Saturday, September 26, 2020

FNBB posts historic results on its core business

First National Bank of Botswana, the second largest company on the Botswana Stock Exchange (BSE), broke the banking sector record as it became the icon  of the industry by achieving 28.1 percent profit, before tax, largely aided by both interest on income and the non-interest income.

Speaking at a briefing on Friday, FNBB managing Director, Danny Zandamela, hailed the results which he said were “achieved┬á mainly through the growth in interest turn and non interest income of 17.9 percent and 22.4 percent respectively, and overall containment of costs to year-on-year increase of 10.2 percent which was well below the average inflation rate over the period.”

The bank’s results, to┬á June 30, 2006, also┬á benefited ┬áfrom the Bank of Botswana regulatory system on BoBcs and foreign exchange moves that were introduced┬á earlier this year and last year, respectively.

Interest income shot up to 583.9 million or 24.6 percent better as compared to the same period last year, mainly because of deposits from BoBcs which increased by more than 800 percent.

The income, before direct taxation, stood at P 299 million or 28.1 percent while non- interest revenue increased 22. 4 percent to P 196 million against the previous period of  P 160 million.  

“ These were brilliant results and┬á the┬á first such kind of results┬á in the banking industry in this country. They have done well in their core business and they say a lot about the new management,” a leading analyst on Botswana’s banking sector, Kudzani Pickup of African Alliance said Friday. ┬á
“They have excellent results from their core business and I think their current exercise, aimed at reviewing of the management cost, will be good for local shareholders,” he added.

The bank┬á saw┬á firm growth in a number of areas, such as the mortgage division which grew by 42 percent as a result of both retail and corporate clientsÔÇöespecially in miningÔÇöand the general increase in advance despite constraints in the corporate division.

“ We introduced the┬á rand mortgage product not because we were┬á running away from competition. We took time to explain it to our customers and its potential risks.

“The┬á product is good for those who have rand receipts which they┬á will use to hedge against possible interest rates movements,”┬á head of┬á Property division at FNBB, Boiki Tema said.

However, the bank said the slow lending rate, by the corporate sector, was more of  the reflection of that state of the economy which is characterised by high inflation and interest rates over the year.

“The┬á┬á corporate loan book is more of the reflection of the state of the economy, but,┬á we are now seeing┬á more and more companies┬á coming forward seeking assistance,” Zandamela said, adding that the economy is strong on the mining sector.

“The┬á mining┬á sector┬á is expanding and there is a tick-up in the non-mining sector as well,” he said, pointing out they are still awaiting for the release of┬á swath of┬á cash spending┬á announced at budget speech to get into the system.

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