FirstRand shares rose more than 3% on Wednesday after the South African bank reported a strong run of underlying results for the year ended June 30, 2026, though a substantial UK regulatory provision masked the strength in headline earnings.
Full-year reported earnings fell 5% to approximately ZAR 76 billion, dragged by a GBP 518 million pre-tax accounting provision linked to the Financial Conduct Authority's redress scheme for UK motor finance. On a normalized basis, earnings jumped 16% year-over-year — or 10% on a like-for-like comparison — as continuing-operations earnings rose 13%.
Normalized return on equity reached 18.3%, while continuing-operations ROE hit 21.5% and exceeded the group's target range when the UK charge was excluded. Return on assets improved by 8 basis points, and economic profits climbed 24% to ZAR 20 billion.
"Earnings increased 16% at an ROE of 21.5%," Group CEO Mary Metcalfe said in the earnings-call presentation. "Most income-statement lines tracked guidance and showed strong top-line growth, improved profitability and returns from FNB and RMB in particular."
Net interest income rose 8%, supported by a 29-basis-point widening of the net interest margin. Lending NII grew 7%, transactional NII rose 8%, and investment-deposit NII expanded 11%. The cumulative delivery of the group treasury ALM strategy since 2018 has now produced ZAR 19.5 billion in benefit, generating ZAR 3.3 billion in NII above the overnight policy rate in the current period alone. An average repo-rate decline of 89 basis points provided tailwind.
South African franchise profitability rose 17%, with FNB personal deposits growing 16% before migration and the Stokvel savings platform surging 31% to ZAR 5.7 billion. Merchant-acquiring volumes jumped 36%, and FNB Connect surpassed 3 million transacting users, including 1 million on its MVNO license. Broader-Africa institutional-business revenue grew 53%, while RMB's ROE improved to 23%.
In the UK, the additional FCA redress provision brings the guided undiscounted total to GBP 807 million from GBP 750 million, with a final discounted balance-sheet provision of GBP 756 million and cumulative provisions of ZAR 16.4 billion. The charge consumed 75 basis points of capital. Goodwill impairment of ZAR 3.7 billion was recorded against the Aldermore disposal, leaving ZAR 3.8 billion in remaining goodwill on discontinued operations.
The group maintained a CET1 ratio of 13.9%, well above its upper internal target of 12.5%, and flagged ZAR 10 billion in excess capital following the final dividend. Cost-to-income came in at 48.5% for the group and 48% for continuing operations, with a medium-term target in the mid-40s.
FirstRand lifted its dividend 16%, extending a 35-year track record of annual payments. Dividend cover stood at 1.6 times, at the bottom of the board's target range.
Shares moved from ZAR 9,623 to around ZAR 9,914, a gain of roughly 3%, trading within a 52-week range of ZAR 7,526 to ZAR 10,288.
