The country’s second biggest commercial bank by profitability, Barclays Bank Botswana, is expecting a bump in profit which will be considerably higher than the previous period, the bank says.
Barclays Botswana, which will from next year be known as AbsaBotswana, says it expects its half year results for the period ended June 2019 to reflect an increase in profitability between 40 to 50 percent, which could be P100 million to P130 million higher than those reported for the half year financials last year.
In the previous half year results, Barclays clocked a profit before tax of P260 million, which was a 4 percent increase from 2017’s interim results. The bank went on to finish the year with a profit before tax of P587 million, up by 5 percent from 2017’s full year financials.
Barclays Botswana’s parent company Absa Group Limited, one of Africa’s largest financial services providers, in June reported an increase in revenue and earnings for 2018, in which they dubbed it “a year of almost unprecedented corporate activity as the group repositioned itself for delivery against a new growth strategy as an independent African bank.” The financial behemoth said growth was on the back of its largest business, retail in South Africa, where lending momentum outpaced the market showing new business growth across home loans, vehicle and asset finance and personal loans.
While Barclays Botswana did not disclose what has fuelled growth in its anticipated profit for this year’s interim results which are due latest next month, a look at Bank of Botswana’s most up to date financial data reveals that commercial banks seem to be doing well since the year began, despite concerns in other sectors of the economy. In the first five months of the year, total deposits held by banks grew 3.4 percent to P72.7 billion in May. About 76.3 percent of these deposits belongs to businesses compared to the 20.4 percent held by households.
Still in the same period, there was a slight growth in credit, only increasing by 1.2 percent to P59.2 billion between January and May this year. A bulk of this credit, representing 61 percent was held by households, the banks’ biggest credit consumers. According to the latest figures, this means households owe banks roughly P36. 2 billion, up by 2.8 percent since the beginning of the year.
From the credit extended to households, 66 percent of these loans or P23.8 billion has been channelled to unsecured loans, which are some of the banks’ top interest income earners. Following unsecured loans is property financing, which households hold about P9.8 billion of this debt, while loans for vehicles accounts for P1.8 billion, and the credit card debt for households is at P735 million.