Africa’s Most Valuable Bank Sees Profit Rebound as Payrolls Jump
Africa’s Most Valuable Bank Sees Profit Rebound as Payrolls Jump
(Bloomberg) -- FirstRand Ltd., Africa’s biggest bank by market value, experienced a better-than-anticipated recovery in the past four months after payrolls recovered to pre-coronavirus levels.
The improvement resulted in fees and commissions “strongly” rebounding, while the lender said its credit-loss ratio also improved from the 1.91% reported for the six months through June. That led to the stock reversing earlier losses to trade 0.7% higher as of 4:28 p.m. in Johannesburg.
“Revenue growth for the four months to October 2020 has been more resilient than initial expectations,” FirstRand said in a statement Thursday. “The earnings trend for the four months from July 1, 2020 to Oct. 31, 2020 is reflecting a better than anticipated rebound.”
Adjusted earnings per share in the six months through Dec. 31, the company’s second-half, are expected to decline by between 20% and 25% from the year-earlier period, when it experienced higher growth, the company said. That compares with a 38% drop in the 12 months through June.
While activity levels in many areas of business have returned to pre-Covid levels at FirstRand, the lender and its South African peers face significant uncertainties in the months ahead as the country braces for a potential surge in virus infections. The fortunes of the nation’s large banks are also tied to an economy mired in a recession and rising government debt.
The group remained cautious on the sustainability of this rebound.
“The long-term impacts of the lockdown are not yet fully known,” FirstRand said. “The South African medium-term budget confirmed the ongoing fiscal and macroeconomic challenges which the group believes will continue to weigh on economic activity and constrain growth.”
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