The First National Bank of Botswana (FNBB), the second biggest listed company on the Botswana Stock Exchange (BSE), shruggedÔÇôoff share price slump as it posted sterling results but came shot of investor expectations in terms of dividends.
The banking outfit, which is the only one to report full year results around this time of the year, is also navigating its way towards the Basel II complianceÔÇöan international banking cash reserve compliance in the next 18 monthsÔÇöin a bid to tinkle candle lights along the International Financial Park area.
According to the full year report to the end of June 30, 2008 turnover amounted to almost P 1.2 billion and price earning ratio dramatically improved from 31 thebe to 16.3 thebe which gives a lot of comfort to investors in the company.
“This has maintained the impairment charge at low and acceptable levels of P 21 millionÔÇöor 0.52 percent advancesÔÇöless than the recommended level.
“The dividend per share slummed 19 percent from 9 .85 thebe to 800 thebe as the bank takes out P 695 million for capital requirement, as stipulated by the central bank and P 789 million to meet the requirements of the Basel II obligations, which were set in Switzerland.
“The net interest income increased by 16 percent compared to the corresponding period, while advances were up 29 percent, thanks to the lending business.”
However, he said it was able to shrug-off the impact of the high interest rates in the market despite the increase which was based on 50 basis point in May and June ÔÇöpushing the bank interest rates for the consumers even higher.
“Despite the strain of high interest rates in the economy after two conservative 0.5 percent increases in May and June, respectively, credit quality has been maintained, additional focus has been placed on the collection process and continuously monitoring non-performing loans.
This growth is largely attributable particularly to electronic banking point of sale, card acquiring and breakthrough channels, which are performing well above expectations, the financial statement stated.
“Year under review has increased total assets by 37 percent mainly as a result of 29 percent in advances, 32 percent in Bobcs and 98 percent in cash and short term funds, financial director of FNBB, Steve Bogatsu said.
The move by the bank coincides with its plans to enlarge its footprint by way of Automated Teller mechanized branches and services offerings beyond the next 12 months.
“Our bank is very sound, and there is nothing that requires us to be done on our part. All what we need to do is to increase our footprint across,” he said.
FNBB is expected to be engaged over the next month until November trying to launch new products, branchesÔÇöespecially in the central districtÔÇöATMs and min-ATMs in the next calendar year.
The move will try to diversify its earning from interest income to none interest income as it will get more volumes from customers.
The proposed plan will be driven largely by the mining sector and public sector spending. The most important staff will be the mining boom in the northern parts of the country where it appears, over the next years, most of the economic activities will be centered.
“This has maintained the impairment charge at low and acceptable levels of P 21 millionÔÇöor 0.52 percent advancesÔÇöless than the recommended level, largely as a growth in the core lending business. Advances increased by 29 percent. The impact of this high growth was fully felt as the drawn-downs took place in the latter part of the year,” FNBB said.