FirstRand says it’s on course to achieve its targets for the year ended June, after a strong first half of its financial year, which saw its normalised earnings up 11% to R23.2bn as its flagship brand, FNB, reported strong growth on the back of improving household affordability.
The group, worth R520bn on the JSE, said on Thursday its return on equity for the six months ended December rose from 20.8% to 21.1%.
FNB was a standout performer in the group, delivering normalised profit before tax growth of 7% and return on equity of 41%.
FirstRand CEO Mary Vilakazi touted the group’s financial management as a big competitive advantage.
This as the lender prioritises a disciplined and discerning approach to lending, supporting customer needs while safeguarding the balance sheet and the group’s return profile.
“Our client-facing franchises are healthy and well positioned for growth, as they have demonstrated in the first six months of this year, delivering topline growth in earnings and improving returns,” Vilakazi said.
The group’s strategy in broader Africa is to build competitive advantage and scale by deepening its presence in selected markets
— Mary Vilakazi, FirstRand CEO
“In addition, our financial resource management approach, which I consider to be a clear differentiator for FirstRand versus its peers, continues to add significant value in driving balance sheet efficiency, margin uplift, capital strength and, ultimately, a superior return on equity.”
The earnings of the group, which also owns RMB and WesBank, remain anchored in South Africa, driven by its sizeable lending, transactional and deposit franchises.
In the six months under review, FNB broader Africa advances grew 3%, with strong growth in Lesotho, Zambia and Eswatini offset by contractions in Namibia and Botswana due to “lower customer demand and business risk appetite as a result of macroeconomic pressures”.
The Botswana economy is traversing its most challenging period in recent history as its key export, diamonds, comes under severe pressure due to the rise in popularity of lab-made diamonds. The structural shift in the diamonds business has seen Anglo American put De Beers up for sale following deep impairments in that business over the past three years.
“The group’s strategy in broader Africa is to build competitive advantage and scale by deepening its presence in selected markets. The group has made meaningful progress in expanding in-country customer franchises, particularly in retail and commercial deposit-gathering and transactional activities.
“In addition, the corporate and investment banking business, which has established a deal footprint covering over 45 countries, is increasingly leveraging its track record of funding cross-border activities to provide integrated service offerings to its clients operating on the continent.”
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