FirstRand final results June 2018
Income from operations for the year increased by 9% to R84.724 billion (2017: R77.785 billion), profit for the year attributable to ordinary equity holders rose by 8% to R26.546 billion (2017: R24.572 billion), while headline earnings per share grew by 12% to 472.7 cents per share (2017: 423.7 cents per share).
The directors declared a gross cash dividend totalling 275 cents per ordinary share out of income reserves for the year ended 30 June 2018.
* Interim (declared 5 March 2018) : 130.0 cents
* Final (declared 5 September 2018) : 145.0 cents
Following the outcome of the ANC elective conference in December 2017 sentiment and markets staged a recovery and the outlook for South Africa remains more positive than it has been for some time. Given, however, the structural nature of many of South Africa's challenges the group believes that domestic fundamentals will not change quickly.
Global financial conditions will prevent the SARB from easing monetary policy despite the low growth outlook. This, combined with lower commodity prices and prospects of a slowdown in global growth next year, means that domestic economic activity will remain subdued in 2019. Against this backdrop, private sector activities such as corporate investment and household consumption will most likely remain under pressure.
In the medium to longer term, given the market leading positions of its businesses in South Africa and the growth strategies it is executing on, FirstRand considers itself strategically well positioned to benefit from renewed system growth. FNB's momentum is expected to continue on the back of customer and volume growth, and cross-sell and up-sell strategies will deliver higher insurance revenues and good deposit and advances growth. RMB's private equity realisations are expected to be lower in the current year compared to previous financial years.
With regard to the rest of Africa, there are signs that economic activity in most of the other sub-Saharan African countries that FirstRand operates in are picking up. The Nigerian economy is experiencing an oil price-induced lift and growth rates in Namibia and Botswana are also expected to improve. The group expects its portfolio to continue to show an improved performance.
In the UK, uncertainty over the outcome of Brexit continues to dominate the macroeconomic outlook and will continue to weigh on business and consumer confidence, which in turn will suppress investment spending to a certain degree. These ongoing headwinds were all anticipated when FirstRand acquired Aldermore and, as indicated previously, the group expects the growth trajectory to slow relative to the previous year, owing to competitive margin pressure and normalisation of credit costs.
The group expects to continue to deliver real growth in earnings and superior returns to shareholders.