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The first half of 2010 has seen South Africa slowly starting to recover from the recession, although the recovery has thus far been jobless. FNB started the year with a positive focus – we continued to look for opportunities for growth, by investing in growth pockets, furthering our expansion into the African continent and updating our technology capabilities. We also persisted in our drive towards improving our service levels and creating efficiencies. During this period FNB grew normalised earnings by 15% to R4 303 million.
Despite a tough macro environment, our steady performance has allowed us to continue to provide employment to over 26 000 people and to provide value to our other stakeholders including customers, suppliers, communities and the natural environment.
We are mindful of the multi-dimensional impacts of our operational activities and the need to balance our business objectives with sound environmental practices and social responsibility. Our sustainability reporting reflects our approach to integrating sustainability principles into our business planning and is an evolving process for us as our operations within the continent continue to grow. For us sustainability issues are more than a compliance requirement, we engage with them willingly and with commitment.
In the South African context we are very aware that Black Economic Empowerment is an important component of the social element of sustainability and we have made huge strides to transform FNB, as evidenced in our performance against the dti Codes of Good Practice. We are proud to say that with respect to employment equity, 71% of FNB's total permanent workforce is made up of African, Coloured and Indian (ACI) employees. 65% of the permanent workforce is female. During FY 2010 we also invested over R252 million in the development of these employees by providing learning opportunities to enable employees to realise their full potential. In addition, 60% of our procurement was sourced from BEE suppliers and we increased our investment in initiatives such as affordable housing, enterprise development and the support of Emerging Micro-Enterprises (EMEs) and black Qualifying Small Enterprises (QSEs).
Although the Financial Sector Charter (FSC) has failed to be gazetted as a Code, we remain committed to the Charter as we believe the 'Access' components of our industry bring a unique element to transformation. This is because we understand that a bank account is the key to participating in the formal economy. With over 1 million new FNB mainstream market accounts opened since June last year, the bank is on track to meet – and where possible exceed – FSC targets to provide banking services in the low-income market. The bank's comprehensive approach to the mainstream market includes offering transactional, savings, loan (home or personal) and insurance products.
FNB's efforts to improve access to banking have seen the bank reaching the highest coverage for LSM 1-5 customers, with 1 in 4 branches situated in a previously disadvantaged area. The FNB Mini-ATM, a unique cashless ATM machine deployed in rural stores which prints out a slip that customers exchange for cash, has significantly improved people's access to banking in under-serviced areas.
We also introduced products which enable access in innovative ways such as PayPal, eWallet and Instant Accounting for small businesses. Our culture of innovation is our key differentiator in the marketplace and we have continued to invest in it through our Innovators Campaign which saw us award four R1 million prizes to staff members in the last year.
Despite these great successes, the year has seen its challenges. In October 2009 we suffered downtime on our internet banking platform due to complications with a major system development. Some customers were unable to transact and this spilled over into negative press coverage and customer complaints. We fixed the problem as speedily as we could and still managed to add some valuable functionality. We are pleased that the financial year culminated in the great excitement of the 2010 FIFA World Cup, a particularly proud moment for FNB as one of the national supporters. Aside from the thrilling action on the soccer pitch, South Africans defied the Afro-pessimists and proved to the world that we are a capable and fun nation. I believe that this is an historic turning point that has stimulated economic interest in our country and our whole continent and we should seize the opportunities this presents.
Michael Jordaan
CEO, First National Bank