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Lending boosts FirstRand profit

Sep 11 2012 09:02 Reuters

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Johannesburg - South Africa's second-biggest bank, FirstRand [JSE:FSR] posted a 26% rise in full-year earnings helped by a strategic push to increase retail customers that has boosted income from lending.

FirstRand said diluted headline earnings per share, which exclude certain one-time items, totalled 226.9 cents in the year to end-June, compared with 179.4 cents in the previous year.

A Reuters poll of 17 analysts expected the earnings to come in 20% stronger at 216 cents.

The lender had already flagged it expected full-year profit to increase more than 20%.

"The most significant driver of earnings was the very strong operational performances from FNB and WesBank, both of which showed excellent topline growth," FirstRand said of its retail bank and vehicle finance unit.

South Africa's banking industry - dominated by heavyweights such as FirstRand, Standard Bank Group [JSE:SBK], Absa Group [JSE:ASA] and Nedbank Group [JSE:NED] - has been ramping up unsecured loans to shore up profit.

FirstRand said net interest income, the measure of a bank's earnings from loans, climbed 26% to R21.89bn.

FirstRand is aggressively courting its rivals' customers. Non-interest revenue came in lower at R29.49bn from a restated R29.57bn.

The bank is also on the prowl for acquisitions across Africa, with the latest being a $91m purchase of a 75% stake in Merchant Bank Ghana.

If successful, the operation will bring FirstRand's interests outside of South Africa to nine, including India.

FirstRand's shares have risen 31% so far this year, bring its price earnings ratio to 11.43 times, above its three main competitors.

The three rivals, who run a calendar year, have already reported first-half earnings.


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