20 Sep 2024

Botswana Stock Exchange (BSE) listed First National Bank Botswana (FNBB) posted impressive results as the financial sector continues to show recovery since the COVID-19 outbreak.This was announced recently during a presentation on financial statements for the year ending June 30, 2024 where dividends were also announced.

The bank’s financial statement shows that the balance sheet grew by 22 percent year-on-year, with a  growth of P2.2 billion (14 per cent) in advances led by a P1.1 billion (11 per cent) growth in retail loans, Commercial and Corporate (RMB) loans were up 16 per cent and 20 per cent respectively, said FNBB Chief Finance Officer, Dr Mbako Mbo.

Dr Mbo said within the retail loan portfolio, personal loans continued to define growth trajectory, particularly after revamping the value proposition for certain key lending schemes in critical services within the public sector.

He said after a few years of dull growth due to difficult economic conditions following Covid-19, the strategic review of the Commercial segment undertaken 18 months ago was now showing good traction with good growth in assets, while maintaining a good trend in deposit growth.

The Commercial Asset Backed Finance (WesBank) portfolio grew 52 per cent, thus driving the overall 16 per cent growth in the segment’s advances, he said.

In overall, Dr Mbo said the WesBank book closed the year on an upward trajectory across both Retail and Commercial segments following a revamp of the offering, adding that RMB (Corporate segment) closed landmark deals within the bank’s ESG framework, participating in a solar plant deal and fully financing a green building for a corporate client.

Dr Mbo said the segment also continued its support to key state owned enterprises (Energy and Agriculture) as well as some material enterprises within the Non-Banking Financial services sector.

He said Non-Performing Loans (NPLs) were down P86 million (10 per cent) year- on-year, and the trend was across all sectors, mentioning that there has also been an attendant 1 per cent decline in the NPL/gross advances which closed at 4 per cent.

He said both recovery and cures drove this performance.

Dr Mbo said the growth in treasury deposits, comprising liabilities from financial institutions and certain key corporates grew P4.4 billion during the year and this was mainly driven by the localisation of pension funds previously held offshore, these constituted the bulk of the P6.6 billion (28 per cent) growth in overall deposit base.

Typically, he said these funds go through deposit accounts before deployment to target asset classes, adding that management continued pursuing a refreshed deposit mix strategy throughout the year, with current, savings and call accounts contributing to a greater part of the growth on core deposit base.

He said growth in other corporate term deposits was muted, while fixed deposits grew within the Retail and SMME portfolios.

Overall, Dr Mbo said commercial segment deposits grew P1 billion (11 per cent) during the year, and the balance of the growth (P0.9 billion) was equally split between the Retail and Corporate portfolios.

He said the loan-to-deposit ratio declined by eight percentage points to 63 per cent as at year end, but largely expected to track back upwards toward the 70 per cent range as temporary pension funds get repatriated to targeted assets.

While financial results for the majority of local banks were yet to be reviewed, this summary partly endorses the recent review by the International Monetary Fund (IMF) which dubbed Botswana’s financial sector broadly sound, stable and resilient. Ends