Bank Windhoek ranked best bank
Bank Windhoek has overtaken FNB as the best bank in Namibia with a top performance in the categories of cost efficiency and credit risk.
03 January 2020 | Banking
In awarding the top honours to the bank, PSG said it had taken note of Bank Windhoek's low operating costs compared to other banks operating in Namibia.
“Bank Windhoek has overtaken FNB as the best bank in Namibia. They performed best in the categories of cost efficiency and credit risk. It is very important to note that the difference between the banks has shrunk considerably over the last three years.
“In 2014 the best ranked bank, FNB, had a weighted rating of 1.3 and the worst, Standard Bank, was at 3.4, a spread of 21 points. In 2019, the best bank, Bank Windhoek, has a weighted rating of 2.2 and Nedbank, the lowest ranked, is at 2.8, which is a difference of only 6 points.
“In our ranking of the Namibian banks, Bank Windhoek Limited has taken the top spot for the first time. They performed best in the cost efficiency and credit risk categories with low credit losses, low operating cost growth rates and good asset growth as compared to operating expenditure over five years,” PSG said.
In the profitability rankings, FNB came out tops followed by Standard Bank, which listed on the Namibia Stock Exchange last year.
“Looking at the rankings in terms of profitability, it shows that FNB was ranked first with Standard Bank in second place, with FNB's poor earnings per share growth rate being made up for by better return on assets, return on equity and net interest margin,” PSG said.
In terms of loans granted to customers, Standard Bank ranked better than other banks.
“In the advances category, Standard Bank is ranked first again due to faster growth over the last three years. In terms of cost efficiency, Standard Bank lags due to their significantly higher cost-to-income ratio and FNB still pays for operating expenditure growth outpacing asset growth over five years.
“This reversed in the last year, and it will be interesting to watch this number in our next report.”
In assessing the banks, PSG said that while profitability was an important factor for the banks under review, the efficient provision of financial services through banks is also critical, especially for a country's economic growth and development.
“A stable and efficient banking system is vital to provide financial services while having the capability of absorbing unforeseen shocks through effective risk, credit and liquidity management.
“While this study addresses profitability, more importantly, it enables us to measure the bank's overall performance and soundness by identifying their strengths and weaknesses in terms of other metrics such as liquidity and credit risk policies,” it said.