FNBB deposit book grows by over 30 percent

Brian Benza
Staff Writer | Friday February 22, 2008 00:00

 

According to the bank's financial results released this week, FNBB incurred a 29.4 percent increase in operational expenses to P120 million, largely due to its expansion programme and process improvements.

'During the period under review, the bank continued with its expansion programmes, with the opening of two branches in Selibe-Phikwe and Serowe. This expansion, together with the introduction of a new treasury system, has impacted on costs, resulting in huge increases in operating expenses during the review period, CEO Danny Zandamela said. But he is confident that the bank will soon recoup the money it invested in expansion as this will open up new revenue streams and improved processes.

Overall, the bank performed well, with return on equity surging to 58 percent from 50 percent in the same period in 2006, while total assets grew by 28 percent. The asset growth was driven by increases in advances and investment securities, mainly from the Bank of Botswana Certificate (BoBCs) holdings, which increased by 30.6 percent.

'Net interest margin shows strong growth,' Zandamela said, 'despite the interest margin compression brought about by the lending rate cut in June 2007 and reducing yields of BoBCs. The control over bad debts also had a positive effect. 'Non-interest revenue, which grew by 25.2 percent in the corresponding period, was driven largely by strong growth in new customer accounts and increased transaction volumes through increased utilisation by customers of the bank's superior delivery channels, particularly our electronic delivery channels.

Judging by the growth of its deposit base and other results, FNBB seems to be growing from strength to strength and looking to challenging Botswana's traditional top two banks, Standard Chartered and Barclays.

For the period under review, the bank's deposit book grew by 30.8 percent on the back of both local and foreign currency deposits in the form of savings and term deposits. Last year, FNBB indicated that it was very optimistic about the future after embarking on an expansion programme targeting mainly the burgeoning mining industry. After the liberalisation of the sector, new banks are also beginning to penetrate the market, with new entrants such as Bank Gaborone advertising jobs in the press, which could indicate expansion.

This year, another bank, Capital Bank, is set to open its doors to the public, bringing the number of commercial banks to seven. However, at a time when they are raking in super normal profits, concerns have been raised about service delivery by commercial banks in Botswana. According to the Banking Adjudicator's annual report, in the period April 2006 to April 2007, there was a 60 percent increase in the number of complaints against banks by customers when compared to the previous reporting period.

With increased competition in the sector, quality of service delivery will be the key as banks try and wrestle customers away from each other.