Standard Chartered Bank Botswana (SCBB) has managed to maintain sustainable and consistent financial growth despite the current global economic conditions.
SCBB financial results for the year ended 31 December 2012 revealed an increase of 13 percent of net interest income from P511.4 million to P577.3 million driven largely by growth in loans and advances to customers, funded with less expensive deposits.
Non funded income was 8 percent lower than the previous year due to a lack of large corporate finance transactions consummated in 2011.
This resulted in a modest 4 percent growth at the total income level. Consumer banking delivered 9 percent incremental revenue, compared to a 5 percent dip in Wholesale Banking.
In addition, operating expenses increased 16 percent, as the Bank accelerated investment spends in people capacity, service delivery, and training and customer channels.
Standard Chartered Bank Botswana Chief Executive Officer (CEO), Moatlhodi Lekaukau, says the bank continues to focus on the basics of banking and growing clients’ businesses while maintaining our balance sheet strength.
“Our results reflect these efforts. Loans and advances to retail customers grew by 23 percent with the Bank sustained its market share in this sector, whilst pursuing an expansion strategy into SME and mortgage markets,” said Lekaukau.
SCBB CEO pointed out that corporate lending also posted an impressive growth at 21 percent as the bank continues to be the choice financier of the mining, diamond and jewellery sectors.
Lekaukau revealed that the bank’s balance sheet is in excellent shape and they continue to be highly liquid, well capitalized and remain deposit funded.
“We are also committed to meet Basel II implementation timelines as advised by Bank of Botswana. We are disciplined and proactive in our approach to risk management,” said Lekaukau. “We will vigorously drive pipeline conversion, especially in the Diamond and Jewellery sector, whilst maximizing return on capital utilisation. New opportunities around coal, energy sector and transport will be areas of focus and the business seeks to leverage its global capability to deliver value added products to its client base.”
When presenting the results on Wednesday, the bank’s outgoing Chief Finance Officer, Dayo Omolokun, revealed that the bank saw a total income of P904 million, 4 percent over 2011, with strong contributions from core segments. Operating expenses increased significantly as the bank accelerated investment spends in people, new branches and technology to underpin the future growth.
Omolokun said that the bank saw a total income increase from P866.5 million to P903.8 million (4 percent), largely driven by growth in loans and advances to customers, funded through less expensive deposits.
He said total costs increased from P458.6 million to P532.1 million (16 percent), mainly on account of increases in staff costs, infrastructure and systems charges. Cost to income ratio increased to 59 percent from 53 percent.
Omolokun pointed out that net impairment charges decreased from P56.5 million to P54.8 million (3 percent) and added that the 2012 charge includes write-down of intangible assets by P18.6m. He said excluding this, impairment relating to loan portfolio reduced by 36 percent to P36.2 million.
He revealed that Profit before tax decreased by 9.8 percent to P316.9 million as increase in operating costs out-paced revenue growth. He added that post-tax profit showed only 0.9 percent reduction from 2011 to P278.8 as a result of application of prior period tax credits in 2012.
“Loans and advances to customers increased by 22 percent as we increase our appetite for risks in both retail and corporate segments, through responsible lending, innovative products .There was a strong return on average equity at 32.1 percent and average return on assets at 2.9 percent,” he said.
He pointed out that the bank is sufficiently capitalized with CAR at 23 percent, with strong contractual and behavioral liquidity profile.
“We continue to pursue our Group aspiration to be The World’s Best International Bank ÔÇô Leading the Way in Asia, Africa and The Middle East. Africa is at the centre of this strategic intent and Botswana is a key part of the African franchise. We are pleased with this most recent set of results and committed to giving our shareholders even more value in the future,” said Omolokun.
Dividend to shareholders achieved a yield of 6.7 percent at 1.4 dividend cover.