Saturday, November 26, 2022

Market conditions force Barclays to slightly slash dividend payout

Barclays Bank Botswana’s newly appointed Finance Director, Mumba Kalifungwa announced Thursday that the bank this year decided to go against its traditional policy of issuing dividends in access of 10 thebe per share. 

Kalifungwa, who was presenting the bank’s financial statements for the 2015 full year said the change on issuance of dividends was necessitated by recent changes in operating conditions and profitability of the company. 

“You will recall that we have historically paid an almost constant dividend of 11thebe per share regardless of profitability levels. However in the current year we adopted an approach that is reflective of the business performance”, Kalifungwa said Thursday. 

In a bid to maintain its year to year payment of dividends, Barclays Bank of Botswana has since proposed a dividend of 7.62 thebe amounting to P65 million. This translates to a dividend pay-out ratio of 63 percent of its earnings, above the bank’s average pay-out ratio of 60 percent over the last three years. Meanwhile Kalifungwa also noted that the closure of two mines in 2015 had a negative impact on the bank’s financial performance. 

“Our 62.5% higher credit impairment was driven largely by personal loans. During the year we also absorbed the impact of two mines that went into liquidation with an impairment of P41 million in total,” he said.

At the same time, the bank’s financial statements show that its loans and advances to customers increased by 20 percent year-on year to P9.7 billion. Kalifungwa explained that the growth was largely driven by Corporate and Business banking segments, whose figures grew by 122 percent and 76 percent respectively. 

“This was mainly in our chosen business segments, where we offered various debt and transactional solution products.”  

Banks in Botswana continue to operate in a challenging environment that saw sector profitability decline in the past two years. Falling interest rates, increased funding costs, the two year moratorium on fee increases, and increasing labour costs have been cited as the major factors that reduced profitability.


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