South Africa's biggest bank by market value has warned that its profits will take a real knock this year, after FirstRand confirmed it is lifting the provision for a costly British motor-finance scandal to around R18 billion and laying the groundwork to walk away from the United Kingdom altogether.
In an operational update released on 23 June, the group said normalised earnings for the year to 30 June 2026 would land between 4% and 9% lower than the prior year once the motor provision is absorbed. FirstRand also expects to exit the UK within the next 12 months, which means its entire British business will be reported as a discontinued operation when results are published.
What is behind the hit
The pain traces back to a long-running investigation by the UK's Financial Conduct Authority into the historical mis-selling of motor finance, one of Britain's largest consumer-redress sagas. The regulator's final compensation scheme, settled at the end of March, has saddled the wider UK motor-finance industry with an estimated £9.1 billion bill. FirstRand, which has repeatedly described the scheme as flawed and disproportionate, raised its own provision sharply to roughly £750 million.
The exposure sits within Aldermore, the British specialist lender FirstRand bought in 2017 as a beachhead into the UK consumer-finance market. Rather than keep absorbing the regulatory uncertainty, management has decided the business no longer fits the group's risk appetite.
A clean break from Britain
FirstRand says it will work with Aldermore's board and UK regulators to manage an orderly transfer of ownership over the coming year. Group return on equity is expected to sit at or just below the bottom of its stated 18% to 22% target range — still robust by global standards, but a step down for a lender accustomed to sector-leading returns.
Crucially, the damage is contained to Britain. At home, FirstRand's core franchises — FNB, RMB and WesBank — have continued to perform, and the group's South African operations remain firmly profitable. The full audited results, which will spell out the UK exit in detail, are due on 10 September.
For shareholders, the update draws a line under an episode that has dogged the share for much of the year. The message from management is that the bleeding is being stopped, even if halting it carries a chunky once-off cost.
