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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 year ending 30 June 2025
FirstRand today updates shareholders on its operational and financial performance for the year to June 2025. This
update does not include any adjustment to the provision raised in relation to the UK motor commission matter.
The macroeconomic environments in South Africa, the broader Africa jurisdictions where the group operates and,
in the UK, remained largely as anticipated although political and macroeconomic uncertainty weighed on business
and household confidence. Domestically, system growth remained muted with lower-than-expected levels of fixed
investment despite the economic reforms underway. Inflation continued to moderate, and interest rates declined,
although the cutting cycle is shallower and later than initially predicted.
Despite this challenging operating environment, FirstRand's operational and financial performance for the 12
months to 30 June 2025 will be more positive than the previous guidance provided in March 2025. This guidance
was outlined in the prospects statement published as part of the group's interim results for the six months to 31
December 2024.
Overall balance sheet growth remained healthy with absolute advances and deposits increasing broadly in line
with guidance. The South African lending franchises remained resilient. Corporate origination and overall
production year-on-year showed good momentum, although the strategy to distribute lower margin assets means
year-on-year absolute corporate advances growth will be lower. Commercial advances continued to grow across
the portfolio given targeted lending strategies, including focused SME lending, albeit slightly slower than in the
first half. Growth was further supported by the ongoing acquisition of new customers. In retail, homeloans
advances growth was relatively muted given household confidence remains subdued, however retail VAF
continued to originate strongly given WesBank's well established relationships with dealers and OEM's. Advances
growth in the broader Africa portfolio is generally trending higher, and in the UK operations advances growth
trended ahead of guidance, with healthier than expected production still anchored to property finance where
margins have remained resilient.
Despite the rate cutting cycle impact on net endowment and the overall origination tilt to comparatively lower
margin corporate and commercial advances, growth in NII will be slightly better than the group guided in March
2025, supported by a reduced 'opportunity cost' emanating from the group's ALM strategy. Net interest margins
remain at broadly similar levels
Overall growth in NIR is in line with guidance, with fee and commission income growth similar to the first half, and
RMB's knowledge-based fees delivered sustained growth off an already high base. Trading income has remained
weak, but this was offset by healthy private equity realisations. Insurance income continued to show good
momentum in operational terms, but absolute year-on-year growth is impacted by the impending sale of
MotoVantage which is treated as an available for sale financial asset for this financial period.
The group's core credit performance is still trending broadly in line with guidance, with the overall CLR remaining
at the bottom-end of the TTC range. Retail impairments have picked up slightly ahead of expectations mainly due
to forward looking macroeconomic volatility, impacting FLI models, coupled with front book strain from the strong
retail VAF origination.
As expected, the commercial CLR is trending at higher levels given the new business strain associated with the
strong SME focused lending over the past 24 months and two large commercial counters that have migrated into
non-performing loans. The corporate CLR remains as expected and the UK's credit performance is better than
anticipated, despite the unwind of the NOSIA provisions already in the base.
Operating expenses are significantly better than guided. With the UK motor commission related provision in the
base, cost growth is negative. Without the provision, cost growth will trend below average inflation.
In March 2025 the group guided "the group now expects to deliver full-year earnings growth above its long-term
stated target range of nominal GDP + 0% to 3%, as second-half absolute earnings will be marginally higher than the
first half".
The group now expects to deliver full-year earnings growth of low double digit to mid-teens, which is also above its
long-term target range. The ROE remains within the stated target range of 18% to 22%.
This guidance does not include any adjustment to the provision raised for the UK motor commission matter. The
group is still awaiting a judgement from the UK Supreme Court which is anticipated by the end of July 2025. This
will be followed by an announcement by the UK Financial Conduct Authority (FCA) on the proposed redress
scheme.
There have been some constructive developments, particularly with regards to statements made by both the UK
FCA and UK Financial Ombudsman Service (FOS).
On the 5th of June 2025, the FCA issued key considerations in implementing any possible motor finance consumer
redress scheme following the UK Supreme Court ruling. There are 7 principles outlined by the FCA, and FirstRand
draws shareholders attention to "Principle 2: Fairness - ensures the approach to determining breaches and
calculating redress are fair to consumers and firms" and to "Principle 7: Market integrity ' support the ongoing,
long-term availability of high quality, competitively priced motor finance."
In addition, the FOS has launched a short consultation until the 2nd of July 2025 related to the interest rate to be
applied to compensation awarded to consumers. For new complaints submitted to the service, the FOS is
recommending changing the interest rate, so it tracks against the Bank of England's base (average) rate +1%.
Previously this rate was set at an annual rate of 8%.
The group expects to be in a position to update its provision as part of its year end results in September 2025.
Shareholders 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.
Sandton
25 June 2025
Sponsor
Rand Merchant Bank (a division of FirstRand Bank Limited)
Date: 25-06-2025 03:30:00
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