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FIRSTRAND LIMITED - Unaudited interim results and cash dividend declaration for the six months ended 31 December 2023

Release Date: 29/02/2024 08:30
Code(s): FSR     PDF:  
Wrap Text
Unaudited interim results and cash dividend declaration for the six months ended 31 December 2023

(Incorporated in the Republic of South Africa)
Registration number: 1966/010753/06
JSE ordinary share code: FSR; ISIN code: ZAE000066304
NSX ordinary share code: FST
LEI: 529900XYOP8CUZU7R671
(FirstRand or the group)


"The shape of these results continues to demonstrate the positive outcomes of strategic calls made by the group.

Once again, the pleasing credit performance stands out, with the credit loss ratio well below the mid point of the group's through-the-cycle
(TTC) range. This is a commendable result given the prevailing inflation and interest rate cycle, and has enabled continued advances
growth as the group services the needs of customers through judicious and tactical origination.

The group saw further deposit franchise growth in the period, resulting from the focus on appropriate, competitive and convenient savings
propositions for customers.

Despite some cyclical pressures and base effects arising from the comparative period, the disciplined deployment of financial resources
has ensured that the group's normalised return on equity (ROE) remains well placed in its stated range."



                                                                                                        Six months ended
                                                                                                          31 December
R million                                                                                                 2023          2022         % change
Basic and diluted normalised earnings per share (cents)*                                                 340.4         320.7                6
Normalised earnings*                                                                                    19 097        17 988                6
Headline earnings*                                                                                      19 135        18 032                6
Normalised net asset value per share (cents)*                                                          3 387.4       2 978.5               14
Ordinary dividend per share (cents)                                                                        200           189                6
Normalised ROE (%)*                                                                                       20.6          21.6
Basic and diluted headline earnings per share (cents)*                                                   341.4         321.7                6
Basic and diluted earnings per share (cents) - IFRS*                                                     348.1         319.7                9
Net asset value per share (cents) - IFRS*                                                              3 384.4       2 977.6               14
Advances (net of credit impairment)                                                                  1 601 558     1 447 667               11
Deposits                                                                                             1 978 278     1 793 318               10
Credit loss ratio (%)                                                                                     0.83          0.74

*  December 2022 figures were restated for the impact of IFRS 17. Refer to pages 213 to 222 of the online version of the results
   booklet for more detail.


The 6% increase in the group's normalised earnings was driven by good topline growth, particularly net interest income (NII), which
benefited from continued momentum in new business origination, ongoing excellent growth from the deposit franchise and the endowment
benefit from the current rate cycle. The period-on-period growth in non-interest revenue (NIR) of 4% reflects the base created by a
significant private equity realisation in the comparative period, fee reductions in the retail and commercial segments in the period under
review, and a loss in the period under review (compared to a gain in the prior period) from the partial unwind of the UK operations' interest
rate risk hedge. The underlying performances from the group's retail, commercial and corporate transactional franchises (measured by
customer growth and volumes) remained strong.

The relative size and quality of its transactional franchise allows the group to achieve high levels of capital-light earnings growth, translating
into superior returns for shareholders. At the same time, FirstRand continues to employ a judicious and tactical approach to lending,
supporting its customer franchises whilst protecting the balance sheet and return profile. This remains a necessary balancing act given the
operating environment, which is still characterised by high inflation and interest rates, combined with sluggish system growth and increased

The overall credit performance continues to trend better than FirstRand's initial TTC expectations, and is a direct outcome of the group's
origination approach. This has resulted in a credit charge for the period under review well below the midpoint of the group's TTC range.

FirstRand delivered a normalised ROE of 20.6%, which is well placed in its target range of 18% to 22%. The 100 bps movement in the
ROE compared to December 2022 (21.6%) was predominantly due to the 9 bps reduction in return on assets (ROA). This resulted from
cyclically high retail credit impairments, the aforementioned partial unwind of the UK interest rate risk hedge due to the recent volatility
in UK interest rates, and the high base from a private equity realisation in the prior period. Including the benefit from foreign currency
movements in the capital deployed in the UK, ongoing capital generation also had a marginal impact.

The group produced R5.5 billion of economic profit or net income after cost of capital (NIACC), which is its key performance measure
(December 2022: R6.1 billion). The reduction period-on-period was a result of a 40 bps increase in the cost of equity and the reduction in
ROE. Total net asset value (NAV) increased 14%.

Given the high return profile, the group remained capital generative, with the Common Equity Tier 1 (CET1) ratio at 13.3%
(December 2022: 13.2%). Taking into account this strong capital level, the board is comfortable to keep the dividend cover unchanged at 
1.7 times. This translates into an interim dividend of 200 cents per share, an increase of 6%.

The following table provides an overview of the group's performance.


                                                                                      Six months ended                          Year ended
                                                                                        31 December                                30 June
R million                                                                               2023          2022        % change            2023
NII                                                                                   42 771        37 681              14          78 615
NIR*                                                                                  26 577        25 534               4          52 393
Operating expenses                                                                   (34 616)      (31 782)              9         (67 320)
Impairment charge                                                                     (6 404)       (5 008)             28         (10 949)
Normalised earnings                                                                   19 097        17 988               6          36 634
NIACC                                                                                  5 492         6 135             (10)         11 904
ROE (%)                                                                                 20.6          21.6                            21.1
Gross written insurance premium on group licences                                      3 653         3 121              17           6 507
Deposit franchise                                                                  1 510 279     1 354 658              11       1 442 610
Core lending advances                                                              1 562 752     1 410 711              11       1 511 037
Credit loss ratio (%) - core lending advances                                           0.83          0.74                            0.78
Stage 3/NPLs as a % of core lending advances                                            3.98          3.59                            3.80

*  Includes share of profit of associates and joint ventures after tax.

FirstRand's performance continues to reflect the consistent and disciplined execution on strategies designed to maximise shareholder
value, tightly managed through the group's financial resource management (FRM) process.

FirstRand's diversified portfolio has allowed the group to capitalise on profitable growth opportunities across its chosen markets, sectors
and segments. The respective performances of the operating businesses are unpacked in the table below.


                                                             Six months ended                                    Year ended
                                                               31 December                                          30 June
R million                                  2023   % composition           2022     % composition      % change         2023    % composition
FNB                                      11 473              60         10 964                61             5       21 700               59
WesBank                                     988               5            924                 5             7        1 850                5
RMB                                       4 475              23          4 659                26            (4)       9 116               25
UK operations*                            1 648               9          1 607                 9             3        3 345                9
Centre*,**,#                              1 161               6            293                 2          >100        1 559                4
Other equity instrument holders            (648)             (3)          (459)               (3)           41         (936)              (2)
Normalised earnings                      19 097             100         17 988               100             6       36 634              100

*  In the UK operations management view shown in the table above, MotoNovo's front and back books were included in the
   December 2022 and June 2023 figures. As MotoNovo's back book has significantly run down and is immaterial to the group and
   the UK operations, the back book is reported in the Centre effective 1 July 2023, with the management reporting view of the
   UK operations now aligned to the segment report on pages 48 to 59 of the online version of the results booklet and the statutory
   view for Aldermore Group.
** Including Group Treasury - includes capital endowment, the impact of accounting mismatches, and interest rate, foreign currency and
   liquidity management.
#  Includes FirstRand Limited (company). Several variables shaped the Centre's performance, including the non-repeat of the
   R498 million provision relating to Ghana's sovereign debt restructure in the prior period, the net endowment benefit, and the impact
   of accounting mismatches.


Overall group NII increased 14%, driven by core lending advances growth (+11%), continued deposit gathering (+11%) and the capital
endowment benefit (+12%), which incorporates the outcomes from the asset-liability management (ALM) strategy, unpacked in more detail

FirstRand's focus on growing liability-related NII played out strongly across all deposit franchises and remains a key underpin to its superior
return profile.

FNB and WesBank's approach to retail origination is informed by internal and external data analyses of affordability indicators which
still suggest that low-to-medium-risk customers have the most capacity for credit. This has been even more evident in a higher-rate

On a rolling-six-month view, absolute advances growth in most SA and UK retail portfolios reduced relative to June 2023. Given customer
affordability pressures and reduced demand, the previous momentum in SA residential mortgages has slowed, however, there has been
a pick-up in unsecured lending with origination anchored to low-to-medium-risk customer cohorts. As expected, there was continued good
growth in corporate advances.

On a period-on-period basis, new business origination showed healthy increases, with advances up 7% and 11% at FNB retail and
WesBank, respectively. The increases in advances from FNB commercial (+9%), RMB (core +14%) and FNB broader Africa (9%) are also
an outcome of focused origination in sectors showing above-cycle growth and which are expected to perform well even in an inflationary
and high interest rate environment.

The 4% decline in UK operations advances (in pound terms) reflects the challenging inflationary and interest rate environment, despite a
resilient new business production from specialist buy-to-let. In rand terms, UK operations' advances increased 11% period-on-period due to
the weakening of the rand.

Origination strategies, combined with the focus on growing the deposit franchise and appropriate provisioning, have resulted in a well-
struck balance sheet. This is a direct outcome of the group's FRM strategy and demonstrates the group's growth vs returns thesis.

Period-on-period movements in advances and deposits are unpacked by operating business and segment in the following table.

                                             Growth in        Growth in
                                            advances %       deposits %
FNB                                                  8               12
- Retail                                             7               11
- Commercial                                         9               12
- Broader Africa                                     9               16
WesBank                                             11              n/a
RMB*                                                14                2
UK operations**                                     (4)               4

*   Advances growth for RMB is based on core advances, which exclude assets under agreements to resell.
**  In pound terms. Growth in deposits refers to customer savings deposits.

Total transactional NII increased 5%, driven by growth in transactional credit product volumes, retail and commercial customer deposits,
and deposit endowment.

FirstRand's approach to managing the endowment profile (the ALM strategy) is designed to optimise TTC returns to shareholders and is a
cornerstone of the group's FRM process.

Rather than take a passive position (i.e. overnight) with regard to the impact of the rate cycle on its endowment profile, the group actively
manages the profile to protect and enhance earnings TTC, and earn the structural term premium for shareholders by investing along the
yield curve over and above the repo rate.

This active ALM strategy is managed by Group Treasury in line with the following underlying principles:
- do not add to the natural risk profile in aggregate;
- consistently apply investment philosophy;
- be countercyclical to operating businesses;
- reduce the natural earnings volatility introduced by the interest rate cycle;
- optimise for capital allocation and risk-adjusted return; and
- take cognizance of accounting and regulatory requirements.

Whilst the absolute period-on-period rate of growth in the group's endowment NII for the current financial period will not reflect the full
extent of the rise in interest rates, the converse was true in previous periods when rates were lower.

The outcomes of this approach for shareholders should be assessed on a TTC basis. The table below shows the cumulative additional
endowment NII of R17 billion earned in excess of an overnight (repo) investment profile since the 2018 financial year, when the ALM
strategies were introduced.


                                                                          Six months ended                                        Cumulative
                                                                            31 December                            Year ended     additional
                                                                                                                      30 June      endowment
R billion                                                                   2023           2022     % change             2023            NII*
Capital endowment                                                            0.3            0.7          (57)             0.9           10.1
Deposit endowment                                                           (1.0)           0.6        (>100)             0.2            6.7
Total                                                                       (0.7)           1.3        (>100)             1.1           16.8

*  Includes additional endowment NII from 1 July 2017 to 31 December 2023.

Financial years 2021 and 2022 delivered R12.3 billion of additional NII when interest rates were low. The group expects, on a TTC basis,
that this cumulative outperformance will offset the lower trend in endowment NII growth in the current period, which is characterised by
higher rates.

In the period under review, there was an effective opportunity cost of R0.7 billion, compared to the R1.3 billion benefit in the prior period.
This R2 billion swing had a negative impact of c. 5% on the period-on-period NII growth rate.

Group net interest margin (NIM) improved 9 bps period-on-period to 4.47% (December 2022: 4.38%), but has remained flat since
June 2023. Lending margins continue to come under pressure from the competitive environment, origination strategies and mix change
(a higher proportion of residential mortgages and CIB advances). NIM benefited from the performance of the deposit franchise (and the
net endowment benefit).

Total group NIR (+4%) reflects a number of one-off positive and negative movements, such as:
- the partial unwind of the UK operations' interest rate risk hedge, which resulted in a loss of £10.8 million in the period under review,
  compared to a profit of £6.7 million in the prior period;
- the non-repeat of the Ghana sovereign debt provision; and
- the non-repeat of the out-sized Studio 88 private equity realisation.

FNB's total NIR increased 5%, driven by customer acquisition (+5%), and good growth in activity levels and transactional volumes across
all channels.

The relatively muted growth in FNB's fee and commission income in the period under review was due to sub-inflation fee increases across
both retail and commercial accounts. In addition, with the introduction of PayShap, FNB reviewed its pricing structures for low-value
real-time payments, and took the decision to reduce all related fees. Despite the impact on fee and commission income in the current
period, FNB believes this is the correct outcome for customers, and retail and commercial are already seeing an increase in volumes.
All of the above actions resulted in a R477 million reduction in fee and commission income in the period under review.

FNB's insurance activities continued to contribute strongly, with increases in new business annual premium equivalent (APE) of 8% in life
and 16% in short-term. Gross written premiums on group licences increased 17%.

Total WesBank NIR (+4%) benefited from a strong rebound from the Toyota Financial Services and Volkswagen Financial Services joint

RMB's total NIR growth (+9%) was achieved despite a mixed performance from its markets business and the base effect of the prior period
realisation. Good growth in private equity annuity income (+15%) was further supported by two realisations, totalling R776 million - one in
the investment banking business and one in private equity. In addition, knowledge-based fee income grew strongly (+25%) on the back of
origination activities and advisory mandates.

Total group operating expenses were 9% higher, including a 9% increase in direct staff costs, driven by targeted and general salary
increases, whilst headcount remained relatively flat.

At an operating business level, FNB grew costs below inflation (+5%), but this strong performance was offset by a significant increase in
costs from RMB (+13%) due to elevated investment expenditure. Ongoing investment in Aldermore's platform, people and processes also
contributed to cost growth of 11%.

The cost-to-income ratio decreased to 49.9% (December 2022: 50.3%). The ratio has benefited from the adoption of IFRS 17, due to
directly attributable insurance costs no longer being reported in operating expenses, but offset directly against insurance revenue. This
benefit at adoption on 1 July 2023 was 40 bps.


The group's credit performance was better than expected, with the credit loss ratio well below the mid point of the TTC range of
80 bps - 110 bps, despite the prevailing macroeconomic environment. The overall credit loss ratio (CLR) increased to 83 bps
(June 2023: 78 bps; December 2022: 74 bps), with increases across all portfolios except broader Africa and the UK operations.

This performance reflects the benefit of the group's approach to origination, particularly post the pandemic when new business was
weighted towards the low- and medium-risk categories, and was achieved despite the current pressures from high inflation and interest
rates. However, given these pressures, balance sheet provision levels against the in-force book remained appropriate as new origination
adapts to macros dynamically. Overall performing coverage on core lending advances decreased slightly to 1.67% (June 2023: 1.72%;
December 2022: 1.72%), reflecting book growth, mix change to a higher proportion of secured advances, and the reduction in modelled
macroeconomic forward-looking information (FLI) given the improved outlook.

Non-performing loans (NPLs) increased to R62.2 billion (June 2023: R57.4 billion; December 2022: R50.7 billion), which represents 3.98%
of core lending advances (June 2023: 3.80%; December 2022: 3.59%). This absolute increase was driven by increased flows into NPL off
the back of advances growth and rising interest rates.


                                                       Six months ended                            December            June        December
                                                                                                    2023 vs         2023 vs         2022 vs
                                                                                                   December        December            June
                                   31 December        30 June     31 December         30 June          2022            2022            2022
R million                                 2023           2023            2022            2022      % change        % change        % change
Movement in balance sheet
Performing book provisions                 (13)         1 658             964          (1 357)        (>100)             72           (>100)
NPL provision                            2 195          1 198            (482)         (1 112)        (>100)          (>100)            (57)
- Provision movements                    2 195          1 198             339          (1 112)         >100            >100           (>100)
- NPL release due to debt-to-
equity restructure*                          -              -            (821)              -          (100)           (100)              -

Credit provision increase/
(decrease)                               2 182          2 856             482          (2 469)         >100            >100           (>100)
Gross write-off and other                6 372          5 344           6 904           7 999            (8)            (23)            (14)
- Bad debts written off**                6 069          6 778           6 382           7 373            (5)              6             (13)
- Debt-to-equity restructure*                -              -             716               -          (100)           (100)              -
- Exchange rate and other                  303         (1 434)           (194)            626         (>100)           >100           (>100)
Amounts recognised directly in
income statement
Modification loss                          356            317             353             267             1             (10)             32
Interest suspended on stage 3
advances                                (1 548)        (1 251)         (1 599)         (1 363)           (3)            (22)             17
Post write-off recoveries                 (958)        (1 325)         (1 132)         (1 381)          (15)             17             (18)
Total impairment charge                  6 404          5 941           5 008           3 053            28              19              64
Credit loss ratio (%) - core
lending advances                          0.83           0.81            0.74            0.47
Credit loss ratio excluding UK
operations (%) - core lending
advances                                  0.99           0.91            0.75            0.45

*   Refer to page 85 of the online version of the results booklet for more information on the debt-to-equity restructure.
**  Write-off of gross balances, excluding prior period provisions held, which have been recognised in the income statement over various
    reporting periods.

The overall impairment charge increased 28% to R6 404 million (December 2022: R5 008 million). Key drivers include:
- performing provisions declining R13 million despite advances growth:
  - overall stage 1 provision balances decreased R444 million as the impact of improvements in the macro outlook during the period
     under review resulted in releases in modelled FLI provisions;
  - stage 2 provisions increased R431 million, reflecting advances growth and expected origination strain, resulting in an increase in
     arrears and significant increase in credit risk (SICR) levels;
- coverage ratios remained largely similar to those in June 2023, benefiting from a decrease in UK operations' provisions, particularly from
  the structured and specialised finance book, as event-driven provisions were no longer required;
- stage 3 provisions increased as NPLs continued to increase, albeit in line with expectations and driven largely by the personal loans,
  card, VAF and residential mortgages portfolios. Coverage remained similar to June 2023 levels;
- a 5% reduction in bad debts written off as the average age of the overall NPL population decreased due to new inflows, partially offset by
  a 15% reduction in post write-off recoveries;
- the UK portfolio's impairment charge decreased, reflecting the impact of a stabilising macroeconomic outlook, allowing for the partial
  release of management overlays raised in the previous year; and
- RMB's impairment charge showed a R595 million period-on-period increase.

The previous table shows changes in impairments on a rolling six-month view, based on movements in the balance sheet. Impairments
increased 28% period-on-period with the greatest impact from the NPL-related component, given the inflow into stage 3. Performing
provisions benefited from the reduction in modelled FLI due to improvements in the macro outlook. Write-offs decreased, but so did post
write-off recoveries.


                                                               31 December 2023 vs                            31 December 2023 vs
                                                                 31 December 2022                                 30 June 2023
                                                                                   Percentage                                     Percentage
                                                                                        point                                          point
                                                                                 contribution                                   contribution
                                                                                   to overall                                     to overall
                                                     R million       % change    NPL increase       R million       % change    NPL decrease
Operational NPLs*                                        6 903             23              14           3 291             10               5
Other paying NPLs**                                      2 668             30               5           1 038             10               2
NPLs (excluding UK operations)                           9 571             23              19           4 329              9               7
UK operations                                            1 960             23               4             479              5               1
Change in total group NPLs                              11 531             23              23           4 808              8               8

*   Include debt-review and other core lending advances =90 days in arrears.
**  Include debt-review and other core lending advances <90 days in arrears and still subject to curing criteria.

Group NPL balances increased 23% period-on-period as a consequence of advances growth and the weak economic environment. This
was in line with expectations.

SA retail NPLs increased 26% period-on-period to R36.9 billion (June 2023: R32.8 billion; December 2022: R29.3 billion) with increases
across all portfolios, but most notably driven by residential mortgage NPLs (+R4.1 billion), personal loans NPLs (+R1.6 billion) and VAF
NPLs (+R1.2 billion). Apart from origination strain related to book growth, these portfolios were significantly affected by inflationary and
interest rate pressures. The absolute growth slowed during the period under review.

SA commercial NPLs remained similar to December 2022, driven by strain in the agric portfolio and benefiting from settlements and
positive migrations.

The period-on-period increase of R1 billion in SA CIB portfolio NPLs was a result of the migration of certain high-value, highly secured
exposures in both SA and in West Africa, due to the deterioration of economic and sovereign conditions. Since June 2023, NPLs have
decreased due to the work-out and write-off of long-outstanding exposures.

The deterioration of macroeconomic conditions across the continent also had an impact on the broader Africa portfolio, with increasing
levels of NPLs since December 2022, most notably in Namibia and Ghana. The NPL ratio decreased to 4.62% (December 2022: 4.83%;
June 2023: 4.62%) given advances growth and further write-offs in Zambia. Post June 2023, the NPL ratio has remained flat as advances
growth decelerated somewhat.

UK operations' NPLs increased 6% (in pound terms) period-on-period and 7% since June 2023, reflecting the impact of inflationary
pressure and higher interest rates on credit performance. This, combined with the reduction in overall advances, resulted in an increase in
the NPL ratio to 2.94% (June 2023: 2.72%; December 2022: 2.66%). The notice of sums in arrears (NOSIA) operational event continues to
weigh on absolute NPL balances at MotoNovo. Remediation relating to the NOSIA event is tracking as expected.

NPL coverage decreased to 45.4% (December 2022: 49.0%) as a result of the reduction across all portfolios. Coverage remained similar to
June 2023, benefiting from the UK operations, in particular the motor finance book.


The management of the group's financial resources, which it defines as capital, funding and liquidity, and risk appetite, is a critical enabler
to ensure FirstRand achieves its stated growth and return targets and is driven by the group's overall risk appetite. Group Treasury is
mandated to execute on FRM strategic initiatives.

Group Treasury also manages the interest rate and foreign exchange rate risk inherent in balance sheet activities within prudential and
management limits, as well as the group's risk appetite. The aim is to protect and enhance earnings without adding to the natural risk

Capital position

Capital ratios for the group and bank are summarised below.


                                             Group                       Bank**
                                                      As at 31 December
%           Internal targets              2023           2022         2023              2022
CET1        11.0-12.0                     13.3           13.2         12.9              12.6
Tier 1      >12.0                         14.1           13.9         14.1              13.6
Total       >14.75#                       15.9           16.0         16.1              16.1

*   Including unappropriated profits.
**  Including the bank's foreign branches.
#   Bank's target remained at >14.25%.

The UK countercyclical buffer (CCyB) requirement was lifted to 2% in July 2023 and has been incorporated in the group's internal targets.
The Prudential Authority's (PA's) proposed directive requiring a positive cycle-neutral CCyB of 1% for South African banks (effective
January 2026) will be incorporated in the group's internal targets when appropriate.

The group's CET1 ratio remained well above the upper end of its internal target range. The group continued to focus on the efficient use of
financial resources and optimisation of risk-weighted assets (RWA). There is ongoing effort to optimise the overall level and mix of capital
across the group and its regulated subsidiaries.

Key factors driving the CET1 outcome include:
- positive earnings generation partly offset by the payment of dividends;
- an increase in the foreign currency translation reserve due to the rand's depreciation against hard currencies;
- successful capital optimisation strategies; and
- an increase in RWA mainly from credit risk, driven by higher volumes and rand depreciation. Higher revenue generation increased
  operational risk RWA.

The bank has issued a combination of Additional Tier 1 (AT1) and Tier 2 instruments to ensure sustainable support for ongoing growth
initiatives and redemption of existing capital instruments. The capital stack has been rebalanced with a tilt towards a higher proportion of
AT1 instruments.

The Resolution Authority (RA) published the draft standard, Flac instrument requirements for designated institutions in 
December 2023, which sets out the qualifying criteria of Flac instruments and the level of required instruments to ensure sufficient 
loss absorption and recapitalisation capacity. The issuance of Flac instruments is expected to take place on a phased-in basis from 
the proposed implementation date of 1 January 2025. The estimated annual post-tax cost, ranging from R200 million to R300 million at 
the end state, will be incorporated into the group's ALM strategies and considered as part of the FRM process.

It remains the group's intention to continue to optimise its total loss-absorbing capacity by issuing a combination of capital and Flac
instruments in the domestic and/or international markets.

The Corporation for Deposit Insurance (CoDI) was established as a legal entity in March 2023 and will be fully operational in April 2024.
The group's impact assessments suggest an annual post-tax cost of R200 million to R230 million for a covered deposit balance of
approximately R110 billion.

Capital allocation and returns

The group's methodology for allocating capital to operating businesses considers internal capital targets, regulatory capital (average RWA
consumption, regulatory deductions and anticipated regulatory changes), economic capital and NAV. Excess capital above internal capital
target levels is not allocated to business.

A summary of the capital allocated to the group's operating businesses is provided in the following table.


                                  Six months ended                          Year ended
                                    31 December                       %        30 June
R million                           2023          2022*          change           2023*
FNB**                             56 890        52 429                9         53 392
WesBank**                          9 025         8 843                2          8 467
RMB                               47 039        41 676               13         43 213
UK operations#                    34 389        26 881               28         29 139
Centre^                           12 959        10 824               20         10 703
Unallocated capital^^             25 432        25 707               (1)        28 633
FirstRand group                  185 734       166 360               12        173 547

*   Restated - refer to pages 213 to 222 of the online version of the results booklet for more detail.
**  Included in the average capital allocated to WesBank is a reduced operational risk capital allocation following the integration into FNB.
    There was a corresponding increase in FNB's allocated operational risk capital.
#   Prior periods included the MotoNovo back book. UK operations' capital represents a quarterly average converted to rand using the
    period-end closing exchange rate.
^   Prior periods excluded MotoNovo back book.
^^  Includes excess capital.

ROEs for the group and its operating businesses are provided in the following table.

The superior returns generated by the group's portfolio have resulted in continued capital generation. With the proposed implementation
of the final Basel reforms, which further incorporate standardised elements, the group is increasing its focus on the true economic risk
introduced to its balance sheet. FirstRand's capital allocation considers both regulatory and economic capital views.


                                 Six months ended            Year ended
                                   31 December                  30 June
%                                  2023          2022*             2023*
FNB                                40.3          41.8              40.6
WesBank                            21.9          20.9              21.8
RMB                                19.0          22.4              21.1
UK operations**                     9.6          11.9              11.6
Centre (including
Group Treasury)                     2.7          (0.9)              1.6
FirstRand group                    20.6          21.6              21.1

*   Restated - refer to pages 68 to 70 and 213 to 222 of the online version of the results booklet for more detail.
**  Prior periods included MotoNovo back book. ROEs calculated in pound terms.

Liquidity position

Liquidity risk is a natural outcome of the business activities undertaken by the group. To manage the resultant risk and enable business
to operate efficiently and sustainably, the group seeks to optimise its funding composition, subject to structural liquidity constraints and
prudential requirements. The group continues to pursue a deposit-led funding strategy that provides diversification and stability with an
inherent liquidity risk offset.

The prudential liquidity risk metrics, liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) are managed with adequate buffers
above the regulatory minimums to enable the group to comfortably withstand the natural liquidity seasonality and cyclicality that is a
consequence of its chosen funding mix. The liquidity buffers are determined using stress testing and scenario analysis of cash inflows and
outflows and the liquid assets that comprise the buffers.

The group's high-quality liquid assets (HQLA) portfolio provides a liquidity buffer against unexpected liquidity stress events or
market disruptions, and serves to facilitate the changing liquidity requirements of its operating businesses. The HQLA portfolio has
been constructed taking the group's funding composition, growth and liquidity risk appetite, as well as prudential requirements, into
consideration. The composition and quantum of available HQLA are determined behaviourally by considering both the funding liquidity-
at- risk and the market liquidity depth of these instruments. The portfolio is continually assessed and actively managed to ensure optimal
composition, return and size.

The group remains well funded, with adequate liquidity buffers to meet both prudential liquidity requirements and internal risk targets. The
group closely monitors market developments, key risk metrics and early warning indicators as part of its ongoing funding and liquidity
management and planning.


                                     Group*              Bank*
                                         As at 31 December
%                                 2023        2022       2023        2022
Regulatory minimum                 100         100        100         100
Actual                             119         121        123         124
Average available HQLA             432         392        372         349
(R billion)**
Regulatory minimum                 100         100        100         100
Actual                             122         120        118         117

*   The group's LCR and NSFR include the bank's operations in South Africa, and all registered banks and foreign branches in the group.
    The bank's LCR and NSFR reflect South African operations only.
**  A breakdown of the group's HQLA is provided in the liquid asset table on page 135 of the online version of the results booklet.

Foreign currency balance sheet

The group adopts a disciplined and measured approach to the management of its foreign currency investments in subsidiaries and their
balance sheets. Approved risk frameworks guide the allocation of resources and the management of local and foreign currency risks. The
group's framework for the management of external debt considers sources of sovereign risk and foreign currency funding capacity, as well
as the macroeconomic vulnerabilities of South Africa. The group continues to employ self-imposed structural borrowing and liquidity risk
limits which are significantly more conservative than the regulatory macroprudential limits.

The group's philosophy is that, over the longer term, foreign currency assets should be supported by appropriate foreign currency liabilities,
primarily in the same jurisdiction. The group's key foreign currency operations are outlined below.
- The UK operations of Aldermore (including MotoNovo) are funded through a sustainable and efficient savings deposit funding base and
  capital markets, as appropriate.
- RMB Mauritius and the London branch are hard currency platforms for the group's broader Africa and other foreign currency exposures.
- FirstRand Securities in the UK provides the group's South Africa-based businesses with a highly capitalised and matched principal
  trading platform and offers access to international market liquidity in the securities and derivative markets in which it is most active.
- RMB Securities (USA) and the New York representative office (managed by RMB) are used to maintain the long-term viability of trading
  securities (in both primary and secondary markets) with institutional investors domiciled in the USA.


In January 2024, the UK's Financial Conduct Authority (FCA) announced that it was undertaking a review of the historical use of
discretionary commission arrangements and sales by the mainstream lenders in the UK motor finance market. The FCA has exercised its
powers under section 166 of the Financial Services and Markets Act to appoint a skilled person to run the review process, and plans to set
out next steps by the end of September 2024.

A team representing FirstRand, Aldermore and MotoNovo are currently cooperating fully with the FCA, and FirstRand shareholders may
take note of the following:

- Most of the vehicle loans originated within the scope of the FCA review reside in FirstRand Bank's London branch in the form of the
  MotoNovo back book, which was not part of MotoNovo when Aldermore acquired the business from FirstRand in 2019.
- A smaller cohort of such loans resides in the MotoNovo front book as MotoNovo started to phase out discretionary commission models
  in 2020.
- It is important to note that not all loans originated through dealers in the review period used discretionary commission arrangements.
- Some claims have already been through the UK county courts. Where individual cases were tested in county court, there have been
  a significant number of positive outcomes for lenders as unfairness and/or customer detriment was not demonstrated. This has been the
  outcome for the majority of court cases.
- Given that the skilled person review has just commenced, and that the group continues to believe that MotoNovo's historical practices
  were compliant with the law and regulations in place, there remains considerable uncertainty and therefore no current requirement for a
  provision to be recognised. With the benefit of greater insight from its engagement with the skilled person, the FCA and the group's legal
  team, FirstRand is likely to be in a position by financial year end to update shareholders on any potential outcome.


Looking ahead, global cyclical macroeconomic conditions should ease, particularly as central banks including the Fed and the Bank of
England (BoE) look to cut rates in the second half of calendar year 2024. This should allow the South African Reserve Bank (SARB) some
room to cut the domestic repo rate.

However, in the second six months of FirstRand's financial year to June 2024, the macroeconomic environment in the jurisdictions where
the group operates are expected to remain largely unchanged, characterised by high interest rates and persistent elevated inflation,
resulting in continued affordability pressures, particularly for households.

Ongoing investments by South African businesses in energy capacity remains an underpin to corporate and commercial credit extension,
and provides some upside for production capacity, GDP growth, and business and consumer confidence.

Against the above backdrop, the group anticipates softer overall advances growth and, given the current high base, deposit growth is also
expected to slow, mainly driven by the retail segment as households draw down on savings. Commercial deposit gathering is expected to
remain resilient.

Although fee reductions continue in the retail and commercial customer segments, the growth trajectory in NIR will benefit from stronger
growth in fee and commission income relative to the prior period, supported by ongoing customer growth and activity. The first two months
of the second half are already performing better than the comparative period.

The credit loss ratio is expected to remain well below the mid point of the group's TTC range. Operating expenses growth will be lower than
in the first half.

The group therefore expects to generate earnings similar to the first half.

The ROE is also expected to be similar to the first half, as the cyclical pressures will remain for the rest of the financial year, and within the
group's stated range of 18% to 22%.


FirstRand's dividend strategy is to provide its shareholders with an appropriate, sustainable payout over the long term. Given FirstRand's
high return profile and ongoing capital generation, the board is comfortable to pay a dividend at 1.7 times cover, representing a payout ratio
of 58.8%.


Changes to the directorate are outlined below.

Name               Position             Effective date
WR Jardine         Chairman and         30 November 2023
                   independent non-
                   executive director

RM Loubser         Independent non-     30 November 2023
                   executive director
JP Burger          Chairman and         1 December 2023
                   independent non-
                   executive director


Ernst & Young Incorporated (EY) was appointed as one of the joint auditors of the group for the financial year ending 30 June 2024.


The issued share capital on the dividend declaration date outlined below was 5 609 488 001 ordinary shares.

The directors declared a final gross cash ordinary dividend totalling 200.0 cents per ordinary share out of income reserves for the
six months ended 31 December 2023.

Ordinary shares

                              Six months ended
                                 31 December
Cents per share                 2023         2022
Interim                        200.0        189.0
(declared 28 February 2024)

The salient dates for the interim ordinary dividend are outlined in the following table.

Last day to trade cum-
dividend                       Monday, 25 March 2024
Shares commence trading
ex-dividend                    Tuesday, 26 March 2024
Record date                    Thursday, 28 March 2024
Payment date                   Tuesday, 02 April 2024

Share certificates may not be dematerialised or rematerialised between Tuesday, 26 March 2024 and Thursday, 28 March 2024, both days

For shareholders who are subject to dividend withholding tax (DWT), tax will be calculated at 20% (or such lower rate as is applicable if a
double taxation agreement applies for foreign shareholders). FirstRand's income tax reference number is 9150/201/71/4.

For South African shareholders who are subject to DWT, the interim ordinary dividend net of 20% DWT at 40.0 cents per share will be
160.0 cents per share.

JP Burger              C Low                             AP Pullinger               H Kellan
Chairman               Company secertary                 CEO                        CFO


This announcement covers the unaudited condensed consolidated financial results of FirstRand Limited for the six months ended
31 December 2023 based on International Financial Reporting Standards (IFRS). The primary results and accompanying commentary are
presented on a normalised basis, as the group believes this most accurately reflects its economic performance. The normalised results
have been derived from the IFRS financial results. A detailed description of the difference between normalised and IFRS results is provided
on pages 150 and 153 of the online version of the results booklet, which constitutes the group's full announcement. It is available at Commentary is based on normalised results, unless
otherwise indicated.

The content of this announcement is not audited. The directors take responsibility for the preparation of this announcement.

Any forecast financial information contained herein has not been reviewed or reported on by the group's external auditors.

Shareholders are advised that this announcement represents a summary of the information contained in the results booklet (the full
announcement) and does not contain full or complete details. Any investment decisions by investors and/or shareholders should be based
on consideration of the full announcement. Shareholders are encouraged to review the full announcement, which is available for viewing on
the group's website ( and on



JP Burger (chairman), AP Pullinger (chief executive officer), HS Kellan (financial director), M Vilakazi (chief operating officer), GG Gelink,
TC Isaacs, PD Naidoo, Z Roscherr, SP Sibisi, LL von Zeuner, T Winterboer

Company secretary and registered office

C Low
4 Merchant Place, Corner of Fredman Drive and Rivonia Road
Sandton, 2196
PO Box 650149
Benmore, 2010
Tel: +27 11 282 1808
Fax: +27 11 282 8088


JSE sponsor

Rand Merchant Bank (a division of FirstRand Bank Limited)
1 Merchant Place, Corner of Fredman Drive and Rivonia Road
Sandton, 2196
Tel: +27 11 282 8000
Fax: +27 11 282 4184

Namibian sponsor

Simonis Storm Securities (Pty) Ltd
4 Koch Street
Klein Windhoek

Transfer secretaries - South Africa

Computershare Investor Services (Pty) Ltd
1st Floor, Rosebank Towers
15 Biermann Avenue
Johannesburg, 2196
Private Bag X9000
Saxonwold, 2132
Tel: +27 11 370 5000
Fax: +27 11 688 5248

Transfer secretaries - Namibia

Transfer Secretaries (Pty) Ltd
4 Robert Mugabe Avenue
PO Box 2401, Windhoek
Tel: +264 612 27647
Fax: +264 612 48531


PricewaterhouseCoopers Inc.
4 Lisbon Lane
Waterfall City
Jukskei View
South Africa

Ernst & Young Inc
102 Rivonia Road
South Africa

29 February 2024

Date: 29-02-2024 08:30:00
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