An FNB branch in Johannesburg. Picture: REUTERS/SIPHIWE SIBEKO
An FNB branch in Johannesburg. Picture: REUTERS/SIPHIWE SIBEKO

FirstRand, Africa’s 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.

Normalised earnings per share for the 12 months to end-June will be lower than the R4.97 reported a year earlier, it said in a statement on Thursday.

A full results report will be released on September 10. A “materially higher credit-impairment charge” 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.

Lower interest rates weighed on lending income, while non-interest revenue growth “showed a marked decline” as the  lockdown in SA resulted in a drop in transaction volumes.

The profit warning from FirstRand, the only of the big four SA banks to report earnings not aligned with the calendar year, follows similar trading updates from its peers, which have all warned of a similar decline for the first six months of the year.

The economy could contract 7% this year due to shocks caused by the Covid-19 and the lockdown to curb its spread, according to the Reserve Bank, the most in at least six decades.

FirstRand fell 2.3% as of 2.21pm, leading declines on the banks index, which was down 1.4%.


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