Tuesday, March 5, 2024

FNBB profits down 15%

First National Bank Botswana (FNBB) continues to experience declining profitability, weighed down by the sluggish economy and tough trading conditions which have besieged the banking sector.

A month before the release of its financial results, the bank cautioned that its overall growth rate for the period ended 31 December 2015 will be lower than the rate reported for the corresponding period ended 31 December 2014. The results, which were presented on Friday last week indicated that profit after tax declined by 15 percent against the corresponding period last year. Similarly it recorded a year-on-year decline of 18 percent for the full year ended 30 June 2015.  

FNBB Chief Executive Officer (CEO), Steven Bogatsu said he anticipates mild recovery in 2016 because of growth in the services sector and some recovery in the mining sector. He added that the expected improvement in the supply of water and electricity will in turn support private sector recovery. Despite operating in an economy that experienced a paltry growth of one percent in 2015, FNBB successfully grew its balance sheet by 14 percent. Bogatsu said this growth was led by an increase in customer deposits of 13 percent, resulting from the bank’s successful deposit raising strategy. The strategy was implemented after the banking sector experienced tight liquidity constraints in the first half ended 31 December 2015.

The bank’s non-interest income increased by 11 percent, reflecting success in increasing transactional volumes by cross selling to its customer base and increasing the numbers of Automated Teller Machines (ATMs), Advance Deposit Taking Machines (ADTs) and use of online banking.

“The bank’s financial position remains strong. The company continues to perform well but not at historical levels,” Bogatsu said.

To lengthen the liability tenure of the bank, a senior debt funding programme was launched and P238 million was successfully raised, bringing total borrowings to P642 million. Bogatsu said in an environment of low market credit growth, the excess liquidity was placed in investment securities, which positioned the bank well for productive credit growth opportunities.

“The bank will continue to be cautious in extending credit and optimising recoveries, with a view to enhancing the quality of overall lending,” he stated.

FNBB Finance Director Makgau Dibakwane said despite the difficult economic conditions, and assisted by both priority focus on collection strategies and selective lending practices, growth in impairments was confined to 10 percent.

“The bank continues with its policy of embedding its segmentation model aimed at providing tailor-made products and solutions and superior service in line with customer-centric strategies. Accordingly, the bank is well positioned in what is a very competitive banking environment,” he said.


Read this week's paper