BancABC has achieved resilience in this first quarter of 2021 with growth in non-funded income large enough to contain pressure on interest income margins from subdued interest rates and loan uptake volumes consistent with the tough market landscape, the bank announced in its results for the period ended 30 June 2021.
It recovered in most of the first half of 2021 from difficult trading conditions in 2020 with its strategy of diversification of income efforts made from prior years cushioning the impact of decreasing interest margins on total income.
BancABC’s interest income has been impacted by cumulative 1 percent bank rate cuts made in 2020 with a 15 percent reduction compared to the first half of 2020 with interest expenses being lower than the previous year, given the impact of the 2020 rate reduction by the Central Bank.
The bank managed to rebuild a stronger liquidity position from the end of the first half 2020 where market conditions were much tighter. Non-interest revenue performed very well in the first half, increasing by P33 million from P42 million in 2020 to P75 million by 30 June 2021. This good performance was largely driven by trading income on the back of good margins and volumes, with BancABC’s digital income also boosting this line.
The bank saw a slight reduction in their loan and advances with the loan book showing a decrease from P6.2 billion to P 6.1 billion due to the impacts of the COVID-19 pandemic and the current existing trading environment. However, BancABC remains optimistic that as the economy opens up, credit appetite will increase.
“Our long-term borrowings are reducing year-on-year as we continue to repay the offshore liabilities as we restructure our balance sheet to become more dependent on local currency funding and we expect to continue seeing these reduce over the foreseeable period,’’ the bank said.
Its retail banking and commercial banking segments both had slightly negative performances with the retail loan book reduced slightly by about 1 percent on subdued retail incomes. However, customer deposits increased by a notable 15 percent in comparison to the same period in 2020 improving the funding mix.
“The products launched to advance the digital strategy for this segment are bearing some positive fruit,” the bank noted. “These products include the mobile app Sarumoney and the Fast Cash voucher product. The focus of our retail segment on digital product offering and secondly on increasing customer deposits is showing some very positive results.”
It added that the slow economic recovery had delayed the anticipated asset growth in the commercial banking segment, thereby the segment experiencing reduction in the lending book. However, asset momentum based on approved but not drawn pipeline suggests recovery in this particular portfolio.
With the anticipated acquisition of Access Bank Plc taking over the full 78.15 percent shareholding of ABCH in BancABC Botswana, the bank expects to be a meaningful partner to its customers and stakeholders in Botswana as Access Bank brings strong financial backing for BancABC Botswana and is expected to significantly fast track the strategic execution for the bank. The transaction is expected to close by September 30 subject to closure of conditions precedent between ABCH and Access Bank PLC.
African Banking Corporation of Botswana Limited, trading as BancABC Botswana, provides corporate banking, retail and investment banking services. The Bank is a limited liability company and is incorporated and domiciled in Botswana.