FNB’s digital strategy pays dividends for customers
First National Bank (FNB) presents its annual results for the financial year ending 30 June 2020. The Bank acknowledges that the year has been very hard for many due to an economy that was already struggling before COVID-19, escalating health risks as well as financial difficulties for both consumers and businesses.
It is against this backdrop that the Bank’s pre-tax profits declined 30%, mainly driven by a significant increase in credit impairments. However, the Bank still delivered a respectable ROE of 25.8% and a resilient operating performance, with pre-provision operating profit flat year-on-year. Below are some of the key operational highlights that underpinned this resilient performance:
· Deposits up 17%
· Loans and advances up 3%
· Vertical Sales Index of 2.92 up on the prior year 2.86
· Banking App volumes up 28%
· eWallet transacting base up 39%
· Wealth and Investments accounts up 13%
· Unchanged fees helped customers save over R410m
· Lives insured under FNB Life at 6.3m
· eBucks earn value up 9% to R2.2bn
FNB Chief Executive, Jacques Celliers says, “We are grateful to all our customers for their ongoing support that is demonstrated through increased adoption of digital platforms which enabled FNB to produce a resilient performance in very difficult circumstances. Our momentum prior to lockdown was encouraging across all performance indicators and we are pleased to report accelerated adoption of our digital channels throughout the financial year. After the announcement of a national lockdown in March, we were agile enough to calibrate our operations to safely provide essential services in branches and Cashflow Relief on platform.”
“Our relief covered instalments on approximately 606 000 agreements for retail and commercial clients. Whilst most of our commercial clients had already received relief from us, as at end of August we have also approved in excess of R1.2 billion on the Government-backed COVID-19 Loan Scheme. In addition to these measures, we sought to alleviate financial pressure on retail and commercial clients by keeping our monthly account fees unchanged whilst expanding value across bank accounts. After witnessing a significant impact in customers’ income during level 5 lockdown, we are now seeing retail customer average income levels recovering to around 95% of what they were before lockdown”, adds Celliers.
FNB achieved customer growth across both its premium and commercial segments, including upward migration of customers from its consumer segment, to maintain 8.23 million customers for the financial year. In addition, the number of customers who regularly transact via eWallet showed remarkable growth (39%) to reach 3.27 million with 29% of all withdrawals on FNB ATMs coming from eWallet users. This is reflective of FNB’s commitment to advancing financial inclusion. Furthermore, the value of eBucks earned by customers has increased by 9% to R2.2bn with an excellent 90% spend to earn ratio.
The Bank’s insurance business increased its annual premium equivalent (APE) by 7% and increased its share on wallet into the FNB base. There was also pleasing growth in underwritten life insurance policies, driven by growth from digital channels. Total policies amount to 4 million and lives covered spans 6.3m people. The wealth and investments business has grown assets under management by 8% benefiting from improved net flows and investment performance. Assets under advice saw net inflows of R4 billion for the period. Furthermore, the investment in platform distribution is assisting with client penetration, with good digital distribution of wills, online share trading and Horizon unit trusts resulting in 13% growth in the account base.
The FNB Rest of Africa portfolio was similarly impacted by significant impairment charges resulting in a decline in PBT of 32% to R1.1bn. The respective countries also offered customers financial relief through a range of instruments to minimise the impact of COVID-19 to both retail and commercial clients.
FNB is committed to, and continues to play a major role in, stimulating economic and cashflow activity among its suppliers. As a result, since March 2020, over R10 billion worth of early invoice payments for 5 288 suppliers have been processed, many of which are SMEs. By June 2020, FNB had waived approximately R119 million in Saswitch fees, unpaid fees, rental on point of sale devices and cash boxes, as well as, early withdrawal fees for commercial clients.
The Bank has protected the savings of its senior citizen customers who are over the age of 55 by not reducing its interest rates on fixed savings products, helping seniors to prevent interest erosion in excess of R10 million. Customers who use FNB Connect were also awarded 1 GB of free data, totaling half a million Gigabytes awarded, to remain in touch with family and friends.
“The pandemic has reinvigorated our commitment to helping customers in every context and we are inspired to further accelerate our platform journey in the months ahead. We are equally grateful to our frontline and other essential staff who continue to help customers beyond the call of duty. In support of the re-opening of the economy, our branches are now operating at full capacity. We are encouraged by evidence of green shoots in consumer and business economic activity, and we hope to see this accelerating even further to boost economic recovery,” concludes Celliers.
DID YOU KNOW?
*eWallet transacting base refers to a wallet that has received funds and been accessed at least twice in a six-month period.
INFO SUPPLIED BY FNB.