Aided by a formidable display from its vehicle finance division, financial services behemoth and South Africa’s biggest lender in terms of value, FirstRand reported a 14% rise in half-year profit on Thursday.
Headline earnings per share amounted to 212 cents in the six months ended December, compared with 185 cents a year earlier. Wesbank shot up by nine percent, while RMB was up by just two percent, as a lack of private equity realisations had an impact on its earnings.
FNB posted a three percent rise in earnings, with the continuing migration of clients from traditional channels to lower-fee digital banking along with an infrastructure lag accounting for the modest gain.
FirstRand CEO Johan Burger believed that the firm were making the right long-term decision to move clients to digital. "Long term this is the right strategic decision. It's a massive shift away from traditional channels. But we will have to recalibrate the branch costs." Burger added that FirstRand maintained a cautious approach to lending in a volatile environment and decisions had to make sense on the "risk-reward" spectrum.
Listed on JSE since its founding in 1998, FirstRand Limited is one of the largest financial institutions in South Africa and the holding company of the FirstRand group of companies. The company employs over 35,000 people and provides banking and insurance products and services to retail, commercial, corporate and public sector customers in South Africa and several African countries. Johan was formerly the group CFO of FirstRand.
With regard to the future, a cautiously optimistic Burger was confident that FirstRand's strategic drive would deliver over the medium to long term."The group expects economic growth to pick up slightly in the second half of calendar year 2017, although this is unlikely to provide significant support to topline growth for some time. FirstRand is committed to its current investment cycle despite ongoing topline pressures, as it believes its growth strategies both in broadening its financial services offerings and building its rest of Africa franchise will deliver outperformance over the medium to long term."
He added that FirstRand continued to aim to deliver real growth in earnings and an ROE of between 18% and 22%.
