Financial services group FirstRand, whose portfolio includes First National Bank (FNB), Rand Merchant Bank (RMB) and WesBank, says it does not expect real full-year growth as the coronavirus outbreak adds further strain to SA's recessionary economy.
Corporate and household income growth is under pressure from rising unemployment and falling real wage growth, with these trends already evident across the group’s businesses so far in 2020, FirstRand said on Tuesday.
“As a large systemic financial services group FirstRand is not immune to the serious macroeconomic challenges facing SA, and the damaging impact of ever declining GDP growth is becoming evident in all of the group’s customer segments in SA,” CEO Alan Pullinger said.
The group will not achieve its stated target of real growth in earnings — meaning above inflation growth — given SA’s current GDP forecast, it said.
FirstRand managed a 5% rise in normalised earnings, boosted by FNB’s growth in customer numbers. Business Day TV spoke to FirstRand CEO Alan Pullinger about the numbers.
FirstRand’s profit for the six months to end-December rose 7% to R14.95bn, with the group raising its interim dividend 5% to 146c.
FNB’s domestic franchise produced a solid performance underpinned by non-interest revenue growth, driven by customer gains and increased transactional volumes, the statement read.
However, some of these drivers have slowed relative to the previous six-month period to June 2019, in line with the weakening economic conditions.
FNB’s fee and commission income grew 5%, mainly due to increased volumes across its digital and electronic channels, however, as expected, the rate of growth in volumes is slowing due to customers’ constrained disposable incomes, certain fee concessions, and increased competition, FirstRand said.