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The curse of COVID

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The curse of COVID

Absa suffers over P200 million drop in profits

Absa Bank Botswana has attributed its huge decline in profit to the impact of Covid-19.

Although the bank raked in P90.7 million in profit over the first six months of the year, the figure represents a 70 percent drop from the P298. 8 million registered in the corresponding period last year.

The bank notes that with Coronavirus causing massive disruption to the community within which it operates, the ease of doing business was severely hampered and ultimately led to a downturn in income.

To counter the pandemic’s effects on customers’ livelihoods, Absa had extended a helping hand in the form of loan repayment ‘holidays’ and loan restructures. This resulted in increased impairments due to changes in risk classification of the bank’s portfolios.

On a year-on-year basis, the bank’s credit loss is reported to have risen significantly, with impairments reaching P178 million this year while the loan repayment holiday hit P1 billion.

Additionally, lockdown restrictions are said to have impacted the performance of the bank’s debt collection as well as customer movements to make payments.

Nevertheless, the bank has registered growth on customer loans and deposits due to stronger balance sheet momentum.

Customer loans grew by seven percent year-on-year to P13.6 billion, from P12.8 billion which was realized across all business segments.

Similarly, customer deposits grew by eight percent year-on-year to P14 billion from P13 billion which is said to have been driven by positive growth across the bank’s segments.

Indeed, despite the hiccups caused by the pandemic, Absa says its balance sheet remains strong at a total financial position of P18.8 billion with strong liquidity and capital adequacy level.

While uncertainty around the impact of Covid-19 remains, the bank says it has positioned itself to respond to the situation.

This includes re-aligning its strategy to ensure that it has a relevant and competitive business model that will see Absa emerge from the crisis as a strong and resilient business. The bank’s strategy also involves accelerating and refining its digital strategies as well as its approach to strategic partnerships.

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