FirstRand’s credit-loss provision more than doubles
Financial services group FirstRand, whose portfolio includes First National Bank (FNB), Rand Merchant Bank and WesBank, has taken a hefty profit hit as the Covid-19 pandemic weighs on the ability of SA consumers to repay loans.
The group provided payment relief and reported a decline in transaction volumes in its year to end-June, when the pandemic added further pressure to an “already extremely weak domestic position”.
Headline earnings fell 38% to R17.3bn in the group’s year to end-June, with dividends for the year halving to 146c. FirstRand did not pay a final dividend, in line with Reserve Bank guidance.
FNB transaction volumes decreased 1%. Electronic volumes remained flat despite banking app volumes being up 28%, while FNB branch transaction volumes fell 31%.
The group reported a total impairment charge of R24.4bn, from R10.5bn previously, while its credit-loss ratio rose to 1.91%, from 0.88% previously.
"The Covid-19 pandemic is a once-in-a-generation event and has had a profound impact on the world,” said CEO Alan Pullinger.
“In SA it resulted in the deepest GDP contraction since the Second World War. The lockdown devastated the economy and it will be a long, hard road back to recovery,” he said.
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