Business

FirstRand declares first half dividend despite lower overall profit

By Staff reporter 12 min ago

Share this article:

FirstRand declares first half dividend despite lower overall profit

Due to improving economic conditions, FirstRand rewards its shareholders. It declared an interim dividend of 110 cents per share for the six-month period ended December 31, 2020.

Even though this is almost 25% less than the payout declared during the same period in 2019, the financial services provider is the first of its peers to declare a dividend.

Basic and diluted net earnings per share also fell, falling 20% ​​to 198.9 cents. The group’s normalized profit fell by 21% while the normalized return on equity (ROE) stood at 21.2% compared to 15.6% previously. FirstRand attributes the decline to a “high credit impairment charge, a significantly lower endowment given the policy rate cuts and lower levels of transaction activity and credit origination.”

Nonetheless, comparing the figures for the period under review to the previous six months up to June 2020, FirstRand said there were early signs of a positive rebound in performance. He specifically highlighted non-interest income (NIR) and impairments.

FirstRand CEO Alan Pullinger said: “Although on a low basis to date the timing and magnitude of the rebound has positively exceeded initial expectations of the group. Net income after cost of capital (NIACC) is the group’s main performance measure. While on June 30, 2020, the group achieved a negative NIACC, it generated an economic profit of Rand 437 million as of December 31, 2020. An ROE above the cost of equity is a satisfactory performance given the macroeconomic environment. current.

RMB

From the perspective of FirstRand’s underlying business, business division and investments, the RMB was the star with a 9% improvement in operating profit before provisioning to 5.37 billion rand. This is mainly due to the excellent performance of its activities in domestic markets and of the rest of the activities in Africa.

ETFs

FirstRand’s retail and commercial banking division, FNB, posted a 4% drop in pre-provisional operating income as margins remained under pressure.

Wesbank

There’s also bad news from WesBank, the group’s installment finance division. Its operating profit before provisioning decreased by 5% due to low production levels (new business decreased by 21%).

Aldermore and Total MotoNovo

The unit posted pre-provisioning profits which increased 16% due to the growth of the book and MotoNovo deposits which benefited the cost of financing.

Going forward, FirstRand said the national operating environment remains challenging, especially given the risk of a third wave as winter approaches and the planned schedule for targeting the population’s target level of immunization.

FirstRand’s share price started the day at R52.29 and then peaked at R54.71 at 10:35 am today.

ACTIVITY REPORT



FirstRand declares first half dividend despite lower overall profit

Source link FirstRand declares first half dividend despite lower overall profit

Back to top button