Achieves a cost-to-income ratio of 53%
Despite operating in a challenging environment, Barclays Bank Botswana achieved a profit before tax of P387 million, representing growth of 49 percent year-on-year. According to Managing Director (MD), Keabetswe Pheko, this performance was influenced by growth in income, contained costs and favourable credit losses.
Total income is up year-on-year 9 percent, translating into an increase of P67 million, propelled by a balance sheet growth of 6 percent and an increase in net fees and commission income by 5 percent year-on-year.
“We continued to drive momentum across all our key segments to negate the effects of compressed margins arising from an increase in cost of funding,” Pheko said at the presentation of the financials in Gaborone recently.
Further, net interest income increased 8 percent year-on-year, mainly driven by balance sheet growth. The business remained resilient in its selected market segments and continued to drive credit growth. Operating costs were well contained with the business achieving a cost-to-income ratio of 53 percent for the period ended 30 June 2019.
“This is in line with our strategy to achieve a cost to income ration of the lower 50s,” Pheko explained. “We incurred total costs of P431 million on a statutory basis, representing an increase of 8 percent year-on-year. On a normalised view, costs grew by 4 percent. We continue to seek opportunities to realise cost efficiencies to ensure a sustainable business operation.
“On a year-on-year basis, our credit losses decreased by 110 percent in comparison to the previous year with an overall net recovery of P8 million for the period ending 30 June 2019. Our year-to-date expected credit losses performance has benefited from a significant recovery from one of the corporate clients, enhanced collections capability and conservative credit extension to high risk sectors.
Loans and advances to customers grew 12 percent year-on-year to P12.8 billion from P11.4 billion. The growth in loans was realised across all business segments as we continue to focus on client penetration and acquisition to drive up our volumes. Customer liabilities increased by 7 percent year-on-year to P13 billion from P12 billion, driven by positive growth across our business segments.”
Barclays Bank Botswana’s balance sheet position remains solid at a total financial position of P17.9 billion, with strong liquidity and capital adequacy levels. The regulatory capital position stood at P2.5 billion representing a ratio of 18 percent against the regulatory limit of 15 percent while liquid assets ratio was well above the regulatory minimum of 10 percent.