By Gugu Lourie
First National Bank (FNB) on Tuesday reported a 17% rise in pre-tax profit to R8.5bn in the six months to end-December 2014, boosted by strong growth in both non-interest revenue (NIR) and net interest income (NII) and a decrease in local bad debts, particularly in residential mortgages and personal loans.
The bank said NIR rose 10% year-on-year with continued strong growth of 12% in overall transactional volumes with electronic transactional volumes up 14%.
It added that its customers continue to migrate to electronic channels with ADT deposits increasing 11%, whilst branch-based deposits decreased 18%.
“The success of FNB’s electronic migration strategy is also reflected in exceptionally strong growth in online transactions (up 15%), banking app (up 67%) and mobile (up 27%). FNB’s strategy to drive card as a transactional product also resulted in 17% growth in turnover, underpinned by good growth in new active credit card accounts of 8%,” the banking group said on Tuesday.
FNB represents FirstRand’s activities in the retail and commercial segments in South Africa and the broader African continent. It is growing its franchise strongly in both existing and new markets on the back of innovative products and delivery channels, particularly focusing on electronic and digital platforms.
FNB’s African subsidiaries performed well, growing pre-tax profits 25%. The company said the Namibia and Swaziland operations in particular generated significantly higher profits on the back of balance sheet growth, improved margins and increased transactional volumes. Zambia, Mozambique and Tanzania continued to invest in footprint and product rollout.
FNB said it produced a return on equity of 40.7%, which remains well above hurdle rates, despite ongoing investment in platforms and new territories.
