How FNBB profits dwarf other banks

Kitso Dickson

In its full year (12 months) reporting period ending 30 June 2019, banking titan First National Bank Botswana (FNBB) generated more than what the other three listed banks made combined in their 12 months reporting periods.  In fact, Barclays Bank, BancABC and Standard Chartered’s post tax profits total about P100 million less of what FNBB generated in its last 12 months period. The three banks made P606.57 million as profit after tax combined while FNBB generated P732.56 million. However it is critical to note that Barclays, BancABC and Stanchart’s beginning of year runs from January 1st to December 31 while FNBB’s stretches from 1 July to 30 June.    

FNBB which is arguably the most innovative bank has been posting a good set of results and has built momentum to record the highest profits under its Chief Executive Officer Steven Bogatsu. The last time the bank hovered around P700 million mark was between 2013 and 2014 where it posted P700 million and P719 million respectively. This was before the banking industry experienced challenging times marked by liquidity issues and low interest rates which led to decline of profit after tax to P591 million in 2015. By 2016, post-tax profits took a further knock to P503.8 million in an environment of limited lending and investment opportunities. In 2017 banking giant dropped slightly to P500.5 million. The signs that the bank was reversing the lost margins began in 2018 when it registered P648 million profit. In the current reporting period, profits grew by an estimate of 13 percent to break record set in 2014. 

In the 12 months ending 30 June 2019, FNBB generated 30 times more than what Standard Chartered Bank last made in its full year period. Stanchart is the least profitable bank on the Botswana Stock Exchange (BSE). In the 12 months ending 31 December 2018, Stanchart generated P23 million post tax profit. FNBB’s post tax profits for its 12 months are more than P700 million of what Stanchart reported. It is however important to note that Stanchart has experienced subdued performance since its last bad record in the full year 2017. The bank was P189 million in the negative, for its full year ending 31 December 2017. This was influenced by a single big loan impairment in the Corporate and Institutional Banking (CIB) segment that caused the greatest attrition to performance. Stanchart’s last best record was in the 12 month ending December 2011 when it hit P281 million as profit after tax, nearly 3 times what FNBB makes currently.  Even in 2011, FNBB generated almost twice what Stanchart made. 

On the Botswana Stock Exchange, BancABC is the third most profitable bank. Before Stanchart’s poor performance, BancABC was Botswana’s 4th most profitable bank. In its last full year reporting period ending 31 December 2018, the bank recorded P128.182 million as profit, about P600 million less of what FNBB made. However BancABC profits had taken a drop from the P139 million in the past corresponding year. This was attributed to the decline of the bank’s interest margins resulting in dwindling overall profits linked to purported high deposit interest rates experienced by the bank. 

Barclays Bank is the only bank which comes closer to what FNBB makes. The bank in its last full year reporting period ending 31 December reached P454.54 million after a jump of 5 percent from the previous period. Barclays is P277 million shy of FNBB’s record.