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FNBÔÇÖs impressive returns still far off-peak

Sun, 9 September 2012 18:35
by Honorine Kaze Senior Business Writer



FNB Holdings, owners of First National Bank Namibia, has recorded a 39.8% return on average investment in 2012 compared to a 43.3% return in 2003; their latest financial statement shows.
Although this is a significant amount to line the shareholders’ pockets considering the ongoing financial set-up locally and abroad, their past financial statements are much stronger than the current ones.
However, the portfolio remains arguably the strongest in terms of liquidity access and financial positioning considering the bank is battling to find a way to increase returns on interest rates after Bank of Namibia (BoN) narrowed the spread three weeks ago.
FNB Holdings’ annual report (2012) shows that 2004 was one of their lowest returns on average investment dropping at 8.7% picking up at a high of 37.4% in 2005.
However, the worst came at the height of the global reception in 2010 when the financial institution saw its return on investment plummeting to 3.6%.
For the FNB Holdings financial year ended June 2012, their headline earnings topped N$526m improving by a moderate 6% year-on-year compared to N$496m in 2011 year-on-year as well.
In 2003, the headline earnings were pegged at N$239m; showing a downward trend in 2003 and 2004 with N$164m and N$204m, respectively, as stated in the report.
The dividend per share declared a 6% increase from 2011 to 2012, making N$0.82cents in 2012 from N$0.77 in 2011.
The dividend per share (including a special dividend) stood at N$ 120cents in 2003 doubling over a 10-year period to N$ 262cents in this financial year.
According to the group chief financial officer, Erwin Tjipuka,  FNB Holdings’ total asset in this year reflects a growth of 15%; while gross advances reflect a year-on-year increase of 11% to N$13.4b.
The total asset growth is attributed to the performance of FNB advance book that grew by 71.3% and deposits which grew by 22% year-on-year from 2011.
Mortgage loans performed at an average of 51% of FNB’s advance book; making over N$10 m this year from just  N$6m in 2005. On the other side,  year on year average deposit increased  by 22% to N$16b.
CEO FNB of Namibia Limited, Ian Leyenaar, acknowledged the challenges ahead of them in terms of economic instabilities. However, he adds that in that regard the bank has decided to position itself from just being retail banker to being more involved in the corporate world.
“The bank has indeed set a challenging budget for the next financial year; especially from the decision of interest cut that was imposed from BoN. One of our strategies will focus on asset growth and increasing key partnerships,” said Leyenaar adding that it is essential to invest more in technology development as it will set them at the forefront.