FNBB diversifies revenues as low interest rates bite
Isaac Pinielo | Tuesday August 30, 2016 18:00
To this end, the bank stated in its financial results for the year ended June 30, 2016 that stimulation of transactional volumes has been a key priority with significant growth being recorded.
According to the FNBB chief executive officer, Steven Bogatsu, FNB Connect, a mobile service, registered a 94% growth, with online banking recording 15%, and mobile banking at 16%. Other new offerings such as Hyphen technology have also gained momentum. “Growth in the branch network volumes showed lower growth levels of only one percent, reflecting success in the bank’s strategy to encourage customers to make more use of the electronic products in favour of visiting branches, so as to pass on real savings to the customers in terms of bank charges,” said Bogatsu. He revealed that the bank grew its customer base by 5.8% in customer numbers and 8.1% growth in account numbers, together with improved cross selling of a wider product range. He added that despite the effective continuation of a moratorium on increases to bank charges, the non-interest income has increased by seven percent, due entirely to increasing the volume of transactions and the range of products on offer.
In an environment of limited lending and investment opportunities, Bogatsu said the group made a deliberate strategy of focusing on balance sheet efficiencies. “This focus resulted in reduced deposits from customers, who declined by one percent, and in changes in the deposit mix in order to manage interest expenditure and elongate funding term to address the maturity profile,” he said.
Although showing overall decline in deposits from customers, current, call and fixed deposits all grew while notice deposits and foreign currency deposits declined. Borrowings grew by 177% over the period, due to the success of a bond issue. Bogatsu indicated that the funding mix reflects the success in achieving diversification of both source and term funding, so as to mitigate future liquidity and concentration risk.The group’s total balance sheet grew by four percent, with market share of deposits declining year-on-year while the loan-to-deposit ratio increased from 75% to 84%.
Advances posted a growth of 12%, outpacing market growth of eight percent and making up 66% of the total assets. Growth emanated from the retail segment and in particular the term loans product. On the other hand, WesBank, the vehicle asset finance division of the group, also posted good growth over the period under review, according to the CEO.
Conversely, he noted that the business and RMB advances books reduced by three percent and eight percent respectively in line with general business credit trends and in the number of viable lending opportunities.