- Investments in people, tech and infrastructure led to 235% PBT growth
- Robust fees and commissions add to growth in customer deposit book of P1.7bn
TLOTLO KEBINAKGABO
Access Bank Limited Botswana has reported significant gains in its financial performance for the period ending 30 June 2024 following strategic investments in people, technology and infrastructure.
The moves were implemented as part of the bank’s broader plan after its acquisition by Access Bank Plc in 2021.
According to Chairperson Lorato Nthando Mosetlhanyane in the bank’s financial statements, these investments have positioned the bank to meet its strategic goals and improve customer experiences.
Outlining how Access Bank has benefitted from the increased volumes in trading and non-interest income, she credits the improvement largely to innovative product launches and strong customer uptake.
Surge in profitability
“As a bank that is looking to have an impact in Africa, and specifically in Botswana for Batswana, it was critical for these investments to be made,” she said. “These will lead to the attainment of the bank’s overall strategic objectives.”
The bank’s investments in operational excellence are already paying off. For the first half of 2024, Access Bank Botswana saw its profit before tax improve by an impressive 235 percent compared to the same period in 2023.
Mosetlhanyane says this surge in profitability is a testament to the solid foundation that has been laid for the bank’s growth. “Our institution is expected to continue to show positive strides towards the attainment of some key strategic goals,” she stated in the report.
“The bank has already started to experience, within a short space of time, increased income resulting in significantly improved performance.”
Challenging market conditions
Despite the challenging market conditions, including reductions in the Monetary Policy Rate by the Bank of Botswana in December 2023 and in June 2024, the bank managed to increase its interest income by 1 percent.
This achievement is notable, given the overall low credit appetite from the market and a declining loan book.
While the bank did see an increase in its customer deposit book by P1.7 billion, this did not result in a corresponding rise in interest expenses, thanks to a focused effort on reducing the cost of funding.
Instead of turning to more expensive financial instruments, the bank grew its current and savings accounts, which helped mitigate the costs typically associated with higher deposit volumes.
Crucial role
Mosetlhanyane added that despite the softening of rates over the last year, Access Bank Botswana managed a 7 percent growth in net interest income.
“The growth in the customer deposit book of P1.7 billion has not resulted in an upward increase in interest expense due to significant effort made on reduction of cost of funding,” she said.
Non-interest revenue played a crucial role in the bank’s strong performance, increasing by 69% during the first half of 2024 compared to the same period in 2023.
This growth was driven by robust fees and commissions, particularly from digital channels, as well as a 14 percent increase in trading income. The rise in trading income was due to higher volumes in the bank’s operations.
Data recalibrations
However, Access Bank Botswana saw a net charge to impairment of P1.4 million during the period, a shift from the release to impairment of P9.4 million in the same period of 2023. This was due to recalibrations in the data for expected credit losses, which resulted in model updates.
Despite this, the bank’s total expenses increased only 4 percent year-on-year, largely driven by investments in its growth areas.
“Increases in costs are predominantly from the investments in people, technology, and infrastructure in support of the strategic expansion of the bank,” Mosetlhanyane noted.
“These were necessary to ensure our strategic milestones are achieved. The growth required an increased staff complement for the expanded network as well as for the diversification of the services offered.”
Confident about its future
The bank’s operating costs were also impacted by inflationary pressures from 2023, though at a reduced rate. Additionally, expenses denominated in US dollars have increased due to the weakening of the Botswana Pula against the dollar, adding to the overall cost structure.
Despite these pressures, Access Bank Botswana remains confident about its future. Mosetlhanyane noted that the investments made are aligned with the bank’s long-term objectives and are setting the institution up for sustainable growth.
“As we continue to build on the Access brand’s embedded excellence in the local market, we are confident that the steps we’ve taken will increase both operational stability and the bank’s product offering, all geared towards improving the overall customer experience,” she said.