This is against the M28 million profit recorded in the previous year.
But the bank has revealed that it remains adequately capitalised, highly liquid and has taken the necessary risk management measures to ensure stability and fully support the economy.
Lesotho Post Bank also reported a slight fall in financial performance for the financial year 2020, registering M60.9 million in profits before tax, versus M72.8 million in 2019.
A cut on the Central Bank of Lesotho (CBL) rate also had a negative impact on performance.
A continuous drop in CBL rate has an impact on the commercial banks’ Prime Lending Rate as the two complement each other.
A drop in CBL rate means a drop in Prime Lending Rate, hence lower returns on loans.
Since 2019, the CBL rate has dropped from 6.75 percent in that year down to 3.50 percent per annum in March this year.
The lower Prime Lending Rate means customers enjoy the benefits and afford credit which otherwise they could not afford.
On the side of the banks it means that the return that the banks make on loans is lower than what they used to get.
“The 2020 financial year was extremely challenging due to the effects of the COVID-19 pandemic that not only had a direct impact on the global economy but humanity as well. The FNB Lesotho balance sheet resilience and income statement protection ability were stretched to the limit due to this phenomenon.
“As a result of this unprecedented economic environment, FNB Lesotho has reported a M17.4 million loss against a M28 million profit in the previous year,” the bank revealed in its 2020 performance overview.
But the company further reported that a total income before credit impairments grew by 0.92 percent from 2019 with non-interest revenue showing resilient performance at 3.87 percent growth.
“This performance was aligned to our digital strategy journey that saw an unprecedented number of clients transacting through our bouquet of digital offerings. The focus on providing customers with safer and readily available transacting platforms saw the customer deposit book grew by 13.1 percent in 2020,” the company further stated.