FirstRand Ltd., Africa\u2019s largest bank by market value, expects full-year earnings to decline by more than 20% as the fallout from the coronavirus pandemic spurs a jump in impairments.<\/p>\n
Normalized earnings per share for the 12 months through June will be lower than the R4.97 reported a year earlier, the Johannesburg-based lender said in a statement on Thursday. A full results report will be released on 10 September.<\/p>\n
A \u201cmaterially higher credit-impairment charge\u201d is being driven mainly by forward-looking assumptions to model expected credit losses, while there has also been a deterioration in its lending books, it said.<\/p>\n
Lower interest rates weighed on lending income, while non-interest revenue growth \u201cshowed a marked decline\u201d as a lockdown in South Africa resulted in a drop in transaction volumes.<\/p>\n
The profit warning from FirstRand, the only of the big four South African banks to report earnings outside the calendar year, follows similar trading updates from its Johannesburg-based peers, which have all warned of a similar decline for the first six months of the year.<\/p>\n
The economy could contract 7% this year due to shocks caused by the virus and a lockdown to curb its spread, according to the central bank. That would be the most in at least six decades,<\/p>\n
FirstRand fell 2.3% as of 14h21 in Johannesburg, leading declines on the five-member South African banks index, which was down 1.4%.<\/p>\n