BBS total savings, deposits soar to P2 billion

The Botswana Building Society Limited (BBSL) has recorded an increase in the total savings and deposits income stream for the 9 months period under review that ended December 31 2018. Total savings and deposits rose to P2.170 billion compared to P1.802 billion in prior year.

According to BBSL, this is a growth of P367 million or a 20%.

This savings and deposits revenue growth comes against the backdrop loss of P26 million relative to a profit of P49.941 million achieved in March 2018.

Remarking on the loss of endured in December 2018, BBS Board Chairperson Pelani Siwawa-Ndai said the loss is not because of poor performance but a change in the Botswana Building Society Limited (BBSL) capital structure following their conversion into a company in April 2018.

“The indefinite period share were converted to a savings product and earn interest expense as opposed to dividends. IFRS 9 also requires that the provision be calculated on expected loss as opposed to incurred loss and one also has to take account forward looking information before it impacts the business,” Siwawa-Ndai declared in Board Chairperson Report.

BBSL achieved a growth of 3.18% in loans and advances from P3 .099 billion in March 2018 to P3.197 billion in December 2018. The company expects further improvement in this area.

Siwawa-Ndai stressed that regardless of the sluggish performance, BBSL remains a very strong institution financially with a massive capital adequacy ratio of 28.40% in December 2018.

Consequently, according to the BBSL Board Chairperson, BBS Limited has more than adequate capital, much higher than the threshold of 15% as outlined in the Banking Act.

As part of driving more growth, the bank says it is finalsing a new business strategy that is more attuned to the demands of commercial bank and boost of new products and services to meet the anticipated circumstances including meeting clientele needs plus those of the market too.

BBSL Managing Director Pius Molefe said this period has been the utmost challenging for BBSL.

He said the bank has in response to COVID-19 introduced interventions to protect staff, customers and shareholders, saying COVID-19 will also affect 2020 financials.

Molefe insisted that the bank is in full mode to run a fully fleshed commercial bank in the event that Bank of Botswana issues a license, adding that he has been involved in a great deal of preparatory work of new model of business with organisational structure finalised.

“The new organisational structure is in line with envisaged business operation. It has a number of new roles that we believe will help us deliver on the mandate of a new bank,” Molefe said.

He said their performance during the year under review was not positive but this should not unsettle the stakeholders as there were positive indicators whilst they did not make a profit.

“The return on average equity ratio improved significantly from 17% in March 2018 to 19% in

December 2018.We maintain a strong capital base with a capital adequacy ratio of 28.40% for the period ended December 2018.The liquid assets to total customer deposits ratio was 27% as at December 2018 much higher than the 10% limit set by the central bank,” Molefe highlighted.

Also, the bank recorded improvement in the Loans to Deposit to 151% at December 2018 from 177% in March 2018 and according to the optimistic MD this was due to growth in deposit balances.