2020 Half Year Financial Highlights:
• Operating income up 14% YoY to BWP384 million
Net Interest Income up 25% YoY to BWP251 million
• Overall Profit before Tax for the year up to BWP109 million, from P33 million in 2019
• Pre-provision Profit before Tax up 71% YoY to BWP76 million
• Loans and Advances to clients up 14%
• Earnings per share up 3.3X to 30.18 thebe
• Cost-to-income ratio down 7% YoY
Gaborone, 4 September 2020 – Standard Chartered Bank Botswana Limited today announced half year results for the period ended 30 June 2020. The Bank demonstrated resilience in the first half of the year to deliver a strong financial performance with pre-provision profit before tax (PBT) growing 71% year-on-year to BWP76 million. Overall profitability was up 2.3X YoY to BWP109 million.
Across financial indicators, the Bank has realised sustainable gains with operating income growing 14% and a 7% reduction in the cost-to-income ratio despite a marginal 5% increase in operating expenses year-on-year. Significantly, the business continues to return value with a 3.3X growth in earnings per share to 30.18 thebe.
The positive returns to both performance and business value corroborate management’s prudent strategy to secure the franchise fundamentals to ultimately build resilience and improve productivity. This has, in turn, delivered confidence to all business segments signified by strong momentum gains and seen overall impairment charges remain at lower thresholds. Furthermore, this has allowed the Bank to accelerate on its digital innovation plan for both retail and corporate banking segments.
The Retail banking segment continues to advance its client-centred digital adoption strategy. The digital bank that was introduced in mid-2019, has seen the Bank extend its reach to both new geographic areas of the country where it has no physical presence and to a more youthful demographic with 74% of accounts opened through the platform by people aged 40 or younger. The platform, which offers over 70 banking services through the SC Mobile App, has shown its relevance and strength during the recent nationwide lockdowns with approximately 93% of retail transactions in the first half of the year done through digital channels. The segment further rolled out cash deposit machines across the country, and deepened integration with Mobile Network Operators (MNOs) with the launch of the country’s first Wallet2Bank functionality offering account funding through a mobile wallet.
The Retail segment saw income rise by 10% with an overall 3% growth in profit for the year. Loans and advances were up 9% despite the challenging market environment, while net interest income grew by 23%.
The Commercial, Corporate and Institutional Banking (CCIB) segment delivered an impressive first half turning around a BWP4 million loss from the previous period last year to a BWP24 million pre-provision profit this year, with the overall segment profits closing the period at BWP72 million after a BWP48 million impairment reversal. The segment returned a 23% year-on-year growth in revenue, with both Net Interest Income and Non-Interest Income posting significant growth at 34% and 12% respectively.
The CCIB client-centric strategy supported an enhanced product mix and despite the challenges of the first half of the year was able to grow advances to clients by 39% year-on-year. The segment continues to be a trusted partner in the economy and sees great potential to assist corporates and institutions not just to navigate the remainder of 2020 but indeed capitalise on opportunities that will spur the economy forward.
Presenting the results, Standard Chartered Bank Botswana Limited Chief Financial Officer, Dr Mbako Mbo remarked on a positive first half performance; “We are encouraged that our business is reflecting the kind of performance which speaks to a strong and well-balanced portfolio. Even more encouraging is that growth is consistently sustained, this is evidenced by not only by the fact that all our business segments are performing well, but that our margins are improving as well. Our cost-to-income ratio has reduced, our cost of funding is declining, and our impairment line is within the lower thresholds.”
Dr Mbo further outlined that whilst significant progress in line with the strategy has been made on strategy execution, the uncertainty surrounding COVID-19 could not be taken for granted, “We do note that though half year performance was good, the effect of the COVID-19 pandemic in Botswana did slow progress in the second quarter. With the possibilities of intermittent national and localised lockdowns, the strains on supply chains and the very real effects on livelihoods, we remain alive to greater impacts to the local economy. We can say that we are confident that our balance sheet is robust and resilient enough for such eventualities.”
Commenting on the Bank’s performance, Chief Executive Officer, Mr. Mpho Masupe expressed his delight at the progress that has been made, “It has taken a great effort and dedication to a strategy that we knew would deliver results to be in the position we are in today. We do know that it is a combination of the great team of people across the country and our products and services which are, day-by-day, demonstrating themselves to be the key drivers that enhance and compliment the needs and lifestyles of our clients. It does also encourage us to stay the course – we have a lot more still to offer across business segments.
Our digital agenda continues to engage more Batswana and show its relevance to even the most seasoned Standard Chartered clients. We will continue to grow this platform and leverage the opportunities to integrate partners and cross sell where it offers value.”
He further commented that whilst significant progress on strategy implementation has been made the responsibility now rested on building from the strong platform, “We have previously mentioned that turning around a balance sheet as large as ours does take time, we believe that we are now pointing in the right direction, but that does mean that we now have to maintain that direction and importantly push ahead. We are very cautiously confident that we have eliminated the drags that are giving this business every opportunity to return to where it should be.
Looking into the second half of 2020, we are committed to ensuring that we are available to support our clients and the nation at large through these uncertain times. In as much as we are proud to share our encouraging financial results, we are very sensitive to the impact COVID-19 is having on our economy and citizens and residents in Botswana. Standard Chartered Botswana has to date contributed a collective BWP5.6 million to the national cause. To assist youth-led businesses, we will be launching a second phase of our Futuremakers programme, phase one of which concluded in February this year.”