A standout financial performance by FirstRand in the second half of the year to June 30 enabled it to grow normalised earnings by 4% as well as absorb a R3 billion provision raised for a UK Financial Conduct Authority review of UK motor commissions, CEO Mary Vilakazi said yesterday.
The investigation relates to whether consumers in the UK were overcharged on vehicle loans due to the open commission model by motor dealers between the years 2007 and 2021. In the UK, FirstRand owns Aldermore, a UK specialist lender, which includes MotoNovo, a vehicle finance business.
Vilakazi said in an interview that the UKs FCA was at this stage of their investigation awaiting the outcome of some related court cases, before concluding its review, and she expected the investigation might conclude in April or May next year, and either way there would be some uncertainty about the outcome until then.
She said the 4% normalised earnings growth was strong given the R3bn provision and the high level of retail banking impairments at FNB due to the high interest rates, which reduced FNBs earnings.
Vilakazi said excluding the UK provision, normalised earnings grew 10% and the return on equity (ROE) of 21.3% moved to the top of the targeted range.
