An increase in loans and advances to Botswana Building Society (BBS) customers pushed the society’s profits for the half year ended September 2012, their financial statement has revealed.The Society, which is among the first few indigenous institutions that provide property finance, saw its long term loan and advances grow by 10 percent to reach P2.1 billion record, from P1.9 billion recorded the previous corresponding period.
With more Batswana turning to property investment, a local property and asset manager said that many Batswana are now seeking more financial rescue in financial institutions so as to own property, which she said has proved itself to be a valuable investment. “At the same time, financial institutions win big because they now sell more loans to aspiring property owners, thus boosting their loan books” she said.
Pius Molefe, BBS managing Director said in the financial statement that the growth was far much bigger than the 6 percent growth attained last year in the same period. “The growth in the mortgage book continues to reflect the confidence that our customers have in our products and services,” Molefe said. As a result of the increase in the society’s advance and loans to customers, BBS saw an 8 percent increase in its profit after tax (PAT) which settled at P38 million compared to P30 million of the prior corresponding period.
BBS currently has got assets valued at P3 billion. The assets saw a 21 percent boost from P2.2 billion recorded during the previous period. Molefe remained optimistic that the society would attain more colorful financial results for the remainder of the financial year. He said this was despite the possibility of further interest rate cuts by Bank of Botswana, which he said couldn’t be overlooked.
“The society’s outlook for the remainder of the financial year remains positive with profitability expected to grow further,” he said. Molefe said the BBS growth in profits would be underpinned by the growth in the balance sheet and containment of costs despite the current challenging economic environment.
Meanwhile previously, BBS board chairperson, Cross Kgosidiile was quoted saying that since financial services sectors change rapidly there is need for the society to be transformed into a commercial bank. “The best way to manage the transformation, whether positive or negative is to anticipate and prepare for it. That is why we have recognized that while the building society model has over the years delivered positive results; it has now reached a point where it can no longer be sustainable.
So we are therefore actively seeking to convert into a commercial bank so that we can offer customers a diverse portfolio of products and services as well as better return of investments,” said Kgosidiile. BG Business understands that BBS is engaged in legislative talks with the government and the commercial banks regulating body, Bank of Botswana (BoB) to change the scope of BBS into a commercial entity.