FNB boosts FirstRand’s earnings
The company says RMB’s portfolio delivered high-quality earnings from its domestic and rest-of-Africa activities, while WesBank remained resilient despite low vehicle sales
Financial services group FirstRand, whose portfolio includes First National Bank (FNB), Rand Merchant Bank (RMB) and WesBank, said on Tuesday that normalised earnings in the six months to end-December rose 7% to R13.3bn, thanks largely to gains from FNB.
“FNB’s results were impressive — earnings increased 13% on the back of strong growth in customers, transactional volumes, advances and deposits,” said FirstRand CEO Alan Pullinger.
FNB, the group’s retail and commercial banking unit, grew normalised earnings in SA by 11.3% to R8.4bn. Earnings from the rest of Africa nearly doubled to R311m.
FirstRand raised its interim dividend by 7% to R1.39 per ordinary share, though normalised return on equity declined slightly, from 22.5% a year earlier to 22.3%.
The group’s shares were 0.8% up at R62.59 in early trade.
“RMB’s portfolio delivered high-quality earnings from both its domestic and rest-of-Africa activities,” Pullinger said. That unit’s normalised earnings grew 5% to R3.3bn.
“WesBank remained resilient despite competitive pressures and low vehicle sales,” he said. The motor vehicle and business finance division’s normalised earnings edged up 1% to R957m.
Aldermore, the UK-based specialist lender that FirstRand took over with effect from April 2018, contributed normalised earnings of R1bn.
FirstRand’s CEO, Alan Pullinger joins Business Day TV to reflect on the numbers that were released on Tuesday and what it means for that long-term growth strategy.
Pullinger said RMB’s short-term performance would be affected by the high base created by large private-equity realisations in the second half of the last financial year.
However, “its leading local market position and ongoing momentum in its rest of Africa activities mean that the portfolio will outperform in the medium term”.
Aldermore’s growth was expected to slow owing to uncertainty in the UK and ongoing investments into systems and processes, including MotoNovo’s integration.
“FirstRand believes its businesses are in good shape and it is executing on appropriate strategies to drive growth and deliver superior returns to shareholders,” Pullinger said.