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FRII FRD FRLE - Trading Statement issued by FirstRand Bank Limited’s parent for the year to 30 June 2020
FirstRand Bank Limited
(Incorporated in the Republic of South Africa)
(Registration number 1929/001225/06)
JSE company code interest rate issuer: FRII
JSE company code debt issuer: FRD
JSE company code ETF issuer: FRLE
LEI code: ZAYQDKTCATIXF9OQY690
(FRB or the bank)
TRADING STATEMENT ISSUED BY FIRSTRAND BANK LIMITED’S PARENT FOR THE YEAR TO 30 JUNE 2020
FRB is a wholly-owned subsidiary of FirstRand Limited (FirstRand or the group), which is listed on the
Johannesburg Stock Exchange and the Namibian Stock Exchange. The bank represents approximately
75% of the group’s balance sheet and earnings base. FRB noteholders are therefore referred to the
announcement released by FirstRand on the JSE Limited Stock Exchange News Service earlier today,
in which it indicated that although it does not have a final view of the performance of the lending books
during May and June, it has sufficient insight to advise its shareholders, with a reasonable degree of
certainty, that headline earnings per share (HEPS), earnings per share (EPS) and normalised earnings
per share (normalised EPS) for the current period are expected to be more than 20% lower than those
reported at 30 June 2019 (HEPS: 497.2 cents per share; EPS: 538.6 cents per share; normalised EPS:
497.3 cents per share).
The main driver of this slowdown in group earnings growth is the materially higher credit impairment
charge for the period, driven partly by deterioration in the lending portfolio performance, but more
significantly by the forward-looking assumptions used in the modelling of expected credit losses.
IFRS 9 requires the group to consider forward-looking information in the calculation of expected credit
losses, therefore the group has estimated an increase in customer stress caused by the pandemic and
resultant economic pressures anticipated over the next twelve to eighteen months. This stress has
been incorporated into the calculation of the group’s expected credit losses and has resulted in a
material increase in provisioning, even though the year to June 2020 only includes three months of the
pandemic.
Other notable drivers of the decline in group earnings include the negative endowment impact on the
back of interest rate cuts and margin pressure. Non-interest revenue growth has also showed a marked
decline due to lower absolute volumes during the lockdown period.
With regard to capital, funding and liquidity, FirstRand supports the actions taken by the South African
Reserve Bank. The group and bank remain well capitalised and capital and liquidity ratios are expected
to remain strong and well above required minimums.
The forecast financial information on which the group’s trading statement is based has not been
reviewed and reported on by the group’s external auditors. FirstRand and FRB’s results for the year
ending 30 June 2020 will be released on SENS on Thursday, 10 September 2020.
4 June 2020
Debt sponsor
RAND MERCHANT BANK (a division of FirstRand Bank Limited)
Date: 04-06-2020 05:15:00
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