FNBB Reviews Bank Charges
- Crescendo of public outcry compels review of charges
- FNBB makes a cool P666m in bank charges in 6 months
Colossal commercial banking outfit, First National Bank Botswana (FNBB), will review its charges as a response to the crescendo of complaints about high charges and fees that the bank levies on customers, The Botswana Gazette has established.
Addressing journalists when FNBB presented its financial results for the six months ending 31st December 2019 in Gaborone last week, the bank’s CEO Steven Bogatsu said they had received complaints about high banking charges and fees and that management would review the charges and launch a public education campaign about the charges and how they were effected.
Bogatsu said it was important for their customers to be equipped with financial knowledge to help them understand processes involved in effecting banking charges. “We apply to Bank of Botswana (BoB) as the regulator, which approves our annual increase on charges,” he explained. “Our charges are also effected in line with the national inflation rate.”
He encouraged customers to transact through FNBB’s electronic platforms, which he said were cheaper while some were free.
The financial education campaign will make customers understand that the increments consider economic segments to ensure affordability. As an example, Bogatsu said charges on student accounts could not be equal to those for gold card account holders which in turn were not the same as those for black card holders.
FNBB makes most of its money through non-interest-income. Non-interest income is bank and creditor income derived primarily from fees, including deposit and transaction fees, insufficient fund (NSF) fees, annual fees, monthly account service charges, inactivity fees, and check and deposit slip fees. Credit card issuers also charge penalty fees, including late fees and over-the-limit fees.
Institutions charge fees that generate non-interest income as a way of increasing revenue and ensuring liquidity in the event of increased default rates.
Meanwhile, under the stewardship of Bogatsu, for the half-year ending 31st December 2019 FNBB saw its non-interest revenue grow by 10 percent to sit at a cool P666 million. The bank is the largest money maker in the field of transactional fees charged on customers. It accounts for more than half of the total non-interest income made by the big five commercial banks.
According to Bogatsu, the increase in non-interest income was driven by a 13 percent increase in the customer base and a successful roll-out of new products. Transactional volumes also rose 13 percent. Bogatsu said the improved connectivity in the point-of -sale machines and an increase in machines in use, combined with the swipe-and-win campaign, resulted in growth of card and merchant commissions.
FNBB is also strong in digital transactions, as well as in cell phone and Internet banking products. FNBB’s profit for the period rose 12 percent to P425 million. “Our digital drive is bearing fruits as more customers are taking up our convenient banking solutions,” the CEO said.
eWallet volumes increased by 31 percent, Pay 2 Cell increased by 41 percent while the usage of cheques dropped by 19 percent. “It is pleasing to see that our customers are shifting from traditional ways of banking to more convenient, efficient, safer and quicker options,” said Bogatsu. “The bank has been on an aggressive cash to card drive which has resulted in an increase in swipe transactional volumes. We continue to influence a change in customer behaviour through our cash-back programme, rewarding customers for transacting on digital platforms. During the past six months alone, we have paid out P11 million to customers as cash-back rewards.”
FNBB continued to expand its footprint, reaching more customers in under served locations, especially the remote areas. Its Bank on Wheels (mobile bank) continues its journey across Botswana and 75 additional points of service have been introduced through its partner banking Cash Plus, leading to a 13 percent growth in customer base and 13 percent transactional volumes. This has tremendously improved access to financial services for the unbanked, making great strides in financial inclusion.
The bank’s funding increased year-on-year by 5 percent, with customer deposits increasing by 10 percent. This is largely attributable to a 12 percent increase in demand deposits in line with the bank’s strategy to enhance its transactional offering base and a 3 percent decline in fixed and notice deposits. FNBB further reduced reliance on institutional funding facilitated by the growth in retail and wholesale deposits which was in turn assisted by higher market liquidity.