Wednesday, November 29, 2023

Once bitten, twice shy…Stanchart de-risk from diamond and jewellery sector

Standard Chartered Bank Botswana has not been hit once but twice by the diamond and jewellery sector. This has forced the bank to consider de-risking from the sector and diversifying its risk exposure across other sectors including mortgage lending where is has been an underdog.

Managing Director, Mpho Masupe on Thursday told a group of journalists in the capital Gaborone during the bank’s financial results presentation that while the bank is not completely quitting the mining sector, “as opportunities still exist”, the lender has exited high risk sector and improved concentration risk in its asset book.

“We are not completely moving away from the mining sector as there are still a lot of opportunities in other sub sectors of the mining sector” said Masupe.

Masupe said that the bank is eyeing Debswana Diamond Company’s Cut 9 project amongst others.

Whilst a reduction in the bank rate by Bank of Botswana put pressure on interest margins of Stanchart, it was ultimately single big loan impairment in the Corporate and Institutional Banking (CIB) segment that is said to have caused the greatest attrition to the bank’s performance.

The bank’s performance, just like its peers also faced significant challenges from within an already stretched banking environment. These collective factors contributed to the London based bank franchise recording a loss for the period ended 31 December 2017. The bank recorded a loss of P189 million for the first time in many years.

The bank’s operating income also went down by 6 percent reflecting challenging market conditions while operations expenses excluding impairment increased by 15 percent due to continued technical support.

“We are aware of our challenges and we know what needs to be done to fix the challenges and we intend to grow our market share,” said Masupe.

He admitted that they had a challenging year for the Bank, adding that lessons have been learnt and the business has had to introspect which has given them greater clarity on where and how the business will return the value that their shareholders deserve.

Stanchart, just like its peers looks to the balance sheet which is well positioned to accommodate good growth and take advantage of the opportunities offered by the promising economic activities in Botswana.

Masupe said that the bank’s biggest revenue contributor, the Retail Banking segment will be unveiling greater innovations and enhancements across their global award-winning digital platforms to accelerate deposit growth and implement non-funded income initiatives.

Meanwhile the bank’s stock at the Botswana Stock Exchange (BSE) continued to record a downward movement. It closed business at P4.99 during the month of March 2018.

Masupe admitted that that the bank’s share price is taking a knock as a result of profitability.


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