First Rand Namibia has recorded results for the half year ended 31 December 2021 that exceeded analysts’ expectations.
In the six months period, the financial institution registered a N$619.6 million profit, which was a 9.7% increase from the previous period.
First Rand’s headline earnings increased by 11% y/y to 236.3 cps, while net interest income for the period increased by 15.8% y/y or N$143.3 million to N$1.05 billion.
Interest and similar income declined 1.4% y/y to N$1.53 billion, and interest earned on advances grew by 2.3%, attributable to demand for home loans, instalment sales and term loans.
Non-interest revenue fell by 3.9% or N$40.5 million to N$998.4 million for the period. Total assets contracted by 3.1% y/y to N$43.4 billion, driven mainly by a 15.9% y/y decline in investment securities.
Gross advances posted a marginal contraction of 0.6% y/y to N$32.5 billion, attributed to muted demand across most portfolios due to lower credit demand across the economy.
In the period under review, deposits declined by 3.5% y/y or N$1.28 billion to N$35.2 billion, which drove some of the decline in interest expense.
Operating expenses rose by 4.7% y/y to N$1.06 billion for the period, roughly in line with inflation of 4.5% over the same period, with staff costs contained at N$591 million.
Analyst views
IJG Securities
“Overall, FirstRand’s results are robust and were in line with our expectations. We continue to believe that the group will be well-positioned to take advantage of the expected rise in interest rates during the year.”
Simonis Storm
“We think FNB remains a cornerstone bank within the Namibian market, not always as exciting, but continually delivering. We are pleasantly surprised with the larger than expected dividend, but also cognizant of the larger than expected payout rate 65.1% (1H21: 44.2%, 1H20: 44.0%). Increasing the payout rate / reducing the retention rate aids the return on equity (RoE) ratio, reported as 21.9% (1H21: 21.5%), to which management incentives are linked.”
