Bank Gaborone plans to raise its market share to at least 10% in the medium term, taking on a cutthroat industry dominated by four well-established players.
With a loan book of P4 billion and deposits of P4.9 billion at the last count, Bank Gaborone is the sixth largest commercial bank in the country with a current market share of about 7.5 percent. The bank trails BancABC, which has a loan book of about P6 billion and customer deposits of P6.2 billion.
The Big Four; First National Bank Botswana, Barclays Bank Botswana, Standard Chartered Bank Botswana and Stanbic Bank Botswana have loan books ranging from P16 billion to P7.4 billion, and deposits ranging from P19.6 billion to P11.8 billion. However, Bank Gaborone, a subsidiary of Namibia’s Capricorn Group, aims to climb the rankings in the medium term.
In the year ended June 30, 2019, Bank Gaborone’s pretax profits rose by 11.4% to P58.2 million, powered by loan book growth as well as higher incomes from forex trading and transaction fees, all three directly linked to stronger customer numbers. While Bank Gaborone only contributed five percent of its parent group’s aftertax profits for the year ended June 2019, directors said Botswana was a key growth area of the three markets Capricorn Group is presently conducting commercial banking activities.
Bank Windhoek contributed 69%, while another commercial banking subsidiary, Cavemont Bank in Zambia was in the negative. The Namibian economy is, however, expected to shrink this year, while Zambia’s growth will also be sluggish, weighed down by large fiscal deficits and
However, directors see opportunity in Botswana. “Namibia is in a recession, Botswana is improving its business climate, and Zambia is losing momentum,” directors wrote in a commentary accompanying the 2019 annual report released this week. “Doing business in the Botswana mining sector is seen as an opportunity as the outlook for diamond, coal, gold and copper mining is positive over the medium term.
“Awarding of new licences and investments by Australian companies add to the attractiveness of the sector.” The country’s rising mobile density, which banks are leveraging on for transactional revenues via mobile banking, was also highlighted as a growth area to watch out for.
Bank Gaborone also expects to anchor its push for greater market share on newly introduced initiatives such as point-of-sale devices, the fast-branch-of-the-future concept, a state-of-the-art data centre established at the bank’s new head office, infrastructure overhaul and new retail and lending products.
The bank is facing cost of funding issues, as the low interest environment means investors are looking offshore for opportunities. In addition, the country’s greylisting by the Financial Action Task Force bodes badly for the Capricorn Group’s ‘correspondent bank relationships’, directors said.
“We are positive that the bank will remain resilient and continue to deliver positive results,” Bank Gaborone managing director, Sybrand Coetzee said. “We will continue to exploit opportunities and further improve our service and product offerings.”