Thursday, October 5, 2023

Barclays targets retail banking as its growth point

Barclays Bank of Botswana (BBB)’s Managing Director, Thuli Johnson, said on Friday that he is embarking on a massive recruitment of the right staff as the bank gets into a two-year strategic plan that will see it maintaining its dominance in the market.

The two-year strategy is underpinned by the zeal to get new retail customers to support its ambitious expansion plan.
“The plan that we have is for massive growth. And we will make sure that we invest around technology. Gone are the days when you open a branch and expect people to come in,” he said.

He said some of the areas they are looking into include the introduction of cell phone and internet banking.

Johnson was speaking to the media at the presentation of the half year results to end of June 2007, which dazzled the market by shooting up seven percent yearÔÇôon-year on its profits after tax to P 147 million supported by all its segments.

According to the half year results to June 30, 2007, net interest income was up to P 269 million or 27 percent from P 212 million. While profit before tax was also seven percent better to P 177.3 million compared to the same period last year and loans and advances moved up to P 533 million from P 130 million.

BBB, which is under the Barclays Group, is the leading bank in Africa and contributes almost 20 percent revenue of its Sub Sahara operations.

The move has been attributed to the banks’ raft measures aimed at aggressively taking its peer head on direct marketing and on the treasury division. During the same period, the bank went into an expansion exercise which saw it opening 13 more branches to bring its total branch network to 39.
The branches were opened in a number of villages, such as Bobonong, Masunga and Shakawe, among others, but it also insisted that it is still weighing possibilities of opening more branches where opportunities arise.

“During the first half of the year, a total of 11 branches were opened bringing the total of branches to 39. As part of this expansion programme, particular attention has been paid to recruitment of Direct Sales Agents (DSA) to support the growth targets that the bank has set for itself.

“This growth both in terms of branches and DSA will increase in the latter part of the year,” the bank said.

As part of its marketing strategy, the bank has outsourced some services, such as loan applications, top up on loans, credit card (however, does not reflect on its balance sheet) to a local Call Center, Oseg Group. The bank has 40 counters there and aims to double the number during the strategic planned period.

The banking sector profits are expected to be dented by a number of factors ÔÇô especially on the treasury division ÔÇö notably the government’s decision to change payment for Debswana for royalties, dividends and taxes ÔÇô now directly paid to Bank of Botswana. However, Barclays was able to second guess the move by introducing innovative products in the treasury division which resulted in bulging to over P 10 billion.

According to a leading banking sector expert at African Alliance, Kudzani Pickup, who is also joining Barclays at the beginning of next month, the decision by government is expected to reduce forex trading income for the banking sector by 25-30 percent. He reveals this in his report entitled Priced Beyond Diamonds.

“The move will have a net effect on the inter-bank foreign exchange trading and skew trades in favour of the central bank,” Pickup said.

“In our 2006 banking sector report, our view was that the banks would benefit from the changes in Bank of Botswana Certificates (BoBcs) regulation in the short term. This would decline over our forecast period of 5 years. We maintain this view and treat the additional BoBcs-related income as temporary,” he added.

He also pointed out that the only growth point for the banking sector will come from the consumer lending ÔÇô an area which is already saturated.


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