Trustco interim results September 2017
Revenue for the interim period lowered to NAD408.1 million (2016: NAD560.2 million). Income from operations decreased to NAD449.3 million (2016: NAD594.6 million). Profit for the period dropped to NAD53 million (2016: NAD166.5 million). Furthermore, headline earnings per share dropped to NAD7.11 cents per share (2016: NAD21.54 cents per share).
The board of directors has decided to defer the declaration of any 2018 interim dividend.
Business review and outlook
During the past year, Trustco weathered increasingly difficult conditions in the Namibian economy. With Q1 and Q2 growth in Namibian GDP both showing negative growth of 1.7%, and economists predicting a similar picture for Q3, the country remained in a technical recession for the entire reporting period. This resulted in an average private sector credit extension (PSCE) growth of 7.4% as at 31 August 2017, a reduction of 4.7% from 12.1% for the 2016 corresponding period. The slow PSCE growth, evidenced by reduced growth in credit advanced to the household and corporate sectors, impacted mortgage and instalment credit the most.
Only two economic sectors in Namibia, namely mining and agriculture, managed to register strong growth for the first 8 months of 2017, which offset the negative growth for the construction, wholesale and retail trade and transport sectors.
Although growth projections for the economies of Namibia and southern Africa remain weak, the growth projections for the global economy reflect an increase of 0.4% from 3.2% to 3.6% for 2018.
A weakened ZAR/USD exchange rate further negatively impacted the growth of Namibia, given that the country remains a net importer. This exposure to a domestic economy where so many of its inputs, such as exchange rate, food prices, drought and global liquidity remain outside of the control of government as well as private sector, shows that Trustco's pursuit of cross border expansion and US dollar based revenues remains key for continued growth.
Notwithstanding the above, Trustco's operations continued to demonstrate reliable performance coupled with resilience, even in the face of adverse financial conditions.
The Board of Directors will continue to exercise its mandate to aggressively repurchase its shares as approved by the Shareholders.
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