Competition compels Barclays to slash customer costs

Brian Benza
Staff Writer | Tuesday April 5, 2011 00:00

 

Botswana's second-oldest bank is doing this in a bid to retain its leading role in providing banking solutions.Announcing the company's results for the year ended 31 December 2010, Acting CEO Wilfred Mpai, said in a 100-day period stretching from the back end of 2010 to early this year, the bank had come up with new initiatives to attract new customers and retain existing clients.

'After a challenging period in the year due to the financial difficulties globally, we are now starting to open up again to the market in a cautious manner, and the results are beginning to be seen,' he said.

'We aim to improve our account recruitment to as much as 1,500 per month from the current figures of about 500 per month. Before the recession, our account recruitment was over 2,000 per month.

'The challenge now lies in the competition in the market whose retail banking potential is now reaching the limit.We have committed ourselves to improving our products and service delivery so that we are the 'go to bank' in the country.'

After dominating the local banking industry for a long time, Barclays has seen fierce competition from expanding and innovative FNBB in the past few years, while the entrance of banks such as BancABC, Capital Bank and Bank Gaborone has eaten into its hitherto lion's share of the market.

Some of the initiatives that the bank has come up with include cutting back its turnaround time for opening a bank account from about two days to just 15 minutes.

'We have been criticised for our slow process in account opening,' said Mpai. 'From now on, customers will get into a Barclays branch and walk away with a cheque book and an ATM card in 15 minutes.'

Barclays is also making its products and services more affordable to customers by reviewing pricing. 'After consultations with the regulators, we have also taken deliberate initiatives to bring down our prices,' Mpai continued.

'From the 1st of March this year, the bank has done away with debit card replacement fees, as well as ATM charges for debit accounts.'

On the lending side, Mpai said loan applications of less than P35,000 would now be approved by branch managers instead of the normal rigorous credit analysis period blamed for slowing down the turnaround time.

Meanwhile, for the year under review, Mpai said interest income declined by 14.0 percent to P1.4 billion while interest expense declined by 33.2 percent to 420.5 million, bringing net interest income to P1 billion, a decrease of 2.2 percent from last year.

'The decrease in interest income is reflective of reduced customer lending, which contracted by 4.4 percent to P5.6 billion,' he said. 'Our balance sheet was flat as we took a deliberate effort not to contaminate it, and this led to a reduction in impairment costs by 20.4 percent to P162.4 million.'

Net fee and commission income increased by 29.4 percent to P289.2 million as a result of the strict credit risk management employed. Staff costs went up by 28.8 percent as salaries were aligned to the market while 90 new cashiers were employed in a bid to improve service delivery.

Profit for the year grew by 11.7 percent to P499.5 million. Deposits declined by 2.5 percent to P9.3 billion. This translates to an advance-to-deposit-ratio of 0.59.

The sale of the bank's custody business, which was completed in November 2010, contributed P73 million to total comprehensive income, P66 million of which was gains on sale net of tax and P7 million as profit after tax before sale.

A final dividend of 17.6thebe per share and a further special dividend of 11.734thebe per share have been declared and are payable on or about May 23, 2011.