Barclays Bank Botswana, one of the leading banks in the country, this week disclosed that most of the competition it will face in future will emanate from non-bank financial institutions, partly due to consumer trends.
This was disclosed by immediate former Managing Director, Reinette van der Merwe in the company’s latest annual report published this week. The lender, which is publicly listed, has posted sustained profits in recent years, reversing prior years of tumbling profits, but acknowledges that they need to be prepared for the future with non-banks firms which, among others, include micro-lenders and some select telecoms firms which offer mobile money services. Orange Botswana, Mascom Wireless, Botswana Post and Botswana Telecommunications Corporation are all players in the mobile money services worth millions of Pula.
“Looking ahead, it is clear that in future, most of our competition will come from the non-banking sector, a change that is driven by the desire of consumers for greater convenience and the ability of technology to deliver on this. The future of banking, we believe, therefore lies in more partnerships with other businesses,” said Van Der Merwe, declaring ‘we are ready for this’. The bank, which is now led by a local, Keabetswe Pheko-Moshagane, has reiterated it will continue to invest in technological platforms to ensure their online services are continuously ready and reliable.
A unit of ABSA group, the bank will continue to invest in human capital, which remains the cog of the business. Even on the backdrop of tough competition, record low interest rates, fragile economic growth, the bank still managed to stand tall in 2018. The benchmark interest rate is 5 percent. For the past year to December 2018, the bank posted a profit before tax of P 638 million, which represents a 14 percent growth year on year.
The profits were backed by strong growth across most segments of the business. Record low interest rates in the domestic banking market did not deter the bank from growing its loans and customer deposits which reached P11, 8 billion and 11, 9 billion respectively. Barclays, which is expected to change its name to Absa Bank Botswana subject to shareholders’ approval later this month, said it will continue to explore opportunities for growth whilst driving balance sheet efficiency and enabling greater utilisation of its electronic channels.
“The high adoption rate of our channels proves that our strategy is working and we are confident about this approach going forward. The end of our five-year strategy opens a new chapter with more possibilities. Our tried and tested strategy gives us the assurance that we will continue to be a resilient business that is relevant for the future,” stated the annual report. Meanwhile, the bank which its board is chaired by former Bank of Botswana deputy governor, Oduetse Motshidisi will hold Annual General Meeting (AGM) on the 27th of June 2019.
Among other action items for the meeting include the re-election of retiring directors in the person of Motshidisi, Alfred Dube and Kenneth Molosi. Shareholders will also have the chance to approve the name change of the bank to Absa Bank Botswana. At the meeting, shareholders will also have the opportunity to approve directors’ remuneration as well as re-appointing KPMG as auditors for the ensuing year.
CA Sales Holdings has recorded a double digit increase in gross profit for the year ended December 2018, despite the challenging operating environment that the fast-moving consumer goods (FMCG) that the company and others face.
“Revenue increased by 14.8 percent to over R5.5 billion from R4.8 billion in the prior year, through a combination of organic and acquisitive growth,” said the Botswana Stock Exchange (BSE) listed company this week. According to the financials, the group recorded a gross profit of 14 percent amounting to R824 million and a robust 31 percent increase in headline earnings to R179.4 million.
“This was also supported by the increased shareholding in major subsidiaries towards the end of last year,” reads part of the financials. The group’s headline earnings per share was up 20 percent to 40.11 cents per share, while the group’s total assets increased by 22 percent to R2.5 billion mainly as a result of the acquisition of the land and buildings in Botswana. During the year under review Breckwick, a subsidiary of CA Sales purchased land with warehouses and offices in Botswana previously leased by the group from a third party.
According to the Group, the purchase price was P243 million financed through a bond from Barclays Bank payable monthly over ten years at an interest rate of prime less 0.25 percent. With a diverse geographical presence across Southern Africa operating in Botswana, Lesotho, Mozambique, Namibia, South Africa, Eswatini, Zambia and Zimbabwe, CA Sales service offering includes selling, merchandising, warehousing, distribution, shopper promotions, training and debtor’s administration.
However, CA Sales has shrugged off challenging operating environment and continue to focus on margin retention, stock management, dynamic service levels and continual cost analysis. The group is pleased with the solid results produced by the major operating companies, despite the challenging economic environment in Namibia and South Africa.
In addition, manufacturers’ below the line marketing spend cuts have negatively impacted on the marketing and promotional operations. “It is expected that the difficult economic environment in certain markets will prevail for the time being. “The group is, however, well positioned with a strong balance sheet and a diverse geographical presence across Southern Africa,” said Frans Britz, CA Sales Chief Executive Officer.
Britz is optimistic that the group’s diversified portfolio should enable it to deliver sustainable results in the future.
Barclays Bank Botswana last week unveiled the refresher digital app to allow their customers convenience to bank with them from anywhere at their own time.
According to Barclays Retail Director, Brighton Banda, the Barclays Mobile Banking App is expected to ease their customer’s lives in terms of digital banking. He said the mobile app was first launched in 2012 and has been upgraded to offer customers a better banking experience. “In 2017, we decided that our App needed a facelift to be competitive with similar offerings in the market and in March 2018, we are able to avail the re-fresher App to our customers and we have seen a positive response by the number of the daily app uploads,” explained Banda. He said the business has identified Digital Banking as a critical element that is needed to drive their strategy now and in the future. “Our commitment towards this strategic pillar is underpinned by our current heavy investment towards maintaining, upgrading and developing our digital platforms,” said Banda.
The refreshed App now has a new look and feel, includes airtime purchase, M-Wallet to Myzaka and Orange Money. This means that through the App one is able to transfer their money from the bank account to My Zaka and Orange Money.
Banda said the airtime purchase functionality has the ability to pick a number from the contact list on the phone rather than inputting the number in the traditional manner. Head of Marketing and Corporate Relations-Barclays, Duduetsang Molloy reiterated that, as customers spend so much time online, on their phones, on the Internet, they are forcing banks to be innovative and provide platforms for them to bank wherever they are. “Barclays Bank Botswana embarked on a digital journey nine years back and today provides convenient banking across almost all its digital platforms being; mobile, internet and through the vast ATM network of 113 i-ATMS,” said Molloy.
The Minister of Youth, Sports and Culture, Thapelo Olopeng has challenged the youth to utilise programmes that are offered by both Government and the private sector to uplift themselves.
He said this during the Barclays Bank Botswana Prosper Film launch in Gaborone, where he noted that programmes such as the Youth Development Fund are meant for young people to access start-up capital to go into business.
“While we are not suggesting that everyone is a business person, we believe such programmes, with the availability of mentorship, can help young people to become economically active and successful business people. There is a gap in the YDF dispensation such as the mentorship programme.
“I therefore encourage the private sector to partner with my Ministry to provide or support a mentorship programme for young people before and after funding so they run successful businesses,” said Olopeng.
Through its other supportive initiatives, Barclays Botswana has over the years achieved 85 percent colleague participation rate in Botswana. And because the colleagues volunteered their time and skills, it has reached well over 12, 000 children and youth across Botswana since 2015.
According to the bank’s Managing Director, Reinette van de Merwe, the majority of youths were engaged in skills development sessions including financial literacy and entrepreneurial skills development programmes lectured by Barclays Bank colleagues.
“We have a variety of other skills development opportunities which we have introduced in Botswana over the years including our Rising Eagles graduate programme.
“This programme allows graduates in Botswana to challenge the conventional and share their innovative ideas with some of the best minds in the financial services sector,” she said.
The Bank also prides itself with Madi Majwana production, which was its first entry into the creative arts sector. The story of Madi Majwana is one of the creative innovations between Barclays Bank of Botswana and Maitisong Theatre.
Through this partnership, the bank is able to teach communities across Botswana practical lessons on financial literacy using examples from daily lifestyles of Batswana. This theatrical series broadcasts across all Botswana radio stations, targeting youths between the ages of 10-35 years.
Madi Majwana is a proudly indigenous production engaging local artists to tell the wonderful, simple and empowering financial Stories from Your Pocket. Youth are part-and-parcel of the entire production process including script writing and implementation.
Olopeng said that government alone cannot achieve holistic empowerment of the young people without the private sector and other players.
“My ministry will not tire in its efforts to call out to the private sector to partner with Government to change the lives of young people. I believe this partnership should make an impact in the lives of these young people because they are the future,” he noted.
Standard Chartered Bank Botswana, the country’s oldest bank, is expecting lower interim results, but has promised shareholders it has a war chest to fund its future strategy.
The lender, which is among the top in the country has been experiencing a string of declining profits in recent years due to among others, lower banking rate, increased competition and closure of mines which the bank has been financially exposed to.
It seems the bank is yet to exit troubled waters while some of its peers such as Barclays Bank Botswana and Stanbic Bank Botswana are reporting improved profits. “Shareholders are advised that the company’s overall performance to be reported period ended 30th June 2017 is lower than those achieved in the corresponding period in prior year,” said a board statement.
For the half year period to June last year, the bank profits tumbled to P62, 9 million from P66, 2 million in the same period the year before. ‘Standard Chartered Bank Botswana Limited continues to have a strong balance sheet with sufficient liquidity and capital to deliver on its strategy’
Standard Chartered has not disclosed to the market what has led to profits fall after telling the media early this year that performance will improve going forward. Meantime, shareholders have been warned to exercise caution when dealing with the bank’s securities.
Despite the challenges at the bank, the board and management are upbeat, at least for the rest of the year. Writing in the bank’s annual report, Board of Directors Chairman, Professor Bojosi Otlhogile said. “A rebound in economic growth is expected in 2017 led by improvement in the mining sector. The business is well positioned to take advantage of the forecast growth given the strong fundamentals in place’ Bojosi, a law lecturer at the University of Botswana added that the lender’s balance sheet is fit for growth, and the control environment has improved. “The teams are focused on sustainable and well controlled growth that will generate good returns for our shareholders for the next coming years.
“We remain confident of our ability to realise long term sustainable gains and build a strong franchise,” he stated. The BSE listed commercial bank is without a Substantive Chief Executive following the unexpected resignation of Moatlhodi Lekaukau in February after five years at the helm. Chief Financial Officer, Mpho Masupe is acting.
At the close of trading on Wednesday, Standard Chartered was trading at 560 thebe.
Barclays Bank Botswana and Liberty Life Botswana have joined hands to launch new insurance products that provide customers with financial assistance during their first diagnosis of chronic illnesses. Named Bosele Life Plan, the scheme gives customers the opportunity to access up to P15 million of life cover with attractive optional benefits such as physical impairment and permanent disability.
Launching the product, Barclays Retail Director, Brighton Banda said the life insurance policy ensures that if a policy holder were to pass away or become unable to provide for loved ones due to illness or disability, their families will receive a lump sum to help them through such a difficult time in life.
“We are proud to have been providing Batswana with relevant, affordable and reliable financial services; we tirelessly endeavour to become this nation’s bank of choice. With over six decades in Botswana, we continue to diversify our portfolio, offering a one stop shop for banking services, ranging from savings and investments, transactional, lending and insurance services - both short and long term,” said Banda.
Barclays’ focus is on being Botswana’s partner for growth. “While we grow our business. We are equally passionate about sharing that growth with our communities, using our expertise, coverage, infrastructure and affiliations,” he said.
Another product, which was launched also is the Tshireletso Plan, which provides customers with finance to assist with the living and treatment expenses on first diagnosis of a chronic illness.
These chronic illnesses include, heart attack, heart failure and cancer up to a limit of P250,000 without need for medical tests. For her part, Liberty Life Managing Director, Lulu Rasebotsa said Bosele Life Plan provides life cover with limited medical underwriting.
“There is no waiting period in the sense that, once client has been fully accepted after having gone through medical underwriting, covers starts immediately. Further to that, it is a whole of life cover,” said Rasebotsa. She also explained that Bosele life plan has optional benefits being, permanent disability, physical impairment, critical Illness, and immediate expense benefits. “A claim from optional benefits will not reduce the main core benefit, which is the life cover,” said Rasebotsa.
Barclays Bank Botswana is expecting interim consolidated profits to June 2016 to be higher than the previous period. The latest notice on improved results comes amid tough trading environment that domestic banks have been subjected to such as lower rates and sluggish economic growth.
The company which is publicly listed has however not disclosed to its shareholders how much profit to expect, save to tell shareholders and the regulator, that the results ‘will be higher than that reported for the period ended June 2015’.
The lender which is under the care of South African-born Reinette van der Merwe hinted on the profits a day after the Monetary Policy Committee (MPC) cut key lending rate from 6 percent to 5,5 percent. Bank of Botswana said a rate slash is necessary to inspire growth in the domestic market.
It is not clear what could have contributed to the rise in Barclays bank’s profits for the period under review. However, writing in the bank’s annual report for 2015, Merwe acknowledged that the sector has been under pressure in the past two years, and they are not immune to challenges which include tight regulatory changes. However, Merwe was upbeat about the year ahead(2016), saying they expect strong revenue from the retail sector. The bank’s digital platforms will also come in handy for the bank. In the last couple of months, the bank launched various digital platforms which allow customers to do banking outside banking halls using their mobile gadgets.
Barclays has also been rigorously advertising their business banking services while some of its peers developed cold feet regarding lending to capital intensive projects in the face of market turbulences. Speaking to BG Business on Wednesday, Head of Research at Motswedi Securities, Garry Juma said the bank’s restricting exercise is starting to pay off. Since Merwe was appointed to head the bank three years ago, the lender undertook a restructuring exercise both in terms of human capital and delivery channel platforms.“The bank is also coming from a lower base,” said the analyst referring to the bank’s half year results to June 2015.
During the period, the bank’s profit was P86, 9 million, compared to P123, 6million. The company has also managed to shrug off negative perception which has made the round ever since Barclays plc announced it was pulling out of Africa operations. In the just-ended period, the bank clinched a $100 million deal to fund BCL copper mine. The loan to the struggling miner has been backed by government in case the mine fails to pay up.
It is some of these corporate deals that will also keep Barclays at the top in the coming months, said Juma. Last month, the bank signed a $125 million credit guarantee scheme with Overseas Private Investment Corporation (OPIC). Under the historic arrangement, the United States government will use 75 percent of the credit risk to fund the country’s diamond beneficiation initiatives. The funding could not have come at a better time for the country’s downstream diamond cutting business, which is struggling to receive rough diamonds to process on the backdrop of reduced diamond demand globally.
Last month, minister responsible for minerals, Kitso Mokaila told lawmakers that the industry dropped by nearly half from the US$936.36 million recorded in 2014 to US$502.16 million in 2015.Two out of 21 companies that were operating in Gaborone at the beginning of 2015 had closed shop by year-end due to viability problems, stated Mokaila. “Therefore, there are only 19 operational diamonds cutting and polishing companies operating in Botswana at the moment and they employ around 2,000 people,” said Mokaila.
Barclays Bank which has upped the ante on marketing and promotional activities for its products and services has cautioned its shareholders when dealing with its securities until the results are formally released.
Barclays Bank Botswana latest new account ‘Ignition’ has hit the market.
According to the bank, the account offers several incentives targeted at young people. The account’s opening deposit is P50 and a free Chip & Pin Debit Card. Users will have interests on account balance, free SMS Alerts with access to mobile and internet banking. They will also enjoy discounts at retailers such as Urban Soul and Cell City on different brands.
The bank‘s Consumer Banking Director Brighton Banda explained that the youth demographic is continuously changing and challenging the way they ‘do things as a bank’. Barclays, one of the country’s leading banks said it will come with products and services that are aimed at making banking easier and affordable to its youth clientele.
Barclays is a unit of Barclays Africa. Latest news is that, Barclays plc intends selling its majority at Barclays Africa. The process is expected to take some few years.
Barclays Bank Botswana, one of the coun- try’s biggest lenders has lost millions of Pula as a result of the central bank’s deci- sion to cut key lending rate twice last year. Finance Director of the BSE listed bank, Mumba Kalifungwa told attendants at the recent an- nouncement of the bank’ full year results that P100 million was wiped off the bank’s balance sheet during 2015, a development that is beyond its control.
Bank of Botswana (BoB), the country’s regulator of commercial banks reduced interest rate by a cumulative 150 basis points to 6 percent last year. The rate was slashed in a bid to spur the struggling economy, which grew by 1 percent in the past. As per regulation, banks are forced to cut lending rates of existing and new loans, in the event that the central announces rates adjustments.
Commercial banks’ prime lending rate is now 7, 5 percent from 9 percent. “These (rate cuts) have affected our performance,” stressed Kalifungwa, who was speaking after the pre- sentation of the company financial results for the year ended 2015 in Gaborone. During the period under review, interest income for the bank increased marginally to P1, 13 billion from P1 billion made the year before.
The central bank, which is headed by Linah Mohohlo, is yet to make any rate adjustment this year. “The current state of the economy and both the domestic and external economic outlook, including the inflation fore- cast suggest that the prevailing monetary policy is consistent with maintaining inflation within the Bank’s medium term objective range of 3-6 percent,” the bank’s Monetary Policy Committee MPC) said last month. Meanwhile, Barclays’ Managing Director Reinette van de Merwe said they have also been affected by the two-year moratorium imposed on the banking industry since January 2014. Under the moratorium, which has since been lifted by BoB, banks were barred from making any upward adjustments on non-interest linked products or services. Meanwhile, Botswana Guardian un- derstands that, even though the moratorium has been lifted, ‘banks are required to go to the central bank if they want to increase fees’.
This was said by a Chief Executive Officer of a listed bank who refused to be named for fear of reprimand by the regulator for sharing the information with third parties. Merwe also told the media that, despite a cut in lending rate, the bank which boasts a market capitalisation of P3, 8 billion managed to increase loans and advances book by 20 percent.
At the end of last year, Barclays’ advances and loan book closed at P9, 8 billion. Barclays bank executives told stakeholders key business seg- ments ‘in our chosen sectors of operation’ boosted that loan book. During the period under review, customers’ deposits stood at P6, 1 billion. Merwe told Botswana Guardian after the results presen- tation that, they managed to return strongly in the second half of 2015 after the liquidity squeeze that nearly brought the whole banking sector to its knees. “Most of our profits were made in the second half of the last year,” she said.
The bank posted a profit of P260 million, lower than P335, 8 million made last year. The Barclays boss is upbeat of the year ahead (2016) despite poor economic performance at a global level, which also impacts Botswana. The bank also plans to introduce more products in the near future, said the Barclays boss.