Rédaction Africa Links 24 with The Africa Links 24
Published on 2024-02-22 21:50:15
First National Bank of Botswana (FNBB) has reported a significant surge in its profit before tax for the six-month period ending on 31 December 2023. The bank’s profit before tax reached P879 million, reflecting a notable 28 percent year-on-year increase as shown in its unaudited condensed consolidated financial statements and dividend announcement released this week.
According to the Chairman of the Board of Directors, Balisi Bonyongo, and the CEO, Steven Bogatsu, the bank’s total income grew by 22 percent year-on-year, outpacing the 16 percent growth in expenses over the same period. They explained that the growth in gross interest income was up 26% thanks to rate hikes and customer advances, and there was a 24 percent increase in funds deployed into investment securities, buoyed by heightened deposit inflows across current, call, and savings accounts.
The bank’s current, call, and savings accounts showed notable growth with the deposit of funds. Additionally, the interest expenses rose by 16 percent, primarily through strategic adjustments in the deposit mix, which led to the Net Interest Income before impairment charges experiencing a robust 30 percent year-on-year growth.
Regarding impairment charges, the executives revealed a notable decline, closing at P10 million for the period, in contrast to P77 million charged during the corresponding period of the previous year. This reduction was primarily driven by overlay releases, indicating improvements in underlying risk positions or recoveries.
In terms of Non-Interest Revenue, the executives noted a moderate 4 percent growth over the period. They highlighted sustained margin volatility and compression in the forex line, alongside adjustments in certain service fees, as factors influencing revenue dynamics. Major Non-Interest Revenue lines continued on a double-digit growth trajectory, fueled by increasing transaction volumes, account numbers, and customer base expansion.
The bank’s total expenses grew by 16 percent, largely attributed to a 15 percent increase in employee costs, aligned with the bank’s ongoing efforts to enhance its Employee Value Proposition. Additional cost increments were driven by product and channel refreshes aimed at augmenting customer experience, as well as technology-related expenditures geared towards operational efficiencies.
Despite the upward pressure on costs, the Cost to Income ratio remained flat at 47.6 percent. Overall, FNBB reported a Return on Equity (ROE) of 36.2 percent, representing a favorable comparison to the 31.2 percent delivered in the first half of the preceding year.
In terms of financial highlights, Profit Before Tax (PBT) reached P879m, representing a 28% increase from the previous year. Additionally, the Return on Equity increased to 36.2 percent from 31.2 percent, the Credit Loss Ratio decreased to 0.1 percent from 0.9 percent, and the Dividend per share (Interim) increased to 16 thebe from 12 thebe.
Overall, FNBB’s performance for the period demonstrates strong growth in profit before tax, a notable reduction in impairment charges, and continued growth in Non-Interest Revenue lines, despite challenges such as sustained margin volatility and cost pressures. The bank’s focus on operational efficiencies, technology-related expenditures, and enhancing customer experience has contributed to its overall favorable financial position.
Read the original article on Gazette News
