Thursday, August 5, 2021

Standard Chartered Bank unstoppable

Like the green colours it is associated with it, Standard Chartered Bank Botswana, continues to defy the headwinds that have dragged performance of most companies that had to deal with the Covid-19 adjustments.

On late Friday, the bank also known as Stanchart, announced that to shareholders that the consolidated profit before tax  for the year ended 31st December 2020 will approximately be between 42 percent to 47 percent (P29.2 million to P32.5 million) higher than the P69.6 million reported for the year ended 31st December 2019.

The Covid-19 defying performance was set in motion last year when Stanchart pressed ahead with stellar performance despite the disruptions brought by interventions aimed at containing the spread of the virus.

In September 2020, the bank reported that the financials for the six months ended 30 June 2020 defied expectations. The operating income was up by 14 percent to P384.2 million, and though expenses rose slightly by 5 percent to P308.4 million, Stanchart delivered a strong profit after tax, up from 2019’s P27 million to P90 million. The improvement in profit was mostly due to a P48 million impairment reversal, courtesy of a cancelled related party loan to the SCB Education Trust, with the reversal consolidated into the group’s results.

Stanchart’s recent performance has been remarkable, staging a recovery after a challenging period of declining profits and in some instances, steep losses. The strong sets of financials build on 2019’s momentum after the bank tripled its pre-tax profit for the financial year ended December 2019 to P69.5 million, up from P23 million registered in 2018 when the bank was just emerging from one of its toughest time since operating in Botswana. For the period of six months ended June 2019, Stanchart’s pre-tax profit was P33 million, up by 65 percent from 2018’s full year profit, which had kickstarted the bank’s return to profitability.

Stanchart, which has been operating in the country for 122 years fell from the list of the top three most profitable banks in the country in 2017 when Stanchart posted a P232 million loss, with the financial performance dragged by the closure of the BCL mines – one of the bank’s top clients. The steep loss 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.

During the mounting losses, Stanchart’s explained that profits were falling due to constrained revenue growth, and a significant loan impairment charges and increase in costs. The subdued performance in that three-year period 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.

In a nod to the bank’s impressive performance, the share price on the Botswana Stock Exchange has climbed by 3.45 percent to trade at P1.50.

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