FNB CEO Lytania Johnson is bullish on the lender’s growth prospects, with R1-trillion in customer deposits, almost 10-million retail customers and a significant share of the lucrative private banking segment.
Those attributes helped the bank report a 12% increase in normalised earnings for the year ended June to R26.4bn, with an impressive 40% return on equity.
The lender, which traces its roots to the founding of the Eastern Province Bank in Grahamstown in 1838, is an important cog in financial services group FirstRand’s portfolio, accounting for 59% of earnings in the year under review.
Johnson, who took the reins at FNB in March, said the company was well placed to defend its market position in key segments such as business and commercial lending and the highly competitive retail banking sector.
She told Business Day the company will continue innovating to stay ahead of the pack in an industry that has attracted the attention of Discovery, Old Mutual, Sanlam and Pepkor.
“We will remain anchored on the fact that we are driving a participation ecosystem. What is important for us is to deliver solutions that allow our customers to grow with us and provide solutions that facilitate participation beyond banking,” Johnson said.
“In FNB Connect, for example, we processed R26bn worth of transactions in the past financial year. We have seen good growth in terms of value-added services. Our focus on investments and insurance is important in terms of the interactions we are seeing from our customers.
“Digital inclusion at scale for us remains critical. This is where a lot of our innovation unlocks growth. This will continue being a key anchor for us.”
FNB ended the year under review with almost 9-million retail clients. Of those, nearly 1.9-million are in the private banking category, which means they have an income of more than R750,000 a year. Private banking is where banks look to win more market share, because these clients hold multiple products.
The bank reported a slight decline in customers in the personal segment, which it attributed to many customers migrating to private banking, which is core to FNB’s strategy of ensuring that offerings are appropriate throughout the lifecycle of each client.
The bank’s digital offering was a standout performer — digitally active customers increased to 8.16-million, and FNB app transaction volumes increased by 10% to 782-million. Activated virtual cards increased 7% to 6.3-million, while transaction values increased 47% to R101bn, supporting secure e-commerce activity and reducing fraud-related outcomes.
The lender has a big exposure to the informal economy, which it describes as the “community economy”.
Johnson said there is a lack of appreciation for this segment of the economy. “Our advances for small and medium business customers in the community economy, those with R5m annual turnover, experienced 31% growth.”
The community economy revenues increased 14% to R4.2bn, while deposits and advances grew by 8% and 12%, respectively. FNB has more than 250,000 active business customers in this segment, which Capitec is eyeing for further growth. “Furthermore, FNB continues to strengthen its position in community-based savings through the Stokvel value proposition, with deposits growing 31% to R5.7 billion.”
Business Day
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