BoB income doubles on weaker pula
Brian Benza | Tuesday May 31, 2016 18:00
Addressing the media in Gaborone yesterday, the central bank’s head of monetary and financial stability, Kealeboga Masalila said net income for the bank stood at P9.1 billion more than double the P4.1 billion realised in 2014.
“The highest contribution came from revaluation gains to net income due to the fall of the pula against major currencies,” he said.
Despite gaining against the South African rand, the pula lost value against most other major currencies translating to high interest, dividends on foreign investments as well as valuation gains on foreign reserves. The central bank invests in international bonds, equities and other investment vehicles on behalf of government. In nominal terms, the pula lost 11 percent against the British pound and Special Drawing Rights (SDR) respectively while it tumbled 15 percent against the US dollar.
The pula, however, gained 13.6 percent against the rand in the year.
The revaluation gains did not, however, translate into high revenues for government as P6.9 billion was transferred to the revaluation reserve account with only P2.3 billion distributed to state coffers compared to P2.4 billion in 2014.
The distribution to government comprised P975 million dividend, P1.1 billion transfer to government investment account as well as P158 million residual net income.
For the year, interest expenses for the bank registered a modest decline to P182 million as the central bank reduced its mopping of excess liquidity activities.
Although excess liquidity returned to the banking system in the year doubling to P8.5 billion, the central bank has made a deliberate effort to trim interest rates as well as the issuance of Bank of Botswana Certificates (BoBCs). The fall of the local currency against the greenback also saw the value of the country’s foreign currency reserves rising to P84.9 billion from P79.1 billion in 2014.
However, in US dollar terms, the reserves decreased by 9.3 percent to $7.5 billion while it fell by 5.3 percent in SDR terms.
Meanwhile, Masalila said the bank expects the economy to rebound to a low positive growth rate this year from a negative of 0.3 percent in 2015.
According to Masalila, early indications are that the water and power shortages, which bedevilled the economy last year, will stabilise this year helping the economy to recover from its first negative growth rate in six years.