Barclays brace for periods of low interest rates

28th March 2018
Reinette Van der Merwe, Barclays MD Source:The Midweek Sun

Barclays Bank Botswana has posted an improved profit for the full year to December 2017 despite operating under weak economy, which is also characterised by low interest rates. Presenting the lender’s results recently, Managing Director, Reinette van der Merwe, announced that profit before tax leapfrogged by 13 percent to close the year at P558 million. “As the bank’s leadership, we are proud to have achieved this feat despite the challenging and competitive environment that we operate in,” said Merwe last Thursday. Revenue for the listed company remained flat at P1.46 billion.

The bank, which also depends on interest income for profit, said income was flat as a result of low interest rates. In October 2017, Bank of Botswana reduced key lending rate by 50 basis points to five percent. The bank, which is a unit of Barclays Africa, said they remained profitable despite intense competition in the banking sector and fragile economic recovery. Loans and advances also increased to P10.7 billion, representing a 14 percent year on year rise. Merwe stated that operating costs were contained due to rationalisation. The bank will continue to implement responsible lending so as to minimise impairments.

The bank’s Board Chairman Oduetse Motshidisi noted at the event that, ‘the results speak quite a lot about the strategy,’ which he said is solid. “We have a winning strategy,” he stressed. Oduetse, who was appointed Chairman last year, told the gathering that, the bank shall brace for prolonged periods of low interest rates. Meanwhile, Barclays also announced that a dividend of 21.23 thebe per share has been declared. “The dividend payout of 65 percent of our earnings in 2017 is slightly above average payout ratio of 60 percent over the last few years,” said Merwe. She said going forward, the bank will continue with strategic partnerships, digital banking and improving customer services, among others.

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