FirstRand Ltd Trading update - FY26 guidance maintained amid solid operating momentum; UK exit a positive catalyst

Research evidence excerpt

FirstRand Ltd Trading update - FY26 guidance maintained amid solid operating momentum; UK exit a positive catalyst

line. The group will commence an orderly exit of its UK operations,

which will be disclosed as discontinued for FY26, with underlying UK

performance softer than anticipated. Capital positions remain above target ratios,

and the group confirms it can pay a dividend calculated on earnings before the post-

tax UK provision and within its cover range. All in, we view this update positively

by FirstRand and reiterate our Overweight rating on the shares.

• Noteworthy Areas: 1) Balance sheet growth is healthy, tracking above

previous guidance for advances, with FNB retail advances growth higher than

the first half, WesBank continuing strong growth in vehicle asset finance, FNB

commercial advances stable, and RMB corporate advances turning positive in

the second half. 2) Growth in NII is trending slightly higher than half-year

guidance, supported by strong deposit franchises and ALM strategy, while net

interest margin (excluding UK) expanded slightly; UK operations continue to

experience margin compression. 3) Growth in NIR remains robust, driven by

strong trading and fair value income, investment income, RMB knowledge-

based fees, and resilient FNB fee and commission income; insurance income

is impacted by investment in distribution and technology, but new business

volumes are strong. The group’s Credit Loss Ratio is expected at the lower end

of the through-the-cycle range, with retail credit improving, commercial credit

within range, corporate credit just below range, and UK credit loss ratio

normalising but still slightly below range. Operating expenses are slightly

higher than guided, mainly due to one-off costs from the HSBC client franchise