FirstRand CEO on results, economic outlook & exposure to geopolitical tensions

South Africa's largest bank by market value, FirstRand, has released its impressive interim results, showing a strong rebound in economic profit and a remarkable 43% increase. Alan Pullinger, CEO of FirstRand, highlighted the resilience of the company's franchises and the significant growth in pre-provision operating profits, particularly driven by the success of FNB. The bank saw a surge in deposits during the pandemic, leading to increased liquidity and treasury operations, which further boosted net interest income. FNB emerged as the star performer, showing growth in customer numbers, transaction volumes, and digital engagement, along with a significant uptick in mortgage and personal loans lending. This positive performance led to FirstRand being the top gainer among banks in the market. The bank's focus on acquiring lower-risk customers and prudent lending practices has strengthened its balance sheet, maintaining healthy capital and liquidity levels. Pullinger emphasized the conservative provisions in place and hinted at potential provision releases in the future, driving further earnings and dividends. The strategic direction for RMB entails a sharper focus on lending to better-quality, lower-risk customers, ensuring sustainable growth and minimizing credit risk. Despite some sectors still facing challenges, economic activity in South Africa is showing signs of recovery, fueled by a commodity tailwind that has expedited fiscal consolidation and social relief efforts. Pullinger expressed confidence in the country's economic momentum, projecting a faster recovery to pre-COVID levels than initially anticipated. He acknowledged the need for accelerated structural reforms and infrastructure development to sustain this growth trajectory. Amidst the global geopolitical tensions arising from the Russia-Ukraine conflict, Pullinger highlighted the potential impact on the global economy. While the conflict poses risks of a global recession if escalated further, the CEO reassured that FirstRand's limited exposure to the region mitigates direct risks. He emphasized the importance of monitoring macroeconomic fallout, fuel prices, and central bank responses to navigate the evolving situation. Despite the uncertain global landscape, Pullinger remains cautiously optimistic about South Africa's position and the potential benefits from heightened commodity prices. The CEO stressed the need for continued vigilance and proactive measures to withstand external shocks and maintain economic stability in the region.