Johannesburg - FirstRand's banking division was delivering "remarkable" efficiency gains through its restructuring strategy and the results should start being reflected in the financial results, Paul Harris, the chief executive of FirstRand Bank, said yesterday.
The FirstRand Banking Group, formed through the merger of the operations of First National Bank and Rand Merchant Bank, contributed R2,2 billion to group earnings in the year to June 30. This was mainly because of strong performances by RMB and Wesbank, the car finance division.
But analysts said the lingering concerns about the retail operations had not been addressed, helping to explain why the group had failed to excite the market. Harris said the two-year restructuring of the group's banking business had progressed well and was beginning to deliver improvements.
He said the plan was to transform the branch network into a structure with specialised units, concentrating on core functions such as sales and service delivery. "Originally, the branches operated like little banks."
James Slabbert, an analyst at Merrill Lynch, said the restructuring of FirstRand's retail activities was progressing and seemed to be reducing costs.
Slabbert said the total gains from the retail restructuring could amount to R500 million a year over the next two years, which should result in an earnings underpin of between 8 percent and 10 percent a year.
As part of the restructuring the banking group cut its staff by about 2 800 people to 25 000. Slabbert said net savings after retrenchments were expected to amount to R70 million in this financial year, with full benefits expected in the next year.
FirstRand closed 12c weaker yesterday at R8,26.