- Report notes environmental agenda centred on addressing climate change
- 26% PBT growth largely driven by a 12% increase in net interest income
- Report stresses ESG principles for Absa operations and strategy
- Total revenue up 9% due to focus on above-hurdle return products
GAZETTE REPORTER
Despite the ongoing economic uncertainties, Absa Bank Botswana remains confident that its business strategy will yield the desired outcomes.
Managing Director Keabetswe Pheko-Moshagane says the bank is well-capitalised and poised to explore growth opportunities while withstanding unforeseen challenges.
“As we continue to grow and diversify our revenue streams, sustainability will be elevated, with Environmental, Social and Governance (ESG) principles embedded in our operations and strategy execution,” she says in the bank’s condensed consolidated interim financial statements for the period ending 30 June 2024.
Sustainable finance
She emphasises that Absa Botswana’s environmental agenda is centred on addressing climate change and its ambition to lead in sustainable finance within Botswana.
Pheko-Moshagane points out that Absa is actively working on developing products and solutions that will assist customers in transitioning to renewable energy.
“We are committed to supporting our customers in addressing social challenges in the communities we serve,” she says in the report in which she also credits the bank’s employees as the driving force behind the execution of its strategy.
“One Story at a Time”
“Our employees meet the daily needs of our customers, and we will continue to invest in their development to ensure they are equipped with the skills and knowledge required to navigate the evolving regulatory environment,” she says.
“In doing so, we will live up to our purpose: ‘Empowering Africa’s Tomorrow, Together … One Story at a Time.’”
During the first half of 2024, Absa Bank Botswana delivered a remarkable 26 percent growth in profit before tax, largely driven by a solid 12 percent increase in net interest income.
Lower interest rate environment
“Our total revenue increased by 9 percent, primarily due to our strategic focus on above-hurdle return products that enhanced interest income growth by 11 percent,” Pheko-Moshagane states.
Operating expenses were kept to a controlled 5 percent increase, attributed to the cost efficiencies gained from initiatives implemented in 2023. “This approach positions us to optimise our performance ahead of the lower interest rate environment,” she writes in the report.
The bank’s strategy of diversifying its revenue streams is also bearing fruit. Fee and commission income grew by 11 percent, driven by digital initiatives and broader diversification efforts.
Cost-containment
“Our pre-provision profit rose by 14 percent, leading to an annualised Return on Equity (ROE) of 28 percent as of June 30,” Pheko-Moshagane says.
Efficiency remains central to Absa’s strategy. According to the MD, the bank’s cost-containment measures have been effective, with overall operational costs increasing by just 5 percent year-on-year, closely aligning with inflation rates.
“These results reflect the continued momentum from last year’s initiatives, ensuring that we have a sustainable business for the medium to long term,” she says.
Robust capital levels
Absa Bank Botswana’s balance sheet remains solid and resilient, with a total financial position of P25 billion, reflecting 6 percent growth compared to June 2023.
Pheko-Moshagane emphasises the importance of this stability, noting: “Our capital levels remain robust, ensuring we are well-positioned to support future growth.”
Looking ahead, Absa Bank Botswana anticipates challenges in the second half of 2024 due to a muted GDP outlook and a lower interest rate environment. Despite this, Pheko-Moshagane reaffirms the bank’s commitment to maintaining its strategic focus.
Customer expectations
“Customer loans and advances rose by 4 percent year-on-year, driven by targeted opportunities within our Retail and Business Banking (RBB) segment,” she states.
“Our strategic focus will remain steadfast on meeting customer expectations and driving revenue diversification to navigate the remainder of the year effectively.”