Thursday, May 19, 2022

Barclays cashes in on Bobcs as economic gloom continues

Barclays Bank of Botswana (BBB) danced to the banking tune in the first half of the year by being tight fisted on loans to the retail sector while on the other hand making huge gains on risk free Bank of Botswana Certificates (Bobcs).

According to the┬á interim results to June 31, 2010 loans and advances to customers fell 2.3 percent to P 5.7 billion┬á while┬á its┬á gains on financial instruments┬á were up 5.8 percent to an outstanding┬á P 3.6 billionÔÇöa figure comparable to the┬á 12 months ┬áperformance in the yesteryear.

┬áThe biggest bank said despite the┬áfall in loans and advances, its capital adequacy┬álevels was┬ámore than┬átwofold┬áat 21.8 percent more than the central bank’s recommended level of 10 percent partly because of the windfall from Bobcs and┬ámove to avoid┬árisky ventures, especially┬áin a recessionary┬áperiod.

Bobcs are the safest investments and pay better interest than what Botswana gets from foreign reserves but the issue is that commercial banks are largely foreign owned.

Barclays holds 65 percent of┬ácommercial banks┬áretail deposit and it also┬áaccounts for 60 percent of the┬ábanking sector’s┬áloan book and has assets┬áworth well over P 11 billion.

During the six months period, the bank, which has been led by Thuli JohnsonÔÇöone of the top creams on the┬ácountry’s financial sector landscape ÔÇö┬árecorded an income growth of five percent to P 676 million, which reflects┬ábetter collections.

However, impairment shot-up during the same period as the impact of the global economic crisis started to be felt across the board.
“Impairment grew from P 28 million to P 109 million as tough economic conditions continue to put stress on our customers. Conditions remain difficult but we have tightened credit policies and significantly increased┬áour account monitoring and collection activities over the year,” the bank said.

The bank was hit hard in one of its most innovative products, which was aimed at getting the unbanked and under banked customers into the financial system. Most of those customers were sacrificed by their employers once the impact of the credit crunch set in.

As part of┬ámeasures to duck-out of┬áa full blown recession, the bank withdrew its placements with other banks┬áfrom P 220 million┬áto┬áP 82 millionÔÇölargely reflecting a lack of confidence in other commercial banks.

The bank has decided on an interim dividend of 11.7 thebe per share that will be paid to shareholders registered on or before September 24.

Barclays closed business on Monday unchanged at 700 thebe.

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