By Adelaide Changole.
FirstRand’s profit rose to a record even after increasing provisions to cover potential compensation and other costs linked to a long-running probe into mis-sold car loans in the UK.
The Johannesburg-based lender’s net income rose 10% to R41.82 billion ($2.4 billion) compared with an estimate of R41.2 billion by analysts in a Bloomberg survey. FirstRand raised provisions — including costs — by R2.96 billion ($169 million). The company had set aside R3.3 billion ($188 million) as of 2024.
FirstRand set aside more despite winning a major reprieve in the case of mis-selling car loans in the UK. The nation’s Supreme Court overturned most of a lower court ruling and said that banks should only pay compensation in the most serious cases. The bank set aside more as it awaits the UK regulator’s ruling on final redress costs in October.
FirstRand was dragged into the case through its MotoNovo unit in the UK, which it acquired from Julian Hodge Bank for about £250 million in 2006. The company now commands about 10% market share in car finance in Britain.
The lender’s overall business in the UK comprises about 10% of its earnings and represents about 20% of its balance sheet, the lender has said previously.
FirstRand declared a total dividend of R4.66 per share, surpassing a R4.49 per share estimate from analysts surveyed by Bloomberg.