BBS’ Poor Results Are Not Irredeemable – Chairman

• Says acquisition of commercial licence will have a positive impact on the bottom line
• Mortgage loans were flat and impacted interest income, fees and commission income
• Bank’s insurance agency contributed P1.1m in profit after tax

“The financial performance under review, although not what we would want it to be, does not point to an irredeemable situation as I pointed out in my December 2022 update to shareholders,” he says in the bank’s 2022 annual report. “We believe very much in the underlying strength of BBS Bank.” He asserts that issuance of a banking licence by the Bank of Botswana eliminated uncertainties that existed in the previous year about the timing of the rollout of commercial banking services and products.

“Management has made progress with the acquisition of commercial banking capabilities which will enable rollout and diversification of income streams,” Mzizi notes. “Although the bank will incur significant transformation expenses in 2023, it is expected that the business performance will improve over time.”

He emphasises that the fortunes of BBS Bank will turn around because it can offer a suite of products and services at the back of investing in the right infrastructure and systems and developing its workforce. “Products are being rolled out gradually and will have a positive impact on the bottom line,” he says. “The new dawn that I referred to fits in well with all the changes that have taken place in recent months. We must now do things differently, driven by the right mindset and culture, to deliver desired results.”

Mzizi appeals shareholders not to be overly concerned with the share price in the short term, saying the growth of shareholder value is a long term process and that the share price will improve in due course, based on the measures that the bank is implementing. “I reaffirm that we are well placed to deliver long term shareholder value which will be a fitting repayment of your decision to put your hard-earned money behind your conviction in BBS Bank,” he states.

Pedzani Tafa, who is now at the helm of BBS Bank as Managing Director following the departure of Pius Molefe, states that the Group recorded a loss of P20 million for the year ended 31 December 2022 compared to P25.3 million recorded for the year ended 31 December 2021. The bank’s insurance agency, which is part of BBS Bank’s long-term strategic plans to diversify its portfolio and offerings, contributed profit after tax amounting to P1.1 million to the Group’s performance.

“Although there has been a slight improvement, it is evident that the bank has not fully recovered from the significant loss of business in the previous financial year,” Tafa says. “Our core product, mortgage loans, remained flat. As a result, interest income and related fee and commission income continued to be under pressure. The liquidity pressures faced by the industry contributed to the continued high cost of funding.” she said.

Established on 6 October 2022, BBS Bank Limited is the youngest commercial bank in Botswana. However, it has been present in the Botswana financial services industry since 1971, first as the United Building Society of South Africa and then as Botswana Building Society in 1976 before it became BBS Limited in 2017. As it solidifies its presence, says Tafa, Botswana’s first indigenously owned commercial bank faces the challenge of diversifying its product portfolio fast, scaling up services, improving staff morale, delivering shareholder value, reducing the cost of running the business, and growing its customer base nationwide.