SBC PROFITS DOWN TO E59M

MBABANE - SBC Limited’s profit before tax declined by four per cent to E59 million (2017: E62 million).

In the company’s financials for the year ended in December 2018, it was reported that an adjustment to a prior year estimate amounting to E2 million lifted the effective tax rate up to 29.2 per cent. The overall result is that earning per share declined from 43 cents in 2017 to 39 cents in the current year. SBC’s revenue grew by seven per cent to E261 million (2017: E244m) with lower yielding Eswatini revenue seeing a further erosion of its yield from 30.5 per cent to 28.5 per cent. This was attributed to the ongoing impact of interest rate restrictions introduced in 2016 by the Central Bank of Eswatini, coupled with a relatively reduced contribution from the higher yielding, short-term loan book occasioned by the discontinuance of certain high yield products deemed to be excessively risky in the prevailing environment.

“This reduction was partially offset by growth in the Lesana loan book, which yields at a rate of 34.2 per cent and comprised 26 per cent of the total gross loan book at year end; an improvement compared to 20 per cent in the prior year,” reported SBC. In this environment, it was stated that SBC was able to restrict its operating expense escalation to one per cent at E117 million. Credit impairments, being the sum of bad debt write-offs and provisions raised during the year, was flat on the prior year at E15 million.

SBC said group costs at E52m were down four per cent on the prior year as a result of rationalisation exercises on the shared group structure as well as growth in other areas of the Select Group, which enabled these businesses to absorb a greater share of the shared expenses. It was reported that staff costs increased 14 per cent to E19 million but this included an amount of E2.5 million on a deferred incentive scheme payment to a senior employee. Excluding this payment, staff costs decreased by one per cent. Operating profit lifted by 13 per cent to E144 million (2017: E128 million).

Arising

Other income, at E54 million, includes E6 million arising from a fair value adjustment on investment property following an independent valuation. The majority of the balance relates to E48 million earned on loans to related parties, which take place on an arm’s length basis, and interest on deposits with banks. 

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