Wanetsha Mosinyi
5 August 2008
Buoyed by the property boom in Botswana that has defied the sub-prime crisis in the US, the Botswana Building Society's (BBS) mortgage advances increased by 14 percent to hit the P1 billion mark, boosting its profit to rise by 20 percent to P69 million.
According to its financial year ending 31 March, BBS profits increased to P69 million compared to P58 million made in the previous year. The Society's mortgage advances now stand at P1.031 billion, while its total assets stand at P1.5 billion.
BBS continues to deliver sterling results despite its mortgage rates being below the prime rate. The Society has kept its variable interest rates unchanged (15.25 percent) even though the central bank increased the Bank Rate twice in the space of a month recently.
"It is not necessary to always follow suit when the Bank Rate increases," says BBS Head of Corporate Affairs, Sipho Showa. "We want to offer Batswana affordable mortgage rates."
The 14-percent increase in mortgage advances is a sign that Batswana are taking property investment seriously despite the soaring interest rates, food and fuel prices, adds Showa.
The strong earning results have enabled BBS to pay a dividend of P39 million to its members. This includes paid-up and subscription shareholders.
The Botswana Building Society has delivered positive results since CEO, Pius Molefhe, took the reigns in 2004 when the Society was doing badly. It was established by statute in 1976. Until 1986, BBS restricted its lending to residential properties as a matter of policy. It has been only since then that it ventured into commercial lending.
BBS recently launched a new mortgage product called Pinagare. It is a low-interest home loan product targeted at youths aged up to 30 offering a 14.50 percent variable interest rate with no cap for home loans.
But Showa says BBS does not envisage launching another new product in the near future. The Society will wait until the relevant law has been reviewed, an exercise Showa hopes will widen the Society's scope of product rollout.
BBS issued a P75 million bond to respond to growing demand in the property market last year.
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