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ABSA profits soar 81 % to P659 million 

Keabetswe Pheko

Absa Bank Botswana, the country second largest commercial bank by profitability on Wednesday released its  results for the financial year ended  31st December 2021,profits rose by a whopping 81%, reflecting favourable trading environment, and impressive recovery from 2020 headwinds occasioned by the COVID-19 pandemic. 

The increase in profit before tax, which closed the year at P659 million,  is mainly attributable to a massive cut  in credit losses, which went down by a staggering 70 %, while on the other hand trading income went up by 19% in addition to a 14% increase in net fee and commission income and a 4% decrease in operating expenses.

Absa Directors, led by the Bank ‘s Managing Director Keabetswe Moshagane on Wednesday said the bank’s intent is to drive fee income together with digital income while continuing to embark on  cost containment strategies which continues to yield fruit as evidenced by increase in most of the Bank’ s income lines, including interest income closing of the year on a high note while  expenses remained contained, with results of the cost containment being visibly noticed on the interest expense and operating expenses.

“Our overall strategy as a bank has yielded stellar results, signaling the recovery of both our financial performance and business environment, together with our digital growth amidst challenges faced in the market post COVID-19 recovery,” said Keabetswe Pheko-Moshagane, Managing Director.  Cynthia Morapedi, Absa Bank Finance Director said during the financial year 2021, the bank maintained strong liquidity position throughout the year despite market liquidity challenges.

“Pleasingly, our digital strategy, portfolio management strategies, revenue diversification strategies together with operational efficiency strategy have all contributed positively our salient performance features, which is a strong reflection of our performance for the year,” she said. Morapedi added that the recovery was broad-based as all business units reported strong growth from a low base in the prior year, while still maintaining strong capital position at 18%, and capacity to pay off dividend which resulted in performance efficiency and improving overall return on equity.

Zooming into the bank’s segmental performance, Retail and Business Banking reported resilient performance, delivering its strategy despite the challenging operating environment.  The segment reported a solid assets (advances) year on year growth of 9%. Overall revenue grew by 10% from the previous year, largely driven by non – interest income growth of 6% whilst net-interest income grew 7% year on year.

Absa directors explained that the availability of self- service and alternative banking channels have led to a 21% year on year growth in the number of customers utilizing the bank’s digital marketing is a very important and important business platforms. “We continue to enhance these channels to create seamless customer experience.  We believe that digitalization is a key cornerstone for banking going forward and therefore have a clear focus on growing our self-service capability which remains imperative and an area of focus,” the bank said.

In terms of Corporate and Investment Banking, the segment leveraged on the recovery of mining sector in 2021, in particular the diamond industry where Absa has a significantly competitive portfolio.  CIB is a key contributor to the diamond sector, Absa says growth experienced in the industry during 2021 presented the segment with an opportunity to review its appetite which ultimately contributed positively the business.

A notable strain was evident in market liquidity with deposits constrained as Public Sector spending budgets reduced and fiscal policy adjustments were made to accommodate the economic impact of COVID-19. The Botswana Stock Exchange listed Bank says that this led to tighter liquidity and margin compression in the market.

“We undertook deliberate efforts to attract the right deposits through our various strategies that delivered healthy growth in our deposit base. We must hasten to state that the slowdown in most economic activity gave us the opportunity to embed our digital agenda with a view of ensuring we provide sustainable, future-fit solutions”

This  according to directors bolstered the bank ‘s growth on client acquisition, propelling the bank to deepen relationships with existing clients and deliver double digit growth in  fee income, earning the bank notable recognition as ‘Market Leader Cash Management’ awarded by Euromoney Awards of Excellence 2021 & ‘Best Investment Bank of the year’ awarded by African Banker Awards 2021.

During the year 2021 Absa supported its clients by extending credit relief measures during very tough economic conditions, a measure deemed critical in ensuring the sustainability of the businesses of the bank’s client.  This intervention resulted in strong recovery by businesses, resulting in positive impairment recovery in excess of 140% YOY which contributed to the overall profit before tax (PBT) growth of 81%. Mrs Pheko-Moshagane says Absa Bank Botswana remains confident in the interventions that it has developed to address the continued social and economic development of the communities in which it operate.

“We have made significant progress in delivering our citizenship strategy which is anchored on Thought Leadership, Education and Skills development and Environmental Sustainability” she said.  Absa projects Botswana’s real GDP growth to soften from 12.5% in 2021 to 5.2% in 2022 as activity levels continues to outflow an initial rebound.  According to Experts at Absa, growth in 2022 will be underpinned by the recovery in key sectors such as mining as the effects of the pandemic recede and commodity prices rebound.

The rise in diamond output will continue to be driven by additional investment in productive capacity and increased international demand for luxury goods caused by the continuing economic recovery in developed markets.  The non-mining sectors are also expected to improve supported by accommodative monetary conditions, implementation of business environment reforms and government interventions against COVID–19, including the Economic Recovery and Transformation Plan (ERTP).

Upside risks to the inflation outlook remain elevated in 2022. The rise in commodity prices, particularly fuel and food prices, remain a key threat to Botswana’s inflation outlook in 2022. The country’s monetary policy will undergo a major overhaul as the Central Bank has revealed plans to make operational changes to improve the effectiveness of the transmission mechanism and its ability to influence monetary conditions. “We continue to focus on our strategy on being a digitally powered bank with a renewed focus on diversifying our revenue and being our customers’ primary partner, ‘” said the Absa MD.

 

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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