As FirstRand presented its interim results for the six months ending 31 December 2020, the bank’s interim performance reflects some improvement in the operating environment despite sustained pressure on consumers and businesses.
“The economic impact of Covid-19 continued to place acute pressure on life as we know it and our group’s performance – just like many other businesses and individuals did not emerge unscathed. But we believe that trends post lockdown are improving as the economic recovery slowly emerges and we remain hopeful that 2021 will be a better year, for Namibia and its people and the world at large,” said Oscar Capelao, FirstRand Namibia Chief Financial Officer.
He added: “Comparing the earnings run rate of pre-March 2020 lockdown period to post lockdown, our estimate of earnings lost approximate N$185 million for the period, being decreased NII of N$156 million, NIR of N$8 million, higher impairments of N$17 million and HOPE fund CSR initiative of N$3.8 million.”
Key financial highlights in the interim results include earnings of N$564.9 million while the return-on-investment ROE at 21.5 % and CTI at 51.1 % were below the comparative period. In terms of revenue, period-on-period (December 2019 to December 2020) net interest income (NII) decreased by 14% whilst non-interest revenue (NIR) was up marginally).
Moreover, retail and commercial deposits grew with 16.3%, with large corporate deposits increasing by 20.2% and the transactional volumes trajectory has rebounded, on an aggregate basis, are back to pre-Covid levels. In addition, total financial transactions were up 6.3%; banking app transactions were up 112.0%; point-of-sale swipes (merchant acquiring) were up 11.2%; while branch transactions were down 6.3%.
Also, group operating costs decreased by 4.6% to N$1,014 million (2019: N$1 063 million), which is reflected in the cost to income ratio of 51.1% (2019: 50.9%).
Meanwhile, the group’s total assets increased by 2.2% to N$44.8 billion (2019: N$43.8 billion). Net advances making up 67.7% (2019: 71.8%) of the balance sheet, reflected a year-on-year decrease of (3.7%) to N$30.3 billion
Advances growth in FNB occurred mainly in the Retail at 2.8%, with the Commercial segment sharply down at minus 13%. At WesBank, the 6.0% decline in advances reflects the material drop in applications during the period in the Namibian retail vehicle asset finance (VAF) business, where new business contracted 26.7% for the calendar year 2020. “Our resilience in the previous six months puts us in a stronger position to accelerate our exponential help for customers in our transact, credit, insure and invest areas in the months ahead. We are particularly pleased to see that our contextual digital platform continues to be warmly embraced by our customers, evident in increasing adoption of our digital interfaces,” said Capelao.
“One of the positive highlights of the past year is the fact that we have more than 280 000 contactless cards in issue, an increase of 1400%. This means our customers are embracing new technology, and minimising physical contact at tills – especially during the Covid-19 pandemic – has thus been successfully circumvented. Contactless payments mean shoppers avoid having to touch card readers and minimises queuing time and we are grateful that this product and service offer has been a winner with our customers.”
“In an unprecedented year, our deep commitment to our brand promise remained steadfast. The pandemic necessitated a deliberate response of help – and as a business, we took active action in providing an enabling environment for our customers, our employees and the communities in which we operate. We are driven by a purpose to be a force of good and, no matter the circumstances, we will continue to navigate a future of shared prosperity. Financial inclusion, sound money management, youth employment creation and public-private partnerships are all important themes in our strategy to provide holistic help,” Capelao concluded.