Bank Windhoek’s reviewed consolidated group results

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Bank Windhoek managing director Christo de Vries

Windhoek

Bank Windhoek Holdings Limited (BWH) published its reviewed consolidated interim group results on February 11. The group continued to achieve sound performance for the half year ended December 31, 2015, reporting profit after tax for the period of N$455.9 million, an increase of 26.4 percent year-on-year. “The positive contribution to the financial performance of our group was evenly spread throughout the business”, said Bank Windhoek managing director Christo de Vries.

Jaco Esterhuyse, BWH chief financial officer, added that net interest income increased by 21 percent to N$727.9 million for the half year ended December 31, 2015. The group also continues to improve its efficiency and diversification ratios with non-interest income covering 83.2 percent (December 2014: 77.8 percent) of operating expenses and contributing 40.9 percent (December 2014: 40.2 percent) of operating income. The bank has maintained low bad and doubtful debt levels with non-performing loans as a percentage of gross loans and advances increasing to 1.24 percent (June 2015: 1.09 percent). Bank Windhoek’s bad debt levels remain within acceptable levels and industry norms.

For the six months ended December 31, 2015 non-interest income increased by 21.7 percent to N$481.4 million. The growth in non-interest income is mainly due to strong growth in commission and income from trading activities, which include income earned from the Kwanza trading activities. The dispensation from Bank of Namibia for Namibian banks to trade in Kwanza was ended in December 2015 and no further income from this source is anticipated.

Operating expenses increased by 13.8 percent to N$578.7 million. The increase is in line with the expense growth of the last 18 months and is mainly due to an increase in staff costs. The growth in operating income of 19.7 percent exceeds the growth in operating expenses of 13.8 percent. As a direct result of this positive operating performance, the cost to income ratio improved from 51.7 percent to 49.1 percent. With less favourable market conditions expected in the short to medium term the bank anticipates the cost to income ratio to remain static in the foreseeable future.

The group’s total asset growth of 19.1 percent is driven by the growth in loans and advances of 15.8 percent, which is mainly due to growth in overdrafts and mortgage loans. Compared to the prior period the growth in loans and advances has slowed down, mirroring the industry growth in credit to the private sector.

Total funding increased by 18.7 percent, comprising a 13.5 percent increase in deposits to N$23.1 billion and other borrowings of N$1.2 billion. Other borrowings consist of long term loans from the International Finance Corporation and Deutsche Investitions- und Entwicklungsgesellschaft of N$920 million and N$250 million respectively. Bank Windhoek Holdings remains well capitalised, with a total risk-based capital adequacy ratio of 14.5 percent (December 2014: 15.7 percent), well above the minimum regulatory requirement of 10 percent.

An interim dividend of 30 cents per ordinary share was declared on 10 February 2016 for the half year ended 31 December 2015.
“The group is expecting a challenging operating environment with sluggish economic growth, increasing interest rates, increasing inflation and a weakening currency. These negative key economic indicators are likely to cause the Namibian consumer to experience financial pressures over the short to medium term. Despite the challenging operating environment, we remain positive and will continue to manage our risks, improve our service offering, grow our customer base and capitalise on the opportunities it brings.” concluded De Vries.

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