- Net fees and commission income grew by 10% Y-O-Y to P176m
- Cost to income ratio stands at 54%
- Return on equity of 22%
- Balance sheet growth of 12%
- Declared an interim dividend of BWP80million subject to regulatory approval
Barclays Bank of Botswana Limited today announced its results for the six months ended 30 June 2018. Profit before tax was P 260 million for the period ended 30 June 2018. This represents a 4% growth year-on-year in comparison to the same period last year. This performance was influenced by growth in income, contained costs and favourable expected credit losses.
On a gross basis, Interest income was up by 4% year-on-year, despite the interest rate cut of 50bps in the last quarter of 2017. However, an increase in the interest cost of funding driven by market trends diluted Net interest income growth resulting in our net interest income being flat year on year.
Net fee and commission income increased 10% year- on –year. This is on the back of our focus on driving innovation through investment and enhancement of our digital channels.
Our Net trading income increased by an admirable 18 % year-on-year. This resulted from an increase in forex sales volumes and our continued focus on client acquisition and penetration.
Operating costs were well contained with the business achieving a cost to income ratio of 54% which is in line with our strategic target of the lower 50’s. Year-on-Year costs grew 6%, largely driven by an increase in technology spend as part of the separation journey from Barclays Plc.
Effective 1 January 2018 a new accounting standard IFRS 9 replaces IAS 39 Financial Instruments :
Recognition and measurement. To this end IFRS 9 introduces a revised impairment model which requires entities to recognize expected credit losses based on unbiased forward –looking information. This replaces the existing IAS 39 incurred loss model which only recognizes impairment if there is objective evidence that a loss was already incurred and measures the loss on the most probable outcome. The day 1 impact of this change that was charged to our Retained earnings on the balance sheet amounted to an after tax amount of P129 million.
However, despite the more stringent accounting for credit losses the bank’s expected credit losses/ impairments decreased by 12.3% in comparison to the prior period. The performance is attributable to our enhanced collections capability and conservative credit extension to high risk sectors, especially in the Retail segment.
The bank delivered results that underscore our resilience as a business. These results were realised in the midst of various external challenges such as the declining credit growth across the sector, low interest rates and a general recovery of commodity prices. These do not deter us from our ambitions to be the leading financial services partner in Botswana. The bank continues to make progress in supporting key segments in various sectors of the economy.
Reinette van der Merwe, Managing Director of Barclays Bank said: ‘We are excited to be part of a financial services group that Africa can be proud of. The transition presents our bank as a more modern, fast thinking and relevant organisation that is truly an African bank that is for the people.’
Balance sheet growth was influenced by loans and advances to customers which increased by 14% year-on-year to P11.4 billion. The growth was fairly distributed across the segments in line with our strategy and continues to be focused around prudent lending in our chosen business segments.
Customer liabilities increased 6% year-on-year driven by continued customer focus and penetration across all the segments. This growth compares favourably against the banking industry growth of 4% year-on-year.
Barclays Bank of Botswana declared an interim dividend of 9.38 thebe per share, subject to regulatory approval for the half year ending 30 June 2018 against a backdrop of strong capital levels and internal capital generation capacity. Looking forward, in light of continued modest growth in household incomes as well as restrained economic expansion, we remain mindful of the challenges, which call for continued caution while exploring opportunities within our chosen segments.
Reinette concludes: “We are committed to deliver on our strategy and through endurance and tenacity we will make it all possible. We remain optimistic of the future and our team remains brave, passionate and ready as we bring the possibilities for our clients to life.”