WINDHOEK - An analysis of the profitability of Namibia’s four commercial banks, as derived from interest and non-interest sources, insinuates that local banking charges are “notably” higher than elsewhere in the world.
According to the Head of Research at local stock brokerage, IJG, Romé Mostert these charges significantly contribute to the profitability of Namibian banks.
“It is difficult to compare local fees and commissions with international fees and commissions, however the bottom line profitability, and the relative breakdown of income between interest and non-interest sources, suggests that these charges are notably higher than elsewhere in the world,” Mostert told New Era.
He said being profitable was not necessarily a bad thing as profitability helps local banks to provide marginal or loss-making services in sparse parts of the country, which in turn contributes to increasing access to banking for the public.
In addition, he said profitability ensures continued investment and job-creation in the country. But, the Bank of Namibia (BoN) feels that local fees and charges need to be better regulated to ensure that they do not become excessively burdensome to the less wealthy in society, a view Mostert said he tends to agree with.
According to figures available on the Internet, Bank Windhoek continued to build on strong performance during 2014, with profit after tax growth at 26,7 percent, close to reaching N$624.9 million. Profit was N$493,3 million in 2013.
The Standard Bank Namibia Group produced a satisfactory performance in 2013, increasing profit after tax by 6 percent to about N$320 million.
FNB Namibia’s profit after tax for the year ended 30 June 2013, was approximately N$606 million. FNB Namibia’s profit for the six months to December 2013 increased by 20 percent to N$383 million (2012: N$320 million).
Nedbank Namibia’s annual report for 2013 shows that the institution generated an after tax profit of about N$200 million, up from about N$160 million during the previous year.
Furthermore, the investment holding company, PSG, in its annual Banking Business Review, states that the total Namibian banking assets accounted for 62 percent of Gross Domestic Product during the 2013 financial year.
“Local banks continued to rely greatly on interest income as the major source of income. Net interest income accounts for between 53 percent and 64 percent of total income in the 2013 financial year,” reads the report.
“Our finding, based from a range of performance ratios is that the local banks remain sound in terms of profitability and capital adequacy with high-quality liquid assets while their credit risks remain intact...With the exception of SBNH (Standard Bank Namibia Holdings), all the local banks reported double digit annualised compounded growth in earnings over the last three years on the back of strong momentum in advances growth.”
IJG’s Mostert explained that the profits made by the four major Namibian banks varied dramatically. “While two are highly profitable, the other two are much less so. Thus, one cannot really say that huge amounts of profit are made by Namibian banks,” Mostert said.
He said the two most profitable banks hold a larger market share than the smaller and less profitable ones, which results in larger interest and non-interest revenues, and also in economies of scale on cost, which reduces unit costs.
Namibia’s two most profitable banks, he pointed out, were notably more profitable than most banks internationally, while the less profitable ones fell more in-line with global levels.
Nam Banks ownership structure
Bank Windhoek Holdings (BWH) is an investment holding company with a 100 percent shareholding in Bank Windhoek Ltd, Namib Bou (Pty) Limited, Welwitschia Insurance Brokers (Pty) Limited, Capricorn Unit Trust Management Company Limited (CUTM) and Capricorn Asset Management Pty Ltd (CAM). Bank Windhoek Ltd is one of the biggest commercial banks in Namibia. BWH also has strategic interests in Santam Namibia (28 percent) and Sanlam Namibia (29.5 percent). Following the listing of BWH on the NSX in June 2013, Capricorn Investment Holdings (CIH) has a 56.81 percent shareholding in BWH.
The Standard Bank Group Limited, registered and listed in South Africa and dual listed on the NSX, transferred its ownership to Standard Bank Holdings Limited effective 01 January 2011. Standard Bank Holdings Limited acts as an investment holding company with 100 percent shareholding in Standard Insurance Brokers (Namibia) (Proprietary) Limited, (a short-term insurance broker), Stanfin (Namibia), (a long-term insurance broker) and Standard Bank Namibia Limited.
Nedbank Group Limited is the South African controlling shareholder (100 percent) of NedNamibia Holdings Limited. NedNamiba Holdings Ltd has a 100 percent interest in Nedbank Namibia Limited and also in NedProperties (Pty) Limited, NedCapital Namibia (Pty) Limited, NedPlan Insurance Brokers Namibia (Pty) Limited and Coversure Limited. Nedbank Namibia Ltd holds a 100 percent shareholding in CBN Nominees, 25 percent in Namclear (Pty) Limited, 80 percent in Nedloans (Pty) Limited, 50 percent in Ten Kaiser Wilhelm Strasse (Pty) Limited and 50 percent in Walvis Bay Land Syndicate (Pty) Limited.
FNB Namibia Holdings has a 100 percent shareholding in First National Bank of Namibia Limited. South African group, FirstRand EMA Holdings is the majority shareholder of FNB, with a 58.4 percent shareholding. GIPF holds 14.8 percent with the remainder of the shareholding held by the public. Five percent of FirstRand’s has been allocated to a black empowerment group, with 1 percent allocated to black employees and 4 percent to a BEE Consortium. The BEE consortium consists of two groups, namely Sovereign Capital and Chappa’Ai Investments.
FNB also has a 51 percent holding in OUTsurance Insurance Company Namibia (Pty) Limited. The group also has a 100 percent holding in RMB Namibia (Pty) Ltd and FNB Namibia Unit Trusts Limited. First National Bank of Namibia accounted for 95 percent of headline earnings in the 2014 financial year.
By Edgar Brandt New Era Reporter
2014-12-05 08:29:14 | 5 years ago