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E1BN REVENUE FOR STANDARD BANK

31/03/2023 08:13:00 Mhlengi Magongo

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MBABANE – Standard Bank Eswatini has reached a landmark by being the first bank to generate E1 billion in total revenue.

This was outlined in the bank’s abridged financial statements for the year ended December 31, 2022. The bank achieved a profit after tax (PAT) of E203 million for the 2022 financial year, which is 14 per cent above the prior year’s E178 million. According to the bank’s Chief Executive Officer (CEO), Mvuselelo Fakudze, these results demonstrate the bank’s resilience despite an uncertain trading environment. He said the bank reached a landmark by being the first to generate E1 billion in total revenue.

Fakudze said non-interest revenue grew by three per cent. He said this was driven by an increase in transactional volumes, as the economy continued to recover, following significant restrictions in the past two years due to the COVID-19 pandemic. The CEO said costs incurred stood at E626 million, representing a 15 per cent growth year-on-year that was attributable to inflation pressures faced in the year, as well as increased investment in information technology as they expanded their footprint through various digital branches, in addition to ensuring a stable network for their customers.
“Significant investments were also made on our UNAYO platform as we drive financial inclusion initiatives,” he added.

Fakudze also mentioned that net interest income grew by 24 per cent year-on-year, driven by an increase in average loan balances in the year and the increasing interest rate cycle environment experienced in 2022. He said impairments increased to E103 million, a 15 per cent increase from the previous year, as a few of their clients experienced challenges in the year under review, with some still recovering from the effects of COVID-19.

Loans

Loans and advances to customers closed at E4.9 billion, which is a 4 per cent growth from the prior year. Deposits from customers during the year, closed at E7.3 billion, which was five per cent below the prior year. When asked about significant factors impact ing results, the CEO said the economic conditions prevailing in the year, with an increase in interest rates and inflation had an impact on the results achieved. “It is through your support that we’ve delivered record headline earnings of E203 million and total revenues of E1 billion for the 2022 financial year,” he added.

Furthermore, he said there have been global and regional pressures impacting the Eswatini trading environment. Economic activities had returned to pre-Covid-19 levels with restrictions fully-lifted.“Despite the prevailing 2023 economic challenges, the bank continues to position itself for opportunities and partnerships that arise in carving out its future, especially through our eco-systems initiatives,” he added. Worth noting, agriculture accounts for 8.5 per cent of Eswatini’s gross domestic product (GDP), and this key sector of the economy provides food and nutrition to the 1.2 million people making up the population.

Financing

The bank has rolled out a raft of financing solutions empowering both small and large-scale farmers, to improve operations, contribute to food security, and boost commercialisation and export competitiveness. The finance packages which are spread across the agriculture and agri-business value chain cover everything from working capital, insurance, distribution and logistics, from farm to table. The loans include Agricultural Production Loan (APL), which is payable within the season, this loan can be acquired for farm inputs and production costs, such as seeds, fertiliser, chemicals or fuel. The second loan is known as Medium Term Loan (MTL), the repayment period for this type is up to 10 years and this loan is ideal for capital expenses.

For a sugar cane farmer, it could come in handy when replanting the fields or changing the ratoon for sustainable production and improved farming systems.The third type of the loan is known as Asset Finance (AF), Standard Bank said it enabled the customer to lease movable assets such as tractors and trucks, instead of saving up for the equipment over the long-term. The maximum repayment period is 60 months. For solar energy equipment, plans are afoot the bank plans to expand the period to 10 years as this is capital expenditure. Lastly, is the Working Capital Loan (WCL), the product is tailor made to assist farmers and businesspeople get credit repayable over a 60-month period which could be utilised to purchase stock or assets.

There is also a partnership with John Deere for agricultural assets, including tractors, where farmers pay interest that is below the market rate.
“Eswatini is our home and we drive her growth. This entails working closely with emaSwati and forging strategic partnerships with various entities to achieve the goal of an inclusive economy for sustainable livelihoods,” said Nomfundo Myeni, Standard Bank’s Head of Business and Commercial Clients.

Standard Bank recently hosted a successful breakfast meeting at Simunye Country Club which brought together farmers in the sugarcane industry and high-value crops sector, and other stakeholders throughout the agri-business value chain. Over 100 people attended. Bringing its products directly to the customer, Mbabane Motors, the Bank’s Vehicle and Asset Finance partners, also showcased a wide range of its vehicles and equipment, including the iconic Isuzu bakkies and trucks, at the venue.

The car dealership’s team had an opportunity to engage and hear from the farmers and the broader agriculture industry about the available comprehensive financing packages. The session proved to be a powerful platform for discussions, networking and feedback on how Standard Bank could further improve its financing solutions offering to the agriculture and agribusiness sectors of Eswatini. Panellists included newly appointed Eswatini Sugar Association (ESA) CEO, Banele Nyamane; National Agricultural MarketingBoard (NAMBoard) CEO, Bhekizwe Maziya; Head of Commercial Clients, Mbongeni Maziya and Head of Unayo, Vukani Dlamini.

Setting the tone for the meeting, Myeni explained that Standard Bank prioritisesauthentically engaging with its cross-section of customers, to fully understand their experiences, requirements and aspirations. “That is the starting point of our product design process which has ensured that as Standard Bank we continue to offer financial solutions and services that are tailor-made to meet the needs of our customers through personalised, distinctive and advice-focused value creation. Our consultants are on hand to offer expertise and guidance to our customers in the agriculture and agro-business value chain, enabling them to choose a finance package that best suits their needs,” Myeni said.

She added that Standard Bank has entered into a partnership with Eswatini Royal Insurance Corporation (ESRIC) for comprehensive insurance coverage of the finance packages as a safety net against losses and shocks which are beyond the farmers’ control. “With the adverse impacts of climate change and other challenges, our farmers, and the agriculture sector in general, face unique challenges, heightened risks and uncertainties to their enterprises. Our well-structured insurance options with preferential loan-linked premiums underwritten by ESRIC, go a long way in ensuring that our customers can weather the storm and protect the sustainability of their business,” Myeni said.

In another matter, Maziya (the Head of Commercial Clients) urged the farmers to utilise Standard Bank’s purchase order financing and invoice discounting offerings. “One of the biggest challenges that some service providers within the agri-business value chain experience is difficulty in raising enough capital to service a large purchase order received from a client.

Standard Bank can extend credit of 90 per cent of the value of the purchase order to help the business not run into cashflow problems while meeting its contractual obligations,” Maziya said. “The repayment period is up to six months depending on the terms of payment. The same goes for invoice discounting where the Bank can offer credit of up to 70 per cent of the value of the invoice, upfront,” he said. He said an eco-system value based approach is being applied to companies such as RES Corporation and Ubombo Sugar Limited, aimed at creating efficiencies for their value chains. This includes out-growers, commercial farmers, and other service providers. The intention is to replicate this with other companies that contribute towards economic growth in the country.