FirstRand’s operational and financial performance is trending in line with its expectations against the backdrop of a slowly improving macroeconomic environment.
The group said in a voluntary trading update for the first half to end-December that the macroeconomic environments in South Africa, most of its African operations and the UK remained largely as expected. However, Mozambique and Botswana remain challenging, it said.
The group said on Tuesday that improving advances growth from the material lending books in all its geographies is still driving net interest income.
Absolute advances growth in the first half will be muted, but this is expected to normalise in the second half. Commercial advances continue to grow across the portfolio given targeted strategies, including focused SME lending, it said.
“As guided in September 2025, there is a gradual pickup in retail lending volumes in both secured and unsecured portfolios. Growth in retail advances is therefore still expected to exceed the previous financial year, with a particularly stronger second-half trajectory as the benefits to households from improving macros fully emerge,” it said.
Moderating inflation and declining interest rates are supporting a gradual recovery in household affordability levels, it said.
Advances growth from broader Africa remains at similar levels, with the UK expected to deliver slightly better than expected new business production, which continues to be anchored to property finance, where margins remain resilient.
All the group’s deposit franchises are growing at similar levels to the previous financial year, in line with expectations.
The group said that, as previously guided, growth in noninterest revenue is trending higher than a year ago due to good momentum in the insurance business, a significant rebound in the performance of the global markets business and further private equity realisations.
There is a slight pickup in fee and commission income growth, which is expected to build stronger momentum moving into the second half, it said.
The group’s core credit performance is “well within expectations” as the overall credit loss ratio remains at the bottom end of the group’s through the cycle (TTC) range.
The group still expects to deliver full-year earnings growth off the previous year base, including the UK motor commission provision, in the high mid-teens, which is significantly above the group’s long-term stated target range. The group’s normalised return on equity is expected to improve and move closer to the upper end of its stated range of 18%-22%.
The guidance for the full year excludes any adjustment to the provision raised for the long-running UK motor commission matter.
In November, FirstRand said it intends to make an adjustment to its provision, only if required, based on the UK’s Financial Conduct Authority’s (FCA) final redress scheme, which is expected to be published by March 2026.
To ensure the group’s response to the FCA’s current consultation process is comprehensive, it has appointed senior legal advisers, including a king’s counsel, and economic specialists.
It has consistently said that it believes the scheme goes beyond what can be deemed proportionate and that any redress anchored on unfairness should not result in the complete loss of more than the cumulative profits made over the period by either the group or the industry.
Given that the consultation process is ongoing, FirstRand intends to make an adjustment to its provision, only if required, based on the final redress scheme, as the eventual financial impact remains unknown and could differ from the amount currently provided, it said.
The group is still engaging with the FCA and will consider all options and reserve all legal rights should the final scheme represent an unfair and/or disproportionate outcome for lenders.
Business Day previously reported that the FCA said banks implicated in the scheme could face an £8.2bn compensation bill, which could go as high as £9.7bn. FirstRand has made a R3bn provision over the matter.
The FCA estimates consumers would receive about £700 per agreement, on average. This is after the regulator found that motor finance companies broke laws and regulations that were in force at the time by failing to disclose important information to consumers, leading to unfairness as consumers were denied the chance to negotiate a better deal.
The investigation found that in some instances consumers paid more for their loan, with the FCA estimating that 44% of all motor finance agreements made since 2007 will be eligible for a payout.
With Kabelo Khumalo
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