WINDHOEK – Standard Bank Namibia Holdings (SBNH)’s total income has increased by 20 percent (N$280 million) to N$1.68 billion while expenses grew by 15 percent (N$134 million), which the bank attributes to continued investment in systems and infrastructure.
The latest annual financial results show 23 percent increase in profit before tax, 13 percent increase in profit after tax and loans while advances increased by 19 percent. The group’s return on equity (ROE) has decreased to 17.67 percent from 18.47 percent in 2013. The bank’s performance has been under pressure due to a high cost base, high levels of impairments and other challenges resulting from the implementation of the new core banking system. The bank’s plan for the 2014 financial year, with the theme “Focus on Basics” had a key objective of building a foundation for sustained growth and success in the years from 2015. “From the results at the end of the year, it is clear that the key areas identified as focus areas for 2014 had been correctly identified and the actions appropriately executed,” said the group in a recent statement.
The group’s net interest income increased 29 percent mainly as a result of growth in interest-earning assets, funding mix and higher margins. Margins improved due to re-pricing new business in the mortgage, business and personal term lending books to better reflect the risk and costs of anticipated regulatory changes, together with the increase in higher-margin unsecured lending.
Non-interest revenue grew by 11 percent during the year with net fee and commission revenue up 23 percent mainly as a result of increased transaction volumes. Trading revenue increased by 6 percent, while other revenue was 22 percent lower than in the prior year. Other revenue decreased due to a reduction in the investment portfolio during the year.
According to the statement, 2014 has been a challenging year for credit impairments at Standard Bank Namibia. In particular, instalment sale and finance leases, unsecured lending and card debtors required higher provision due to higher levels of customers defaulting during the year. However, the bank said decisive action to reduce the risk profile and the tightening of lending parameters has seen a softening of the impairments towards the end of 2014.
“The main contributor to the increase in operating costs was staff costs which grew 8 percent for the year due to annual salary and other benefit increases offset by reduced temporary headcount as a result of the completion of our core banking implementation,” read the statement.
Other operating expenses increased by 22 percent largely as a result of increased IT expenditure, including higher consultancy and software licence fees.
Total loans and advances were up 19 percent. Contributing to the increase in loans and advances was a 9 percent increase in mortgage loans. Other term loans increased by 37 percent mainly due to the increased term loans to corporates. Instalment sale and finance leases increased by 19 percent due to growth in the passenger vehicle market.