As at 13 February 2026

Executive Summary

Key highlights

In this report, we review the pre-close investors update for 1H26 released in December 2025:

Financial results at a glance:

• Net interest income (NII): Growth is driven by improving advances across SA, broader Africa and the United Kingdom (UK). Large corporate production remains strong, with the originate-and-distribute strategy delivering a much-improved margin. First-half advances growth is muted as the distribution strategy was not in place in the comparative period but is expected to normalise in H2. Commercial advances continue to grow through targeted strategies, including focused small and medium‑sized enterprises SME lending.

• Retail and regional advances: Retail lending is gradually recovering across secured and unsecured portfolios, with growth expected to exceed the prior year as improving macros support household affordability. Broader Africa advances remain stable, while UK new business production is slightly ahead of expectations, anchored to property finance.

• Deposits and margins: The group's Assets and Liabilities strategy continues to protect the endowment despite rate cuts, supporting NII growth and group margin. Deposit franchises are growing at similar levels to the prior year. 

• Non-interest revenue (NIR): NIR growth is trending higher, driven by insurance momentum, a rebound in global markets, and private equity realisations. Fee and commission income is expected to build momentum in 2H26.

• Credit performance: The credit loss ratio remains at the bottom end of the through-the-cycle range. Retail credit is improving, commercial remains within through the cycle despite front-book strain, and large corporate continues at the bottom of its range. UK credit is normalising following prior provision releases. 

• Costs and guidance: Expense growth is expected at 2%–3% above inflation. Full-year guidance remains intact: high mid-teen earnings growth and ROE improving toward the upper end of 18%–22%. The UK motor provision is unchanged pending the Financial Conduct Authority’s (FCA) final scheme in March 2026.

  
  

Analyst thesis

Our recommendation is based on:

• Diversified franchise with leading market positions: FirstRand operates through FNB, RMB, and WesBank, providing balanced revenue streams across retail, commercial and corporate segments, primarily in South Africa (SA) with selective international exposure. The diversified portfolio of franchises generates recurring cash flows, captures selective higher margin opportunities, and provides exposure to secured lending, collectively supporting resilient earnings through economic cycles.

• Digital leadership driving growth and efficiency: FNB’s digital capabilities, including nav» Money and core banking modernisation with Fiserv, drive customer acquisition, engagement and operating leverage. Over 80% of retail transactions are digital, reinforcing a durable competitive advantage.

• Strong capital generation and disciplined returns: FirstRand maintains robust capital ratios and ROE above 20%, supporting attractive dividend payouts, while funding growth initiatives.

• Macro headwinds limit near-term upside: SA’s low GDP growth, intensifying competition, elevated unemployment, and pressure on disposable income constrain credit demand and asset quality.