Standard Bank Namibia, one of the leading financial services institutions in the country, has recorded a N$371 million after tax profit for the year ended 31 December 2021, a 11.9% decline from the N$421 million reported at the end of 2020.
SBN Holdings Ltd, the parent company of Standard Bank Namibia, said while its profit after tax shows a decline after several years of strong growth until 2019, the group was able to contain this decline to a moderate level and emerge from a difficult year in sound financial health with strong capital and liquidity positions.
The group’s net interest income for the period increased by 5.8% from N$1 169 million to N$1 237 million attributed to a focused approach on growing loans and advances and improvement of the net interest margin (NIM), which increased from 3.7% to 3.9%.
“By changing the composition of the deposit and current accounts with customers, through repricing of term funding and interest rate reductions in the market, the interest expense was reduced by 26.7% year-on-year. Interest income only reduced by 9.2% resulting in the increase in net interest income of 5.8%,” the listed company said.
Non-interest revenue for the period under review increased by 1.4% from N$1 193 million to N$1 209 million, while net fee and commission revenue increased by 6 %, with trading revenue increasing by 14.4%.
“This is mainly attributable to the increase in economic activity we saw in the latter part of 2021. The NIR growth was impacted by other gains and losses, originating from investments in unit trusts, which fell by 36.3% because of the reduced interest rate environment.”
SBN Holdings’ operating expenses increased by 5.9% for the period, while other operating expenses increased by 7.1% mainly due to the implementation of the SA group’s change in operating model.
“Service level agreements (SLA) have been formalised between Standard Bank South Africa and all subsidiaries within the Standard Bank Group for intra-group service management. The SLAs are compliant with the transfer pricing framework. Although the initial cost impact is significant, the change in the operating model gives us autonomy and the opportunity to simplify our IT architecture to make it locally relevant, agile and future-ready,” added SBN Holdings.
The listed financial services company’s gross loans and advances to customers growth of 1.9%, outpacing private sector credit, extension growth of 1% in 2021.
“The strongest growth was recorded in vehicle and asset finance at 13.5%. The decline in sovereign lending was due to the settlement of a sizable, structured repayment obligation,” the company said.
Deposits by customers for the period increased by 10.6% from N$24.2 billion to N$26.8 billion in 2021.
“The strongest growth was recorded in term deposits increasing by 45.1% followed by current accounts growing by 24.9% year-on-year. The concentration level of negotiable certificate of deposits (NCDs) continued to reduce from 20% in 2019; 15% in 2020 to 13% in 2021. The reduced reliance on NCDs helped to reduce the negative impact of the significant reduction in interest rates.”
SBN Holdings, which declared an ordinary final dividend of 15 cents per share, noted that Standard Bank Namibia Limited successfully raised an equivalent of N$1.5 billion of funding in the debt capital markets in 2021, for refinancing of N$1.3 billion worth of maturing bonds and to support general business growth.
