The Botswana Building Society (BBS), the titanic mortgage lender, sprang to the challenge last week by raising P 150 million bond aimed at addressing the defiant mortgage borrowers’ appetite in the face of economic down-turn.
“We have managed to raise P 150 million which will be used as our working capital, especially for the buoyant mortgage demand. Further, we do have a commitment to the tune of P 120 million that we have to deal with,” spokesperson for BBS, Sipho Showa said Friday.
The P 150 million bond has a 15-year-maturity period and it is priced at 11. 2 percent ÔÇô in the same lines with its P 100 million bond that was issued in December 2006.
“The bond was largely received by local institutional investors,” he added.
BBS has a loan book of over P 1 billion that is generally spurred by residential mortgage sector and it is aggressively looking at other avenues of increasing its market share in the mortgage business.
The P 150 million is part of the P 500 million that was approved by Botswana Stock Exchange two years ago and is now being rolled out in tranchees.
Earlier this year, BBS’ chief executive officer, Pius Molefhe, stated that his institution is on a strong standing to compete head ÔÇôto head with other foreign owned banks in the local market as it delivered strong earning for the mid year result.
According to the full year financial results to March 31 this year profits surged by 20 percent to P 69 million year-on-year while assets bulged to P 1.5 billion compared to five years ago when it was technically bankrupt.
“I think we are doing what we have set out to do in 2004. We outlined that we would like to turnaround the institution by promoting its image and profile to be a leading financial institution,” he said.
The Society prides itself of being an indigenous financial institution with the aim of positively contributing to the development of the countryÔÇö- without milking the customers their hard earned cashÔÇöand at the same time working towards increasing its shareholders’ value. Its mission was well demonstrated recently when central bank increased the bank rate which triggered other commercial banks to increase their interest rates but BBS kept its rates steady.
“We have enough cash and our challenge is to spend it,” he said, adding that recently they have added a new product aimed at youth empowerment by trying to help the youth to climb the property market ladder.
The Society is currently anxiously awaiting the review of the Society Act which is still being discussed with the relevant authorities before it could surprise the market with a string of product roll-out.
One of the key elements within the review is expected to include a relaxation of the retail banking business rules that will pave the way for it to openly compete with commercial banks in terms of product roll-out and pricing. At the moment it is positioning itself to attract the high net earning clients into its banking halls and services by improving its IT platform. That will put it on the same wave length with the tigers of the industry such as First National Bank of Botswana and Standard Chartered among others.
“We are currently working on our IT platform so that we can serve our customers better. We have strong capital base and what we need is a huge (IT) platform going into the future,” he added.