The Botswana Building Society (BBS), the country’s leading mortgage-lending outfit, saw its profits easing by four percent to P66 million, a move that was largely blamed on high provisions as the world economy entered a recessionary period.
However, the Society said that despite the high provisions that were made during the full year to the end of March 2009, the default rates at the mortgage bank were not that alarming.
“The economy slowed-down. However, a lot of Batswana still believe that in terms of rates, we are better than others, hence, our mortgage loan book is growing,” Chief Executive Officer of BBS, Pius Molefe said in an interview with Sunday Standard on Friday.
The Society’s performance was largely driven by the interest income that shot-up to P 224 million from P 194 million recorded in the corresponding period in the past year but impairment dug a P 4 million hole in the Society’s wallet.
On Friday, Molefe said they were embolden by the world’s economic recovery as the Diamond Trading Company (DTC) has started to sell Botswana mined diamonds after the suspension of trades beginning of this year.
The rough diamond industry is the country’s economic back-bone and contributes 33 percent to the GDP and over 50 percent of government revenue.
“We have seen that Debswana and DTC have started selling diamonds. Although the economy will not be that robust, we believe that our results will be a lot better in the current financial year,” Molefe said.
Further, the Society has called for a review of the current Building Society’s Act in a bid to give it a competitive edge that will see it operating with a full-fledge banking license.
It is understood that governmentÔÇöthrough the Ministry of Finance and Development Planning ÔÇô is in the process of commissioning a consultancy that will look into areas that would broaden its operating space.
“I think going forward, we can not rely on an Act that is hampering our progress,” Molefe said, supporting the view that has been expressed by Cross Kgosidiile, the chairman of the board.
“The board is currently seized with ensuring that the Society continues to do well into the future. One of the initiatives the board is currently undertaking is finding ways of transforming the business so that it is better able to compete. There is a realisation that given the constraints posed to the operations of the Society by the Building Society Act, the board, acting with management, must find ways of improving the business to ensure long term sustainability. Therefore, we will be coming with concrete proposals, which we hope you will support, on how this may be achieved,” Kgosidiile said.
“We need to acquire a proper banking license because we are better placed and we do have the client base,” Molefe added.
Further, the Society is looking into areas of improving its accessibility by increasing the number of its ATM across the country and improving customer relations. Some of the notable developments over the year include the bolstering of the paid up and subscription shares which shot-up from P 1 billion to P 1.3 billion during the period under review while reserves have swollen in a bid to have stable and financially sound Society.