15 February 2013

Namibia: FNB Rakes in Million in Banking Fees

Windhoek — First National Bank (FNB) Namibia made N$350 million from banking fees and commissions alone in the six months to December 2012.

The figure reflects an increase of 18 percent, and FNB says it is thanks to "good growth in accounts and transaction volumes." The banking operations, which form a major part of the FNB Namibia Holding Group, reported a net interest income increase of 10 percent to N$488 million, which is N$5 million more compared to the same time in 2011.

Fair value income of N$26 million is shown under non-interest income rather than interest income. Therefore normalised interest income growth was 16 percent, in line with the 16 percent growth in average advances. Through the low interest cycle, margins have been well managed.

Non-interest income increased by 20 percent to N$403 million, and excluding the N$26 million fair value income reflected under non-interest income, the growth achieved is 13 percent. The FNB Namibia Holdings Group announced a 14 percent increase in profit, an 18 percent growth in advances and a 9 percent increase in costs, for the six months ending December 2012.

The interim figures show an increase of 14 percent in earnings per share to 121.3 cents, up from 106.7 cents in 2011, and a 12 percent increase in headline earnings per share to 121.3 cents. This also reflects operational efficiency, with a respectable 48 percent cost-to-income ratio and an increase in return on equity to 31 percent, which allowed the group to declare an interim dividend of 46 cents in January this year compared to 41 cents last year.

During June last year the group sold its 51 percent shareholding in Momentum Namibia to Metropolitan Life Namibia. The increase in profit from continuing operations in the six months ended 31 December 2012 to N$320 million compared to N$281 million at 31 December the previous year, was achieved despite the absence of two non-recurring sources of revenue in the corresponding period during 2012.

Over the past year, cellphone banking transactions, albeit from a small base, have increased by 83 percent and internet banking volumes are up 18 percent. Foreign exchange income at N$32 million was marginally down on the corresponding period last year on lower volumes and increased competition.

Non-interest expenditure increased by 10 percent to N$441 million. The higher than inflation cost escalation is due to new representation points, additional staff, the roll out of Account Opening Optimisation and E-wallet system development costs. Profit for the period increased by 12 percent to N$292 million from N$261 million.

Profit on the underlying core banking business activities increased by 28 percent, excluding the once-off adjustments for the impairment reversal and profit on the sale of Visa in the prior period. FNB remains well capitalised with a total capital adequacy of 16.09 percent compared to 16.7 percent previously.

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