Staff Writer

FirstRand Namibia released its financial results for the year ending 30 June 2020 where its profit before tax decreased by 23.7 percent to N$1.21 billion compared to N$1.58 billion recorded prior year.

“FirstRand Namibia entered this crisis in a position of strength in terms of capital, liquidity, technology and, importantly, talent. Considering the repo rate and prime rate reduction during the reporting period of 275bps, net interest income remained flat, N$2 013.4 million (2019: N$2 012.2 million). Interest expense decreased by 0.4 percent while interest income decreased by 0.2 percent,” FirstRand Namibia Chief Financial Officer Oscar Capelao said.

FirstRand’s non-interest revenue grew 4.7 percent, led by fee and commission income growth of 6.2 percent driven by strong electronic transaction volumes and ongoing customer acquisition.

“Volumes growth on our self-service platforms increased by 14 percent and the traditional in branch volumes are down 9 percent. Net fee and commission income represent 85.4 percent (2019: 87.9 percent) of group operational NIR.”

The group’s operating costs (normalised) increased by 2.6 percent to N$2,1 billion from N$2,069 billion prior year.

“Staff costs increased by 5.5 percent. Staff cost growth is influenced by the above inflationary wage increase settlement with the union for non-managerial staff. Leave days utilisation in the second half of the financial year was lower given the lockdown restricting movement in the country, contributing to the overall increase in staff cost.”

Regarding the impact of COVID-19 on the group’s earnings, Capelao said, “comparing the earnings run rate to pre-March 2020 lockdown period to post, our estimate of earnings lost approximate N$465 million for the current financial year, being decreased NII N$97 million, NIR N$108 million, higher impairments of N$252 million and PPE expenditure N$3.3 million and HOPE Fund CSR initiative N$3.8 million.”

“The group remained well capitalised with levels above the minimum regulatory requirements. Capital adequacy ratio for the group was 18,2 percent and CET 1 capital 15,9 percent. As we deal with the spiraling effects of this pandemic, we continue to focus on what we as a group can do to remain strong, resilient and well-positioned to support our employees, clients, customers and communities across Namibia.”