Half Year 2026 FirstRand Ltd Earnings Call Transcript
Key Points
- Firstrand Ltd (FANDF) reported a strong operational performance with an 11% increase in normalized earnings and a 26% growth in net income after cost of capital.
- The company's return on equity (ROE) is moving closer to the top of its stated range of 18% to 22%, demonstrating strong operational performance.
- Firstrand Ltd (FANDF) is in a position to grow dividends faster than earnings due to high ROE and excess capital generation.
- The company has seen strong growth in its client-facing franchises, with FNB growing earnings by 8% and RMB lifting margins and ROE significantly.
- The group's deposit franchises delivered good growth, contributing to a strong capital position with a CET1 ratio of 14.4%.
- The global macroeconomic environment remains uncertain, with geopolitical tensions and economic shocks posing risks.
- The UK operations faced challenges with NIM pressure and elevated borrowing costs, impacting performance.
- The Aldermore Group's ROE is below target due to hefty investments in operational efficiency and offshoring initiatives.
- Broader Africa's performance was impacted by macro pressures in Botswana and Mozambique, affecting profitability.
- The UK motor commission issue remains unresolved, with potential financial impacts pending the FCA's final redress scheme.
Good morning, everyone. Welcome to FirstRand's results presentation for the 6 months ended December 31, 2025. I'll start with the -- I'll start the presentation with an overview of the group's operating environment over the last six months.
In the period under review, the global macroeconomic backdrop continued to be characterized by heightened geopolitical uncertainty, and this is likely to persist for some time. Global growth slowed and inflation and monetary policy continued to play out differently across the world's largest economies.
The FirstRand house view is underpinned by an expectation of ongoing geopolitical fracturing and reorientation. Unfortunately, that does imply more frequent global economic shocks, the impact of which is controlled for in our baseline and risk expectations. The current Middle East conflict is an example of one such shock.
In South Africa, the combination of structural reform efforts spearheaded by Operation Vulindlela, fiscal discipline and the lowering of the inflation target have
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