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FNBBs focus on customer-centric strategy fired up the balance sheet

First National Bank Botswana FNBB released its unaudited summarised consolidated financial results recently in Gaborone. The financials depict a strong balance sheet for the six months ended 31 December 2019.

During the past six months, the Bank continued to place focus on improving credit discipline with concentrated efforts on the distressed debt portfolio. According to the Bank, priority was given to customer-centric strategy through continued investment in infrastructure and digital customer solutions, with the roll-out of new products such as Cash Plus together with contactless POS devices and cards.  When announcing the results, FNBB’s Chief Financial Officer, Luke Woodford noted that the Bank’s funding increased year-on-year by 5 percent, with customer deposits increasing by 10 per cent. ‘’This is largely attributable to a 12 percent increase in demand deposits in line with the Bank’s strategy to enhance its transactional offering base, and a 3 percent decline in fixed and notice deposits.

During the year under review, the Bank increased the funding pool by issuing Tier II Capital amounting to P196 Million. Woodford announced that gross customer advances growth of 3 percent year-on-year was predominantly driven by retail lending although offset by further reductions in the business portfolio due to the intentional reduction of key high-risk accounts.
He further shared that ewallet volumes increased by 31 percent over the period while Pay 2 Cell increased by 41 percent, as customer continued to take up to the Bank’s convenient solutions. These factors combined with an overall increase in digital transactions resulted in a 29 percent growth in card and merchant commissions.

FNBB says its forward-thinking approach to technology and innovation will remain a constant focus point as the Bank enters the next era of rapid technological development around the world. The Bank has launched contactless point of sale devices and cards to further streamline and develop the customer and merchant experience.  ‘’Creating a seamless channel experience for our customer remains a focal point, with further developments planned for the FNB banking App. The Bank seeks to provide its clients with the flexibility to serve themselves in the form of convenient, value-added services. Combatting the ever-changing nature of cyber security remains paramount. The Bank deploys significant resources in this area and remains constantly vigilant to the evolving nature of the risk,’’ reads a statement from the Bank.

According to the Bank’s financial results, profit after tax jumped 12 percent due to the strong growth in income and resulting in an improved return on equity of 25.4 percent as compared to 24.6 percent in 2018. Interest income rose by 5 per cent against a gross advances growth of 3 percent.  ‘’The increase in average client rates was driven by a change in the portfolio mix towards retail as the Commercial portfolio continued to experience attrition. Set against the significant liquidity pressures seen in the prior period, the easing of liquidity in the current period and the success of the Bank in increasing transactional balances across all segments saw the interest expenses reduce significantly by 17 percent,’’ said Woodford.

Woodford also indicated that the impairment charge for the period indicated an increase of 10 percent against the prior year, following continued default pressure in the retail portfolio and further impacted by an extension of the collateral realisation period in the provisioning models. The impairment charge was further increased by the rise in retail personal loans which in turn now carry a higher expected credit loss provisions at initial origination.

Furthermore, the Bank’s non-interest revenue grew surged by 10 percent over the period from increases in volumes of customer transactions, as well as, from merchant service revenue following improved connectivity in the point-of-sale machines and an increase in machines in use. Revenue from foreign exchange reduced by 3 percent on the prior year, during which exchange rate volatility increased demand above usual levels.

The improvement in the cost-to-income ratio from 48 percent to 47 percent is largely due to the strong growth in NIR and reduced funding costs. It also reflects continued cost management initiatives, with the overall expenditure remaining within an acceptable range. For the six months ended 31 December 2019, the Bank continued to operate above the regulatory minimum capital adequacy ratios. As at the end of the final year period, the total capital adequacy ratio was 20.77 percent and is above the regulatory minimum of 15 percent.

FNBB declared an interim dividend of 6 thebe per share for the half year ended 31 December 2019. This dividend is payable to all shareholders registered in the books of the company at close business on 31 March 2020. The dividend will be paid on or about 25 March 2020 less withholding tax at the rate of 7.5 percent. Meanwhile, FNBB reiterated its commitment to its social responsibility to the community and performs this function through its foundation. The Bank has committed to contributing up to 1 percent of each year’s profit after tax to the Foundation. Since its inception in 2001, the Bank has made grants of more than P57 Million to the Foundation, which has been invested appropriately in qualifying beneficiaries.

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Jewellery manufacturing plant to create over 100 jobs

30th January 2023

The state of the art jewellery manufacturing plant that has been set up by international diamond and cutting company, KGK Diamonds Botswana will create over 100 jobs, of which 89 percent will be localized.

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Investors inject capital into Tsodilo Resources Company

25th January 2023

Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.

According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.

The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.

Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.

Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company’s market capitalization.

Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana.  The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.

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Global CEOs Back Plan to Unlock $3.4 Trillion Potential of Africa Free Trade Area

23rd January 2023

African heads of state and global CEOs at the World Economic Forum Annual Meeting backed the launch of the first of its kind report on how public-private partnerships can support the implementation of the African Continental Free Trade Area (AfCFTA).

AfCFTA: A New Era for Global Business and Investment in Africa outlines high-potential sectors, initiatives to support business and investment, operational tools to facilitate the AfCFTA, and illustrative examples from successful businesses in Africa to guide businesses in entering and expanding in this area.

The report aims to provide a pathway for global businesses and investors to understand the biggest trends, opportunities and strategies to successfully invest and achieve high returns in Africa, developing local, sub-regional and continental value chains and accelerating industrialization, all of which go hand in hand with the success of the AfCFTA.

The AfCFTA is the largest free trade area in the world, by area and number of participating countries. Once fully implemented, it will be the fifth-largest economy in the world, with the potential to have a combined GDP of more than $3.4 trillion. Conceived in 2018, it now has 54 national economies in Africa, could attract billions in foreign investment, and boost overseas exports by a third, double intra-continental trade, raise incomes by 8% and lift 50 million people out of poverty.

To ease the pain of transition to its new single market, Africa has learned from trade liberalization in North America and Europe. “Our wide range of partners and experience can help anticipate and mitigate potential disruptions in business and production dynamics,” said Børge Brende, President, and World Economic Forum. “The Forum’s initiatives will help to ease physical, capital and digital flows in Africa through stakeholder collaboration, private-public collaboration and information-sharing.”

Given the continent’s historically low foreign direct investment relative to other regions, the report highlights the sense of excitement as the AfCFTA lowers or removes barriers to trade and competitiveness. “The promising gains from an integrated African market should be a signal to investors around the world that the continent is ripe for business creation, integration and expansion,” said Chido Munyati, Head of Regional Agenda, Africa, World Economic Forum.

The report focuses on four key sectors that have a combined worth of $130 billion and represent high-potential opportunities for companies looking to invest in Africa: automotive; agriculture and agroprocessing; pharmaceuticals; and transport and logistics.

“Macro trends in the four key sectors and across Africa’s growth potential reveal tremendous opportunities for business expansion as population, income and connectivity are on the rise,” said Wamkele Mene, Secretary-General, AfCFTA Secretariat.

“These projections reveal an unprecedented opportunity for local and global businesses to invest in African countries and play a vital role in the development of crucial local and regional value chains on the continent,” said Landry Signé, Executive Director and Professor, Thunderbird School of Global Management and Co-Chair, World Economic Forum Regional Action Group for Africa.

The Forum is actively working towards implementing trade and investment tools through initiatives, such as Friends of the Africa Continental Free Trade Area, to align with the negotiation process of the AfCFTA. It identifies areas where public-private collaboration can help reduce barriers and facilitate investment from international firms.

About the World Economic Forum Annual Meeting 2023

The World Economic Forum Annual Meeting 2023 convenes the world’s foremost leaders under the theme, Cooperation in a Fragmented World. It calls on world leaders to address immediate economic, energy and food crises while laying the groundwork for a more sustainable, resilient world. For further information,

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