<\/p>\n
You can also listen to this podcast on iono.fm here.<\/p>\n
JIMMY MOYAHA: FirstRand Limited \u2013 South Africa\u2019s most valuable bank by market capitalisation \u2013 today at 08:30 released full-year results for the financial year ended 30 June\u00a02026.<\/p>\n
We\u2019re going to take a closer look at these numbers with the company\u2019s group chief executive officer, Mary Vilakazi. She joins us on the line now to see what we make of their performance. Mme Vilakazi, lovely having you on the show as always. Thanks so much for taking the time.<\/p>\n
A year that can be characterised as very positive from an underlying business perspective. Of course there are one or two things that can\u2019t seem to let you have the sparkling year that the business has had. Nevertheless, the business has reported very strong earnings, a very strong return-on-equity growth.<\/p>\n
How do you reflect on the year from a management perspective?<\/p>\n
MARY VILAKAZI: From a management perspective, I am very happy and super pleased with the delivery by our SA franchises and broader Africa subsidiaries.<\/p>\n
FNB, I think, has done a stellar job growing off this big base that they have. They grew profits; their profits were up 12%. RMB had an outstanding year, growing its PVT [Private] Banking up by 15%.<\/p>\n
I think both franchises also managed to improve their ROE [return on equity], which, knowing our group, is quite sacrosanct.<\/p>\n
So they\u2019ve done really well in looking after their customers, growing the customer franchises, coming up with solutions in a very competitive environment. We don\u2019t take these gains for granted.<\/p>\n
So yes, we\u2019ve had the additional provision to take in the UK \u2013 which I had been hoping would not be the case. But disappointingly, that ended up being the case, and we took a provision of \u00a3807 million this year.<\/p>\n
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Our earnings reduced by 5%. I guess when you go through this it is disappointing, but you also get to reflect on the quality of our business and the strength of its balance sheet in moments like this \u2013 that we could absorb that provision.<\/p>\n
Capital levels \u2013 we are sitting in an excess capital position. We\u2019re able to declare dividends to our shareholders, which excluded the impact of this provision, just because we are sitting in an excess capital position.<\/p>\n
Even the reality of just what we have to deal with is not a bad picture, but certainly the picture about our franchises and their ability to grow and deliver in really tough and challenging macroeconomic conditions is, for me pretty commendable.<\/p>\n
JIMMY MOYAHA: Mme Vilakazi, we\u2019ll take a look at those franchises in a moment. I suppose the glaring issue is, of course, that provision that you mentioned and the impact that that has had from a business perspective.<\/p>\n
This was a business you bought at some stage for around \u00a31.1billion. As it stands, the provision that\u2019s been raised is just over the \u00a3800 million level \u2013 almost equivalent to the value that you paid for this business.<\/p>\n
Of course, at the time you bought the business you had no idea that the regulatory environment would suddenly change.<\/p>\n
Take us through this UK business from when the FirstRand Group acquired it to now where it stands. It is now listed as a \u2018discontinued operation\u2019. You are looking to exit that business, but that provision is something you can\u2019t really get rid of until the commission\u2019s case is finalised.<\/p>\n
MARY VILAKAZI: Jimmy, let me first do the UK business justice. The business we bought, Aldermore [Bank] for the \u00a31.1\u00a0billion that you quote \u2013 that business is intact. That\u2019s the business that we\u2019ve put up for sale, and I believe that we will be able to extract reasonable value for our shareholders when we sell it.<\/p>\n
There was nothing wrong with the Aldermore business. When we bought it, FirstRand already owned MotoNovo [Finance] \u2013 that\u2019s where the motor financing took place. So you can say that even if we had not bought Aldermore, with this MotoNovo business we would, one way or another, have been impacted in this.<\/p>\n
Read:<\/p>\n
FirstRand to exit UK as car-loan charges hit R16.8bn
\nFirstRand \u2018concerned\u2019 by UK motor finance judgment<\/p>\n
Barclays stopped being in motor finance about six years ago; but because the rules of this scheme are retrospective, they catch business that you\u2019ve written in 2017. So, in a way it\u2019s quite important to see the two as separate.<\/p>\n
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Because we operated in the UK during that period of time, even if we did not have Aldermore, we would still be sitting with the motor finance problem. But obviously it got bigger because we continued writing motor finance because we had Aldermore.<\/p>\n
So I hope that just kind of clarifies it to you.<\/p>\n
But that motor finance business is a good business. Even now in the process of trying to sell the businesses in the group, people see it as attractive.<\/p>\n
So the motor provision, the motor issues, are actually for me a function of a regulatory environment that has changed. And on the consumer finance side, I think it has definitely become less attractive to operate for businesses.<\/p>\n
I just want to isolate [that], because we\u2019ve got very hardworking people who are executing on a strategy on our UK businesses, and they\u2019re doing well. But they can\u2019t help [the fact] that the regulatory environment can throw such curveballs their way.<\/p>\n
So we\u2019ll see when we dispose of Aldermore, and I think shareholders will be able to judge whether buying Aldermore made sense.<\/p>\n
But I think that\u2019s quite separate from the redress issue. That money we\u2019ll never get back. That\u2019s maybe the moral of the story.<\/p>\n
JIMMY MOYAHA: And I think to your point, Mme Vilakazi, on that business, the fact that you have more than five or six interested suitors in purchasing this UK business from you is a telltale sign that the business is still a valuable asset to the FirstRand Group indeed. Hopefully that transaction continues smoothly and we can put this UK conversation behind us.<\/p>\n
Mme Vilakazi, before I let you go, I want to take a look at the rest of the business, because it isn\u2019t made up of just that UK asset.<\/p>\n
Obviously the continuing operations that exist outside that have been doing exceptionally well. Net interest income from a businesses\u2019 perspective has grown at a group level. Non-interest revenues as well have started to perform even better. They grew double digits over the last financial year.<\/p>\n
So the business beyond just the conversations around the UK still are fundamentally exceptionally strong with a strong balance sheet.<\/p>\n
MARY VILAKAZI: Jimmy, thank you for that, because that\u2019s our bread-and-butter business there, and I think the phrase has come to the fore this year. So for me, the key highlight is really the deposits.<\/p>\n
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If I look at the FNB franchises, they\u2019ve been able to come up with good savings propositions for their customers over a number of years, and you can see the trust that lies in our solutions. I think their deposits in FNB hit a trillion rand for the first time.<\/p>\n
So look at the deposits\u2019 growth, look at advances\u2019 growth, advances growth across our portfolio \u2013 if I adjust for the fact that we had some distribution activities in RMB, which is a deliberate strategy \u2013 our core advances would have been up 10%. I can\u2019t quite remember when last we were at those levels.<\/p>\n
So it\u2019s encouraging to see that we are able to lend in this kind of environment, and I think with the distribution activities we just want to optimise the capacity we have on the balance sheet. We\u2019re hoping there are more infrastructure projects that come along.<\/p>\n
And then we\u2019ve been able to grow customers. We continue to grow customers, continue to grow relevance to our customers.<\/p>\n
We compete quite fiercely in this market to make sure our propositions are priced well and that they\u2019re performing and delivering to clients \u2013 and that we continue to earn the trust given to us by our customers.<\/p>\n
Read:<\/p>\n
FNB and Boxer bolster partnership after 99c bread deal
\nFNB, Pick n Pay unlock R600m in rewards through retail banking push<\/p>\n
I think in RMB, the Investment Bank division, continues to be a consistent performer, and this year what\u2019s really been pleasing is the recovery of the Global Markets business.<\/p>\n
It is something that we thought was coming. We knew that the team is restructuring and resetting the strategy. So it\u2019s been good to see the results, and I think there\u2019s certainly more to come that RMB can deliver.<\/p>\n
So those are basically our local franchises that have delivered strongly \u2013 and I believe that they\u2019ve also got further growth runway looking ahead.<\/p>\n
JIMMY MOYAHA: A business with strong underlying fundamentals and a business that continues to remain focused on its own strategy, regardless of how that strategy is impacted by external events.<\/p>\n
We\u2019ll leave the conversation on that note. FirstRand Limited\u2019s group chief executive officer, Mary Vilakazi, joined us to take a look at the performance of the business over the previous financial year.<\/p>\n
#FirstRands #breadandbutter #businesses #deliver #setback<\/p>\n","protected":false},"excerpt":{"rendered":"
You can also listen to this podcast on iono.fm here. JIMMY MOYAHA: FirstRand Limited \u2013…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[4],"tags":[21123,954,545,21122,9342],"_links":{"self":[{"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/posts\/15781"}],"collection":[{"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=15781"}],"version-history":[{"count":0,"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/posts\/15781\/revisions"}],"wp:attachment":[{"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=15781"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=15781"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=15781"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}