The year under review was a challenging one given the slowdown in economic activity characterised by negative growth, declining house prices and high levels of consumer indebtedness as the economy petered into a recession. We anticipated these conditions by positioning our business correctly for the current tough times and focused on executing our well-considered plan in a tough operating environment.
This enabled us to produce a solid return on equity due to strong performance across most of our business. Our absolute level of profitability however declined due to increased bad debts and slowing non-interest revenue.
Despite this, we remain on course with our goodtoGreat2010 strategy focused on building enduring, rewarding relationships supported by the three pillars of people, efficiencies and innovation. We have chosen not to waste a good crisis and opted to use the economic downturn as an opportunity to get back to basics. This enabled us to implement several changes across our business, which will pay dividends in the future. These measures include a particular focus on innovation as a cross-cutting imperative to create efficiencies and invest for growth, supported by a key focus on talent management and the retention of high calibre staff.
We are sticking to our vision of being a great bank helping to create a better country through the pursuit of sustainable business practices based on two principal drivers - understanding that sustainable development and sustainable profitability are complementary objectives and that the interests of all of our stakeholders converge in the long run. We maintain our focus on building enduring, rewarding relationship as the basis for our stakeholder engagements, which is more relevant in these times, for realising socioeconomic transformation objectives and sustainable development impacts.
Our performance in the last year is underpinned by the effective management of financial and non financial stakeholder issues. These include a strong commitment to the responsible provision of financial services, responding effectively to customer indebtedness and the cost effectiveness of our products, ensuring customer safety, facilitating socioeconomic transformation, having a positive effect on the communities in which we operate and minimizing our negative impact on the natural environment.
We ensure that the relationship between profitability and stakeholder welfare remains positive over time through four important mechanisms – sound corporate governance, responding effectively to financial and sustainability risks and opportunities, rigorous debate of the business case and through living up to our brand promise of “how can we help you?”
In FY 09 we continued to enable convenient and accessible banking, remained a responsible lender through tightened credit lending criteria and extended our helpfulness campaign to assist customers in times of financial distress. We kept overall banking fee adjustments at 6.7% on average and enabled entrylevel banking for customers who previously did not have a bank account. We enhanced our customers’ experience at branches and introduced additional security measures as part of our revised branch operating model. We also managed our direct environmental impact by participating in FirstRand’s third carbon footprint exercise, implementing numerous measures for energy saving and further developing waste management strategies. We addressed our indirect environmental impacts through FirstRand’s adoption of the Equator Principles and screening risks linked to environmental and social impacts accompanying the activities of our customers and suppliers.
We continued to invest in social upliftment by approving grants to 80 organisations totalling R28 000 806, extending 50.1% of our procurement spend to black businesses and providing supplier development support, which included originating R42 984 387 for agricultural financing and facilitating R22 million in BEE transactions. Such performance would not have been possible without the commitment and drive of our people who will ultimately be the key differentiator for us to achieve business success. Greater attention will be placed in FY 2010 on effectively growing and developing our talent, as part of our human capital project, aligned to business needs and ensuring staff retention.
We will continue on our journey to greatness in the coming year by focusing on the prime objective to not just survive the current financial crisis but to thrive in the relentless pursuit of our strategy. We present this report to our stakeholders detailing our progress towards integrating business goals and the realisation of sustainable business practices, taking into account economic, environmental, social and governance considerations. While the journey is given orientation by a strong belief that this is the right thing to do, we also know that it makes business sense.
