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Johannesburg - Analysts have touted FirstRand [JSE:FSR] as the best performer with superior growth potential among the country's major banking groups groups, based on financial results posted during the past two months.
Posting its full-year figures to end-June last week, FirstRand delivered a 34% increase in headline earnings to R9.4bn. Its dividend declared was up by 38%.
Operations at investment group subsidiary Rand Merchant Bank (RMB) were also back on track after a torrid 2008 and 2009.
Nedbank Capital recently updated its overview of the banking sector, issuing a "buy" recommendation on FirstRand, a "hold" on Absa, "sell" on Standard Bank and a note saying that Nedbank itself "is improving".
Firm analyst David Danilowitz increased his price target for the company to 2 450 cents per share. At around 09:40 on Monday, FirstRand was trading at 2 015c - placing it on a forward price to earnings multiple of 9.6 times earnings and offering a dividend yield of around 3.8%.
Danilowitz said FirstRand has been generating superior return on equity figures relative to its peers. "FNB demonstrated the strength of its transactional base, with better cost control than peers," he said.
Citigroup analyst Henry Hall advised clients that while FirstRand may not have an international shareholder, this will not necessarily count against it.
"We think it has unique growth opportunities, provided it can successfully pitch itself as the only true SA bank — something that may have particular appeal in the mass market," said Hall.
"We think the next challenge is to continue to eliminate cost duplications and inefficiencies, for which we see significant scope but not at the cost of its entrepreneurial culture."
A change in the so-called entrepreneurial culture is likely to be something analysts will watch closely in the light of Sizwe Nxasana taking up the CEO mantle.
FirstRand has long been viewed as the most entrepreneurial of the big banking groups, as division heads have had a great deal of freedom to pursue opportunities.
This decentralised model came in for criticism in 2008 and 2009 as RMB took some stick for its risk management strategy. In 2009, its offshore trading unit saw more than R1bn in writedowns.
Stockbrokerage Barnard Jacobs Mellet said it continues to see FirstRand as its preferred counter in the sector, although it regards the counter as "fair value" given a recent run in the share price.
Another brokerage, Imara SP Reid, has also updated its recommendations on the banks with a "hold" on Investec and Absa, an "add" on Standard Bank and a "fully valued" on Nedbank. Imara gave FirstRand an "add" recommendation in June, and said an update is still under review.
- Fin24.com
Posting its full-year figures to end-June last week, FirstRand delivered a 34% increase in headline earnings to R9.4bn. Its dividend declared was up by 38%.
Operations at investment group subsidiary Rand Merchant Bank (RMB) were also back on track after a torrid 2008 and 2009.
Nedbank Capital recently updated its overview of the banking sector, issuing a "buy" recommendation on FirstRand, a "hold" on Absa, "sell" on Standard Bank and a note saying that Nedbank itself "is improving".
Firm analyst David Danilowitz increased his price target for the company to 2 450 cents per share. At around 09:40 on Monday, FirstRand was trading at 2 015c - placing it on a forward price to earnings multiple of 9.6 times earnings and offering a dividend yield of around 3.8%.
Danilowitz said FirstRand has been generating superior return on equity figures relative to its peers. "FNB demonstrated the strength of its transactional base, with better cost control than peers," he said.
Citigroup analyst Henry Hall advised clients that while FirstRand may not have an international shareholder, this will not necessarily count against it.
"We think it has unique growth opportunities, provided it can successfully pitch itself as the only true SA bank — something that may have particular appeal in the mass market," said Hall.
"We think the next challenge is to continue to eliminate cost duplications and inefficiencies, for which we see significant scope but not at the cost of its entrepreneurial culture."
A change in the so-called entrepreneurial culture is likely to be something analysts will watch closely in the light of Sizwe Nxasana taking up the CEO mantle.
FirstRand has long been viewed as the most entrepreneurial of the big banking groups, as division heads have had a great deal of freedom to pursue opportunities.
This decentralised model came in for criticism in 2008 and 2009 as RMB took some stick for its risk management strategy. In 2009, its offshore trading unit saw more than R1bn in writedowns.
Stockbrokerage Barnard Jacobs Mellet said it continues to see FirstRand as its preferred counter in the sector, although it regards the counter as "fair value" given a recent run in the share price.
Another brokerage, Imara SP Reid, has also updated its recommendations on the banks with a "hold" on Investec and Absa, an "add" on Standard Bank and a "fully valued" on Nedbank. Imara gave FirstRand an "add" recommendation in June, and said an update is still under review.
- Fin24.com
