Among SA’s bank stocks on the JSE, FirstRand is trading at the highest premium, and its most recent financial results make it easy to see why. The banking group, which owns FNB, Rand Merchant Bank, WesBank and UK specialist bank Aldermore, posted a 7% increase in net profit for 2018. FirstRand’s largest business, FNB, grew profit by 12% to R8.7bn, while some of its peers recorded only single-digit growth (though theirs were full-year results while FNB’s were interims). Absa increased its profit for the year by only 3%, to R16.1bn and Standard Bank’s earnings rose 6% to R27.9bn. Nedbank is the only one that outperformed FNB — profit was up 14.5% to R13.5bn. However, FNB delivered more than double the returns to its shareholders in 2018 than Nedbank did. Its return on equity (ROE) at the half-year mark shot the lights out, at 42.2%, while Nedbank’s full-year ROE stood at 17.9%. Absa’s ROE was 16.8% while Standard Bank’s was 18%. At group level, FirstRand’s ROE was also higher than tha...

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