FirstRand Declares Dividend after Unexpected Profit Growth

FirstRand became the first banking group to declare a dividend after the SA Reserve Bank’s Prudential Authority lifted its effective ban on dividends last month.

The group – which owns First National Bank (FNB), RMB and Wesbank – reported a 20% fall in its half-year headline profit (to R11.1 billion).

“Since June 2020, earnings have recovered faster than expected driven by a better than anticipated rebound in the economy, which has supported transactional volumes, growth in deposit balances and an improved credit experience,” the company said in a statement. This enabled it to declare an interim dividend, of 110c (25% lower than its previous interim dividend). The group did not declare a final dividend in 2020.

After taking impairments into account, the loans and other credit the group extended over the past six months were flat compared to the same period in the previous year. But deposits increased by 8%.

FNB normalised profit before tax declined by 19% over the six months, but its customer base in South Africa increased by 3% to 8.5 million customers. Its deposits in SA grew by 19%, but ,”non-performing” loans increased by 26%.

FirstRand’s share price rose by more than a percent by Thursday midday, and was last trading at R52.84.

Source: Business Insider SA

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