Business Updates | Banking & Finance
Stanbic Bank Botswana, the country ‘s third largest commercial bank, a subsidiary of the South African headquartered Standard Bank, has come out of the year 2022 with a double fold increase in profits, the Bank reported recently.
The bank’s profit before tax grew by 111%, from P281 million to P594 million, at the back of technological advances as well as use of data insights. Also adding to the growth was an insurance claim recovery of P98 million for which was an impairment provision raised in 2021.
The rebound in economic activity has seen an impressive recovery in the Bank’s revenue activities, seeing net interest income (NII) growing by 20.7% driven by the Bank’s focus on balance sheet optimisation.
The Central Bank’s monetary policy response to inflation by increasing interest rates has also had an impact on the growth in NII. The balance sheet optimisation efforts have seen an impressive growth in NII despite a 1.6% growth in customer loans.
This according to Stanbic is a strong demonstration on the Bank’s focus which continues to yield positively despite the market liquidity challenges in 2022. Customers changing needs have also meant that the balance sheet demands have been muted as the focus was largely on platform banking requirements.
This saw a demand largely in the Corporate and Investment Banking (CIB) book posting a growth of over 20% compared to a flat growth in the Consumer and High Net Worth (CHNW) book. The changing business needs are evident in the growth of non-interest revenue (NIR) wherein platform banking has been a focus area. This, coupled with the Bank’s growing use of data have seen an improvement in NIR of 22.4%.
The rebound in economic activity has also contributed to the growth in trading revenue by 34.4% as the Bank continues to support its clients trade both regional and international.
This is achieved through the Global Markets business as well as the Africa China trade partnership led by the Business and Commercial Clients (BCC) segment.
Stanbic says improvement in client engagements, which have been led by data insights allowing the Bank to engage through predictive analytics have seen an uplift in revenue by P40 million in 2022 alone.
According to Stanbic directors the bank’s financial performance continues to demonstrate resilience and its activities and client focus are testament to the Bank’s continued improvements in its operating environment.
The Bank’s focus on supporting its clients and their businesses especially following a difficult business environment post COVID-19 restrictions, show a positive recovery story.
“Our client engagements, employee focus, risk management practices as well as focus on our control environment have improved efficiencies in the business and have strengthened the Bank’s financial performance.” the bank said.
To support the people behind the relationships, the Bank further continued to address gaps and needs in the technology infrastructure, enhance its processes, as well as training its people.
The increase in the clients’ need for convenient banking has seen the Stanbic carry out the much-needed enhancements to its self-service platforms as well as an investment in enhancing the technology and people in its Voice Branch to allow clients to be able to transact anytime, anywhere for their personal and business needs.
The growing changes in the business landscape accelerated by COVID-19 have prompted the Bank to structure its activities and technologies to ensure its clients’ growth strategies are supported effectively.
To respond to its clients’ needs, the Bank has also had to reposition itself and how it structures itself to be able to serve the stakeholders with the changes accelerated by the COVID-19 pandemic.
This has meant that Stanbic has had to look at how it deploys its balance sheet and other resources to ensure sustainable delivery and profitability, with new and enhanced technologies taking a priority.
Stanbic says the Bank’s financial performance is evidence of these changes and continued agility by the Bank to respond timely to economic and market need.
Stanbic balance sheet grow by 13.3% largely driven by the growth in loans and advances, specifically placement with other banks.
Advances to customers were muted, growing by only 1.6%, a deliberate move by the Bank to optimise the loan book as well as to deploy funds in platform enhancements in response to customer needs for more capabilities to grow their businesses.
In terms of Capital and liquidity management Stanbic says it continues to periodically review its balance sheet and capital management practices to ensure optimal capital consumption. The balance sheet has proven resilient during the year as well as through the COVID-19 pandemic, and into 2022, with the Bank continuing to be adequately capitalised.
The Bank closed the year with a strong capital base, recording a Capital Adequacy Ratio (CAR) of 19.24% compared to 17.32% in 2021, well above the minimum statutory requirement of 12.5%. The 2022 financial performance also improved the capital position, driven by the growth in profit.
In June 2022 the Bank had a redemption of P200 million in tier II capital and replaced it with a P215 million issuance in July 2022 to maintain a good capital base.
The Bank’s balance sheet management focus is preceded largely by liquidity management to ensure the Bank is able to meet its operational demands, as well as to meet prudential requirements, especially now in a constrained market.