Private renewable energy projects currently under development will go a long way to alleviate power shortages, Rand Merchant Bank (RMB) CEO Emrie Brown said yesterday.
She said RMB at present had a pipeline of more than 5 000MW. In the six months, RMB’s sustainability finance and ESG advisory teams facilitated deals worth R17.3 billion, adding to the R26.41bn facilitated over the previous financial year.
“This enables clients to have access to reliable power supply to ensure they positively contribute to our economy,” she said at the release of the bank’s interim results for the six months to December 31.
She said RMB, the corporate and investment banking arm of FirstRand had ramped up its transition and infrastructure financing and continued to grow its broader Africa business in the six-month period.
RMB reported a 25% growth in normalised profit before tax (PBT), reflecting a strong operational performance across the portfolio. A return on equity of 22.4% was achieved – up from 20.1% at December, 2021.
“Working with our clients, through transition advisory and financial support, we want to make a meaningful contribution towards delivering socio-economic growth,” Brown said.
She said changes in the regulatory environment had resulted in a big increase in the number of private sector-led power projects in South Africa.
RMB supported its clients in this space by providing long-term funding to accelerate the implementation of projects, which range from rooftop solar solutions, which can be owned and/or leased; long-term power purchase agreements with independent power producers; and short-term contracts with energy traders.
“ESG client solutions remain a key growth area in South Africa, and RMB is committed to facilitating sustainable finance transactions of R100bn by next year, and R200bn by 2026. We believe the opportunity also applies to our broader Africa jurisdictions, where the team has already started to engage with clients,” she said.
The funding that RMB provides that has a real-world positive impact is wide ranging. From a social perspective, RMB arranged Africa’s award winning R1.143bn first gender-linked bond and a social loan to deliver affordable quality purpose-built student accommodation.
RMB’s banking business, incorporating investment banking and corporate transactional banking grew by 18% after benefiting from “robust core average advances growth of 21% and resilient fee income. The transactional banking business delivered 15% growth in average deposits and sustained growth in primary banked clients in a highly competitive environment.
Private equity delivered strong growth of 18% in gross annuity income, and benefited from a material realisation.
The markets business showed mixed performance with resilient growth in revenues, driven by asset-class and geographical diversification, and overall performance impacted by investment spend. Client activities in broader Africa remained robust.
Ashburton Investments benefited from increased inflows and an improved investment performance. Assets under management in South Africa grew 11%.
The broader Africa portfolio delivered a strong growth in PBT, which represents 25% of RMB’s overall PBT. Ongoing primary banked client acquisition assisted average deposit growth, and deposit margins improved on the back of interest rate increases.
BUSINESS REPORT