Stanbic Bank profits bounce back
Staff Writer | Thursday March 31, 2016 18:00
Despite challenges that included company closures, household over indebtedness, drought, water and power challenges, Stanbic says the improved profits resulted from refined operational efficiencies.
In the period, the bank’s profit after tax stood at P132 million from P91 million, driven by an 18 percent growth in non-interest income.
Total income increased to P700 million in 2015 while return on equity increased from 11 percent in 2014 to 14 percent in 2015.
“Although the bank profits have improved, management remains concerned about the prevailing environment which demands continued prudency,” said Stanbic Bank Botswana Chief Executive, Leina Gabaraane.
The rise in non-interest income was seen as a reflection of the bank’s transactional capabilities it had acquired since the implementation of the new improved core banking system in 2013.
“This has allowed for best-in-class digital value-added products to be introduced on the market. Additionally, the trading desk leveraged the volatilities in the foreign exchange market to post very strong revenues,” said the bank.
On the other hand, interest income declined by five percent as a result of the loan book declining by nine percent due to the challenging business environment and the endowment effects of the 150 basis points bank rate cuts during the year.
“The prevailing low business confidence resulted in a decline in the loan book growth. This has naturally forced us to re-look at our operational efficiencies and delivery of service to ensure that customers are sustainably delighted,” Gabaraane said. “It is no longer about the loan size or number of customers but more about the return on assets and the quality of every transaction that the bank enters into.”
In the period, the bank’s operating costs increased by five percent, primarily as a result of investment into technology and building critical staff competencies.
Amidst all this, the bank says it elected to focus on operational efficiencies and service excellence; this resulted in a healthy growth of increased transactional volumes and non-interest revenue.
According to Gabaraane, the Corporate and Investment Banking (CIB) division continued to provide a strong anchor for operations, generating growth in revenues whilst the Personal and Business Banking (PBB) unit emerged stronger than in the previous year. While the loan book remained flat year-on-year, there was an enhancement of the risk profile of the book, which provides a positive outlook for both units.
“We are committed to making progress, real and tangible, as we continue to fortify our customer confidence and improve their banking experience through relevant, innovative banking solutions,” he said.