- Profit before tax up 33%
- CashPlus extends services to remote locations
- Forex revenue up 30%
- But banks says credit risk remains heightened
A sharp increase in the Non-Interest Revenue (NIR) has contributed to First National Bank Botswana (FNBB) achieving excellent growth in the profit before tax.
According to the banks’ financial statements for the year ended 30 June 2022, NIR, along with normalisation of credit losses, contributed to its 33 percent growth in profit before tax. For the period under review, FNBB recorded a pre-tax profit of P1.2 billion, a 33 percent growth from P900.9 million registered in the corresponding period last year. This was largely driven by growth in NIR which increased by 15 percent year-on-year, from P1.2 billion to P1.4 billion. This was primarily driven by a recovery in the foreign exchange business, while service and other fees rose as well as card commissions rose significantly.
The bank reported that the 30 percent growth in the foreign exchange revenue came from a return to pre-pandemic trading volumes, with increased overall activity across all sectors and customer segments. The growth in service fees and card commissions was reportedly supported by increased volumes across the bank’s digital and electronic channels, most notably in merchant transactions. “The bank continues to broaden its financial inclusion with further expansion of its CashPlus channel, thereby bringing services to more remote locations and enhancing for our customers.”
The bank has also noted that credit risk remains heightened despite the economic uncertainty from Covid having subsided considerably. “The bank continues to apply a cautious approach to lending to ensure responsible and manageable consumer exposure.” “This is evidenced by the gross customer advances growing at a similar pace market.” The bank’s gross customer advances increased by 8 percent while market gross advances grew by 6 percent. Retail advances for FNBB increased by 4 percent while the country’s retail market as a whole grew by 5 percent.
FNBB says its growth was driven mostly by term loans where the tenor was selectively extended while maintaining a prudent credit approach. Corporate advances experienced the highest growth of 40 percent year-on-year, as the bank supported a resurgence of expansion plans. The commercial segment on the other side, saw a moderate decline of 2 percent due to write-offs during the year of some long-outstanding irrecoverable advances. Combined advances of commercial and corporate advances resulted in a growth of 16 percent.
FNBB has during the year under review, seen the Non-Performing Loans (NPLs) decline by 26 percent from P1.1 billion to P802 million, resulting in an NPL/gross advances ratio of 5 percent as of 30 June 2022. Deposits remained flat at P22.2 billion following corporate outflows as trading levels normalised and Botswana grey list status was lifted “The retail segment experienced a flattening out of the deposit portfolio due to increased customer spending. The commercial segment experienced growth of 13 percent aligned to strong customer growth,” the bank announced.