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South Africa’s FirstRand Banking Group  has reported a 43% decline in attributable earnings from R11,3bn to R6,5bn for the year ended June.

Against a difficult macro background, exacerbated by losses from certain international strategies which the group said had now been terminated, pro forma normalised earnings were down 31% to R7,151bn.

Diluted headline earnings per share reflected a 29% decline from 187.8 cents to 133.1 cents, with diluted nomalised earnings per share showing a 32% drop from 187.7 cents to 126.8 cents. The normalised return on equity (ROE) for the year was 14% compared to 22% in the previous period. FirstRand (JSB:FRS)  declared a final dividend of 22 cents versus 38.25 cents per share in 2008 which, together with a 34 cents interim dividend, amounts to a total dividend for the year of 56 cents per share versus 82.5 cents per share last year.

Looking ahead, the group said it believes that the tough operating environment will continue for the remainder of 2009 with a slow improvement from 2010 as lower interest rates and fiscal stimulus begin to have a positive impact. “The South African economy is still facing difficulties. The consumer will remain under pressure in the medium term, despite the recent easing of interest rates, as the excesses created in the previous upward cycle unwind. Further job losses also remain a risk.

“These issues mean that transaction volumes and asset growth in the retail segments will stay subdued although bad debts should start to unwind as affordability levels improve. Corporate lending portfolios are still showing signs of stress. “Against this background it is expected that FNB and WesBank’s earnings will remain under pressure but should gradually recover from current levels. “Further mark to market losses or profits on the legacy portfolios in

RMB are dependent on market movements. In addition the level of private equity realisations that took place in the first half of the year to June 2009, is not expected to be repeated in the current financial year.

“Whilst Momentum’s earnings are geared towards equity markets it has, over time, built an inherently defensive business model. Its diversified product range and distribution model, upper-income market focus, capital efficient liability mix and conservative investment mandate, will continue to provide protection to earnings. “Given the degree of economic recovery envisaged over the next 12 months, FirstRand believes that overall top line growth will remain under pressure. However the Group believes it has responded quickly to the changes in the macro environment and implemented the appropriate adjustments to strategy and new business origination. Cost management is a key focus without compromising on investment for the future,” FirstRand said.

“The balance sheet from both a capital and funding perspective, remains robust and this will allow the Group’s operating franchises to take advantage of an improving cycle. FirstRand remains committed to providing real growth and returns to its shareholders,” the group added.