By Hilary Mare
FNB Namibia Holdings Limited recorded an annual tax contribution of N$924 million for the year ended 30 June 2017, thereby surpassing its previous annual contribution of N$882 million by N$42 million.
According to the group’s financial results presented last Friday, total taxation amounted to N$565 million, comprising of N$524 million income tax and N$41 million indirect tax (VAT and stamp duties), whilst tax collected on behalf of government amounted N$399 million (including withholdings taxes, import VAT, VAT, social security and PAYE).
During the period under review, advances grew at 9.6 percent compared, to market credit extension of 8 percent, while deposits increased by 9.7 percent.
The number of active accounts increased by 4 percent, despite the high number of retrenchments in the country, and as a result of the good growth of its core business, interest revenue increased by 15 percent, while normalised non-interest revenue grew by 7 percent.
“During the year, the Namibian economy continued to struggle, as gross domestic product numbers confirmed that the economy remained in the grip of a recession for four consecutive quarters. Being a responsible lender, we continued our prudent approach to good quality asset growth, maintaining the group’s strong capital levels, and managing liquidity needs dynamically,” said FNB Chief Financial Officer, Oscar Capelao.
“Although the group continued its investments in staff, infrastructure and risk management (with operating expenses up by 17 percent), its performance is still positively correlated to Namibia’s economic performance. The group positioned all its operating entities to make the most of the limited growth opportunities and produce another set of satisfactory results in an increasingly difficult operating environment.”
Profit for the year ended 30 June 2017 was N$1.1 billion (2016: N$1.2 billion).
Headline earnings, being adjustments for the profit on sale of properties during the period, decreased by 4.4 percent to N$1.08 billion. Earnings per share decreased to 418.9 cents (2016: 459.7 cents).
Return on average equity reduced to 25.6 percent (2016: 31 percent), return on average assets was 3 percent (2016: 3.6 percent) and the cost to income ratio increased to 48.9 percent (2016: 43.7 percent).
Normalised profit before tax, which caters for headline earnings adjustments, and the impact of the acquired subsidiaries, which did not form part of the group for the full year, increased by 3.8 percent to N$1.768 billion. The normalised return on equity (ROE) is still a very healthy 28.4 percent.
The banking group and OUTsurance are the two key operations, with the banking side dominating the contribution to earnings.
The group results include the consolidation of Pointbreak and EBank for the three months to year-end, as well as the newly launched Ashburton Investments.
Net interest income grew by 6.7 percent to N$1.7 billion (2016: N$1.6 billion).
The increase of 17 percent in the group’s operating expenses is reflected in its increased cost-to-income ratio of 48.9 percent (2016: 43.7 percent).
The cost reduction of the operating base is lagging the migration of clients to digital channels from its branches.
The consolidation of Pointbreak and EBank entities during the final quarter of the year also contributed to the increase in operating expenses.
Regulatory changes during the year, the introduction of mandatory deposits for instalment sales, and for secondary home loans, contributed to the cooling of demand for credit for home loans and vehicle finance.
Mortgage loans increased year-on-year by 6.5 percent to N$12.6 billion and constitute 44.5 percent (2016: 45 percent) of FNB’s advances book, while the granting of instalment credit slightly reduced by 0.1 percent, as 2016/17 reported the worst industry vehicle sales figures since 2012.
Growth in the RMB and FNB business advances was 14 percent, compared to corporate private sector credit extension (PSCE) of 7.5 percent for June 2017.
The total dividend declared for the year is 204 cents per ordinary share.
“FNB Namibia is a significant stakeholder in the financial services sector and the effect of the downturn in the economy directly impacted performance. The group continues to exercise discipline in allocating capital, and will not chase market share growth at the expense of returns. We believe these results demonstrate the quality of our underlying businesses and strikes the right balance between growth, prudent risk management and investment for growth,” Capelao added.
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