FNB records N$1,2bn profit

Leading banking group FNB Namibia Holdings has recorded a N$1,2 billion full-year profit for the year ended 30 June 2016 - a 21,9 percent increase from the previous year.
The Namibian Stock Exchange (NSX) listed group’s normalised profits for the year increased by 18,2 percent to N$1,119 billion.
FNB’s banking unit was a key contributor to the group’s earnings, with its net interest income growing by 13,8 percent to N$1,653.6 billion.
OUTsurance Namibia’s net earned premium income during the period under review grew by 23 percent to N$189 million, as its net profit for the year remained unchanged at N$30 million, despite exceptional growth that saw annualised new business premium up 47 percent, bolstered by a client base of nearly 28,000.
OUTsurance has paid over N$25 million in OUTbonuses to claim-free clients to date, and rewards of N$6,9 million were paid during year under review.
FNB Namibia Chief Financial Officer, Oscar Capelao, said margins have not widened to the extent experienced previously, when interest rates increased, mostly due to the relative increase in cost of funds during the cycle.
“The net interest margin improved slightly, mainly through higher interest income on advances. Advances priced mostly from the prime overdraft rate, which effectively increased by 75 basis points,” he said.
FNB bemoaned the Bank of Namibia (BoN) directive - exempting fees being charged on cash deposits made by individuals and SMEs, which came into effect in April 2015 - which it attributed to a 13,5 percent growth in the group’s net fee and commission income.
“This item is also impacted by Namfisa’s directive on policy fees for FNB Insurance Brokers – FNB’s insurance brokerage,” Capelao said.
The FNB group total non-interest revenue increased by 19,6 percent to N$1 506 million - bolstered by the once-off N$67 million profit from the disposal of the Talas building in Windhoek during the period under review.
FNB’s operating costs increased by 16 percent in the period as staff related costs were up 15 percent attributed to a growth in the head count largely due to reinforcing the bank’s risk and compliance team.
 “Other triggers of the above inflationary increase include property costs reflecting constant investment in our footprint. While the focus was on the new Windhoek building, an additional outlet was opened in Rundu in December 2015 to alleviate branch congestion. In addition, 42 additional ATMs/mini ATMs were installed with associated data line, rental costs and guarding costs,” the FNB Group Chief Financial Officer said.
The group’s total assets grew by 14,8 percent to N$34,2 billion with year-end advances, making up 75,4 percent of the balance sheet, reflecting a year-on-year increase of 12,9 percent to N$25,8 billion.
Average advances grew 14 percent in the year under review with mortgage loans increased year-on-year by 10,4 percent to N$11,8 billion, constituting 45 percent of FNB’s advances book.
Deposits increased by 16 percent to N$28 billion.
FNB Namibia Holdings Chief Executive Officer, Sarel van Zyl, said the listed entity will retain its focus on its bricks to clicks strategy.
 “We remain focused on increasing the customer base to generate transactional revenue. The number of active accounts increased by 10 percent to 902,320 compared to the previous year.
“We have been successful in migrating clients to electronic channels. Transactions in branches reflect global trends of no growth. There has also been a reduction in cheques processed after the Bank of Namibia limited the value of cheques. This has enabled business clients to fully realise the benefits of electronic products. It is in the interest of both clients and FNB to use more cost-effective electronic channels,” he said.
FNB declared a final dividend of 122 cents per share for the year.
The group’s total annual contribution to the FNB Namibia Holdings Foundation in the period under review amounted to N$10,3 million.