FirstRand Nam braces itself for lower earnings

Jo-Maré Duddy – The plunge in interest rates to historic lows will hurt the earnings of FirstRand Namibia, the locally-listed group has warned.FirstRand Namibia, one of the heavyweights on the Local Index of the Namibian Stock Exchange (NSX), expects its earnings for the six months ended 31 December 2020 to be between 5% and 10% lower than the same half-year in 2019.“The main driver of this slowdown in earnings is the pressure on margins given the repo rate cuts and prime rate by 300bps [basis points], compared to the prior period,” FirstRand Namibia said in trading statement on the NSX on Wednesday.The Bank of Namibia (BoN) last year slashed rates in response to the impact of the Covid-19 pandemic which ravaged the economy. The BoN’s repo rate at the end of June 2019 was 6.75%. A year later, the rate was 4.0%. The prime lending rate dropped from 10.5% to 7.75%. At the end of 2020, the repo was 3.75% and the prime 7.5%.Both its earnings share (EPS) and headline earnings per share (HEPS) will drop by between 5% and 10%, FirstRand Namibia said on Wednesday.PREVIOUS BOOK-YEARIn its 2020 annual results, released in September last year, FirstRand Namibia reported a net profit of N$833 million for the year ended 30 June 2020 – N$253 million or 23% down from the nearly N$1.1 billion in its previous financial year.HEPS – a profit gauge – was 331.8c, 19% lower compared to its 2019 book-year.FirstRand Namibia’s share price has tumbled by nearly 31% since the beginning of 2020.It closed at N$23.06 per share on Wednesday. FirstRand Namibia’s market capitalisation by total shares in issue was N$6.171 billion, making it the second biggest company on the Local Index after Namibia Breweries.FirstRand Namibia’s interim results will be released on or about 4 March, the group said.

FirstRand Nam braces itself for lower earnings

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FirstRand Nam braces itself for lower earnings

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