Hits P422 million on net interest income
Suffers 17% decline in profit before tax
Board elects not to pay dividend in 2020
The Pan African and Botswana Stock Exchange (BSE) listed bank, BancABC accrued P544.7 million revenues for the financial year ended 31 December 2020.
BancABC Botswana, which is part of Atlas Mara Group, achieved a modest growth in 2020.
"Despite the economic and global challenges, income lines showed relative resilience and growth in the case of Net Interest Income (NII), although this was insufficient to offset challenges of increases in expected credit losses. Overall the bank had a 17% (P25.7 million) decline in profit before tax (PBT) from a restated position of P150.6 million to P124.9 million," the bank stressed.
BancABC said good progress has been achieved on the management of interest expense as well as careful management of interest margin during the financial period under review.
Non-Interest Income decreased by 1% buoyed a strong Global Markets business performance which offset a reduction in activity linked fee while the expected credit losses increased by 124%.
Net Interest Income closed the year at P422 million which was above prior year's performance.
"Introduction of 84 months tenure for personal loan was successful in uplifting asset yields as well as assisting the clients that required some relief on their disable income," said BancABC.
The bank's balance sheet was not stable as deposits for the year from customers ended at P6.6 billion - representing a 5.8% decline on the prior year as core customer segments in the corporate sector experienced reduced operating cash flows but the bank had a notable increase in retail deposits of 21%.
In addition, the bank that is led by Kgotso Bannalotlhe as Managing Director said its loan book closed the year at P6 billion, a 6% reduction from the previous financial year.
This reduction was predominantly from the customer repayments and reduced activity on new lending mainly in the corporate segments where the bank was more cautious on large ticket deals.
Meanwhile, the bank said it remains in a strong solvency position reflecting on its capital adequacy.
BancABC said its unimpaired capital and risk weighted assets stood at P1.4 billion and P7 billion respectively thus resulting in a very strong and impressive capital adequacy ratio of 20%.
"Expected credit losses in loans and advances resulted in an impairment charge of P3.7 million during the year compared to a P16 million in 2019. Some loans were restructured, and customers given repayment holidays to assist them to cope with the general deterioration in the economy which restrained the cash flows," said the bank confident of a better recovery.
Total operating expenses of P416 million are 4% above the expenses posted during prior year.
According to the bank, the significant increases on costs incurred were from the amortisation of the capitalised projects in line with investments made in technology infrastructure in the past.
In a continued abundance of caution, the bank's Board has elected not to pay dividend in the current year until the COVID-19 pandemic's recovery trajectory is clearly certain.