FirstRand produces good growth in earnings driven by organic growth, innovation and collaboration across all its businesses
FirstRand Limited (FirstRand), the integrated financial services group, today announced results for the year to 30th June 2004.
- Headline earnings per share +19%
- Headline earnings +18%
- Dividend per share + 31%
- Return on equity 25.6%
- Net Asset value + 15%
FirstRand also announced that it has reduced its dividend cover from 2.85 to 2.5 times which the group believes is a sustainable level as it is generating more capital than it needs for the business. In addition, the dividend policy will be based on sustainable earnings growth as the group’s headline earnings include AC133 volatility and translation gains and the group wishes to protect its shareholders from this level of volatility going forward. The total dividend for the year increased by 31% from 35 cents to 46 cents.
Commenting on the results, Laurie Dippenaar, FirstRand CEO, said;
"I think these results clearly show how well positioned the group is against the favourable background of low interest rates, increased consumer confidence and a sound economy," said Dippenaar.
"The environment was particularly positive for banking, and the FirstRand Banking Group generated strong organic growth evidenced by the higher new business volumes across all the businesses. In addition, the group’s focus on innovation and increasing collaboration between the business units allowed FirstRand Limited to deliver a superior performance."
FirstRand Banking Group
FNB Retail had a good year with strong growth in non-interest income, deposits and advances, more than compensating for the margin squeeze resulting from low interest rates.
FNB HomeLoans increased new business production by 67% although the run-off in the acquired NBS and Saambou books meant that total advances grew at a slower rate of 11.3%.
WesBank had an outstanding year, achieving a 52% increase in profit to R1.05 billion.
Driven by a very buoyant motor vehicle market, new business grew by 26% with growth in assets up 22%.
Insurance profits as a proportion of the retail bank’s profits increased 48%. OUTsurance performed very well and the banking group’s share of OUTsurance’s headline earnings increased by 89.4% to R161 million.
FNB Corporate produced a billion Rand of profits for the first time, resulting from good advances growth in the medium corporate sector, client acquisition and higher transactional volume flows.
RMB produced exceptional results, growing net income before tax by 30%. All the businesses performed well, in particular Corporate Finance, Private Equity and Special Projects International.
Momentum delivered a satisfactory performance in market conditions that remained tough, showing growth in headline earnings of 14%. The results benefited from good new business growth in risk products and linked products and improved performance from asset management operations.
Discovery produced an excellent performance reflecting a combination of strong organic growth and increased efficiencies. This translated into a 102% increase in operating profits with headline earnings attributable to FirstRand increasing by 49%.
Looking forward Dippenaar said that he expected the economy to be sound and that interest rates would remain relatively stable.
"FirstRand is confident that the underlying strengths of its businesses and its focus on innovation and operating efficiencies will continue to deliver strong organic growth. This combined with a favourable operating environment, further opportunities through collaboration and the development of new markets, both in Africa and internationally, positions the group very well in the year ahead".
A full copy of the FirstRand Limited Results Announcement can be obtained from FirstRand Investor Relations on 011 282 8059/1341 or from Cordev Marketing on
011 783 2070 and is available on the FirstRand Website - www.firstrand.co.za.
For further enquiries please contact
Sam Moss, Director Investor Relations
+27 11 2821341
+21 82 490 9985