RMBH is a focused investment company, holding a 34.1% interest in FirstRand, Southern Africa’s pre-eminent banking group. In 2016 RMBH announced the extension of its investment strategy to include a property investment business.
RMB HOLDINGS LIMITED (RMBH)
The main asset of RMBH is a fully diluted interest of 34.1% in FirstRand Limited, and its performance is therefore primarily related to that of FirstRand Limited. In July 2016, RMBH concluded its first acquisition, a 27.5% interest in Atterbury Property Holdings Proprietary Limited (Atterbury), and is in the process of finalising the acquisition of a 34% interest in Propertuity, an urban renewal business.
The contribution of RMBH to Remgro’s headline earnings for the year under review increased to R2 112 million (2015: R2 005 million) due to good operational performances of all three of the main FirstRand brands (FNB, RMB and WesBank).
FirstRand provides banking and insurance, as well as investment products and services, to retail, commercial, corporate and public sector customers in South Africa and several other African countries. The group is differentiated by its owner-manager culture and executes its strategy through a portfolio of leading franchises, namely Rand Merchant Bank (RMB), First National Bank (FNB), WesBank and Ashburton Investments.
FIRSTRAND LIMITED (FIRSTRAND)
FirstRand’s contribution to Remgro’s headline earnings represents Remgro’s 3.9% direct interest in FirstRand and excludes the indirect contribution from FirstRand through Remgro’s 28.2% interest in RMBH. The contribution of FirstRand to Remgro’s headline earnings for the year under review increased to R877 million (2015: R840 million).
FirstRand’s headline earnings for its year ended 30 June 2016 increased by 6% to R22 387 million (2015: R21 141 million), as all three franchises delivered good operational performances off a high base. The group’s net interest income and non-interest revenue grew by 13% and 7% respectively year on year, while operating expenses increased by 11% as the group remains committed to investing in future growth strategies, including building out its insurance and asset management franchises and its footprint in the rest of Africa.
The group believes that normalised earnings more accurately reflect operational performance and therefore headline earnings are adjusted to take into account non-operational items and accounting anomalies.
FirstRand’s normalised earnings for the year under review increased by 7% to R22 855 million (2015: R21 286 million). FNB’s contribution to normalised earnings increased by 8% to R12 282 million (2015: R11 385 million). This was driven by the ongoing strategy to grow and retain core transactional accounts, use its customer relationships and data-analytics to effectively cross-sell and upsell into the customer base whilst applying disciplined origination strategies and providing innovative transactional and savings products. RMB contributed R6 287 million (2015: R5 758 million) to FirstRand’s normalised earnings, representing an increase of 8% from the previous year. This performance was achieved against a challenging macroeconomic environment and highlights the resilience and diversification of RMB’s business portfolio. WesBank’s contribution to normalised earnings increased by 22% to R3 941 million (2015: R3 221 million), as it continued to grow new business volumes across all portfolios.