Staff Writer
FirstRand says its operational performance for the six months ending 31 December 2025 is tracking in line with expectations. The group said easing inflation, lower interest rates and gradual improvements in household affordability supported performance across its key markets.
A voluntary trading update released on the JSE noted that macroeconomic conditions in South Africa, most African markets and the UK remained as anticipated, although Mozambique and Botswana continued to pose challenges.
Despite subdued domestic system growth, inflation eased, and two 25 basis point rate cuts in July and November helped stimulate demand. FirstRand said both operational and financial performance remained on course with the guidance issued in September.
Net interest income continued to be driven by advances in growth across South Africa, the rest of Africa and the UK. Large corporate lending held steady, supported by the group’s originate-and-distribute strategy, which improved margins.
While advances growth appears muted due to the absence of this strategy in the comparable period, the bank expects lending activity to normalise in the second half.
Retail lending volumes are slowly increasing across secured and unsecured credit. The group expects stronger growth in the second half as households benefit from better macroeconomic conditions. SME lending continues to support commercial advances.
In the UK, new business volumes are expected to exceed earlier targets, supported by resilient property finance margins.
Deposit franchises are growing in line with the previous financial year. The group’s asset and liability management strategy continues to cushion the endowment effect as rates fall, supporting net interest income and overall margins.
Non-interest revenue is trending higher, driven by strong insurance operations, a rebound in global markets and continued private equity realisations. Fee and commission income have begun to recover, with stronger momentum expected later in the year.
Operating expenses remain in line with earlier guidance, excluding base effects from prior provisions. Salary inflation of 5%, agreed with unions in June, continues to anchor cost pressures.
Total expenses are expected to run 2% to 3% above inflation. The group reaffirmed that full-year earnings growth would be in the high mid-teens, above its long-term target. It expects its normalised return on equity to move toward the upper end of its 18% to 22% range.
Caption
FirstRand has said operations in Mozambique and Botswana continued to pose challenges.
- Photo: Contributed
