First National Bank of Namibia (FNB Namibia) recently released its integrated annual report for the 2014/2015 financial year, which indicated that profits were up by 27.2%, bringing their profits to N$998.7m.
Earnings per share increased to 377 cents, whereas they were at 298 cents in the previous financial year.
Customer E-wallet transactions went up by 125%, surpassing Speed-point transactions, which went up by 21%, cell phone banking by 19%, ATM transactions by 11% and online banking by 9%, while customer transactions stagnated at 0%.
Of the revenue generated, N$644m was spent on salaries and other benefits for employees; N$359m went into dividends for shareholders, while government pocketed N$488m in taxes.
FNB has 2556 registered shareholders, of whom 2439 are Namibian, sharing among all of them roughly 104 million in shares which are valued at N$3.4b by 30 June 2015.
The report noted that the Namibian population has an interest in the company through various investments by Namibian pension funds in FNB Namibia Holdings’ shares.
“Key ratios all improved. Returns on average equity rose to 32.2% (2014:30.9), returns on average assets was 3.6% (2014: 3.2%) and the cost-to-income ratio improved to 43.9% (2014: 47.3).
“The banking group and OUTsurance are the FNB profit up by 27.2% key operations in the group. Banking’s dominant role is well-illustrated by its 94.4% contribution to group profits (2014:93.1%)”, Oscar Capelao, the Chief Financial Officer (CFO) said in the report.
Capelao added that net interest income increased by 27.6% to N$1.452m, in comparison to the N$1.138m from the previous year.
“The margin on advances increased by 69bps, contributing an additional margin of 14bps. Investments also show an increased return of 74bps.
This contributed a further 19bps to the bottom-line, over and above the prime increases. The margin’s improvement was especially offset by an increase in cash balances and the resultant increase in holding costs,” the CFO was quoted as saying in the report.
He added that expectations for the Namibian economy were positive as the Group remained poised to capitalise on profitable business opportunities in both the consumer and corporate markets.
“A number of initiatives are being driven simultaneously to improve our internal processes to make banking more cost-effective and efficient. We are also implementing new processes necessitated by changes in the regulatory environment. These changes mean we have to revisit our implementation plans continuously,” Capelao noted.
The Chief Risk Officer, Johan du Plessis, also compiled a risk report for the integrated annual report, in which he stated that Namibian consumers’ disposable income continues to be under pressure.
“Consumers’ disposable income continues to be under pressure due to rising unemployment, tighter credit conditions and inflation. Private investment spending will also slow as confidence wanes and profitability falls. This may also result in continued pressure on the retail credit book performance and growth, as well as increased levels of non-performing loans (NPLs), including unsecured lending portfolios,” Du Plessis said in the report.
He explained that Namibia’s economic growth is affected by unrest in the labour market in the surrounding regions, and manifests in delayed delivery of goods and services here.
Factors which may impact the economy include potential power blackouts, an economic slump in China and an economic fallout in Europe.
“With global cyber-crime increasing, renewed focus is being placed on protecting the Group against external and internal breaches,” Du Plessis said, adding that good progress was made by the group to adopt guidelines from the 2015 Information Security Forum and incorporate these principles into the risk frameworks.