Wrap Text
Update to shareholders and noteholders on its operational and financial performance for the year to 30 June 2026
FIRSTRAND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1966/010753/06)
JSE share code: FSR; ISIN: ZAE000066304
NSX share code: FST
JSE company code interest rate issuer: FSDI
LEI: 529900XYOP8CUZU7R671
(FirstRand or the group)
Update to shareholders and noteholders on its operational and financial performance for the year to
30 June 2026
Over the last six months the global macroeconomic environment was characterised by an escalation
in geopolitical tensions, a disruption of the global oil market and heightened uncertainty. This
resulted in upward revisions of near-term inflation forecasts, changes in interest rate expectations
and downward revisions in economic growth forecasts in most of the countries where the group
operates. The effects of these developments are beginning to emerge, with inflation lifting, some
central banks tightening monetary policy and consumer confidence weakening.
Despite these global pressures, supportive export commodity prices and ongoing economic reform in
South Africa and several of the jurisdictions in the group's broader Africa portfolio, have provided
some protection. In South Africa, fiscal consolidation remains intact, the South African Reserve Bank
continues to target low and stable inflation, and the government is implementing its structural
reform agenda under Operation Vulindlela. These developments serve as important anchors for the
currency and domestic interest rates.
Although the FCA UK motor redress scheme is being challenged, as previously communicated to
shareholders on 7 April 2026, the group expects the total UK motor commission redress scheme
provision to be approximately £750 million. This results in a further pre-tax accounting provision of
£510 million raised during the current financial period. The group confirms its guidance that the
impact of this additional provision is expected to result in a contraction in normalised earnings of
between 4% and 9%, with a Return on Equity (ROE) slightly below the bottom end of its stated range.
Despite the challenging macro backdrop and the impact of the FCA scheme, the group's underlying
operational performance (excluding the additional UK motor commission provision) has continued to
track strongly, and on this basis the previously disclosed guidance on growth in normalised earnings
and ROE for the year to 30 June 2026 remains intact. The unpack of the operational performance
below is presented excluding the provision.
Overall balance sheet growth remained healthy with the level of advances growth increasing in the
second half of the year, resulting in net interest income (NII) growth for the year trending slightly
higher than the half year guidance. This was driven by the large South African and broader Africa
lending franchises. As expected, FNB's retail advances growth will be higher than the first half.
WesBank has continued to originate strong growth in its vehicle asset finance book. FNB's
commercial advances are trending at similar levels to the first half of the year. Growth in RMB's
corporate advances turned positive in the second half given the lower distribution levels relative to
the first half and the normalisation of the base impact of distribution in the prior year. Both broader
Africa and UK operations constant currency advances growth remains solid, with the stronger rand
marginally impacting the translated growth outcome.
NII was further supported by the strength of the group's large deposit franchises and the endowment
protection provided by the group's Asset and Liability Management (ALM) strategy. Net interest
margin (excluding the UK operations) expanded slightly relative to the first half with the UK
operations continuing to experience margin compression as competitive pressures weighed on
customer deposit pricing.
The group's core credit performance will be better than guided with the credit loss ratio expected to
be at the lower end of the through-the-cycle (TTC) range. Retail credit continues to improve,
commercial remains within its TTC range and corporate credit is expected to print just below its TTC
range. The UK credit loss ratio continued to normalise off the low base of the prior year but is still
expected to remain slightly below the bottom end of its through-the-cycle range. To date, the impact
of the Middle East conflict has predominantly manifested in increased accounting forward looking
provisions.
Non-interest revenue (NIR) remains robust driven by strong growth in trading and fair value income,
investment income and RMB knowledge-based fees and supported by resilient fee and commission
income from FNB. Insurance income continues to be impacted by investment into distribution and
technology capabilities, but new business volumes remain strong. Private equity continues to deliver
solid equity accounted earnings growth, with second half realisations lower than the first half.
Operating expenses are expected to be slightly higher than guided. Core operating costs remain in
line with expectations, however higher than expected one-off costs associated with the integration
of the HSBC client franchise, broader Africa platform project costs, and costs related to the staff
offshoring project at Aldermore have resulted in overall expenses trending up.
As part of its statement on 7 April 2026, the group confirmed that it will commence an orderly exit of
its UK operations. Considering this decision and given that the group expects to substantially
complete this exit process within the next 12-month period (still subject to all required regulatory
approvals and timelines) the entire UK operations will be disclosed as a discontinued operation for
the financial reporting year ending 30 June 2026.
The underlying operational performance (excluding any additional FCA redress scheme provision)
from the UK operations is expected to be softer than initially anticipated due to the impact of further
margin compression and the acceleration of associated costs of the offshoring project (to support
the exit process). The strengthening rand against the pound sterling exchange rate will also dampen
year on year earnings growth.
The stronger performances from the South African and broader Africa franchises have more than
offset the weaker performance from UK operations. FNB's South African franchise continues to
perform well with ongoing solid top-line growth, disciplined cost management, and an improving
credit performance. RMB's top line remains supported by growth in advances, knowledge-based
fees, the turnaround in global markets and the on-going contribution from the private equity
portfolio. WesBank's top-line also remains strong on the back of sustained advances growth.
The group's operating performance remains an outcome of disciplined financial resource allocation,
capital optimisation, and the quality of its customer franchises. The capital positions of FirstRand
Limited, FirstRand Bank Limited and Aldermore Group remain above their respective targeted capital
ratios. The group confirms its statement on 7 April 2026 that it can pay a dividend calculated on
earnings before the post-tax impact of the UK motor commission provision and within its cover
range.
Shareholders and noteholders are advised that the financial information on which this voluntary
trading update is based is the responsibility of the directors of FirstRand and has not been reviewed
or reported on by the group's external auditors. The group will announce audited financial results for
the full year to 30 June 2026 on Thursday, 10 September 2026.
Sandton
23 June 2026
Sponsor
Rand Merchant Bank (a division of FirstRand Bank Limited)
Debt sponsor
FirstRand Bank Limited
Date: 23-06-2026 02:30:00
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