First National Bank advances grow by 9.6%
Loans made at the First National Bank grew by 9.6% compared to market credit extension of 8%, while deposits grew by 9.7%, FNB Namibia Holdings revealed in their 2017 Full Year results this week.
According to the bank, the number of active accounts increased by 4%, despite the high number of retrenchments in the country, and as a result of the good growth of our core business, interest revenue increased by 15%, and normalised non-interest revenue grew by 7%.
PSG Namibia analysts is of the view that the Group’s operating conditions may become more demanding and depend on economic and regulatory changes in the coming months, while focus is still placed on the company’s strong balance sheet.
“In the past financial year, the introduction of mandatory deposits took place for installment sales and for secondary home loans. Demand for loans is not expected to pick up noticeably,” PSG stated.
Return on equity is down to 25.8% compared to 32.7% in the 2016 Full Year.
Growth in Net interest income about halved to 6.7% in FY17 versus the 12.4% forecasted. Growth in Non-interest income also disappointed at 3.1% versus our forecast of 10.8%. Interest expenditure increased by 25.1% compared to the 14.5% increase in interest income.
PSG indicated that the operating expenditures increased by 17%, which includes depreciation costs which are 21% higher than FY16 due to the new Head Office building being on the books for the full 12 months.
“Normalised return on average equity (excluding Pointbreak and EBank impact and headlines earnings adjustments for subsidiaries not forming part of the group for the full year) is 28.4% for FY17, very close to our forecast of 27.8%. The group results include the consolidation of Pointbreak for 3 months prior to year end and the newly launched Ashburton Investments,” PSG added.
PSG viewed that the results are slightly below investor expectations, adding; “Investors are, however, expecting slower growth from Namibian banks. The dividend yield of 4.4% has remained steady. Our target price and recommendation will be updated will our full results review report.”