Banks continue to tighten screws

Earlier this year, BoB released P 2. 3 bn into the market
Earlier this year, BoB released P 2. 3 bn into the market

While the Monetary Policy easing might have been a welcome development for consumers, commercial banks are finding it hard to exceed or reach their targets because of this.

This has compelled banks to think of more innovative ideas in order to stay afloat and most importantly shift focus.

Lending rates have drastically gone down in the past two years. Laws and regulations, coupled with the economic situation, have also not made the already suppressed margins better.

Professional banker, Lebogang Keabetswe said the recent focus by most big banks on increasing their product offerings especially in the securities front is a sign that banks are opting for products that are less riskier.

Standard Chartered Bank recently launched Offshore Fixed Income Proposition for their Retail Clients.

“What really stands out for me about this offer is that not only is it a first in Botswana, but the customer base it is targeting as well,” she said.

Keabetswe said Standard Chartered Bank continued to concentrate on commercial, corporate and investment banking. According to the banker, the bank is probably trying to tap in all segments and balance their revenue coffers without the risk of neglecting the other but of course concentrating on more secure products.

“What I am not really sure about is their qualification criteria. You will find that, though it’s said to target the low to medium income earners, the requirements will probably put them off,” she added.

Keabetswe further indicated that there is no doubt that spending habits surpass saving habits in the retail banking space. Nonetheless, she said, Standard Chartered Bank needs to be applauded for this initiative.

On the other hand, Barclays Bank Botswana also announced the listing of Exchange Traded Fund (ETF) on the Botswana Stock Exchange (BSE).

Keabetswe said the catch in the listing of the ETF is that Barclays is tapping and leveraging on being a member of the Barclays Africa Group Limited (BAGL) and is fully taking advantage of all avenues availed to them to compete in the Botswana and broader Africa market.

“That’s what investors are looking for; flexibility to invest into any market without difficulty. This will certainly increase BBB market share and liquidity,” she said.

The banker also indicated the banking industry is forever changing, noting that the products and customer care and economics teams are always on alert to study trends to see what next thing they can offer their customers to keep their customer base and income growing.

“It’s our spending and savings patterns that inform them of their next move, e.g. Motshelo Account at Barclays and the cellphone buying scheme at FNB (First National Bank),” said Keabetswe.

She noted that FNB will probably continue to lead the market by remaining resolute on their alternate channels offerings and tapping more into their mass market segment which is working quite well for them, as they have become a one stop for everything.

Earlier this year, Bank of Botswana (BoB) moved to ease the prevailing tight liquidity conditions in the banking industry by releasing P2.3 billion into the market.

In a move aimed at augmenting funds available for lending for commercial banks, BoB governor, Linah Mohohlo halved the Primary Reserve Requirement (PRR) for commercial banks from 10 to five percent, effective April 2015.

Primary reserves are the commercial banks’ deposits held in a special non-interest earning account at the Central Bank.

The maintenance of these deposits at the Bank contributes to the absorption of excess liquidity in the banking system.

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