First Rand Namibia 2018 financials show poor growth
First Rand Namibia showed poor financial results for the year ended 30 June 2018, in comparison to the previous financial year.
Normalised profit before tax for the year decreased by 3.8%, while the return on average equity was 22.1% (2017: 25.6%). Meanwhile, return on average assets was 2.7% (2017: 3.0%) while cost to income ratio increased slightly to 50.3% (2017: 48.4%).
However, these results are in line with expectations from financial analysts, given that the local economy continues to struggle and the amount of non-performing loans and impairments increase.
Analysts from PSG Konsult Namibia said that return on assets has declined in line with their expectations while expenses increased significantly, and profits are lower, as expected.
“In this economic climate it is not a surprise that the non-performing loans ratio deteriorated from 1.3% in 2017 financial year (FY17) as a percentage of average gross loans and advances, to 1.7%,” PSG said.
The firm noted that First Rand management expects the demanding operating conditions to continue, in both the Namibian economic and regulatory environment, but are re-assured by their strong balance sheet and innovative customer solutions.
PSG added that dividends remaining the same at 204cps (capped price serving) will mollify investors at a good yield of 4.6%.
“We are satisfied that the return to all of our investments of time, effort and expense has delivered appropriately to our stakeholders, and we are ready to continue upping our game year on year. Systems enhancements, treating customers fairly through strengthened governance structures, and managing legacy systems while investing in digital innovations, has certainly affected profit, but we believe the investments we have made to be sound, and good, for customers. We are committed to delivering to our ‘bank of the future’ goal while remaining today’s preferred bank too,” said Sarel van Zyl, CEO of FirstRand Namibia.
According to First Rand, these earnings deliver sound returns to its local shareholders (nearly 40%), and nearly 80% of the group’s profit before tax distribution stays in Namibia via local shareholders’ returns, 35% re-investment into Namibia, and taxation.