COVID-19 pandemic takes bite out of FirstRand Namibia financials
FirstRand Namibia recorded a 19.1% drop in its headline earnings, signalling a challenging trading environment brought on by the COVID-19 pandemic and subsequent state-mandated lockdowns.
During the financial year ended 30 June 2020, FirstRand Namibia posted headline earnings of N$867 million (down by 19.1%). The Group’s profits before tax decreased by 23.7% to N$1.21 billion (2019: N$1.58 billion) while recording a lower than expected loan growth of merely 0.7%.
The group’s impairment charge, occurred as the result of the pandemic and tough economic environment, increased year-on-year to N$559.7 million (2019: N$214.8 million). The impairment charge is 1.79% (2019: 0.72%) of gross advances. The increased pressure on customers due to Covid-19 also impacted the group’s impairments.
Despite this mostly negative charges, FirstRand Namibia’s portfolio of businesses, which includes First National Bank and RMB Namibia, still produced a satisfactory top line growth and delivered earnings above cost of capital for the financial year under review.
Oscar Capelao, FirstRand Namibia’s Chief Financial Officer said the Group entered the pandemic in a position of strength in terms of capital, liquidity, technology and talent.
Considering the repo rate and prime rate reduction during the reporting period of 275 basis points, the Group’s net interest income remained flat at N$2 013.4 million (2019: N$2 012.2 million), while its interest expense decreased by 0.4% and interest income decreased by 0.2%.
“As we deal with the spiralling effects of this pandemic, we continue to focus on what we as a group can do to remain strong, resilient and well-positioned to support our employees, clients, customers and communities across Namibia,” Capelao said.