BBS profit drops on subdued housing market
Isaac Pinielo | Tuesday August 1, 2017 18:00
For the twelve months to March 2017, the society earned a profit of P47.9 million, reflecting a 13% decrease from P54.9 million the previous year.
BBS managing director, Pius Molefe said the decline in profit was exacerbated by the fact that the business has a very limited product range compared to its competitors.
The organisation is expected to operate fully as a bank by the first half of 2019 subject to obtaining the relevant shareholder and regulatory approvals. Molefe also expressed optimism about the future of BBS, stating that it will be made stronger by becoming the first indigenous commercial bank.
Meanwhile, the society’s assets also decreased by 11% from P4.09 billion in the 2015/16 financial year to P3.65 billion in 2016/17.
As for paid up and subscription shares, there was an increase of 1.04% from P503.4 million in 2015/16 to P508.6 million.
Fee and commission income registered a decrease of 10% from P25.1 million during 2015/16 period to P22.5 million. Interest income decreased by 2.5% from P307.02 million in 2015/16 to P299.4 million. Dividends paid amounted to P59.4 million compared to P59.9 million the previous year, this being a decrease of 0.8%.
Given the nature of the results in particular and the need to provide the customers with diversified products and services, Molefe said they are looking forward to the society becoming a commercial bank.
He said the transition from a building society to a commercial bank would place BBS in a stronger position to face the future, as its demutualisation process takes shape.
He said the preparatory work on the demutualisation project has been done and all that is required is the shareholders to support the initiative at the special general meeting.
“Strategically, this transformation will result in a stronger BBS, financially and operationally, which will also deliver high shareholder value over the coming years,” he said.
BBS board chairperson, James Kamyuka said the society is at a stage where it can make a special resolution on the demutualisation.
While it had been said that the demutualisation would take place on November 2016, he said timelines had to be shifted because the drafting of key documents such as the conversion statement had not been completed.
“Over the past months, the board and management have been working very hard to finalise all the necessary issues pertaining to the project,” Kamyuka said. He noted that a special general meeting is scheduled to take place immediately after the normal annual general meeting so that shareholders can vote on the demutualisation matter.
He said the BBS board has full confidence in the strategy that was created for BBS and in the capabilities of the management team to lead a transformed business.