- Underlying profit before tax P77 million; up 42% (net off once off P48m reported in prior year)
- Profit after tax up 21% to P60 million
- Return on Equity improved by 110bps to 5.8%
- Robust total balance sheet growth: 10%
- Customer deposits up 6% year-on-year
- Net fees and commission up 2% driven by improved business volumes
- Operating income marginally down 2% to P739 million
- Interest expense down 14%, despite a volatile liquidity environment
- Strong Capital Adequacy Ratio (CAR) at 16.5% against the regulatory requirement of 12.5%
The Bank says, in the face of this challenging environment, it drew on the experiences across its Global network to deliver a resilient performance, with underlying profits up by 25 percent. Operating income was marginally down by 2 percent, primarily due to a drop in interest income. The low interest rate environment coupled with market liquidity constraints contributed significantly to low margins with a resultant 4 percent drop in interest income. The bank says business strategies to grow sustainable non-funded income are beginning to show results, with net fees and commissions registering a 2 percent growth surpassing pre-pandemic performance.
Notable growth was recorded across products in both the Retail and Corporate businesses, as the segments expanded their value propositions through the year. Strong discipline on cost lines reaped desired results as operating expenses were held flat year-on-year. Credit impairments remained low due to a combination of diligent portfolio management and the improving macro-economic variables and asset quality.
Overall profit after tax increased by 21 percent resulting in improved shareholder returns; Return on equity increased by 100bps to 6 percent. Tax charges for the year declined substantially due to a once off deferred tax charge of P37 million reported in 2020.
The Retail segment – Consumer, Private and Business Banking (CPBB) – spurred on by client behaviour, was able to accelerate the digital transformation strategy. The year under review saw 98 percent of client acquisitions and 80 percent servicing done digitally, and over 70 percent of the existing client base active on digital channels.
The segment grew the Affluent segment proposition with the launch of Offshore Mutual funds and Fixed Income products. The digital bank launched the long-awaited Cardless Cash functionality which has seen exponential growth volumes since its launch in Q3 of 2021. To progress the Bank’s sustainability agenda, the segment launched a first-of-its-kind green-energy Express Banking Centre in Lobatse. The combined initiatives and enhancements saw the CPBB business register a 7 percent year-on-year growth in revenue, a 5 percent growth in client assets and a 2 percent growth in client deposits.
The Corporate segment – Corporate, Commercial and Institutional Banking (CCIB) – recorded a second year of profitability albeit at reduced level compared to the previous year. The segment saw subdued income, due to low momentum in the early part of the year as clients emerged from the strains caused by the pandemic and the re-alignment to focus on key segments of Financial Institutions, Public Sector and Multinational Corporates.
Client deposits showed resilience amid the re-alignment strategy, posting an 8.7% growth year-on-year. Indicating that the fundamental base of the segment and strategy is strong. The portfolio re-alignment and balance sheet composition resulted in a decline in advances to clients.
Continued investments in digital platforms – particularly the launch of Straight2Bank NextGen – yielded positive results with costs declining by 3.7 percent year-on-year. Credit impairments remain well controlled with a release of P28million from a loss of P19million in the prior year as the Segment continues in its quest of sustainable lending. A strong pipeline of transactions and mandates is expected to be converted early in 2022.
Tapiwa Butale, Acting Chief Financial Officer at Standard Chartered Botswana, when presenting the results said: “the results that we have posted reflect the reality that the pandemic – though a lesser unknown compared to its early years – continues to test business resilience and agility. The periods under the Delta and Omicron variants of the virus had definite impacts to operational momentum and the understandable changes to client transactions. That said, the business responded to the resilience test further validating the strength of our balance sheet. Moreover, we leveraged the insights coming in from across our Global network to adapt our operations and portfolio decisions. The results – particularly the growth in Return on Equity and underlying profit give confidence that our strategy continues to be effective.”
Mpho Masupe, Chief Executive Officer at Standard Chartered Botswana, added: “Much like all businesses across industries and economies, we sought to find the most optimum ways to live with the pandemic and offer our clients relevant product and service solutions. If we have learnt anything from the years of the pandemic, it is the need to embrace agility and trust the strength of our balance sheet to continue to invest for business growth. Alongside this, is the priority to be unwavering in protecting our people and customers by offering them an environment that they can safely thrive in.”