The Botswana Building Society (BBS) has bounced back to a bullish mood after recording a six percent rise in profits to P72 million for the financial year ending March 31, 2015.
In the previous year to March 2014, the Society’s profits declined four percent to P68 million. This year’s profit rise comes as the Society prepares to bolster its revenue by venturing into commercial banking sector with the submission of banking licence application to the central bank slated for October this year.
Board chairman Cross Kgosidiile said he was confident of the long-term prospects of Society, which will be enhanced by the commercialisation of the business, a process that is on track.
BBS has been pushing for demutualisation in order to better compete with commercial banks, which have aggressively encroached into its mortgage-lending mainstay.
Through demutualisation, BBS will convert from being owned by their members (the borrowers and savers of the society) to being a public limited company owned by shareholders.
Commercial banks have in the past few years grown their mortgage-lending book, as they become more risk averse through reduction of exposure to unsecured lending.
“We have completed the business plan for the envisaged bank and an application to become a company will also be lodged with the Registrar of Companies as this is a crucial step to becoming a bank in that the business must first change from the status of a building society.
“We will submit the actual application for a banking licence with the Bank of Botswana during the month of October 2015. We have been advised that feedback from the Bank of Botswana on the banking licence application takes up to 6 months. Therefore, at the maximum, we should receive a response on the application in March 2016,” said Kgosidiile.
A special general meeting is expected to be called before October where members, having fully considered the prospectus, will vote on the conversion of the business from a building society to a company leading to its subsequent registration as a commercial bank. BBS’s biggest members include MVA Fund, Botswana Privatisation Asset Holdings and the Botswana Police Service Staff Fund.
Managing director, Pius Molefe stated that the profit attained was in no small part due to the focus on customer service so that BBS becomes the leading provider of financial services and products now and in the future.
Molefe emphasised that BBS is focused on becoming one of the leading home grown commercial banks to all those that it serves.
In addition to the Society’s profitability, total assets increased by 15% from P3.045 billion as at March 2014 to P3.496 billion in March 2015.
Long term loans and advances, after impairments, grew by 16% to P2.9 billion from P2.5 billion in March 2014. Cash and cash equivalents and investments with banks increased by P38.744 million or 12%.
However, short term loans and advances decreased by 3% from P78.9 million as at March 31, 2014 to P76.5 million because of the desire by BBS’ customers to save rather than spend their investments.
Cost to income ratio moved from 57% in March 2014 to 58% as at March 2015 mainly because of work being done on the demutualisation project. The Society declared a dividend amount of P60.304 million. The payout to shareholders was an increase of 2% compared to a dividend of P59.125 million paid in the prior year.