29th March 2022
Own Correspondent
Standard Chartered celebrates 125 years of existence in Botswana in 2022, a proud legacy of banking firsts and close partnership alongside the growth of the nation.
Hard hit by the challenges created by the COVID-19 pandemic, the Bank delivered results that reflect an overall improvement in business momentum, responding positively to the gradual economic recovery following the apparent peak of the pandemic through 2020 and into early 2021.
The Bank, in the face of this challenging environment, drew on the experiences across its Global network to deliver a resilient performance, with underlying profits up by 25%. Operating income was marginally down by 2%, primarily due to a drop in interest income.
Mpho Masupe, Chief Executive Officer(CEO) at Standard Chartered Botswana, said: “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.””
He said, “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.”
The low interest rate environment coupled with market liquidity constraints contributed significantly to low margins with a resultant 4% drop in interest income. The business strategies to grow sustainable non-funded income are beginning to show results, with net fees and commissions registering a 2% growth surpassing pre-pandemic performance.
“The growth in our business offered us a greater opportunity to invest in the community despite the ongoing uncertainty that the pandemic is creating. P1.5 million since 2019 has been committed to our Futuremakers project, supporting community youth-led businesses to find scale and efficiencies with an emphasis on women-led businesses. The success stories are very real, as we proudly see these businesses finding their place in the market, creating employment and lifting participation,” Masupe.
He said, “Furthermore, our sustainability drive put its first significant marker in the ground with the proud launch of our solar-powered Express Banking Centre (EBC) in Lobatse. The EBC is a prime example of digital innovation and sustainability coming together, given that the majority of the structure is made from a previously-used shipping container. We have strong commitments to continue addressing our carbon footprint across our distribution channels and our head office.”
Overall profit after tax increased by 21% resulting in improved shareholder returns; Return on equity increased by 100bps to 6%. Tax charges for the year declined substantially due to a once off deferred tax charge of P37m 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% of client acquisitions and 80% servicing done digitally, and over 70% of the existing client base active on digital channels. The efficacy and relevance of the digital platforms to the Botswana market validated by two (2) international banking awards as the best digital bank in Botswana by Global Finance and the Global Retail Innovation Awards.
“The effects of the pandemic continue to require more from our strategy, but our performance gives us confidence that our business is on the right path. The growth in Return on Equity is encouraging, internally we are committed to ensuring that this growth is sustained, and we are confident that the fundamentals of our business will drive this,” said Masupe.
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.
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 2022.
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% year-on-year growth in revenue, a 5% growth in client assets and a 2% 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 the fundamental base of the segment and strategy is strong.
Continued investments in digital platforms – particularly the launch of the Straight2Bank NextGen – yielded positive results with costs declining by 3.7% 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 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.”
She said, “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.”
She said, “Furthermore, our sustainability drive put its first significant marker in the ground with the proud launch of our solar-powered Express Banking Centre (EBC) in Lobatse. The EBC is a prime example of digital innovation and sustainability coming together, given that the majority of the structure is made from a previously-used shipping container. We have strong commitments to continue addressing our carbon footprint across our distribution channels and our head office.”
