FirstRand Limited has announced its unaudited interim results and cash dividend declaration for the six months ending 31 December 2023. Despite facing headwinds from prevailing economic conditions, the group showcased resilience and strategic acumen, delivering robust financial performance and sustaining shareholder value.
Financial Highlights
The interim results underscored the positive outcomes of strategic decisions made by FirstRand, as evidenced by several key financial metrics:
| Financial Metric | Six Months Ended 31 Dec 2023 (R million) | Six Months Ended 31 Dec 2022 (R million) | Percentage Change |
|---|---|---|---|
| Basic and Diluted Normalised Earnings | 19,097 | 17,988 | +6% |
| Normalised ROE | 20.6% | 21.6% | |
| Dividends Per Share | 200 cents | 189 cents | +6% |
| Net Interest Income (NII) | 42,771 | 37,681 | +14% |
| Non-Interest Revenue (NIR) | 26,577 | 25,534 | +4% |
| Credit Loss Ratio | 0.83% | 0.74% | |
| Common Equity Tier 1 (CET1) Ratio | 13.3% | 13.2% |
Strong Financial Performance
FirstRand’s performance reflects its adeptness in navigating challenging economic terrain while leveraging strategic initiatives to drive growth:
Robust Revenue Growth
- Net Interest Income (NII) surged by 14%, benefiting from continued momentum in new business origination and growth in the deposit franchise.
- Non-Interest Revenue (NIR) witnessed a 4% increase, supported by strong performances across retail, commercial, and corporate transactional franchises.
Prudent Risk Management
- Despite cyclical pressures, the group maintained a commendable credit loss ratio of 0.83%, well below its through-the-cycle range midpoint.
- FirstRand’s disciplined approach to lending and strategic provisioning ensured a resilient credit performance.
Shareholder Value Creation
- Normalised ROE remained robust at 20.6%, within the target range of 18% to 22%, reflecting the group’s ability to deliver sustainable returns.
- The board maintained the dividend cover unchanged at 1.7 times, translating into an interim dividend increase of 6%.
Strategic Initiatives Driving Performance
FirstRand’s success can be attributed to its focused execution of strategic initiatives aimed at maximizing shareholder value:
Customer-Centric Approach
- The group’s emphasis on affordability indicators in retail origination underscored its commitment to meeting customer needs amidst a high-rate environment.
Balance Sheet Management
- FirstRand’s balanced approach to balance sheet management, including appropriate provisioning and focus on growing the deposit franchise, contributed to its financial resilience.
Optimized Endowment Profile
- The management’s prudent management of the endowment profile played a pivotal role in optimizing returns amidst economic uncertainties.
Conclusion
FirstRand Limited’s strong financial performance for the first half of 2023 reflects its resilience and strategic prowess in navigating challenging economic conditions. By maintaining a customer-centric focus, prudent risk management, and disciplined execution of strategic initiatives, the group has sustained its position as a leading player in South Africa’s financial landscape. As it continues to adapt to evolving market dynamics, FirstRand remains well-positioned to capitalize on growth opportunities while delivering sustainable returns to its stakeholders.
