We have extracted the financial summary from the full year abridged report of Standard Chartered Bank Botswana Limited listed on the Botswana Stock Exchange under the share code STANCH.bw. Standard Chartered is the oldest financial institution in Botswana and operates operating in the retail, corporate and institutional banking sector.
The following is an excerpt from the full year abridged report:
Business and Financial Performance Review
Despite the headwinds, the bank returned to profitability posting a Profit After Tax of P24million, up from a loss incurred in 2017 (P189 million). Although top line performance remained subdued, mainly as a result of contained growth during the first half of the year, there was strong performance in overall cost management due to efficiency improvements across the business. There was an overall 11% reduction in costs, mainly from the administrative and business support cost lines.
The portfolio, mainly across the Corporate segments was substantially reviewed and optimally rebalanced, results of which are reflected by an overall decrease on non performing loans from 7.1% to 3.3%. This is part of the wider initiative to secure income foundations for sustainable growth and creating long term value.
Although reflecting a year on year flat trend on customer deposits, market share remained relatively stable at 17%. However, market conditions contributed significantly to a higher cost of deposits, particularly towards the end of the financial year. On the other hand, the market share of customer assets also remained stable at 13%.
Balance sheet resilience continued its improvement path, closing the year with a growth supporting capital adequacy ratio (CAR) of 22%. Liquidity remained sound, with an asset deposit ratio (ADR) of 61% demonstrating capacity to accelerate growth in top line performance in the context of risk adjusted returns.
The Bank adopted IFRS 9 effective 1 January 2018. The standard requires the recognition of expected credit losses (ECL) rather than incurred losses as was the case with IAS 39. The initial adoption of the ECL approach impacted retained earnings, with a Day 1 impact of P64 million charged. No significant losses were recorded and carried as at year end.
To realise long term value, the bank remains focused on improving customer experiences through investments in technology and offering attractive value propositions for our clients. We continued to re-configure our branch networks leveraging on the strength of our digital platforms and staff capabilities. Two paperless branches and a fully digital branch were launched successfully, alongside an enhanced online banking platform.
The Bank launched its 360 degrees loyalty rewards program, a first of its kind in the market. The program comes as part of Standard Chartered Bank’s card offering and rewards customers in a variety of ways that include prestigious shopping, flights to global destinations and hotels across the world depending on the amount of accumulated points, all at no cost.
Still in 2018, the Bank launched its prestigious Visa Infinite Cards for the priority segment. The cards come with a range of added life style benefits that include the accumulation of 360 degrees loyalty points, decent discount at selected shopping centres and free access to almost 1000 premium airport lounges across the world, among others. A suit of General Insurance products was launched in a bid to exalt customer convenience, and in this regard the Bank has entered into strategic alliances with Insurance Industry leaders to ensure optimal delivery channels.
The Bank remains committed to invest in human capital, driving the right client centric culture, while attracting, harnessing and retaining talent.
The economic outlook is positive and the Bank is geared for growth leveraging on balance sheet strength and strong capital position. The business is focused on improving the top line performance, while maintaining both cost and capital discipline. The sound capital position is expected to drive credit growth and consequently net interest income and non-funded income, complemented by a diversified product offerings and digital platforms.