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FNB banks 11% more profits as clients up business

Cape Town - FNB’s profits in South Africa increased by 11% for the year to 30 June 2016, which can largely be attributed to the gains made in the premium and business banking sectors. 

One of South Africa’s four big banks and a division of FirstRand [JSE:FSR], FNB managed to grow business significantly among its existing client base – 90% of all personal loans and more than 70% of credit card limit increases came from existing clients. 

“By lending to existing transactional customers risks are minimised,” says Jacques Celliers, CEO of FNB. 

In the customer segment, profits were down year on year, which was a reflection of the pressure in South Africa’s general economy. 

“However, these issues masked some stellar performances in the consumers transactional business,” Celliers said, “where revenue losses due to lower interchange rates were offset by gains in transactional revenue and overall profits grew by 8% year-on-year.”

FirstRand’s annual results, which were also announced on Thursday, reflected an increase in net income of 4.2%. This was the slowest pace since 2009, which could be attributed to South Africa’s “fragile economy”, the company said in a statement.

FNB, which represents FirstRand’s activities in the retail and commercial segments, managed to expand its footprint in its mature businesses in Namibia, Swaziland and Botswana and established new business activities in other African countries, such as Ghana, Tanzania, Zambia, Mozambique and Lesotho, as well as in India. 

In the past financial year, the retail bank saw a strong surge in the take up of cellphone, app and online banking services.

READ: FNB smartphones ‘target brand-conscious customers’

FNB expects to see continued low economic activity amid the recent hikes in interest rates, which is likely to put further pressure on the consumer and add to the current upward trend in non-performing loans and impairment charges. 

“Bad debts and cost management will be key focus areas in the year ahead. We will persist with our strategy to lend predominantly to our existing customer-base to enable improved risk management,” Celliers added. 

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