FNB Botswana makes a loss attributable to COVID-19

The First National Bank Botswana yesterday presented it’s unaudited condensed consolidated financial results and dividends announcement of the six (6) months ended 31 December 2020. Even though it is one of the best banks and has a good management, FNBB was not spared by the negative effects brought about by Corona Virus Disease (COVID-19).

According to the report, FNB Botswana recorded a loss of twenty-three percent (23%) for both profit before tax and profit after tax, this was “due to pressure on top line revenue and increased credit provisioning to adequately provide for the effects of COVID-19.”

“The overwhelming impact on the December 2020 results was the difficult trading environment created by COVID-19, which the banking industry as a whole continues to navigate responsibly. The pandemic has presented itself as a real and severe economic test, and FNBB has shown that its income streams are resilient while a key focus has been on strengthening the balance sheet.” the report revealed.

The 23% percent profit decline was due to among other factors; an eight percent (8%) decrease in interest income, decrease in Non-interest revenue (NIR) by four percent (4%), and a sixteen percent (16%) increase in impairment charge, the charge stood at one hundred and ninety-nine million pula (P199 million) which is almost two hundred million of pulas. The underlying factor for this charge is due to “an increase in stage 1 and 2 impairments in the tourism and transport industries.”

In accounting, an impairment charge describes a drastic reduction in the recoverable value of a fixed asset. Impairment can occur due to a change in legal or economic circumstances, or as the result of a casualty loss from unforeseen hazards. In this instance, FNBB’s impairment charge is attributable to COVID-19 which caused a in economic circumstances.

However, there were some benefits amid the pandemic as the bank’s costs reduced by six percent (6%). This 6% cost reduction was attributable to; three percent (3%) decrease in discretionary employee remuneration, and eight percent (8%) decrease in other expenses like; foreign expenses, entertainment and travel.

This decrease in net profit meant that the shareholders will get a smaller share of dividends. This year the FNBB shareholders will get six thebe (6 thebe) per share, this is against the preceding year’s seven thebe (7thebe) per share. The dividends will be paid around the 30th March this year.