South Africa’s FirstRand said on Tuesday that first-half diluted normalised headline earnings per share rose 12% to 105,6 cents, at the lower end of its forecasts, despite tough market conditions.
The group said it was unlikely to meet its long-term targeted growth in earnings of 10% above inflation in the current financial year due to pressure facing its businesses in the second six months, combined with significant earnings in the year to June 2007.
FirstRand, South Africa’s second-biggest banking group by assets, said normalised earnings rose 12% to R5,953-billion for the half year to end-December, excluding Discovery health insurer it spun off in November last year.
”The local and international financial-services environment was particularly challenging in this period,” chief executive Paul Harris said.
Inflation and interest rates rose more than the bank had anticipated, resulting in higher bad-debt charges, particularly in its WesBank finance and FNB card units, he said.
Internationally, equity market volatility resulted in losses in its RMB equity trading unit.
”This meant that the group did not achieve its earnings growth targets of 10% over CPI,” Harris said.
The group reported normalised return on equity of 26%.
Its shares were almost flat at R18 at 7.18am GMT, underperforming a 1,1% rise in the banks index, and a 1,2% rise in the blue-chip Top-40 index. — Reuters