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4-Traders Homepage  >  Equities  >  NAMIBIAN STOCK EXCHANGE  >  FNB Namibia Holdings Ltd    FNB   NA0003475176

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FNB Namibia : Despite Recession, FNB Rakes in the Profits

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09/11/2017 | 07:07pm CEST

First National Bank keeps raking in millions from Namibian consumers as its annual results released on Friday show that the institution made a whopping N$1,1 billion in profit.

Despite the recession where many companies retrench as profits drop significantly, FNB Namibia's profit for the year ended 30 June 2017 only went down by 8,6% to N$1,1 billion from N$1,2 billion recorded for the 2016 financial year.

FNB said it executed its growth "strategy" of its core business well during the year under review, with advances growing at 9,6% compared to market credit extension of 8%, while deposits were grown by 9,7%.

The number of active accounts only increased by 4%.

Despite the high number of retrenchments in the country, FNB interest revenue increased by 15%, and normalised non-interest revenue grew by 7%.

"The macro-economic environment, however, remained tough in the period under review, globally, in the rest of the sub-Saharan region and locally. A number of countries, including Namibia, had to deal with ongoing commodity price challenges and an increased cost of liquidity (up 26%)," said FNB on Friday.

Headline earnings, being adjustments for the profit on sale of properties during the period under review, decreased by 4,4% to N$1,08 billion. Earnings per share decreased to 418,9 cents (2016: 459,7 cents).

Return on average equity reduced to 25,6% (2016: 31%), the return on average assets was 3% (2016: 3,6%) and the cost to income ratio increased to 48,9% (2016: 43,7%).

Normalised profit before tax, which caters for headline earnings adjustments, and the impact of the acquired subsidiaries which did not form part of the group for the full year, increased by 3,8% to N$1,76 billion. The normalised return on equity (ROE) is still a very healthy 28,4%.

Net interest income grew by 6,7% to N$1,76 billion (2016: N$1,65 billion).

Margins came under severe pressure with no upward adjustment in the repo rate during the review period, while interest expenses increased by 25% linked to liquidity challenges in the economy and deposit growth of longer term products which are more expensive.

Total unadjusted non-interest revenue increased by 3,1% to N$1,55 billion (2016: N$1,50 billion). The prior year figure was boosted by the sale of the Talas building at a gain of N$67 million (compared to an N$7 million gain on the sale of property in the current year) and the net forex gain from trading in kwanza as allowed for in the prior year.

The increase of 17% in the group's operating expenses is reflected in the bank's increased cost to income ratio of 48,9% (2016: 43,7%).

The bank said cost reduction of the operating base is lagging the migration of clients to digital channels from their branches. The consolidation of Pointbreak and eBank entities during the final quarter of the year also contributed to the increase in operating expenses.

Regulatory changes during the year, the introduction of mandatory deposits for instalment sales and for secondary home loans, contributed to cooling of demand for credit in home loans and vehicle finance.

Mortgage loans increased year on year by 6,5% to N$12,6 billion and constitute 44,5% (2016:45%) of FNB's advances book while the granting of instalment credit slightly reduced by 0,1% as 2017 reported the worst industry vehicle sales figures since 2012.

Growth in the RMB and FNB Business advances was 14%, compared to corporate Private Sector Extended Credit (PSCE) of 7,5% for June 2017.

Total dividends declared for the year are 204 cents per ordinary share.

Simonis Storm Securities on Friday said the results are slightly below expectations.

"Despite slowing private sector extended credit (PSCE), gross advances for the period grew by 9,6% to N$28,3 billion. We like that the group still managed to increase its loans and advances above the year-on-year PSCE average 9,5% growth level," said Simonis.

Copyright The Namibian. Distributed by AllAfrica Global Media (allAfrica.com)., source News Service English

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