Expecting the worst

Kabelo Adamson
Absa forecast huge credit losses

In a vivid portrayal of the far-reaching effects of Covid-19, Absa Bank Botswana Finance Director, Cynthia Morapedi revealed the past year’s expected credit losses were greater than the previous three years combined.

Writing in the bank’s latest annual report, Morapedi explained this was primarily driven by the increase in credit risk as customers went into distress due to economic outturn and the pandemic’s significant impact on businesses.

“We were resolute as an entity in terms of how we wanted to support our customers and the government of Botswana in initiatives that preserved livelihoods and contained the spread of the virus,” she noted.

During the period, Absa extended debt relief measures to over 1, 000 customers on its loan book over P1.6 billion.

“This remained the principal driver for the significant increase in credit risk, which swelled up the credit impairment number for 2020,” highlighted the Finance Director.

At a total of P263 million and 674 percent year-on-year growth, Morapedi says credit impairments remain the biggest reason for the decline in the bank’s profitability.

- Advertisement -

She says the bulk of this increase was predominantly in the retail sector, which accounted for over 70 percent.

While it was a tough year business-wise, Absa shareholders did not go home empty-handed as a sum of P176 million was declared as dividends at year-end.

“Following Absa Group Limited’s stated principle of treating minorities fairly in respect of the separation costs incurred by the Bank, following the Barclays PLC separation from Absa Group, the bank’s board resolved to declare a differentiated dividend such that minority shareholders received a final dividend of 26.499 thebe per share and Absa Group received a final dividend of 17.799 thebe per share,” concluded Morapedi.

Share This Article
Leave a comment