FNB records 5% growth in profit; says SA economy to slowdown

FirstRand which is the parent company of First National Bank, Wesbank and Rand Merchant Bank, released its interim financial results showing that its businesses collectively grew normalised earnings by 5% in the six months to December.

FNB South Africa, which is the biggest contributor to the group's profits grew its earnings by 5%. The bank gained more customers who deposited more money with the bank and increased its transactional volumes.

However, this growth came with an increase in the bank's credit impairment charge.

The group said FNB card impairments increased by 77% as advances grew by 21%.

Non-performing loans (NPLs) in card business increased by 84%. FirstRand said it expects ongoing elevated NPLs in the card business during the rest of the 2020 financial year.

FNB's personal loans business also recorded a 47% increase in impairment charges. The bank's residential mortgage book saw its credit loss ratio increase to 22 basis points as NPLs increased by of 12%.

FNB commercial NPLs increased by 47% while the group's UK business Aldermore saw NPLs increase 51%.

FNB has a subsidiary in Ghana and is expected to release its 2019 Financial Report soon.

The country's largest banking group by market capitalisation says it has experienced "a material slowdown" in its South African operations since the beginning of 2020.

"Looking forward to the second half of the year, the group is of the view that the South African macroeconomic environment will continue to deteriorate, probably at a faster rate than in the first half," FirstRand said.

The group said as the coronavirus outbreak is expected to result in supply chain disruptions, while the weak economy will leave consumers will less disposable income and job losses, companies will be under pressure.

"FirstRand has already experienced a material slowdown in its domestic business since the beginning of 2020. Given the expected pressures on top line the group appreciates the need for ongoing cost efficiencies, balanced with continued investment in sustainable growth strategies," read FirstRand's statemen