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Namibia CPI – September 2016

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The Namibian annual inflation rate increased to 6.9% in September, up from the 6.8% recorded in August. Prices increased by 0.2% month on month. Half of the basket categories showed higher inflation than the previous month, the most notable being Food inflation which has accelerated to 12% y/y.

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Housing, water, electricity, gas and other fuels, which increased by 8% y/y was the largest contributor to the overall annual inflation figure due to it being the largest component of the basket. This was driven largely by the 12% increases seen in water supply, sewerage service and refuse collection and electricity gas and other fuels sub groups. Rapid price increases have been seen in this basket category mainly as a result of increases in inflation for water supply, sewage services and refuse collection after the City of Windhoek increased water tariffs in July.

Food prices increased by 0.9% month on month led by the large increases in the prices of fish (up 4.4% from August) and fruit (up 3.3% m/m). Food price inflation remains worrying with most of the sub groups showing yearly increases in the high teens. Coffee, tea and cocoa increased by 19.5% y/y, sugar jam and honey was up 18.7% y/y and fruit showed an increase of 17.8% y/y. The upwards pressure on food prices are mainly a result of the continuing drought in Southern Africa.

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Inflation expectations remain high. South African inflation is expected to average 6.4% in 2016 and 5.8% in 2017, according to the South African Reserve Bank. These expectations are largely driven by currency weakness and the pass though effect of higher Import prices. The effect of higher food inflation due to the continuing drought also has a negative effect. Due to inflation expectations which return to the target band and low level of growth we do not anticipate rate increases from the South African MPC anytime soon.

Our expectations of Namibian inflation for 2016 is for an average of 6.5% The main reason for relatively high level being the increases seen in administered prices, but also the large step-up in rental inflation seen since January 2016. Our expectations for 2017 are also above the South African target band at of 3-6%, at 6.4%.

FNB Namibia Sens: Acquisition of Pointbreak and EBank

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FNB NAMIBIA HOLDINGS LIMITED

(Incorporated in the Republic of Namibia) (Registration number: 88/024)

ISIN: NA0003475176

Share Code (NSX): FNB

( “the Company”)

Renewal of Cautionary – Acquisition of Pointbreak and EBank

Further to the cautionary announcement dated 29 September 2016 shareholders are advised that FNB Namibia has successfully concluded negotiations to acquire 100% of Pointbreak and EBank, subject to all necessary regulatory approvals.

Pointbreak, a Namibian financial services group, provides investment management and wealth management services to the private, corporate and institutional markets, managing in excess of N$8 billion of third party capital. EBank delivers innovative inclusive banking to its clients, many of whom are in rural areas with little access to banking services.

The acquisition of Pointbreak will enhance the investment know-how and local wealth management capability of FNB, while Pointbreak’s long standing client focused approach aligns well to FNB’s vision of leading the premium banking space in Namibia.

The transaction will further complement the intended launch of Ashburton Investments in Namibia, the asset management business within the FirstRand group, FNB Namibia’s controlling shareholder.

Clients of Pointbreak will therefore receive access to the wider range of investment products and financial services offered by FirstRand.

EBank and FNB have a similar vision of achieving inclusive and broad-based banking in Namibia, primarily utilising technology and cell phone banking capabilities. The partnership will enable the activation of FNB’s eWallet to EBank’s client base, with the ultimate goal of providing banking services to all Namibians, even in areas that cannot be serviced through a branch network.

Said Sarel van Zyl, CEO of FNB Namibia

“We are excited about the enhanced customer proposition this transaction will bring to the Namibian market. Innovation in the way we do business is core to our long term strategy; and will enable us to continue to deliver sustainable benefits to our staff, customers and shareholders.”

According to Pointbreak CEO, Josephat Mwatotele, “There are many synergies between Pointbreak, FNB and Ashburton and we look forward to unlocking these synergies for the benefit of our long standing Namibian client base. We are confident that the transaction will allow us to broaden our wealth and investment management offering even further, in the pursuit of providing a one stop financial home for our clients.”

Mike Mukete, EBank CEO commented that the transaction was a major step towards EBank’s vision for accessible banking and economic inclusion. “The EBank team is most excited about the many opportunities presented by the large footprint and infrastructure provided by the FNB Namibia group.”

The transaction is still subject to various regulatory approvals, including those from the Bank of Namibia, Namfisa, Namibian Competition Commission and the South African Reserve Bank and can only be implemented after these approvals have been received.

For more information: Tracy Eagles, Chief Marketing Officer at FNB Holdings: (+264 61) 299 2101.

18 October 2016