FirstRand eyes 35% hike in annual profit |

LENDER FirstRand said yesterday that it expected its annual earnings to increase by 35 percent, because the economy had rebounded faster than initially expected. Its current trends indicated that customers were using their discretionary savings as the economy had opened up. “Consumer spending is now back at pre-Covid levels,” First-Rand said. FirstRand’s portfolio of leading financial services franchises includes Rand Merchant Bank, First National Bank and WesBank. FirstRand’s headline earnings per share (Heps) of 308.9 cents, earnings per share (Eps) of 303.5c and normalised Eps of 307.8c for the year to June 30, 2020 would be exceeded by more than 35 percent in the year to June 30, 2021. FirstRand’s Heps, Eps and normalised Eps would be at least 417c, 409.7c and 415.5c, respectively, it said. The financial services group told shareholders in March that the absolute level of earnings for the six months to December 2020 would likely not be repeated in the second half. It warned investors in March, when it said its first-half performance had beaten its expectations, not to expect a similar level of absolute earnings in the final six months. However, since then – with expectations of the elevated cost of credit in South Africa because of the lockdown restrictions in December and January and the third wave of Covid-19 in the UK resulting in higher arrears and non-performing loans – FirstRand said the group had seen the economy rebound much faster than initially expected. This, combined with ongoing strong collections, had resulted in lower impairments than predicted. Arrears had reduced, and although non-performing formation had continued, it was trending lower than expected. In the UK, the credit experience has also been better, supported by the extension of the government furlough scheme. |