{"id":790736,"date":"2024-09-12T09:47:53","date_gmt":"2024-09-12T07:47:53","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=790736"},"modified":"2024-09-12T13:49:53","modified_gmt":"2024-09-12T11:49:53","slug":"fnb-hits-8-6-million-customers-in-south-africa-but-many-are-under-severe-strain","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/banking\/790736\/fnb-hits-8-6-million-customers-in-south-africa-but-many-are-under-severe-strain\/","title":{"rendered":"FNB hits 8.6 million customers in South Africa – but many are under severe strain"},"content":{"rendered":"\n

FNB’s retail customer base has grown to 8.6 million, but its customers are feeling the strain of high interest rates as the group’s credit impairment charges shot up 50% and credit losses increased.<\/p>\n\n\n\n

In parent company FirstRands’ results for the year ended 30 June, FNB said that its retail customer numbers increased by 4% to 8.6 million.<\/p>\n\n\n\n

This saw its Personal client base increase by 4% to 6.84 million (earning under R600,000 pa), and its Private client base increase by 5% to 1.76 million (earning over R600,000 pa).<\/p>\n\n\n\n

The group’s broader African customer numbers grew by 8% to 2.2 million.<\/p>\n\n\n\n

Over the year, FNB’s normalised profit before tax increased by 1% to R31.5 billion, while its return on equity increased by 36.9%.<\/p>\n\n\n\n

FNB’s net interest income (NII) growth of 6% year-on-year was also driven by the strong performance of its deposit franchise, which increased by 10%.<\/p>\n\n\n\n

“Despite challenging macroeconomic conditions and the resultant pressure on customer affordability levels, FNB grew advances 7%.” <\/p>\n\n\n\n

FNB\u2019s Non-interest revenue grew by 5% and was supported by new customer acquisition and improved transactional volumes.<\/p>\n\n\n\n

“In support of the group\u2019s strategy to diversify sources of NIR, FNB\u2019s insurance activities continued to contribute strongly, driven by growth in insurance revenue and favourable claims experience in the life portfolio,” said the group. <\/p>\n\n\n\n

Fee and commission income grew by 4% despite sub-inflation fee increases, R985 million in fee reductions and the reduction of fees for all low-value real-time payments with the introduction of PayShap.<\/p>\n\n\n\n

“Despite the impact on fee and commission income in the current year, FNB believes this is the correct outcome for customers, and retail and commercial have already experienced a 34% increase in volumes since the reductions were implemented,” said the group. <\/p>\n\n\n\n

Given the worse-than-expected interest rate cycle, the FNB retail portfolio is trending above its Through-The-Cycle (TTC) range.<\/strong><\/p>\n\n\n\n

However, the group said that all retail lending lines remain profitable due to its consistent origination for low-to-medium-risk customer cohorts.<\/p>\n\n\n\n

That said, FNB’s credit impairment<\/strong> charge increased by 50% to R10,148 million<\/strong> (2023: R6,744 million).<\/p>\n\n\n\n

The credit loss ratio also jumped to 185 bps <\/strong>(2023: 132 bps).<\/p>\n\n\n\n

The group said that this was driven by: <\/p>\n\n\n\n