FNBB financial year results have continued to be characterised by resilience amidst difficult trading conditions. The bank continued to operate across its 24 branches while expanding its agency network to 358.
This provided more than 600,000 customers of the bank with additional points of presence to access banking services throughout the year. Key financial performance highlights for the year are that the Non-Performing Loans (NPL) reduced as a percentage of advances to 7.3 percent while the credit loss ratio has normalised.
The bank experienced a slight increase in cost to income ratio with the moderate increase in costs and a compression of earnings profile. Balance sheet reduced by 6 percent, culminating in 0 percent growth in profit before tax to P900.8 million and reduction in return on equity to 18.2 percent.
The statement of financial position indicates an overall 6 percent compression, with investment securities reducing 17 percent, net advances to customers by 7 percent and deposits from customers reducing by 8 percent.
The income statement comprises interest income which reduced by 18 percent while interest expense reduced by 22 percent. This triggered a 13 percent reduction of net interest income offset by a sharp reduction in impairment of advances by 43 percent, resulting in a net interest income after impairment of advances of 1 percent.
Non interest revenue growth of 1 percent was offset by the increase in costs by 2 percent. Gross advances reduction of 7 percent overall comprised a 7 percent reduction in the retail portfolio, a 19 percent reduction in the business portfolio and a 19 percent increase in the corporate portfolio.
The retail portfolio reduction of 7 percent is in contrast to market growth of 9 percent as the bank has maintained its lending stance of being conservative and ensuring that it does not relax loan parameters. Business portfolio experienced a significant reduction in the non performing loan base as well as very moderated levels of sales coming through during the year.
Stage One portfolios have reduced from P13.5 billion to P12.4 billion on the back of a reduced advances portfolio and limited sales during the year. Stage Two portfolio increase indicates the stress experienced on the early stages of a number of FNBB clients as well as high risk industries that have experienced significant increase in credit risk.
Stage Three portfolio has experienced a pleasing reduction year-on-year as inflows have been contained and the bank proceeded with a review of all long outstanding non-performing loans and accordingly accelerated the write-off there on.
Coverage ratios have remained stable year-on-year with the additional post-model adjustments that were raised in the June 2020 financial year remaining intact in June 2021. June 2021 credit loss ratio of 1.6 percent has returned to the 2018 and 2019 ratios previously seen. The June 2020 credit loss ratio of 2.6 percent elevated on the back of COVID-19.
The current interest revenue growth of 1 percent is extremely resilient. Foreign exchange revenues were down 30 percent with a 12 percent reduction in the FX business due to reduced trade in tourism. P40 million fair value loss is mostly attributable to the bond trading portfolio due to the increase in government bond rates during the year.
Service and other fees’ increase of 7 percent is on the base of customer growth of 5 percent as well as a 15 percent growth in e-banking volumes. This includes Pay2Cell and E-Wallet volumes as well as the use of FNBB’s banking app and other mechanisms that customers have used to migrate their banking across the digital channels.