The country’s largest banking group by market capitalisation says it has experienced “a material slowdown” in its South African operations since the beginning of 2020.
FirstRand released its interim financial results showing that its businesses collectively grew normalised earnings by 5% in the six months to December:
- FNB South Africa grew its earnings by 5%
- More customers deposited more money
- FNB experience a R910-million increase in the bank’s credit impairment charge
- FNB card impairments increased by 77% to R270 million as advances grew by 21%
- Non-performing loans (NPLs) in card business increased by a 84%
- FNB’s personal loans business also recorded a 47% increase in impairment charges to R300-million
- The residential mortgage book saw its credit loss ratio increase to 22 basis points as NPLs increased by of 12%
- FNB commercial NPLs increased by 47%
“Looking forward to the second half of the year, the group is of the view that the South African macroeconomic environment will continue to deteriorate, probably at a faster rate than in the first half,” FirstRand said.
The group said as the coronavirus outbreak is expected to result in supply chain disruptions, while the weak economy will leave consumers will less disposable income and job losses, companies will be under pressure.
“FirstRand has already experienced a material slowdown in its domestic business since the beginning of 2020. Given the expected pressures on top line the group appreciates the need for ongoing cost efficiencies, balanced with continued investment in sustainable growth strategies,” read FirstRand’s statement.