Banking

One of South Africa’s most valuable banks planning major exit

Malcolm Libera

 ·10 Sep 2026

FirstRand is preparing to exit one of its major UK businesses as the South African banking group shifts its focus back to South Africa and the rest of Africa.

This was communicated in the bank’s audited annual results for the year ended 30 June 2026.

The group has classified the entire Aldermore Group, which includes Aldermore Bank and MotoNovo Finance, as a discontinued operation and a disposal group held for sale under IFRS 5 accounting rules.

FirstRand has started a sale process that it expects to complete within 12 months. A confidential information memorandum and virtual data room have been made available to potential bidders.

Non-binding offers are expected by the end of September 2026, and will be followed by due diligence, with final binding offers expected by the end of December.

“The UK operating environment for a consumer finance business is increasingly uncertain, with the current regulatory landscape creating untenable look-back risk,” the group said.

“This led the group to conclude that further capital deployment would not meet its risk appetite or hurdle rates.”

A major factor behind the exit is the regulatory uncertainty surrounding historical motor finance commission arrangements.

FirstRand recorded an additional pre-tax charge of £518.4 million (about R11.3 billion) for potential customer redress arising from the Financial Conduct Authority’s review.

It also recognised £29.4 million (R692 million) in associated costs, taking the total pre-tax impact of the UK motor commission issue to £547.8 million, or roughly R12 billion.

After tax, the impact was R8.715 billion.

The balance sheet provision for potential customer redress and associated costs reached R16.4 billion at 30 June 2026, compared with R5.8 billion a year earlier.

FirstRand said the gross undiscounted provision, including the expected extension of the scheme start date, was £807 million, or about R17.5 billion.

The proposed disposal also resulted in a R3.741 billion impairment of goodwill attached to the UK operation.

Strong performance back home

FirstRand said the classification of the business as held for sale required the goodwill to be reassessed and impaired.

Transaction and separation costs amounted to £4.8 million, or R109 million, while restructuring charges linked to cost-efficiency and location strategy programmes totalled £18.1 million, or R410 million.

Overall, discontinued operations resulted in a loss attributable to ordinary equityholders of R2.655 billion.

Despite the UK costs, FirstRand’s continuing operations performed strongly. Normalised earnings from continuing operations rose 13% to R44.46 billion, with a return on equity of 24.9%.

The group’s total normalised earnings, including the discontinued operation, declined 5% to R39.69 billion, while group ROE remained within its target range at 18.3%.

FirstRand said the exit would allow it to concentrate capital and management resources on markets where it sees stronger returns.

“FirstRand has taken the decision to exit these businesses in the next 12 months to focus on South Africa and broader Africa,” it said.

“The group believes this pivot in strategy and resource allocation should, over time, unlock higher levels of earnings growth and enhanced ROE.”

Its main African businesses continued to provide the earnings strength behind the group. FNB’s normalised earnings increased 12% to R26.44 billion, while RMB’s rose 15% to R12.29 billion.

WesBank’s earnings declined 4% to R2.29 billion, despite 14% growth in core advances, as higher credit impairments weighed on performance.

Credit quality across continuing operations nevertheless improved, with the credit loss ratio falling to 1.05% from 1.08%.

The board also declared a total ordinary dividend of 539 cents per share, up 16%, giving shareholders the group’s highest-ever total dividend payout.

FirstRand said South Africa and broader Africa offered improving macroeconomic conditions and further growth opportunities, with FNB, RMB and WesBank positioned to benefit from that environment.

The table below summarises FirstRand’s key financial results for the year ended 30 June 2026: