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FirstRand Limited
(Incorporated in the Republic of South Africa)
(Registration number 1966/010753/06)
JSE ordinary share code: FSR
Ordinary share ISIN: ZAE000066304
NSX ordinary share code: FST
LEI:529900XYOP8CUZU7R671
(FirstRand or the group)
Voluntary trading update for the six months ending 31 December 2025
FirstRand today updates shareholders on its operational performance for the six months ending 31
December 2025.
In the first half of the group's financial year the macroeconomic environments in South Africa, the
majority of the broader Africa jurisdictions where the group operates and, in the UK, remained
largely as anticipated with Mozambique and Botswana continuing to be challenging.
Although relatively muted domestic system growth persists, inflation continued to moderate, and
interest rates declined, with two further 25bps cuts in July and November 2025. These positive
outcomes are supporting a gradual recovery in household affordability levels.
Against this slowly improving backdrop, FirstRand's operational and financial performance is trending
in line with its expectations, as outlined in the prospects statement published on 11 September 2025
as part of the group's year end results announcement.
As anticipated, net interest income (NII) growth continues to be driven by improving advances
growth from the material lending books in South Africa, broader Africa and the UK. Large corporate
overall production has maintained strong momentum, with the originate and distribute strategy
resulting in a much-improved margin. Absolute advances growth in the first half will be muted given
the distribution strategy was not in place in the comparative period; however, this is expected to
normalise in the second half of the financial year. Commercial advances continue to grow across the
portfolio given targeted strategies, including focused SME lending.
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.
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.
Despite the rate cutting cycle, the group's ALM strategy continues to protect the endowment,
providing further support to NII growth and the overall group margin.
As guided, growth in non interest revenue (NIR) is trending higher than in the previous financial year.
This is 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 of the financial year.
The group's core credit performance is well within expectations as the overall credit loss ratio (CLR)
remains at the bottom-end of the groups through the cycle (TTC) range. Retail's credit performance is
improving as anticipated, and despite ongoing front book strain the commercial portfolio is situated
within its TTC range. Large corporate credit continues to be resilient and still trending at the bottom
of its TTC range.
As guided in September 2025 the credit performance in the UK operations is normalising off a base
that benefited from the release of cost of living and NOSIA provisions raised in prior periods.
Guidance on costs indicated that excluding the base effect from the provision, growth in expenses
would increase 2% to 3% above inflation. The group's inflation number is anchored to salary inflation
of 5% which was negotiated with the unions in June 2025.
Given all the above, the group's guidance statement that "the group now expects to deliver full-year
earnings growth off the prior year base (which includes the provision) of high mid-teens, which is
significantly above the group's long-term stated target range" remains intact. The group also guided
that its normalised ROE is expected to improve and move closer to the upper end of its stated range
of 18% to 22%.
As previously stated, this guidance for the full year excludes any adjustment to the provision raised
for the UK motor commission matter. FirstRand confirmed in its announcement of 6 November 2025
that the group intends to only make an adjustment to its provision, if required, based on the FCA's
final redress scheme (the scheme) which is anticipated to be published by March 2026.
To ensure the group's response to the FCA's current consultation process is appropriately
comprehensive, it has appointed senior legal advisors, including a Kings Counsel, and economic
specialists. The consultation document is lengthy and complex and requires a detailed response to
several critical considerations.
One of these considerations is the FCA's interpretation of applicable legal judgments. Of particular
concern relates to the UK Supreme Court's conclusion that the determination of an unfair
relationship between a creditor and a debtor, requires the court to consider all matters it regards as
relevant. The group's view is that the current FCA proposal appears to consider each matter in
isolation and not as a combination and then applies this approach on a backward-looking basis to
2007.
Secondly, the group 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. The group's current provision is aligned with this view.
Thirdly, as it navigates the consultative process the group must also continue to protect all
stakeholder interests and not inadvertently give credibility to the current redress proposal, which the
group and its advisors believe needs to materially change.
Shareholders are advised that the financial information on which this voluntary trading update has
not been reviewed or reported on by the group's external auditors.
Sandton
2 December 2025
Sponsor
Rand Merchant Bank (a division of FirstRand Bank Limited)
Date: 02-12-2025 03:00:00
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