FirstRand, South Africa’s second-biggest banking group by assets, reported a 13% fall in full-year normalised headline earnings on Tuesday, and said credit market conditions remained challenging.
The firm, the last of the country’s four big banks to report full-year results, said normalised headline earnings for the year to end June were R8,8-billion.
FirstRand said it had been hit by slower asset growth and higher bad debts at its retail units. Bad debts at its retail unit were at R4,7-billion versus R2,6-billion in the previous corresponding period.
Rising borrowing costs have dented consumer demand, the key growth driver in South Africa, hitting retail banking hard over the past year.
FirstRand’s peers, Absa, Nedbank and Standard Bank, all posted higher first-half headline earnings per share last month but said bad debts at their retail units were mounting.
South Africa’s central bank has raised interest rates by 500 basis points since June 2006, but its decision last month to keep rates steady spurred hopes that Africa’s biggest economy had seen the peak of its interest-rate cycle.
Analysts have told Reuters they expect earnings and return to equity for South Africa’s big banks to pick up from 2010.
But FirstRand said it was unable to give an outlook for its short- and medium-term earnings growth targets due to the current volatile market conditions. — Reuters