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FirstRand Sees Earnings Jump on South African Recovery

Business Maverick

Business Maverick

FirstRand Sees Earnings Jump on South African Recovery

Pedestrians pass street advertising for First National Bank (FNB), a division of FirstRand Bank Ltd., in Johannesburg, South Africa. (Photor: Dean Hutton/Bloomberg)
By Bloomberg
08 Jun 2021 0

FirstRand Ltd. sees profit rising more than expected after the South African economy rebounded strongly from the early stages of the coronavirus pandemic.

Africa’s biggest bank by market value sees earnings per share rising by at least 35% in the year through June, according to a statement on Monday. Impairments are significantly lower than anticipated and the cost of credit has improved, the Johannesburg-based company said.“Current trends indicate that customers are utilizing discretionary savings as the economy has opened up,” FirstRand said. “Consumer spending is now back at pre-Covid levels.”

The lender joins other South African banks in seeing an improved outlook as the nation recovers from an economic contraction of 7% last year, largely caused by lockdown measures to contain the coronavirus. Standard Bank Group Ltd. said last week it anticipates headline earnings per share will rise by at least 40% for the six months through June.

South Africa’s central bank sees a a rebound to 4.2% growth this year, and first-quarter data due Tuesday will probably show an expansion from the previous three months. That said, the economy is still likely to have contracted from the mostly pre-lockdown period a year earlier, while power-supply shortages continue to weigh on the recovery.

Read More: South Africa Tallies Virus Blow, Warns on Economic Scarring

South Africa’s banking regulator has also relaxed guidance on capital preservation, altered to make sure the industry continued to lend during the worst of the pandemic. That’s helped South Africa’s big four banks issue dividend payments earlier this year.

FirstRand shares rose 0.6% by 10:25 a.m. in Johannesburg, extending the year’s gains to 10%.

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