Banking group FNB says it has expanded its customer base over the last year, now counting 8.25 million active retail customers – almost a quarter of which are high-income.

Reporting its financials for the full year ending June 2023, the group recorded a 12% jump in normalised earnings to R21.9 billion for the year, with profit before tax up 10% to R31.4 billion.

Return on equity (ROE) improved to 41.7% from 40.6% in 2022, with 15% growth in net interest income.

FNB’s active customer base has grown to 11.49 million customers across all segments, of which 8.25 million are part of the retail base. This is up 5% from 7.86 million customers in FY 2022.

The group has also seen a boost in digital customers, with 6.13 million eWallet users and 6.9 million “digitally active” users.

Notably, the bank has continued to expand its private client base.

While still only comprising around a quarter of its retail customer base, the group has hit just under 2 million private clients – a 14% jump from 1.7 million private clients in 2022.

The private client segment represents customers who have an income of over R450,000 a year.

“(The) private segment growth (was) driven by both migration from the personal segment and net new customer acquisition,” FNB said.

“This reflects FNB’s strategy to provide enhanced and appropriate product propositions as customer needs change.”

The group’s financial performance wasn’t without its drawbacks, however. Reflecting the wider trend in the banking space, FNB reported an increase in credit impairments.

This reflects the broader stresses of debtors, as households struggle to pay back their loans.

FNB’s credit impairment charge increased 37% to R6 744 million (2022: R4 938 million), with the credit loss ratio increasing to 132 bps (2022: 104 bps).

This was driven by increased risks in personal loans and overdrafts, gradual increases in arrears and a general deterioration of the fiscal outlook.

However, FNB said that its analysis of affordability suggests that low-to-medium-risk customers still have the capacity for credit and a propensity to take up a broader range of products.

Growth in unsecured lending, particularly card and FNB personal loans, has gained some momentum, it said.

FNB CEO Jacques Celliers said the results were solid amid an uncertain economic environment.

FirstRand results

FNB represents the retail and commercial operations of the FirstRand Group.

For the year ending June 2023, FirstRand reported a 12% growth in headline earnings to R36.7 billion, with net asset value up 10% to R180.7 billion.

The group declared an annual ordinary dividend of 384 cents per share, an increase of 12% year-on-year.

“The 12% increase in the group’s normalised earnings was driven by good topline growth, reflecting continued momentum in new business origination in all large lending portfolios, ongoing growth from the deposit franchise and the performance of the group’s transactional franchise,” it said.

It noted that it had a year of balancing acts, given that the current operating environment in South Africa and has been characterised by high inflation and interest rates, combined with sluggish system growth and competitive behaviour.

It downplayed the credit issues with the customer base, noting that it was “in line with expectations”, largely due to the group’s orgination strategy emanating from the Covid-19 pandemic.

“The decision to tilt origination to low- and medium-risk customers has resulted in a credit loss ratio below the group’s TTC range, despite a higher interest rate and inflation cycle than initially anticipated,” it said.

“Over the past 18 months, the group has gradually lifted origination back to pre-pandemic appetite.”

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