The constant increases of the repo rate during 2022 drove Standard Bank Namibia to record a massive increase in its profit.
The bank’s profit for 2022 increased by 70.5%, according to the bank’s annual report for 2022 released on Wednesday.
Chairman H Maier said the profit spiked from N$366 million in 2021 to N$624 million in 2022, driven by the increase in repo rate and improvement of the company’s collection strategy to reduce our credit impairment charges which are down 44.2%.
The bank’s net interest income increased by 17.5% to N$1,445 million, predominantly due to the steady 300 basis point increase in the repo rate from 3.75% to 6.75% since 1 January 2022 and ongoing improvement in net interest margin, up from 3.9% to 4.4%.
Non-interest revenue increased by 6.1% to N$1 283 million, driven by 31.8% growth in trading revenue due to increased client flows and volatility in currency markets.
In addition, other revenue of the bank was up 37.1% from N$106 million to N$146 million supported by growth in growth in bank assurance revenue, as well as additional property-related revenue from the newly acquired property portfolio..
The bank’s credit impairments decreased by 44.2% year on year, primarily due to the ongoing implementation of our 2021 non-performing loan reduction strategy and the achievement of related strategic initiatives. As a resultthe bank’s credit loss ratio reduced by 49 basis points from 1.09% to 0.60%.
Operating expenses increased by 5.8% to N$1.7 billion, below the average annual inflation of 6.1%.
Loans and advances to customers and banks increased by 2.3% to N$26 billion.
The Corporate and Investment Banking (CIB) portfolio grew by 35.5%, driven by strong growth in corporate lending due to increased client activity.
The Consumer and High Net Worth (CHNW) and Business and Commercial Banking (BCB) portfolios declined by 7.8% to N$17.7 billion, partly driven by the 8.4% decrease in other loans and advances due to a debt settlement transaction that led to the acquisition of a property portfolio.
The increase in property in possession was the result of the acquisition of the property portfolio.
Deposits from customers and banks declined moderately by 3.2% to N$27 billion, predominantly driven by a decline in negotiable certificates of deposits, savings deposits and demand deposits.
Debt securities, increasing by 28.9% due to its inaugural green bond issuance that raised N$400 million across two notes.
The group’s liquidity position remained strong and within approved risk appetite and tolerance limits.
The ROE improved from 8.6% to 13.7%. The group is well-positioned to achieve its ROE target of a minimum of 15% by 2025.
Meanwhile, the financial research agency Simonis Storm said the records of the group are displaying an earnings beat, mainly attributed to the positive endowment or hiking interest-rate environment.
However, the Simonis Storm analysts said the headwinds, unfortunately, are still very much around, detracting from the longer-term growth narrative.
“The group did not report on gross loans and advances, but on a net basis, and it is down. We think this can largely be due to the property onboarding or debt settlement transaction,”the firm said.
The financial research firm emphasised that this was something they did not like and maintained its position.
It said management, at the time, assured Simonis Storm that this transaction was a crucial one and shareholders to reap the benefits longer-term.
“Today we can finally also report on the carrying value, as at 31 December 2022, being N$491.2mn (2.2% of their net advances to customers),” it said.
Furthermore, Simonis Storm in its report on Standard Bank Namibia said the bank’s board of directors is undergoing a 70% turnover.
“30% in FY22, and the remaining 40% in FYE23. Regarding the latter, the group revealed that three members will resign as part of their internal succession plan, and one to resign due to external regulatory requirements.”
On the board it added that the one director seat that it is focusing on is that of an executive director, more specifically the CFO.
“Importantly, we should highlight that the outgoing CFO will remain at SBN and as such will provide support to the new incumbent.”