Tuesday, November 29, 2022

Stanchart results get a boost from BoB policy change

Standard Chartered Bank, the third largest company on the exchange, last week released strong half year results which were supported by the treasury departmentÔÇö in line with the sector ÔÇö following the restriction of sales of Bank of Botswana certificates to the commercial banks.

The move saw current and deposits accounts ballooning to P 5.7 billion from P 3.3 billion compared to the same period last year and leaving its assets seating pretty at P 6.4 billion or 66 percent better.

The bank’s net interest earnings shot up by 24 percent to P 170 million against P 137 million in the previous year while non-interest earning stood strong at P 94 million or 23.9 percent better against P 75 million in the yester-year.

Commenting ahead of the banking sector’s results a leading banking analyst, Kudzani Pickup, pointed out that Bank of Botswana’s policy change on BoBcs that was effected in March this year will positively influence the banking sectors’ earnings.
“Stable net interest margins on continuing loan book growth momentum will continue to underpin growth in the near term. Marginal income on the previously off-balance sheet BoBcs combined with forex income will contribute strongly to interest and non interest income respectively,” Pickup said in his research released last month.

BoB’s two proned strategy which liberalised the forex exchange by creating a wide-spread among the commercial banks and channelling funds through commercial banks into BoBcs lifted bank’s earnings.

A swath of billion previously invested directly into BoBcs by pension funds and insurance companies are now routed through commercial banks allowing them to charge commissions.
BoBcs’ primary objective is to mob- up excess liquidity in the market thus trying to rein in inflation.

“The commercial banks have been flooded with deposits that previously would have been housed in off-balance sheet BoBcs bought by the banks on behalf of corporate entities. Standard Chartered deposits over ÔÇô the first three months to MarchÔÇöshowed a phenomenal growth of 69.2 percent to over P 5.4 billion, largely due to this policy shift. Although Stanchart has strategically leveraged off this opportunity by offering its larger corporate clients deposits products linked to the return on the BoBcs holdings, the increased supply of funds appears to have benefited Stanchart,” he added.

“The major theme evident in these results ( first three months to March) was the strong contribution of the Bank of Botswana policy changes to overall profitability, with earnings rising 42.8 percent to P 57.7 million ( compared with the same period last year).

“Net interest income growth over the period slowed to 24.1 percent rise to P85.3 million as the loan book slowed to 17.8 percent at P 2.2 billion and the net interest margin remained relatively stable,” he said.

But the bank was able to grow its loan book to P 2.3 billion during its six months to end of June this year.

The bank announced a dividend of 20.13 thebe and closed business Friday at P 16.25 thebe.


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