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FirstRand had “more than expected” rebounds, but customers are still struggling

FirstRand reports a 21% decline in monauralized revenue, more than three times what it recorded in the six months to June 2020. Photo: FirstRand

  • FirstRand announced its six-month financial results, which ended in December 2020, showing a 21% reduction in revenue.
  • However, the normalized revenue for the six months to December was more than three times the revenue recorded for the six months to June 2020.
  • However, some customers still struggle to repay their loans after the payment leave.

FirstRand, FNB’s parent company, reports that increased credit impairment costs reduced normalized headline revenues by 21% over the six months ending December 31.

Revenues are down compared to December 2019, but more than three times what the company recorded in the six months to June 2020.

Impairment costs in Firstland increased 59% compared to the pre-pandemic period, which ended in December 2019, as some customers still need payment relief.

Impairment costs for all banks began to rise in early 2020 as some loans were restructured and repayment leave was provided to struggling customers. FirstRand’s non-performing loans rose from 4.37% in June 2020 to 4.8% of total down payments, as some customers were still unable to repay their loans when these payment vacations were due to end. did.

Prior to the pandemic, non-performing or delinquent loans in December 2019 accounted for 3.58% of total down payments.

FirstRand said most of the payment relief arrangements offered to its customers were completed by the end of September 2020. However, there were still customers who needed expansion across retail, commercial, and corporate banking. Banks provided this “carefully”, with relief bank books increasing by R10.6 billion to R75.8 billion between June and December 2020.

In the field of commercial banks, relief books fell from R30.8 billion in June 2020 to Ran 20.8 billion as most customers began repayment of loans.

In corporate banking, relief books also fell from Ron 58.1 billion in June 2020 to Ran 31.4 billion, or 9% of total upfront payments. According to the group, some of the more acclaimed customers still need bailouts to actively approach banks to manage their liquidity facilities.

In the UK, aggressive bailouts consisted only of holidays currently unpaid in either the second or third bailout request. FirstRand said it had only 6% of Stage 3 non-performing loans on its balance of Ran 198.5 billion bailouts at the end of December 2020.

Recovery after June 2020 exceeded expectations

While some customers are still fighting, FirstRand said the earnings recovery was better than initially expected compared to what the group recorded in the six months to June 2020.

FirstRand reported normalized revenues of R $ 17.3 billion for the entire 2020 fiscal year, but in the second half of the reporting period from January to June 2020, revenues reached only R3.26 billion. ..

The group said at the time that normalized earnings had returned to 2014 levels.

Alan Pringer, CEO of Firstland, said:

With this earnings recovery, FirstRand has declared an interim dividend of R1.10 per common stock. He added that while earnings growth for the six months to December 2020 is likely to repeat in the second half of the year, full-year results up to June 2021 are expected to exceed the previous year.

But while the rebound was encouraging, Pulinger said Firstland remained cautious, especially given the risk of a third wave towards winter.

“For most of 2021, some sectors are expected to continue to be challenged, and the full effect of the adjusted Level 3 blockade has not yet been felt,” Pullinger said.

“The possibility of a third wave with mini-lockdowns heading for winter and the extended time frame associated with reaching the target level of vaccination should assume a cautious outlook,” he said. I added.

FirstRand had “more than expected” rebounds, but customers are still struggling

Source link FirstRand had “more than expected” rebounds, but customers are still struggling

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