Net income increased to 7.57 billion rand ($836 million) in the six months through December from 6.59 billion rand a year earlier, the Johannesburg-based company said in a statement today. Diluted earnings per share excluding one-time items climbed 29 percent to 1.31 rand and the lender boosted the half- year dividend 25 percent to 55 cents a share.
FirstRand, which owns a vehicle-financing unit and a consumer bank, increased lending in 2012 even as the South African economy cooled. The lender has been expanding through acquisitions in Africa, with a bid to buy Merchant Bank Ghana Ltd. the latest transaction aimed to bolster earnings.
“An excellent set of numbers, driven by very strong topline growth,” Greg Saffy, a Johannesburg-based analyst for RMB Morgan Stanley, said in an e-mailed response to questions today. “All divisions performed strongly during the period. We expect share price strength on the back of these numbers.”
FirstRand closed at 32.20 rand in Johannesburg, up 4.4 percent, giving it a market value of 181.5 billion rand. The shares have gained 3.9 percent this year after increasing 50 percent in 2012.
South Africa’s central bank has approved the Ghanaian purchase and FirstRand is now awaiting sign-off from Bank of Ghana, Sizwe Nxasana, chief executive officer of the lender, said in a telephone interview in Johannesburg today. FirstRand still wants to buy a retail bank in Nigeria and will deploy more capital to expand in Mozambique, Tanzania and Zambia rather than buy assets in those countries, he said.
The bank’s return on equity rose to 21.9 percent in the period and its total capital adequacy ratio was 14.9 percent, above the upper end of the group’s target of 13.5 percent, according to the statement. While the value of non-performing loans declined, the bank’s credit-loss ratio increased to 91 basis points as it provided for impairments.
While a “difficult macroeconomic environment” may continue, the group expects First National Bank’s focus on consumer banking and Rand Merchant Bank’s client activities to “drive non-interest revenue growth,” FirstRand said. “With respect to advances growth, new business volumes in the retail lending books are expected to moderate in the second half.”
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