FirstRand boosted by FNB earnings

Listed financial services group FirstRand Limited, which comprises FNB, RMB, WesBank, Aldermore and Ashburton Investments, has reported results for the six months to December 2018, showing that profit for the period was 6% higher to R13.95 billion.

Normalised earnings for the six month period grew 7% to 13.34 billion, the company said. Diluted headline earnings per share (HEPS), meanwhile, moved 6% higher to 237.9 cents, from 224.2 cents a year earlier.

The group announced a dividend per ordinary share up 7% to 139 cents

Income from operations climbed 18% to R48.6 billion, while employee numbers were 5% higher to 47,334, serving 8.2 million group customers.

“FirstRand produced quality topline growth and a superior ROE, despite a very challenging operating environment,” said FirstRand CEO, Alan Pullinger. FirstRand reported normalised return on equity (ROE) of 22.3%.

FNB accounts for 61% of FirstRand’s earnings, followed by RMB (23%), Wesbank (7%), and Aldermore (7%).

“FNB’s results reflect another strong operating performance from its domestic franchise, driven by healthy 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 performance of FNB’s rest of Africa portfolio continued to improve,” FirstRand said.

“RMB’s portfolio also delivered a resilient performance driven by good growth in high-quality earnings and solid operational leverage. WesBank delivered a subdued performance,” it said.

“FNB’s results were impressive – earnings increased 13% on the back of strong growth in customers, transactional volumes, advances and deposits. RMB’s portfolio delivered high-quality earnings from both its domestic and rest of Africa activities. WesBank remained resilient despite competitive pressures and low vehicle sales,” Pullinger said.

Looking forward, Pullinger commented that despite the difficult macroeconomic environment in South Africa, FirstRand would continue to invest in its long-term growth strategies.

“FNB has consistently demonstrated that despite a very subdued operating environment, its strategy to grow customers, activate digital channels to drive volumes, and cross-sell and up-sell to main banked customers using behavioral analytics, is generating growth significantly above that currently provided by the system. This momentum is expected to continue.

“Whilst RMB’s short-term performance will be impacted by the high base created by large private equity realisations in the second half of last year, going forward, its leading local market position and ongoing momentum in its rest of Africa activities means that the portfolio will outperform in the medium term.”


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FirstRand boosted by FNB earnings