26 Feb 2017

FNBB 2016/17 financial results for the half year ended 31 December 2016, have indicated that despite the continued tight liquidity position in the market, growth in deposits was a credible four per cent from P16.4 billion to P17.1 billion.

Speaking at the results announcement, FNBB CEO, Mr Steven Bogatsu said the growth had predominantly been in the retail and business segments and focused on diversifying the funding mix and maintaining a loan deposit ratio of 88 per cent.

Mr Bogatsu also noted that as the market moved to a position where the supply of BOBCs became limited as well as the level of reverse repos available, the bank saw a decline in its holding of BOBCs by 16 per cent and growth in the cash and short term funds of 24 per cent.

He also highlighted that the impact of the strength of the funding mix has contributed significantly to the increase in net interest income of 35 per cent from the corresponding period.

However, he indicated that interest expense reduced by a significant 40 per cent whilst interest income increased by 10 per cent, to mirror the growth in advances of 13 per cent.

He further said growth was achieved despite the 50 basis point rate cut over the period.

Nonetheless, Mr Bogatsu said the business environment continued to be challenging, and characterised by business closures and restricted consumer spending power, the most significant closure being that of BCL, with an impact on banks both through direct and indirect credit exposures.

He said prudent provisioning adopted by the bank against the BCL exposures caused impairments to increase by 56 per cent, while discounting the BCL effect, impairments would otherwise had increased by 23.6 per cent, reflecting the bank’s credit structures, and its careful and selective approach to lending.

Notwithstanding the difficult conditions, Mr Bogatsu said the bank continued to focus on attracting and retaining customers through a number of innovative initiatives, and in line with its customer-centric strategy.

Therefore, the bank launched eBucks, being a customer loyalty program aimed at encouraging customers to make use of certain identified channels and products.

Strategic partnerships, he said had also been adopted whereby benefits and discounts from the services and products of the identified partners are passed on to the bank’s customers.

Mr Bogatsu however noted that significant investment costs were incurred in establishing these customer-focused initiatives and in developing and maintaining systems platforms.

Further investments costs, he added were incurred from opening two additional branches in Mogoditshane and Mochudi, expanding the bank’s branch representation to 24.

He also said initiatives to improve and diversify services had resulted in customer numbers growing from 445 000 to 477 000, being a seven per cent increase year-on-year.

In addition, he said the number of customer accounts grew by seven per cent to 726 000.

With the resultant increase in transactional volumes, the bank witnessed good growth in its non-interest income of seven per cent.

Therefore, the fundamentals of FNBB remain strong with profit before tax increasing by nine per cent from the prior year, reversing a 13 per cent decline for the period to June 2016, and achieving a healthy return on equity of 24 per cent. ENDS