Monday, August 15, 2022

Standard Chartered defies challenging H1 as it grows loan book, deposits

Standard Chartered Bank Botswana said this week it will continue to invest in technology and branch refurbishments in a bid to reach out more people and continue the momentum of the first quarter where it managed to grow deposits and loan book in a challenging period where civil servants were subjected to a no-work-no policy during a recent public strike.

The bank’s results, for the six months ended 30 June, 2011, showed both its wholesale and consumer banking divisions registered an increased business activity while it managed to capture market share from its competitors.

In a very difficult trading period in which the banking sector was affected by the striking government employees, Standard Chartered increased loans to customers by 29 percent to P4.1 billion, while revenues increased by 21 percent to P 419 million.

Analysts had warned that no-work-no pay was going to hurt the banking sector, adding on the woes of economic recession.

However, acting Chief Executive Officer of the Botswana Stock Exchange (BSE) listed bank Dr. Michael Wiegand, told Sunday Standard, the bank managed to dribble the strike action as it undertook impairment provision measures.

“We did see a small increase in delinquencies. It peaked, but reduced as we started to work with individual customers,” Wiegand said.

Also during the strike, Wiegand said the deposits ‘did not slowdown’ while personal loans also grew saying they became proactive in ‘terms of working with government workers’.

“The business continued to perform well,” he added.

The bank’s consumer banking delivered 28 percent pre-tax profit growth and wholesale banking was up 127 percent while the bank’s profit before tax was up 44 percent to P 176.5 million.

The bank said deposits from non-bank customers grew by 33 percent to P 8.8 billion while its bad debt charge was down 2 percent to P 23.6 million.

During the period, Standard Chartered launched Salary Advance service that the bank argued is not necessarily targeted at lower income bracket.

Wiegand argued the product is not a microlender’s facility because it only permits its current account holders to draw emergency cash against their salaries.

“It is quite different (from microlending). It is not targeted at lower income people and it is not targeted to be a loan. When payday comes, people are out of debt,” said Wiegand.

“We believe it is a great service for customers. Response has been positive,” he said, adding that the product will also help the bank attract new customers.

However, operating expenses remained a worry as they went up 10 percent to P 218. 8 million. The costs, the bank said, are necessitated by the desire to improve service delivery. The higher expenses covered costs that included depreciation of past capital and salaries, amongst others.

Branch refurbishments did not account to high operating expenses as refurbishments are ‘capitalised’. There were renovations in Mahalapye and Serowe, which cost about P1.5 million.


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