COVID-19 Claims P270m from ABSA
Currently the second most profitable commercial bank in Botswana, ABSA might just lose that position following its announcement that up to P270 million will be wiped out of its profits recorded during the previous corresponding period.
Last week Friday, the Board of Directors at ABSA, advised shareholders that the company’s consolidated interim results for the period ended 30 June 2020 will be substantially lower than the results reported for the period ended 30 June 2019.
Chaired in the interim by Alfred Dube, the board announced that profit before tax is expected to be lower by between 60 – 70 percent (approximately P230 million to P270 million) than that reported for the period ended 30 June 2019, which amounted to P387 million. Absa Bank Botswana Limited is required, in line with the Botswana Stock Exchange (BSE) Listings Requirements, to announce through the BSE and to the shareholders any circum-stances or events that have, or are likely to have, a material effect on the financial results of the Company for the period to be reported on.
Dube said the outbreak of COVID-19 has had a significant impact on the economy and business community across different industries at large.
“In our business, the impact has been significant on the credit impairment provisions line given the size of our business as well as the strategies we deployed to support our customers during this difficult time, through extension of payment holidays and other relief programs,” he noted.
As a result, he further stated that this surge in credit impairments provisions has materially impacted ABSA’s profit before tax in comparison to prior period results. Dube stressed that the full details will be provided to shareholders at the announcement of the half year financial results due to be released in September 2020, before advising the shareholders of the company and potential investors to exercise caution when trading in the company’s securities until the results are formally published. By losing up to P270 for the interim period ending June 2020, ABSA will see profits plunge to just P117 million, as compared to the P387 million recorded previously.
Using the 2019 financials, ABSA, formerly Barclays Bank Botswana, was the second most profitable commercial bank after the colossal First National Bank Botswana (FNBB).
FNBB’s pre-tax profit for the half year ended December 2019 increased by between 10 percent and 20 percent, which resulted in an addition of between P48 million and P72 million to the 2018 interim pre-tax profit of P481 million.
Consequently, FNBB made over P500 million in profits for only six months in 2019. While ABSA is currently the second most profitable bank, by shedding P270 million, other competitors like Stanbic Bank Botswana and Standard Chartered Bank Botswana, might just snatch the position.