The country’s largest bank by balance sheet, First National Bank Botswana (FNBB) slashed its impairments by 43% to P241 million in the year to June 2021, as it maintained tight risk assessments and handheld businesses hit by the pandemic.
“The bank continues to apply a prudent approach to lending to ensure responsible and manageable consumer exposure. “This resulted in a decline in gross customer advances by seven percent, while market gross advances increased by four percent,” directors said.
Within the gross advances, retail advances, a key sector for FNBB, declined by seven percent while the broader commercial banking sector increased by nine percent.
“The decline was driven by competitive pressures, with the market extending loan tenures, resulting in increased market debt. “The bank maintained its existing affordability criteria and a selective approach to retail exposure,” directors said.
The corporate segment experienced excellent growth of 19% year-on-year in advances, while the commercial advances portfolio reduced by 19% due to the bank’s cautious lending risk appetite.
The lower loan book growth meant that FNBB was able to slash its impairments, a performance that set off the lower interest income and resulted in pretax profits remaining flat year-on-year at P901 million.
Directors said going forward, global and regional uncertainties around COVID-19 and vaccine rollouts could translate into the continuation of muted credit extension within Botswana.
FNBB executive said the bank would continue to invest in a forward-thinking approach to technology and innovation, targeting further growth in its various digital platforms.
The bank declared a special dividend of 40 thebe and a final dividend of nine thebe, which – coupled with its results – has seen its share price rise by 10% between the release of the results on September 10 and Wednesday this week.
For the year, FNBB’s share price has risen 12.7% with most of that growth coming since the release of the full-year results earlier this month.