31 March 2021*Indicating positiveBalance sheet growth increased 9% to P20.6 billionCustomer loans increased 4% to 13.9 billionDigital channels number of customers up by 34%Customer deposits increased 11% to 15.9 billionFinal Dividend declared of 176 millionGABORONE - Absa Bank Botswana today reported a 46% decline in profit for the year to P364 million after impairments significantly increased by 674% to P263 million amid the economic downturn that was precipitated by the Covid-19 pandemic.The Covid 19 pandemic brought about a difficult time for our customers and businesses whose financial means are being negatively affected. This prompted a well calculated and swift move to engage regulators and other stakeholders in implementing a comprehensive customer, business and corporate relief programme.“Our key priority remains as to ensure the safety and wellness of our employees, customers and community during these challenging times” said Keabetswe Pheko- Moshagane, Absa Bank Botswana Managing Director. The successful completion of the largest bank separations in the continent was a significant undertaking and milestone which gave us confidence as we embark on the next phase of our journey with bolstered skills in executing large projects, which has begun paying good returns many times over, especially in our Covid-19 pandemic response..COVID-19 pandemic responseWe demonstrated resilience of our business with the launch of numerous product offerings that offers convenience. Our people delivered exceptional support for our customers and clients under very challenging circumstances brought about by the pandemic throughout our 32 branches which remained operational during the entire lockdown periods.Our priority has therefore been to support the efforts of Botswana Government with a donation of P1.5 million into the Covid-19 Relief Fund. In addition, we made a donation of 10,000 masks for children and3000 masks for teachers was made to the Ministry of Basic Education through our Citizenship agenda.Our employees play an important role in being a force for good as we implement our Citizenship Agenda with their active participation in the communities which we operate in..Financial performanceStatement of comprehensive incomeWe are proud of our response to the Covid-19 pandemic and the operational and financial resilience of the business. Our people delivered exceptional support for our customers and clients under very challenging circumstances. At the onset of the Covid-19 crisis, our immediate priority was to keep our colleagues safe and healthy, and therefore we quickly switched to a predominantly remote working model, which our technology capabilities enabled. With most of our staff still working remotely today. In addition, we ensured customer safety by putting in place various measures to ensure our branches and ATMs were configured appropriately for social distancing. We also gave customers considerable support through repayment holidays. Our customers with loan balances totaling P1.6 billion, constituting 11% of the loan book, took advantage of the repayment holidays. Our digital platforms also came in handy with an increase of 34% being noted on digital platform usage. This was also a deliberate decision to focus more on corporate social responsibility as a main priority and not solely on performance, as a way to offer relief and support to our customers who are our number one priority, in challenging times such as the Covid pandemic.Total income is down year-on-year by 3% due to margin compression on interest income resulting from interest rate cuts and sluggish momentum of asset growth. We continued to drive momentum across all our key segments to negate the effects of compressed margins arising from an increase in cost of funding.Our operating costs were well contained with the business achieving a cost to income (CIR) ratio of 60%. Costs increased by 3% year-on-year largely driven by technology spend as part of separation process.On a year-on-year basis our credit losses increased by 674% in comparison to the previous year which is the main driver for our reduced earnings. Prior to April impairment was trending according to plan however this was significantly impacted by the outbreak of Covid -19 with a high volume of customers requesting for payment holidays, restructures and forbearance programmes. Lockdown also impacted the performance of debt collectors as well as customer mobility to effect payments. The compound of these leading us to a higher impairment charge..Statement of financial positionLoans and advances to customers grew by 4% year-on-year to P13.9 billion from P13.3 billion. The growth in loans was realised across all business segments as we continue to focus on client penetration and acquisition to drive up our volumes. Customer deposits increased by 11% year-on-year to P15.9 billion from P14.4 billion driven by positive growth across our business segments.Our balance sheet position remains solid at a total financial position of P20.6 billion, with strong liquidity and capital adequacy levels. Our regulatory capital position stood at P2.9 billion representing a capital adequacy ratio of 18% against the regulatory limit of 12.5%..Retail and Business BankingThe Covid-19 pandemic has challenged the way we work, do business and socially interact with our customers and colleagues. The new normal began with an uncomfortable feeling of change and anxiety of what the future holds. We have accepted that change is inevitable hence the need to always find a way of getting things done. With the help of our sound business resilience measures, we have stood strong for our customers by rapidly adapting our strategies to address both the challenges and opportunities created by the crisis. We remained resilient in 2020 with a focus on Africanacity- helping our customers find a way of getting things done.As an organization, we have accelerated our digital investments in order to strengthen resilience and thrive in the future. The 34% growth in digital adoption and usage is an indication that customer preferences are growing towards self-service channels. This was on the back of launching various platforms such as the Absa Sky Branch which offers a wide range of services through the contact center including account maintenance/ amendments, loan and credit card applications and contactless payments. We also launched ‘Abby’, (Chat Baking) which allows customers to make enquiries and transact on WhatsApp, and other innovative user-friendly services.We launched an extensive Covid-19 payment relief plan for our customers who were negatively impacted by the pandemic as well as a 3 month discount on our digital platforms in order to facilitate banking at the customers comfort and convenience. Our customers are also able to request for personal loan top ups via our Internet Banking platform and do not have to visit the branch for this request. This is a further testament that our customers are increasingly inclined towards digital platforms. Furthermore, to support the resumption of economic activities of the informal sector post-Covid-19 repercussions, the Retail segment in partnership with Citizen Entrepreneurial Development Agency (CEDA) Letlhabile programme introduced Remmogo Current Account to the beneficiaries of the Informal Sector Stimulation Programme (ISSP).Business Banking has continued with its focus on the key chosen priority sectors of Agriculture and Corporate & Investment Banking value chain to grow the balance sheet and income statement. The business continues to drive its Relationship Banking model, and remains focused on enhanced product development and improving client service. We have also entered into a Memorandum of understanding with Debswana to Drive the Citizen Economic Empowerment Program, Kamoso, to enable Small and Medium Enterprises (SMEs) to access their supply value chain, Local Enterprise Authority and Tokafala assist with the Capacity building & mentoring of the SMEs. Over 500 SMEs were trained as part of Entrepreneurship and Enterprise Development programs. In our continued effort to drive the ESD program we have disbursed at least P100 million to assist businesses, mainly SMEs which are key to the economy of Botswana..Corporate and Investing Banking (CIB)The challenging economic environment as a result of the novel corona virus disease negatively affected Business activity in 2020. The lockdowns, which required a number of significant manufacturing companies and retail businesses to close or reduce their activities, has dreadfully slowed down the global economy.. The Bank offered a discount on electronic channel fees aimed at providing some relief to clients to navigate through the challenges brought about by the corona virus pandemic.The economic outlook for 2021 remains highly uncertain with the massive economic disruption caused by the lockdowns and curfews across both the local, regional & global economies necessitated by the health crisis. Focus remains on differentiating ourselves through structuring the right banking solutions and customer centric transactional banking solutions that focuses on providing a positive customer experience..StrategyWe have refreshed our medium term strategy to take into account the macroeconomic factors and impact of COVID-19 on our business and the communities that we operate in. The refreshed strategy will ensure that we are able to connect our customers and clients to solutions that help them get things done as well as re-affirm our purpose and role in communities that we operate in. Absa will continue to focus on exceptional customer service and building lasting legacies for all our stakeholders. This will be delivered through our 5 strategic pillars focusing on growth and defending our market share; accelerating our digital strategy; leading with purpose; building an entrepreneurial culture amongst our colleagues and protecting the returns of our shareholders.Absa invested heavily on our technology and newly launched brand during the last 3 years as part of our Barclays Separation journey. The technology and brand will be the core enablers as we execute our strategy. As we now operate in an evolving environment, Absa will continue to apply world class governance processes, embed controls seamlessly into daily operations and remain agile to respond to regulatory and economic changes.Our colleagues and customer’s safety and wellness remains key as we navigate through the pandemic and ensure compliance with the Government and internal set Covid-19 protocol..OutlookThere remains substantial uncertainty regarding the global economic recovery, which depends on the roll-out of effective vaccines and additional policy support. However, Absa expects an improved macroeconomic environment in 2021, which should support financial performance.We expect overall output to have contracted 8.2% in 2020.It was a difficult year for an economy too reliant on diamonds, with the data showing that rough diamond exports fell significantly as global trade was impacted by the pandemic; domestic virus containment measures further adversely impacted economic output. Botswana’s medium-term outlook remains challenging given ongoing concerns about the global outlook. However, we expect the economy to return to positive growth in 2021 expanding by 6.8%. An improved global demand for diamonds, accommodative monetary conditions and the government’s Economic Recovery and Transformation Plan (ERTP) will support economic growth in the coming period.We expect inflation to average 3.5 % in 2021 and monetary policy to continue to support the economic recovery throughout the year.We hold an optimistic view of the future as our strategy positions us to become a business that creates sustainable-shared value and play a meaningful role in our colleague, customer and client life journey.ENDS.
31 March 2021*Indicating positiveBalance sheet growth increased 9% to P20.6 billionCustomer loans increased 4% to 13.9 billionDigital channels number of customers up by 34%Customer deposits increased 11% to 15.9 billionFinal Dividend declared of 176 millionGABORONE - Absa Bank Botswana today reported a 46% decline in profit for the year to P364 million after impairments significantly increased by 674% to P263 million amid the economic downturn that was precipitated by the Covid-19 pandemic.The Covid 19 pandemic brought about a difficult time for our customers and businesses whose financial means are being negatively affected. This prompted a well calculated and swift move to engage regulators and other stakeholders in implementing a comprehensive customer, business and corporate relief programme.“Our key priority remains as to ensure the safety and wellness of our employees, customers and community during these challenging times” said Keabetswe Pheko- Moshagane, Absa Bank Botswana Managing Director. The successful completion of the largest bank separations in the continent was a significant undertaking and milestone which gave us confidence as we embark on the next phase of our journey with bolstered skills in executing large projects, which has begun paying good returns many times over, especially in our Covid-19 pandemic response..COVID-19 pandemic responseWe demonstrated resilience of our business with the launch of numerous product offerings that offers convenience. Our people delivered exceptional support for our customers and clients under very challenging circumstances brought about by the pandemic throughout our 32 branches which remained operational during the entire lockdown periods.Our priority has therefore been to support the efforts of Botswana Government with a donation of P1.5 million into the Covid-19 Relief Fund. In addition, we made a donation of 10,000 masks for children and3000 masks for teachers was made to the Ministry of Basic Education through our Citizenship agenda.Our employees play an important role in being a force for good as we implement our Citizenship Agenda with their active participation in the communities which we operate in..Financial performanceStatement of comprehensive incomeWe are proud of our response to the Covid-19 pandemic and the operational and financial resilience of the business. Our people delivered exceptional support for our customers and clients under very challenging circumstances. At the onset of the Covid-19 crisis, our immediate priority was to keep our colleagues safe and healthy, and therefore we quickly switched to a predominantly remote working model, which our technology capabilities enabled. With most of our staff still working remotely today. In addition, we ensured customer safety by putting in place various measures to ensure our branches and ATMs were configured appropriately for social distancing. We also gave customers considerable support through repayment holidays. Our customers with loan balances totaling P1.6 billion, constituting 11% of the loan book, took advantage of the repayment holidays. Our digital platforms also came in handy with an increase of 34% being noted on digital platform usage. This was also a deliberate decision to focus more on corporate social responsibility as a main priority and not solely on performance, as a way to offer relief and support to our customers who are our number one priority, in challenging times such as the Covid pandemic.Total income is down year-on-year by 3% due to margin compression on interest income resulting from interest rate cuts and sluggish momentum of asset growth. We continued to drive momentum across all our key segments to negate the effects of compressed margins arising from an increase in cost of funding.Our operating costs were well contained with the business achieving a cost to income (CIR) ratio of 60%. Costs increased by 3% year-on-year largely driven by technology spend as part of separation process.On a year-on-year basis our credit losses increased by 674% in comparison to the previous year which is the main driver for our reduced earnings. Prior to April impairment was trending according to plan however this was significantly impacted by the outbreak of Covid -19 with a high volume of customers requesting for payment holidays, restructures and forbearance programmes. Lockdown also impacted the performance of debt collectors as well as customer mobility to effect payments. The compound of these leading us to a higher impairment charge..Statement of financial positionLoans and advances to customers grew by 4% year-on-year to P13.9 billion from P13.3 billion. The growth in loans was realised across all business segments as we continue to focus on client penetration and acquisition to drive up our volumes. Customer deposits increased by 11% year-on-year to P15.9 billion from P14.4 billion driven by positive growth across our business segments.Our balance sheet position remains solid at a total financial position of P20.6 billion, with strong liquidity and capital adequacy levels. Our regulatory capital position stood at P2.9 billion representing a capital adequacy ratio of 18% against the regulatory limit of 12.5%..Retail and Business BankingThe Covid-19 pandemic has challenged the way we work, do business and socially interact with our customers and colleagues. The new normal began with an uncomfortable feeling of change and anxiety of what the future holds. We have accepted that change is inevitable hence the need to always find a way of getting things done. With the help of our sound business resilience measures, we have stood strong for our customers by rapidly adapting our strategies to address both the challenges and opportunities created by the crisis. We remained resilient in 2020 with a focus on Africanacity- helping our customers find a way of getting things done.As an organization, we have accelerated our digital investments in order to strengthen resilience and thrive in the future. The 34% growth in digital adoption and usage is an indication that customer preferences are growing towards self-service channels. This was on the back of launching various platforms such as the Absa Sky Branch which offers a wide range of services through the contact center including account maintenance/ amendments, loan and credit card applications and contactless payments. We also launched ‘Abby’, (Chat Baking) which allows customers to make enquiries and transact on WhatsApp, and other innovative user-friendly services.We launched an extensive Covid-19 payment relief plan for our customers who were negatively impacted by the pandemic as well as a 3 month discount on our digital platforms in order to facilitate banking at the customers comfort and convenience. Our customers are also able to request for personal loan top ups via our Internet Banking platform and do not have to visit the branch for this request. This is a further testament that our customers are increasingly inclined towards digital platforms. Furthermore, to support the resumption of economic activities of the informal sector post-Covid-19 repercussions, the Retail segment in partnership with Citizen Entrepreneurial Development Agency (CEDA) Letlhabile programme introduced Remmogo Current Account to the beneficiaries of the Informal Sector Stimulation Programme (ISSP).Business Banking has continued with its focus on the key chosen priority sectors of Agriculture and Corporate & Investment Banking value chain to grow the balance sheet and income statement. The business continues to drive its Relationship Banking model, and remains focused on enhanced product development and improving client service. We have also entered into a Memorandum of understanding with Debswana to Drive the Citizen Economic Empowerment Program, Kamoso, to enable Small and Medium Enterprises (SMEs) to access their supply value chain, Local Enterprise Authority and Tokafala assist with the Capacity building & mentoring of the SMEs. Over 500 SMEs were trained as part of Entrepreneurship and Enterprise Development programs. In our continued effort to drive the ESD program we have disbursed at least P100 million to assist businesses, mainly SMEs which are key to the economy of Botswana..Corporate and Investing Banking (CIB)The challenging economic environment as a result of the novel corona virus disease negatively affected Business activity in 2020. The lockdowns, which required a number of significant manufacturing companies and retail businesses to close or reduce their activities, has dreadfully slowed down the global economy.. The Bank offered a discount on electronic channel fees aimed at providing some relief to clients to navigate through the challenges brought about by the corona virus pandemic.The economic outlook for 2021 remains highly uncertain with the massive economic disruption caused by the lockdowns and curfews across both the local, regional & global economies necessitated by the health crisis. Focus remains on differentiating ourselves through structuring the right banking solutions and customer centric transactional banking solutions that focuses on providing a positive customer experience..StrategyWe have refreshed our medium term strategy to take into account the macroeconomic factors and impact of COVID-19 on our business and the communities that we operate in. The refreshed strategy will ensure that we are able to connect our customers and clients to solutions that help them get things done as well as re-affirm our purpose and role in communities that we operate in. Absa will continue to focus on exceptional customer service and building lasting legacies for all our stakeholders. This will be delivered through our 5 strategic pillars focusing on growth and defending our market share; accelerating our digital strategy; leading with purpose; building an entrepreneurial culture amongst our colleagues and protecting the returns of our shareholders.Absa invested heavily on our technology and newly launched brand during the last 3 years as part of our Barclays Separation journey. The technology and brand will be the core enablers as we execute our strategy. As we now operate in an evolving environment, Absa will continue to apply world class governance processes, embed controls seamlessly into daily operations and remain agile to respond to regulatory and economic changes.Our colleagues and customer’s safety and wellness remains key as we navigate through the pandemic and ensure compliance with the Government and internal set Covid-19 protocol..OutlookThere remains substantial uncertainty regarding the global economic recovery, which depends on the roll-out of effective vaccines and additional policy support. However, Absa expects an improved macroeconomic environment in 2021, which should support financial performance.We expect overall output to have contracted 8.2% in 2020.It was a difficult year for an economy too reliant on diamonds, with the data showing that rough diamond exports fell significantly as global trade was impacted by the pandemic; domestic virus containment measures further adversely impacted economic output. Botswana’s medium-term outlook remains challenging given ongoing concerns about the global outlook. However, we expect the economy to return to positive growth in 2021 expanding by 6.8%. An improved global demand for diamonds, accommodative monetary conditions and the government’s Economic Recovery and Transformation Plan (ERTP) will support economic growth in the coming period.We expect inflation to average 3.5 % in 2021 and monetary policy to continue to support the economic recovery throughout the year.We hold an optimistic view of the future as our strategy positions us to become a business that creates sustainable-shared value and play a meaningful role in our colleague, customer and client life journey.ENDS.