The Botswana Building Society (BBS), the largest residential mortgage lender in the country, brightened shareholders faces as it delivered strong earnings results for the fourth year in a row while at the same time building a mountain of cash that will enable it to compete head to head with foreign-owned banks on the local market.
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,” Chief Executive Officer of BBS, Pius Molefhe, told Sunday Standard in an exclusive interview.
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 of 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.
The new developments, however, will not deter the Society from its primary objective of being the largest mortgage lender in the country. Presently, 95 percent of its loan book, which stands at over P 1 billion, is geared towards residential property while the rest go into commercial and industrial property.
“We think we will continue to make good returns for the shareholders and we will continue to serve Batswana.
“We believe that the economy will continue to do well and our institution will benefit from the boom,” he said.
The mining sector is the pillar of Botswana’s economy and it is waiting to unleash a boom thanks to the rise of Asia as a global power-house, though China is showing some signs of a slow-down. However, Botswana, which is reputed to be the best mining destination for global investors in Africa, is planning to grow its beneficiation programe and widening the scope within the sector. Plans are afoot for the diamond stock exchange that will compliment the establishment of Diamond Trading Company Botswana and Commodities exchangeÔÇöthat will work along the same lines with the London Metal Exchange and Merchantile in the USA. The discovery of new economically mineable diamond mineral deposits alluring other minerals such as coal, copper, gas, nickel, silver and uranium is sparring home that the economy will remain strong in the foreseeable future.
“DTC, Francistown developments and Mosetse will contribute to our future profits,” Molefhe said, “as he plans to expand the Francistown branch and, at the same time, working on a programme aimed at serving some of the lucrative areas which might not need the brick and motar establishments.