FirstRand revenue shoots up to over N$2 billion…six month results show 6% increase
FirstRand Namibia Limited yesterday reported results for the six months to 31 December 2019. The results show that for the six-month period the Group’s headline earnings increased 13.3% with a Return on Equity (ROE) of 24.6%. ROE is a measure of financial performance calculated by dividing net income by shareholders’ equity and because shareholders’ equity is equal to a company’s assets minus its debt, ROE could be thought of as the return on net assets.
The half-year results also indicate that FirstRand Namibia’s revenue increased by 6% to N$2.089 billion while Non-Interest Revenue (NIR) increased 7.4%.
In addition, yesterday’s results showed that FirstRand Namibia’s net interest income of N$1 054 million, increased by 5.4 % and advances at the end of the period increased 8.3% to N$31.5 billion. Also, the Group’s Capital Adequacy Ratio stood at 18.8% which resulted in a dividend of 104 cents per share.
FirstRand Namibia CEO, Sarel van Zyl: “We are pleased to report that our concerted efforts to manage our operating expenses, as well as our ongoing investment in the quality of our lending book over the past three years have started to pay off. We have generated returns above our cost of equity, resulting in positive net income after capital charges (NIACC) despite the higher levels of capital required. This performance is the result of careful and consistent execution of several very specific growth strategies, with the objective to create shared value for all stakeholders - staff, customers and shareholders. We firmly believe that this group’s ability to generate superior NIACC, our key performance metric, is testament to a successful operating business model, a portfolio of unique customer-centric franchises with clear competitive strengths, our highly-engaged talent and our discipline in allocating financial resources.”
Furthermore, yesterday’s results show that FirstRand Namibia has maintained a good balance between net interest income (NII) and Non-Interest Revenue (NIR). NII is 50.4% of revenue and NIR contributes 49.6%.
The bank also continued to fuel growth in the economy through responsible end of period advances growth of 8.3% to N$31.5 billion versus the prior period, while franchise deposits increased 7.1% to N$25.1 billion and institutional deposits increased 1.8% to N$10.8 billion. The Group’s NIR increased 7.4%, which has been described as a resilient performance given the real economy challenges, mainly on the back of increased transactional volumes.
Meanwhile, ongoing customer growth in the premium and commercial segments delivered fee and commission income growth of 10.8%, supported by strong volumes across FNB’s digital and electronic channels. Also, volumes growth on self-service platforms and channels increased by 17% and the traditional in-branch volumes are down 19%.
As a result of the migration of customer transactions from the expensive branch channels to self-service channels, the cost of the Group’s physical infrastructure reduced year-on-year, significantly contributing to the improvement in profit before tax.
FirstRand Namibia’s net interest income of N$1.054 billion, increased by 5.4 % from the prior period, which was driven by both advances’ growth in Retail and Commercial at 5.8% and Corporate and Investment banking at 31.4%. The deposits franchises also increased well at 7% from prior period.
Mortgages (5%) grew marginally, deliberately below mortgage PSCE while specific provisions in Home Loans remained at a very low 0.16% of the book. Two thirds of the growth in FNB Mortgages was primarily in the segment of N$0.5million to N$1.5million, enabling increased access to housing countrywide.
Growth in both the premium and consumer segments was driven by unsecured lending and cross selling into the base. WesBank exceeded expectation by maintaining its advances book at N$3.5billion, when compared to new vehicles sales which are down 12.6%, the lowest since 2006.
The Investment Banking Division (IBD) in RMB was able to lift business by continuing to deliver landmark and innovatively structured deals, which translated into solid growth in advances and lending income, contributing to economic growth and job creation.
During the period, the group contributed N$10.7 million to the FirstRand Namibia Foundation, its primary corporate responsibility vehicle. Educational and medical grants by the FNB Staff Assistance Trust amounted to N$0.8 million for the six-months ended December 2019.
Looking forward, van Zyl said: “Given the structural nature of Namibia’s challenges, the group believes that domestic economic activity will remain under pressure for the foreseeable future. However, FirstRand Namibia remains optimistic that, despite this difficult backdrop, it is executing on appropriate cost management and responsible growth strategies to deliver growth based on the increased trust of customers and backed by the confidence of shareholders.”
2020-03-11 08:40:18 | 4 months ago