. . . as financial institution begins ‘digital journey’
STANDARD Lesotho Bank (SLB) registered a 13 percent profit growth of M387 million in 2016 compared to the same period in the prior year despite the tough economic environment.
Announcing the bank’s financial results for the year ending December 2016 this week, SLB Chief Executive Mpho Vumbukani said they had managed to register a profit in an adverse economic environment characterised by low global demand – which negatively affected the export sector — and slow growth in South Africa.
“Profit after tax was M387 million, which is a 13 percent increase on the prior year. Total income grew by 9 percent to M986 million whilst total operating costs were up 7 percent translating into 2 percent positive jaws ratio, i.e. our total income grew at a faster pace than operating costs with a margin of 2 percent,” he said.
“However, we experienced huge drop of 17 percent (M1.4 billion) in our financial position as at end 2016 compared to 2015 largely attributable to withdrawals of the deposits by some of our top customers during the second half of 2016.”
Mr Vumbukani said the bank continued lending to businesses and individual customers.
“. . . however the repayments offset the new loans book to an extent that gross loans and advances to customers declined by 3 percent (M120m), further evidencing the tough economic environment that impacted consumer spending.
“As indicated, this good performance came amid a huge economic downturn, but we were able to contain our costs and improve efficiencies to maintain our operating costs. We were also able to contain fee increases within the inflation rate of 6 percent, and in some instances, kept fees flat in 2016.”
SLB, he said, also improved its banking channels such as ATMs, with some now having touch screen functionality and cash deposit capabilities.
“Our POS terminals have increased from 535 to 568 in 2016, and also made improvements to our Internet banking platforms which improved both service and our offering to assist in generating good profits.
“I must mention that we are among the top three biggest contributors to taxes in Lesotho and we also invest a substantial part of the profits annually to charitable causes throughout the country.”
Mr Vumbukani also touched on the recent launch of SLB’s Core Banking System, saying customers should expect a vast array of banking innovations.
The new system was unveiled last month and uses Finacle – a banking solution developed by an Indian corporation called Infosys.
Mr Vumbukani said the system was globally used by over 400 banks, adding that Lesotho was the 10th country to adopt it among the 17 in the Standard Bank group. He also pointed out that the last system upgrade was done 19 years ago.
“This core banking system upgrade involved the improvement of the back-end processing systems that handle all our banking operations including teller services, sales, loan origination, payment systems, ATMs, and electronic services to mention just a few,” he said.
“Therefore, it is clear that by this upgrade, we have improved the nerve centre of all our operations, which go a long way in improving the services that the bank offers.”
While the system upgrade experienced some teething problems, Mr Vumbukani said they had been largely dealt with over the last few days.
“We will now begin the Digital Journey as we introduce some of the new products and services that our customers have asked for through some of the engagements we had with them in 2016. One of them was called ‘The Voice of the. Customer’, where we needed to define their voice and hear what they really need from us as their partner.”
Some of the products available under the Core Banking System include the EMV Chipped Debit Card – a Europay, MasterCard and Visa-enabled debit card used for ATM and point of sale terminals.
“With the use of both magnetic strip and chip, I am happy to announce that our cards will now be fully compliant with international standards and have high technology security that is going to solve our long standing problems when it comes to international transactability and instances of card cloning that was a problem. With the new EMV cards, our customers will use their cards at more than 40 million retailers in more than 210 countries across the globe,” Mr Vumbukani said.
Enterprise Online is another internet banking product targeted at small to medium-sized businesses.
“You will recall that we currently have personal internet banking and Business Online, both of which cater for private individuals and large corporates, and we did not have a middle option for growing businesses.
“Enterprise Online is intended to bridge that gap and offer businesses the convenience of doing business online so that our businesses do not use their personal profiles to do their business banking.”
He also mentioned Smart App, an application that enables SLB customers to transact on their mobile phones.
“The Standard Lesotho Bank Smart App will also enable customers to calculate if they can afford to get a home loan, repayments for the home loan as well as calculate how much finance they can get to purchase a vehicle asset,” the SLB boss explained.