Firstrand Ltd

Welcome to First Run's results presentation for the six months ended 31st December 2025. I'll start the presentation with an overview of the group's operating environment over the last six months. In the period under review, the global macroeconomic backdrop continued to be characterized by heightened geopolitical uncertainty. And this is likely to persist for some time. Global growth slowed and inflation and monetary policy continued to play out differently across the world's largest economies. The first-run house view is underpinned by an expectation of ongoing geopolitical fracturing and reorientation. Unfortunately, that does imply more frequent global economic shocks. The impact of which is controlled for in our baseline and risk expectations. The current Middle East conflict is an example of one such shock. In South Africa, the combination of structural reform efforts spearheaded by Operation Wulingela, fiscal discipline and the lowering of the inflation target have started to have a positive impact. South Africa sovereign rating improved, the country was removed from the FETF grade list, the currency strengthened, and inflation registered the lowest average in years. These factors have mitigated the impact of elevated global uncertainty within the SA macro context. The recent bond market impacts of the Middle East conflict have seen bond yields lift 40 basis points of their recent lows. Whilst it is still early days, this has a relatively small impact on the overall bond yield reduction of 220 basis points over the last year. We are monitoring the unfolding events and the related impacts closely. Lower inflation allowed the sub to cut the interest rates, and affordability pressures on consumers and households are easing. During the period under review, we saw household borrowing tick up marginally in real terms, whilst corporate borrowing continued to grow strongly, potentially signalling an emerging credit and investment cycle. The RMBR Business Confidence Index rose from 44 to 47 since the last quarter, an encouraging data point. Barring the post-COVID recovery, this is the highest business confidence level since 2015, giving us confidence about the emergence of a credit and investment cycle for South Africa. Several countries in the Group's broader Africa portfolio also made good progress on reforms. Nigeria continues to strengthen its macroeconomic position, While Ghana and Zambia have benefited from the post-debt restructuring reforms implemented over the last few years. The three countries made difficult and tough decisions and are now reaping the benefits of the reform processes. Certain cyclical factors also provided support, with inflation moderating and growth stabilizing on the back of a positive commodity cycle. By the end of 2025, economic activity in the UK had slowed. Inflation eased but remained a bus target, and the Bank of England responded cautiously. Activity was supported by public sector spending, however private sector demand remained constrained by still elevated borrowing costs and persistent inflation pressures. Moving on to an unpack of the Group's operating performance, And just to recap how the group's operational performance in the first six months is tracking against the guidance for the full year to June 2026. Pleasingly, all the key line items are trending as expected. NII is up high single digits with a significantly NIM uplift. With NIR prints materially higher than the previous year, This strong top-line performance has resulted in an improved cost-to-income ratio continuing to be in the 40s range. Credit is in line with our expectations, with NPLs looking better given the supportive macro environment. As guided, the group's ROE is moving closer to the top of our stated range of 18-22%. These metrics clearly demonstrate the strength of the operational performance delivered by the business, which we are very pleased about. This slide unpacks the performance metrics. Particular call-outs include the strong growth in earnings, economic profits, and NAV accretion. We're also pleased to be in a position to grow the dividend faster than earnings, as the high ROE means we continue to generate excess capital. This is earnings and ROE over a five-year period. The only point I'd like to make here is that earnings growth has shown a stronger trajectory over the past three years. This demonstrates the group's ability to deliver higher and more sustainable growth in earnings despite one-off contributions in each year's base, testament to the quality of earnings generated by our franchises. This slide demonstrates that the group continues to accrete NAS. The five-year CAGR of 8% is testament to the group's ability to consistently deliver value for shareholders. Net income at the cost of capital or economic profits is a group's key performance measure for shareholder value creation. We saw very strong growth in this period in NIAC. The five-year CAGR of 14% in economic profits is particularly pleasing given that this was delivered during a period characterized by muted macros and sluggish GDP growth. It demonstrates the group's ability to deliver on its objective to capture the largest share of economic profits available in the system. The Group Superior ROE benefited from an ongoing improvement in return on assets, which increased five basis points in the period. This was again a result of the quality of operational performance, particularly the strong growth in investment income, a recovery in trading income, and stable impairments. Gearing continued to decrease, and the lower cost of equity contributed 10% to the NIAC growth of 26%. The reduction in the SA risk premier is potentially structural, given the improved macroeconomic conditions, fiscal discipline as reflected in the recent budget, and delivery on the reform agenda. The market pricing indicates a further ratings upgrade is possible in this calendar year, and this could present potential for a sustainable, lower cost of equity going forward for South Africa. This is a snapshot of the operational performances delivered by client-facing franchises. All the domestic franchises performed extremely well, more than holding their own in a fiercely competitive operating environment. F&B performed well, growing earnings by 8% and significantly lifting ROE to 41%. And within this, F&B SA grew earnings by 10%, offset by a softer performance in broader Africa. RMB really had a standout six months, lifting its margins and ROE on the back of strong top-line growth. West Bank again delivered a solid growth and an impressive ROE, given how fiercely competitive the market is. The broader Africa portfolio continues to contribute to overall earnings growth. This year, the performance was driven by RMB's cross-border activities. RMB's in-country CIB businesses delivered an impressive increase of 62% in profits before tax. And FNB's in-country, broader Africa in-country performance was impacted by macro pressures in Botswana and Mozambique, as we previously signaled. Pleasingly, the long-term strategy of growing in-country franchises remains on track. The group is relentless in its pursuit of high-quality earnings growth and superior ROE, and many of the decisions the team makes are anchored to deliver on these two ambitions. From a balance sheet perspective, this is why we are so focused on growing advances and in appropriate risk-adjusted returns, and why we have a limitless appetite for deposits. We are working hard to defend and grow our large, valuable transactional franchises, Given that they provide a significant underpin to our ROE, and we continue to find sources of capital-light income streams. I'll now cover the performance across the three themes, similar to how I presented this in the June results. So let me start with the health and quality of our client-facing franchises. As I mentioned in the previous slides, F&B SA franchise performed really well. Turning to F&B Retail First, the business delivered 14% growth in PBT and was the most significant contributor to F&B's overall ROE uplift. The performance was characterized by solid top-line growth with NII growth impacted by tough lending markets with muted demand, although we do expect this to pick up in the second half. NIR growth improved on the back of higher transaction volumes and customer growth. The retail credit experience was better than we expected and supported retail earnings growth during this period. I just want to call out the turnaround in the customer growth in the personnel segment, where competition is really tough. During 2025, this segment was struggling to grow customers, but this has now reversed significantly on the back of a strong sales effort. Before migrations to the private segment, personal segment grew customers up 3%. In our early engagements with Optasia, we do see exciting opportunities to leverage their capabilities to further grow F&B's offerings in this segment. The private segment grew a solid 8% driven by customer acquisition and migrations from personal segments. Overall, we continue to see growth in F&B's main banked clients, up 6%, which demonstrates F&B's success in switching customers banked elsewhere with a single F&B product to a full transactional offering, the strength of the F&B franchise. F&B Commercial continues to grow off a high base. NII was supported by steady advances and deposit growth. The commercial deposit franchise remains by far the largest in South Africa. Solid customer growth has supported growth in fees and transactional volumes, supporting NIR. Merchant services experience margin compression as F&B responds to a competitive environment. In response, F&B has launched new speed points yesterday with enhanced business solution offerings and competitive pricing points. F&B is still leaning in for SMEs that are well positioned to benefit from the early structural reforms, and F&B remains the largest lender in South Africa to this sector. F&B's focus on meeting the needs of SMEs is also supporting its strategy to grow in the community economy, with advances now at R17.3 billion and deposits at R43.3 billion. As I mentioned earlier, F&B continues to grow NIR, and the growth is reflective of the different strategies to defend and grow the transactional franchise. The slide shows that the business continues to achieve steady growth across traditional sources of fees, and importantly, is scaling new sources of fees supported by its platform strategy. Digital Wallet and PayShip Volumes are showing very strong growth, and the paycheque volumes are also reflecting the strategy to fulfill client needs or the business strategy to ensure that they fulfill client needs and payment needs as client behavior and adoption evolves. The graph on the right-hand side demonstrates ongoing traction in F&B's long-standing strategy to monetize its value-added services. The MVNO business in particular is scaling well, with users increasing to 3 million. WestBank delivered another strong performance, growing advances in a market showing signs of a sustained recovery, driven by new car sales in the industry which are up 16% and an emerging replacement cycle. There was a slight recalibration of risk appetite to capture the opportunities emerging from these market dynamics. Origination has shifted from only originating in low to medium risk to a higher proportion of medium risk customers. This has resulted in some front book strain but remains well within expectations. The insurance business continues to deliver good growth on the group's own licenses, as reflected in the new business APE numbers on the slide. The growth in the Infos APE for life and short-term demonstrates the quality of these books. The top-line growth has not translated into PBT growth in this period as we continue investing for future growth. This investment in distribution capability will set the business up strongly to grow in F&B's customer base as well as the open market. A data point that supports this thesis is the 38% growth in APE that's been generated from the private advisor distribution channel. As I called out earlier, RMB had an excellent first six months of the year. Absolute advances growth declined due to the distribution strategy, but production was robust at significantly higher margins. NIR benefited from a private equity realization and a turnaround from the global markets business. All these drivers helped lift RMB's ROE. The HSBC transaction has been successfully completed, introducing 260 new large corporates and multinational clients to RMB. And the shout-out here goes out to the technology teams who ensured that there was a seamless transition of these clients, building platform capabilities that the group will be able to leverage in future growth strategies. The strategy to build scale in the corporate transactional bank and the introduction of a dedicated executive focus is resulting in good progress on mining the client base, and it is clear that there is a great deal of runway here. I've already mentioned the turnaround in the global markets business. This slide demonstrates that the early recovery is emanating from across the portfolio and the business continues to focus on client franchise activities to ensure that the recovery is sustained. I want to cover the point-in-time ROE at the Aldermore Group. We are still executing On a clear medium strategy to move this ROE closer to 15%. However, the journey to operational efficiency has required a hefty investment into the current offshoring initiatives. This, in time, will increase operational leverage once completed. In addition, the NIMH pressure across the industry has also had an impact on Aldermore's performance in six months. This will be partly addressed by Aldermore's objective to diversify into higher margin asset classes as well as accessing other funding sources post the FCA's motor redress process when Aldermore again can go into the capital markets. The excess capital we continue to hold in the UK depresses the Aldermore ROE by 1.5%, but we are hopeful that this will be resolved by the end of this year. The performance from our broader Africa portfolio is pleasing, particularly given the macro pressures in Botswana, which is one of our larger jurisdictions. This portfolio is still relatively undiversified, so volatility in two markets will have an impact. However, despite these pressures, the overall profitability and ROE held up well, supported by good performances from Zambia, Nigeria, and Namibia. There was cost pressure in Ghana due to the platform investment that's required there. RMB's cross-border business and in-country CIB activities performed strongly, as I've mentioned earlier. I want to spend a little time on the overall strength and health of our Origination franchises, and Markos will cover line-by-line growth in more detail when he takes over the presentation. This slide unpacks the group's long-standing philosophy on Origination. One recent adjustment is the slight shift in West Bank's risk appetite, which I covered earlier. A key element of our FRM strategy is to originate to the most appropriate balance sheets and underwriting vehicles. This has created additional capacity for the group, creating additional capital and funding velocity to support further origination. On slide 28 here, we can see that the lending growth we have achieved across brands, customer segments, and product lines, and we are comfortable with these outcomes. Standouts here are West Bank, corporate and commercial, where we have seen growth pick up as the economy shows signs of shifting to a more investment-led cycle. Given the macro backdrop, we expect the modest pickup in retail to accelerate in the second half. The pie chart on the right unpacks the results of the sector-specific lending strategies we have been pursuing. Again, this is a high-level unpack of the credit performance which Markos will cover in much more detail. The point I'd like to make here is that retail's performing better than our initial expectations, and the UK normalization this year in their CLR is in line with expectations given the base effects from last year's provision releases. I want to spend a bit more time on the deposit franchises which deliver our high-quality Capital Light NIR. It is extremely pleasing to see that all of the group's deposit franchises delivered good growth over this period. RMB's corporate deposit franchise is showing good momentum in South Africa and in broader Africa. The steady strategy to build country deposit franchises in the broader Africa portfolio is also gaining traction. SAE retail and commercial deposits continue to increase and grow off an already high base. The group once again benefited from the group treasury's active management of interest rate risk and ALM risks, ensuring that the group earns appropriate value from interest rate risk and credit premium. In the current year, the strategy produced an additional $1.2 billion of NII compared to an opportunity cost in the comparative period. With interest rates forecasted to further reduce, The ALM strategy is expected to yet again have outperformed as shown in the grey shaded area on the graph. The group's margin was up 8 basis points and up 15 basis points excluding the UK operations. Improved asset margins were achieved through the mix of balance sheet growth and deliberate FRM strategies with disciplined segment execution to ensure appropriate risk-return margin, considering client, channel, and market conditions. Where quality credits did not meet the balance sheet costs and frictions, these were matched to alternative platforms and investor base as executed through the RMB distribution strategy. The negative impact to the group margin in funding and liquidity of 11 basis points was a consequence of both the higher levels of excess liquidity and lower return on liquid assets. This is a strong margin outcome achieved through active FRM, which the group will continue to use as a central process to deliver shareholder value. A walkthrough of the Group CET-1 ratio shows a lifting in the capital position Following ongoing optimization, FRM initiatives have highlighted and Basel reforms. RWA consumption up 70 basis points reflects ongoing growth in constant currency as well as investment in strategic initiatives. A CC1 ratio of 14.4 provides a group with sufficient financial resources to deliver on the group's growth ambitions. The strong level of capital and FRM initiatives supports a sustainable dividend cover that remains at the bottom end of the range. I will now hand over to Markos, and he'll come back to contribute with the prospects in looking forward.

Thank you, Mary, and good morning, everyone. Considering the backdrop of the group's strategic and operational performance, I am now pleased to present the financial review of the first-hand group for the six months ended 31 December 2025. Mary has covered the key performance highlights and as a quick recap, the group delivered 11% normalized earnings growth coupled with an improving ROE and a resultant 26% growth in NIAC. This performance did not include an adjustment to the UK FCA motor redress provision. However, legal and specialist costs of R333 million pre-tax and R244 million post-tax impacted operating expenses and earnings growth by 1%. The Group expects the final redress scheme to be published by the end of March and will update shareholders on any potential impact thereafter. NAV is up 7%, with the stronger RAND impacting the group's foreign currency translation reserve. Excluding this impact, NAV would be up 10% for the period. The final call-out is that the Group's stronger CET1 position of 14.4% places it in a position that, if required, the Group can absorb any of the possible negative outcomes from the UK FCA Motor Commission Redress Scheme, and Mary will touch on this further in the prospects. The Group's normalised earnings growth is driven by a strong top-line performance, with both NRI and NIR up 8% and 12% respectively. Gretin Positive Jaws Against Credit Impairments which are up 6% at a CLR of 86 basis points and Cost Growth up 9%. I will unpack all of these shortly. As the only additional notes to the slide, RMB implemented a debt-to-equity restructure during the period. As a result, a portion of the non-performing loan was converted to equity with the remaining loan settled. In accordance with IFRS, the group recognised an investment income gain of R242 million for this conversion, with the settled advance resulting in a release of Stage 3 impairments of R143 million, and the remainder of the loan was written off. The converted equity exposure is then recognised and associated for the group, and the cumulative equity accounted losses resulted in a R377 million loss in associate earnings line, but the net impact to NIR is therefore R135 million. Netting these impacts results in only a R8 million gain being recognised and hence I will not cover it further in this presentation. Let me now turn to the quality of the financial performance and its key drivers starting with NII. Turning to advances, retail mortgage growth continues to be subdued as overall demand and customer affordability do start to show early signs of improvement. Production has picked up in recent months with this improvement expected to drive momentum into the second half of the financial year. West Bank VAF grew 14%, capturing a large proportion of the bounce back in vehicle sales. An important note is that additional retail risk appetite has been allocated. Mary did touch on this. We are using a data-led basis and we're expanding lending to the quality side of medium risk customers. As the group continues to monitor improvements in retail credit lending conditions and proactively prepares for an improving affordability cycle. Commercial growth of 9% reflects the consistent and focused strategy Mary alluded to earlier, with a continued focus on growing the SME customer base, and unsecured SME lending is up 11%. Broader Africa continued to service customer needs for credit products in the group's presence countries, up 9% in constant currency, and as a call-out, Zambia showed excellent in-country advances growth of 35%. Aldermore delivered 9% growth in advances, primarily driven by its strong origination network in property finance, which was up 15%. Final point on the slide relates to RMB, where growth appears subdued at 7% down, but both translation impacts and the deliberate distribution strategy that Mary touched on earlier impacted its balance sheet growth. But what is pleasing about this, we now have a demonstrable financial data point on the underlying hypothesis with RMB's portfolio margin improving by 20 basis points and despite a smaller balance sheet, RMB lending in our eyes at 15% for the period. On this slide we reflect the impact of the RMB distribution strategy and the group's currency translation impacts to total advances, with each having a 2% negative impact to growth. The group's deposit franchises continue to show momentum across all of the customer segments, with overall growth of 6%. This performance, when coupled with RMB distribution strategy, enabled a net 2% reduction in total institutional and other funding, and in particular a reduced term debt securities funding cost, which further benefited NRI and margins. The group's institutional funding mix and weighted average term continues to be well-managed, with the right-side graphs depicting the funding mix change between FI deposits and MCDs. Reflecting the group's balance sheet strategies in an activity view highlights the effective partnership and FRM discipline between the franchises and group treasury. Lending NII benefited from advances, growth and mix changes, as well as the improved margins in RMB. Despite 107 basis points decline in average interest rates, both transactional NRI and capital endowment activities increased 7%, strongly supported by growth in invested balances and the Group's ALM strategies and active portfolio management approach. Group Treasury delivered a very good outcome with NRI up 61%, driven by the lower funding costs previously mentioned, The UK NII is up only 1% with pressure on cost of funding and deposit margins given the continued elevated level of competition for liabilities and a reducing rate cycle which had some impact on unhedged capital endowment. Mary has already covered the margin outcome earlier, and here I depict it in the usual waterfall view. In summary, group margins excluding the UK have expanded 15 basis points, 8 basis points to June 25, and then a further 7 basis points to December. Lending asset margins expansion contributed 12 basis points, with RMB a significant contributor to the uplift, and with continued disciplined pricing across all the other lending portfolios. As mentioned, the ALM strategies reinforced both deposit and capital endowment margins, with Group Treasury reflecting an 11 basis points impact, mainly due to the lower HPLA margins. The UK margin compression resulted in an offset of 7 basis points to the Group. Moving to the Group's impairment charge, which is up 6%. The Group's total CLR remains below the midpoint of the TTC range, with a slight improvement of 2 basis points to the CLR excluding the UK. An important note at this point is that in the comparative period, the UK CLR benefited from one-offs relating to various items including NOSIA, cost of living, and these did not repeat in the current period. These supported the prior period outcome for the group CLR that was 84 basis points. And if you look at the current period, 86 basis points, this is a normalization of these impacts in effect. The overall diversification of the Group portfolio continues to support a CLR below the midpoint of the TTC range. The Group's impairment charge of R7.3 billion further reflects the UK normalisation, as well as front-book strain from balance sheet growth, impacting Stage 1 provisions predominantly. I'll give more colour to this shortly in the segmental breakdown of the charge. Stage 2 provisions and subsequent coverage are lower as a result of a migration of a few higher coverage watchlist assets to Stage 3 in RMB. This then reflects in the slight growth in Stage 3 provisions in coverage of 43.8% and further contributing to the Stage 3 coverage with increases relating to an age in NPL portfolio and higher operational NPL inflows. The Group's overall provision stock remains appropriate at R56 billion with a performing coverage of 1.43%. The group's NPL formation continues to reflect a slowing six-month trend across most portfolios, except West Bank, WAF and RMB. RMB had a single counterparty in the cross-border portfolio that migrated straight from Stage 1 to Stage 3 and has been appropriately provided for at this point in time. The particular circumstances of this event are isolated and is not pervasive to the portfolio. This new slide depicts the group's segmental composition of its impairment charge. It aims to highlight the diversification of the credit charge as well as period-on-period increases of each segment's charge. What can be seen is that the UK impairment growth accounts for $338 million of the total $442 million group increase, with commercial and broader Africa also up significantly for the period. These were then offset by lower impairment outcomes in retail and CRV. With this backdrop, let me now unpack these individually. Retail CLR has, as expected, trended lower into the bottom end of its TTC range. Improved forward-looking macros, better collections, coupled with increased customer prepayments and reduced Stage 3 inflows were all key contributors. Strong book growth in BAF drove some front book strain, which was more than offset by an improved mortgage outcome as house prices in Gauteng and KZN showed signs of recovery. Increased NPL coverage driven by time in NPL and slowing lower coverage inflows also weighed in. Retail unsecured is benefiting from lower front book strain and pleasingly a decline in debt counselling inflows albeit this portfolio remains structurally higher than in the past. Commercials impairment outcome continues to lag retail but with signs of improvement since June. There has been no new jump to default counters like in the prior period, but the Group has proactively raised out-of-model provisions against the larger commercial watchlist, exposures and potential industry concentrations. The 94 basis point CLR is an improved rolling 6-month print compared to the previous 125 basis points and remains below the midpoint of the TTC range. A significant driver of the increase in charge relates to what I refer to as good CLR in the form of front book strain, which is as a result of the continued strong advances growth across most of the commercial lending portfolios. RME's impairment charge continues to be best described as benign, with a single counter migrating to stage 2 due to a rating revision triggering SICA. NPLs continue to see some new inflows from the credit watchlist, with an offset for migrations out of NPL as RMB's debt restructuring capability continues to successfully assist customers. In addition, the previously mentioned broader Africa exposure that migrated to Stage 3 also impacted RMB's NPL level and provision increases. And finally, the debt to equity restructure I mentioned earlier impacted RMB, but even if you add it back, RMB is below its TTC range of 30 basis points to 50 basis points. I've already covered the core one-off benefits to the UK's 14 basis points charge in the prior period, and is the primary reason for the more than doubling of the charge to this year. And during this period, in line with expectations, the UK CLR has trended up to the bottom end of the TTC range, with core performance and collections tracking well. Areas continue to improve, with new origination resulting in some front book strain. UK forward-looking macros have, on average, C.A. C.A. C.A. C.A. The increase in impairment charges mainly from proactive provisioning in Botswana to capture the potential impacts of the visible slowdown in activity and additional out-of-model provisions have been raised to cater for the increased uncertainty in Mozambique. Moving on to NIR where the group delivered 12% growth driven by resilient fee income, a robust recovery in global markets and a private equity realisation. Pleasingly, fee and commission income continues to show resilience, up 7%, driven by inflationary fee increases coupled with 4% growth in both F&B customers and volumes. R&B knowledge-based fees also printed good growth of a relatively high base as it continues to offer clients market-leading structuring, arranging, and advisory solutions. Mary has already highlighted the key message from the F&B fee and commission outcome, including the 14% growth in value-added services income. What I'd like to do is just give a little more colour to the financial impacts of two of the items you referred to earlier. Firstly, FMB defaulted customers' real-time payment requests to the cheaper pay shop rail. This resulted in a reduced contribution and reliance on the old rail. and Associated Fees and it meant, you would have seen in her chart there was a graph that showed payment fees down, it meant that those fees are 33% down for the period and effectively have been replaced by the other income lines if you look at the 7% up at the total level. This strategy also was the key driver to the sixfold increase in the values and volumes that Mary highlighted. Secondly, Mary also highlighted the pressure related to merchant services competition with fees relatively flat for the period. But what I can also note is that billable devices are actually up 10% for the period. And again, the key take-out is that despite these two big impacts, the group has managed to grow its fee and commission 7%. Total insurance income is up 5% and requires further unpacking. Life is up 13% with underlying performance in underwritten life growing 14%, credit life up 15% and core life growth of 16%. F&B employee benefits were also moved into F&B life from commercial during the period due to the synergies of the group life and employee benefit offerings and were a slight offset to the other life product performances based on the take-on of a large client Mary mentioned earlier. Short-term insurance continues to scale ahead of expectations, with insurance income up 17%. Westpac benefited from the exit of Motivantage, which resulted in a rundown portfolio being recognised this year, with no base as the investment was classified as hold for sale in the prior period. The offset to these good performances relates to a continued reduction in the income from participation agreements. We have previously noted these are winding down and any new business is being written on the group licences. In addition, broader Africa is down 26% due to additional weather-related claims in Namibia and a lackluster premium growth in credit-linked products in Botswana. And finally, the group continues to invest in its operational distribution capabilities, which Mary touched on. In the insurance income, the attributable costs get offset against these and reflect in this chart against the growth levels. These investments are expected to result in ongoing support for growth in policy numbers and new business APE. Trading and other fair value income was driven by the strong recovery in RMB global markets, which Mary unpacked in some detail earlier. This graph does, however, reflect the extent of the recovery and highlights that in the prior period there were also contributions from fair value income from RMB's PI portfolio and other Treasury-related benefits, which in the year to date have all been replaced by the global market's revenues. Turning to the significant growth of 65% in investment income, which is predominantly driven by a significant realisation in the private equity portfolio. But in addition, RMB's associated earnings in the light grey on the chart also remain resilient, especially considering the lost earnings from the prior year realisations that would no longer be in the base. It highlights the quality of the underlying performance of the investee companies. Pleasingly, despite these realisations, the unrealised value of the private equity portfolio has also increased by 12% to R8.4 billion, driven primarily by an earnings uplift. West Bank's associates TFS and VWFS also had improved performances, driven by advances in NRI growth and a good impairment print. VWFS also benefited from a large once-off in the current period, which is not expected to repeat next year. Lastly, the improved overall performance in the bond and equity markets resulted in an uplift of R239 million in investment income related to the assets back in the group post-retirement employee liability portfolio. Turning to operating expenses, which grew 9%. As mentioned earlier, the costs incurred in response to the UKFCA consultation paper resulted in a 1% impact to cost growth, and its impact is included in the appropriate cost lines in the pie chart. Going forward, once a redress scheme is announced, any future legal costs would be allocated against the provision raised as opposed to expense through the income statement. The Group also continues to invest and allocate resources to its technology platform, with total IT functional spend across all cost categories up 13% to just under R11 billion. A more detailed breakdown of this is included in the presentation annexures and the booklet. Professional fee growth of 26% is as a result of increased spend related to the implementation of the HSBC transaction, including API integration, as well as some external professional support during the implementation of a core banking platform in Ghana. These costs are not expected to repeat next year. Advertising and marketing costs increased 14% as F&B continued to invest in its brand value propositions and marketing activities, and the increase in the group's depreciation, repairs and maintenance costs are mainly due to increased campus requirements as staff return more regularly to the office. In addition, amortization costs were impacted by the implementation of a new global markets platform, a portion of which was previously capitalized. And then finally on OPEX, included in other expenses is the increase in the Department of Home Affairs ID verification fee, which had a six-monthly impact of R60 million and is a new ongoing cost of customer onboarding and compliance. Staff cost remains a significant portion of the cost base and increased 7% for the period. Salary increases of 5% coupled with average headcount growth of 1.5% for the key drivers. Headcount growth was focused on growing the group's points of presence, particularly in community economies, with 18 new branches opened during the period. In addition, Mary has mentioned the UK strategy to offshore some of its enablement headcounts as part of improving the overall UK cost-to-income ratio and ROE. This does, however, result in transition costs with a period of duplicate headcount to appropriately manage the offshoring execution. To date, the costs incurred total £2 million and is expected to ramp up by June as the execution nears completion. As highlighted earlier, this performance has resulted in positive cost draws with an improved cost-to-income ratio anchored below 49%. And in closing, and as an overall summary from my side, a solid group performance with strong business execution and financial outcomes that reflect the progress against the group's strategic framework. Thank you. I will now hand you back to Mary to cover the group's full year prospects.

Okay, we are nearing the end. Thanks, Markos, and turning to prospects. Looking forward in terms of macro developments in South Africa, further moderation in inflation creates scope for additional policy rate cuts. This is, of course, barring the events that are taking place at the moment with the oil price from the Middle East conflict. As I said, combined with structural reform improvements and supportive commodity cycle prices, we believe that this is expected to begin lifting real GDP growth. With regards to broader Africa, Despite global uncertainty, economic prospects for most countries in the portfolio are improving thanks to lower inflation and policy rates and economic reform progress and supportive commodity prices. We expect this to continue. The key exceptions are linked to domestic governance and debt pressures in the case of Mozambique and the need to diversify the economy following the diamond price correction in the case of Botswana. Hopefully, we have provided you with appropriate insights to support our view that FirstRend is on track to deliver another strong operational performance in line with guidance. We expect to deliver high single-digit growth in NII, a strong NIR trajectory, and an improving credit outcome. The combination of a growing top line and an increased focus on managing costs will result in positive jaws, something this management team is fully committed to. As the last bullet on this slide points out, this guidance does not include any potential adjustments to the current accounting provision for the FCA process in the UK. In closing, I want to identify two significant strategic advantages this group has at its disposal to generate an ongoing strong operational performance for the rest of this year and beyond. Our client-facing franchises are healthy and they are well positioned for growth, as they have demonstrated in the last six months of this year, delivering good quality top-line growth, growth in earnings and improving returns. Our FRM strategies, which I consider to be a clear differentiator for first-rank investors as our peers, have added significant value in driving balance sheet efficiency, margin uplift, capital strength, and ultimately a superior ROE. A strong capital position means that under any expected scenario outcomes from the FCA pre-dress scheme, the board and the management team are confident that the group will be in a position to pay a dividend on normalized earnings pre the motor provision. This brings me to the end of the results presentation. I'd like to thank the employees across the first-rank group for your diligent efforts in looking after our businesses and ensuring that the group executes on its vision of delivering shared prosperity to our customers, to each other, to the communities that we serve. You can be proud of what the group has delivered to its shareholders. And lastly, thank you To our customers across the group, your trust in us inspires us to innovate to support your current and evolving needs. I will now pause to take questions if there are any. Thank you. Okay, there's a question in front.

Morning Mary, thank you for a beautiful presentation and compliments on the excellent results. I find it very challenging to see you sustaining this level of growth, because you seem to have accelerated your growth tremendously, while the economy has not helped you much at all. If I may make a minor comment on slide number 11 of your earnings, it would have been very helpful if you had included in that slide a line showing the headline earnings per share, and maybe you could consider that in the future. And then on your private equity realizations, every presentation, they're a feature of the results. What fascinates me is the size of the deals that you must be doing and the quantum. And again, I asked the question how sustainable that might be. And on slide 23, the global market's growth of 62% again raises the same sustainability question. And I found your comment at the end quite telling in terms of the dividend in the context of the UK provision. Unless the world falls apart or the UK motor market falls apart, that's never going to impact your overall earnings to any extent to affect your dividend. Thank you.

Okay, I will take some of those questions and then, Emery, you can prepare for the private equity related one and the global markets one. Let me see if my memory holds well. So we are confident that we can deliver on the full year earnings guidance and the strong growth print. And as I said, I think the quality of our franchises and the diversified portfolio that we have, it means some other businesses are doing well and others are not doing well. We can have an overall Good outcome. And I suppose we've had a number of very large one-offs in the past, and I think our commitment is to ensure that we are overall ensuring that the portfolio grows. So the last period that we've operated in, the last couple of years, the macros in South Africa haven't been particularly supportive, and we are constructive on a better operating environment going forward. And I suppose the fact that Our business is 80% in South Africa. This is really the market that we are looking to see some recovery. And you can see we are gaining traction in our strategies in broader Africa, where some of those markets are growing. So I think you can take comfort that our earnings growth is sustainable. I'll ask Emery to comment on the RMB private equity portfolio, which actually has quite a number of investments, and then the global markets recovery. Oh sorry, Markos will make a note of the headline earnings per share disclosure for next time. I'll come back to the UT.

Thanks, Mary. Yeah, it's especially private equity portfolio. I think, first of all, for us, we have been very focused over all the years to build a diversified portfolio. And as indicated in the booklet, we, I think, now take a much more active portfolio management approach in respect of the portfolio, which ensures that we make continuous investments. I think if you think back about five years ago, that was one of the challenges we didn't regularly invest. So the portfolio management from an investment perspective, but also managing continuous realizations to have the velocity of capital is very much a focus in how we think about our private equity business. So I think where we are at the moment, based on the contribution of private equity to the overall RMB and first-rank results, this is the level that we're comfortable with and we manage that part of our business very much with that in mind. On global markets, yes, I would say that this year is more a bounce back from a low in the prior year, as well as very deliberate strategies in how we take our global markets products to our full client base. So we feel that this is a more normalized performance, but having said that, the global markets business is exposed to Msibi, Msibi, Msibi, Msibi.

And lastly, on the UK, the reason we made that statement is because the final redress scheme by the FCA is going to be announced end of this month. They have undertaken. And we are waiting for the final redress scheme to ultimately understand what the financial impacts on the group will be. We don't have the number, but we also know that there are some scenarios where the number is not the amount that we've provided, and hence we make that comment. As we've worked through all the expected scenarios from the consultation paper, shareholders can be assured that the capital that we sit with should be able to cover any of those scenarios. So still high levels of uncertainty, but hopefully the end is near with the redress scheme over the next month. Do you have any other questions online? Oh, sorry James.

Good morning, everyone. James Dock from R&B, Morgan Stanley. Mary and Markos, congratulations on the strong results. Three questions from me. The first, I think maybe we can pass this one to Harry. On the customer gains in F&B, can you perhaps expand on some of the initiatives you've deployed to turn around the growth trends there? Then just pleasing progress on the cost of income ratio more generally. I mean, how do you plan to sustain this momentum going forward? And then lastly, just on capital generation, it is very strong. Can you please expand on your plans for the surplus capital generation, particularly with regards to acquisitions? Thank you.

Okay. Should we just take it in that order? Harry?

James, thanks for the question. If you look at the customer growth, I mean, if you look at the investments we've done in terms of infrastructure and people, So you're seeing growth in our headcount, but a lot of that growth is sitting in our branch network. Branches, I mean, if I remember the number right, between December last year to December now, our branches were up So 13 branches new. At the same time we're investing in what we call Agency Plus. That went from 63 to just over 170 Agency Plus in the last 12 months. So we actually got a larger footprint in order to be able to serve customers and clearly we've capacitated that with individuals to be able to sell. So I mean I think that's probably the largest drivers.

Lots of hard work, James. I think on the cost-to-income ratio, Markos will cover the expense piece and the sustainability of the cost trajectory, but James, fair to say that our ambition is for that cost-to-income ratio to have a full handle looking forward. So, Markos, maybe on the costs.

Thanks, James. I mean, I guess we've said it a few times, but positive draws will result in the CTI improving. So that focus is actually what drives it. And during budget periods, I mean, that's kind of the key point that we drive into the teams when they bring budgets if you have revenue. B.C. B.C. B.C. B.C. But effectively, it actually is the base size of the cost base allows us to kind of manage this to the objective we stated. Thanks.

Okay. And then, James, on your question on the surplus capital. So, I mean, that we acknowledge. I guess the board's target range for the CT1 is 11.5, 12.5%. So, at 14.4, we are way over. I guess you have to appreciate the fact that we've been operating in an environment where there's been high levels of uncertainty because if it wasn't that we had to make sure that we are well positioned to deal with any adverse scenarios, I suppose we would have reconsidered those capital levels in the last year. So hopefully we are close to doing that and then we can have a bit more clarity on the capital that we require. I think we have enough capital to fund any of the growth initiatives that we are looking at. We are not holding on to that level of capital because there's something very big pencil marks, James. I think it's just to get through the UK uncertainties. You can trust that we will do the right thing when we have better clarity on the way forward. Andries, do you want to comment?

Sorry. Yeah.

Oh.

Morning. Thank you for that presentation. Mobi Lejula from Reuters. Mary, what's your strategy, if any, you know, around East Africa? I mean, we're seeing a lot of activity there. We're seeing South African lenders also, you know, having a lot of interest there. I mean, are you thinking about it? Are you actively looking in that region?

Okay, this one I can definitely pass on to Andries who looks after the broader Africa strategies and as well as M&A activities.

Thank you. I'll also link to the previous one. When we do expand to M&A, there's two fundamental cornerstones. We underpin our discipline, FRM, and we have to add shelter value. On expansion, we look at capabilities. Can we acquire capabilities? Customers, is it franchise value? And then to your question, geographical expansion. Eastern Africa is a key market we want to enter. We've had discussions, it didn't come to fruition, and we're looking at the appropriate vehicle, but it's very important from a first-hand perspective. We won't renege on our FRM discipline and how do we create shelter value.

Yeah, so we keep looking. We've been looking for a while though, but hopefully some of the consolidation activities that are taking place in the market will open up some opportunities for us. Is there another question? Do you have questions on the webcast? We've got a few.

Thank you, Mary, if I may. On slide 65, there's a caption that says share price incentives linked a negative. Now, I follow your share price probably as closely as you do. And I haven't seen a negative I know bounces around. I'm just fascinated to understand the basis of that comment. Thank you. Okay, thanks. Markos can take that.

Thanks. That refers to the employee share scheme, which previously vested at a higher level based on the performance in prior periods, and all it means is that currently that vesting is expected to be lower based on the current performance measures. And when I say high, it was higher than 100% in the prior year, so it's currently accruing at 100%, which is below that, so it's negative year on year. That's the main reason. There's no share price impacts into the employee share scheme. It comes through IFRS 2 charge.

Thank you. Did I hear you correctly? I saw your structured aspects of your performance incentives. Is that the key point here?

Yes, it's just the way the accounting plays out in the long-term incentive scheme as such.

Thank you.

Okay, let's go to the line. Maybe what you can just maybe do is just check if some of the questions we've answered already and maybe we don't repeat them.

We'll do. Thank you, Mary. Some of them have already been partially answered. We'll start with Baron Gormo from JP Morgan. Given your strong capital ratios, in which segment or region do you see the greatest opportunity to deploy capital? Over the next two years, that's been partially answered. The second one is, what is your strategy to deepen and grow broader Africa franchises?

Okay, so I think opportunities that we see in our business, I think the corporate and commercial sector, I think we are quite optimistic about the structural economic reforms and activity that will happen in SA. Phuket Phuket Phuket Phuket Phuket More the corporate commercial aspects of opportunities. And I guess broadly, we are looking at making sure that all our franchises are growing and are actively taking advantage of the different various opportunities. So it's not just penciling in those growth aspects for SA. And then how we plan to grow broader Africa. I suppose we are executing on organic strategies. We had an opportunity of buying the sand charter book in Zambia, so that provided us an opportunity to scale some of our existing markets. The M&A team continues to look if there are other inorganic opportunities that come our way. But I'd say that we are quite small in Ghana and Nigeria. And I think in the various markets, we still think we've got runway in our current existing portfolio. But there's lots of focus to ensure that we are capturing the growth that we're expecting from the rest of the region.

Thank you, Mary. We've got Charles Russell from SVG Securities. He's got three questions. I think one of them has been answered. The first one is, can you take us through key dates and first-range decisions and responses over the coming 12 months relating to the UK Motor Commission issue? The second one is, can you unpack the 37% growth in trading and fair value income? And then the third one, I think we've answered saying our CET1 looks very full, but I think we've answered how we're going to manage that.

Okay, Markos?

So on the dates, I mean we've called out that even recently as this week, the FCA have said that by the end of March they will give an update on the final redress scheme paper. Obviously our legal teams would need to work through that together with our specialists and we would have to then regroup on a path of action if we are happy with the paper or if we are not. So that will play out in the next month. Thereafter we'll update shareholders once we've got a sense of kind of what the impact is. We've got all our models built and ready for the various scenarios that can play out. And in the booklet we do call out kind of the three criteria which are the biggest drivers of impact in things that we didn't agree with in the original papers.

That's basically the global markets recovery that we spoke about. And there is a slide, I don't know which slide that is, that shows where the global markets growth came from. You mentioned that slide number. And yeah, I suppose Emery has covered it earlier on that for global markets as a recovery because we had a number of years where we went backwards and I think it's largely reflective of global markets.

Thanks Mary. Then the last set of questions is from Ross Kriff from Investec. It says, just to clarify on the FY26 guidance, does unchanged guidance imply an expectation of high mid-teen earnings growth ex-UK motor provisions and assuming PE realizations as expected? And then the second question, on the UK Motor Commission related OPEX, how do you expect this to unfold in H226 and beyond?

Okay. I think Markos has covered that last point by saying that depending on just the paths that we take forward, any expenses that get incurred will be charged against the provision that we've released. I think it was just to give an indication that the base hopefully should not have as many legal expenses as we have incurred, and I think that's how they'll be dealt with. And the other question level?

Just on the guidance.

Oh, on the guidance, yeah. Okay, let me step through this slowly. So the guidance we gave for the full year, it had the UK provision obviously in the base, and we said, assuming there's no other provision, earnings growth should be up mid-teen. So that's the guidance that we are confirming today. And private equity, there's uncertainty, there's always uncertainty, but I guess we are not saying we are We're not saying that the guidance is subject to that realization taking place, but we note that there can always be changes in the dates. I think my R&B team are still good for their number.

We have additional questions that have come through online. So the first one is for Mario Stradum. It does say, well done with your strong insurance new business growth, and thank you for your improved disclosure on these businesses. Can you please speak to the near-term outlook for operating expenses growth, the rundown profile for other participation agreements, and the potential for short-term insurance to double policy count by FY30?

Okay, Andries, maybe you can take some of that and then I will fill in for the insurance. And Marius, I suppose all these questions are related to insurance, even the expense outlook.

Yes, no problem. The strategy was to obviously originate our own licenses, so that will continue. We're quite confident to the numbers that you've alluded to, both as we go in our own channels and also open market on a short term. Our expenses will probably continue to be at a high end as we invest in new products and also new distribution and also further into new business lines where we are underrepresented.

There's a fair chunk of investment in the distribution channel, Andries, which once we get to a point whereby surely we are at the levels we want to operate with, it will be rather acquisition cost versus an investment in that. So that I would say is the part, of course, that profile should change.

Maybe just a point to add on the other participating agreements. This year you'll see the 66% decrease means there's a $50 million six-monthly base there. So it's a much more manageable base than what it was in the past year. So its impact is reducing.

And then we have a last one. It comes from Harry Porter from Bofa Securities. To clarify, is the mid-teens earnings growth potential still intact for 2026? Are you making any technical adjustments to your hedging program for yield curve changes?

Okay, so the first answer is very simple, Harry. No change to the full year earnings guidance that we provided. Hope that helps. Bhulesh, do you want to comment on the hedging strategy?

So the hedging strategy follows an investment process. So with the volatility we've been experiencing this week, Certainly there would be tactical adjustments, but that would follow the investment process that's in place.

Okay, I think are we at the end?

Yes, we have no further questions.

No further questions in the room? Okay, well thanks everybody for joining, thanks for your time, and we'll see you in six months' time.