RMB sees higher earnings
March 10, 2010
Diversified financial services holding group RMB Holdings, whose investments include FirstRand, witnessed a 22 percent improvement in normalised earnings from R1.353 billion to R1.654 billion for the six months ended December.
This translated into normalised earnings per share of 136.8 cents versus 111.9 cents fopr the previous comparable half year.
The interim dividend was unchanged at R653 million or 54 cents per share.
RMBH said the six month period showed early signs of an improving global and local economic environment. GDP in most of the world's developed markets is beginning to slowly recover and some emerging markets, notably China, are showing robust growth.
In South Africa, the operating environment remained recessionary and only posted positive growth of 0,9 percent during the third quarter of 2009, followed by 3.2 percent in the final quarter of the year.
This brought the full year change in GDP to -1.8 percent (vs. +3.7 percent in 2008). The growth appeared to be mainly driven by the manufacturing sector and government spending programmes.
Otherwise, economic conditions remained challenging with real disposable income and jobs declining by 1,1 percent and 870 000 respectively. Inflation remained above the South African Reserve Bank's targeted range at 6,3 percent on 31 December 2009, the group said.
"The decline in economic activity and domestic demand prompted a further 50bps repo rate decrease in August 2009 following on the cumulative 450bps decrease during the period from December 2008 to 30 June 2009.
The impact of these interest rate reductions, together with a stabilisation in house prices and a recovery in equity prices, provided some relief to consumers.
"However, levels of consumer indebtedness remain high and in addition some signs of stress remain evident in certain commercial and corporate segments.
Whilst the reduction in interest rates has had an initial positive impact on retail bad debts, it continues to negatively impact on banking deposit margins and income earned on the capital endowments held by the groups in which we are invested," the group stated.
"Against this background, our portfolio of financial services businesses produced a satisfactory outcome.
Its Australian initiative is performing better than initially projected," RMBH continued.
"The greater RMBH Group continues to focus on protecting its origination franchises and balance sheets to ensure it is optimally positioned to take advantage of growth opportunities as they arise, particularly as the negative credit cycle reverses," it added.
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