The negative impact of a reduction in the Bank rate by Bank of Botswana in 2016 and late 2017 is not exclusive to the big boys of the banking sector only, even the small banks have felt the pinch.
The leader of the lower band ÔÇô BancABC has also come out to say its performance during 2017 was affected by the current levels of interest rates.
The bank, which is ranked fifth, just under Stanbic Bank Botswana in market share recorded a 14 percent fall on its Return on Equity (ROE) whilst cost to income ratio increased to 62 percent.
Notably, the bank recorded a decline in Net Interest Income from 543 million in 2016 to P488 by 31 December 2017. The balance sheet also got reduced by 2 percent in response to an 11 percent reduction in deposits.
Kgotso Bannalotlhe, the managing director explains that the reduction in deposits was due to the loss in the first quarter of 2017 of transitory customer liabilities which were received towards the end of 2016.
As a result, the bank recorded a net Profit After Tax (PAT) of P139 million which was 18 percent lower than prior year.
Bannalotlhe says the reduced overall market liquidity in the Botswana financial market have continued to impact the industry as a whole leading to less profitability for the entire sector.
“The bank implemented debt collection agency model to ensure better collection rates on over dues. We continue to educate our customers to better manage their debt,” he stated.
The bank did not make profit losses only but also lost three board members, Doreen Khama, Leonard Makwinja and Nomathemba Segage who all resigned.