Friday, January 21, 2022

Stanbic Bank shoots-up on strong loan book and treasury division

Stanbic Bank, the smallest retail bank in the country, rode on the back of the treasury department in its first six months to end June to score a pre tax profit of 27 percent or P 63 million.

According to the financial statement, the bank, which controls 11 percent of the retail market, pointed out that its treasury department almost doubled from P 2.1 billion to P 4.1 billion over the year, while the loan book surged from P 1.5 billion to P 1.8 billion , representing an increase of 21 percent year -on-year.

The treasury departments’ performance is in line with market expectations following the move by the central bank in March to restrict the Bank of Botswana Certificate sales to commercial banks.

“The commercial banks are set to make a big kill on the BoBcs. We have a situation where a number of financial players, such as insurance companies, fund managers and other interest players have been closed out of direct participation in the sale of the lucrative BoBcs.

“Now, the only way in which they can still participate in the BoBcs is through the commercial banks and they are charging an interest for that,” A researcher at African Alliance, Kudzani Pickup said, at his company’s breakfast presentation on the Banking Sector on Tuesday.

“The banks also have another window to tap on the forex exchange where they can charge wider margin unlike under the previous regime,” he added.

His comments were shared by other analysts towards the end of the week as Stanbic Bank showed “impressive results”, showing a near double digit growth in the treasury department which tended to replicate Barclays’ results nearly a fortnight ago.

“A double digit growth across the income statement is quite impressive,” Leutwetse Tumelo of Capital Securities said, adding that treasury ballooned up by 97 percent as a result of the BoBcs.

“The most interesting thing will be the second half in as far as the loan book is concerned. That is period when we have Christmas and Independence Anniversary and that is the periods when we are expecting see more and more people coming up to apply for short-loans,” he added.

The 21 percent jump in the loan book is expected to be underpinned by the retail spending as opposed to corporate loans as in line with the Bank of Botswana’s Mid Term Review of the Monetary Policy Statement released on Monday.

The statement said credit growth is at 12 percent.
“The loan book growth is impressive and the assumption is that most of it was geared towards retail in the form of property finance, car loan scheme and personal loans,” Alphonse Ndzinge said.

“What we are seeing that competition within the banks is intensifying and what is needed is that they need to diversify their products.

There is still a scope for a well priced credit card in the market given that the banks want to target the micro-finance market. That will be cheaper to run compared to the normal loans in the market,” he added.


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