Windhoek-FNB Namibia Holdings’s half-year results up to December 31, 2016, were released yesterday in the context of an embattled economy. Previously flourishing on pro-cyclical fiscal spending and foreign investment in new mines and infrastructure, the Namibian economy is facing severe headwinds that include a current economic growth forecast for 2016 which has been revised downwards by government and most research houses.
“For the period under review, the economy was challenged by lower commodity prices, severe drought conditions, weaker global and regional growth, and a sudden slump in the construction and manufacturing sector. FNB Namibia Holding’s performance for the six months ended 31 December 2016, reflects the impact of the macroeconomic environment”, said Oscar Capelao, Chief Financial Officer at FNB Namibia Holdings.
While the Namibian group’s local investment continued at full commitment, specifically in infrastructure, capacity-building referenced to increasing regulatory rigour, corporate social responsibility projects, community development and disaster relief support and necessary people development and training; rising costs and falling incomes in real terms, affect normally high returns to stakeholders and shareholders.
FNB’s core operations have performed well over the period with active accounts up by 9 percent, Electronic channels, such as eWallets showing growth of 44 percent and point of sale transactions growing by 12 percent, and advances growth of 8.4 percent.
However, performance was impacted by the increased cost of funding in the current tighter liquidity environment and investment in risk management.
Profit for the half-period is N$599.2 million, compared to N$597.4 million in 2015: Earnings per share are flat at 226.3 cents compared to 2015’s 226.5 cents. Other key ratios reflect a similar trend. Return on average equity was 30.3 percent compared to 35.4 percent in 2015, return on average assets at 3.5 percent (2015: 3.9 percent) and cost to income ratio at 46.3 percent (2015: 42.4 percent). The return on average equity at 30.3 percent is closer to the five year long term average of 29 percent.
Normalised earnings for the period increased by 7 percent paralleled to the prior period, after adjusting for Kwanza trading in the base, the @Parkside building depreciation, and fair value income volatility. An interim dividend for the six months ended December 31, 2016 of 91 cents per ordinary share was declared on 31 January 2017.
“While we anticipate operating conditions to become more demanding – in both the economic and regulatory environment, we believe our strong balance sheet, diversified earnings base and innovative customer solutions and service will work together to deliver a continued solid and sustainable performance,” said Sarel van Zyl, Chief Executive Officer at FNB Namibia Holdings.