RMB HOLDINGS LIMITED (RMBH)
RMBH’s main asset is a fully diluted interest of 34.1% in FirstRand Limited, and its performance is therefore primarily related to that of FirstRand Limited. The extension of the investment strategy into property involved the acquisition of a 27.5% interest in Atterbury Property Holdings Proprietary Limited (Atterbury), a 34.1% interest in Propertuity Development Proprietary Limited (Propertuity), an urban renewal business and a 40% interest in Genesis Properties Three Proprietary Limited (Genesis Properties), a mezzanine debt and equity funding business.
RMBH’s contribution to Remgro’s headline earnings for the year under review increased to R2 232 million (2016: R2 112 million) due to good operational performances of all three of the main FirstRand brands (FNB, RMB and WesBank). FirstRand’s contribution to RMBH’s normalised headline earnings amounted to R8 334 million (2016: R7 783 million), while the newly established RMH Property contributed R8 million.
FIRSTRAND LIMITED (FIRSTRAND)
FirstRand’s contribution to Remgro’s headline earnings represents Remgro’s 3.9% direct interest in FirstRand and excludes the indirect contribution from FirstRand through Remgro’s 28.2% interest in RMBH. The contribution of FirstRand to Remgro’s headline earnings for the year under review increased to R931 million (2016: R877 million).
FirstRand’s headline earnings for its year ended 30 June 2017 increased by 6.1% to R23 762 million (2016: R22 387 million), as all its businesses delivered resilient performances characterised by quality top-line growth, improved cost management and ongoing conservatism. The group’s net interest income and non-interest revenue grew by 7% and 8% respectively year on year, while operating expenses increased by 7%.
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 7.1% to R24 471 million (2016: R22 855 million). FNB’s contribution to normalised earnings increased by 5.3% to R12 947 million (2016: R12 294 million). This was driven by a strong performance from its domestic business underpinned by solid non-interest revenue growth on the back of ongoing customer gains and growth in transactional volumes, and high-quality net interest income growth. FNB’s rest of Africa portfolios delivered a mixed performance.
RMB contributed R6 955 million (2016: R6 287 million) to FirstRand’s normalised earnings, representing an increase of 10.6% from the previous year, with private equity realisations contributing more than R1.9 billion to income. WesBank’s contribution to normalised earnings increased by 1.8% to R3 996 million (2016: R3 927 million), delivering a solid performance off a high base. The local operations remained resilient given the credit cycle, while the earnings in rand terms from the United Kingdom business were negatively impacted by the currency appreciation.