A combination of favourable economic factors in South Africa is offsetting the potentially negative impact that might arise from the uncertain global geopolitical environment, FirstRand CEO Mary Vilakazi said Thursday.
Speaking at the release of the group results for the six months to December 31 – FirstRand owns well-known South African financial brands such as FNB, Wesbank, and RMB – Vilakazi said they anticipate that current levels of global geopolitical fracturing and uncertainty, including the crisis in the Middle East, are not expected to abate in the short term.
The geopolitical uncertainty might create negative economic effects such as higher fuel and inflationary, and trade pressures.
In the six-month period, the ongoing global geopolitical realignment has kept market volatility elevated and maintained developed-market inflation and interest rates above pre-pandemic levels, she said..
In contrast, stable oil and food prices and China’s sharp disinflation lowered import costs across most of the jurisdictions where FirstRand operates. Global growth slowed, and monetary easing cycles became increasingly unsynchronised, but supportive commodity prices provided a buffer for South Africa and other African markets.
She said recent positive macroeconomic factors in South Africa included the benefits of structural economic reforms coming to the fore, the sovereign debt ratings upgrade, removal from the FATF “Grey List” last October, lower interest rates, supportive commodity prices, the current low inflation rate, and the recent strengthening of the rand.
“Improved terms of trade, rand strength, and closer coordination between the SA Reserve Bank and National Treasury, along with better real economic performance, contributed to S&P’s one-notch sovereign rating upgrade. Additional upgrades will depend on stronger-than-expected GDP growth and ongoing fiscal consolidation,” she said.
Macroeconomic conditions across the group’s Africa portfolio were shaped by commodity prices, geopolitical tensions, and varying domestic policy responses. Nigeria’s reform momentum strengthened its economy, and International Monetary Fund programs in Ghana and Zambia helped stabilise their economies, but political uncertainty in Mozambique weighed on the outlook. In Botswana, falling diamond prices triggered a balance-of-payments shock.
In the six month month period, FirstRand increased normalised earnings by 11% to R23,2 billion, driven by good topline growth, with net interest income (NII) up 8% and non-interest revenue (NIR) up 12%.
The results were also impacted by lower non-performing loans, which was what one would expect with slightly better affordability levels, she said. The group credit performance resulted from improvements in SA retail portfolios, offset by the normalisation in the UK cost of credit and an increase in broader Africa, mainly due to macroeconomic headwinds in Botswana.
The group generated R7,8bn of net income after the cost of capital, its key performance measure, and produced an improved normalised ROE of 21,1%. This is above the midpoint of its stated ROE target range of 18% to 22%.
The group’s overall credit loss ratio – at 86 bps – was below the midpoint of its through-the-cycle range. The total dividend increased by 18% to 259 cents a share.
“FirstRand delivered a commendable performance. Once again, the group’s diversified portfolio of leading client franchises – FNB, RMB, and WesBank – has supported this performance, as all delivered growth and improved returns.”
FNB delivered normalised profit before tax (PBT) growth of 7% and an improved ROE of 41%. The South African business posted a strong 10% increase in PBT, offset by a lower contribution from its Africa subsidiaries, mainly due to difficult macros in Botswana and Mozambique and investment costs in Ghana.
FNB’s NII growth of 7% was supported by good momentum in both advances and deposits. The deposit franchise, which is the largest in South Africa, grew 6% off a high base.
FNB advances increased 5% as FNB focused on accelerating lending in support of its retail client acquisition strategies, given improving household affordability levels.
FNB delivered 8% growth in NIR. Fee and commission income benefited from moderate fee increases across both retail and commercial accounts, new customer acquisition, improved volumes, and focused cross-sell. Growth was also supported by value-added services such as FNB Connect, Send Money, eBucks, and nav.
FNB Connect serves about three million customers. Revenue from total value-added services grew 14% to over R1,6bn.
WesBank delivered strong normalised PBT growth of 11% period on period and an ROE of 21%. The business benefited from strong origination in retail vehicle asset finance and sustained momentum in commercial.
RMB’s performance was driven by strong results from its Global Markets and Private Equity divisions, and investment banking growth. PBT increased 18%, supported by a strong performance from broader Africa, where PBT increased 42%.
The South African business grew PBT by 8%. RMB’s NII increased 15%, driven by growth in deposits in South Africa and broader Africa.
FirstRand’s UK operations, represented by the Aldermore Group, delivered a mixed operational performance. Core lending advances increased 9% to £17.4bn, driven by property and motor finance. The overall performance was mainly impacted by normalising credit due to weaker macros.
Vilakazi said the current level of operational momentum in the business had set the group up for a strong second half, with performance guidance for the 12 months to June 2026 unchanged.
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