FirstRand recognised an additional pre-tax provision of £518.4m (R11.3bn) for customer redress under the Financial Conduct Authority’s review of historical motor finance commissions in the year to June, alongside £29.4m (R692m) in associated costs. The gross undiscounted provision, including an expected extension of the scheme start date, stands at £807m (R17bn), against R5.8bn a year earlier. Headline earnings fell 5% to R39.7bn.
The group is not an incidental party to the scheme. The United Kingdom Supreme Court’s August 2025 judgment in the conjoined appeals of Hopcraft v Close Brothers and Johnson and Wrench v FirstRand Bank Limited, London branch, trading as MotoNovo Finance, found that one commission arrangement created an unfair relationship under the Consumer Credit Act. The FCA built its redress framework on that finding and published final rules on 30 March 2026. FirstRand’s exposure runs through Aldermore Group, comprising Aldermore Bank and MotoNovo Finance.
The regulator estimates that roughly 12.1-million agreements written between 2007 and 2024 fall within scope, with redress of about £7.5bn (R158bn) and a total industry cost near £9.1bn (R191bn) once administration is included. FirstRand’s gross provision therefore represents close to a tenth of the industry redress estimate.
Two sets of numbers now describe the group. On a statutory basis headline earnings per share for continuing operations rose 1% to 693.1c and fell 5% for total operations to 712.9c, at a return on equity of 18.3%. Normalising for the provision across both the 2025 and 2026 financial years, normalised earnings rose 10% at a return on equity of 21.5%, with normalised continuing earnings up 13% at 24.9%. The group regards the latter as the truer measure of ongoing performance.
The dividend follows the normalised figure. The board declared 280c, up 16% and described as the highest payout in the group’s history, based on earnings growth excluding the UK provision and its associated costs. Shareholders are therefore being paid against a number the statutory accounts do not report.
The provision itself rests on unsettled ground. It was determined on a single scenario aligned to the FCA’s final policy statement, and FirstRand has not incorporated the effect of legal challenges announced in April, with hearings expected between December 2026 and February 2027. The Upper Tribunal had already suspended parts of the scheme on 2 July on terms agreed with four challengers. A 5% movement either way in the number of customers requiring redress would shift the provision by £51.5m (R1.1bn), and the group concedes the ultimate impact could differ materially.
FirstRand chose not to challenge the scheme but has objected to its design, including the treatment of certain commission-related factors as standalone indicators of unfairness, a redress calculation that is not loss-based, and a minimum 3% interest floor it says materially increases expected costs.
Underneath the provision the operating result was strong. Against mid-teens guidance issued in June 2025, earnings rose 16% at a return on equity of 21.5%, at the top of the 18% to 22% target range, on double-digit profit growth at both FNB and RMB. Net interest income benefited from higher advances and deposit momentum, while non-interest revenue was driven by RMB and FNB with support from Group Treasury. The credit loss ratio improved to 105 basis points from 108, below the midpoint of the 100 to 130 basis point through-the-cycle range, though additional forward-looking provisions were raised against the Middle East conflict and oil price disruption. Operating expenses rose 9%.
For 2027 the group expects normalised earnings growth in the high single to low double digits for continuing operations, and has revised its return on equity range upwards to 21% to 2