Monday, September 21, 2020

Barclays pushes up DCI ahead of banking reporting period

Barclays Bank of Botswana, the biggest retail bank in the country, got the approval of investors last week when its share price jumped up 13 percent on Friday to 800 thebe per share ahead of the unveiling of its full year’s results.

Investors who are beating on the expected banking results helped by treasury departments and homeownership boom saw Barclays market capitalisation touching P 6.8 billion ÔÇô the value it reached on October 12 last year before the share split.

The bank moved the Domestic Company Index (DCI) three percent up to 6592.62 points on the day over 45,769 shares that moved from 720 thebe to 800 thebe.
Analysts pointed out that the banking sector, which is currently in a closed period before they release their results between February and March, are expected to show some “excellent results”.

“There is still some upside on the banking sector and that could be reflected on Barclays trading today (Friday),” Chief Executive Officer of Stockbrokers Botswana, Geoffrey Bakwena said.

At its mid-year results, BarclaysÔÇölike all other banksÔÇö showed strong results which were powered by the treasury but slipped on the property market. The treasury department was supported by the restrictive Bank of Botswana policy which allows the selling of Bobcs to commercial banks only.

“The banks still have the money from Bobcs and there is no reason why they can not do well,” Bakwena added.

BObcs are a short term financial instrument which were introduced with the view of mopping up excess liquidity in the market to control inflation. But, since the introduction of the policy, banks have introduced some innovative products to try to lure in money from non banking institutions.

“I think the banks will be relying on profits from the treasury divisions,” Gregory Matsake of Capital Securities said. “I do not think that other income streams will do as much as treasury.”

However, he said First National Bank of Botswana, which is in stiff competition with Botswana Building Society ( BBS) is expected to show a strong loan book on the mortgage side.

“FNBB is very innovative and it has a dedicated property division. Among the listed commercial banks it is leading in terms of mortgage loan book and I expect it to do well in that area,” he said.

At its half year results to the end of June, it reported a rise of 46 percent with a portfolio value of P 1 billion. That was close to BBS the results of whose portfolio to the end of September was at P 1.2 billion.

However, it will be interesting to see the contest between Barclays and Stanbic on mortgage side. Stanbic, which is the first bank to come up with the Rand Link Mortgage scheme, has been slightly ahead of Barclays while Standard is trailing behind all the banks.

It is also expected that FNBB will come up on top with regard to motor vehicle and assets financing scheme as it has two divisions which are dedicated to financing vehicles. The two divisions are WesBank, which specializes in brand new cars, while its other division First Funding, a micro lending scheme, directly covers cars bought on the parallel market- from Japan and Singapore.

Since the advent of second hand cars from Japan and Singapore, the motor vehicles scheme has been negatively affected.

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