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ABSA in the money

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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.

HAPPY BANKER: Kalifungwa

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.

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Business

De Beers cuts production as Covid-19 effects set in

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In response to the Covid-19 pandemic, diamond mining conglomerate De Beers – has revised its global production guidance.

The company, which operates Debswana Mines with Botswana government in a 50/50 joint venture, revealed this week that it has cut its global production guidance by 7 million carats to reflect demand and support long-term value.

When updating the media last Thursday afternoon, De Beers – Global Sightholder Sales Executive Vice President, Paul Rowley described the pandemic as unprecedented and nothing like what the world has ever faced.

Previously, production guidance was set between 32-34 million carats for the year, but non due to the pandemic which has affected business across sectors.

Rowley told the media that the diamond mining giant is also refocusing and repurposing marketing plans to reflect a changing situation.

Furthermore, he said the group is also working with partners in government to see how to generate revenue when international customers are unable to travel adding that creating viewing centres in other countries is another option being considered as a temporary measure.

Despite the current challenges facing the diamond industry, and all other industries, Rowley said De Beers continues to make major investments across the diamond value chain to ensure the industry’s continued success during these unprecedented times.

De Beers, according to Rowley, is making investments in production capacity expansion, rough diamond distribution efficiency and downstream consumer marketing campaigns.

Rowley told journalists that Covid-19 has impacted heavily on all the three streams, being downstream, midstream and upstream.

On the downstream side, he noted that the pandemic has had a direct impact of De Beers Jewellers retail outlets due to store closures and consumer demand impact.

In the midstream, he says the pandemic has negatively affected the rough diamond sales as the third sight was cancelled due to logistical challenges as countries went on a lockdown.

The fourth sight was only attended by local beneficiation Sightholders as international buyers were unable to travel once again.

In the upstream, Rowley said operations across the globe were impacted and the group has had to implement new requirements and procedures in the workplace to keep the workers safe.

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Business

Letlole La Rona suspends CEO

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Letlole La Rona (LLR), a property company listed on the Botswana Stock Limited (BSEL), on Tuesday moved to suspend its Chief Executive Officer, Chikuni Shenjere-Mutiswa.

His suspension, according to a notice to shareholders, follows preliminary findings arising from an investigation into issues relating to the company’s Long-term Incentive Plan.

Mutiswa who was appointed LLR CEO in June 2018, is said to have been suspended with full benefits pending the outcome of the full investigations.

Commenting on the latest developments, LLR Board Chairperson, Boitumelo Mogopa noted good governance remains sacrosanct to the board and all staff of the company.

“The preliminary findings of the possible misconduct arising from the investigations relate to the circumstances around the company’s Long-term Incentive Plan during or around March this year and possible acts or omissions by an individual in a unique position of power,” said Mogopa.

Mogopa said this by no means reflects the integrity of the board, financial performance and company portfolio.

“For us, it remains business as usual as the due process takes its course,” said Mogopa.

Meanwhile, the board has in the interim appointed Botshelo Mokotedi to hold the fort on an acting basis while investigations continue.

Mokotedi is seconded from Botswana Development Corporation (BDC) – a major shareholder in LLR – where he is the Head of Risk.

He is described as a forward-thinking, highly motivated and results-oriented individual with more than a decade experience in the financial services sector across a variety of senior roles, including Business Development, Credit Analysis as well as Portfolio and Risk Management.

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