FNBB profits tumble 18%
Pauline Dikuelo | Tuesday September 1, 2015 18:00
While the bank’s top line interest earnings registered a modest four percent rise to P1.29 billion, a mammoth 43 percent rise in interest expenses, induced by the tight liquidity, effected a P415 million dent on net interest income. On the other hand, a 64 percent jump in impairment charges to P201 million, caused by the weak economic environment, further pulled the profits down.
According to Chief Executive Officer, Steven Bogatsu, the bank has done well under the prevailing circumstances.
Despite the challenges, Bogatsu said they managed to keep the bank afloat when they were experiencing pressure around their interest income by utilising their products to diversify their revenue stream.
“The bank was successful in posting healthy statement of financial position growth of 19 percent buoyed by 20 percent growth in deposits resulting in a sound liquidity position,” he said.
“During the year, impairments rose by 64 percent, which is reflective of both consumer strain and the ailing property market. This was despite the bank strengthening its collections strategies and maintaining selective lending practices,” he said.
According to Bank of Botswana (BoB) figures released this week, the rate of loans uptake by both business and households dropped by 45 percent in the first half of the year from 13.5 percent in December 2014 to 7.4 percent in June 2015.
In the period, credit uptake by businesses took the hardest knock with year-on-year growth in lending to the business sector decreasing from 17.2 percent in December 2014 to 4.2 percent in June 2015.
FNBB Chief Finance Officer, Boitumelo Mogopa said that at the back of the ability to attract funding, advances posted growth of six percent driven by growth in consumer segment, term loans, business segment, commercial property finance and Wesbank.
She said the growth aligns with the bank’s credit risk appetite of focusing on the more secure asset classes aimed at preserving the overall quality of the book.
“The growth of the statement of financial position has allowed the bank to consistently maintain its market share. Despite having the limited opportunities in the market, the six percent growth in advances coupled with growth in investment securities translated to a four percent increase in interest income. Deposits posted a 20 percent year-on- year increase leading to an interest expense increase of 43 percent, which is reflective of the prevailing market conditions,” she said.
Liquidity challenges experienced in the market called for all banks to increase the rates being paid on deposits in a bid to attract much needed funding.
Going forward, the bank said it intends to continue investing in their business by ensuring that they acquire assets and monitor them properly and continue sourcing funds to ensure that they are well diversified.
They also intend to invest in infrastructure and open new branches, add 30 more Automated Teller Machines (ATMs) and increase the number of slim lines Wi-Fi mini ATM’s from 28 to 70 in the coming financial year.
“The bank will continue on its drive to provide innovative products to attract less expensive funding sources and to grow its non-interest income through both transaction volumes and diversification,” she said.