FNB ready to spend but needs projects

• Bank keen to support Ramaphosa’s growth agenda, but policymakers must play ball — CEO

FNB, one of the country’s top banks, says it has “ample credit” appetite and is well positioned to support SA’s growth agenda and urged President Cyril Ramaphosa’s government to implement policies needed to kickstart the economy and help the banking sector shake off the effects of Covid-19.

“We are well set with proper capacity on our balance sheet to support the growth agenda,” CEO Jacques Celliers told Business Day in an interview after the release of parent company FirstRand’s results for the year to June. “We’ve got proper liquidity, we’ve got proper capital and we’ve positioned for a growth agenda. If there can [just] be a little bit more comfort in policies.”

FirstRand, the banking conglomerate that owns FNB along with Rand Merchant Bank and WesBank, delivered a 54% jump in normalised earnings.

This is part of a trend as local banks recover from the ravages of the pandemic and lockdown in 2020, which caused them to increase provisions for bad loans and stop dividends, as per a Reserve Bank advisory.

While it was a strong performance from FirstRand compared with 2020’s results, the overall normalised earnings level for 2021 was still 4.8% lower than that in the 2019 fiscal year prior to the Covid-19 pandemic.

FNB was the star performer in the group’s 2021 fiscal year, with its R16.28bn in normalised earnings up 33% from R12.23bn the previous year, and even beating its performance in 2019. It also accounted for 61% of the FirstRand group’s normalised earnings for the fiscal year.

The fact that FNB was able to achieve that at a time when much of the country continued to battle the pandemic suggests it is well-poised to continue growing in a world that is tentatively getting back to normal.

With healthy balance sheets, banks are searching for opportunities to grow in an economy that shrank 6.4% in 2020 and shed more than 1-million jobs. While the recovery is being hampered by a slow vaccination rollout, a far bigger issue for businesses is continued policy

stasis by the government, something they bemoaned even before the pandemic.

While Ramaphosa said in late 2020 that the government plans to unlock R1-trillion in infrastructure investments over the next four years, no tangible projects have yet emerged.

Duncan Artus, chief investment officer at Allan Gray, said this week that 99% of political speeches are “rubbish” and that SA wants to see action.

Celliers said: “Fortunately our banking system has not become a problem for the country. In fact, we’ve got too much liquidity in the market relative to the opportunities.

“We really need some of the infrastructure builds to come through the market, otherwise there’s just not enough growth for everyone. There’s enough capital, there’s enough liquidity, we just need the projects and growth opportunities.”

In the meantime FNB continues to invest in its digital banking platform to better serve its retail banking client base, which increased to 10.48-million in the 2021 fiscal year, from 9.98million the previous year. It is the active digital user base that Celliers sees as the real attraction, because the data that FNB is able to mine on consumer behaviour allows it to tailor products.

FNB’s active digital platform users top 8.65-million SA customers, and the number swells to just more than 16-million when factoring in the rest of Africa and 5.6-million eWallets.

With digitally active customers typically using between two and four times the number of products and services used by nondigital customers, it allows FNB to tap nonbank revenue streams from items such as prepaid airtime and electricity sales, insurance and financial planning advice.

Celliers said FNB is making 30-million digital product offers a month to clients on its digital platform, which is rapidly emerging as the sales channel of the future. He now wants to optimise the channel’s digital penetration, which reaches almost 70% of its client base, to sell a greater variety of products and services over time.

“We think there’s a lot of runway for us to do a lot more with our own customers,” he said.