FNB upbeat investments on data to bear fruits
Despite increased cost on First National Bank Botswana’s operations last year due to data revamping journey, the bank is optimistic that positives will emerge from the digital overhaul expenses.
According to the bank’s latest unaudited condensed consolidated financial statements and dividend announcement for the six months ended 31 December 2023, the deployment of appropriate technology, and benefits from the associated efforts will increasingly consolidate into the remainder of the financial year and well beyond. “As such, customer and employee experience is expected to be enhanced. This will come at increased costs year- on- year, but the ratio of overall costs to income will be maintained within the levels predetermined by management, with guidance from the board,” said FNBB Chief Executive Officer, Steven Bogatsu.
The financial results have indicated that total expenses grew 16 percent, driven mainly by a 15 percent growth in employee costs as the bank continues to revamp its employee value proposition. “Further cost increases were influenced by product and channel refreshes that enhances customer experience as well as technology related expenditure that enhances efficiencies within the operating environment of the bank.” Bogatsu says despite the pressure on costs, the cost to income ratio has been maintained at 47.6 percent. He said FNBB’s focus during the remainder of the financial year and beyond is to continuously enhance customer experience through product refresh and channel optimisation, with an increased shift towards self- service secure digital channels. “The people agenda continues to remain at the centre of the bank’s operations, with work afoot to transition into a high performance culture. A blueprint has been drawn up in this regard, and focus during the remainder of the financial year will be towards implementation,” said Bogatsu.
However, under the six months, FNBB recorded profit before tax for the half year of P879 million, reflecting a 28 percent growth year- on year. On the other hand, total income grew 22 percent year- on- year, outpacing the 16 percent growth in expenses over the same period. “At top line level, gross interest income grew 26 percent, driven by residual impact of rate hikes at the latter part of the last financial year, as well as an overall 12 percent growth in customer advances. An additional 24 percent growth in funds deployed into investment securities also contributed to the overall growth in gross interest income, and this was on the back of increased deposit inflows on current, call and savings accounts.” Bogatsu further highlighted that the growth in interest expense over the period was contained to 16 percent mainly through a shift in deposit mix. He also indicated that as a result, overall net interest income before impairment charges grew 30 percent year- on- year.
Looking at factors outside its operations expected to spur the bank’s operation, FNBB pins hope on mining as Jwaneng and Karowe mines expected to transition from open cast to underground mining, extending the life of both mines, in anticipation of demand for diamonds improving from second half of 2024 onwards.
In addition, the bank says the potential for growth to exceed expectations lies in the successful implementation of projects, and initiatives, under the Transitional National Development Plan, and the impending National Development Plan 12. 8 “These include the continued construction of key infrastructure - road, ICT, water, and electricity across the country, which, if completed timeously, would improve the general operating environment in Botswana.”
Bogatsu is also optimistic that with a moderate growth of advanced economies and an expected inflationary review, the Botswana economy will continue its expansion and diversification. However, Bogatsu’s concern remains the RussiaUkraine war and the Middle East - Gaza conflict for the bank’s operations.