Wednesday, June 12, 2024

Retail lending buoys SCBB earnings

The retail segment remains an income leader for the Standard Chartered Bank Botswana’s business.

For 2019, retail lending closed at just above 80 percent of the overall client’s assets books ahead of industry averages which hover around 63 percent.

The retail segment registered a P76, 2million growth in profit before tax for the period under review from P68, 5million in the prior year, while Corporate & Institutional Banking (CIB) recorded P17, 4million from P10, 2million in 2018.  

According to the banks’ latest annual report, the retail book grew 12 percent year-to-year, broadly in line with total growth in loans and advances to households at industry level.

Total unimpaired income for the retail segment was up 5 percent, driven by improved margins on top line and a modest 1 percent increase in non-funded income. Improved margins came on the back of optimised average asset pricing against a reducing cost of funds.

Impairments were higher than prior year at P25 million but remain very low in the context of total retail client asset base. Profits for the segment were 17 percent higher as operational costs ascribed to the segment climbed down 5 percent to close the year at P426 million.

Looking at the Commercial, Corporate & Institutional Banking, overall segment income was 6 percent down to P207 million as a decent 4 percent growth on the non-funded income line was totally offset by a 14percent degrowth in net interest income.

The bank ascribed this to combined effects of subdued demand for corporate debt and the bank’s strategy on stepping up its non-lending business support to corporates. Loans and advances went down 2 percent at industry level. The CIB sub segment registered a 71 percent growth in profit before tax, while the CB sub segment materially cut down its losses from the prior year by more than half.

In commenting, the banks’ chief financial officer, Mbako Mbo indicated that, the total income remained relatively flat in 2019 while costs went down.

“Portfolio rebalancing initiatives, supported by discipline over the quality of new asset origination led to a decline in Non-Performing Loans (NPLs). An improved liquidity, an enhanced efficiency in liability deployment and a more optimal asset pricing led to improved returns.”

As most businesses are battling to adjust in the new normal brought about by the Covid-19 storm, the banks’ management stand ready to foster continuity in the face of the COVID-19.

The bank stand firm to continue to roll out digital led solutions to advance client experience. Just last week, the bank introduced to its clientele ATM deposit taking which it has been lagging behind compared to its major competitors listed in the local bourse.


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