BANC ABC SHOWS RESILIENCE UNDER COVID TEST

The Botswana Stock Exchange (BSE) listed Banc ABC has like many of its peers in the market been hit by gestures extended to customers who were negatively affected by the difficult COVID-19 trading environment.

The managing director of the bank, Kgotso Bannalotlhe said the main detractors in their performance were the increase in expected credit losses from the supportive measures extended to struggling customers and enhancements made to its credit provisioning models.

The bank registered a P3.7 million increase in expected credit losses compared to a prior year release in credit provisions. However, the MD said Banc ABC showed some resilience during the period.

According to the bank’s financial results for the period ended December 31, 2020, its profit before tax declined by 17% to P124.9 million from the P150.6 million recorded in the corresponding period.

Presenting the Banc ABC’s results, Bannalotlhe said the bank’s performance, however, showed it has weathered the pandemic well. The MD said the bank showed its strong resilience in its income lines as well as controlled operating expenses against a subdued economic backdrop, exacerbated by the COVID-19 pandemic and related lockdowns.

“BancABC demonstrated strong resilience during this challenging period and was able to provide financial support to customers negatively impacted by the pandemic’s subsequent lockdowns, whilst continuing to maintain a healthy solvency ratio, improved liquidity and robust income lines,” he said.

“We are proud to have launched improved digital channels for our customers just in time before the pandemic hit.”

As part of its strategic focus of ensuring customers receive consistent quality service, BancABC has rolled out new retail banking digital platform, SaruMoney, which saw a 60% increase in digital subscribership.

The bank also expanded its footprint by adding ATMs in Kanye, Gantsi, Molepolole and Letlhakane. In addition, it launched the 3D Secure programme 2.0, Verified by Visa to further improve customers’ security when performing e-commerce transactions. “All these initiatives are aimed at enhancing the overall customers’ banking experience.

Trading revenue saw 114% growth, which was supported by BancABC’s adequate capacity and focus, resulting in improved client activity with higher volumes and healthier margins,” added Bannalotlhe.

He said the bank remain focused on its strategy to grow the business highlighting that as they anticipate further uncertainty and short to medium-term headwinds due to the pandemic, the essence of the business will ensure that the bank is well-positioned to weather another difficult year.

“Our resilience will be underpinned by our continued investment in enhancing our value proposition that is grounded in our desire to provide relevant financial solutions that address the customers’ changing needs, and ultimately deliver sustainable shareholder value,” Bannalotlhe said.

According to the results, the bank’s net interest income (NII) increased by two percent to P422 million, while interest income declined by four percent compared to the prior year, on the back of the policy rate changes and reduction in the loan book.

Non-interest revenue (NIR) of P122.7 million was slightly lower due to the decline in customer transaction activity linked to income and discounts granted as well as a reduction in lending.

Interest expenses saw a decline due to the lower interest rates.

The bank’s unimpaired capital and risk-weighted assets were P1.4 billion and P7 billion, respectively, at period end, resulting in a 21% capital adequacy ratio against a 12.5% regulatory requirement.

Meanwhile BancABC recently launched its new brand promise, ‘We Understand You’, to reflect its commitment to providing world-class banking solutions to its customers, consistent quality service and continued relationship building.

This new initiative seeks to strengthen the Bank’s offering within the Retail, SMME and Corporate banking segments.