Jacques Celliers, CEO of FNB.
Financial Highlights:
• Overall profits up 11%
• Profit before tax grew 12% in the domestic franchise
• Customer numbers above 7.8 million
• Digital and product migration strategies continue to progress
• Switching, upsell and cross-sell strategies continue to be effective
• Digital platform evolution sees aggressive growth in usage, with APP volumes surpassing online in key segments.
• NIR up 11% and bad debts were well contained
Profits from FNB's Retail business surged 21%, while the bank’s Commercial business units produced profit growth of 13%. The results were robust given modest advances growth.
The bank’s Retail businesses experienced excellent contributions from its client franchises; credit card, residential mortgages and the transaction franchise all showing strong double digit growth. Credit card earnings were buoyed by a 20% increase in advances in the upper end of Retail (Premium) whilst bad debts remain well-contained across the book.
Performance in residential mortgages was a story of improved margins, excellent collections performance and cost-containment. The core transactional business which services Consumer and Premium segments both produced strong results, benefitting from transaction volume and active customer base growth.
FNB’s Commercial business demonstrated resilience with profitability up 13%. Performance was underpinned by excellent contribution from the transactional business segment in Commercial, where growth in the active base lifted profits by 12%. Key areas such as Agriculture and Forex delivered strong growth, and all other business units surpassed last year’s performance
Says Jacques Celliers, FNB CEO “The excellent results reflect the strong momentum we’ve created over the last few years. Our cross-sell and upsell strategy was supported by very strong new-to-bank sales performance across all key channels.”
“The technology and data driven platform evolution amongst others has seen significant adoption by our customers, particularly the FNB App that experienced continued growth and increased customer usage. We are particularly pleased about the number of visitors who are experimenting with new functionality on the platform,” added Mr Celliers.
“The 11% growth in profitability shows an all-round strong team performance. Deposit growth and strong contribution from our market leading transactional franchise underpinned an excellent domestic performance. The contribution from our African subsidiaries improved from the prior period,” continued Mr Celliers.
FNB continues to invest in digital platforms and its digital migration strategy, which has been very effective in the consumer businesses, is benefitting Commercial with APP penetration and usage continuing to grow aggressively.
“Our client-centric approach is delivering results and we have been recognized for our market leading position in key Business and Premium banking areas. The focus on customer needs continues to see improvement in client product take-up, which talks to our main bank strategy and our commitment to offer a full service offering to clients,” says Mr Celliers.
The bank’s cash migration strategy, which continues to effectively move activity from branch to ADT and cash centre to SmartBox technology, has allowed the bank to optimise branch sizes and rationalize the expensive telling infrastructure while leveraging branch capacity towards value adding sales activities.
The improvements are enabled by:
• Declining branch deposit volumes and values
• Improving ADT (Automated Deposit Terminals) utilization
• Significant improvements in sales productivity
• Optimising branch cost base
The digital strategy has seen sharp increases in APP registration and usage showing:
• APP usage up 66%
• Financial transaction volumes up 10%
• Active clients on Connect now over 600 000
Insurance activities have also seen excellent growth with the policy numbers now well over 3 million. Key policy information is now also available via the APP, with simple Life Assurance being executable across digital platforms.
FNB’s investment pillar is being rejuvenated with product and service offerings being enhanced. The bank is focussing on goal-based advice. Significant investment in systems (Robo Advice) and client-facing channels is expected to contribute substantially to revenues in the future.
“We are grateful to our clients for their loyalty and the enthusiasm with which customers use our new services and digital banking channels. I am humbled by the effort of FNB staff who have remained deeply committed and innovative in a challenging operating environment,” says Mr Celliers.
“The FNB strategy of cross-sell and upsell built around sweet spot clients continues, as does the ambition to enhance earnings through building our FNB Insurance and Investment offerings.
We are cognisant of the importance of platform-based thinking; there are a string of exciting developments which are scheduled for this year which will continue to differentiate our digital offering,” concludes Mr Celliers.
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