WINDHOEK, Sept. 7 – First National Bank (FNB) has made N$1,086.3 million profit after tax, a decrease of 4,4% at the end of their financial year in June.
Meanwhile headline earnings per share decreased by 4,5% to 416,2 cps. However, normalised earnings before tax, which adjusts for non-operational items and the impact of the acquisitions of EBank and Pointbreak, increased by 3,8% to N$1,768 million.
Dylan van Wyk, an analyst with Simonis Storms Securities said the results were reflective of the recessionary economic conditions prevalent in Namibia and slowing private sector credit extension.
“An amount N$328,4 million appears in the cash flow statement as acquisition of investments in subsidiaries, which would suggest that this was the combined purchase price of EBank and Pointbreak. Although a decline in profit was expected, these results were below our expectations,” Van Wyk said.
Advances grew by 9,6% to N$28,26 billion from N$25,78 billion in FY16. Van Wyk said this was driven largely by a 32,9% increase in overdraft accounts which grew to N$3,5 billion from N$2,63 billion in FY16 as well as a 6,5% increase in home loans, which grew to N$12,58 billion from N$11,82 billion in FY16.
Interest income grew by 14,5% to N$3,29 billion, while interest expense grew by 25,1% to N$1,52 billion. As a result, the new interest margin contracted by 17 basis points from 7,11% to 6,94%.
“Over the year, the average rate of interest on loans (excluding interbank lending) was 12,16%, while the average funding costs was 5,22%. Deposits grew by 9,7% and the higher cost of funding was mainly due to a change in funding mix. Retail funding (current, call and savings accounts) declined by 2,3% and institutional funding (fixed deposits, floating rate notes and NCDs) increased by 25%,” Van Wyk said.
Van Wyk added that the tough economic environment had a minimal effect on impairment losses, which increased to N$59,3 million or 0,22% of advances, up from 0,20% in FY16. However, non- performing loans have increased sharply, from 0,97% to 1,4% of total advances.
Meanwhile, total operating income was split 47,7% to 52,3% between non-interest income and net-interest income (after impairments). Non-interest revenue grew by 3,1% to N$1,55 billion from N$1,51 billion in FY16.
“The relatively slow growth figure is attributed to the high base set by forex trading activities. The number of active accounts increased by 4% to 908,349, while net fee and commission income grew by 12% as the adoption of electronic channels continues to gain momentum,” he said.
He noted that operating expenses grew by 17,3% driven largely by increased staff costs, which increased by 21,1% and now make up 54,2% of total operating expenses.
“The increased staff cost was mainly as a result of expansion of the risk and compliance divisions as well as an increase in temporary staff working on regulatory projects. Additionally, depreciation increased by 20,2% while IT costs increased by 30,7%. The company’s cost to income ratio has increased to 48.9% from 43,7% in FY16,” Van Wyk noted. – Sharma Mundingi