Barclays records P 260 million profits
Business
Barclays Bank of Botswana announced its financial results for the half year six month ended 30 June 2018, recording P260 million profit before tax mirroring a 4 percent growth year-on-year compared to the half year period ended June 2018.
When briefing its stakeholders and members of the media in Gaborone on Thursday morning, Barclays top brass observed that the performance attributable to growth in income, well contained costs as well as favourable credit losses. Deliberating on the financial figures Barclays Finance Director Mumba Kalifungwa said on a gross basis, interest income went up by 4 percent year-on-year despite the interest rate cut of 50bps in the last quarter of 2017.
Mumba, however highlighted that an increase in the interest cost of funding driven by market trends diluted Net interest income growth in the bank‘s net interest income resulting in flat figures year on year. Barclays further revealed a satisfactory net and commission income increase of 10 percent year –on –year during the period under review. “This is on the back of our focus on driving innovation through investment and enhancement of our digital channels,” explained Finance Director Mumba Kalifungwa.
The Botswana Stock Exchange Limited (BSEL) listed banking outfit registered a 18 percent hike on net trading income attributable to increase in forex sales volumes. Kalifungwa noted that the bank’s continued focus on client acquisition and penetration had a positive impact on the net trading income growth. “Operating costs were well contained with business achieving a cost to income ratio of 54 percent which is in line with our strategic target of lower 50 s. Year on year costs grew by 6 percent ,largely driven by an increase in technology spend as part of the separation journey from Barclays PLC,” he said.
Barclays Finance chief also revealed that the bank was currently coming up with ways to manage and contain expenses. “We continue to exploit cost saving opportunities through a review in all our cost lines and various supplier contracts in order to identify opportunities for savings,” he said.
With regards to the new accounting standards IFRS 9 which was introduced beginning of January this year to replace the old IAS 39 Financial tool, Barclays says so far the new standards bring in a revised impairment model which requires entities to recognize expected credit losses based on unbiased forward-looking information.
“This replaces the existing IAS 39 incurred loss model which only recognizes impairment if there is objective evidence that a loss was already incurred and measured the loss on the most probable outcome, The day 1 impact of this change that was charged to our Retained earnings on the balance sheet amounted to an after tax amount of P129 million,” explained Mumba. Despite the more stringent accounting for the credit losses Barclays’s expected credit losses/impairments decreased by 12.3 percent in comparison to the prior period.
According to Finance Head the performance is predominantly due to enhanced collections capability and conservative credit extension to high risk sectors especially in the retail segment. Barclays outgoing Managing Director Reinette van der Merwe told stakeholders that the bank ‘s first 2018 half year results mirrored resilience as the business continues to operate in a highly competitive and modest local banking environment.
“This result were realized in the midst of various external challenges such as the declining credit growth across the sector, low interest rates and a general recovery commodity prices, this did not deter us from our ambition to be the leading financial services partner in Botswana,” she said. Van der Merwe noted that Barclays continues to make progress in supporting key segments in various sectors of the economy.
“We are excited to be part of a financial services group that Africa can be proud of, the transition from Barclays Group to Absa brand present a more modern, fast thinking and relevant organization that is truly an African bank that is for the people,” she said.
Barclay’s balance sheet grew by 12 percent ending the half year period at 16.9 billion pula. According to bank Finance Boss the expansion was influenced by loans and advances to customers which increased by 14 percent year –on –year to 11.4 billion pula.
“The growth was fairly distributed across the segments in line with our strategy and continues to be focuses around prudent lending in our chosen business segments,” he said. Customer liabilities increased by 6 percent year on year driven by continued customer focus and penetration across all segments. Mumba noted that the growth compares favourably against the banking industry growth of 4 percent year –on –year.
“ We continue to strive to providing world-class customer services and products to existing and potential customers with a view to providing access to finance and various payment solutions, to this end we continue to focus on way of optimizing our balance sheet and the resultant funding sources” reiterated Kalifungwa. He added that given Barclays‘s strong profitability the bank’s return on equity remains solid at 22 percent and compares favourably against the banking industry average of 16.7 percent .
“Our regulatory capital position stood at 2 billion pula representing a ration of 19.4 percent against the regulatory minimum requirement of 15 percent, this is testament to how our balance sheet continues to remain prudently positioned with strong liquidity and capital levels, and sound provisioning for expected credit losses,” he said. The bank announced a proposed interim dividend payout of P80 million at 9.38 thebe per share subject to regulatory approval.
Barclays MD noted that in light of continued modest growth in household income as well as restrained economic expansion the bank remains mindful of challenges which call for continued caution while exploring opportunities within chosen segments. She added that the recently declared economic recession in South Africa posts possible challenges that will require close monitoring of expenditure and banking systems to remain operational with strong capital levels and internal capital generation capacity, she however observed that anticipated increased government spending sparks confidence as its likely to open new business opportunities in the market as well as increase house hold spending. “We are committed to deliver on our strategy and through endurance and tenacity, we remain optimistic of the future,” she said.
Business
CA SALES revenues rose to R9.5 billion
The Botswana and Johannesburg Stock Exchange listed distributor of fast-moving consumer goods
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Business
Grit divests from Letlole La Rona
Grit Services Limited, a member of the pan African real estate group, London Stock Exchange listed Grit Real Estate Income Group is divesting from Letlole La Rona Limited (LLR), a local real estate company established by government investment arm Botswana Development Corporation over a decade ago.
The Board of Directors of Letlole La Rona Limited this week announced in a statement to Unitholders that Grit Services Limited (‘Grit’) has informed them of its intention to exit its investment in the company.
Grit has been a material shareholder in LLR since 2019. On 07 March 2023, Grit sold 6 421 000 linked units, representing 2.29% of the Company’s total securities in issue, at a market value of BWP 22 537 710.
This trade follows previous sales of 6.79% in December 2022, as communicated to Unitholders on 10 January 2023, as well as a further sale of 4.78% (representing 13 347 068 linked units) on 24 February 2023 to various shareholders.
In aggregate, Grit has sold 13.9% shareholding in the Letlole La Rona between December 2022 and March 2023, resulting in current shareholding of 11.25% in the Company.
Letlole La Rona said in the statement that the exit process will take place in an orderly manner so as to maintain stability of the Company’s share price.
The statement explained that Grit’s sale of its entire shareholding in LLR is in line with its decision to exit investments where it does not have majority control, or where it has significant exposure to currencies other than US dollar, Euro or hard-currency-pegged revenue streams.
“Grit has announced similar decisions pertaining to certain of its hospitality assets in Mauritius recently. The Company would like to advise Unitholders that it remains focused on long-term value delivery to all stakeholders” LLR said
In July last year as part of their Go-to-Africa strategy Letlole La Rona acquired an initial 30% equity stake in Orbit Africa Logistics, with an option to increase this investment to 50%. OAL is a special purpose vehicle incorporated in Mauritius, owning an industrial asset in a prime industrial node in Nairobi, Kenya.
The co-investment was done alongside a wholly owned subsidiary of London listed Grit. The Orbit facility is situated on a prime industrial site on Mombasa Road, the principal route south of Nairobi center, serving the main industrial node, the port of Mombasa and the industrial town of Athi River and is strategically located 11 kilometers south of the international airport and 9.6 kilometers from the Inland Container Depot.
Grit shareholding in Letlole La Rona was seen as strategic for LLR, for the company to leverage on Grit’s already existing continental presence and expand its wings beyond Botswana borders as already delivered by Kenya transaction.
Media reports have however suggested that LLR and Grit have since late last year had fundamental disagreements on how to go about the Go-to-Africa strategy amongst other things, fuelled by alleged Botswana government interference on the affairs of LLR.
Government through LLR founding shareholder – Botswana Development Corporation has a controlling stake of around 40 percent in the company. Government is the sole shareholder of Botswana Development Corporation.
Letlole La Rona recently released their financial results for the six months ended December 2022, revenue increased by 4% to P50.2 million from P48.4 million in the prior comparative six months, whilst operating profit was up 8% to P36.5 million. Profit before tax of P49.7 million was reported, an increase of 8% on the prior comparative six months.
“We are encouraged by the strong results, notwithstanding a challenging economic environment. Our performance was mainly underpinned by annual lease escalations, our quality tenant base and below average market vacancy levels, especially in our warehouse portfolio,” Kamogelo Mowaneng, Letlole La Rona Chief Executive Officer commented.
LLR reported a weighted average lease expiry period of 3.3 years and escalation rates averaging 6.8% per annum for the period ended 31 December 2022.Its investment portfolio value increased by 14% year-on-year to close the period at P1.4 billion, mainly driven by the acquisition of a 30% stake in OAL in July 2022.
The Company also recorded a significant increase in other income, predominantly due to foreign exchange gains on the OAL shareholder loan. “We continue to explore pipeline opportunities locally, and regionally in line with our Go-to-Africa strategy and our interest remains on value-accretive investments,” Mowaneng said.
An interim distribution of 9.11 thebe per linked unit was declared on the 6th of February 2023 for the half-year period to 31 December 2022, comprising of a dividend of 0.05 thebe and debenture interest of 9.06 thebe per linked unit which will be paid to linked unit holders registered in the books of the Company at the close of business on 24 February 2023.
Business
Stargems Group establishes Training Center in BW
Internationally-acclaimed diamond manufacturing company StarGems Group has established the Stargems Diamond Training Center which will be providing specialized training in diamond manufacturing and evaluation.
The Stargems Diamond Training Institute is located at the Stargems Group Botswana Unit in Gaborone.
“In accordance with the National Human Resource Development Strategy (NHRDS) which holds the principle that through education and skills development as well as the strategic alignment between national ambitions and individual capabilities, Botswana will become a prosperous, productive and innovative nation due to the quality and efficacy of its citizenry. The Training Centre will provide a range of modules in theory and in practice; from rough diamond evaluation to diamond grading and polishing for Batswana, at no cost for eight weeks. The internationally- recognized certificate offered in partnership with Harry Oppenheimer Diamond Training School presents invaluable opportunities for Batswana to access in the diamond industry locally and internationally. The initiative is an extension of our Corporate Social Investment to the community in which we operate,” said Vishal Shah, Stargems Group Managing Director, during the launch of the Stargems Diamond Training Center.
In order to participate in this rare opportunity, interested candidates are invited to submit a police clearance certificate and a BGCSE certificate only to the Stargems offices. Students who excel in these programs will have the chance to be onboarded by the Stargems Group. This serves as motivation for them to go through this training with a high level of seriousness.
“Community empowerment is one of our CSR principles. We believe that businesses can only thrive when their communities are well taken of. We are hoping that our presence will be impactful to various communities and economies. In the six countries that we are operating in, we have contributed through dedicating 10% of our revenues during COVID-19 to facilitate education, donating to hospitals and also to NGOs committed to supporting women and children living with HIV. One key issue that we are targeting in Botswana is the rate of unemployment amongst the youth. We are looking forward to working closely with the government and other relevant authorities to curb unemployment,” said Shah.
Currently, Stargems Group has employed 117 Batswana and they are looking forward to growing the numbers to 500 as the company grows. Majority of the employees will be graduates from the Stargems Diamond Training Center. This initiation has been received with open arms by the general public and stakeholders. During the launch, the Minister of Minerals and Energy, Honorable Lefoko Moagi, stated that the ministry fully endorses Stargems Diamond Training and will work closely with the Group to support and grow the initiative.
“As a ministry, we see this as an game changer that is aligned with one of the United Nations’ Six Priority Sustainable Development Goals, which is to Advance Opportunity and Impact for Diversity, Equity, and Inclusion (DEI). What Stargems Group is launching today will have a huge impact on the creation of employment in Botswana. An economy’s productivity rises as the number of educated workers increases as its skilled workmanship increases. It is not a secret that low skills perpetuate poverty and widen the inequality gap, therefore the development of skills has the potential to contribute significantly to structural transformation and economic growth by enhancing employability and helping the country become more competitive. We are grateful to see the emergence of industry players such as Stargems Group who have strived to create such opportunities that mitigate the negative effects of COVID-19 on the economy,” said the Minister of Minerals and Energy.