Barclays Bank Botswana board has approved an interim dividend of P80 million for the half year period, with the figure translating into 9.38 Thebe per share which will be paid to shareholders towards end of October this year.
This comes after the bank made a profit before tax of P260 million during the first six months of the year, a 4 percent growth year on year.
Barclays CFO Mumba Kalifungwa said on Thursday that based on the growth in profitability, they have proposed an interim dividend that takes cognisance of the impact International Financial Reporting Standards (IFSR) 9 on the bank’s retained earnings.
Kalifungwa said the day one impact of IFSR 9 compliance that was charged to the bank’s equity amounted to P129 million after tax.
The IFRS 9, which is a new accounting standard, came into effect at the beginning of January this year, replacing IAS 39 Financial Instruments: Recognition and measurement.
The new accounting standard includes requirements for classification and measurement of financial assets and financial assets, financial liabilities and impairment of financial assets.
The new standard introduces a revised impairment model which requires entities to recognise expected credit losses based on unbiased forward looking information. The previous model only recognised impairment if there is objective evidence that a loss was already incurred and measured the loss on the most probable outcome.
Despite the interest rate cut of 50 bps in October last year, Kalifungwa said interest income is up by 4 percent, but says the market liquidity in the first half of the year was thin which resulted in increased cost of funds.
“Net interest income was muted as a result of the prevailing market conditions,” said Kalifungwa.
He said they continued a forward momentum of driving interest income growth through prudent lending across business segments. On operating costs, Kalifungwa said the bank’s operating costs were well contained with the business achieving a cost to income ratio of 53.6 percent which he said is in line with Barclays’s strategic target of the lower 50’s.
“Year on year costs grew largely driven by an increase in technology spends as part of the separation journey from Barclays Plc,” he explained.
He said the bank continues to exploit cost saving opportunities through a review of all cost lines and various supplier contracts in order to identify opportunities for savings. As Barclays remains in pursuit of growing the business, its overall balance sheet grew by 12 percent, ending the period at P16.9 billion.
According to the bank CFO, the key component of the balance sheet continues to be driven by loans and advances and customer liabilities which he said speak to the primary drivers of the bank total revenue.
Earlier during the presentation of the financial results, the bank’s Managing Director Reinette van der Merwe said they were focusing on digital priorities.
“Our customers continue to be at the centre of everything we do and we have noted an increase in the adoption rate of our digital banking channels,” she said.
Van der Merwe said they have always made it clear that their ambition is to become a business which is digitally led, digitally capable and scalable. She said their parent company Absa Group Limited has made investments in leading-edge cyber capabilities and collaboration with several Fintechs to drive innovation.