- Non-interest revenue increased modestly in H1 2022
- Interest income up 12% due to increases in prime lending rate
Based on current conditions and forecast trajectory, as well as the backing of a strong parent, the directors of Access Bank Botswana deem the business and macroeconomic environment to be supportive of resuming dividend payment.
The first dividend was declared in March 2022 and the directors say the company is making an additional catchup dividend payment. An interim dividend of 20.7 thebe per share for the period ended 30 June 2022 has been declared and will be payable on 21 November 2022 to those shareholders registered at close of business on 9 November 2022 with an ex-dividend date of 7 November.
The dividend will attract withholding tax in accordance with the Republic of Botswana Income Tax (Cap 52.01) regulations. The directors confirm that after payment of this dividend, the Group will satisfy the solvency test. Capital adequacy is at 20 percent as at 30 June 2022, which is well above the 12.5 percent minimum requirement. The bank says the strong capital levels position it well for future growth as investment into transforming Access Bank is key to unlocking growth.
The directors have been abundantly cautious during the COVID-19 pandemic not to declare dividends and ensured the Group had more than sufficient capital to sustain itself through a prolonged persistence of business disruptions seen between the years 2020 and 2021. The bank says it has achieved resilience in terms of revenue in this period, with growth in non-funded income being largely enough to contain pressure on interest income margins from tight liquidity conditions in the market.
Non-interest revenue increased modestly in the first half of 2022. The result was due to continued strong performance of fees and commission revenue streams from lending business and also from increasing digital channels activity. Despite the strong performance in fees and commissions, trading income declined due to adverse margins. Interest income increased 12 percent compared to 30 June 2021 despite a relatively modest growth in the loan book.
This was due to increases in the prime lending rate by the Bank of Botswana, as already explained, in addition to volume growth. Interest expense increased by 33 percent due to adverse liquidity conditions in the market which have resulted in competitive pricing for deposits and increased our cost of funds. “Tight liquidity conditions have negatively affected our cost of funds and growth of the loan book,” the MD, Kgotso Bannalotlhe, wrote in the results for the period ended 30 June 2022.
“Preservation of the balance sheet has been a priority as the bank continues the integration to Access Bank and also prepares the right infrastructure to support the planned strategic expansion.” To-date the bank has upgraded its core banking software systems, launched 55 new ATMs, and opened 5 new Sales and Service Centres to bring banking closer to its current and future customers. Access Bank has rolled out 700 point of sales (PoS) terminals, launched refreshed products aimed at customer acquisition, and added critical value proposition enhancements to its digital channels.
New products, further enhancements, and new services such as Agency Banking are expected to be rolled out in the second half of the year. The company says it considers transformation achievements to-date to be satisfactory progress towards creating value for all stakeholders in the period ahead. “We expect to complete the remaining elements of the integration into Access Bank,” said Bannalotlhe. “The remaining months of the year will be focused on further enhancements of our customer value proposition and expansion strategy, particularly balance sheet optimisation and increases to our distribution channels and product offering to our customers.”
Overall, Access Bank’s total expenses are 19 percent higher than the 2021 first half of the year. Increases in costs are in support of the strategic expansion of the bank where staff costs have increased from mobilising the required human capital to drive the expansion, enhancement and support of information technology (IT) infrastructure and marketing initiatives to drive brand and product awareness. Operating expenses have also increased due to depreciation and amortisation from the bank’s investment in IT systems and infrastructure.