FNB interim profit increases by 15%
MBABANE – The FNB Eswatini’s half-year results show a profit before tax increasing by 15 per cent to E174.9 million when compared to the E152.6 million recorded in 2022.
According to the bank’s abridged interim financial results and interim dividend declaration for the six months ended December 2023, the above profits indicated, a 20.3 per cent return on equity (2022: 18.6 per cent).
This continues FNB Eswatini’s track record of delivering robust shareholder returns and strong earnings. The bank reported that the 14 per cent increase in its loan book to E3.9 billion (2022: E3.4 billion) helped lift net interest income contribution by 9 per cent, compared to the December 2022 half-year results.
Increased
It was reported that customer acquisition and increased transactional volumes are a major contributor to earnings growth strong effort has been maintained in acquiring new customers, leading to an increase of 13 per cent in the bank’s active customer base compared to the same half-year period in December 2022.
The bank’s customer base continued to increase usage of the bank’s digital platforms, and the combined growth in active customer numbers and transaction volumes is reflected in the 17 per cent increase in non-Interest Revenue recorded in December 2023.
This was reportedly a significant improvement considering that price adjustments during the reporting period were well within reported inflation. The bank says it will continue to identify measures to improve affordability as digital migration continues.
Advances
It said quality of lending would remain a priority despite some indicators of strain in consumer capacity to borrow, impairments of loans and advances have been managed within acceptable levels, with E12.3 million charged against income for the half-year, compared to a similar number in the previous reporting period (2022: 12.4 million).
The bank further reported that credit loss ratios have improved to 0.36 per cent (2022: 0.44 per cent), reflecting a focus on the quality of credit extended, and the increased use of artificial intelligence tools in assisting with the management of high volume credit applications and decisions. The bank has also been deliberate in helping customers who have reported strain by finding ways to improve their affordability.
Improve
Furthermore, the bank’s infrastructure investment has continued to help improve customer and employee experience significant investment has been made in modernising experience centres for both customers and employees.
This was reflected in the completion of the new head office at Ezulwini in the first quarter of this financial year and the construction of a branch at the Matsapha Lifestyle Centre, which was expected to be completed in the third quarter.
Furthermore, the bank plans to establish a presence in growing towns like Buhleni in Hhohho. These infrastructure projects will be followed by deliberate efforts to increase self-service opportunities for FNB customers who still use branch services, centralisation of some functions that customers traditionally visited branch services for, through leveraging technology and finding more efficient ways to manage the continued high use of cash in some customer sub-segments.
Pressure
While the cost to income ratio has improved to 58.3 per cent (2022: 59.1 per cent), there will be pressure going forward as these major projects are completed.
The bank will continue to find means to extract the required efficiencies from the technology and infrastructure investment to lower operational costs.
Listing of FNB Eswatini on the Eswatini Stock Exchange and Local Participation in Shareholding on December 5, 2023, FNB Eswatini successfully listed on the Eswatini Stock Exchange (ESE), with a 20 per cent in shareholding sold to local institutional investors who represent a broad base of working class and pensioned emaSwati.
This development not only gave local investors access to what was now the largest listing on the ESE by market capitalisation, it also marked a significant step for the bank to cement its identity as a strong contributor to the local economy and demonstrates commitment to shared prosperity values.