FNB Achieves Healthy Half-Year Growth

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By Staff Reporter WINDHOEK First National Bank (Namibia) increased its earnings by 21% to N$136.1 million in the first six months of the financial year ending December 31, 2006. In a statement last Thursday, FNB said it is the first time a Namibian bank has exceeded the N$10 billion mark in total assets. It is the oldest bank in Namibia and the only Namibian bank listed on the Namibian stock exchange. FNB currently has the highest market capitalization (excluding dual-listed companies) of almost N$2 billion on the Namibian Stock Exchange. The bank says the Group’s position as market leaders resulted in a total dividend of 114 cents per share being declared, which includes an ordinary dividend of 24 cents per share and a special dividend of N$250 million. The Group says its improved cost to income ratio of 47.6% affirms that it achieved these results through sound business practices. According to the bank, the improvement is primarily due to improved net interest income, supported by a focus on efficiencies. This helped the Group keep price increases to the minimum. It also resulted in positive growth despite ongoing efforts to migrate customers to more affordable self-help channels, which resulted in reduced income for the Group. FNB says that in an ongoing effort to make banking accessible to all Namibians, the Group currently offers banking services across Namibia through a network of 46 branches and agencies, 100 full ATMs, 121 mini ATMs, 1ÃÆ’Æ‘ÀÃ…ÃÆ”šÃ‚ 300 point-of-sale devices and Internet Banking. FNB claims to be the only bank with technology to open accounts in rural areas through cell phone [GPRS] technology. Cell Phone banking will be introduced within a few months. The bank feels the success of this customer-centric approach is reflected in the FNB Banks’ results, which showed an increase of 20%. This growth was also assisted by the widening of margins on the back of the rise in interest rates, while fee and commission income increased by 13%, driven by volume growth. To secure future growth, investments in IT and personnel caused operating costs to increase by 14%. The banking group’s total assets grew by 15% with gross advances exceeding N$8.1 billion. Deposits increased by 23%, driven primarily by the corporate segment. It was, however, supported by a concerted effort to encourage a savings culture and the introduction of FirstSave, a true savings product for the consumer market. Due to sound risk and credit management processes, growth was achieved without impacting on the quality of the book with the percentage of non-performing advances to total advances remaining at 3%. Swabou Life and Insurance have also shown good growth, the bank says. Swabou Life’s earnings increased by 87% to N$28.9 million on the back of synergies within the Group together with exceptional returns in the investment portfolio and strong premium inflows. FNB, through its Foundation, has invested N$7.4 million in social development projects across the country since its inception in 2003. The FNB Foundation is funded by 1% of the annual post-tax profits of the Group, meaning that the shareholders are contributing 1% of their profits as part of an overall acceptance of its role in contributing to the social and economic upliftment of the society that supports it. FNB says additional proof of its commitment to Namibia is that seven of the ten members of FNB Holdings Board are Namibian, three representing BEE partners. As part of the merger with Swabou in 2003, FNB entered into a Broad-Based BEE agreement with Chappa ‘Ai Investments (Individuals & business) and Sovereign Capital (Individuals; business; NAPWU; NANTU) who, together with all black FNB staff and non-executive directors and Namibian institutional investors (GIPF; CBN Nominees; SBN Nominees) own a 40% stake in FNB. These BEE partners derive a real economic value through their shareholding and the dividend payout, FNB says.