Financial services group FirstRand has delivered a 10% increase annual earnings, with all of its large domestic operating businesses delivering high-quality growth in earnings and improved returns.
The group reported headline earnings of R41.88bn for the year to end-June from R38.05bn a year ago, which translated to 748.8c per share.
A final dividend of 247c per share was declared, taking the total dividend for the year to 466c, up 12% year on year.
The group said despite the macroeconomic challenges in the jurisdictions in which it operated it delivered a strong operational performance.
This performance enabled the group to absorb the impact of a further pre-tax accounting provision of R2.7bn relating to the previously disclosed UK motor commission matter. This compares to R3bn raised in the previous year.
In addition, a further R253m of legal and professional fees were incurred in relation to the matter. The total pre-tax impact of these two items relating to the UK motor commission matter was R2.96bn for the year, it said.
Despite this provision, normalised earnings increased 10% to R41.8bn and the group produced a normalised return on equity (ROE) of 20.2%, which remains well within the group’s stated range of 18%-22%.
The group said its diversified portfolio played its part in delivering this operational performance. The gradual recovery in retail and the particularly strong performance from WesBank mitigated the early credit strain emerging from FNB’s commercial portfolio.
RMB delivered healthy profit before tax, with growth mainly emanating from its private equity and investment banking franchises.
The broader Africa portfolio’s contribution was softer, with FNB’s broader Africa franchise increasing profit before tax by 5% (8% in constant currency) and RMB’s broader Africa profit before tax declining 2%, but up 2% in constant currency.
The UK operations produced 2% growth in underlying profit before tax in sterling.
The Centre, comprising group treasury and support functions, produced normalised earnings of R4.6bn, up 29% year on year.
Overall group net interest income increased 6%, driven by core lending advances growth (6%), continued customer deposit gathering (8%) and the capital endowment benefit (14%).
The group’s credit loss ratio — at 85 basis points (bps) — is at the bottom of the group’s through-the-cycle range of 80bps-110bps.
“This is a positive outcome and in line with expectations, despite the shallow rate-cutting cycle and low system growth, and continues to reflect the benefit of the group’s approach to origination, with new business continuing to be weighted towards the low- and medium-risk categories,” it said.
FirstRand said the global macroeconomic environment remained unsettling but cyclically it was tracking broadly in line with expectations. In SA, global fracturing is expected to result in periods of volatility. However, there are a number of positive signals, such as slow but steady progress on structural reforms unlocked by Operation Vulindlela and other initiatives, and the shift towards a lower inflation level.
“While the shift in US trade policy remains a source of global uncertainty, the direct GDP impact from higher tariffs on broader Africa is not significant, given limited exports to the US, strong trade links with China and, to date, many export commodities are exempt from tariffs. Certain countries are benefiting from surging precious and base metal prices and there are several country-specific factors that should remain growth-supportive,” it said.
It said the underlying operational performance of the group was likely to be better than the 2025 financial year, across various income statement lines.
For the 2026 financial year, FirstRand expects normalised earnings growth off the current year base (which includes the provision) to trend up into the high mid-teens, which is significantly above the group’s long-term stated target range of nominal GDP +0%-3%. The normalised ROE is expected to improve and move closer to the upper end of its stated range of 18%-22%.
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