FirstRand Ltd., South Africa’s biggest banking group by market value, will pay a record dividend to shareholders as the bank benefits from a post-pandemic resurgence.
The company, which owns First National Bank, Rand Merchant Bank and Wesbank among others, said combined dividends will result in a total payout of 467 cents per share, the highest in the history of the group at 26.2 billion rand ($1.5 billion).
The company posted a 23% jump in headline earnings in the year to June, lifting profit before tax to 46.68 billion rand, and its return on equity to 20.6%.
“We are very pleased we could reward shareholders with an attractive dividend and dividends really matter in an inflationary world,” Chief Executive Officer Alan Pullinger said in an interview.
Deposits climbed 7% to 1.66 trillion rand in the period, while rising interest rates helped the bank’s net interest income climb 5%. The company’s shares climbed as much as 4.1% in Johannesburg.
The lender is eyeing expansion opportunities in Ghana and in the UK, and mulling entry into Kenya, as it looks to expand its footprint.
The bank acquired Ghana’s biggest mortgage provider in 2020, and plans to expand its offerings under the First National Bank Ghana brand to include insurance, personal loans and investment products.
“We are investing quite heavily to consolidate the two banks that we had in that market, so there’s a fair amount of investment happening there,” Pullinger said.
FirstRand is also eyeing Kenya but the bank has yet to find an ‘’attractive entry point” into the market. It is also looking for new opportunities in the UK, given the large market available and the attractive risk-adjusted returns it offers. The bank’s unit in the UK, posted a 6% jump in loans in the 12 months to June, and a 14% jump in deposits.
“Ironically, with some market disruption, and tougher times coming, this is a good opportunity if you’re looking to do some bolt-on acquisitions,” Pullinger said, adding that the bank is “ not hunting anything at the moment, but we are keeping a close eye on any opportunities that pop up.”