During a period marked by two bank rate cuts, Standard Chartered Bank Botswana focused on optimising its deposit mix to ensure a stable source of liquidity that could support its lending operations.
The bank’s Chief Financial Officer, Tapiwa Butale, noted that this was a key priority in the first half of the year, and the bank successfully achieved it.
“From a loan and advances point of view, there was a significant decline of 16 percent year-on-year, but it is a decline that we are not worried about,” Butale said during the presentation of the bank’s financial results for the period ending June 30, 2024.
“It is a decline that we understand, and it reflects the nature of our business. We will continue to monitor it going forward.”
There bank explained that there are areas which are growing while others are a bit flat. The growth is driven by SMEs and housing while personal loans were fairly muted. StanChart made some changes and easing during H1. It extended amounts and turners of loans.
In the first half of 2024, the bank’s total loans and advances to customers decreased by 16 percent compared to the previous year, closing the period at P7.6 billion, down from P9 billion. This decline was most notable in the Corporate and Investment Banking (CIB) book, which was impacted by the repayment of term and trade facilities in lending and corporate finance. Meanwhile, the Wealth and Retail Banking (WRB) assets, formerly known as Consumer, Private, and Business Banking (CPBB), remained flat compared to the prior year.
Butale attributed the muted performance in sales to the flat WRB results, which also explained the 20 percent year-on-year decline in non-funded income.
“This is partially explained by the commission costs we incurred. We spent quite a bit on commission income paid to some of our agents,” Butale clarified.
Total customer deposits increased slightly, closing at P12.8 billion, up 1 percent year-on-year, primarily driven by inflows in corporate deposits, resulting in strong, sticky deposits. The overall advance-to-deposit ratio was 60 percent, down from 73 percent in 2023, largely due to the drop in customer assets.
Thanks to strategic investment decisions, the bank achieved a 5 percent year-on-year increase in its top line, growing from P523 million to P548 million. This growth was supported by a 15 percent increase in Net Interest Income (NII).
“From a cost point of view, overall costs increased by 3 percent, but it is worth noting that our strategic focus on digitisation continues to bear fruit,” Butale said.
“When you look at the costs in detail, the increases are mainly in staff expenses, which is where we want to see growth.”
Staff costs rose from P118.6 million to P132.4 million year-on-year, reflecting investments in training, exposure, and rewarding strong performance.
“This is a key strategic area for the bank,” Butale noted.
“Our cost lines continue to drop, reflecting the efficiency we’re gaining as our costs to serve customers decrease due to the digitisation agenda.”
Overall, Butale emphasised that the bank remains well-capitalised and profitable. Standard Chartered Managing Director, Mpho Masupe, acknowledged the challenging operating environment but affirmed that the bank continued to generate returns for its shareholders.
“That has not taken away our ability to ensure that the financial services sector, including ourselves, operates as it should,” Masupe said.
Masupe also expressed concerns about emerging signs of financial crises reminiscent of those seen in the past but remained confident in the government’s ability to manage such situations.
With the bank’s Profit Before Tax (PBT) growing by 6 percent, Masupe highlighted that the growth was broad-based, allowing the bank to equally split profits between its retail and corporate businesses.
“Two years ago, we were concerned about the fragility of our retail book compared to our corporate book,” he said.
“Now, we are at a point where we can split profit 50/50 between the two.”
