BBS FOCUSES ON RETURN TO BSE
Although smarting from suspension of BBS from the Botswana Stock Exchange for contravening the BSE Listing Requirements of the bourse, BBS says it is determined to mend the broken cord and pursue abiding goal of becoming a commercial bank by Q1 2021.
The importance of submitting financial results in time as a critical measure of the fiduciary responsibility of business entities came under sharp relief recently when the Botswana Stock Exchange suspended of BBS bond “BBS005” from trading. According to the BSE, Botswana Building Society was suspended contravening Sections 3.23(b) and 14.75 of BSE Listings Requirements.
In terms of these requirements, a bond issuer must submit annual financial statements (AFS) within six months of the end of every financial year. However, to-date BSE has not submitted an audited financial statement for the financial year ended 31 December 2019, which is the end of its financial year, thus flouting the BSE Listings Requirements. According to BSE, the suspension is effective from 3 August 2020 until BBS publishes its 31 December 2019 audited financial statements.
Reacting to the suspension of BBS005, BBS has assured asset managers and their clients that it will continue to pay coupons biannually with the principal amount settled fully upon maturity. According to BBS, the suspension only affects tradability of BBS005 on the BSE counter and not BBS’s obligations to investors.
The Secretary of BBS, Sipho Showa, says BBS Limited recently concluded the audit for 2018 and BBS Limited and is working on the audit for the year ended 31 December 2019. The date of completion will be announced in due course to enable, amongst others, reinstatement of BBS005 to the BSE.
Showa explains the delay in releasing the results to work on upgrading of the core banking system of BBS that he says took longer than expected. This also had ripple effects on addressing post-implementation issues, especially those that had an impact on the financial statements of the company.
In an interview with this publication, Showa said they were currently working tirelessly on the audit following the Annual General Meeting last month so as to have the 2019 audit finalised and the BBS Bond re-registered and share trading on the BSE resumed.
Meanwhile, BBS only recently released its annual report for 2018 according to which, although it did not make a profit, positive performance indicators included an improved return on average equity ratio of 19 percent in December 2018 from 17 percent in March 2018.
The reports says BBS maintains a strong capital base with a capital adequacy ratio of 28.40 percent for the period ended December 2018. The liquid assets to total customer deposits ratio was 27 percent at December 2018, which is much higher than the 10 percent limit set by the central bank.
In 2018, dividends paid amounted to P57.803 million compared to P59.376 million in 2017, this being a decrease of 3 percent that resulted from a decrease in interest rates. BBS’s cost to income ratio in 2018 was 67 percent compared to 68.45 percent in 2017. According to management, cost to income ratio is expected to be high for the next few years as BBS continues to implement initiatives pertaining to its transformation process.
Should it be granted a licence, BBS limited aims to become a commercial bank by the second quarter of 2021. “I would like to assure you that BBSL is in full mode to run the commercial bank in the event that the Bank of Botswana issues it with a licence,” said Managing Director, Pius Molefe.