- But investment securities decline by 26% following decrease in investible capital
The bank reported ROE of 24.7 percent during the six months ended 31 December compared to 17.9 percent in 2020.
The bank says ROE increased due to the previously conservative level of capital held in the prior period as well as its 38 percent increase in profit after tax to P450.4 million Faced with significant uncertainty during the initial stages of the pandemic, the directors said they opted at the time for a prudent approach to balancing an efficient capital position with the need to retain sufficient capital for unexpected fluctuations in earnings volatility.
This resulted in a subdued dividend being declared for this prior period. At the close of the June 2021 financial year, and by then equipped with greater understanding of the probable economic impact of the pandemic, FNBB then rebalanced its capital portfolio by way of a special dividend.
“The latter took full account of the outlook on risk weighted asset growth, expected earnings volatility levels, and capital efficiency,” said the bank’s CEO Steven Bogatsu, noting that the bank’s performance over the six-month period ended 31 December 2021 reflects a recovery to the target range of expected levels of return. FNBB paid P1,246,413,000 to shareholders for the year ended 30 June 2021 after declaring 49 thebe dividend per share made up of the 9 thebe final dividend per share and the special dividend of 40 thebe per share.
“The bank’s decision was informed by the bank’s capital management strategy which aims to ensure an optimal level and composition of capital and effective allocation of financial resources including capital and risk capacity, so as to achieve a sound return on equity and ensure a sustainable dividend distribution to shareholders,” FNBB said at the time.
However, during this reporting period this resulted in the bank’s investment securities declining by 26 percent following this decrease in investible capital after special dividends. On an average base, the bank said they decline by an average of 4 percent.
Nonetheless, FNBB says it maintains sound capital ratios so as to maintain confidence in the solvency and the quality of its capital during both calm and turbulent periods in the economy and in financial markets. For the six months ended 31 December 2021, FNBB said it continued to operate above both the internal and regulatory minimum capital adequacy ratios. A dividend of 10 thebe per share has been declared for the six months ended 31 December 2021.