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UPDATE 2-S.Africa's FirstRand hopes to return to dividends next year

* FirstRand says coronavirus has devastated economy

* Profit drops 38% as bad debt charges more than double

* Says hopes to restore dividends at 2021 interim results

* Says crisis will weigh on profit for some time (Recasts on dividend, adds shares)

JOHANNESBURG, Sept 10 (Reuters) - FirstRand, Africa’s largest bank by market value, hopes it can restore dividend payments by March 2021, Chief Executive Alan Pullinger said on Thursday after the lender reported a 38% drop in full-year profit.

The South African bank had already flagged that profit could fall by up to 45% due to the impact of the coronavirus pandemic. It did not declare a final dividend in line with guidance from the country’s central bank that lenders should avoid this to preserve capital during the crisis.

“We are hopeful that we will get back to a declaration and distribution of dividends by our interims,” Pullinger told investors, referring to the bank’s half-year results in March next year.

“We’re going to need to be guided by the regulatory authority,” he said, adding the bank did have the capital to absorb a final dividend, albeit a smaller one, and capital was not a constraint.

FirstRand’s headline earnings per share - the main profit measure in South Africa - fell 38% to 308.9 cents in the year to June 30, compared to 497.2 cents reported a year earlier.

That was mainly due to a 15.2 billion rand ($908.8 million) increase in provisioning for bad debts related to the coronavirus crisis, which prompted a more than doubling in the bank’s credit impairment charge to 24.4 billion rand.

Pullinger said the pandemic, a once-in-a-generation crisis, would likely weigh on business for at least the next year, with the bank warning it did not expect earnings in the second half of 2021 to reach June 2020 levels.

“The lockdown devastated the economy, and it will be a long hard road back to recovery,” he said.

Like its peers, FirstRand said it had shifted its focus away from growth and towards preservation with the aim of emerging from the crisis strong.

Its shares were up 1.17% at 1117 GMT.

$1 = 16.7251 rand Reporting by Emma Rumney; Editing by Jan Harvey and David Evans

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