Bank registers 15 percent profit increase
Two months after its official name change, Absa Bank Botswana has announced a 15 percent jump in profits.
This week, the bank’s Managing Director, Keabetswe Pheko-Moshagane revealed that despite the challenges faced by the industry, Absa registered profit after tax of P678 million for the 12-month period ending 31 December 2019.
Highlighting the bank’s success, Finance Director, Mumba Kalifungwa explained it continued on a forward momentum of driving interest income growth through prudent lending across all segments.
“On a gross basis, interest income was up by 10 percent year-on-year (YoY). However, market liquidity in the year was thin and this resulted in increased costs of funds,” he said, adding overall net interest income increased by six percent.
Furthermore, according to Kalifungwa, Absa’s net trading remained flat despite an increase in trading volumes.
“This was due to the tough trading conditions and the global geo political challenges experienced in the year. To this end, in 2019 our net fee and commission income as a portion of total income represented 35 percent of total revenue which resonates with our strategy to diversify our revenue mix,” he said.
When it comes to credit losses or impairments, the bank’s expected year-on-year credit losses decreased by 64 percent in comparison to the prior period.
Kalifungwa attributed this to the Absa’s enhanced collections capability, conservative credit extension to high risk sectors especially in the Retail segment as well as significant recovery from one of their clients.
The Finance Director added that as they continue to pursue growth the overall balance sheet grew by 11 percent, ending the year at a whopping P18 billion.
“For the year under review, our customer loans and advances grew by 13 percent compared to market growth of 7.7 percent. This was achieved by growth in all our segments in line with our growth strategy,” he explained, noting the main driver behind the balance sheet’s growth continues to be loans and advances and customer liabilities which remain key drivers of the bank’s total revenue.
During the period, Absa’s loans and advances to customers increased by 13 percent YoY to P13billion.
“The growth was fairly distributed across the segments in line with our strategy and continues to be focused around prudent lending in our chosen business segments,” Kalifungwa concluded.
Meanwhile, the bank has set aside a total of P231 million as dividends for the year, with shareholders set to receive 25 Thebe per share.