First National Bank Botswana (FNBB) has announced a remarkable 18 percent growth in Profit Before Tax (PBT) from P1.2 billion in 2022 to P1.4 billion for the fiscal year ending on June 30, 2023. In an exclusive interview with this publication, Dr. Mbako Mbo, the Chief Financial Officer of FNBB, has provided insight into the key revenue sources responsible for this significant growth.
Dr. Mbo stated, “The growth in profit for the year under review can be attributed to two main factors. Firstly, all our major income streams experienced an upswing, and secondly, our overall cost growth was slower than the growth in income. FNBB operates across various banking segments, including Retail, Commercial, and Corporate (branded as RMB), and income and profitability saw improvements in all three.”
Regarding the Retail segment, Dr. Mbo revealed that there was a substantial increase in volume in their Retail Transact business. This growth encompassed various key products such as e-Wallet, third-party product sales via platforms (airtime, electricity, bill payments), CashPlus services, and ATM transactions. Dr. Mbo added, “These volume increases exceeded one million in all cases. Additionally, our Retail lending products, including home loans and unsecured personal loans, saw increased volumes, with interest rates further boosting income.”
In the Commercial segment, FNBB continued its strong performance, reporting a 16 percent revenue growth driven by an 8 percent increase in advances, including working capital solutions for businesses, including SMMEs, and their substantial commercial property portfolio. Dr. Mbo emphasized the success of secured lending and growth in transact business with commercial clients, as FNBB onboarded new clients and expanded its merchant services.
Regarding the Corporate (RMB) segment, Dr. Mbo noted that FNBB continued to support key sectors of the economy, through State Owned Enterprises, contributing to the growth in advances. He highlighted elevated trading activity in Global Markets, characterized by landmark deals, an expanding client base, and strengthened client relationships.
FNBB’s balance sheet expanded by 9 percent year-on-year, which Dr. Mbo attributed to increased Treasury placements in Global markets, taking advantage of improving returns. However, the primary driver of growth was advances to customers, which increased by 8 percent or P1.2 billion year-on-year, with substantial growth in both secured and unsecured lending.
As for the substantial increases in Corporate, Commercial, and Retail advances, Dr. Mbo explained, “Our growth strategy closely aligns with key sectors of the economy, particularly within the Commercial and Corporate sectors, where growth primarily occurred in tourism, agriculture, and real-estate lending. In the Retail segment, we continued to support personal lending to clients with risk appetite adjusting for improvements in the credit market. Above all, we remain committed to the financial inclusion agenda.”
When asked about FNBB’s ability to maintain a low level of credit losses and their risk management practices, Dr. Mbo stated, “We have been unwinding some of our risk positions influenced by economic strains we previously observed. However, we are pleased with the improvements we are witnessing, which has led to a release of some unwarranted provisions. Our primary goal is to be a responsible lender. We assess and grant credit based on the capacity of the underlying credit counterparty. This approach has kept our Credit Loss Ratios within a range of 0.3-1.1 percent.”