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Banking stocks facing the heat with nose down

Banking-stocks-facing-the-heat-with-nose-down

The once MVP of the local bourse, and the leader in the banking sector in terms of market performance First National Bank Botswana(FNBB) has been going downwards on the slide amid 48-day national lockdown at a time when customers were not traditionally queueing for services or banking was practiced via social distancing.

When statistically studying the FNBB price, things started to change for the worse a week before lockdown when it saw a drastic fall of 20 thebe or -6. 78 percent as the stock rolled down from a solid price of 295 thebe to 275 thebe.

But the signs of tough times ahead also came when Motswedi Securities researchers signalled that FNBB is looking down the swing as on 25 March the share price tumbled down from 290 thebe to 288 thebe.

This sudden drop in the FNBB stock was discovered just three days before Botswana announced her first three cases of coronavirus. Government declared an initial 28-day lockdown, when the FNBB stock was already feeling the temperature.

On February, before March fall of its price, FNBB posted their half year 2020 financial results according most experts expectations the bank profit before direct tax went up by 13 percent while its non-interest income pumped up 10 percent.

But the 20 thebe downward move by the bank stock on 27 March overlooked this FNBB financial performance. A market expert engaged for the stock reaction during corona strike and the subsequent lockdown said: ‘‘Banks will get the heat because of possible impairments and bankruptcies and loan defaults which are their main revenue.”

A study of the FNBB stock from 20th March 2020 to 19th June 2020 shows that from 295 thebe when many expected the stock to go up in reaction to the half year positive financial results, the FNBB share price went the opposite direction of the expectations.

But after the 20 thebe fall on 27 March the stock slowed in gliding down and remained at 275 thebe beginning of April. However, it fell down by 5 thebe on 9 April, a price it maintained for the whole month till May before encountering another slip to 265 thebe or -1.9 percent on 15 May. The FNBB price is currently selling at 240 thebe.

In an interview with BusinessPost, Stockbrokers Botswana research analyst Donald Motsomi put it to thought that FNBB is not the only banking stock getting shocks of the pandemic’s effects, there has been a downfall in the share price of another listed bank, Stanchart.

Motsomi said, but it is only a matter of time till ABSA and BancABC stock looks down. “It is likely only a matter of time before ABSA and BancABC share prices come under pressure as well,” he said in an interview.

The Stockbrokers Botswana researcher noted his concerns on the banking sector, going as far to state that the dire economic situation of coronavirus bound failures is a generic issue. He said a repricing of all the banking stocks is warranted.

One of the corona response to come to the banking sector during the pandemic was the 50 basis points rate cut by Bank of Botswana in April, Motsomi saw this as the positive side for the sector.

“The support measures initiated by the Bank of Botswana such as the easing of the capital adequacy requirements, regulatory forbearance and liquidity support initiatives should help banks face this extreme stress event,” said Motsomi.

Motsomi further stated that measures including government wage subsidies, tax deferrals, the recent 50 basis points rate cut, restructuring of loans and payment holidays by the banks will provide some relief to households and businesses.

He talked of the rate cut to the relief of inevitable retrenchments, contractions in income, and declines in business profitability and closure of some businesses. Motsomi said anything worse than the mentioned could cause impairments to rise across the banking industry.

“Furthermore, the recent rate cut will result in pressures on banks’ margins with little to no pass on effect on already low deposit rates. The quality and composition of the banks’ loan books differ and thus will be affected to differing extents,” emphasized Motsomi.

However, central bank’s recent decision to maintain the rate at 4.25 percent was not fully welcomed by FNBB in its analysis.  “While we anticipated rates to go down by between 25bp and 50bp at today’s meeting, Bank of Botswana’s (BoB) MPC decided to leave rates unchanged at 4.25 percent today (Thursday).

The BoB reiterated that with the advent of Covid-19, domestic inflation will be restrained due to slow growth in personal incomes as well as low foreign inflation which provides scope for rates to remain accommodative.

The economy will also undergo significant growth pressures due to the anticipated recession and the impact of the pandemic on economic activity,” said Rand Merchant Bank (FNBB) researchers just after the central bank decision.

Rand Merchant Bank experts also explained that unlike the 2009 economic recession, when the economy underwent a current and capital account crisis, the effects of Covid-19 are expected to be broad-based as the pandemic is expected to impact both the supply-push and demand-pull pressures.

Business

Food prices continue to rise, but at a slower rate

28th November 2022

Prices for cereals or staple foods in Botswana and other Southern African countries continue to rise at a slower pace, following trends in the global markets, according to the latest November 2022 Food Price Monitoring and Analysis by Food Agricultural Organization (FAO) of the United Nations.

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Business

Still doing business the old way?

18th November 2022

It’s time to get business done better with MTN Business Botswana’s ICT Solutions.

Running a digital businessMTN Business Solutions Botswana, popularly known as MTN Business is an Internet Service Provider. We are a subsidiary of MTN Group Limited, a multinational telecommunications Group headquartered in South Africa, which operates in 19 markets across Africa and the Middle East.

More and more, clients are looking for ways to keep their staff productive in a dynamically changing business environment. Whether your people are working from home, the office or abroad, there is a growing recognition that digitising your operations can offer unprecedented commercial value in flexibility, productivity and growth. This new, digital reality means that it is more important than ever to stay agile – if there is anything that can slow a business down, it is being burdened by othatld technology.

Having made substantial investments in fibre technology, high-speed terrestrial and undersea networks and new frequency spectrum across the markets wherein it operates, MTN is perfectly positioned to respond to this shift in the market.

A few years ago, MTN also made the decision to build an IP capable radio network for its mobile services, giving its core network the ability to seamlessly integrate with enterprise IP networks. The mobile towers deliver services to enterprise clients absolutely anywhere it has a network, shortening the last mile and removing complexity and cost.

Now there is increasing demand from clients to connect their remote sites in all areas, including rural and semi- rural. MTN has assisted clients with overcoming this connectivity hurdle, enabling their staff to get the job done wherever they are.
MTN’s evolution

For MTN, the focus has shifted from just being a core telecommunications services provider, towards also becoming a technology solutions provider. The service offering now also includes Unified Communications, Data Hosting and Cloud Solutions, Security-As-A-Service and Managed Network Services. The scope has changed to being client and industry specific, so the requirements and service portfolio vary from one client to the next. The expectation is that a company like MTN must respond to these challenges, helping clients to get business done better as they shift from old to new technologies.

As many businesses continue to grapple with a digitally dynamic world, they face new challenges that have to be solved. This environment will benefit those that are more digitally enabled and agile. It is a brave new world that will favour online over on-site, wireless over wired and fluid over formulaic. Businesses will seek out partners and suppliers that are every bit as flexible and forward-looking as they are.
Ultimately, clients need partners like MTN Business that will invest in infrastructure, deliver the services they require, have market credibility, are financially sound and have a long-term commitment to their market presence.

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Business

BIE to vitalize the Dignity of Engineers

9th November 2022

Botswana Institution Of Engineers (BIE), has last week hosted a gala dinner in  which they appreciated engineers who worked tirelessly and with dedication for 10 years from 1983 to steer the BIE to its current status.

The event that was held at the Phakalane Golf Estate had brought together young, experienced and veteran engineers and was held under the theme “Vitalize the dignity and eminence of all professional engineers”.

Explaining the theme, the institution’s treasurer, Thanabalasingam Raveendran said that engineers were looked upon reverentially with respect as the educated but with time it seems to have deteriorated. He indicated that there is a need to change the narrative by all means.

“The BIE exists for the welfare and the betterment of us Botswana engineers, we need to recognize specialised units within our Institution. We Engineers strongly believe in Engineers make it happen” Raveendran said.

He indicated that under the theme they appeal to all engineers to energize, to attain quality of being worthy of honour and respect and to achieve recognized superiority amongst the Society.

Raveendran stated that engineers need to ensure their end product is of good quality satisfying the end users expectations and engineers must be honest in their work.

“Approximately 8000 engineers registered with Engineering Regulatory Board (ERB) are not members of the BIE, engineers need to make every effort to recruit them to BIE” he said.

He alluded that BIE being a society, it currently needs to upgrade itself at par with professional institutions elsewhere like the UK and USA.

He further stated that BIE has to have engineering units of specialised disciplines like Civil/Mechanical/electrical etc

“As President Masisi indicated in his inaugural speech, the young people, who make 60 percent of the population of this country, are the future leaders and therefore investing in them is building the bridge to the future” said Raveendran

Kandima indicated that BIE has a memorandum of Understanding with Engineers Registration Board (ERB), where BIE is a recognised provider of CPD training, mentorship programmes and more importantly IPD undertaking to upgrade the skills and know-how of our engineers.

“For us to achieve our mandate and make worthwhile changes to engineering in Botswana, we have to be totally focused and act with intent” said Kandima.

Furthermore, Stephen Williams, past president of the BIE from 1986-1988 told the engineers that  the BIE provides a fertile environment where they can meet, share ideas and grow professionally.

“The BIE is also a nesting place for graduate engineers to learn from their peers and seniors, it also cater for engineering technicians and technologists and so nobody in the technology field is left out” he said.

He further indicated that Botswana Government provides a conductive environment for growth of engineering professionals.

“It must be stated that the Botswana Government recognises the existence of BIE and it can further be stated that the government enables ERB to carry out its mandate as a regulator of engineering professionals” said Williams

He plead with engineering companies to recognize and support BIE as it is the only source of engineering personnel’s for various Industries .

Furthermore, when giving his farewell speech, Michael Pinard , a past president of the institution  said how they are viewed as engineers by the general public might be due to some lack of appreciation as to exactly what role they play in the development of the country.

“The BIE slogan is aptly coined-Engineers make it happen, in other words, what man dreams engineers create” Said Pinard.

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