Sunday, October 25, 2020

STANCHART BACK IN THE GREEN

The oldest commercial bank in the country Standard Chartered Bank Botswana (SCBB) continues to improve on its bottom-line, with the bank announcing that it is expecting an increase in profit for its interim results.

The Botswana Stock Exchange listed company informed the markets this week that the pre-tax profit for the six months ended June 2019 will be 10 to 15 percent higher than the P27.5 million profit fetched in June 2018. The anticipated financial results will be made public month end, the bank said.

The bank’s return to profitability started last year when it raked in P20 million in pre-tax profit, coming from a period of losses which knocked the bank out of the top three commercial banks in Botswana by profit.

The commercial bank which has been operating in the country for 122 years has had a tough time in the last three years. In 2017 the bank recorded a startling loss of about P66.5 million in the half year results, triggering in motion a larger loss in the 2017 full year results which came at a whooping loss of P232 million.

This was in contrast to the P79.7 million profit made in 2016, which of course was also a sign of the bank’s declining bottom line performance – falling from the highs of P319.2 million made in 2014, before plunging to P47.4 million in 2015.

SCBB’s explanation for its past dwindling profits had been attributed to constrained revenue growth, and a significant loan impairment charge on one client and increase in costs. The subdued performance in the past three years was mainly caused by once-off impairments – a diamond and jewellery client in 2015, a mining client in 2016 and another diamond and jewellery client in 2017.

The bank has since reduced its exposure in certain categories of its portfolio, particularly mining, and has also tightened its risk appetite. The effects of these became evident in the bank’s half year results for the period ending June 2018, when bank declared a profit after tax of P22.7 million.

While its fortunes are improving, SCBB’s stock price has been battered. Following periods of losses which might have spooked some investors, the share price started falling, from the highs of P15 to the current P3.80, and just this year alone, the share value dropped by 56 percent, making it the worst performer, a trend that has been ongoing in the last three years.

Meanwhile, its proving to be a profitable year for commercial banks in Botswana, with First National Bank Botswana recently delivering stellar profits, cementing its position as the country’s biggest commercial bank. Not far off was Barclays Bank Botswana which saw its interim profit shoot up by 49 percent. However, BancABC has warned its shareholders to expect a lower profit, which might be  a 20 percent drop from the previous interim profit.

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