Sales growth boosts FirstRand's profits

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Jimmy Moyaha: In the financial sector, FirstRand also reported results today. They, like some of the other participants reporting today, reported interim results for the six months ending Dec. 31.

This set of results we are looking at is particularly interesting. It's a bittersweet reflection not only on FirstRand's performance, but also on his performance at FirstRand under the leadership of his outgoing CEO, Alan Pullinger. He will go through this with me.

Read: FirstRand's first-half profits rise 6%

Good evening, Alan. I am always grateful for your help. The numbers look good, but it's almost sad to say goodbye. It's a bittersweet moment to think about this, but think about it nonetheless. This is his last interim financial results as CEO.

Alan Pullinger: Okay, good evening, Jimmy, and hello to all the listeners. Yes, it's a surreal moment. FirstRand, it was a big part of my life and I will miss it very much. But as CEO, I'm grateful to be able to stand on my toes and leave the business in decent shape. Looking at these numbers, we are pleased to see a return to strong lending. We refer to loans as “advance payments.” Our progress increased by 11%. Our deposits increased by 11%. We achieved a good top line.

Credit information is always a big issue for banks. You make all these loans, but it's important that you can repay them. And it was a really good result for us too.

In an environment like ours, the results were better than expected. I'm really happy to see that.

Therefore, there is a significant return on equity. Dividends can be returned to shareholders. And I am grateful for many things. Of course, I am forever grateful to be a part of her FirstRand. I've been very fortunate to have learned from great people and stood on the shoulders of giants, which has made me look good.

But I have to thank the person who taught me everything I know, who guided me and held my hand. They are true icons of the industry. So, yes, I'm very grateful.

Jimmy Moyaha: Alan, if you look back at the set of numbers from your time at FirstRand and now, as you said, there are periods where growth is very rapid, but there are also periods where business tends to slow down. Just make sure you're continually moving forward instead of just going backwards.

In particular, of all the challenges you've had to go through, what do you think has been the highlight of being CEO during this particular period? We rarely get a chance to think about the issue, and all the other situations we've all had to go through. What do you think was your most memorable experience during your time at FirstRand?

Alan Pullinger: I've been here a long time, and I think when you've been in the market long enough, you've seen a lot of good and bad.

Let's go back to the global financial crisis. I had just become president of the investment bank Renminbi, but both Bear Stearns and Lehman had hit a wall. Indeed, there was real panic in the financial sector.Them [events] It was a particularly difficult time for us.

And then Covid. COVID-19 was completely different. It was a different challenge, a human tragedy, and it was global.

In many ways, I think that made the situation worse. It also had a very long tail. I think we are still dealing with some of the scars and after-effects of the coronavirus.

But when you step back and look at all of these things, I think what stands out to me is the team. If you have a good team around you, it's a team that works together. They are very focused and can actually overcome a huge amount of challenges.

I think that's where things go wrong when you realize you're alone. I've been very lucky to have great people around me. I'm grateful to the team. We were able to overcome this difficulty as a team. And as you can see from the results you're seeing here today, FirstRand has a formidable leadership team.

That's why I can look back with pride and confidence at the same time, I'm still a shareholder in this business and I'm convinced that this team is out of the top class. It's definitely the A team.

I think it all boils down to that. The challenge will be there. You can never predict what will happen, but make sure you have good people around you.

And as a company, always try to hire talented people. We often say that we try to hire people who are better than us. Every year, I have the opportunity to speak with new employees hired as new graduates. If I were to step back, I would call them children because they are younger than my children.

But they're very bright kids, so I'm very grateful to see them and have them in this business. But then I say to myself: could I cling to them for 20 years like I couldn't leave them? And that is our challenge. And if you can catch these kids, they're way ahead of where I was, for sure. As long as your business has that and you're hiring great people, you'll be able to keep them engaged and excited.

Listen, the future looks rosy. [they are] They are the ones who solve growth problems and come up with new innovations for customers. Yes, for me it's always about the people.

Jimmy Moyaha: I believe these are sentiments echoed by our incoming CEO, Mary Vilakazi. I remember reaching out to her when she made her announcement. She said the same thing about how she's been in this business all her life. What matters is whether you can look at your business from a long-term perspective rather than a short-term approach.

In that sense, as you said, the numbers speak for themselves. Each business has performed very well in this interim period, growing from strength to strength and stabilizing where it needs to be stable, while also rewarding shareholders. This means you can still increase your overall profit and overall earnings per share, providing a better return on investment. Shareholders.

Alan, do you think this is a consistent forecast for the second half of this year… I know you're going to be out of the business soon, but is it just a forward-looking statement? Or from an operational perspective? , do you think business is in good shape at the moment?

Alan Pullinger: Yes, Jimmy, we have given pretty clear guidance for the year to June. Our financial year ends in June, so for the next six months. And I have almost the same idea. If anything, I think things are heading in a slightly better direction.

Of course, lending is starting to slow down. Loans are growing very well. But we are already seeing that unsecured lending in particular is starting to slow down. That's not to say the demand doesn't exist. Demand is still very high. However, we are seeing a very low approval rate as more and more customers are unable to pass the affordability checks that we have to do. But the pressure is there. So we're seeing lending start to slow down.

We hope to see the volume, transaction volume, and customer growth that we've seen so far. I hope we can continue that. As far as the trust story goes, it's probably going to be a very similar story given our position and the provisions that we have.

And more or less, from a revenue perspective, our guiding principle is that we can do the same in the second half in terms of the absolute amount of revenue. So if you can reproduce it to some extent, it's not a bad idea to pencil it in as some kind of guidance.

And obviously we're going to strive for better. We strive to outperform and please the market as much as possible. It's tough, but I know Mary and her team are keeping their heads down and very focused on running through to June.

And of course, it's a long-term story. That's after that. And hopefully, I think we're setting the business up for a better 2025 and he 2026. We have to get through the election. We have to start looking forward to a time when, hopefully, interest rates will be lowered around the world and many of the world's problems will be solved. We have a lot.

I know we get depressed in this country. But I have to say, if you look around the world, there are a lot of problems in a lot of countries, Jimmy. Sometimes we are grateful that we have our own problems and are not addressing some of other countries' problems.

Jimmy Moyaha: There is also a bigger problem. As you rightly said, Alan, I think this is a great place to leave a thriving business. And then you retire and hand things over to a strong, highly capable team. I think that's what we can expect and what CEOs can expect when they report their results. And having been in business for so long, it's about leaving on good terms and leaving the business in a strong position. And you accomplished both.

We wish Alan all the best in his future endeavors. I look forward to seeing you soon. And we'll be keeping an eye on FirstRand in the second half of this year to see how it performs for the full year when we look back at it later this year.

But for now I'll leave it alone. That was when Alan Pullinger, the outgoing CEO of FirstRand, reported interim results for the first half of this year.