FNB customers see salaries drop by 20% during lockdown

The average income of customers at South Africa’s First National Bank plummeted by about 20% during the nation’s lockdown as people took pay cuts or had less work to do.

FirstRand Ltd.’s retail banking unit also experienced a “major drop off” in transactional activity and credit-card spending as businesses closed and people stayed home, FNB’s retail banking head Raj Makanjee said on a call with reporters on Tuesday.

Credit growth suffered as South Africans opted to save, he said.

The slump in business is in line with guidance from other South African lenders that earnings for the first half of the year will probably decline by at least 20% as measures to curb the pandemic take their toll on the finances of customers.

Unlike its main competitors, FirstRand reports annual results through June.

Banks have all extended relief to clients to help shore up their cash flows, including payment holidays and emergency loans.

South Africa moved to alert level 3 from June 1 after being at level 4 for a month. That was preceded by five weeks of a strict level 5 lockdown that shuttered almost all activity except essential services. The central bank sees the economy contracting by 7% in 2020.

Read More: Banks Keep Staff, for Now, as South Africa Faces Jobs Carnage

FNB has also adjusted its eBucks rewards program to offer Netflix Inc. and Spotify Technology SA discounts as clients spend more time indoors, Makanjee said.

Pressure to outshine peers persists for South Africa’s biggest banks, which have seen several new players enter the market in recent years, while intensified competition in the industry has also seen incumbents snatching some clients, Makanjee said.

“When the economy goes through this level of challenge we do expect a level of consolidation. It’s going to be very difficult for all competitors to stand and cope with the magnitude of the impact,” he said.

“Certainly we want some of these new competitors to be strong but we think it’s going to be tougher.”


Read: Here are all your new FNB banking fees for 2020

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FNB customers see salaries drop by 20% during lockdown