Wednesday, November 30, 2022

BancABC decries interest spread as it records big earnings

BancABC Group scathingly attacked the prevailing interest rates spread as it announced one of its landmark earnings results in its history.

Although the bank, which has just entered the┬ádog-eat ÔÇô dog┬áretail market, did not want to be associated with the high lending rates, it, however, pledged┬áthat it would have┬ásomething to differentiate itself from its peers in the market.

“We are coming into the game to deal with that issue, which is to reduce the cost of lending,” Group Chief Executive Officer, Douglas Munatsi, said.

“I think if┬áyou remove the Bobcs (Bank of Botswana Certificates) maybe these rates will collapse,” he added.

His stance was supported by the Group Chief Operating Officer, Francis Dzanya, who said by all accounts rates are high but it will only take stronger competition within the financial sector to bring them down.

The┬áinterest rates spread in Botswana are so wide, which has enabled the banking sector to make what has been dubbed┬á “super profits” at the expense of the retail customers.

BancABC┬á said,┬á for┬á the first time,┬á all its operations were “profitable” and┬á its impairments over the┬á year ending December 31, 2011 were┬á significantly lower.

“Our businesses are now solid,” Dzanya said ,as he outlines that their main focus is to engage the more established banks.

In Botswana, BancABC falls outside the top ranked four banks but it has indicated that its aim is to grow its market share beyond the three percent that it currently controls. It will use the power of technology and improved turn-around time to fight competitors.

Net Income Interest jumped up from P 178 million to P 297.8 million while profit for the full year shifted from P 68.5 million  from P 58 million in the previous reporting period. Earnings per share improved by six thebe to 46.3 thebe while   net average value  edged up from P 2.73 to P 2.93 over the period under consideration.

The balance sheet of the bank strengthened  from  P 4.4 billion to P 6 billion deposit  also firmed from P 3.3 billion to P 4.9 billion.

The  good performance was attributed to a number of  things, including  tight credit management, where the  economies were emerging out of the global recession and selective lending. Further, agriculture, construction, property and  services made a sterling contribution.

Over the year, the bank  went into retail banking that resulted with 17 branches  across the five countries that it operates from. And the intention is to increase the branch net work during  the course of  2011.

Going forward, Botswana┬á and Zimbabwe are expected to continue to play┬á an important role in the company’s balance sheet as evidenced during the period under review.

“We are going to focus our energies to retail business. We will focus on the┬á mature markets like Botswana, where we will try to win the hearts and minds of the people,” Dzanya said.

However, the company said  Zimbabwe is likely to be the  biggest contributor but  it is wary of the political climate in that country  if the general election was to be called this year.

The company, with┬á cost-to ÔÇôincome ratio of 77 percent, made history by declaring its first dividend of 10 thebe per shareÔÇötranslating to P 14.4 million.


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