The sluggish economy and tough trading conditions are beginning to weigh heavily on the banking sector as revealed by one of the oldest commercials banks in Botswana. Standard Chartered Bank Botswana, one of the country’s top four bank’s has released financial results which are lower than the corresponding period in 2014.
The bank’s half year results show that its total income is down 18 percent despite sustained growth in customer assets and liabilities due to higher cost of funding. Its operating expenses increased by 9 percent as the bank continues to invest in technology and infrastructure support. However the bank says it continues to deliver shareholder value with Earnings per Share (EPS) pegged at P0.22 and return on average equity at 11.3 percent.
At 17 percent, Stanchart’s capital adequacy ratio remains well capitalised and liquid with a balance sheet that continues to strengthen. The bank’s financial statements shows that loans to customers increased by 9 percent to P7.8 billion while customer deposits rose by 21 percent to P11.5 billion.
“As interest rates continued to be depressed and competition for deposits heightened, business performance came under pressure, resulting in total income falling 18 percent below the same period last year,” said Chief Executive Moatlhodi Lekaukau.
In a statement accompanying the financials, Lekaukau speaks about the bank undertaking a reorganisation of the Retail Clients segment, to better align the structure with opportunities in the market and to enable the bank to be more responsive to clients needs. Lekaukau is of the view that it is expected that performance will improve as the strategy is refined and increasing focus is placed on improving service delivery.
Lekaukau stated that the corporate clients segment continues to focus on leveraging our strong solutions capabilities to deliver value. “There is increasing appetite for our technology based cash management solutions which offer enhanced features that deliver more convenience and flexibility for clients,” he said. He added that the trade business continues to tailor solutions which allow clients to manage their businesses better.
Recently other top banks which are listed on the Botswana Stock Exchange (BSE), Barclays Bank Botswana and First National bank Botswana, also announced that the consolidated results for the period ended 30 June, 2015 will also be lower than those reported for the period ended 30 June, 2014.
The banks are of the view that the decline in profits is as a result of the challenging trading environment which has tightened overall margins, adding that their financial position remains strong.