FNB attributes Q1 performance to efficient cost mgnt
First National Bank (FNB), one of the country’s foremost financial institutions, has attributed its performance in the first quarter of the year to efficient cost management, a practice it intends to consolidate in the months and years ahead.
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The bank its performance on growth in customer base and good credit also led to the turnaround of its fortunes adding that while industry-wide non-performing loans (NPLs) hovered around 25 per cent, the bank’s NPLs was around 11 per cent.
It said it was looking to continue this trajectory with more customers, enabling access to its financial services through the bank’s agency plus partners expansion and further making it rewarding for customers to bank with the bank.
Financial performance
The bank made a dramatic turnaround in its financial performance, posting positive results in the first quarter of the year.
From a loss position of GH¢7.8m in the first quarter of last year, the bank posted a profit of GH¢14.3 m in the same period this year, representing a 100 per cent improvement.
Total Operating Income, which is the bank’s profit after deducting operating expenses for the period in review, also went up to GH¢94.9m. This is a significant increase of 49 per cent over the previous year.
There was an improvement in all income lines. For instance, Net Investment Income (NII) rose by 10.6 per cent, fees and commission, by 16 per cent and other operating income up by 100 per cent.
Deposits also went up to GH¢3.1 billion for the period, which is 30 per cent higher than the same period last year, while total assets also shot up to GH¢4.4b, representing a 26 per cent increase.
Total equity, the value left in the bank after subtracting total liabilities from total assets, stood at GH¢365 m in quarter one of 2024, a significant improvement from the same period last year by 53 per cent.
Industry standing
Banks in the country made a remarkable comeback in 2023 after a difficult 2022, which saw 16 out of the 23 banks recording significant losses.
The 2023 financial results released by 20 out of the 23 banks showed a return to profitability of the sector, largely driven by increased income from banks’ investment in securities.
An analysis of the results indicates that the total investment securities of the 20 banks grew by almost 50 per cent from GH¢60.22 billion in 2022 to over GH¢90 billion in 2023.
This helped push total profit for the year under review to GH¢9.5 billion, up from the GH¢424.88 million recorded in 2022.
The results also show that all 20 banks recorded huge increases in total deposits and total assets.
For instance, total deposits grew from GH¢155.01 billion in 2022 to GH¢205.25 billion in 2023, with total assets also increasing from GH¢197.86 billion in 2022 to GH¢259.01 billion in 2023.
At the time of going to press, Agriculture Development Bank (ADB), Universal Merchant Bank (UMB) and National Investment Bank were yet to publish their end-of-2023 financial results.
Banks, some of which had between 30 to 50 per cent of their net funds in government securities, were hardly hit in 2022 by the Domestic Debt Exchange Programme, which saw the government swap bonds worth GH¢82 billion for 12 new ones at reduced coupon rates and longer tenors.
Although the banks were given three years to recover from the losses, it appears a majority of them have already recovered, with 16 banks recording profits in 2023.
Although four banks recorded losses, the losses recorded were an improvement of the losses that were recorded in 2022.