Latest news with #FirstRand
IOL News
a day ago
- Business
- IOL News
Proceeds from a 5-year R1,000 investment in FirstRand shares is now worth 25% of groceries
IOL's calculations show that, without reinvesting dividends, your shares would be worth about R1 785. Image: Ai If you invested R1 000 in FirstRand shares five years ago and reinvested all dividends (excluding the effects of inflation), your investment would now be worth about R2 378. This includes both share price appreciation and the compounding effect of reinvested dividends. That gain, of R1 378, is the equivalent of a quarter of the cost of an average food basket, based on May figures from the Household Affordability Index, published by the Pietermaritzburg Economic Justice & Dignity Group. The Group's report indicated that the national minimum wage in May, based on 21 working days, is R4 836. The average cost of a household food basket, in the same month, is R5 466. The Pietermaritzburg Economic Justice & Dignity Group's food basket tracks 44 basic food items, including a range of essentials like maize meal, potatoes, tomatoes, bananas, and various other fruits and vegetables, as well as staples like bread and milk. IOL's calculations show that, without reinvesting dividends, your shares would be worth about R1 785. Overall, dividends earned and reinvested over the period contributed an additional R593 to your investment value. This calculation is based on a five-year share price increase of about 78.7% and an average annual dividend yield of roughly 5.9%, with dividends reinvested each year. In contrast, the JSE's All Share Index has climbed some 81% over the same period. Dr Azar Jammine, director and chief economist at Econometrix, pointed out to IOL that the Index was worth some 7 000 points at the turn of the century and is now heading towards 100 000. FirstRand started out as FNB, which claims to be South Africa's oldest bank. Its history can be traced back to the Eastern Province Bank formed in Grahamstown in 1838. Initially the Eastern Province Bank, FNB was established in Grahamstown and initially focused on financing the wool export boom in the district. It later hit a wobble and was acquired by the Oriental Bank Corporation in 1874, which was later bought out by the Bank of Africa in 1879. IOL
Reuters
21-05-2025
- Business
- Reuters
Close Brothers bolsters capital ratios before landmark motor finance judgment
LONDON, May 21 (Reuters) - Close Brothers' (CBRO.L), opens new tab total capital ratio rose by 80 basis points to 18% in the quarter to the end of April, as it bolstered its finances pending a ruling that may force the bank and others to pay out millions of pounds in redress to motor loan customers. Close and South Africa's FirstRand (FSRJ.J), opens new tab are seeking to overturn a Court of Appeal judgment which said brokers owe a fiduciary duty to customers and must have their fully informed consent to receive a commission from lenders. The ruling has sent shockwaves around the UK banking industry, with several banks facing the prospect of repaying affected customers compensation plus interest. Close said on Wednesday its common equity tier (CET1) capital ratio, which reflects a bank's ability to absorb losses without jeopardising solvency, was 14%. The applicable minimum CET1 and total capital ratio regulatory requirements were 9.7% and 13.7% respectively at April 30. Close also said it expected the CET1 figure to exceed its medium-term target range of 12% to 13% by the end of the financial year. Analysts at KBW said the improved capital position "removed the risk of a capital raise" to cover possible liabilities. KBW has set Close's 'worst case' liability estimate at 460 million pounds. Close shares, which have fallen 57% so far this year, were unchanged in early trading. "We are taking proactive steps to ensure that the group is well positioned to generate strong, sustainable returns once the motor finance commissions uncertainty has been resolved," CEO Mike Morgan said in a statement. "Alongside a stronger capital position, delivering on these priorities will create a more efficient and resilient business, one that delivers greater value for shareholders and continues to support customers, as we have through many cycles." Close and FirstRand have set aside 165 million pounds ($221.61 million) and 140 million pounds, respectively, to cover potential claims, while Lloyds Banking Group (LLOY.L), opens new tab has earmarked 1.15 billion pounds. Santander UK has set aside 290 million pounds and Barclays 95 million pounds. Close said it was on track to deliver annualised cost savings of around 25 million pounds by the end of the 2025 financial year and would update investors on further initiatives to increase savings. ($1 = 0.7445 pounds)
The Guardian
29-03-2025
- Automotive
- The Guardian
Banks aim to reverse crunch appeal court victory for car buyers
British lenders are heading to the supreme court this week as they try to overturn a ruling that has propelled the car finance scandal to new heights, triggering government intervention and prompting fears of a £44bn compensation bill. Two specialist lenders, Close Brothers and FirstRand, are challenging three consumers who collectively won a court of appeal case in October. That ruling said that failing to disclose plainly to consumers the amount of commission paid to dealers, and get their informed consent, was unlawful. The decision sent shockwaves through an industry already spooked by the potential fallout of a much smaller car loans investigation launched by the Financial Conduct Authority (FCA) last January. The high-profile case is due to run for three days from Tuesday in front of judges including the supreme court president, Lord Reed, in London. Depending on the final ruling, it could have significant implications for both the financial services industry and inbound UK investment. Roughly 90% of new cars, and a growing number of used vehicles, are bought with the help of motor loans, many doled out through car dealers. While the ruling was in reference to car loans, there are fears that it could encompass a range of financial products that are sold on commission, including insurance, resulting in a massive compensation bill that analysts have been loath to estimate. The car loans scandal alone is projected to cost lenders, including Santander UK, Close Brothers, Barclays and Lloyds, a collective £44bn, according to some analysts. That would nearly rival the payment protection insurance (PPI) saga, which cost banks £50bn. The Financing & Leasing Association, which represents car lenders, has been warning the government that a massive bill could end up disrupting the market, forcing some lenders to shut up shop, offer fewer loans or raise interest rates. Concerns over the potential bill prompted a controversial intervention by the chancellor, Rachel Reeves. The Treasury wrote to judges in January, urging them to avoid handing 'windfall' compensation to borrowers, and warning that the case could 'cause considerable economic harm'. Reeves later denied caving in to lobbying by the financial sector or working against consumer interests. While her intervention was ultimately rejected, executives from the wider financial sector – including JP Morgan's Chase UK and the retirement fund provider Phoenix – have said that the scandal has dampened foreign appetite for British shares. Executives argued that the situation could scare off investors wary of putting money into UK businesses that could face billions in costs on the basis of a ruling by a regulator or court in future. That could compound existing panic about the future of the London stock market, they claim. The Treasury seems to have already heard the message, warning in its letter that the case might 'generate a perception that regulation in the UK is uncertain'. That has put further pressure on the FCA to provide extra guidance to lenders. It plans to confirm within six weeks of the supreme court's decision if it will be proposing a customer compensation scheme and, if so, how it will take this forward. If the scheme floated by the FCA goes ahead, lenders are likely to have to proactively contact all borrowers who meet the mis-selling criteria and offer compensation – dealing a blow to claims management firms. As it stands, lenders are already steeling themselves for the fallout. Close Brothers, which is the most exposed to motor finance among its peers, with about 20% of its portfolio dedicated to car loans, has put aside £165m, cancelled dividends and plans to sell off its asset management business to strengthen its finances. Lloyds, the largest provider of motor loans through its Black Horse division, had already put aside a total of £1.2bn for potential compensation, with its latest provision contributing to a 20% drop in annual profits. Santander UK has allocated £295m, prompting frustration at the top of the Spanish-owned bank, which is said to be considering a potential sale of its retail business. With memories of PPI – Britain's costliest ever consumer scandal – still fresh for many banking executives, events at the supreme court will be closely watched.
