Consolidated unaudited
group results
for the 6 months ended 31 December 2012
www.fnbnamibia.com.na
Condensedconsolidatedst...
of 1

FNB Namibia HY2013 financial results

FNB Namibia HY2013 financial results for the period ended 31 December 2012
Published on: Mar 3, 2016
Published in: Investor Relations      
Source: www.slideshare.net


Transcripts - FNB Namibia HY2013 financial results

  • 1. Consolidated unaudited group results for the 6 months ended 31 December 2012 www.fnbnamibia.com.na Condensedconsolidatedstatement ofcomprehensiveincome Unaudited six months ended 31 December Audited yearended 30June 2012 20111 2012 N$m N$m N$m Continuingoperations Interest and similar income 807 759 1 525 Interest expense and similar charges (312) (314) (635) Netinterestincomebeforeimpairmentofadvances 495 445 890 Impairment reversal on advances 1 27 42 Netinterestincomeafterimpairmentofadvances 496 472 932 Non-interest income 432 358 740 Net insurance premium income 48 41 84 Net claims and benefits paid (25) (20) (41) Fair value adjustment to financial liabilities 3 4 Incomefromoperations 951 854 1719 Operating expenses (460) (422) (884) Netincomefromoperations 491 432 835 Share of profit from associates after tax 1 1 3 Incomebeforetax 492 433 838 Indirect tax (10) (10) (17) Profitbeforetax 482 423 821 Direct tax (162) (142) (282) Profitfortheperiodfromcontinuingoperations 320 281 539 Discontinuedoperations Profit attributable to discontinued operation 26 1 Profit after tax on sale of discontinued operation 232 Profitfortheperiod 320 307 772 Othercomprehensiveincomefortheperiod Continuingoperations (1) 5 Gain on available-for-sale financial assets (5) (1) 7 Deferred income tax relating to other comprehensive income 4 1 (2) Totalcomprehensiveincomefortheperiod 319 307 777 Profitfortheperiodattributableto: Ordinary shareholders 314 289 762 Equity holders of the parent 314 289 762 Non-controlling interests 6 18 10 Profitfortheperiod 320 307 772 Totalcomprehensiveincomefortheperiodattributableto: Ordinary shareholders 313 289 766 Equity holders of the parent 313 289 766 Non-controlling interests 6 18 11 Totalcomprehensiveincomefortheperiod 319 307 777 Earnings per share (cents) Basicanddilutedearnings per share (cents) From continued operations 121.3 106.7 204.5 From discontinued operations 5.1 89.8 121.3 111.8 294.3 1 Comparatives have been reclassified. These reclassifications are unaudited. Condensedconsolidatedstatement offinancialposition Unaudited as at 31 December Audited as at 2012 20111 30Jun 2012 N$m N$m N$m Assets Cash and cash equivalents 716 1 731 1 002 Due from banks and other financial institutions 911 1 750 1 926 Derivative financial instruments 26 21 27 Advances 15 655 13 280 14 077 Investment securities 2 342 1 948 2 144 Accounts receivable 278 45 216 Investments in associates 4 2 4 Tax asset Property and equipment 284 292 287 Intangible assets 7 22 11 Deferred tax asset 3 3 Reinsurance assets 1 1 Non-current assets and disposal group held for sale 1 459 Totalassets 20226 20551 19698 Equityandliabilities Liabilities Deposits 17 210 16 358 16 239 Due to banks and other financial institutions 72 50 48 Short trading positions 81 Derivative financial instruments 71 42 60 Creditors and accruals 145 128 230 Tax liability 35 163 152 Employee benefits 107 100 128 Deferred tax liability 24 3 19 Policyholders liabilities under insurance contracts 42 36 45 Tier two liabilities 393 268 393 Liabilities directly associated with disposal group held for sale 1 174 Totalliabilities 18099 18403 17314 Capital and reserves attributable to ordinary equity holders of parent 2 104 1 991 2 362 Non-controlling interests 23 157 22 Totalequity 2 127 2 148 2 384 Totalequityandliabilities 20226 20551 19698 1 Comparatives have been reclassified. These reclassifications are unaudited. Condensedconsolidated statementofchangesin equity Unaudited six months ended 31 December Audited year ended Unaudited six months ended 31 December Audited year ended 2012 2011 30June 2012 2012 2011 30June 2012 N$m N$m N$m N$m N$m N$m Attributable to equity holders of the parent Non-controlling interests Balanceasatbeginningoftheperiod 2362 1820 1820 22 166 166 Total comprehensive income for the period 314 289 766 6 18 11 Share option costs 2 2 4 Dividends paid (573) (106) (212) (5) (27) (27) Change in ownership interest in subsidiaries (11) (10) (128) Consolidation of share trusts (1) (3) (6) Balanceasatendoftheperiod 2104 1991 2362 23 157 22 Condensedconsolidatedstatement ofcashflows Unaudited six months ended 31 December Audited year ended June 2012 20111 2012 N$m N$m N$m Net cash generated from operations 594 1 719 559 Tax paid (290) (248) (153) Net cash flow from operating activities from continuing operations 304 1 471 406 Net cash outflow from investing activities from continuing operations (14) (60) 284 Net cash outflow from financing activities from continuing operations (576) (108) (116) Netincreaseincashandcashequivalents (286) 1303 574 Cash and cash equivalents at beginning of the period 2 1 002 428 428 Cashandcashequivalentsatendoftheperiod 716 1731 1002 1 Comparatives have been reclassified. These reclassifications are unaudited. 2 Includes mandatory reserve deposits with central bank Condensedconsolidatedsegment information Unaudited six months ended 31 December Audited year ended June 2012 2011 2012 N$m N$m N$m Incomefromoperationscontinuingoperations: FNB 892 805 1 617 OUTsurance 26 24 50 Other 3 33 25 52 951 854 1719 Profitbeforetax: FNB 441 393 771 OUTsurance 18 15 27 Other 3 23 15 23 Profitfortheperiodfromcontinuingoperations 482 423 821 Momentum 30 10 Profitfortheperiodfromcontinuinganddiscountinued operations 482 453 831 Totalassets: FNB 20 265 19 198 19 752 Momentum 1 459 OUTsurance 86 73 99 Other 3 (125) (179) (153) 20226 20551 19698 3 Other segment includes FNB Insurance Brokers, property and consolidation entries Headlineearningsreconciliation Unaudited six months ended 31 December Audited year ended June 2012 2011 2012 N$m N$m N$m Earnings attributable to equity holders of the parent 314 289 762 Headlineearningsadjustment Realised gains on available for sale financial assets (9) (9) Profit on disposal of subsidiary (232) Impairment of intangible asset 5 Headlineearnings 314 280 526 From continued operations 314 267 525 From discontinued operations 13 1 Contingentliabilitiesandcapital commitments Unaudited six months ended 31 December Audited year ended June 2012 2011 2012 N$m N$m N$m Contingent liabilities 1 420 1 073 1 350 Capital commitments: contracted for 2 10 8 not contracted for 423 408 Featuresofthegroupresults Unaudited six months ended 31 December Audited year ended June 2012 2011 2012 Financialstatistics Headline and diluted headline earnings per share (cents) 121.3 108.3 203.1 From continued operations 121.3 103.0 202.9 From discontinued operations 5.3 0.2 Ordinary dividends per share (cents) - (declared for the period) 46.0 41.0 82.0 Number of shares in issue (millions) - ordinary* 259.3 259.2 259.0 Weighted number of shares in issue (millions) - ordinary* 259.1 258.9 259.0 * after consolidation of share trusts Net asset value per share (cents) 812 768 912 Closing share price (cents) 1 667 1 356 1 466 Market capitalisation (millions) 4 461 3 629 3 923 Price earnings ratio 6.9 6.1 5.0 Price to book ratio 2.1 1.8 1.6 Selectedratios Return on average shareholders’ equity (%) 30.7 28.2 25.8 Return on average assets (%) 3.1 3.1 2.9 Cost to income ratio (%) 48.2 44.6 52.4 CapitaladequacyofFNB 2012 2011 2012 N$m N$m N$m Riskweightedassets Credit risk 12 624 10 237 11 640 Market risk 26 4 38 Operational risk 1 939 1 763 1 843 Totalriskweightedassets 14589 12004 13521 Regulatorycapital Share capital and share premium 1 143 1 143 1 143 Retained profits 636 607 895 Capital impairment: intangible assets (173) (197) (183) Totaltier1 1 606 1 553 1 855 Eligible subordinated debt 390 260 390 General risk reserve, including portfolio impairment 159 143 144 Current audited board approved profits 191 73 Totaltier2 740 476 534 Totaltier1andtier2capital 2346 2029 2389 Capitaladequacyratios Tier 1 11.0% 12.8% 13.7% Tier 2 5.1% 3.9% 4.0% Total 16.1% 16.7% 17.7% Tier 1 leverage ratio 7.9% 8.1% 9.4% Return on equity 31% Groupoverview FNB Namibia Holdings Group (the group) is moving ever closer to its goal of becoming the most valued financial services provider in Namibia. Despite the absence of two non-recurring sources of revenue in the corresponding period last year, profit from continuing operations increased by 14% in the six months ended 31 December 2012 (N$320 million against N$281 million). This enabled it to fulfil two further goals - to improve returns to shareholders and to entrench a sustainable business model. Last year’s non-recurring revenue items arose from a N$ 27 million impairment reversal and the proceeds on the group’s disposal of its shareholding in Visa Incorporated at a profit of N$9 million. Three factors were fundamental to the overall performance: year on year advances growth of 18%, non-interest revenue up 19% and operating expenses contained at a 9% increase. An interim dividend of 46 cents was declared in January 2013 against 41 cents last year. As reported last year, the group sold its 51% shareholding in Momentum Namibia to Metropolitan Life Namibia on 29 June 2012. Its financial performance is therefore more accurately reflected by considering the performance of continuing operations. Earnings per share from continuing operations increased by 14% to 121.3 cents (2011: 106.7 cents). Headline earnings per share increased by 12% to 121.3 cents (2011: 108.3 cents). In line with the group’s strategy to improve capital efficiencies, return on average equity improved to 30.7% (2011: 28.2%). The cost to income ratio is 48%, reflecting the emphasis on operational efficiency. Reviewofkeyoperatingentities FirstNationalBankofNamibiaLtd(FNB) Statement of comprehensive income Net interest income increased by 10% to N$488 million (2011: N$443 million). However, FNB’s Investment Banking Division’s loan transactions are, for accounting purposes, designated at fair value through profit and loss. Fair value income of N$26 million is shown under non-interest income rather than interest income. Therefore normalised interest income growth was 16%, in line with the 16% growth in average advances. Through the low interest cycle, margins have been well managed. In the previous year the net impairment reversal of N$27 million arose as a result of rigorous actuarial calculation based on historic data, mainly relating to the portfolio impairment. Thisreliefwasnotexpectedtorecurinthecurrentreportingperiod.Consistent and sound lending policy and prolonged low interest rates resulted in a further net release of N$1 million specific impairment in the current period. This is unlikely to be repeated. Non interest income increased by 20% to N$403 million. Excluding the N$26 million fair value income reflected under non-interest income, the growth is 13%. Banking fee and commission income grew by 18% to N$350 million, on the back of good growth in accounts and transaction volumes. The launch of E-wallet in December 2012 is part of our strategy to encourage customers to change from traditional branch banking to electronic channels. Over the past year, cell phone banking transactions, albeit from a small base, have increased by 83% and internet banking volumes are up 18%. Foreign exchange income at N$32 million was marginally down on the corresponding period last year on lower volumes and increased competition. Non interest expenditure increased by 10% to N$441 million. The higher than inflation cost escalation is due to new representation points, additional staff, the roll out of Account Opening Optimisation and E-wallet system development costs. Profit for the period increased by 12% to N$292 million (2011: N$261 million). Profit on the underlying core banking business activities increased by Advances up 18% 28%, excluding the one-off adjustments for the impairment reversal and profit on the sale of Visa in the prior period. Statement of financial position Excess liquidity in the previous period has been taken up by advances growth. Year on year advances increased by 18% to N$16 billion. Main categories of growth were: overdrafts and fair value advance 31%, WesBank 15%, term loans 15% and home loans 14%. Deposits grew by 5% to N$17 billion. The ratio of non performing loans to average gross advances continued to improve, reducing to 0.9% (2011: 1.3%). Non performing loans reduced by 19% to N$136 million (2011: N$168 million), as reflected in the chart below: FNB remains well capitalised with a total capital adequacy of 16.1% (2011: 16.7%) – well above the statutory requirement of 10%. Economic risk is backed by a strong Tier 1 capital level of 11.0% (2011: 12.8%). In assessing capital, FNB believes it is appropriate to view its capital requirements in terms of long-term growth strategy in relation to the group’s potential to generate future capital through earnings. Rigorous stress testing is performed annually and forms an integral part of the capital management process. OUTsurance The 25% increase in profit after tax for the first six months of the year is distorted by accounting provisions made in the previous year and now released as they are no longer required. Despite an 18% growth in net earned premium income, the expected start-up losses experienced on the newly launched Business OUTsurance product as well as the more normal but a higher loss ratio experienced compared to last year’s corresponding period had a negative impact. The solvency margin of 38% as at 31 December 2012 (2011: 37%) is well above the regulatory required 15% and indicates the claims-paying ability of OUTsurance. Groupoutlook The greatest identified unknown is how and when the global environment will exit the lacklustre growth stage, and therefore downside risks to global and local growth remain. Namibia, like most regional economies, will continue to experience positive growth in 2013. The construction of the Husab mining project and the Otjikoto gold mine are among the key projects due to commence in 2013. These projects hold positive knock-on effects for growth. For example, Jun 2008 Jun 2009 Jun 2010 Jun 2011 Jun 2012 N$million 16 000 14 000 12 000 10 000 8 000 6 000 4 000 2 000 0 6% 5% 4% 3% 2% 1% 0% -1% 9 036 Dec 2011 Dec 2012 10 032 11 032 12 158 13 47213 006 14 709 Gross Advances (YTD avg) Total Impairment Charge as % of Gross Advances NPL’s as % of Gross Advances GrossAdvancesvsNPL’s&Impairment Percentage-% Dividends per ordinary share of 46 cents the N$21 billion Husab project will employ between 4 000 and 6 000 people during construction, which augers well for domestic spending. Credit demand, which is a good proxy for consumer and business confidence, started accelerating during the second half of 2012 by 16% on average on an annualised basis. This has been the strongest second half performance in the credit environment since 2006. We view this as a precursor to a revival in private sector led investment over the medium term, especially in commercial property. Husab and Otjikoto gold should have a positive knock-on effect for household spending. Given these prospects, combined with several other factors - our strategy of building enduring and rewarding customer and stakeholder relationships; further capitalising on efficiencies throughout the operations; and managing increased risks confronting the financial services industry - the group is well positioned to deliver sustainable returns to all stakeholders. For and on behalf of the board CJ Hinrichsen Chairman Windhoek, 13 February 2013 Dividenddeclaration Notice is hereby given that an interim dividend (number 39) of 46 cents per ordinary share was declared on 31 January 2013 for the half year ended 31 December 2012. The last day to trade shares on a cum dividend basis will be on 1 March 2013 and the first day to trade ex dividend will be 4 March 2013. The record date will be 8 March 2013 and the payment date 27 March 2013. By order of the board Yamillah Katjirua Company Secretary Windhoek, 13 February 2013 Basisofpresentation The group prepares its consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) and the Namibian Companies Act. The principal accounting policies are consistent in all material aspects with those applied as at 30 June 2012. The adoption of new and revised Standards and Interpretations which have become applicable during the current period has not resulted in changes to the group’s accounting policies. The estimates and judgements made in applying the accounting policies are consistent with those applied and disclosed in the annual financial statements for the year ended 30 June 2012. Directors: CJ Hinrichsen# (Chairman), Adv V R Rukoro (CEO), C L R Haikali, J R Khethe*, J K Macaskill*, S H Moir*, M N Ndilula, P T Nevonga, I I Zaamwani-Kamwi * South African              #German Registered office: First National Bank Building, 209-211 Independence Avenue, P O Box 195, Windhoek, Namibia, Registration No. 88/024, ISIN Code: NA0003475176, NSX Share Code: FNB Transfer secretary: Transfer Secretaries (Pty) Ltd, 4 Robert Mugabe Avenue, P O Box 2401, Windhoek, Namibia, Registration No. 93/713 Sponsor: IJG Securities (Pty) Ltd, First Floor Heritage Square, 100 Robert Mugabe Avenue, P O Box 186, Windhoek, Namibia, Registration No. 95/505

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