FirstRand FY HEPS up 4%

FirstRand, a leading financial services provider, recently reported a 4 percent increase in annual normalized earnings and doubled its annual dividend. However, this positive performance was overshadowed by a provision of R3 billion set aside to cover the potential impact of a UK investigation into vehicle loans and rising bad debts across its divisions. In a recent interview with CNBC Africa, Mary Vilakazi, CEO of FirstRand, shed light on the ongoing UK probe and the company's outlook. Vilakazi discussed the origins of the UK Financial Conduct Authority's review of motor finance commission practices and the potential implications for FirstRand. Despite facing challenges from claims management companies, Vilakazi emphasized the company's compliance with regulations and its commitment to customer welfare. She highlighted the complexity of the situation and expressed optimism that the review process would provide clarity in the second half of the financial year. Vilakazi also addressed the potential outcomes of an unfavorable finding and the sufficiency of the provision made by FirstRand. She emphasized the group's transparency and proactive approach to managing the situation. Looking beyond the UK probe, Vilakazi discussed the performance of FirstRand's UK operations, noting a 25 percent increase in normalized earnings. She expressed confidence in the market's potential growth and the supportive environment created by declining inflation and interest rates. Vilakazi highlighted the resilience and strong credit experience of FirstRand's businesses, particularly Aldermore and Motonova, in the UK market. Despite challenges in other African markets, including Ghana, Nigeria, and Zambia, Vilakazi underscored the company's deliberate focus on industry-specific opportunities and risk management. She acknowledged the macroeconomic challenges in these regions but expressed confidence in FirstRand's ability to navigate and absorb shocks. Transitioning to the retail segment, Vilakazi addressed the impact of the PaySharp initiative on the company's fee structure and broader financial inclusion efforts. She explained the rationale behind reducing fees for transactions below R3,000 and highlighted FirstRand's proactive cost-cutting measures to align with technological advancements and promote efficiency. Vilakazi emphasized the company's commitment to innovation and responsiveness to industry developments. Overall, Vilakazi's insights provided a comprehensive overview of FirstRand's performance, challenges, and strategies for sustained growth in a dynamic financial landscape.