BancABC Botswana’s Managing Director, Kgotso Bannalotlhe is one of the few locals who are at the helm of major commercial banks. Running a commercial bank in Botswana is considered a plum yet challenging position. This perhaps explains why until recently, almost all the banks in the country were headed by foreigners who are considered ‘fit for purpose’. Whatever ‘fit for purpose’ means, it will appear the landscape is changing now that seasoned local bankers like Bannalotlhe and other locals are having a bite at the cherry.
After working for several banks, mostly in positions of influence, Bannalotlhe found the necessary courage to apply for a position of running BancABC Botswana. That was in 2017, some months after Kitto Kurian left the bank for undisclosed reasons. After all, he has acted as Managing Director for both Standard Chartered Bank Botswana and Barclays Bank Botswana on several occasions during his stay at the banking industry stalwarts. It was only natural that he wanted to step in the top post and see how he could perform. It has been nearly twenty months since he was appointed Managing Director of the bank, which is a unit of the Atlas Mara-backed African Banking Corporation (ABC) Limited, which has several operations in the SADC region.
“When I applied for the post, I believed I was ready,” he confidently confided to Botswana Guardian. We are in the first floor of BanABC Botswana’s head office in Gaborone. In this exclusive interview, we are joined by head of marketing, Polelo Kilner, and PR practitioner, Harriet Nkonjera. Having been at the bank for over a year, what has been some of Bannalotlhe’s major achievements and challenges? “We spent the better part of last year (2018) preparing the bank for future growth. This included raising capital and opening new service centres,” said Bannalotlhe.
Last year, BancABC Botswana floated shares on the Botswana Stock Exchange amid pomp and fanfare from local investors, who have longed for a differing banking stock. Being part of a senior team that has taken BancABC Botswana to the public, Bannalotlhe knows very well that, his job has been cut and with the addition of new investors, the job will even be more challenging. He told Botswana Guardian that, they have also spent part of the proceeds from the listing to improve their technological infrastructure which is important for the smooth delivery of services to customers, more especially in the digital space. “We have also refreshed our team,” he said, adding that, the bank needs highly talented bankers who have the necessary drive to pick the bank to another level. The lender is the fourth profitable bank in the country.
Bannalotlhe, who has a Bachelor of Commerce (Bcom) from University of Melbourne, said one other major action item that they have executed included improving on customer experience. “The number of people using our electronic channels has increased five folds,” he said with content. The bank has also put in place an exclusive online platform that targets the corporate sector. “We want to be a serious player in this space (corporate lending),” he said, adding that, collaborations with other key stakeholders will also be what the bank will continue to do. “We are a bank that is strong on partnerships,” he said as a matter of fact. The bank has cordial working agreements with government (for Pula Card), unions, private and public entities.
The banking sector in the country is faced with hurdles such as record low interest rates, fragile economy, and tight competition among others. Bannalotlhe disclosed, perhaps the bank’s biggest challenge today is the low interest regime. Bank of Botswana’s benchmark rate is 5 percent, the lowest in more than two decades. Low interest rate regime has affected all the banks, especially given the fact that banks in Botswana have over the years relied heavily on interest income to drive profits. On the flipside, Bannalotlhe sees an opportunity in lower interest rates as they will now concentrate on coming with strategies that can pick non-interest revenue such as transaction banking.
He was quick to brush aside the notion that low interest rates have exposed banks’ lack of innovation when it comes to non-interest services/products. “The industry has grown a lot over the years. Banks are no longer depending on interest income only. We have seen non-interest income increasing on a yearly basis,” he said. Millions of Pula spent on infrastructure development will also help BancABC to offer even improved services to customers which will be a plus to non-interest revenue. Related to this, the competition is brewing from unlikely contenders like mobile telecommunications companies. Mascom, BTC’s Be Mobile, Orange, Botswana Post have all debuted mobile money services, which offer exactly the same payment services which traditional banks are offering.
Mobile money platforms allow customers to transact, pay for utility services, wage/salary payments, airtime, services which under anordinary bank are classifiedunder non-interest bearing services/products. “I don’t see these companies (telecos) being our competitors. I actually see them as offering complementary services to the banking industry,” reasoned Bannalotlhe, explaining they have alsopartnered with some of them.
BancABC is predominantly a retail bank, and it is rarely mentioned on major deals within the corporate/public sector. This explains why the corporate and investment banking division is contributing 15 percent to total profits, with retail at 70 percent, while treasury takes the rest. Nonetheless, Bannalotlhe stated that the corporate and investment banking division is performing above average. They have financed a number of projects across major sectors of the economy such as real estate, construction, non-banking financial institutions among others. The newly-launched online platform which targets corporates is off to a good start. The bank is also a notable player in the SMEs space. The bank’s target markets are those who are mostly sub-contracted by major companies across different sectors of the economy.
“The problem with SMEs is their balance sheets. However, we have found a way in which we are able to help them with funds without exposing ourselves to risks,” he stated. As part of its reforms of the policies governing the commercial banks, Bank of Botswana which is led by Moses Pelaelo, recently reduced the maturity of BoBCs from 14 days to 7 days. BoBCs are part of the tools which the central bank uses to mop excess liquidity in the money market. “This is a useful move,” said Bannalotlhe, adding they will always welcome any development that is meant to mop excess liquidity in the industry. In the past, some economists argued banks were using BoBCs, which are almost risks free savings to their advantage, while at the same time they will extend funds from these to customers at exorbitant fees in the form of loans and advances.
Bannalotlhe disagrees with the above perception, insisting that in the past there was too much excess liquidity in the market, and part of the problem was there were limited projects that banks could fund; hence the central was forced to use BoBCs to mop this glut. Bannalotlhe said there are more projects in commercial real estate, mining, services industries which are benefiting from commercial banks’ funding. The bank has just completed its opening of four service centres in Molepolole, Kanye, Jwaneng and Gantsi which are expected to bring even more convenience to these centres.
In the coming months, BancABC will focus on improving customer service, which will ensure they attract and retain existing customers.
The listing of BancABC Botswana will allow the corporate and retail bank to tap into the local market for funding as well as cement its position as one of the market leaders in the cutthroat local banking sector, its Chief Executive, Kgotso Bannalotlhe has divulged.
The regulator, Botswana Stock Exchange Limited (BSEL) has approved the bank’s listing which is slated for 10 December 2018; a development which will see the country having four listed commercial banks. Bannalotlhe said listing will also be an opportunity to allow locals to become part of their family by buying their shares, an opportunity that ended when the parent company-African Banking Corporation Holdings was delisted from the domestic bourse years ago.
“Listing will provide us with an opportunity to bring boarder shareholders in the form of pension funds and institutional investors into our shareholding structure,” noted the bank’s top executive who ditched rival Barclays Botswana last year. To this end, the bank has invited selected investors to apply to purchase up to 180,525,000 ordinary shares at a price of P2, 00.
ABC Holdings has proposed to sell nearly 25 percent of the ordinary issue shares. According to Bannalotlhe, 30 percent of the offered shares will be offered to clients of the sponsoring broker, who may be the public. Motswedi Securities is the sponsoring broker.
Part of the proceeds of the listing will be used to fund the group’s IT infrastructure project, from which the local subsidiary, as the biggest, will handsomely benefit. The IT project will focus on acquisition of a core banking platform as well as banking channels upgrade. The new infrastructure is expected to also allow the bank to improve their digital banking channels.
The 5th biggest bank by asset in Botswana is, like its peers, affected by record low interest rates which affect the bottom line. The bank rate is currently at 5 percent. It is expected to be at this level for some time, an analyst at Inkunzi Investment, Jonathan Paledi has said in a previous interview with Botswana Guardian.
“Bank of Botswana is likely to maintain rates at current levels well into 2019 but downside risks remain given the benign inflation environment and any rate cut could likely dent the interest income line segment for these banks,” he told Botswana Guardian. Bannalotlhe said as a bank, they have a long term vision of the country, suggesting they view the record low rates as cycle which will eventually end. The bank is expected to open more branches in the country next year, effectively increasing the bank’s more than 300 employees.
BancABC Botswana has appointed Kgotso Bannalotlhe as its Managing Director effective Monday this week. He joins a growing list of locals who are at the helm of commercial banks in Botswana. Bannalotlhe is Barclays Bank of Botswana’s former Head of Corporate Investment Banking.
The University of Melbourne, Australia, graduate has also held several positions with the listed bank such as that of Country Treasurer and Head of Markets. He has over 14 years of banking experience, having worked for Standard Chartered Bank Botswana and First National Bank Botswana (FNBB), all top listed banks in Botswana.
The board of BancABC has welcomed Bannalotlhe to the bank which is part of African Banking Corporation (ABC), an Africa-focused bank which delisted in the Botswana Stock Exchange some few years ago. ABC is owned by London-based investment boutique owned by former Barclays plc CEO, Bob Diamond and Ashish Thakkar.