After a turbulent pandemic year 2020 characterized by record impairment stocks, First National Bank Zambia’s balance sheet repositioning has paid off with a first quarter after tax earnings sprint to K96.3 million (27x higher than a year ago).
One line that evidences the current profitability status quo is the credit provisioning line in the first quarter of the year narrowing significantly to K20.8 million from K446.8 million (YTD) at year end of 2020. The bank’s elevated impairment charges in the initial COVID pandemic year demonstrated commitment to accounting for economic related risks on its balance sheet, a strategy which is yielding initial fruits in 2021.
Cost to income ratio has shown a cost containment trajectory at 55.0% from 63.0% a year ago same period as non interest expenses ebbed 23.0% while total headline earnings grew by 95.0% supported by growth in fees and foreign exchange trading and lengthened duration.
The bank well known for its large retail brand has also had the most changes to its executive suite over the last year with a fully indigenous executive committee compliment led by a local Chief Executive Officer – Bydon Longwe in 2020. The banks first quarter performance could be genesis of a solid trajectory, a testament of local based executive committee team then marking the apocalypse of a loss making streak weighed by non quality credit exposures historically.
As mirrored by various disruptive interventions its parent in South Africa is rolling out, it is suspected that FNB has chat bot and artificial intelligence (AI) driven products under its sleeves for launch to positively disrupt the market this year. Its Apps and payment platforms remain the markets most preferred for user friendliness, convenience and client centric design. FNB has nonetheless successfully penetrated the retail space, no wonder the call it’s a ‘spaza-shop’ bank, for its understanding of the needs and wants of the personal and small to medium sized market niche.
The Kwacha Arbitrageur