S.Africa's FirstRand CEO says likely to shrink branches
* Could cut branch network by 30 pct in square metres -CEO
* Bank trying to digitise, become a 'platform'
* Retail earnings outstrip rivals
* Profits increase 6 pct in H1, shares up 1.34 percent
(Recasts, adds detail from CEO interview, shares)
By Emma Rumney
JOHANNESBURG, March 12 (Reuters) - FirstRand will
likely need to shrink its branch network over the next decade as
South Africa's largest retail bank looks to digitise and adopt a
platform model offering services beyond banking, CEO Alan
Pullinger said on Tuesday.
The country's oldest bank dating back to 1838 reported a 6.1
percent rise in half-year headline earnings on Tuesday,
outperforming rivals in retail banking but with costs that are
rising above inflation.
"We're a big old banking group that's been around for 180
years, so we have lots of branches, and processes, and stuff
that's probably not fit for this future platform bank we want to
get to," Pullinger told Reuters in a phone interview.
Its branch network would likely need to be at least 30
percent smaller in square metres, Pullinger said, with a focus
on reducing floor space rather than closing branches.
Pullinger told Reuters the bank eventually wants spending as
a proportion of income to drop into the 40s from 52.4 percent
currently, and that it had to modernise and find efficiencies.
FirstRand wants to operate as a platform like companies such
as Amazon, catering to customers seeking not only banking but
services such as car licence renewals.
It is investing heavily in digital technology and working to
encourage customers to use its online and mobile channels.
"If we can get them out of the branch, we can start shutting
branches," he said, adding that FirstRand will always need
branches, just not as many.
In addition to investing in technology, FirstRand has seen
its costs rise as a result of its investments in insurance,
savings and asset management, as well as its 2017 acquisition of
British mortgage and savings bank Aldermore.
These investments would continue, Pullinger said.
Lenders have struggled to grow traditional revenue in a
sluggish South African economy, where consumers have reined in
spending and borrowing amid high levels of unemployment and
FirstRand is less geographically diversified than its rivals
and so is more exposed to these problems.
However, it managed to increase earnings at its retail bank
by 13 percent in the six months to December 31, far ahead of its
Its headline earnings per share - the key profit gauge in
South Africa - rose to 237.9 cents ($0.1915) from 224.2 cents a
year earlier, the bank reported on Tuesday.
The bank's shares were up 1.34 percent at 1443 GMT.
($1 = 14.3069 rand)
(Reporting by Emma Rumney; editing by Subhranshu Sahu and Jason
First Published: 2019-03-12 09:12:16
Updated 2019-03-12 17:20:12
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