JOHANNESBURG - Financial services group FirstRand said on Tuesday its portfolio of businesses produced quality topline growth in the six months to December despite a challenging macroeconomic backdrop, FirstRand’s portfolio of businesses produced quality topline growth.
FirstRand, whose portfolio includes First National Bank (FNB), Rand Merchant Bank (RMB), WesBank, Aldermore and Ashburton Investments said the group continued to strengthen its balance sheet and protect its return profile.
Normalised earnings for the six months increased seven percent, with a normalised return on equity (ROE) of 22.3 percent.
"Certain strategic actions taken to expedite the execution of group strategy in the last six to 12 months have resulted in some changes to the composition of earnings at an operating business level," FirstRand said.
"Although these do not impact like-for-like comparisons at a group level, they are material when assessing the breakdown of sources of normalised earnings from the portfolio and include the following."
Given the structural nature of many of South Africa’s challenges, First said it believed domestic fundamentals would not change quickly.
Global financial conditions will prevent the South African Reserve Bank from easing monetary policy despite a low-growth outlook and this, combined with low commodity prices and a further slowdown in global growth, would keep domestic economic activity under pressure for the rest of 2019.
Against this backdrop, private sector activities, such as corporate investment and household consumption, would remain subdued.
"In the medium to longer term, given the market-leading positions of its businesses in South Africa and the growth strategies it is executing on, FirstRand considers itself strategically well positioned to benefit from renewed system growth, it said.
FNB’s momentum was expected to continue on the back of customer and volume growth, while RMB’s performance would be impacted in the second half of the year, given the very high level of private equity realisations in the base of the six months to June 2018.
"With regard to the rest of Africa, there are signs that economic activity is improving in some of the other sub-Saharan African countries in which FirstRand operates, and the group expects its portfolio to continue to show an incrementally improved performance," the group added.