FirstRand Namibia expects lower earnings

Jo-Maré Duddy – Locally-listed FirstRand Namibia expects its earnings per share (EPS) and headline earnings per share (HEPS) for the year ended 30 June 2020 to be between 15% and 25% lower than its 2019 financial year.
In a trading statement released on the Namibian Stock Exchange (NSX) today, FirstRand Namibia said the main driver of this slowdown in earnings growth is the materially higher credit impairment charge for the period, driven partly by deterioration in the lending portfolio performance, but more significantly by the forward-looking assumptions used in the modelling of expected credit losses.
“IFRS 9 requires the group to consider forward-looking information in the calculation of expected credit losses, therefore the group has estimated an increase in customer stress caused by the [Covid-19] pandemic and resultant economic pressures anticipated over the next 12 to 18 months,” according to the trading statement.
FirstRand Namibia added: “This stress has been incorporated into the calculation of the group’s expected credit losses and has resulted in a material increase in provisioning, even though the year to June 2020 only includes three months of the pandemic.”
FirstRand Namibia’s audited financial results will be released on or about 10 September.
FirstRand Namibia is listed on the Local Index of the NSX. It closed at N$23.01 per share on Wednesday. The share price has shed N$10.40 a piece or 31% since the beginning of 2020.