Africa’s largest financial services group FirstRand Limited expects its earnings to rise by more than 30 percent for the first six months of the year ending Dec. 31, representing the final half of its current financial period.
The earnings guidance issued by the leading financial services provider can be linked to a sustained rebound in the retail and commercial banking segment in South Africa, as the country’s economy staged a strong recovery from the early stages of the COVID-19 pandemic.
The bank stated that headline earnings per share, the primary profit measure in South Africa, will be at least R2.586 ($0.1604) for the period, up from R1.989 ($0.12325) a year earlier. This represents an increase of more than 30 percent when compared with prior years.
This strong growth in earnings was driven by the economic rebound from the disruptions caused by COVID-19 and the reduction of credit impairments, which impacted last year’s earnings.
The statement comes after the company’s major rival on the South African market, Standard Bank, revealed that its lending book in the 10 months from January to October beat expectations. The book is a crucial driver of profitability. It forms a significant block of their headline earnings.
The recent earnings estimate from FirstRand is a step forward in its strategy to leverage its robust portfolio of interest-bearing assets, coupled with earnings- and revenue-enhancing opportunities in its operating environment to deliver value for shareholders.
Alan Pullinger, the company’s CEO, noted that the improvement in its performance demonstrates FirstRand’s strong portfolio and its ability to capitalize on the rebound currently under way.
FirstRand Limited is Africa’s largest financial services group in terms of market capitalization.
Under Pullinger, the company operates in South Africa, the UK and other regional markets in Sub-Saharan Africa.
As a leader in the African market, its integrated financial services portfolio comprises FNB, RMB, WesBank and Aldermore.
Recall that earlier in the first half of 2021, the company announced that its earnings increased by 54 percent to R26.5 billion ($1.64 billion), a resilient performance that caused the group to produce R4.9 billion ($303.5 million) in economic profit.
As of press time, Nov. 30, shares in FirstRand Limited were trading at R55.28 ($3.42) on the Johannesburg Stock Exchange.
At this valuation, the company’s market capitalization is R314.5 billion ($19.47 billion), making it the most capitalized financial services group in Africa.