First National Bank Botswana remained resilient amid what they termed “real and severe economic test”, with the country’s largest commercial bank reporting a slightly reduced profit.
The bank’s financials for the year ended June 2021 show that profit after tax fell by 2 percent to P685.1 million, with the reduction largely influenced by changes to the interest rates by Bank of Botswana.
“FNBB has demonstrated a resilient performance amid COVID-19 uncertainty demonstrated by maintaining the profit before tax in spite of the significant reduction in the Bank Rate. This was underpinned by a normalisation of credit losses, as well as, a resilient non-interest revenue (NIR) base,” said Luke Woodford, the chief financial officer at FNBB.
He disclosed that a decrease of 15 percent in interest income was driven by the reduction in the bank rate, the decline in the advances book, as well as by a change in the advances portfolio mix.
Though the fall in rates reduced the income, it also helped to lower the interest expense, which declined by 22 percent following an 8 percent decrease in deposits.
Non-interest revenue remained flat with a 1 percent increase year-on-year. The increase was driven by service fee and card commission income growth of 7 percent offset by a 30 percent reduction in foreign exchange revenue.
“The growth in service fee and card commission was supported by increased volumes across the bank’s digital and electronic channels, but most noticeably in merchant transactions. Improved connectivity on our digital channels generated growth in both transactional volumes and values,” Woodford said.