Banking

FNB-owner sets aside R5.8 billion for legal troubles in the UK

Luke Fraser

 ·5 Mar 2026

Despite FirstRand setting aside close to R6 billion for claims related to a legal dispute in the UK, the company’s interim results were relatively strong.

In its interim results for the six months ended 31 December 2025, CEO Mary Vilakazi said the bank has delivered strong topline growth, underpinned by momentum in deposits and advances.

“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,” said Vilakazi.

“FirstRand’s normalised earnings increased by 11%, and economic profits grew by 26%. The capital, asset and liability optimisation strategies implemented over the past year have resulted in a sustainable, structural uplift in margin.”

This supported an improved normalised ROE of 21.1%. This high ROE and resulting strong capital position enabled 18% interim dividend growth to 259.0 cents per ordinary share.

Despite strong interim results, the group is still facing a legal dispute over its UK business, MotoNovo.

The UK Financial Conduct Authority (FCA) is investigating the dealer who receives commission from MotoNovo for arranging car finance.

While the UK Supreme Court held that motor dealers do not owe a fiduciary duty to highlight the commission arrangements, it still found FirstRand liable for unfair practices.

FirstRand has thus been ordered to pay compensation in the case, and while the exact amount is yet to be determined, it will likely be in the billions of rands.

During the interim period, FirstRand saw its group’s operating expenses increase 9%, which included R333 million of legal and other costs related to the UK motor commission matter

The group has also set aside a provision of £240 million (about R5.8 billion), which is considered the best estimate, following the Supreme Court’s judgement. The provision was set aside before the interim period.

After the FCA opened a consultation in October 2025 on a proposed industry-wide motor finance compensation scheme, FirstRand submitted a comprehensive response to the consultation paper.

This response included input from King’s Counsel and economic specialists. The group expects to hear the outcome of the consultation before the end of March 2026.

However, the group said that even if the final FCA scheme requires a further provision beyond the current R5.8 billion, its strong capital position means that it will be able to declare a final dividend.

FNB results

FNB also delivered a decent performance over the period, with normalised profit before tax (PBT) growth of 7%.

FNB South Africa grew PBT 10%, supported by solid growth in its deposit, lending and transactional franchises.

However, FNB’s broader Africa PBT reduced 12%, impacted predominantly by constrained client activity, increased funding costs and credit provisions in Botswana on the back of macroeconomic pressure and liquidity.

Higher costs in Ghana also drove the implementation of a new core banking platform. Despite weaker performance in the African portfolio, FNB still posted an improved ROE of 41%.

The improvement in ROE was driven by capital optimisation initiatives, improving retail credit performance, and NIR growth.

“The size and quality of the transactional and deposit franchises continue to provide support to a sustainable, superior ROE,” said FirstRand.