17th September 2024
Own Correspondent
Absa Bank Botswana today announced its financial results for the first half of 2024, demonstrating resilience and strong performance amidst a challenging socio-economic environment. to customer-centric innovation and operational excellence.
Total income increased by 9%, Net interest income grew by 12% to P761 million, Net fee and commission income rose by 4% to P362 million and Customer deposits declined by a marginal 2%.
ABSA’s Corporate Banking sector has remained resilient in its strategic execution, focusing on enhancing client experience, sector-specific growth, and emerging industries, while diversifying revenue streams with the business achieving an 18% revenue growth compared to the previous year.
“In Botswana, weak diamond demand has led to a 5.3% economic contraction in Q1 2024. o The fiscal outlook has been negatively impacted by the severely strained global diamond sector, which will most likely result in lower mineral revenues than expected in the 2024 Budget,” said Keabetswe Pheko-Moshagane, Managing Director, Absa Bank Botswana
She said, “Central Bank data reveals a notable deceleration in commercial bank credit growth, which fell from 9.8% in January to 3.9% by June 2024. This slowdown was largely driven by reduced lending to the business sector, coupled with lower utilization of overdraft and revolving credit facilities. On a positive note, inflation has stabilised, averaging 3.3% in the first half of 2024, leading the Central Bank to lower the policy rate twice this year to provide support to economic recovery.”
The first half of the year saw ABSA pursue a strategic push towards commercializing recently launched products in Trade and Working Capital. Unsecured bid bonds were introduced in the final quarter of 2023 aligned with the Citizen Economic Empowerment Initiatives by the Government.
The Retail Bank’s performance was promising, with retail revenue playing a significant role in driving overall Bank performance. Our total revenue experienced a year-on-year growth of 4%, supported by a 6% increase in interest income and a 5% growth in non-interest income.
Notably, customer deposits expanded by 14%, while loans and advances saw a 2% increase, reflecting the success of strategic initiatives aimed at fostering a savings culture amidst household income pressures. Our strategy to drive customer primacy has led to a 4% year on year growth in customer numbers.
ABSA launched the Absa Flexi Funeral Plan and enhanced the Kgomotso funeral plan proposition through partnership with Funeral Services Group, to offer discount to clients upon placing funeral claims.
The refurbished four in one Francistown Branch was opened in Galo Mall, offering clients convenience of a one stop shop. It also enhanced its personal lending propositions by expanding the maximum unsecured loan limits to P750,000, and maximum loan term to 96 months to provide the much-needed financing to our clients. These enhancements highlight our customer centricity and commitment
to giving clients the best value through our services.
“We also invested in social and sports initiatives by sponsoring the inaugural Absa Summer Kidz Marathon, where 1000 children participated, showcasing our dedication to advancing youth sports and financial literacy. FutureU, our flagship product, played a key role in this commitment allowing us to continue to foster a savings culture in our youth,” said Pheko.
She said, “We continued to drive financial inclusion through our Spark by Absa wallet by partnering with entities in remote and rural areas to act as a Spark merchants.”
For first six months of the year business banking has grown revenue by 9.8%, compared to the same period in 2023. Loans and advances have shown a decline of 5% due to the slow conversion of the pipeline, high attrition of the loan book (mainly in the Commercial Asset Finance), and customer deposits grew by 31.9%.
The business has experienced some significant increases on the impairment mainly coming from the construction sector. A total of 350 capacity development trainings were delivered to various Small, Medium and Micro Enterprises (SMMEs) across the country in collaboration with a key strategic partners.
The SMMEs funded for the period under review created a total of 336 new jobs. As part of driving the digital channels adoptions, we onboarded 537 new customers on the Absa Internet banking for Business (AIB). We also had 61% digitally active customers.
Business Banking has continued to sponsor and participated at Mookane, Sandveld, Voorslag fields days as part of our strategic focus to support the agricultural sector. The segment has also seen some improvement on the customer experience score, treating the customers fairly matrices, and this underscores our commitment to continue to address the key issues impacting our customers.
“Our balance sheet remains strong, with total assets at P25 billion, and loans up 4%. ▪ Return on Equity of 28% compared to 23% in the prior period. o These results influenced the board decision to approve an interim dividend payout ratio of 78%,” said Pheko.
The business was recognized by Global Finance magazine as the Best SME Bank and the best Agri bank for 2024.
