FNBB’s profits reach P1.4bn
Pauline Dikuelo | Monday September 18, 2023 06:00
Presenting the numbers on Wednesday, the bank’s CEO, Steven Bogatsu, attributed the higher profits to a healthy post-COVID-19 loan book.
“The growth was reflective of an economy emerging from the COVID-19 pandemic,” he said.
During the reporting period, FNBB’s balance sheet grew by nine percent year-on-year mainly driven by growth in advances to customers across all segments. Corporate advances realised 11% growth while commercial and retail were measured at eight percent and seven percent respectively.
The growth in corporate advances was driven by working capital support to State Owned Enterprises and Fast Moving Consumer Goods (FMCG) sectors as well as leverage finance deals in the financial services sectors.
“Key deals in the tourism, fuel, and agriculture sectors supported growth in the commercial advances book while personal loans in the retail book grew on the back of extended tenures and ticket size limits to individuals within the group schemes,” FNBB directors stated. “At a gross level, bank advances grew by eight percent.”
FNBB is the first of the major banks to release its financials in the current reporting season and its strong profits are due to be reflected across the sector, according to updates released by the banks recently.
Kgori Capital investment analyst, Godfrey Matale, recently told BusinessWeek that local commercial banks’ bumper profits this reporting season were mainly due to the high-interest rate environment, decreased impairments since the COVID-19 era and increased credit growth which was up 9.9 percent year-on-year as at May 2023.
Matale said the higher interest rate environment has translated to higher net interest income margins for banks and has positively affected the sector’s profitability.
Meanwhile, despite the strong growth of its loan book, FNBB was generally able to restrain its Non-Performing Loans (NPL). In the year to June 30, these increased by eight percent year-on-year from P802 million to P863 million.
“Contributing to the somewhat significant growth in NPLs is a low base effect. Prior year NPLs included the impact of accelerated write-offs,” directors stated.