After going through a rough patch, Barclays Bank Botswana has recorded increased profitability against a challenging backdrop of plummeting interest rates, modest economic growth, freeze on fee charges and evolving market liquidity.
The Bank’s financial results for the period ended 31 December 2014 show that earnings per share improved 16 percent to 39.4 thebe while return on equity (“RoE”) stood at 23.2 percent. Barclays’ revenue grew by 0.5 percent as the Bank maintained its dividend per share at 23.5 thebe per share. Loans and advances to customers increased by 10.8percent and credit impairment charges fell by 24.2 percent.
Presenting the financial results, Barclays Chief Financial Officer (CFO) Lipalesa Makepe on Thursday said key drivers for the improved performance were improved collections which greatly reduced the Bank’s overall impairment charges. She further spoke of the higher quality of loan bookings made during the year, which also improved the structure of the portfolio on both retail and corporate.
“We will continue to diversify our revenue streams on the back of margin compression on lending products,” said Makepe.
Further growth was supported by senior debt issuance from the Bank’s recently listed P2 billion Medium Term Note Program to match tenure of the longer dated assets, increased deposits to banks and P60.3 million increase in balances with related companies. However, this was offset by P317.3 million lower deposits as customers focused on driving core balances, which resulted in a 19.3 percent decline in the interest expense.
“We have been deliberate in managing our cost of funding and reducing wholesale funding to a minimum as required,” said Makepe.
Led by Managing Director (MD) Reinette van der Merwe, Barclays’ loans and advances to customers increased by 10.8 percent to P8.1billion, supported by a corporate growth of 17.5 percent as the Bank serviced both its local and continental clients.
“This growth was also backed by a 9.6 percent growth in retail secured lending, which was funded by deliberate optimisation of our balance sheet,” said van der Merwe.
She further revealed that a key impetus for Barclays is to increase its fee and commission income, particularly in the current environment of low interest rates. Van der Merwe said the bank will continue to be deliberate in investing in the business to ensure future sustainability, while seeking to engage and involve customers.
“We seek to grow our corporate and SME business, while selectively growing our retail secured portfolio. This growth will be achieved through optimising our balance sheet while ensuring that we continually invest in this business,” she stated.
While it remains very much aware of the existing economic headwinds in the short-term, Barclays believes the fundamentals for long-term growth remain strong. To that extend, said van der Merwe, the Bank will keep on improving, picking up the pace on turning around business banking and driving growth in the corporate and retail businesses.