FirstRand’s ‘bread-and-butter’ businesses deliver despite UK setback

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JIMMY MOYAHA: FirstRand Limited – South Africa’s most valuable bank by market capitalisation – today at 08:30 released full-year results for the financial year ended 30 June 2026.

We’re going to take a closer look at these numbers with the company’s group chief executive officer, Mary Vilakazi. She joins us on the line now to see what we make of their performance. Mme Vilakazi, lovely having you on the show as always. Thanks so much for taking the time.

A year that can be characterised as very positive from an underlying business perspective. Of course there are one or two things that can’t seem to let you have the sparkling year that the business has had. Nevertheless, the business has reported very strong earnings, a very strong return-on-equity growth.

How do you reflect on the year from a management perspective?

MARY VILAKAZI: From a management perspective, I am very happy and super pleased with the delivery by our SA franchises and broader Africa subsidiaries.

FNB, I think, has done a stellar job growing off this big base that they have. They grew profits; their profits were up 12%. RMB had an outstanding year, growing its PVT [Private] Banking up by 15%.

I think both franchises also managed to improve their ROE [return on equity], which, knowing our group, is quite sacrosanct.

So they’ve done really well in looking after their customers, growing the customer franchises, coming up with solutions in a very competitive environment. We don’t take these gains for granted.

So yes, we’ve had the additional provision to take in the UK – which I had been hoping would not be the case. But disappointingly, that ended up being the case, and we took a provision of £807 million this year.

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Our earnings reduced by 5%. I guess when you go through this it is disappointing, but you also get to reflect on the quality of our business and the strength of its balance sheet in moments like this – that we could absorb that provision.

Capital levels – we are sitting in an excess capital position. We’re able to declare dividends to our shareholders, which excluded the impact of this provision, just because we are sitting in an excess capital position.

Even the reality of just what we have to deal with is not a bad picture, but certainly the picture about our franchises and their ability to grow and deliver in really tough and challenging macroeconomic conditions is, for me pretty commendable.

JIMMY MOYAHA: Mme Vilakazi, we’ll take a look at those franchises in a moment. I suppose the glaring issue is, of course, that provision that you mentioned and the impact that that has had from a business perspective.

This was a business you bought at some stage for around £1.1billion. As it stands, the provision that’s been raised is just over the £800 million level – almost equivalent to the value that you paid for this business.

Of course, at the time you bought the business you had no idea that the regulatory environment would suddenly change.

Take us through this UK business from when the FirstRand Group acquired it to now where it stands. It is now listed as a ‘discontinued operation’. You are looking to exit that business, but that provision is something you can’t really get rid of until the commission’s case is finalised.

MARY VILAKAZI: Jimmy, let me first do the UK business justice. The business we bought, Aldermore [Bank] for the £1.1 billion that you quote – that business is intact. That’s the business that we’ve put up for sale, and I believe that we will be able to extract reasonable value for our shareholders when we sell it.

There was nothing wrong with the Aldermore business. When we bought it, FirstRand already owned MotoNovo [Finance] – that’s where the motor financing took place. So you can say that even if we had not bought Aldermore, with this MotoNovo business we would, one way or another, have been impacted in this.

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Barclays stopped being in motor finance about six years ago; but because the rules of this scheme are retrospective, they catch business that you’ve written in 2017. So, in a way it’s quite important to see the two as separate.

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Because we operated in the UK during that period of time, even if we did not have Aldermore, we would still be sitting with the motor finance problem. But obviously it got bigger because we continued writing motor finance because we had Aldermore.

So I hope that just kind of clarifies it to you.

But that motor finance business is a good business. Even now in the process of trying to sell the businesses in the group, people see it as attractive.

So the motor provision, the motor issues, are actually for me a function of a regulatory environment that has changed. And on the consumer finance side, I think it has definitely become less attractive to operate for businesses.

I just want to isolate [that], because we’ve got very hardworking people who are executing on a strategy on our UK businesses, and they’re doing well. But they can’t help [the fact] that the regulatory environment can throw such curveballs their way.

So we’ll see when we dispose of Aldermore, and I think shareholders will be able to judge whether buying Aldermore made sense.

But I think that’s quite separate from the redress issue. That money we’ll never get back. That’s maybe the moral of the story.

JIMMY MOYAHA: And I think to your point, Mme Vilakazi, on that business, the fact that you have more than five or six interested suitors in purchasing this UK business from you is a telltale sign that the business is still a valuable asset to the FirstRand Group indeed. Hopefully that transaction continues smoothly and we can put this UK conversation behind us.

Mme Vilakazi, before I let you go, I want to take a look at the rest of the business, because it isn’t made up of just that UK asset.

Obviously the continuing operations that exist outside that have been doing exceptionally well. Net interest income from a businesses’ perspective has grown at a group level. Non-interest revenues as well have started to perform even better. They grew double digits over the last financial year.

So the business beyond just the conversations around the UK still are fundamentally exceptionally strong with a strong balance sheet.

MARY VILAKAZI: Jimmy, thank you for that, because that’s our bread-and-butter business there, and I think the phrase has come to the fore this year. So for me, the key highlight is really the deposits.

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If I look at the FNB franchises, they’ve been able to come up with good savings propositions for their customers over a number of years, and you can see the trust that lies in our solutions. I think their deposits in FNB hit a trillion rand for the first time.

So look at the deposits’ growth, look at advances’ growth, advances growth across our portfolio – if I adjust for the fact that we had some distribution activities in RMB, which is a deliberate strategy – our core advances would have been up 10%. I can’t quite remember when last we were at those levels.

So it’s encouraging to see that we are able to lend in this kind of environment, and I think with the distribution activities we just want to optimise the capacity we have on the balance sheet. We’re hoping there are more infrastructure projects that come along.

And then we’ve been able to grow customers. We continue to grow customers, continue to grow relevance to our customers.

We compete quite fiercely in this market to make sure our propositions are priced well and that they’re performing and delivering to clients – and that we continue to earn the trust given to us by our customers.

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I think in RMB, the Investment Bank division, continues to be a consistent performer, and this year what’s really been pleasing is the recovery of the Global Markets business.

It is something that we thought was coming. We knew that the team is restructuring and resetting the strategy. So it’s been good to see the results, and I think there’s certainly more to come that RMB can deliver.

So those are basically our local franchises that have delivered strongly – and I believe that they’ve also got further growth runway looking ahead.

JIMMY MOYAHA: A business with strong underlying fundamentals and a business that continues to remain focused on its own strategy, regardless of how that strategy is impacted by external events.

We’ll leave the conversation on that note. FirstRand Limited’s group chief executive officer, Mary Vilakazi, joined us to take a look at the performance of the business over the previous financial year.

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