Banking group FirstRand is working on further diversifying by starting a life insurance business in SA and aims to start operating in Ghana by mid-year.
Chief executive Sizwe Nxasana said FirstRand had received a licence for the life insurance business. It is rebuilding this capability after unbundling MMI in 2010.
“It will be different from how traditional life companies operate‚” he said‚ after FirstRand released interim results for the six months ended December. “It will have new ways of underwriting risk.”
The new business will offer life and disability insurance‚ taking on traditional insurers.
Nxasana said FirstRand was also running trials on a mobile financial services business in SA.
FirstRand has more than R10-billion in excess capital and will deploy this on growing the business in SA‚ the rest of Africa and India. In Nigeria‚ it wants to convert its merchant banking licence to a universal one‚ while in Kenya‚ it is deciding whether to enter the market through retail or a commercial bank.
It has operations in Namibia‚ Swaziland‚ Botswana‚ Lesotho‚ Mozambique‚ Tanzania and Zambia‚ with representative offices in Kenya and Angola.
Of SA’s major banks‚ Standard Bank has the widest footprint in Africa‚ followed by Barclays Africa Group. Nedbank has access to the West and Central African markets through its investment in Ecobank.
“In Ghana‚ we have set up the platform‚ there is a head office and staff. We are adding more capital to our Tanzanian business‚” said Nxasana.
“In India‚ we are looking to grow our business. Our corporate business is doing well – we have to scale that up.”
While it was looking for an acquisition in Nigeria‚ FirstRand would work on building a retail banking footprint organically. In Ghana‚ authorities were busy with a report after inspecting the FirstRand banking systems last month.
In East Africa‚ the plan was to start operating in Kenya‚ Nxasana said.
In its interim results presentation‚ FirstRand said it had identified high-risk exposures of R901-million and had to increase its provisioning for doubtful debts.
Deputy chief executive Johan Burger said the defaults had not happened yet‚ but the group took proactive steps as it was exposed to businesses linked to lower commodities prices in Nigeria and Angola.
FirstRand said R214-billion of total corporate credit exposure was domestic‚ with R27-billion in the rest of Africa. It posted a 26% increase in bad debts to R3-billion‚ with the credit loss ratio up to 0.86% from 0.77% as the bank decided to take conservative action by increasing provisions. Without this‚ the credit loss ratio would have gone down to 0.66%.
Net interest income before bad debts grew 16% to R19-billion‚ while non-interest revenue rose 13% to R16.8-billion.
The return on equity was 24%‚ from 23.4%.
PSG Wealth portfolio manager Adrian Cloete said the profits would have been much higher had there been no proactive action on provisioning for doubtful debts in the rest of Africa.
He said FirstRand still had the strongest performance of SA’s big four banks. Barclays Africa group grew headline earnings 10%‚ Nedbank 14% and Standard Bank 1%.
Standard Bank would have grown its headline earnings 20% if its results had not been affected by the discontinued global markets business‚ which had been sold. — BDLive
FirstRand looks to life insurance
Banking group FirstRand is working on further diversifying by starting a life insurance business in SA and aims to start operating in Ghana by mid-year.
Chief executive Sizwe Nxasana said FirstRand had received a licence for the life insurance business. It is rebuilding this capability after unbundling MMI in 2010.
“It will be different from how traditional life companies operate‚” he said‚ after FirstRand released interim results for the six months ended December. “It will have new ways of underwriting risk.”
The new business will offer life and disability insurance‚ taking on traditional insurers.
Nxasana said FirstRand was also running trials on a mobile financial services business in SA.
FirstRand has more than R10-billion in excess capital and will deploy this on growing the business in SA‚ the rest of Africa and India. In Nigeria‚ it wants to convert its merchant banking licence to a universal one‚ while in Kenya‚ it is deciding whether to enter the market through retail or a commercial bank.
It has operations in Namibia‚ Swaziland‚ Botswana‚ Lesotho‚ Mozambique‚ Tanzania and Zambia‚ with representative offices in Kenya and Angola.
Of SA’s major banks‚ Standard Bank has the widest footprint in Africa‚ followed by Barclays Africa Group. Nedbank has access to the West and Central African markets through its investment in Ecobank.
“In Ghana‚ we have set up the platform‚ there is a head office and staff. We are adding more capital to our Tanzanian business‚” said Nxasana.
“In India‚ we are looking to grow our business. Our corporate business is doing well – we have to scale that up.”
While it was looking for an acquisition in Nigeria‚ FirstRand would work on building a retail banking footprint organically. In Ghana‚ authorities were busy with a report after inspecting the FirstRand banking systems last month.
In East Africa‚ the plan was to start operating in Kenya‚ Nxasana said.
In its interim results presentation‚ FirstRand said it had identified high-risk exposures of R901-million and had to increase its provisioning for doubtful debts.
Deputy chief executive Johan Burger said the defaults had not happened yet‚ but the group took proactive steps as it was exposed to businesses linked to lower commodities prices in Nigeria and Angola.
FirstRand said R214-billion of total corporate credit exposure was domestic‚ with R27-billion in the rest of Africa. It posted a 26% increase in bad debts to R3-billion‚ with the credit loss ratio up to 0.86% from 0.77% as the bank decided to take conservative action by increasing provisions. Without this‚ the credit loss ratio would have gone down to 0.66%.
Net interest income before bad debts grew 16% to R19-billion‚ while non-interest revenue rose 13% to R16.8-billion.
The return on equity was 24%‚ from 23.4%.
PSG Wealth portfolio manager Adrian Cloete said the profits would have been much higher had there been no proactive action on provisioning for doubtful debts in the rest of Africa.
He said FirstRand still had the strongest performance of SA’s big four banks. Barclays Africa group grew headline earnings 10%‚ Nedbank 14% and Standard Bank 1%.
Standard Bank would have grown its headline earnings 20% if its results had not been affected by the discontinued global markets business‚ which had been sold. — BDLive
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