DURBAN – FirstRand on Thursday flagged that its total impairment charge more than doubled in the six months to end June, rising to R24.38 billion as bad debts escalated on expected credit losses arising from the economic consequences of Covid-19.
The group said that the impairment charge more than doubled on the IFRS 9 accounting standard requirements to make provisions for bad debts based on forward-looking estimates of expected credit losses and further provisions were raised for increased arrears and non-performing loans as customer income and affordability deteriorated.
“The impact of the credit performance was further compounded by margin pressure, subdued non-interest revenue growth due to lower absolute volumes during the lockdown period, and depressed new business origination,” FirstRand said.
Last year the group reported a total impairment charge of R10.50bn.
The group said that its normalised earnings for the period also fell 38 percent to R17.3bn, with return on equity (ROE) declining to 12.9 percent.