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Here’s what recovery looks like – FNB CEO

‘We won’t see the kind of festive season we’re used to.’
Customers who had been resisting electronic channels suddenly had no choice but to use them, and FNB was ready. Image: Moneyweb

FNB CEO Jacques Celliers says that while the broader FirstRand group is in a “very good place from a franchise perspective” in that it’s been able to get to the “other side without major damage to our core client base”, there remains a need to “get the economy going again”.

The bank’s primary bank strategy, in place for many years, means it has an outsized share of the market when it comes to economically active customers. It also “banks all the industries in the commercial” segment, so has been able to “track any commercial activity that makes sense and looks viable”. With this data-driven approach, it therefore also has a good sense of which individuals were likely to be affected which means it has been able to provide the right assistance to the right retail customers.

In its retail lending book, R105 billion (or 24%) is described as “Covid-19 impacted”. Of that amount, it granted relief on a total of R67 billion in loans. R329 billion in retail loans are performing. The commercial book is more impacted, with 40% or R50 billion affected. Of that, it has granted relief on R30 billion in loans.

Retail Commercial Corporate
Covid-19 impacted R105 billion (24%) R50 billion (40%) R76 billion (21%)
– Relief granted R67 billion R30 billion R56 billion
– No relief R38 billion R20 billion R20 billion
Performing book R329 billion (76%) R76 billion (60%) R280 billion (79%)

Celliers says the banking group has been actively “looking for opportunities in our client bases”, which come as a result of moments of massive disruption.

Some of the bank’s customers found opportunity, even in sectors that had been truly devastated.

He offers examples of how some restaurants, manufacturers and bed and breakfasts somehow managed to trade through and “make another plan”.

This speaks to the quality of these businesses and these entrepreneurs.

In the commercial business, it has granted substantial relief in the automotive retail, impacted real estate, transport and aviation, and leisure and hotels sectors. The total relief granted to other impacted sectors is R16 billion, slightly higher than the R13 billion in relief granted to the specific sectors listed.

Transactional activity bounced back quickly in July and August (post FirstRand’s year-end), and is now above 90% of normal levels.

Celliers admits that some of this may have been pent-up demand. Gauteng is “not quite firing on all cylinders yet” and the Western Cape, given its reliance on the inbound tourism market, has among the weakest activity levels across the provinces.

Confident yet cautious

While confident, he says we simply “won’t see the festive season that we’ve seen in previous years”, with bonuses or 13th cheques highly unlikely. He adds that people and business are still “understandably cautious”.

The group expects the recovery to be slow, with real GDP forecast to contract by 8% this year. By 2023, the South African economy is likely to still be below 2019 levels.

How does this change?

Much rests on the government’s planned infrastructure development programme.

The group says a “real recovery” requires “urgent” implementation of structural reform initiatives identified by National Treasury, including:

  • Ensuring stable and sufficient electricity supply (modernising network industries);
  • Allocating 5G spectrum (modernising network industries); and
  • Attracting highly skilled professionals to South Africa through relaxation of visa requirements (alleviating skills constraints).

It has “previously appealed to government to crowd-in the private sector [with] financial capacity and skills to enable delivery”.

Relief measures

It adds that Covid-19 initiatives such as the Solidarity Fund and FirstRand’s ‘Spire’ (SA Pandemic Intervention and Relief Effort) Fund “demonstrate how effectively South African business partnered with government to tackle social and economic challenges at scale”.

It says “implementation could be rapid, should be inexpensive and will boost business confidence and private sector investment”.

Responding to President Cyril Ramaphosa’s criticism on Wednesday night that banks had not lent enough under the R200 billion loan guarantee scheme and that thresholds and criteria possibly need to be adjusted downwards, Celliers says the banks did a “large amount of voluntary relief on our own”.

In contrast to immediate government support in other markets, there was no certainty that help from government would even come.

“By the time the guarantee scheme came in, we had dealt with lots of volume already,” says Celliers, adding that FNB had “done an incredible job” of providing relief to customers. And because the crisis is “not over yet” the loan guarantee scheme provides banks with an “additional lever that we can pull”.

Digital uptake

He says the bank is grateful that the strategies that it has been working on for years, specifically in the digital space, have “landed almost perfectly for what we need right now”.

If anything, Covid-19 and the lockdown “expedited its strategy” where those customers who had been resisting it “all of a sudden had no choice” but to use electronic channels. It could deal with over 100 000 applications for relief via its in-app process. Celliers says this would simply not have been possible in the “normal way” of doing things, such as using email or call centres. Lockdown demanded an entirely different scale of operations.

In its credit life business, as one example, it went from 50 to 4 000 applications a day.

“How do you normally operationalise that without the digital platforms already in place?”


The banking group reported a 38% decline in normalise headline earnings for the year to June 30, helped by the fact that its first-half (to December) was not impacted.

Return on equity declined to 12.9% (from 22.8%), and in line with the guidance from the regulator, no final dividend was declared. Its credit loss ratio more than doubled to 1.91% (from 0.88%), with the bank taking a R18.449 billion impairment charge in the second half (up from R5.9 billion in the first six months of the year).

For now, the situation looks “very positive” says Celliers, in that the bank can see the “profile of income that’s coming back” across most of its clients. “The data shows that there is lots of sustainability in how we exit this.”

In the worst-affected sectors, such as hospitality and entertainment, he says the “dependency on relief needs to reduce over time”.

He hopes the job market will remain “fairly stable”.

The big question, however, is “what government is going to do with its wage bill”.

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The banks are very good at playing the political patronage game. That’s always short-term for the country.

The ANC are very good at throwing funny money around. There isn’t any real money to go around anymore.

The reality is that as it stands now, there is absolutely no way that South Africa is going anywhere long-term without the ANC doing away with BEE.

I suspect that the ANC realised this some years ago, but the cadre greed has kept pushing the BEE agenda.

Doing away with BEE will create far more jobs than keeping it will. There is no two ways about it.

Of course the catch is that the BEE tenderpreneurs wont get their short-term monies.

Regrettably I have to disagree with you except for one point i.e
…South Africa is going anywhere long-term without the ANC doing away with BEE.Because of COVID-19 the majority of Saffas (probably 95%of them) is not going anywhere in the future and have never gone anywhere in the past. So ‘going nowhere’ is nothing new for Saffas.

Having said that……I add

1. History will show that had USA not adopted a form of AA/BEE slavery would have still existed in USA. BEE (sometimes called affirmative action/diversity ) – calling for advancement/equal treatment of women and other minority groups i.e gays, lesbians, etc are in place in many countries globally.
2. Cadre greed, corruption and lack of education (of us as township dwellers) are S.A greatest challenges. The education issue will be resolved in long term. Greed and corruption can be secured in short term.
3. Here in the township (Bonteheuwel) we are confident that things will change for the better.
4. You are early – How’s the weather where you are today?

Since this article is actually about FNB. My message to FNB. Keep up the good work and thanks for my (1982) scholarship when you guys were still known as Barclays Bank and I lived in township a.k.a Bonteheuwel.

You cannot claim to know what ‘recovery looks like’ with uncertainty on the sovereign remaining front and center.

Our sovereign still thinks the GDP drop for the year 2020 will only be 7,2%.

The ANC policies create a very lucrative environment for financial services companies that facilitate the emigration of assets. These companies thrive under the ANC government. The ANC creates a business model for these companies and then motivates citizens to do business with them.

The anti-capitalist government does not realise that capitalists act on incentives, and no matter what policies they implement, they inevitably incentives and reward certain actions.

The capital is moving offshore, even while the president’s investment drive is ongoing. The more the special envoys plead for investments, the faster the investors move offshore.

Capital does not react to invitations, it reacts to incentives. A capitalist simply wants profits and doesn’t need a welcoming committee. The investor doesn’t care about your inferiority complex or your slave mentality, and he certainly is not willing to support policies that forces him to share his capital with BEE partners.

Various taxes on capital, that act as an expropriation of capital, forces capital to flee offshore. These taxes are like a subsidy for offshore trust companies, it supports their business plans.

The ANC is losing lifeblood through both wrists. It is looking paler by the day. It is bleeding itself to death in an effort to revive itself.

The banks provided relief to people that are in right standing in terms of credit e.g. my application was denied 1st time round due to my credit card or current account having been overdrawn “once upon a time”. This was a minor discretion. To be honest, I took the money, due to not having to pay my bond, and invested in gold. I did not need relief. The people that did need relief were people who were likely already in trouble. Thus, the bank did provide payment holidays, however, they will recoup the money and as a result, their financials look way better than what it actually is since, all those missed payments are considered, loan advances which are an asset. Banks do what is best for them. They should have never accepted the mandate from the government to advance loans, if they apply the responsible lending criteria.

Moneyweb, Can you stop blocking my comments!!!!
It stated the facts!

End of comments.





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