Integrated financial services group, FirstRand, has not been affected by the Lehman Brothers crisis, FirstRand chief executive Paul Harris said on Tuesday at his company's results presentation.

He was referring to the bankruptcy of the world's fourth largest investment bank, Lehman Brothers Holdings, in the United States.

"We don't own any Lehman paper and we owe them more than they owe us," said Harris.

In the worst case scenario, FirstRand's exposure to the Lehman crisis would be no more than US$10-million, he added.

Johannesburg Securities Exchange-listed FirstRand was presenting its June full-year results.

The company posted earnings of R10.4-billion which on a normalised basis were eight percent lower than the performance of the previous year, when they grew 32 percent.

Harris said that in relation to the losses at the company's offshore equity trading division, FirstRand had misread the market.

"The losses were painful, but manageable in relation to our size," said Harris. "We apologise to shareholders."

Harris said FirstRand had misread the market's volatility.

Market prices fell below valuations and initially it was decided to reduce the portfolio but hold until value was restored.

"When the market got worse, we decided to sell.... We sold down 95 percent of the portfolio."

He said the loss was "not one single event". "The loss was due to the accumulation of daily losses."

He said that selling down proved to be the right decision in the current market.

"There was no failure of risk management... we misread the market."

Most of the portfolio was in long mid and small caps/short indices.

Harris said that in the future there would be "lower risk and less volatile earnings."

Sapa