Avior Financials | ABSA, JSE and FirstRand pre-close notes | Discovery Bank | ACG

In this week's Avior Financials note:

Discovery released an update on its bank and expects to start migrating its Discovery Card customers (c.300k) onto the bank's card and banking account over the next few months. In our view, Discovery is not a significant threat to the other major SA banks in terms of customer losses (particularly as it does not have secured credit products). However, we expect Discovery to place pressure other SA banks' net fee income, as banks need to compete with Discovery's rewards. Discovery also noted that it will offer up to 6.5% on "lazy" or current account balances.

We had a FY ‘19 pre-close call with FirstRand this week. In our view, the commentary implied earnings growth of 5-6% for FY '19 (in line with our estimates and consensus).

We had a H1 '19 pre-close call with ABSA this week. The FY '19 guidance remains that Group ROE should increase y/y (FY '18: 16.8%). However, the H1 '19 ROE will probably decline y/y. . The guidance is in line with our expectations of 5% y/y growth in normalised diluted HEPS in H1 '19 and a ROE of 16.6% (H1 '18: 16.9%).

Investec's FY '19 Annual Report notes that the demerger is expect to be complete in H2 CY '19 (versus by Sep '19 previously).

Anchor Capital released a trading update following its AGM. AUM has increased by 10% from R49bn in Dec ‘18 to R54bn as of 31 May '19.

The JSE expects a 25% to 35% decline in H1 ‘19 HEPS. The trading statement is ahead of our previous expectation of a c.20% decline in H1 HEPS. We expect the JSE to have an improved H2 '19 as earnings recover off a lower base. However, we do not believe the JSE can cut costs further. Unless there is improved trading activity and improved business confidence, we expect the JSE's short-term earnings prospects to remain muted.