BBS profits maintain downward trajectory
Boniface Keakabetse | Friday November 28, 2014 16:53
The mortgage lender has stated that it earned a profit of P31.6 million in the half-year period ended 30 September 2014. This is 15 percent lower than the recorded mark in the same period last year. This follows another decline that happened in the previous period. In the year ended 31 March 2014, the society recorded a four percent decline in profits from P71million in the previous year to P68 million.
In a statement accompanying the results managing director, Pius Molefe attributed the decrease in profitability to the decline in interest rates and the increase in operating costs due to the demutualisation project.
Demutualisation is a process of converting the building society into a commercial bank. Molefe revealed that demutualisation costs to date are P4.121 million.
BBS hopes the ongoing demutualisation will level the playing field for them, as they would now be able to compete with other commercial banks. Through demutualisation, BBS is expected to convert into a shareholder owned company, which would allow the organisation to apply for a commercial banking licence.
BBS has faced stiff competition in the market from commercial banks in the past, which can offer many other lines of products, while the Society has been restricted by law to mortgage lending and deposit-taking activities only.
In the period, the Society’s long term loans and advances grew by 7 percent to reach P2.714 billion from P2.526 billion as at end of the financial year compared to 4 percent growth for the same period last year. Growth in the mortgage book continues to reflect the confidence that customers have in our products and services.
“The society’s capital base remains strong. The capital adequacy ratio as at 30 September 2014 was 56.58 percent. The society also complied with liquidity requirements as required by the Building Society Act,” said Molefe.
He said an interim dividend of P29.4 million was paid to members, adding that the dividend paid was 3 percent lower than the P30.3 million paid during the same period last year, as a result of reduction in the dividend rate.
Shareholders of BBS in August agreed for preparatory work to start on a demutualisation process, which would pave way for the transition of the society into a commercial bank. Once the preparatory work has been carried, a draft prospectus on the demutualisation of BBS would be compiled for the consideration and approval of shareholders at a second Special General Meeting to be held in 2015. BBS’s biggest shareholders include MVA Fund, Botswana Privatisation Asset Holdings and the Botswana Police Service Staff Fund. The Society has also set up a demutualisation committee consisting of prominent captains of industry such as Tsetsele Fantan, James Kamyuka, Gerald Thipe, and CEO Pius Molefe.