Alan Pullinger. Picture: KEVIN SUTHERLAND.
Alan Pullinger. Picture: KEVIN SUTHERLAND.

First National Bank’s (FNB’s) digital innovation has boosted earnings growth to levels ahead of its peers’ as the group aims to become the financial services equivalent of Amazon.

"This journey to become an Amazon is huge for us. And it’s starting to play out," said new FirstRand CEO Alan Pullinger at the group’s results for the 12 months ended-June.

The FirstRand subsidiary has been at the forefront of migrating clients from its traditional bricks-and-mortar operation to digital channels that include its website and smartphone app. The next phase has seen FNB offer more diverse products and services on its platform, as well as beginning to gather ever more amounts of data on its clients, which promotes more tailored offerings.

"Its built around the primary bank relationship strategy," said FNB CEO Jacques Celliers.

He explained how the relationship generated frequent "interactions" with clients that gave the bank the ability to cross-sell and up-sell products, as well as increase the "utility" of the platform by allowing clients to do things such as order passports, renew vehicle licences and pay fines — services not directly related to banking.

FirstRand announced normalised headline earnings and the dividend per share grew by 8% to R4.70 and R2.75 respectively. FNB grew its normalised earnings 16% to R14.8bn for the year, and now accounts for 57% of the group’s earnings.

While like-for-like comparisons are difficult to make, FNB’s earnings growth appears to be close to double that of its peers — Standard Bank, Nedbank, and Absa — while its return on equity for the year to June stands at an eye-popping 40%.

Sanlam Investment Management head of equities Patrice Rassou was impressed. "The whole result was really about how well FNB is doing in a market in which retail is struggling. They are gaining customers across the board. Despite saying they are cautious, it belies what is going on beneath. Card’s lending book was up 24%, while personal loans rose 46%. So it’s big numbers at a very targeted client base. When a business like this adds clients, increases margins and lowers costs you get this exponential growth."

Pullinger, who took over from Johan Burger as CEO of FirstRand on April 1, said he has spent the past few months understanding the workings of FNB and is really excited by the transition to what he calls "Amazon platform thinking".

"We are beginning to know who you are and what we can offer you," says Pullinger.

"With technology like geo-location, FNB might soon be able to help clients value and sell assets like cars and houses by providing a market for clients to do so on its platform.

"So besides financing a car and insuring it for you, we could assist in helping you service it, and at some point, even value and sell it. We can open your car to our marketplace," he said.