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Pre-tax profits increased 6% to ZAR10.4-billion and ROE of 25.3%
Rand Merchant Bank (RMB), the Corporate and Investment Banking division of FirstRand Bank Limited, has delivered a solid performance in the 2018 financial year. RMB’s overall pre-tax profit of ZAR10.4-billion increased 6% to June 2018, from ZAR9.8-billion in June 2017. RMB also maintained its premium returns, delivering a ROE of 25.3% underpinned by high quality earnings.
Moneyweb editor Ryk van Niekerk speaks to James Formby, chief executive at RMB, about this in more detail.
Says RMB CEO James Formby: “I am very proud of RMB’s results which were delivered against a challenging macro-economic and political backdrop. The performance demonstrates that our strategy to put clients at the centre of our business is working. I would like to thank our clients for continuing to work with RMB as their trusted banking partner.”
In a year that was characterised by tough credit markets and low growth, the investment banking and advisory activities delivered strong results. RMB originated and led a broad range of investment banking transactions across many sectors. RMB also continued to provide support for the public sector through constructive engagement and deal activity. It supported inclusive economic development with lending for transformational infrastructure of close to R13 billion and BEE financing of close to ZAR10-billion, as well as advising on over ZAR30-billion of BEE deals in the year to June 2018.
RMB's corporate and transactional banking activities delivered solid earnings. The business continues to focus on the enhancement of its digital platforms in order to offer real time visibility and execution. Their aim has been to enhance client experience and improve client self-service. Ongoing cost discipline created the scope for continued investment into this strategy.
The markets and structuring activities had a challenging year but made good progress on its electronification strategies. Our online FX channel, Accelerate, now provides clients with pricing and liquidity 24-7, giving them greater accessibility and transparency. With further system enhancements planned, we expect to significantly increase dealing through this digital channel. In addition, FirstRand is a member of the London Clearing House and RMB has cleared over ZAR200-billion in ZAR interest rate swaps through this platform since the beginning of 2018. RMB continues to invest in its broader markets infrastructure transformation via automation and electronification.
The Private Equity results were supported by the Servest UK realisation – a transaction that demonstrates the value that can be unlocked through the partnership between entrepreneurs and RMB’s Private Equity teams. Servest UK delivered compound profit growth of 26% per year over the investment period and an exit valuation of GBP540-m was achieved.
The Broader Africa strategy showed impressive growth of 31% in pre-tax profit to ZAR1.7-billion to June 2018 from ZAR1.3-billion a year earlier, with 110 new corporate client relationships formed. RMB is focussed on establishing strong in-country businesses across the continent and on rolling out platforms and diversified product offerings to deliver client solutions in the Broader Africa.
Says Formby: “We are particularly pleased with the performance of our Broader Africa strategy, which is enhancing the diversification of our business. The contribution grew to 17% of overall RMB pre-tax profits in 2018, up from 13% in the prior year.”
RMB Nigeria continues to grow. It recently marked its fifth anniversary and has launched its online banking platform. It plans to extend the market and risk management products available to clients.
Concludes Formby: “Our business is about reliably delivering financial solutions to our clients – be they day to day or highly complex. Our growth enables us to continue investing in systems and platforms to ensure we bring market leading banking solutions to our clients across the continent. The business is well positioned to continue delivering good business to create a better world.”
Click here to view FirstRand Limited’s results for the year ended 30 June 2018: