Stanbic Bank Botswana said it continues to perform impressively despite operating in a challenging economic environment. The bank posted a 9 percent increase in profit after tax, up from P444 million in 2022 to P484 million in 2023.
The bank attributes its strong performance to a number of revenue-generating strategies including the Letsema 2025 Corporate strategy.
โOur revenue-generating models are bearing fruit,โ said Chief Executive Officer, Chose Modise.
Despite challenges like increased interest rates, underperforming diamond sales, and geopolitical turmoil, the bank achieved growth in headline earnings, maintained a strong balance sheet, and invested in technology and workforce development. These efforts align with the Letsema 2025 strategy, which aims to transform Stanbic into a platform-based business for sustainable growth and competitive advantage.
Guided by its core purpose of driving Botswana’s growth, Stanbic Bank ended December 2023 with a strong balance sheet, a strong liquidity position, and a Capital Adequacy Ratio of 19.92 percent, significantly above the regulatory threshold of 12.50 percent. The bank generated headline earnings of P484 million, reflecting a 9.0 percent growth from the previous financial year.
Investments in systems, technology, and infrastructure have boosted operational efficiency. Organisational reforms have aligned staff competencies with customer-centric goals, equipping the workforce with the skills necessary to deliver financial services effectively. People and technology are viewed as critical levers for gaining a competitive edge in the banking industry.
The Letsema 2025 plan, launched in 2023, aims to convert the bank from a conventional supplier of financial services into a platform-based enterprise. This involves developing digital platforms and providing supplementary services tailored to meet diverse client needs. The bank is focused on enhancing internal controls, supporting balance sheet resilience, leveraging data for decision-making, and preparing its staff for future roles. Central to this vision is a skilled and adaptable workforce passionate about delivering services. In the future, Letsema 2025 will use innovation and technology to create new value and opportunities, expand distribution networks, improve digital capabilities to boost productivity and reduce expenses, promote economic inclusion, sharpen staff skills, and accelerate the adoption of Environmental, Social, and Governance (ESG) priorities. The bank believes that despite market and operational challenges, these difficulties are uniting its workforce under capable leadership to achieve long-term goals.
ย To maximize technological expenditures and align with a new operating model, Stanbic Bank has focused on upskilling its workforce. The bank examined client segmentation and product structures to ensure every customer has access to products that meet their needs. This improved customer satisfaction, resulting in new alliances and sector reorganisation. The bank’s data optimisation journey, facilitated by extensive training in data science, allows for precise decision-making and meets the demands of the underbanked and unbanked.
Modernising internal processes and updating technological architecture has provided an operational foundation to support the platform journey and transition away from traditional financial services. Corporate and Investment Banking (CIB) reported a 34 percent year-over-year increase in profit, credited to enhanced credit risk management and balance sheet optimisation. Business and Commercial Banking (BCB) saw a decline in profitability due to a one-time credit recovery in 2022, though cost control measures and improvements in book quality have been noted. Personal and Private Banking (PPB) experienced a 6.0 percent increase in net interest revenue, with operational expenses reduced by 5.8 percent.
The bank’s balance sheet grew by 4.2 percent, fueled by deposit reorganization and slight increases in loans and advances. Focus on financial awareness and targeting the informal sector and younger clientele led to a notable increase in household deposits. Careful liquidity and risk management increased financial investments by 26.1 percent, ending the fiscal year with a 19.92 percent capital adequacy ratio. The bank announced and distributed P200 million in dividends to its owners.
In 2023, the bank’s loan-to-deposit ratio decreased from 71 percent to 69 percent, with the Assets and Liabilities Committee (ALCO) managing liquidity. Technological innovations have made it easier for customers to access products and services, preserving liquidity. Net interest income increased by 30.6 percent of overall operational revenue, while fees and commissions saw slight growth. Despite economic challenges, credit impairments remained resilient, with total impairment charges ending at P109 million. The bank’s credit loss and non-performing loan ratios closed at 3.5 percent and 0.6 percent, respectively, due to leveraged investments in people and risk management techniques. Operational expenditures increased by 5.6 percent due to a one-time increase in personnel costs from a redesign exercise. Continuous cost optimisation resulted in a 3.6 percent decrease in other operational expenses, lowering the Cost to Income ratio to 52.8 percent.
Stanbic Bank continues to invest in its structures to protect clients and ensure seamless business operations. Using data and analytics for predictive and behavioral profiling has allowed for early distress detection and intervention, enhancing credit management strategies. With a focus on client satisfaction and operational efficiency, the bank said it is well-positioned to navigate future challenges and opportunities.
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