{"id":756083,"date":"2024-02-29T10:25:22","date_gmt":"2024-02-29T08:25:22","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=756083"},"modified":"2024-02-29T14:19:58","modified_gmt":"2024-02-29T12:19:58","slug":"fnb-sounds-the-alarm-for-consumers-in-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/banking\/756083\/fnb-sounds-the-alarm-for-consumers-in-south-africa\/","title":{"rendered":"FNB sounds the alarm for consumers in South Africa"},"content":{"rendered":"\n

FNB has seen a growth in profit in the first half of the financial year, but its retail customers are increasingly struggling to repay debt. <\/p>\n\n\n\n

In its parent company FirstRand’s interim results for the six months ended 31 December 2023, FNB said that its normalised profit before tax grew by 5%, with a return on earnings (ROE) of 40.3%. <\/p>\n\n\n\n

The group also saw net interest income (NII) growth of 9% period-on-period, driven by the strong performance of the deposit franchise, as deposits increased by 11% domestically and 16% in broader Africa. <\/p>\n\n\n\n

“In addition, despite challenging macroeconomic conditions and the resultant pressure on customer affordability levels, FNB grew advances 8%. The current interest rate cycle resulted in a net endowment benefit,” the group said. <\/p>\n\n\n\n

“However, this was lower period-on-period, given the impact of the group\u2019s Asset and liability management (ALM) strategy.” <\/p>\n\n\n\n

The group saw a R477 million reduction in fee and commission income over the period, but this was due to sub-inflation fee increases across both retail and commercial accounts.<\/p>\n\n\n\n

“In addition, with the introduction of PayShap, FNB reviewed its pricing structures for low-value real-time payments, and took the decision to reduce all related fees. Despite the impact on fee and commission income in the current period, FNB believes this is the correct outcome for customers.”<\/p>\n\n\n\n

Furthermore, amid the challenging macroeconomic environment, as customers struggle with both high inflation and increased interest rates, FNB’s impairment charges increased by 31%.<\/strong> <\/p>\n\n\n\n

The credit loss ratio thus increased from 128 bps in H1 2023 to 155 bps in H1 2024. <\/p>\n\n\n

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*Restated<\/figcaption><\/figure><\/div>\n\n\n

“This outcome is broadly in line with expectations given the group\u2019s origination strategies and economic outlook. The strain was most evident in the retail portfolios<\/strong>,” the group said. <\/p>\n\n\n\n

Several other financial services providers have highlighted an increase in impairments as consumers buckle under the pressure of the current cost-of-living crisis.<\/p>\n\n\n\n

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Woolworths takes a hit<\/a><\/blockquote>