South Africa’s gauge of banking stocks headed for the highest level in five months, buoyed by the second-largest lender, which boosted profit by 20 percent and increased its dividend.
The six-member FTSE/JSE Africa Banks Index gained as much as 1.3 percent and traded up 1 percent at 52,857.08, the highest since April 12 on a closing basis, by 12:38 p.m. in Johannesburg. FirstRand Ltd. (FSR) reported profit growth of 20 percent and a 33 percent dividend increase yesterday. All of the gauge’s members advanced.
“FirstRand brought out a solid set of results on Tuesday showing strong earnings growth, an increase in dividends and solid return on equity of 22%,” Ryan Wibberley, head of equity dealing for frontier and emerging markets at Investec Asset Management, said by phone from Cape Town today. “This result has given the whole banking sector a shot in the arm.”
South African lenders have underperformed the benchmark 165-member FTSE/JSE Africa All-Share Index by 11 percent this year. The continent’s largest economy is forecast to expand 2 percent this year, the slowest since a 2009 recession, according to the central bank, adding to pressure from a 25.6 percent unemployment rate.
RMB Holdings Ltd., which owns a 34 percent stake in FirstRand, led the lenders, rising 1.8 percent to 44.25 rand. RMB increased its dividend 36 percent to 1.71 rand per share after earnings, excluding one-time items, jumped 21 percent to 3.59 rand per share, the Johannesburg-based company said today. FirstRand advanced 0.9 percent to 32.60 rand, the highest since April 2 on a closing basis.
Standard Bank Group Ltd. (SBK), Africa’s largest lender, rose 1.2 percent to 114.66 rand, while Nedbank Group Ltd. (NED), owned by Old Mutual Plc (OML), the U.K.’s third-largest life insurer, gained 1.2 percent to 198.37 rand.
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