The bank fared better than rivals Standard Bank and Nedbank as South Africa’s economy, which for some time has been characterised by stagnant growth, high unemployment and rising living costs, tipped into recession in the fourth quarter of last year.

FirstRand’s shares rose as much as 7% in early trade before giving back gains to stand 1.85% higher at 0725 GMT, modestly outperforming the Johannesburg Stock Exchange’s Top-40 index.

Still, like its peers, the lender reported a spike in its credit impairment charge, which rose 18%. FirstRand runs the largest retail bank in South Africa and can be seen as a bellwether for the country’s economic health.

“As a large systemic financial services group, FirstRand is not immune to the serious macroeconomic challenges facing South Africa, and the damaging impact of ever declining GDP growth is becoming evident in all of the group’s customer segments,” Chief Executive Alan Pullinger said in a statement.

The bank’s headline earnings per share, the main profit measure in South Africa, stood at 249.4 cents ($0.1572) for the six months to Dec. 31, compared to 237.9 cents a year earlier.

The figure was normalised to exclude 2.3 billion rand in after-tax profit earned in the prior year from the sale of a credit card portfolio.

The bank’s South African retail operation, First National Bank (FNB), grew normalised earnings by 5%, a substantial slowdown compared to 2018 when they rose by 13%.

It said growth in credit impairment struck mostly in unsecured retail advances and to a smaller degree in commercial lending.

“The macroeconomic environment deteriorated more rapidly than anticipated, particularly in late 2019 and the velocity of this deterioration could not be immediately captured by FNB’s origination scorecards and collections processes,” the group said in its statement.

Although the necessary adjustments had been made, these would probably only have an impact in the next financial year, it added.

($1=15.8616 rand)

(Reporting by Emma Rumney; Editing by Muralikumar Anantharaman, Kirsten Donovan)

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