Botswana Building Society (BBS), one of the pacesetters in the mortgage business, saw its profits shooting up by more than three-fold during its half year to September, largely because of strong appetite from the property division.
According to its financials, which were released on Friday, the Society recorded profits of P 26 million against P 8.4 million in the prior year. The move was attributed to a strong appetite on the mortgages advancesÔÇölargely on residential ÔÇö which pace-up by 91 percent while the cost income ration improved substantially from 61 percent in 2004 to 40 percent.
“ I am very excited about the results which show that the Society has performed well. We achieved a profit of P 26 million in a period of six months compared to a profit of P 30 million for the financial year ended March 2006,” BBS General Manager, Pius Molefhe, said in an interview on Friday.
“Not only our mortgages advances went up by 91percent, our balance sheet has grown two-folds from P 608 million to P 1.2 billion,” he said.
BBS is in close contest with First National Bank of Botswana, which saw its mortgage loan book improving 46 percent at its full year results in June to P 1 billion as they both benefit from the strong performance of home-ownership in the country. The two banks’ results are expected to be a barometer on the commercial banks’ full year results, which are expected in the coming weeks as they closed the year in December.
Investors will be keeping an eye on Barclays Bank and Standard Chartered Bank. Though big in size, they have not performed as well as the peer on the mortgage front at their half-year results in June.
“I can only attribute this results to hard work by staff, new innovation and the fact that we brought in experienced and good personnel,” Molefhe said.
“To sum it up, I would say all this was achieved through cost containment, rationalization and effective staff,” he added.
The cash-rich Society said it is well positioned to engage its peers in the market, as Botswana Housing Corporation (BHC) and the mining sector are likely to drive the property market into a positive direction. BHC has embarked on a build-and-sell programme which started with Block 7 in Gaborone while the impending mining boom in the northern parts of the country is likely to influence spending in property.
“We benefited a lot from BHC programme especially with Block 7. And we hope that the mining sector will support this growth going forward,” Molefhe said.
Since he took over in 2004 to work on plans of the first viable indigenous bank, he pruned head counts of senior management from 13 to seven and worked on a restructuring plan that saw many people being retrenched. The retrenchment exercise cost the bank close to P 13 million in golden handshakes but the Society’s fortunes improved.
Further, the Society introduced ATM, refurbished its banking halls and came up with some of the innovative saving programmes and a fix rate bond which saw some clients of the traditional banks migrating to BBS. Customers’ deposits have bulged to P 211 million as against P 189 million during the same period last year.
The Society declared divided of 11.5 thebe per share to both local and international investors.
Some of the innovative programmes that were introduced over the period include the Letsibogo account, which was meant to encourage Batswana to have a saving culture and money transfer system.