access
more together
Our best-in-class innovations have been designed with a clear purpose in mind, being: To deliver the banking solutions Batswana need to thrive.
We are proud of the journey we have taken to create an environment that allows our customers to achieve faster growth. This is why we have delivered 58 additional ATMs and six new Sales and Service Centres. We have enhanced our digital platforms with leading functionalities.
Our strategic partnerships help ensure every customer has access to inclusive services, tailor-made to meet their financial needs. Together, we developed ground-breaking solutions, such as the “N’stakolle”
Nano loan, Salary Advance and Estate Liquidity & Fiduciary Offering.
Our daring ambition to become market leaders, has not gone unnoticed. We were named Best Digital Bank 2022 by Digital Banker, Outstanding New Acquiring Bank 2022 by Africa Bank 4.0 Awards and Best Trade Finance Bank in Botswana 2023 by Global Finance Awards.
Our journey isn’t over, in fact it’s just begun. Our vision is to be The World’s Most Respected African Bank.
GLOBAL FINANCE 2023
BEST TRADE FINANCE BANK IN
BOTSWANA
DIGITAL BANKER 2022
BEST BANK FOR
TRANSACTION BANKING SERVICES –
BOTSWANA
AFRICAN BANK 4.0 AWARDS (NETWORK INTERNATIONAL) 2022
OUTSTANDING NEW ACQUIRING BANK
AWARD
Africa | Asia | Europe | Middle East
https://botswana.accessbankplc.com/
PERFORMANCE BACKGROUND
Post the completion of the acquisition transaction, Access Bank Botswana has been resolute in completing its brand transition, leveraging Group support and capabilities to accelerate integration and assimilation into the Access Bank Group and investing in building a compelling and competitive customer value proposition. In the first half of 2022, the Bank successfully integrated into Group technology platforms, including upgrading its core banking and card platforms, migration as well as derecognizing old systems no longer relevant to the business strategic direction. We further enhanced our digital platforms to become award winning platforms with market leading capabilities. The Bank expanded its distribution footprint through opening of 40 new ATM sites bringing the total number of ATMs to 58. Additionally, the Bank added 6 new Sales and Service Centers. The Bank launched several innovations, including with its market partners, on expanding payments capabilities, instant financing options and service point expansions. This has accelerated in transitioning of the Bank’s capabilities beyond those of a niche lending dominated bank into a full-service digital banking ecosystem capable institution that can begin to grow its market presence and transforming into a resilient business with diversified revenue lines.
Global Economic Developments
The Global economic theme for 2022 was anchored around aggressive central banks’ policy tightening to combat high global inflation emanating from geopolitical conflicts in an ever connected world economy as well as lingering effects of the COVID-19 pandemic which disrupted global supply chains; Russia-Ukraine conflict, as well as the resurgence of COVID-19 in China weighted heavily on global economic growth prospects. The year saw major Central Banks adjusting policy rates upwards amid increasing risks of global recession.
The World Economic Outlook (WEO) posits that inflation and demand are cooling off in response to the aggressive monetary policy tightening but the full impact will be realized before 2024. Global headline inflation appears to have peaked in the third quarter of 2022. Prices of fuel and nonfuel commodities have declined, lowering headline inflation, notably in the United States, the euro area, and Latin America.
Global economic growth is estimated at 3.4% in 2022 and is projected to fall to 2.9% in 2023 before rising to 3.1% in 2024. Global inflation is forecasted to slow down to an annual average of 6.6% in 2023 from 8.8% in 2022 then fall further to an average of 4.3% in 2024 but still above the pre-pandemic (2017-19) levels of circa 3.5%.
Local Economic Developments
Locally, in addition to reforms on the monetary policy implementation, the Bank of Botswana focused on minimising the impact of increasing inflation on the economy; the Central Bank adjusted the Monetary Policy Rate (MoPR) on three occasions to a cumulative 151bps for the full year 2022. Inflation averaged 12.2% in the year and is currently expected to trend towards the Bank of Botswana medium term objective range of 3-6% in Q2 of 2024. The main drivers to the inflationary environment were upward adjustment in administered prices and the second-round effects thereof, the global increase in commodity prices as well as supply-chain disruptions caused by the Russia-Ukraine conflict.
The Ministry of Finance estimates Gross Domestic Product (GDP) to have expanded by 6.7% in 2022, and projects GDP growth to moderate to 4.0% in 2023, before accelerating to 5.1% in 2024 as the mining sector is expected to show strong growth. It is further anticipated that performance of the non-mining sectors will improve, supported by improvements in electricity and water supply, as well as finance, insurance and pension funds sectors.
SUMMARY OF FINANCIAL PERFORMANCE
The Bank has achieved resilience in terms of revenue in this period with growth in non-funded income being largely enough to contain pressure on interest income margins from reduced liquidity conditions in the market. Looming reorganisations in some larger organisations and increased interest rates necessitated a cautious approach and slowed the growth of the loan book. Balance sheet optimisation has been a priority as the Bank continues the integration to Access Bank and also prepares the right infrastructure to support the planned strategic expansion.
OVERVIEW OF OUR BALANCE SHEET
Loans and advances grew 2% year on year due to conservative approach to lending. Net Barring impact of loan write-offs, the loan book increased by P190 million during the year. Customer deposits grew at a higher level of 10% year on year. The bank has managed to increase its current and savings accounts by 25%. Increase in current and savings accounts remains the Bank’s focus area as part of the expansion strategy and the increase noted in 2022 shows movement in the right direction. The increase in exposure to related parties was due to short term money market placements with fellow subsidiaries given excess foreign currency liquidity. The bank’s overall borrowings declined 10% due to repayments and amortisation.
OUR INCOME STATEMENT
Net Interest income
Interest income increased by 15% due to increases in prime lending rates during the year. The loan book also grew marginally which contributed to the increase in interest income. However, the growth was offset by increase in interest expense of 36% due to increased deposit growth as well as tightened market liquidity conditions which resulted in increase in the cost of funding. Therefore, net interest income remained flat in 2022.
Non-interest revenue
The Bank focus has introduced digital channel enhancements that would allow it to become a transactional bank to grow its lower than non-interest revenue. It is pleasing that transactional digital income grew by over 80% in the period, validating the strategic direction. The increase in fees and commissions was due to an 80% rise in fees and commissions from growth in transactional revenue streams from increased banking channels and increase in customer base predominantely, offsetting a decline of 15% on trading income due to reduced margins from the volatility in currency rates noted during the period.
Impairments
There was an impairment release of P20 million during the year. This was due to better quality loan book following write-offs of non-performing loans that were adequately provided. The Bank’s improved collection strategies coupled with subdued loan book growth have also resulted in the recoveries and impairment releases noted.
Total expenses
Overall, expenses have remained relatively flat against the prior year. Whilst there were once-off integration costs in the prior year, current year savings were offset by increased administrative and personnel costs in line with the Bank’s expansion strategy and inflation.
CAPITAL ADEQUACY AND DIVIDEND DECLARATION
The Bank continues to hold healthy capital adequacy levels at 21%. The strong capital levels position the Bank well for planned growth trajectory and achieving the Bank’s 5-year strategy. During the year, the Bank declared and paid a sizeable dividend of 20.7 thebe per share that was payable in November 2022. The dividend included a catch up consideration given a cautious approach through the transition and COVID-19 environment. The directors have resolved not to declare an additional dividend for the remainder of the period, however, this is not considered to be a departure from the planned resumption of regular annual dividend.
OUTLOOK
Integration into Access Bank has substantially been completed and the Bank is well poised to executing on its 5-year strategy journey. Focus will be taking our enhanced customer value proposition through increased customer touchpoints and differentiated products to the market. The Bank has recently launched the salary advance product to provide short term relief to its customers. The Bank has also partnered with Orange Money to launch the market first mobile Nano loans product named N’stakolle, in order to reach the under-banked and informal market segments.
AUDIT REPORT
PricewaterhouseCoopers, who issued an unqualified audit opinion, have audited the financial statements from which the abridged results were extracted. This summary itself has not been audited.
ACKNOWLEDGEMENT
We extend our sincere gratitude to our customers, the Board, management, and the entire Access Bank Botswana Warriors for all their unwavering support during 2022. Our heartfelt gratitude to our customers, regulators and partners who have supported and guided us through our transition journey and the expansion journey that we embarked. We remain committed to an accelerated execution of our plans to grow shareholder value and customer value proposition.
Mrs. Lorato Nthando Mosetlhanyane Chairperson
Mr. Kgotso Bannalotlhe Managing Director
ASSETS
Summarised Consolidated Audited Statements of Financial Position as at 31 December 2022
Cash and balances with the central bank Balances with other banks
Balances due from related parties Investment securities
Derivative financial assets
Loans and advances to customers Current tax receivable
Other assets
Property and equipment Intangible assets Deferred tax asset Total assets LIABILITIES
Balances due to related parties
Deposits from banks
Deposits from customers Derivative financial liabilities Other liabilities
Current tax payable Borrowed funds Deferred tax liability
Total liabilities
EQUITY Stated capital Retained earnings Revaluation reserve Other reserves
Total equityTotal equity and liabilities
Significant accounting policies for the year ended 31 December 2022
General information
Access Bank Botswana Limited provides corporate banking, retail and investment banking services. The Bank is a limited liability company and is incorporated and domiciled in Botswana (registration number BW00001089931).
The summarised financial statements for the year ended 31 December 2022 have been approved for issue by the members of the Board on 26th March 2022.
Neither the members of the Board nor others have the power to amend financial statements after issue.
1. Basis of presentation
1.1 Statement of compliance
Accounting policies
The consolidated financial statements comprise the consolidated statement of profit or loss and other comprehensive income showing as one statement, the consolidated statement of financial position, the consolidated statement of changes in equity, the consolidated statement of cash flows.
New Accounting Standards and Changes in Accounting policies
Effective 1 January 2022 – Amendment to IFRS 3, ‘Business combinations’ Asset or liability in a business combination clarity’.
The amendment aids to determine what constitutes an asset or a liability in a business combination. This amendment did not have a significant impact on the financial statements of the Group as there were no business combinations in the current year.
Effective 1 January 2022 – Amendments to IAS 16 ‘Property, Plant and Equipment’: Proceeds before Intended Use. The amendment to IAS 16 prohibits an entity from deducting from the cost of an item of PPE any proceeds received from selling items produced while the entity is preparing the asset for its intended use (for example, the proceeds from selling samples produced when testing a machine to see if it is functioning properly). The proceeds from selling such items, together with the costs of producing them, are recognised in profit or loss.
This amendment did not have a have a significant impact on the financial statements of the Group.
Effective 1 January 2022 – Annual improvements cycle 2018 – 2020. These amendments include minor changes to:
IFRS 1, ‘First time adoption of IFRS’ has been amended for a subsidiary that becomes a first-time adopter after its parent. The subsidiary may elect to measure cumulative translation differences for foreign operations using the amounts reported by the parent at the date of the parent’s transition to IFRS.
IFRS 9, ‘Financial Instruments’ has been amended to include only those costs or fees paid between the borrower and the lender in the calculation of “the 10% test” for derecognition of a financial liability. Fees paid to third parties are excluded from this calculation.
IFRS 16, ‘Leases’, amendment to the Illustrative Example 13 that accompanies IFRS 16 to remove the illustration of payments from the lessor relating to leasehold improvements. The amendment intends to remove any potential confusion about the treatment of lease incentives.
These amendments did not have a significant impact on the financial statements of the Group.
Use of estimates and judgements
The preparation of consolidated financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the bank’s accounting policies. The areas involving a higher degree of judgment or complexity or areas where assumptions and estimates are significant to the financial statements are disclosed, in the annual financial statements.
The critical accounting estimates and areas of judgement relate to the following elements of the summarised financial results:
/ Impairment of financial instruments: key assumptions used in estimating recoverable cash flows
/ Determination of the fair value of financial instruments with significant unobservable inputs
/ Determination of the fair value of land and buildings with significant unobservable inputs
/ Determination of lease period (impact of renewals) and incremental borrowing rate applied to discount lease liabilities
Going concern
As the global economy emerges and stabilizes from the impact of the Covid-19 pandemic, the positive gains have been dampened by the Russia-Ukraine conflict as evidenced by inflation increasing globally, mostly attributable to high food and energy prices. As such, interest rates are expected to increase to bring inflation back to target levels across the globe after a prolonged period of support from central banks during the Covid-19 pandemic. Increasing inflation poses material risk to the global economy’s recovery. In addition, pressure on global diamond prices contributes to additional uncertainty to the domestic market. As such, management judgement has been applied to quantify the impact of the existing and developing stressors on the global and local economy.
The directors reviewed the group and company’s budgets and flow of funds forecasts over a 5 year period (2023 – 2027) in light of changing economic circumstances and considered the group and company’s ability to continue as a going concern in light of current and anticipated economic conditions. These budgets and flow of funds forecasts took the impact of the above mentioned economic uncertainty into consideration, including projections of the impact on the group’s capital, funding and liquidity requirements, all of which have remained within internal targets and above regulatory requirements.
On that basis, the financial statements are prepared on a going concern basis as there are neither intentions to cease trading nor adverse issues identified that threaten the continued operations of the company.
Stated Capital
The issued share capital of the bank comprises of 725 000 000 ordinary shares which are 78.15% owned by Access Bank PLC. There has been no change in the bank’s stated capital during the period.
Summarised Segmental Reporting for the year ended 31 December 2022
Basis of segmenting
The Managing Director, supported by the rest of the Management Committee (MANCO), is considered the Chief Operating Decision Marker (‘CODM’) for the purposes of identifying the Group’s reportable segments. The Group’s business results are assessed by the CODM on the basis of Profit Before Tax (PBT). The Group has three reportable segments being Retail, WholeSale Banking and Global Markets.
All operating segments used by the group meet the definition of reportable segments and the results presented are in line with internal reports used internally to assess each reportable segment. The CODM uses Profit Before Tax (PBT) as the measure of segmental performance. Head Office is not considered a segment and Head Office costs are apportioned to the respective operating segment.
Segmental Reporting 31 December 2022
Statement of comprehensive income Net interest income
Non- interest income
284,131 113,204
57,076 32,560
61,944 6,540
403,151 152,304
Total income Movement in impairment
397,335 13,155
89,636 –
68,484 6,847
555,455 20,002
Net income Operating expenditure
410,490 (380,925)
89,636 (57,468)
75,333 (66,865)
575,457 (505,258)
Profit before taxation Taxation
29,565 (25,864)
32,168 (28,613)
8,468 (7,514)
70,199 (61,991)
Profit after tax
3,701
3,555
954
8,208
Statement of financial position Financial assets held at amortised cost
Loans and advances to customers
–
6,213,846
876,333
–
–
404,349
876,333 6,618,195
Total assets for reportable segments
6,642,210
2,274,006
394,660
9,310,875
Deposits from customers Deposits from banks
Other liabilities for reportable segments
983,837 – 5,238,856
– 191,565 1,329,041
6,292,881 – -5,753,807
7,276,718 191,565 814,090
Total liabilities for reportable segments
6,638,346
1,520,606
123,421
8,282,374
Retail Banking
P’000
Segmental Reporting 31 December 2021
Retail Banking
P’000
Global Markets
P’000
WholeSale
Banking
P’000
Total P’000
Statement of comprehensive income Net interest income
Non- interest income
281,385 94,952
53,073 38,311
66,272 6,043
400,730 139,306
Total income Movement in impairment
376,337 (12,906)
91,384 –
72,315 (8,485)
540,036 (21,391)
Net income Operating expenditure
363,431 (403,951)
91,384 (44,596)
63,831 (49,253)
518,645 (497,800)
Profit before taxation Taxation
(40,520)
9,552
46,788 (9,384)
14,577 (4,257)
20,845 (4,089)
Profit after tax
(30,968)
37,403
10,320
16,756
Statement of financial position Financial assets held at amortised cost Loans and advances to customers
– 6,052,763
567,960 –
– 455,932
567,960 6,508,695
Total assets for reportable segments
6,384,186
1,707,981
1,018,492
9,110,659
Deposits from customers
Other liabilities for reportable segments
716,516 5,081,811
– 1,601,515
5,891,365 (5,366,684)
6,607,881 1,316,642
Total liabilities for reportable segments
5,798,327
1,601,515
524,681
7,924,523
Global Markets
P’000
WholeSale
Banking
P’000
Total P’000
Discover
more than banking with Access
Over 1,000 Merchant POS devices at numerous merchant locations; 250 Access Closa Agents;
18 Branches and Sales & Service Centres with 6 new locations (Lobatse, Mochudi, Mahalapye, Shakawe, Kasane & Mogoditshane);
First in market Nano loan product, commonly known as “N’stakolle”; 58 ATMs and growing (41 of these are cash deposit ATMs);
Market Salary Advance Loans;
Introduction of First in market Estate Liquidity Cover and Fiduciary Offering; and Enhanced our Digital Platforms – SaruMoney for Retail customers and BancOnline for Corporate to become market leading and winning platforms.
Attachments
Disclaimer
Access Bank Botswana Ltd. published this content on 30 March 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 March 2023 06:20:04 UTC.
