Net Interest Income increases to P685m
Total Income decline by 5% to P1.08 billion
Bank upbeat of strong performance in 2021
Stanbic Bank Botswana’s financial performance dipped in 2020 with total income down 5.1% to P1.08 billion but posted growth of P685m in Net Interest Income (NII).
Chose Modise – Chief Financial Officer at Stanbic – revealed this in the bank’s 2020 annual report.
He said Net Interest Income grew by 0.6% while the decline realised in total income came about as a result of the restrictive measures put in place in effort to control the spread of COVID-virus.
According to Modise, the Non-Interest Revenue (NIR) dropped by 13.5% to P398 million in 2020.
“Non-Interest Income growth reflects the bank’s focus on originating good quality assets as well as a tightly managed funding strategy. Loan book grew by 36.4% largely through the Personal and Business Banking (PBB) segment which delivers both better margins compared to other solutions of the bank and low concentration risk. The Group maintained strong capital adequacy ratio in 2020,” he said.
He said the total capital adequacy ratio closed the year at 16.92% (2019: 17.70%), well above the minimum regulatory requirements of 12.5% (2019: 15%) and well within the internal risk appetite.
“The Group also closed with a strong liquidity position well above the approved risk appetite and tolerance limits. The prudential liquidity requirement averaged 13.9% in 2020, exceeding the minimum regulatory requirements of 10.0%. Other liquidity matrices such as the internal stress testing and net stable ratios remain in excess of internal requirements,” added Modise.
According to Modise, the Corporate and Investment Banking (CIB) segment has also shown some resilience particularly in Investment Banking and Transactional Products and Services (TPS).
This growth has mitigated the impact of a 125 basis points cumulative bank rate cut since October 2019. Regarding the outlook, Modise said they expect the global economy to grow by around 5% in 2021.
However, the growth is most likely to be uneven and contingent on successful rollout of vaccines and continued accommodative fiscal, monetary and financial conditions in the larger economies of the world.
Liquidity pressures, he said, are expected to continue into 2021 as many governments go to the market for funding in order to meet the direct and indirect costs emanating from Covid-19 pandemic.
Stanbic Botswana Chief Executive Sam Minta said the largest investment during the year was made to upgrade the Bank’s core banking system to the latest version.
“This was crucial to embed deeper personalised banking solutions, improve service turnaround times and enable offsite banking from our clients’ ‘physical locations via “Moby Banker”. This also opens the exciting capability for “plug & play” solutions through API collaborations with the Fintech players on the Finacle Version 3 system,” stressed Minta.
With the advent of the Fourth Industrial Revolution (4IR), Minta said the bank’s clients are increasingly using the mobile devices and faster internet connectivity for the financial services. The bank’s chairman Craig Granville said notwithstanding all the Covid-19 challenges, the 2020 performance reflected a resilient balance sheet and good judgment by the Management team.
“The Group delivered profit after tax (PAT) of P302 million (2019: 140 million) with a significant portion coming from recoveries. We are confident that the 2021 performance will be equally strong as the Group focuses on alternative revenue streams as part of its digital transformation journey,” he said.
The pandemic, according to Granville, has undoubtedly presented the world with the unprecedented challenges, resulting in major disruption to markets, economies and livelihoods.