GT reflects and predicts
INVESTORS IN FIRSTRAND who failed to take heed of chairman GT Ferreira’s warning in the group’s 2007 annual report that its performance this year would not match last year’s growth, will be paying considerably closer attention to his 2008 comments, looking for guidance from one of this country’s most seasoned bankers.
In his candid final report as chairman of FirstRand Group (of which he’s a co-founder) Ferreira warns the global financial credit crisis still has a long way to run.
“De-leveraging on a massive scale has been the theme of the last 12 months and should probably be regarded as one of the key determinants of the depth and duration of the current cycle and going forward will have a significant impact on global growth,” writes Ferreira, adding: “I believe we’re likely to experience ongoing financial turbulence and economic strain for an extended period of time.”
Ferreria’s instincts 12 months ago were right. Then he told shareholders not to expect a performance that would match FirstRand’s bumper results of 2007. In that year results were boosted by considerable gains in equity trading at Rand Merchant Bank and a strong performance from its retail banking operations that were driven by the considerable consumer appetite for debt.
However, not even he forecast how rapidly the global environment would deteriorate and the impact it would have on the group. “I did not imagine the carnage that would visit the financial markets in the last year,” he says.
However, it doesn’t mean the group intends resting on its laurels and waiting for the storm to pass before exploring new revenue-generating opportunities.
“While it’s natural and correct for a