Business is'burgeoning' at Stanchart

Staff Writer | Tuesday September 28, 2010 00:00

 

In a statement accompanying the results, the bank says while its consumer banking division recorded a sustainable level of income, the wholesale banking segment continued to be impacted by lingering effects of last year's interest rate cuts and a snail's pace of economic recovery in non-mining sectors.

'While the economy heads towards full recovery from its worst recession in more than 40 years, the bank is positioning itself for the future with strategies to restructure the balance sheet,' says the statement.

'Operating expenses increased by 12.4 percent to P199 million due to progressive investment towards improving service delivery channels and operating efficiency.'

For the period, total income decreased 8.7 percent to P345.8 million while cost to income ratio was up by 12 percent to 58 percent.

Loan impairment provisions reduced by 45.2 percent to P24 million, a reflection of the 'quality of our loan portfolio despite the challenging economic environment, as well as strong discipline in lending and collections', the bank says.

Profit before taxation decreased by 22.2 percent in spite of the strong income momentum in consumer banking and because of the impact of lower margins, lower average earning assets and lower trading revenue in wholesale banking.

On the other hand, the balance sheet size increased during the period from P8.1 billion to P9.3 billion.Investments assets in loans/advances and Bank of Botswana Certificates increased by 18 percent to P 7.6 billion, with a marginal increase in customer deposits from P6.6 billion in June 2009 to P7.0 billion in June 2010.

Says CEO David D Cutting, commenting on the outlook for the second half of 2010: 'Our business pipeline is burgeoning and new deals seen since the beginning of the second half imply promising momentum in both our Wholesale and Consumer Banking businesses.

'We will be launching Priority Banking before the end of the year. This will offer premium level service and differentiating benefits for a select group of customers.'

Meanwhile, Stanchart has announced that all regulatory approvals have been obtained for the acquisition of custody business from Barclays Botswana.

The bank proposes to finance the transaction and the subsequent integration of the acquired business, as well as the planned business growth of Standard Chartered Bank Botswana by a rights issue.

The minimum amount to be raised through the rights issue to satisfy the above purposes is P137 million. 'The transaction is proceeding on schedule with completion expected before the end of the year, subject to certain conditions precedent to the agreement between Standard Chartered Bank and Barclays Bank PLC,' the statement reads.