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Absa Group walks high against a tough 2019

The year 2019 was altogether a tough business year for most businesses, but Absa Group Limited moved heavily against the gravity of challenging macroeconomic backdrop and the sluggish South African economy.

Absa Group known in full as Amalgamated Banks of South Africa, is a pan African financial group offering personal and business banking, corporate and investment banking, wealth and investment management as well as bank assurance. Absa group has its presence in 12 African countries and plans to open international offices in the United Kingdom and the United States. According to Absa Group audited consolidated financial results for the reporting period ended 31 December 2019 released this week, the group put up its numbers with an improvement in its revenue and with headline earnings.

Absa Group Chief Executive Officer Daniel Mminele said they delivered a resilient performance, adding that the bank managed to maintain balance sheet momentum and growth was broad-based across most businesses. The financial results also states that revenue saw an increment of six percent while headline earnings, the measure most analysts use to gauge profit, rose 1 percent as impairments increased.

‘’Our revenue growth is showing an improving trend, with strong deposit growth of 12 percent and customer loan growth of 9% for the Group,’’ said Absa Group Financial Director Jason Quinn. Overall, Absa’s balance sheet, revenue and earnings growth were in line with peers after lagging for a number of years. The Absa Regional Operations business, comprising Absa Group’s African operations excluding South Africa, delivered strong financial performance in 2019 with earnings growth of 16 percent (12% in constant currency), enhancing the overall Group’s position.

 ‘’We are pleased with the results of our regional operations and their contribution to Absa Group’s overall performance, having maintained double-digit growth and growing our headline earnings. We look forward to continuing to grow our revenue market share on the continent over the coming years,’’ Regional Operations CEO Peter Matlare said. He further noted that Absa Group is optimistic about the future and the opportunities that lie ahead united under one Absa across their African markets.

Their objective, he said, is to develop strong, digital first financial systems in a sustainable manner and to contribute positively to the development of communities in which they operate. ‘’The publication of our parent company, Absa Group’s results publishing comes just barely after the completion of our brand transition and we are excited about the journey ahead as Absa Bank of Botswana. Collectively our values and journey is one of striving  to be customer obsessed, acknowledging the strength of our people and delivering results sustainably,’’ said Keabetswe Pheko-Moshagane, Absa Bank of Botswana Chief Executive Officer.

Absa Group launched its growth strategy in March 2018 after Barclays PLC ceased to be the controlling shareholder in the Pan African banking group. The group is now working to complete its separation programme, one of the largest in the banking sector in terms of size and complexity. According to Absa Group audited consolidated financial results for the reporting period ended 31 December 2019, the regional operations recorded growth in revenue of 14 percent, pre-provision profits that grew by 17 percent as well as cost-to-income ratio that improved by 57.8 percent. While separating, ARO has grown its retail primary customer base in 2019 to 1.5 million customers.

Further, gross loans and advances grew by 7 percent to R530 billion, deposits grew by 10 percent to settle at R373 billion while non-interest income grew by 6 percent. Cost-to-income ratio saw a significant improvement from 57.7 percent in 2018 to 58.4 percent in 2019. Customer growth only saw an advance of 1 percent to become 9.7 million. The group also saw market share growth in retail deposits and retail loans and advances, including personal loans, new home loans and vehicles.

Absa Group also saw growth in corporate and investment banking, which was driven by strong performance in countries outside South Africa, which partially offset a decline in earnings in South Africa. There was a continued growth momentum in ARO with total income growing 15 percent to R7.4 billion, and also a solid income growth from corporate bank franchise of 9 percent to R10.6 billion. Absa Group also realised a strong growth momentum in the trade finance business in South Africa, with a CAGR of 19 percent in the last four years.

According to the group’s financials, ordinary dividend of 620 cents per ordinary share was declared on 11 March 2020, for the period ended 31 December 2019. The ordinary dividend is payable to shareholders recorded in the register of members of the company at the close of business son Friday, 17 April 2020.

The Directors of Absa Group Limited confirm that Absa Group will satisfy the solvency and liquidity test immediately after completion of the dividend distribution. Absa says the dividend will be subject to local dividends withholding tax at a rate of 20%. The dividend has been declared out of income reserves, and the gross local dividend amount is 620 cents per ordinary share for shareholders exempt from the dividend tax.

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Matsheka seeks raise bond program ceiling to P30 billion

14th September 2020
Dr Matsheka

This week Minister of Finance & Economic Development, Dr Thapelo Matsheka approached parliament seeking lawmakers approval of Government’s intention to increase bond program ceiling from the current P15 Billion to P30 billion.

“I stand to request this honorable house to authorize increase in bond issuance program from the current P15 billion to P30 billion,” Dr Matsheka said. He explained that due to the halt in economic growth occasioned by COVID-19 pandemic government had to revisit options for funding the national budget, particularly for the second half of the National Development Plan (NDP) 11.

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Lucara sits clutching onto its gigantic stones with bear claws in a dark pit

14th September 2020
Lesedi La Rona

Botswana Stock Exchange (BSE) has this week revealed a gloomy picture of diamond mining newcomer, Lucara, with its stock devaluated and its entire business affected by the COVID-19 pandemic.

A BSE survey for a period between 1st January to 31st August 2020 — recording the second half of the year, the third quarter of the year and five months of coronavirus in Botswana — shows that the Domestic Company Index (DCI) depreciated by 5.9 percent.

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Botswana Diamonds issues 50 000 000 shares to raise capital

14th September 2020
Diamonds

Botswana Diamond PLC, a diamond exploration company trading on both London Stock Exchange Alternative Investment Market (AIM) and Botswana Stock Exchange (BSE) on Monday unlocked value from its shares to raise capital for its ongoing exploration works in Botswana and South Africa.

A statement from the company this week reveals that the placing was with existing and new investors to raise £300,000 via the issue of 50,000,000 new ordinary shares at a placing price of 0.6p per Placing Share.

Each Placing Share, according to Botswana Diamond Executives has one warrant attached with the right to subscribe for one new ordinary share at 0.6p per new ordinary share for a period of two years from, 7th September 2020, being the date of the Placing Warrants issue.

In a statement Chairman of Botswana Diamonds, John Teeling explained that the funds raised will be used to fund ongoing exploration activities during the current year in Botswana and South Africa, and to provide additional working capital for the Company.

The company is currently drilling kimberlite M8 on the Marsfontein licence in South Africa and has generated further kimberlite targets which will be drilled on the adjacent Thorny River concession.

In Botswana, the funds will be focused on commercializing the KX36 project following the recent acquisition of Sekaka Diamonds from Petra Diamonds. This will include finalizing a work programme to upgrade the grades and diamond value of the kimberlite pipe as well as investigating innovative mining options.

Drilling is planned for the adjacent Sunland Minerals property and following further assessment of the comprehensive Sekaka database more drilling targets are likely. “This is a very active and exciting time for Botswana Diamonds. We are drilling the very promising M8 kimberlite at Marsfontein and further drilling is likely on targets identified on the adjacent Thorny River ground,” he said.

The company Board Chair further noted, “We have a number of active projects. The recently acquired KX36 diamond resource in the Kalahari offers great potential. While awaiting final approvals from the Botswana authorities some of the funds raised will be used to detail the works we will do to refine grade, size distribution and value per carat.”

In addition BOD said the Placing Shares will rank pari passu with the Company’s existing ordinary shares. Application will be made for the Placing Shares to be admitted to trading on AIM and it is expected that such admission will become effective on or around 23 September 2020.

Last month Botswana Diamond announced that it has entered into agreement with global miner Petra Diamonds to acquire the latter’s exploration assets in Botswana. Key to these assets, housed under Sekaka Diamonds, 100 % subsidiary of Petra is the KX36 Diamond discovery, a high grade ore Kimberlite pipe located in the CKGR, considered Botswana’s next diamond glory after the magnificent Orapa and prolific Jwaneng Mines.

The acquisition entailed two adjacent Prospecting Licences and a diamond processing plant. Sekaka has been Petra’s exploration vehicle in Botswana for year and holds three Prospecting Licenses in the Central Kalahari Game Reserve (Kalahari) PL169/2019, PL058/2007 and PL224/2007, which includes the high grade KX36 kimberlite pipe.

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