The largest commercial bank in the country appears poised to experience a substantial boost in profits, as indicated by a cautious communication from the Botswana Stock Exchange (BSE), where the bank is listed.
The bank has revealed that its profit before tax (PBT) for the fiscal year ending in June 2023 is projected to surpass the previous year’s earnings by a notable margin of 15 to 20 percent. This growth trajectory is expected to elevate the new profit figures to as high as P1.4 billion, which would stand as the bank’s most substantial earnings achievement to date.
During the initial six months ending on December 31, 2022, FNBB reported an after-tax profit of P536 million, marking a significant rise from the P450 million recorded during the same period in 2021. The bank’s loan portfolio increased from P14.2 billion to P15.9 billion, while customer deposits also expanded from P20.4 billion to P21.6 billion.
The robust 19 percent growth in after-tax profit can be attributed to a notable 33 percent surge in interest income, which escalated from P696 million to P925 million. This enhancement was propelled by the decision of the Bank of Botswana to raise the monetary policy rate by 1.51 percent, leading to increased loan costs. Capitalizing on the higher interest rates, FNBB also capitalized on the optimization of their investment securities by augmenting holdings in treasury bills and bonds. Notably, the Botswana government introduced a program in 2020, securing P30 billion through treasury bills and bonds from the market.
Although interest expenses registered a substantial 81 percent surge, elevating from P124.6 million to P226 million, the bank’s overall income was supplemented by non-interest revenue. This category surged from P718.6 million to P757.2 million, primarily driven by strong performances in foreign exchange activities, service-related fees, and other charges. The bank experienced notable growth in eWallet volumes, a popular means of transferring money to non-FNB account holders. Bolstered by these soaring profits, FNBB declared an interim dividend of 12 thebe to its shareholders. In terms of its financial strength, the bank, with total assets amounting to P28 billion, held P6.5 billion in cash reserves.
