By Portia Nkani
Despite hiccups in the domestic banking sector, the commercial banks listed at the Botswana Stock Exchange Limited (BSEL) have delivered positive numbers on the third quarter of 2018 (Q3:2018).
Latest capital markets figures from the local bourse shows that amidst an environment characterized by higher credit growth, margin compression and higher cost of funding on the back of tight liquidity conditions in the market, the three banks at BSEL domestic board fared well.
According to local stock brokering form – Stockbrokers Botswana’s third quarter financial analysis of the BSEL performance, Stanchart emerged from losses to post a small interim profit of P22.7 million in comparison with-P57.4 million in 2017. Portfolio rebalancing resulted in a net recovery for the bank, while cost controls resulted in a decline in the cost base. However, all income lines were down with the bank producing a cost to income ratio of 95 percent, far higher than its listed peers. Stanchart consecutively was one of the biggest losers in both quarter two at 14.1 percent change and -5.9 percent change in quarter three respectively.
Donald Motsomi ÔÇô a Research Analyst at Stock Brokers Botswana says the market will likely adopt a “wait and see” approach with regard to Stanchart management’s execution of the bank’s strategy before investor confidence is restored.
Following two years of double digit growth in profits, Barclays’s interim results saw a 5 percent growth in the bottom line to P201.1 million from P192 million in 2017 same period. The bank saw solid growth in its non-funded income in line with its strategy. The loan book grew in double digit figures as the bank looks to acquire further market share. Just like its competitor Stanchart, Barclays was amongst losers in the local bourse in both quarters second and third crawling at 8.5 percent, -3.4 percent change respectively. However, it played one of the top turnovers in the period under review as it accrued P14.8million, playing along with Letshego reaching P42.0million on a high leading the horde.
The Steven Bogatsu led First National Bank Botswana (FNBB) headquartered at the new Central Business District; delivered the strongest performance with a 29 percent growth of full year profits to P648.1 million from P500.5 million in 2017. Robust non-interest income growth, normalization of impairments and cost containment saw earnings revert to a mean level. FNBB became one of the top gainers by 4.5percent change in the period under review.
Meanwhile the Monetary Policy Committee (MPC) of the Bank of Botswana recently maintained the rate at 5 percent at the MPC meeting held over the quarter. On the money market, yields on the 14-day and 91-day Bank of Botswana Certificates (BoBCs) increased from the previous quarter. Interest paid on the 14-day BoBCs paper rose to 1.52 percent in September 2018 from 1.47 percent in June 2018, while interest on the 91-day BoBCs paper also rose to 1.52 percent in September 2018 from 1.48 percent in June 2018. Motsomi said, the increase in these nominal rates coupled with lower inflation resulted in higher negative real interest rates quarter on quarter.