Sunday, May 26, 2024

Stanbic surprises the market with poor results

Stanbic Bank Botswana, the unlisted commercial bank, released flat year-on-year results Friday which were largely affected by the defaulting delinquencies rate which impaired on its book.

According to the results to the end of December 2006, profit before tax stood at P 104 million as against P 103 million in the past year. This was blamed on bad debts that ballooned by 288 percent to P 24 million. Further, operating expenditure also climbed 21 percent to P 108.5 million from P 89.8 million from last year. However, on the other hand, deposits shot-up 54 percent from P 2.5 billion to P 3.7 billion due to short-term financial instruments, namely Bank of Botswana Certificates (BoBcs).

“Tight economic conditions, together with high interest rates, saw pressure on the retail market. This pressure resulted in non performing book. Stanbic chose to adopt a very prudent stance by applying more stringent provisioning criteria,” Dennies Kennedy, Managing Director of Stanbic said in a statement.

The results baffled financial markets since all the banks across the country reported some decent results but they were quick to single out the repossession exercise on the vehicle and asset management which recently had a knockÔÇöespecially on the high range brands.

“This is very surprising because all other banks made money. They are very lucky because they are not listed,” one observer said, adding that “the bank has been aggressive on the retail front especially in the car loan scheme.”

The bank’s results were slightly supported by the strong performance of treasury division in line with the trends in the market. The move was supported by the Bank of Botswana’s decision restricting the investment in BoBcs to the commercial banks leading to loads of cash in the market.

“During the first half of 2006, inflation continued to rise due to high oil prices and the currency devaluation in 2005,” said the bank’s statement. “The effects of the devaluation subsided during the second half of the year and we saw a downward trend.”


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