First National Bank Botswana, not only the largest commercial bank in the country, but also the leading mass retail bank, plans to reduce its exposure to retail clients, and instead put concerted efforts towards emerging opportunities in the resurgent business sector.
John Macaskill, FNBB chairman, was bullish about the local economy in his chairman report contained in the bank’s 2018 annual report, noting that the increase in government spending, foreign investment in mining, utilities and infrastructure development point to better days ahead, particularly in the business sector.
“Additionally, there is a focus on driving investment spending for diversification of the economy and creation of employment,” said Macaskill. “The activity indicators are pointing towards a renewed strengthening for local growth which will lead to improvement in both business confidence and growth and we will play a decisive role in the process.”
FNBB is the biggest commercial bank in the country with a balance sheet of P24.9 billion built over the years through its dominance of the retail market. The bank has over 500,000 customers concentrated in its retail segment – which is the bank’s cash cow. In the last financials of the bank, the retail arm led all other segments, contributing the most to total revenue. The retail segment also contributes the most to FNBB’s huge loan book, accounting for about 55 percent.
However, in the last four years the segment has come under economic pressures ÔÇô rising unemployment figures, depressed disposable incomes, over indebted customers and tough competition ÔÇô resulting in increased impairments and little room for growth. This has led to the bank being cautious about lending to this market.
Faced with these realities, FNBB buoyed by improved business confidence says there is growing demand from other sectors such as mining, construction, real estate and tourism. Nonetheless the bank has been cautious, explaining that meeting client credit requirements remained a main challenge in the prevailing market conditions.
“There was a rise in non-performing loans, and larger corporates continue to taper down their investment and capital expenditure. The Bank has put in place strategies to meet the demands of the growing sectors of the economy, such as tourism, and is focusing on credit growth in specific industries that are not considered high risk,” the bank said in its annual report.
On future prospects, the leading commercial bank says as markets continue to evolve, the bank sees particular opportunity for growth by ensuring that its value propositions meet the needs of businesses in growth areas of the economy.
“We anticipate growth in targeted financing for some sectors of the economy such as agriculture, manufacturing and tourism, which will be supported by credit guarantees from development finance institutions,” said Steven Bogatsu, FNBB CEO.
