Africa-Press – Namibia. STANDARD Bank Namibia Holdings has made a profit of N$371 million for the 2021 financial year, and shareholders’ cut is 15 cents per share.
The final dividend will bring the full-year dividend to 31 cents, a few cents less than the 35 cents declared and paid for 2020. The banking services-dominated company released the financial statements for the year ended 31 December 2021 last week, which chief executive officer (CEO) Mercia Geises said was a year of resilience.
Over the past five years, Standard Bank Namibia has not profited below N$400 million, but the year was a rather unfortunate one, said Geises, blaming Covid-19 and other global occurrences. In 2016, profit was at N$540 million.
Geises started her CEO role in May last year, and said despite 2021 being a challenging year with profit after tax continuing to show a decline, she was pleased that the company was able to hold to a moderate level and emerge from a difficult year in sound financial health with strong capital and liquidity positions.
Capital adequacy at the end of 2021 was at 15%, way above the 10% minimum regulatory requirement, with a N$30 billion funding base. Most of that funding came from customers, at N$26 billion. Capital and reserves are at N$4,3 billion.
The financials show that net interest income increased by 5,8% from N$1,1 billion to N$1,2 billion due to a focused approach on growing loans and advances, and improvement of the net interest margin, which increased from 3,7% to 3,9%.
By changing the composition of the deposit and current accounts with customers through repricing of term funding and interest rate reductions in the market, the interest expense was reduced by 26,7% year on year.
Interest income only reduced by 9,2%, resulting in the increase in net interest income of 5,8%. Non-interest revenue increased by 1,4% from N$1,1 billion to N$1,2 billion, with net fee and commission revenue increasing by 6%, while trading revenue increased by 14,4%.
This is mainly attributable to the increase in economic activity we saw in the latter part of 2021. “The NIR growth was impacted by other gains and losses, originating from investments in unit trusts, which fell by 36,3% because of the reduced interest rate environment,” said the company in the commentary statement.
Non-interest income is some 97% of interest income. The 13,7% increase in impairments year on year is driven firstly by the decline in the valuation of residential and commercial properties.
“Secondly, the prevailing circumstances delayed the effectiveness of our non-performing loans’ (NPL) recovery strategy, but we have taken clear actions towards the end of 2021 to ensure a reduction in our NPL and credit-loss ratios (CLRs) in 2022,” said the company.
The bank’s operating expenses increased by 5,9%. Adjusting for the voluntary separation package that was taken up by qualifying staff and staff costs would have only increased by 1,9%.
Other operating expenses increased by 7,1% – mainly due to the implementation of the South African group’s change in operating model. Service level agreements (SLA) have been formalised between Standard Bank South Africa and all subsidiaries within the Standard Bank Group for intra-group service management.
“Our gross loans and advances to customers had a growth of 1,9%, outpacing private sector credit extension growth of 1% in 2021. The strongest growth was recorded in vehicle and asset finance at 13,5%.
“Deposits by customers increased by 10,6% from N$24,2 billion to N$26,8 billion in 2021. The strongest growth was recorded in term deposits increasing by 45,1%, followed by current accounts growing by 24,9% year on year.”
Standard Bank Namibia Limited raised N$1,5 billion of funding in the debt capital markets in 2021, for refinancing of N$1,3 billion worth of maturing bonds and to support general business growth.
“Our improved liquidity year on year gives us a strong footing for substantial growth in 2022. The reduction in return on equity from 10,2% to 8,7% is driven by reduced profit after tax for 2021,” said the board.
Looking ahead, Geises and her team have set some bold ambitions. The strategy is to return revenue growth of between 5% and 9%, “reducing our cost-to-income ratio to below 60%, achieving a credit-loss ratio of 70 basis points (bps) to 100bps through-the-cycle and return of equity of between 15% and 18% by 2025,” she said.
The bank had N$578 million sitting in treasury bills and N$17,5 million in government, municipality and utility bonds. These are over N$100 million more than the N$417 millon at the end of December 2020. The share price on Friday closed at N$5,40 – still below the initial public offer price.
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