NII growth adds to FirstRand’s FY results

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“[This was] driven by ongoing gains in new business, re-pricing in certain asset classes and lower overall NPLs,” FirstRand said.

“There was also a marginal endowment benefit resulting from the 50 bps increase in interest rates in January 2014. Group Treasury’s strategies to hedge capital, investment risk and liquidity risk further positively impacted NII.”

(READ MORE: FirstRand posts solid interim results due to growth in its 3 franchises)

The financial services group, which comprises First National Bank (FNB), Rand Merchant Bank (RMB), WesBank and Ashburton Investments, also stated that total non-interest revenue (NIR) increased by 14 per cent year-on-year, with another strong contribution from FNB, which grew NIR 10 per cent.

“This performance was driven by both the retail and commercial segments and resulted from increases in fee and commission income,” said [DATA FSR:FirstRand].

“FNB’s ongoing strategy to encourage customers to migrate onto electronic platforms continued to produce good growth in electronic volumes of 15 per cent year-on-year.”

Net income from operations grew 27 per cent to 25 billion rand for the year ending 30 June 2014 from 19 billion rand for the same period in 2013.

“FirstRand produced good results for the year, achieving a normalised ROE of 24.2 per cent, which in the group’s view remains at a cyclical high given the slower than expected emergence of the credit cycle,” the company said.

“The group’s banking franchises, FNB, RMB and WesBank, delivered strong operational performances and continued to outperform the market.”

Profit before tax increased by 26 per cent from 20 billion rand in the 2013 year to 25 billion rand in 2014 and basic headline earnings per share rose 22 per cent to 340 cents from 279 cents.

(WATCH VIDEO: FirstRand reports increase in FY earnings)

“The group believes that its strategy to grow customers, drive NIR and exercise discipline in its credit origination strategies in the retail market places it in a strong position to weather the difficult credit cycle as it continues to emerge over the next 12 to 18 months,” FirstRand said.

“Economic headwinds are increasing and growth in the system continues to slow. The group believes its franchises have the appropriate strategies in place to deliver good operational performances.”