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Absa Botswana cuts costs; post strong results

patriot by patriot
September 23, 2021
in Business
0
Absa Bank Botswana Managing Director Keabetswe Pheko-Moshagane

Absa Bank Botswana Managing Director Keabetswe Pheko-Moshagane

STAFF WRITER

editors@thepatriot.co.bw

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Absa Bank Botswana has lauded positive performance of the impairment line as well as positive momentum in cost lines for a whooping growth of 126 % in profit before tax.   

“Pre-provision profit has also grown year-on-year by 9%. Consequently, we have seen Return on Equity (ROE) growing to 19%. Our total revenue declined 1% year-on-year. Net interest income declined 8% due to margin compression driven by interest rate cuts in 2020, however the sales and transactional banking franchise realised pleasing recovery rates with volumes going up to almost pre COVID-19 levels, thereby our fee revenue grew 20% year-on-year. Operating costs remain well contained, on a reducing trend compared to prior year. On a statutory basis operating expenses totalled P460 million representing a 7% decrease year-on-year. This was achieved by an overall reduction in spend as we continue to leverage on a leaner, rotational and digitally-led operating model,” said the bank in a statement prefacing the financial results for the period ending 30 June 2021.

The bank said costs benefited from the absence of Voluntary Staff Separation exercise that happened in the first half of 2020, together with a significant reduction in separation expenses as the rebranding exercise has been completed.

“On a year-on-year basis our credit losses decreased materially by 74%. This significant drop was driven primarily by better than-expected performance of the macroeconomic variables, predominantly GDP which carries a higher weighting in our risk models, together with improved and stable portfolio performance, loan loss rate improved to less than 1% for period ended 30 June 2021,” the bank said.

The bank’s balance sheet posted an overall growth of 14% to reach P21.5 billion with customer loans and deposits being key drivers of balance sheet growth.

“Customer loans grew by 9% year-on-year to P14.8 billion. We have seen increased momentum in our loan conversion rates especially in RBB where growth was driven by scheme loans, mortgage loans and Enterprise Supply-chain Development (ESD) loans. This growth is in line with our strategy to continue to lend a hand to our customers who need support during this period and support the initiatives around the citizen economic empowerment and economic diversification,” said the bank.

Customer deposits, the bank said, registered 15% growth in comparison to same period last year reaching P16 billion as of 30 June 2021.

“With our solid balance sheet position, recovery in profitability we have strengthened further our capital position which stands at P2.9 billion and representing a capital adequacy ratio of 18% against a regulatory requirement of 12.5%. Liquid assets ratio stood at 14.6% well above a regulatory limit of 10%,” said the bank.

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  • Where are the ladies?October 7, 2025
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