FNB delivers substantial interim financials
Despite a deteriorating Namibian and Global economic climate, FNB Namibia Holdings performed well for the six months ended 31 December 2015. The first-half results were achieved by consistently executing our strategies and focussing on delivering sustainable value to all stakeholders. This were the words of a proud Oscar Capelao, Chief Financial Officer, FNB Namibia.
The group declared an interim dividend of 91 cents for the six months ended December 2015.
The interim financial statements show that profit for the period increased by 20.5% to N$597.4million (2014: N$495.6 million). Earnings per share increased by 21% to 226.5 cents (2014: 187.2 cents). Return on average equity improved to 35.4% (2014: 35.0%), return on average assets increased to 3.9% (2014: 3.7%). Cost to income ratio was a very efficient 42.4%. Non-interest income increased by 15.6% to N$744.2 million (2014: N$643.9 million). Net fee and commission income increased by 11.9%.
Consumers benefited from a waiver of cash deposit fees on individual and Small Medium Enterprise transactions which came into effect in April 2015. Year on year our customer numbers grew by 15%. The group continues to see traction in the migration of its customers onto electronic channels, with growth of 18% in electronic transactions compared to a decrease in branch-based transactions.
Net interest income increased by 15.6% to N$815.5 million. “Although in an increasing interest rate cycle, the group is benefiting from the positive endowment effect. Due to an increase in the average cost of deposits, banks have been experiencing a margin squeeze. Interest expense increased by 22% compared to interest income growth of 18%,” added Capelao.
For the first six months of the financial year, the total impairment charge was N$31.7 million (2014: N$30.1 million), amounting to a 0.27% (2014: 0.20%) charge of average advances. The portfolio provision charge of N$3.3 million (2014: N$18.9 million) is in line with the group’s strategy of maintaining an appropriate level of provisioning on the performing book.
Total operating expenses increased by 12.5% to N$677.5 million (2014: N$602.4 million). Staff related costs, amounted to more than 50% of operating expenses, and are up 11.0%. Staff numbers grew by 7.4%, largely due to the strengthening of our risk and compliance team. A minimum annual salary increase of 7.75% was agreed with the union, which resulted in an average salary increase of 8.6%.
FNB’s total tax contribution amounted to N$397 million for the period, for direct and indirect taxes collected.
Advances, making up 76.7% of total assets, reflected a year on year increase of 15.1% to N$24.9 billion. Growth was ahead of private credit extension, which grew by 13.6% in December. FNB’s home loan book also surpassed the N$11 billion mark, representing 45.9% (2014: 47.1%) of FNB’s advances book.
Deposits increased by 11.7% to N$25.7 billion, trailing the growth in advances. The slower growth in general customer deposits, particularly influenced by large corporate clients, was supported by the issuance of additional NCD’s in the professional market.
“FNB Namibia expects operating conditions to become more challenging on both the economic and regulatory fronts. However, we believe our strong balance sheet, diversified earnings base and innovations at providing cost-effective and efficient banking for all will ensure a sustainable performance,” Capelao assured.