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FirstRand shares gain on half-year financials

Mar 06 2018 18:03
Ntaoleng Lechela

Johannesburg – FirstRand shares were trading up 2.44% in the early afternoon on Tuesday, after it announced a 7% rise in group earnings for the half-year ended 2017, despite what it said was a difficult operating environment. 

The group released its unaudited interim financial results for six months ended December 31 2017 on Tuesday.

FirstRand [JSE:FSR] comprises First National Bank (FNB), WesBank, Rand Merchant Bank (RMB) and Ashburton Investments, among other subsidiaries. 

In a statement FirstRand said that its two largest operating businesses, FNB and RMB, had produced strong operational performances, while WesBank had a tough six months.

Overall FirstRand earnings grew by 7% to R12.4bn and pre-tax profits saw an increase of 8% to R17.3bn.

Dividends per share increased 9% to 130c per share, from 119c per share in the last six months of 2016.

FirstRand’s outgoing CEO Johan Burger said in a statement that the results were pleasing given that "the second half of 2017 was a very challenging operating environment". 

“Since the outcome of the ANC elective conference in December 2017, sentiment and markets have staged a material recovery and the outlook for South Africa is more positive than it has been for some time."

FNB recorded a pre-tax profit increase of 11% to R10.4bn.

Its CEO, Jacques Celliers, told Fin2424 the bank was incredibly proud of the results.

"We are in a very good space," he said.  

About R9.8bn in pre-tax profit came from its South Africa businesses, and R566m from the rest of Africa, which includes banks in Namibia, Botswana, Mozambique, Zambia, Tanzania and Ghana. This figure also included the sale of a portion of FNB's operations in India. 

FNB's normalised earnings for the six months ended December 2017 were R7.1bn. 

Corporate and Investment bank RMB, meanwhile, performed well in the rest of Africa, recording an increase in pre-tax profits of 23% to R839m.

Its total pretax profits rose 11% to R4.4bn, with the bank's SA businesses contributing R3.61bn.

WesBank under pressure

While FNB and RMB saw increases, WesBank’s pretax profit was down by 2%. It recorded R2.705bn in the six months ended 2017, compared to R2.755bn in pretax profit in the last six months of 2016. 

"WesBank’s performance showed a mixed picture," said FirstRand in its financial analysis. "The South African VAF (vehicle and finance) business experienced a tough six months on the back of worse than expected arrears and non-performing loans. However, the personal loans and corporate business performed strongly and MotoNovo delivered a solid performance."

MotoNovo is the bank's UK-based motor finance division.  

In a statement Burger said, “in the medium to longer term, given the market leading positions of its businesses and the growth strategies it is executing on, FirstRand considers itself strategically well positioned to benefit from renewed growth”.

He added that due to the country’s challenges being of a “structural nature”, the domestic fundamentals are unlikely to change anytime soon. Therefore, he expects a similar outlook for the next year end.

As reported in Fin24, FirstRand Limited will see a change in management when Burger retires at the end of the month. His deputy, Alan Pullinger, will take over as CEO on April 01.

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banking  |  fnb  |  firstrand


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