FirstRand Limited (FSR)
Who would have thought banking can be made fun? The race is on for digital dominance in the local banking sector with SA’s most valuable bank by market cap still ahead of the rest. FirstRand‘s most successful brand FNB has made “FinTech” and Digital Banking the new norm.
Fundamentals
Despite a very challenging economical land scape, FirstRand still managed to deliver great results over the year ending June 2019. The latest earnings released showed that headline earnings increased by 5% keeping pace with inflation. Income before tax was up 8% with profit for the year also increasing with 5% to R29.44 billion.
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FirstRand Limited
FNB is still the biggest driver of revenue for the group with higher volumes reported through its digital and electronic channels. WesBank and Rand Merchant Bank (RMB) both declined in growth from the previous reporting period.
The group also pay a final dividend of R1.52 per share bringing the total dividend for the year to R2.91. The stock is going Ex-Dividend on the 24th of September 2019 and the dividend payment date is scheduled for the 25th of September 2019.
First Rand share overview:
Outlook
The group expects that the domestic economy will remain under pressure for some time to come with low income growth and weaker domestic demand being some of the main driving factors. However, the group expects the momentum from FNB to continue on the back of customer and volume growth. RMB is expected to remain resilient with WestBank’s performance subdued due to factors like expected lower vehicle sales over the coming period.
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FirstRand Limited
Chart Life
By looking at the price action we can see the rebound in the share price, mainly due to the strengthening South African Rand and better than expected earnings. We would need to see the price action hold momentum and close above the 6418c per share resistance level. A close below the 6161c per share support would negate the uptrend.
The Relative Strength Index (RSI) technical indicator is also reaching over bought levels which might indicate the new trend is nearing its end.
Source - Bloomberg
Portfolio particulars:
Know your company: FirstRand Limited (FSR)
*Portfolio Hold (Current) refers to investors who already hold the stock within their portfolio.
**Portfolio Buy opportunity refers to Technical level crossed which might imply that the markets behaviour would support the outlook and Close above refers to a share price close above a Technical Resistance level.
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Barry is a market analyst with GT247, with a wealth of experience in the investment markets. Now in his tenth year in the markets, Barry "The Beef" Dumas brings a combination of technical analysis and fundamental insights to the table.