RMB HOLDINGS LIMITED (RMBH)
Since the restructuring of RMBH’s banking and insurance interests during 2011, its only asset is a fully diluted interest of 33.9% in FirstRand Limited and its performance is therefore directly related to that of FirstRand Limited.
The contribution of RMBH to Remgro’s headline earnings for the year under review increased to R1 793 million (2013: R1 460 million) due to strong operational performances of all three of the main FirstRand brands (FNB, RMB and WesBank).
FIRSTRAND LIMITED (FIRSTRAND)
FirstRand’s contribution to Remgro’s headline earnings represents Remgro’s 4.0% direct interest in FirstRand and excludes the indirect contribution from FirstRand through Remgro’s interest in RMBH. The contribution of FirstRand to Remgro’s headline earnings for the year under review increased to R749 million (2013: R617 million).
FirstRand’s results for its year ended 30 June 2014 reported that headline earnings increased by 22% to R18 671 million (2013: R15 327 million), as all three franchises delivered strong operational performances and continued to outperform the market. The group’s net interest income and non-interest revenue grew by 23% and 18% respectively year on year as operating cost increases were limited to 15%, reflecting the continued investment in electronic platforms and FirstRand’s African operating footprint.
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 21% to R18 663 million (2013: R15 420 million). FNB’s contribution to normalised earnings increased by 18% to R9 462 million (2013: R7 998 million). This was driven by continued customer acquisition, loan and deposit growth, strong growth across the African footprint and increased transactional volumes across all of its platforms, particularly its electronic platform. RMB contributed R5 342 million (2013: R4 383 million) to FirstRand’s normalised earnings, representing an increase of 22% from the previous year, as its diversified investment banking and corporate portfolios delivered strong profit growth, with a growing contribution from activities in the rest of Africa. The contribution of WesBank to normalised earnings increased by 2% to R2 830 million (2013: R2 774 million), as it continued to grow new business volumes across all portfolios, but was offset by increased credit impairments.
During June 2013 FirstRand launched its investment management franchise, Ashburton Investments, whose long-term strategic objective is to become the leading new-generation investment manager in Africa. Ashburton is managed separately from the banking business, avoiding any potential conflicts of interest and has grown its assets under management to R115 billion at the end of this financial year.
