Interim Report
The effects of the crisis that shook the financial sector and the banking industry in 2008 have continued to be felt during the period under review. The effects thereof on the bank are reflected, particularly, but the very moderate 4,8% increase in the bank's advances book since 30 June 2008. In spite of this, the bank performed relatively well during the period under review in having increased its income earned from advances to customers by 13, 1% to R 92, 0 million and its income earned from equity finance by 8,7% to R 12,3 million. As a result of the foregoing, the share of income paid to depositors increased by 15,1% to R 57,5 million and, consequently, the net income before impairment for credit losses increased by 9,6% to R 46,8 million.
In light of the deterioration in economic conditions that prevailed during the period under review, the bank's arrears ration increased from 1,3% at 31 December 2008 to 1,6% at 30 June 2009. As a result, the impairment losses charged to the income statement increased by 36,1% from R 1,0 million to R 1,3 million. This, together with the 28,9% decline in fee and commission income caused by the slowdown in business activity, resulted in a moderate increase of 5,4% to R 49,3 million in the bank's net income from operations.
The 26,0% (R7,7 million) increase in operating expenditure was brought about mainly by an increase of R 4,7 million or 25,9% in staff costs. This increase was incurred primarily as a result of the growth in the bank's staff complement in line with the bank's objectives of enhancing delivery of services to its customers. the increase in other operating costs were occasioned mainly by expenditure associated with the opening of the Cape Town and Port Elizabeth Corporate offices late in 2008 and early 2009, the introduction of the bank's foreign exchange activities as well as the new corporate image branding exercise.
It is most pleasing to note that in contrast to the slowdown in advances growth, deposits have continued to reflect healthy growth as evidenced by the 17,7% increase to R 1,8 billion, when compared against the previous year's corresponding period.
Interim Report - 6 Months Ending 30 June 2009
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