FirstRand has reported a 5% decline in headline earnings to R39.7 billion for the financial year ended June 2026, after recognising a substantial R17 billion provision related to UK motor finance redress. The provision stems from the group’s exposure through Aldermore Bank and MotoNovo Finance, following a Supreme Court ruling and new rules issued by the UK’s Financial Conduct Authority (FCA).
Despite the headline earnings setback, the group’s underlying performance remained robust. Normalised earnings—which exclude the impact of the UK provision—rose 10%, with return on equity (ROE) holding steady at an impressive 21.5%. This was driven by double-digit profit growth at First National Bank (FNB) and Rand Merchant Bank (RMB), underscoring the strength of FirstRand’s core South African franchises.
In a show of confidence, the board declared a record dividend of 280 cents per share, up 16% year-on-year. The dividend is based on normalised figures, excluding the once-off UK provision, reflecting the group’s view that the redress liability is a contained, non-recurring event rather than a reflection of its ongoing earnings power.
Analysts have described the results as a tale of two stories: the resilience of FirstRand’s domestic operations versus the drag from its UK operations. The motor finance redress issue has affected several UK lenders, with the FCA mandating compensation for customers who were allegedly overcharged on car loans. FirstRand, through Aldermore and MotoNovo, has taken a conservative approach by provisioning the full estimated liability.
“The strength of our South African businesses has more than offset the UK headwinds,” said FirstRand CEO Alan Pullinger. “We remain confident in our ability to generate sustainable returns and deliver value to shareholders.”
The record dividend payout is likely to please investors, who have rewarded the group for its capital discipline and consistent performance over the years. However, questions remain about the full extent of the UK redress liability and whether further provisions may be required. For now, FirstRand has drawn a line under the issue and is focusing on what it does best—growing its core banking operations and returning capital to shareholders.
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