Stanchart weathers liquidity storm

SHARE   |   Sunday, 12 April 2015   |   By Kabelo Adamson
Lekaukau Lekaukau PIC: RICARDO KANONO

• Loans to customers up 29%
• Deposits up 27%
• Total income grows by 7%
• Declares 46.59 Thebe dividend 

Standard Chartered Bank Botswana Chief Executive Officer, Moatlhodi Lekaukau, says they posted a solid performance despite liquidity and low interest rate factors that impacted banks in the past year.  
The challenging trading conditions have caused a rapid decline in margins.
When presenting the group financial results on Friday for the period ending December 2014, Moatlhodi conceded that liquidity has been a challenge to the commercial banks as most banks struggled with growth. Other banks have previously announced their discontent regarding the liquidity challenge and the low interest rate which was reduced by the central bank by 1 percentage point from 7.5 percent to 6.5 percent.
“We achieved what we think is a good performance and we are still growing significantly above the inflation rate,” Moatlhodi said, adding that the retail sector of the business remains the largest of the business.
Regarding the retrenchment speculation, Moatlhodi said they have not offloaded people but rather will continue to increase their work capital. He was reacting to allegations that banks, Standard Chartered included, have embarked on a retrenchment spree.
Moatlhodi said they are changing the organisational structure of the company to give it a new shape and no one has been rendered unemployed due to the process.
The bank’s Chief Financial Officer (CFO), Mpho Masupe, noted that despite the low interest rate and liquidity, the balance sheet continues to grow, having strengthened by P2.7 billion during the past year. He said as a result currently the balance sheet stands in a good shape.
Loans to customers increased by 29 percent to P8.1 billion while deposits grew by 27 percent to P10 billion while impairment was well managed, decreasing by 94 percent year on year.
Standard Chartered, one of the listed commercial banks on the Botswana Stock Exchange (BSE) with a market capitalisation of P3.7 billion has seen its total income go up 7 percent when compared to the previous one. This was largely driven by good growth in the retail clients and corporate and institutional client segments.
Lekaukau had explained that the commercial and institutional clients segment also performed well due to strength in transaction banking offering combined with Financial Markets risk management expertise.
Having recently took a decision to ease the tight liquidity conditions in the banking industry by releasing P2.3 billion into the market, Masupe said the decision is most welcome as it will help to ease the challenge.
However, external environment is expected to continue to be a challenge in 2015 with Lekaukau saying that the bank has positioned itself to respond to these challenges and will continue supporting its clients through effective management and the provision of tailored solutions.
Standard Chartered board of directors has recommended the declaration and payment of a final dividend of 46.59 Thebe per ordinary share. By Friday the bank’s share price was trading at 1240 Thebe per share.

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