First National Bank Botswana (FNBB), a leading commercial integrated service provider, has recorded a profit after tax of P536 million for the period that ended on December 31, 2022. This figure represents an increase of P86 million from the P450 million recorded in the previous corresponding period. The bank’s financials for the period under review have revealed that FNBB recorded an interest income growth of P229.4 million, which is a 33% increase, from P696.1 million in the corresponding period to P925.5 million in the period under review.
Interest Income Growth
According to FNBB’s Chairman, Balisi Bonyongo, and CEO, Steven Bogatsu, the increase in interest income was driven by the 151 basis points in the prime rate, the 11% growth in gross advances, and the optimization of the investment securities portfolio. The bank invested in longer-dated bonds and treasury bills, which offer attractive yields, and increased placements with other banks (30%), resulting in increased income.
Non-Interest Income Growth
FNBB’s non-interest revenue grew by P38.5 million (5%), delivering a resilient performance over the period due to the strong performance of the foreign exchange business, which grew by 9%. Bonyongo and Bogatsu noted that service and other fees reflected a moderate growth of 5%, driven by an increase in eWallet volumes and the account base. Card commission grew by 2%, benefiting from an increase in transactional volumes and a 3% customer growth.
Balance Sheet Increase
FNBB’s balance sheet increased by 7% year-on-year, with good growth in advances and deposits. Bonyongo and Bogatsu noted that the bank maintains a prudent approach to lending and recognizes the need for responsible and manageable consumer exposure during times of uncertainty, especially the recent impact of inflation and interest rate pressures. The bank’s gross customer advances increased by 11%, while the market gross advances rose by 5%.
Non-Performing Loans (NPL)
The bank’s non-performing loans (NPL) declined by 4% year-on-year, resulting in an NPL/gross advances ratio of 5.1% as of December 31, 2022, compared to 5.8% as of December 31, 2021. Bonyongo and Bogatsu noted that the reduction in NPLs was primarily due to a recoverability assessment of long outstanding exposures and the consequent write-off of irrecoverable loans. The bank’s deposits increased by 6% year-on-year.
Prudent Financial Resource Deployment
FNBB has continued to deploy its financial resources appropriately and prudently, with conservative capital and provisioning levels. This approach has allowed the bank to respond to customer needs by extending credit selectively without relaxing its overall credit parameters. The growth in gross advances over the period is evidence of this approach.