Bank Gaborone�s recovery firms as profits double
Isaac Pinielo | Tuesday October 17, 2017 12:46
The bank’s net profit after tax (PAT) shot up by 97.6% to P35.8 million for the financial year ended June 2017 compared to P18 million in the prior year, and realising a return on average of 10.4%.
In a commentary accompanying the financial results, managing director of Bank Gaborone, Sybrand Coetzee said this was the second consecutive year of profit growth in excess of 90%, emphasising the consistent performance of the bank. Net interest income increased by 36.9% from P133.8 million to P183 million, which is attributed to a reduction in cost of funding as a result of improved liquidity in the market compared to the previous year.
Impairment charges also increased by 62% from P21.8 million to P35.4 million in 2016. “This was mainly due to provisions made during the year for customers in the mining industry as a result of closure of those mines,” Coetzee said. The bank’s non-performing loans, as a percentage of gross loans and advances, was 5.3% as compared to 5.5% in the previous year. Non-interest income increased by 1.5% to P43.2 million from P42.6 million the previous year, which was attributed mainly to the growth in transaction-based fee income and trading income. Coetzee stated that transaction-based fees continue to be the largest contributor to non-interest income with an increase of 10% from the previous year. “Operating expenses increased by 14% to P140.3 million from P123.4 million.
The increase in operating expenses is due to the increase in staff costs and technology related expenses, mainly due to implementation of new projects during the financial year,” he said. The cost to income ratio reduced from 73.1% in June 2016 to 63.8% as at June 2017. The bank grew loans and advances to P3.08 billion from P2.83 billion in June 2016.
The 8.7% increase is mainly due to growth in overdrafts by 23.4% to P333 million from P252 million last year, commercial loans by 24% to P838 million from P649 million and mortgage loans by 5.6% to P1.49 billion from P1.4 billion. The bank’s total assets increased by 4.7% from P4.44 billion as at June 2016 to P4.64 billion in June 2017, which is commendable given the current competitive banking environment.
According to the managing director, total funding increased by 3.9% to P4.2 billion from P4.03 billion last year, comprising a four percent increase in deposits to P3.98 billion from P3.84 billion last year mainly due to increase in demand deposits by 26.7% to P599 million compared to P473 million last year. Savings deposits increased by 25.4% to P136 million from P108 million and term deposits by 1.9% to P2.82 billion from P2.77 billion and increase in debt securities in issue by P25 million. “The bank remains well capitalised and is generating sufficient profits to fund the growth in the loans and advances book,” Coetzee enthused.
He stated that at 17.91%, the risk-based capital adequacy ratio remains well above the minimum regulatory capital requirements of 15%. “We expect more challenging conditions to persist in the short-term with slower economic growth, inflationary pressures and increases in interest rates,” he said. Coetzee further indicated that they will continue to strive to improve the ease of doing business and the level of service to their customers.