FNB Nam Posts Solid Results
FNB Bank recorded a firm performance for the year that ended 31 December 2014, with substantial increases in net interest and non-interest income recorded for the comparative period witnessed.
Net interest income increased by 26.7% to N$705 million as compared to N$557 million recorded in the 2013 trading period.
An 18% increase in average advances and deposits and the two prime rate increases of 25 basis points each underpinned growth.
Although interest earned on assets was re-priced in line with prime, funding costs were level with the prior year as the market had anticipated the rate increases.
The endowment effect on FNB’s large capital base and retail deposits also benefited the margins.
Non-interest income has increased by 21.1% to N$644 million as compared to the N$531 million recorded in 2013.
Fair value income increased by 18.1%, contributing N$80.5 million to non-interest income.
This increase is mainly attributable to a 31.5% growth in Forex and although margins remained under pressure, the volatility in the Namibian dollar against the United States dollar provided an opportunity to increase revenue.
In the last six months the bank witnessed an 11% increase in the number of accounts and an 11% increase in transaction volumes which were the main contributors to the 23.1% increase in fee and commission income.
This comes against a background where consumer expenditure spurred growth and credit extension resulting in increased imports and declining foreign reserves, prompting the central bank to raise interest rates twice by a total of 50 basis points in June and August 2014 respectively.
Furthermore, weak growth in the world’s largest economies and a strengthening US dollar, weighed on uranium, copper and zinc prices.
Namibia’s livestock sector restocked after 2013’s devastating drought, while the agronomic sector has recovered along with improved grain prices for local producers.
The portfolio provision charge of N$18.9 million as compared to N$7.5 million recorded in 2013, was in line with the group’s strategy of maintaining a level of provisioning of at least equivalent to the previous year.
The portfolio provision charge represents the growth in advances to maintain the credit overlay and not any specific stresses.
Deposits also increased by 12.4% to N$22.9 billion.
“Although we saw average growth in overall value, mostly due to a limited increase in wholesale deposits, the bank experienced 23% annualised growth in retail deposits to more than N$5 billion. This is mainly because of our focus on growing transactional accounts, which also provide good opportunities to increase retail savings and investments,” said Oscar Capelao, FNB Chief Financial Officer.
Subsidiary OUTsurance’s net premium income increased by 23.3% with the main driver being growth in the personal lines policies.
Claims and benefits paid increased by 9.1% which caused profit after tax to increase by 94% after higher premium growth and favourable loss experience.
FNB also remained the market leader for vehicles and home loans as mortgage loans constituted 47.1% of FNB’s advances book with an average loan to value ratio close to 70%.
The ratio of non-performing loans to average gross advances continued to improve, reducing to 0.67% as compared to 0.96% recorded in 2013.
Significantly, non-performing loans decreased by 18% to N$139.7 million.