FNB financial results impressive-IJG

FNB delivered another set of impressive results bolstered by the endowment effect and robust noninterest revenue growth, resulting in the group’s return on equity (ROE) improving to the highest level since 2016, IJG Securities said.Profit after tax rose by 36.4% year-on-year to N$845.2 million, while headline earnings rose by 20.9% year-on-year to 318.2cps. An interim ordinary dividend of 209.70cps (1H22: 153cps) as well as a special dividend of 186.85cps was declared for the period. ROE improved materially from 21.8% in 1H22 to 27.8% in 1H23, while ROA came in at 3.4%.Profit growth was mainly driven by an increase in net interest income of N$277.3 million or 26.4% year-on-year to N$1.33 billion, aided by the endowment effect following 300bps worth of rate hikes by the central bank. Interest and similar income increased by 49.2% to N$2.28 billion, emanating from growth in interest earned on advances, which grew by 33.4% year-on-year or N$425.0 million and growth in interest earned on cash and cash equivalents of 91.4.4% or N$264.6 million. Interest expense and similar charges grew by 99.6% or N$475.1 million to N$952.0 million, IJG said.The group reported non-interest revenue growth of 12.2% year-on-year to N$1.12 billion in 1H23, following moderate growth of 1.4% in FY22. Card commissions increased by 23.2% year-on-year to N$165.9 million and bank charges climbed by 14.2% year-on-year to N$848.1 million. The fee and commission income growth was on the back of a 13% increase in transaction volumes.Nearly all deposit account categories recorded growth on a year-on-year basis, resulting in total deposits growing by 11.4% year-on-year to N$39.2 billion. Call deposit accounts growth of N$2.17 billion or 26.4% year-on-year was responsible for more than half of the N$4.0 billion increase in deposits.Current accounts grew by 7.0% year-on-year to N$13.0 billion, IJG added.Operating costs climbed by 7.4% year-on-year to N$1.14 billion, slightly ahead of Namibian annual CPI growth of 6.9% over the same period. Staff costs, which make up 56.5% of total operating expenses, grew by 9.0% year-on-year to N$644.3 million. Management ascribed the increase to salary increases of 5.8% and variable remuneration growth of 28% due to improved performance. As revenue growth outpaced expenses growth, the company’s cost-to-income ratio improved from 51.0% in 1H22 to 46.0% 1H23.“Using a panel of standard valuation techniques, a cost of equity of 16.9% and a long-term sustainable return on equity of 20.0%, we derive a target price of N$c3729. Coupled with an expected final dividend of 422cps, we derive a potential total return of 23.7%. Based on the discount, we view the current share price as undervalued and upgrade our recommendation on FNB to BUY,” IJG said.

FNB financial results impressive-IJG

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Namibian Sun 2025-04-07

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FNB financial results impressive-IJG

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Namibian Sun 2025-04-07

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