Full Year 2024 FirstRand Ltd Earnings Call Transcript
Key Points
- Firstrand Ltd (FANDY) reported resilient earnings growth of 4% despite challenging macroeconomic conditions.
- The Group's Return on Equity (ROE) remains strong, positioned in the middle of its stated range of 18% to 22%.
- Firstrand Ltd (FANDY) achieved significant dividend growth of 8%, outpacing earnings growth.
- The Group's insurance business has been particularly successful, contributing 9% of total Non-Interest Revenue (NIR).
- The UK operations delivered healthy growth in earnings and an improved ROE, with a focus on improving returns from the motor business.
- The Group had to raise an accounting provision of ZAR3 billion related to the UK motor finance sector regulatory review.
- Credit impairments increased by 15%, driven predominantly by retail credit strain and a 15% increase in Non-Performing Loans (NPLs).
- The Group's overall effective tax rate reduced to 22.4%, impacting headline earnings growth.
- Retail credit loss ratio remains elevated, particularly due to systemic weakness in house prices and increased debt review inflows.
- The Group's Net Interest Income (NII) growth is expected to be weaker in the coming year, around mid-single digits, due to competitive pricing pressures and rate cuts.
Welcome to everyone who's joined us for the FirstRand Ltd results presentation for the year ended 30 June.
Yes, just a quick recap of the operating environment. We're navigating in this period in South Africa. Our the rate cycle has played out as probably the most significant macro callout, particularly as it was worse than we initially predicted, with rates remaining high for a prolonged period.
The dotted lines on the graph reflect our baseline expectation for the past for the part of the repo rate over the past three years. I believe the group's origination pieces has somewhat shielded us from the full impact of this unexpected cycle as we grew back completely from high-risk business and focus on low to medium risk business.
We will cover this in more detail later. In the UK cost of living pressures we experienced across the economy sorry, while these pressures such as inflation eased over the period, rates remain higher than historical level at now for the UK. And some other countries within the
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