BancABC’s total bank income has increased by 8 percent year on year driven by a strong performance on net interest income (NII) despite two rate cuts of 50bps in August 2019 and April 2020.
The BSE quoted banker says the Covid-19 pandemic continues to create significant uncertainty around the duration of constrained economic activity and timelines for the economy to be fully operational.
The banker’s unaudited results for the period ending 30 June 2020 shows an overall profit after tax stood at P55.7 million representing a 9 percent increase.
The bank’s balance sheet has grown by about 3 percent driven primarily by the growth in the loans and advances at about 4percent.
BancABC’s Chief executive – Kgotso Bannalotlhe says the retail lending continues to be the main driver of the asset book, adding that volumes were muted due to the delay in the expected government employee’s salary increases. The unaudited financials also shows that the bank’s total deposits reduced slightly by about 4 percent year on year on tighter review end liquidity, however, deposit growth has returned to a stronger position early in the third quarter.
“We understand this is a challenging period for our customers and will continue to support them through various initiatives,” said Bannalotlhe.
BancABC says one of its strategic objectives at the of listing at BSE was to prepare for the future by investing in systems and overall operational upgrades that will enhance the customer experience. He stated that decision has begun to bear fruit, with the bank accelerating its transformation programme and achieving key value milestones.
He stated although the bank’s key income lines reflect strong performance, during the second quarter it began to see a reduction in activity within its branch network as well as the corporate and SME segment due to the lockdowns imposed as containment measures to curb the spread of COVID-19. He adding as a result, the weaker activity damped BancABC’s growth prospects for the 2020 financial year.
“The second quarter of 2020 was characterised by muted economic activity due to containment measures put in place locally and globally to contain the COVID-19 outbreak,” said Bannalotlhe.
The bank’s credit impairments for the first half of the year was an increase in provisioning by P2 million compared with a net release in the prior year. Added is that the increase is driven primarily by a deterioration on the largely SME lending book due to the current stresses experienced due to COVID-19.
“Since listing, the Bank has put in place the appropriate building blocks to help mitigate downside pressures such as the current market condition. The business has demonstrated resilience as a result of our continued client support,” he said.