FirstRand Namibia Limited (FNB) reported a 9.1% year-on-year (y/y) increase in profit after tax for the financial year ended 30 June 2024, reaching N$1.7billion.
According to IJG Securities Research Analyst Zane Feris, the positive performance was primarily driven by growth in the group’s balance sheet, improved net interest margins, and a rise in transaction volumes.
During the period, FNB’s headline earnings per share rose by 10.1% to 641 cents per share, compared to 582 cents per share in the previous financial year.
“FNB declared a final dividend of 180.16 cents per share, bringing the total payout ratio to 55.2%. The group’s return on equity (ROE) also improved, reaching 27.9%, up from 25.5% in FY23,” Feris said in the FirstRand Namibia Limited FY24 Initial Impression September 2024 report.
Net interest income increased by 14.3% y/y to N$3.08 billion, benefiting from higher repo rates during the reporting period.
“This increase was primarily driven by growth in interest-earning assets and strategic pricing. However, interest expense rose sharply by 30.9% y/y to N$2.97 billion, outpacing the 21.9% y/y increase in interest income,” he said.
Despite this, FNB’s net interest margin improved to 5.3%, compared to 5.0% in FY23.
Total assets grew by 4.2% y/y to N$60.79 billion, although there was a slight contraction of N$38.2 million since the first half of FY24.
Gross advances showed robust growth, increasing by 7.2% y/y to N$39.42 billion.
“This growth was largely attributed to a 20.6% y/y rise in term loans and an 18.2% y/y increase in instalment sales agreements. However, overdrafts and cash-managed accounts declined significantly by 22.1% y/y,” he noted.
Furthermore, impairment charges surged by N$212.0 million to N$425.6 million in FY24, nearly doubling compared to the previous year.
“This rise in impairments was driven by increased defaults, particularly in the commercial business banking and SME sectors. The group also saw higher defaults in personal and home loan products, leading to an increase in the credit loss ratio to 1.08%, compared to 0.58% in FY23,” he noted.
FNB’s non-performing loans (NPLs) reached N$2.39 billion, translating to an NPL ratio of 6.1%, which is in line with the industry average.
Non-interest revenue (NIR) saw a solid increase of 10.6% y/y to N$2.44 billion, supported by a 12.0% y/y rise in transaction volumes.
Bank charges, the largest contributor to NIR, grew by 7.2% y/y, while dividends received also saw a notable increase of N$46.8 million during the year.
FNB’s deposits increased by 4.5% y/y to N$44.67 billion, although they contracted slightly since the first half of FY24.
“The growth in deposits was driven by a 17.9% y/y increase in current accounts, while fixed and noticed deposits declined by 11.9%. FNB maintained a strong capital adequacy ratio of 17.6%, reflecting its financial stability,” said the report.
IJG noted that operating expenses grew by 11.1% y/y to N$2.65 billion, outpacing inflationary pressures.
“This was mainly due to continued investment in technology and digital solutions, with IT expenses increasing by 17.9% y/y. Staff costs also rose by 10.4%, driven by an average salary increase of 6.2%,” he noted.
