Namibian commercial banks, well known for declaring handsome profits every year, have come under pressure due to lower advances growth and lower interest rates charged to clients,
a local economic analyst has said.
FNB Namibia, the country’s biggest bank with total assets of N$37.3bn as at the end of the 2017 financial year, said this week that it expects unaudited earnings for the six months ended 31 December to be materially lower than the comparative period by 10 percent to 15 percent.
According to statistics released by Global Credit Ratings on Wednesday, FNB Namibia has a market share of 32.6% and 34.2% in terms of total industry assets and customer deposits respectively.
“Headline earnings and earnings per share for the period ended 31 December 2017 will be materially lower than the prior period by 10 percent to 15 percent,” FNB said in a trading statement released to shareholders on Wednesday.
The group’s unaudited interim financial results will be released on 15 February.
“These are cyclical events and do not guarantee perpetual doom,” said Eloise du Plessis, an analyst at PSG Namibia.
Pressed to say whether Standard Bank, Bank Windhoek and Nedbank will also report lower earnings, Du Plessis said it was important to note that these are interim results.
“It is not the final full-year results. We do not know the reason for the decline at this stage; we will know when the results come out on 15 February.”
She said FNB earnings in the first half of the previous financial year were still very good, which is what the growth figures of this result period are based on.
“In simpler terms, this time last year the effects of the slower economy had not yet been seen in banks’ earnings. This only showed by the end of the financial year, in June 2017. It is therefore still possible that for the full-year 2018 we might not see this large decline in earnings.”
Bank of Namibia statistics show that the overall liquidity position of commercial banks decreased to N$3,1 billion at the end of December 2017, from N$3,2 billion at the end of November 2017.
The central bank attributed the decrease in the overall liquidity position to the periodic corporate tax payments to the State at the end of the year.