FirstRand Earmarks $924m for Expansion in Africa

FirstRand Limited, Africa’s biggest bank by market value has said it is setting aside 10 billion rand ($924 million) for expansion across the continent, as profit increases from regions outside its home market, South Africa.

“We’ve got a provisional licence in Ghana and should be up and running there in early 2015,” Chief Executive Officer of the Johannesburg-based bank, Sizwe Nxasana told Bloomberg yesterday.

He added: “In time, we’ll set up operations in Kenya and Angola.”

South African and international banks are targeting expansion in West and East Africa to take advantage of accelerating economies and population growth.

Robert Diamond’s Atlas Mara Co-Nvest Ltd, last week increased its stake in

Union Bank of Nigeria Plc after buying lenders in Botswana and Rwanda. Also, Qatar National Bank QSC acquired a 12.5 percent of Togo-based Ecobank Transnational Incorporated last week.

FirstRand has representative offices in Angola and Kenya, full service operations in countries including Botswana and Zambia, and investment banking in Nigeria.

While the lender last year considered buying Nigeria’s Mainstreet Bank Limited or Keystone Bank Limited, it now favours organic growth, Nxasana said.

Automobile financing and investment banking recorded “strong growth” outside of South Africa in the year through June, FirstRand said in its annual earnings statement yesterday, without giving more detail.

Net income in the period rose to 18.4 billion rand, from a restated 14.8 billion rand a year earlier. Its earnings per share excluding one-time items increased 22 per cent to 3.36 rand, beating the 3.20 rand median estimate of 13 analysts surveyed by Bloomberg.

It was “another good set of results which were marginally ahead of our above market expectations,” banks analyst at RMB Morgan Stanley, Greg Saffy said yesterday.

He added: “Very good topline growth is a stand out feature.”

The final dividend per share was 97 cents, a 20 percent increase from 81 cents a year ago. With capital adequacy ratio above regulatory minimums, FirstRand ruled out special dividends with Nxasana saying the lender would prefer to increase payout ratios.

South Africa’s gap on the current account, the broadest measure of trade in goods and services, expanded to 6.2 per cent of gross domestic product from 4.5 per cent in the previous three months, the Reserve Bank said in its Quarterly Bulletin released yesterday.

“The group believes its franchises have the appropriate strategies in place to deliver good operational performances” and returns should be sustainable, it said.

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