and increased customer usage. We are particularly pleased about the number of visitors who are experimenting with new functionality on the platform,” Celliers said.

FirstRand said that RMB delivered a strong operational performance, with pre-tax profits increasing 11% to R4.5 billion. “The ROE of 22.9% demonstrates both the quality and diversification of the portfolio,” it said.

The rest of Africa portfolio remains key to RMB’s strategy and delivered pre-tax profits of R839 million, up 23% on the comparative period.

WesBank, meanwhile, saw profit before tax decline 2%, resulting in an ROE of 18.6% and an ROA of 1.74%.

“While the local personal loans and corporate lending businesses showed strong operational performances, the local VAF business had a challenging six months,” the bank said.


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FNB reports strong growth: profits up 11%