- Posts a significant yoy PBT rise of 28% to P879 million
- Gross Interest Income up 26%, thanks to rate hikes and customer advances
GAZETTE REPORTER
Leading commercial banking outfit, First National Bank of Botswana (FNBB), has reported a notable surge in its profit before tax for the six-month period ending on 31 December 2023.
With profits reaching P879 million, the bank’s performance reflected a significant 28 percent year-on-year increase, as shown in its unaudited condensed consolidated financial statements and dividend announcement released this week.
This is the bank that also saw its total income growing 22 percent year-on-year, outpacing the 16 percent growth in expenses over the same period.
Current, call and savings accounts
The Chairman of the Board of Directors, Balisi Bonyongo, and the CEO, Steven Bogatsu, have used the report to explain the financial dynamics.
“At the top-line level, Gross Interest income saw a substantial 26 percent growth, driven by residual impacts of rate hikes from the previous financial year, coupled with a commendable 12 percent growth in customer advances,” they wrote.
Furthermore, the executives highlighted a noteworthy 24 percent increase in funds deployed into investment securities, buoyed by heightened deposit inflows across current, call, and savings accounts.
Impairment charges
They also emphasised a judicious containment of interest expenses, which rose by 16 percent, primarily through strategic adjustments in deposit mix. Consequently, the Net Interest Income before impairment charges experienced 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, they explained, was primarily driven by overlay releases, indicating improvements in underlying risk positions or recoveries.
Forex line
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.
Despite these challenges, major Non-Interest Revenue lines continued on a double-digit growth trajectory, fuelled 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.
Tech-related expenditure
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 favourable comparison to the 31.2 percent delivered in the first half of the preceding year.
FINANCIAL HIGHLIGHTS:
Profit Before Tax (PBT) is P879m (Dec 22: P687m) +28%
Gross advances to customers is P18.9bn (Dec 22: P16.9bn) ………………………… +11%
Cost to Income Ratio is 47.6 percent (Dec 22: 47.6 percent)
Return on Equity is 36.2 percent (Dec 22: 31.2%) ………………………… +500bps
Credit Loss Ratio is 0.1 percent (Dec 22: 0.9%) ………………………… -80bps
Dividend per share (Interim ) 16 thebe (Dec 22: 12 thebe) ………………………… +33%