CEO’S STATEMENT  
 
KEY MARKETS

Africa
FirstRand is a leading financial institution in Africa and its various brands such as First National Bank, Rand Merchant Bank, WesBank, Momentum and OUTsurance are already established in several African markets.

The Group seeks to expand its activities on the African continent by;

  • Leveraging synergies and platforms between its various brands;
  • Growing the commercial banking activities initially in Sub- Saharan Africa and later potentially in East, Central and West Africa; and
  • Growing its investment and merchant banking activities in various parts of the continent where it has a product and skills competitive advantage.


India

FirstRand hopes to be the first bank from the African continent to be granted a branch licence to operate in India. It will initially focus on trade with Southern African and other selected African countries. We believe that there are significant opportunities in these markets. India’s trade with Southern Africa comprises about 20% of the total trade with Africa, and this percentage increases significantly if one excludes Nigeria’s oil exports. FirstRand has already established a representative office in Mumbai. It is staffed by seconded FirstRand staff and new Indian management. It is able to pave the way for the various FirstRand divisions that are already implementing business plans that have been through the internal approval process. They also support those divisions that are still conducting research into new opportunities.

Brazil
South Africa is part of the India, Brazil and South Africa (IBSA) initiative which was signed by the respective governments to promote trade and other relations between the three countries. Brazil is a potentially significant trading partner of South Africa. It has a population of 160 million, a GDP growth of about 4%, a stable political environment and a commitment to sound macro economic policies. FirstRand believes that there are many similarities between the Brazilian and South African economy that provide excellent opportunities for some of our divisions.

CURRENT INTERNATIONAL OPERATIONS AND PLANNED INITIATIVES

The most appropriate way to detail the Group’s current international operations is by franchise.

FNB, the commercial bank, is already present in Namibia, Botswana, Swaziland, Lesotho and Moçambique. These operations currently represent around 5% of total Group earnings and have consistently delivered strong growth in profits and superior ROE’s.

Going forward, FNB’s strategy is to enter certain additional strategic African markets with particular focus on the SADEC region given its proximity to South Africa. FNB’s long term objective is to become a full service bank offering a comprehensive range of commercial, retail and corporate transactional banking products and services. It has already demonstrated that in these markets it can offer a competitive advantage particularly given its strong brand and innovative technology platforms.

FNB favours a “Greenfields” or “accelerated Greenfields” approach, and board approval has been granted to pursue the establishment of a branch in Zambia and a representative office in Angola.

RMB has already had success in several business areas, including Private Equity in Australia, Infrastructure and Project Finance predominantly in Africa, Trade Finance in Africa and other emerging markets and Resources in Africa. It is well placed to capitalise on the planned infrastructure plans of rapidly emerging African economies such as Nigeria and Angola and is focused on building this already successful business.

RMB is currently exploring investment banking partnerships with local banks in several jurisdictions that have the presence and balance sheet to complement its expertise in investment banking, most notably in Nigeria.

WesBank has identified the Brazilian asset finance market as its most attractive off shore business opportunity due to the macro economic environment and the rapid growth in vehicle finance. At this stage WesBank is investigating entering this market via a partnership with Banco do Brazil. It will allow WesBank to access a powerful brand, funding from a strong balance sheet and a very extensive distribution network.

In addition to the Brazilian initiative, WesBank currently operates in the UK market with the Carlyle Finance franchise. This is a niche operation which has now found itself in a very difficult market, so its focus is on achieving operational efficiencies in order to create a stable platform for future growth.

Momentum’s strategy in Africa is currently focused on a health product driven strategy. It currently operates in 8 countries.

In addition it has a successful London office of RMB Asset Management, which operates alongside Ashburton, the established fund and private client investment manager based in the Channel Islands. Together they provide a comprehensive range of international asset management capabilities to South African and international clients.

In conclusion, FirstRand’s primary focus is on the South African market where we believe we have significant opportunities for growth. In addition, we are actively exploring international markets in our divisions with the objective of providing growth impetus to the Group over the medium to long term.

PK Harris

PK Harris
Chief executive officer

     
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