The First National Bank of Botswana (FNBB) has registered a deposit growth rate faster than that of the market, its interim financial results released on Friday show.
Data from the financial markets shows that in 2013, the total market deposits by commercial banks increased modestly by 2.8 percent due to tight liquidity conditions.
However, the FNBB half year financial results for the period that ended December, 2013 indicate that it was able to achieve a seven percent growth on deposits from its customers thus recording a growth rate that is faster than the market.
Boitumelo Mogopa, FNBB Chief Finance Officer (CFO) explained on Friday that the growth was driven mainly by transactional accounts in the corporate segment, in line with the bank’s funding strategy.
Still within the first six months of trade, FNBB’s advances went up by 18 percent from P9 221 892 million in 2012 to P10 922758 billion December 31 2013. Notwithstanding the 18 percent growth in advances to customers, FNBB’s interest income registered a 6 percent growth.
Mogopa said advances to customers are less than-proportional growth in interest income due to the impact of the rate cuts over the period.
Since the beginning of 2013, the Bank of Botswana (BOB) cut the bank rate four times by 50 basis points (0.50 percent) each time in May, June, August and lately in December last year. Overall, this reduced the Bank rate to 7.5 percent from 9.5 percent since the previous rate cut in December 2010.
Mogopa said that the growth was achieved through Group Scheme Lending the consumer segment as well as term loans to the public sector segment. Both these books exhibit lower credit risk and hence this area of growth is aligned with the Bank’s conservative approach with respect to unsecured lending particularly to the Consumer segment.
At the same time, Mogopa pointed out that with the loan-to-deposit ratio being maintained at more than acceptable levels and focus being placed on higher yielding assets, the level of investment in Bank of Botswana Certificates over the period has declined by 50 percent.
She stated that in a period where liquidity conditions are tight and credit growth is on a downward path, the bank has managed to achieve a 6 percent growth in total balance sheet.
The bank’s financials also shows that its non-interest income increased by 4 percent from P34 803 million in 2012 to P377 878 million during the period under review. The same statements show that its profit before tax went up by 5 percent from P440 935 million to P44 380 million.
Meanwhile the bank has declared an interim dividend of 5 thebe per share for the half year period that ended 31 December, 2013. The bank’s capitalisation currently stands at 10,408,622,000.
The dividend will be paid on or about 21 March 2014.