Botswana Building Society (BBS), the largest mortgage lender has appointed Absa Capital as its advisor on its ambitions to raise P 2 billion through debt as it anticipates an increased demand pressure on its property development loan applications.
Chief Executive Officer, Pius Molefe told The Telegraph on Monday that plans are afoot to raise cash by floating a bond before the end of the year.
“We will┬ácertainly be raising cash┬ásometime this year. We believe that we will go to the market by September.
“There have been some delays along the way, but we think we will need more money by September,” Molefe said.
The BBS bond issuance will form part of other corporate deals on the Botswana Stock Exchange (BSE) that are expected to start this month with the secondary listing of Firestone Diamonds.
But industry sources say the situation will become clearer after the civil service strike which is beginning to dampen confidence over the local economic outlook.
BBS loan book has been rising at a faster rate hitting P 1.5 billion from P 1.3 billion in the first six months of its fiscal year to the end of September 2010 ÔÇô shrugging off concern around the impact of the global economic crisis.
The society also saw an increase in its asset base to over P 2 billion and its income to cost ratio edged up to 65.7 percent.
However, collections improved over the period leading to lower provision for bad and doubtful debts in the midst of a very challenging economic environment.
“The level of loan provision, however, reduced┬áfrom P 23 million in September┬á2009 to P 9 million┬áas at┬á30 September┬á2010 on account of improved collection strategies by the Society,” he added.
“We awarded Absa capital the tender some two weeks ago and┬áright now we are at planning stage,” Molefe said.
The move by BBS is aimed at preparing it for future cash demand pressures that will be driven by its intention of retaining its share market in the property sector and at the same time comfortably deal with costs of rolling out new products as it eyes to turn into a commercial bank.
Some of the products that are expected to need finance include the Express Lounges that are to be rolled out in the major centre of the country and increase in the ATMs in bid to deal with competition.
Earlier this year it indicated that it is planning to embark on┬áa consultation process with the major shareholders ÔÇô including government ÔÇô with the view of de-mutualising.┬á
That will put it head-to- head with┬áa club of ivy-league banks such as the top four ÔÇô Barclays Bank of Botswana, First National Bank of Botswana, Stanbic Bank of Botswana and Standard Chartered Bank of Botswana.
