Thursday, April 25, 2024

FNBB’s balance sheet looks stronger

First National Bank Botswana (FNBB) has posted a strong total balance sheet growth of 9 percent from P20.5 billion to P22.4 billion taking advantage of moderate recovery over the last six months to December 2016.
 The bank’s unaudited consolidated financial results for the half year ended December 31, 2016, show that advances grew by 13 percent, in a market where overall credit extension over the period was at 7,8 percent leading to growth in the market share from 29 percent to 30 percent. 
This growth is reportedly to have been led primarily by the retail term loans in an environment where business and corporate clients have experienced low growth opportunities.
FNBB’s borrowings grew by 60 percent reflective of the bank’s success in diversifying its funding sources.
FNBB Chief Executive Officer (CEO) Steven Bogatsu said the business environment continued to be challenging, and characterised by business closures and restricted consumer spending power. 
He stated that the most significant closure was that of BCL, with an impact on banks both through direct and indirect credit exposures. 
“The prudent provisioning adopted by the bank against the BCL exposures caused impairments to increase by 56 percent,” said Bogatsu.
He added that discounting the BCL effect, impairments would otherwise have increased by 23.6 percent, reflecting the bank’s credit structures, and its careful and selective approach to lending. 
Bogatsu said despite the continued tight liquidity position in the market, growth in deposits was a credible 4 percent from P16.4 billion to P17.1 billion. He added that this growth had predominantly been in the retail and business segments and focused on diversifying the funding mix and maintaining a loan to deposit ratio of 88 percent.
“Banks will be impacted by the BCL mine liquidation and it will start showing in 2017 and beyond,” Bogatsu stated.
FNBB Chief Financial Officer (CFO) Makgau Dibakwane said the there was a significant increase in net interest income of 35 percent from the corresponding period. He added that interest expense was reduced by a significant 40 percent whilst interest income increased by 10 percent, to mirror the growth in advances of 13 percent. 
Dibakwane stated that this growth was achieved despite the 50 basis point rate cut over the period.
He is of the view that the fundamentals of the bank remain strong with profit before tax increasing by 9 percent from the prior year, reversing a 13 percent decline for the period to June 2016, and achieving a healthy return on equity of 24 percent.
“Significant investment costs were incurred in establishing these customer-focused initiatives and in developing and maintaining systems platforms. Further investment costs were incurred from opening two additional branches in Mogoditshane and Mochudi, expanding the bank’s branch representation to 24,” said Dibakwane.
The FNBB CFO is optimistic that the bank will continue with its focus on efficiency which will culminate in its overall goal of being a customer-centric bank and diversifying revenue streams. 
An interim dividend of 5.0 Thebe per share has been declared for the half year ended December 31, 2016. The dividend will be paid on or about March 31, 2017.



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