[2008-09-10]  Financial counters bullish as demand overwhelm stockbrokers
As the companies reporting period gathers steam, financial counters on the Botswana Stock Exchange (BSE) continue to sparkle while demand for shares outstrips supply.

Over the past few weeks during which commercial banks released good results, investors acquired a huge appetite for commercial counters, particularly bank shares.Orders for bank shares have grown so high that stockbrokers say it has become difficult to find a seller, unless at a generously high premium, leading to the strengthening of the share prices.

FNBB, ABCH, Stanchart, BIHL, Investec and Barclays have all firmed in the past weeks following the release of healthy results. However, InvestecÕs and BarclaysÕ are yet to be released, but should happen soon.In the past two weeks, FNBB shares have leapt from around 235thebe to settle at 275thebe last Friday after the bank announced a profit after tax rise of 21 percent to P374 million for the six months to June 30, 2008 while Stanchart shares increased by over 30 percent to 1700thebe last Friday.

As a result of the stellar performance by financial counters, the DCI continues to head northwards and is now on the verge of reversing its year-to-date negative movement.On a year-to-date, the DCI is now down by 6.92 percent, while the FCI and the ACI are up by 16.68 percent and 15.31 percent respectively.

The domestic bourse closed the week 1.38 percent higher at 7,843.56 points on Friday, while the FCI lost 0.26percent to close the week at 2,568.20 points. Aviva emerged the star performer for the week, up 50thebe to 400thebe. Banking giant FNBB has continued to gain momentum, closing the week at 275thebe, up 7.84 percent.

Other advancers included IamGold and Discovery Metals. African Diamonds was the biggest loser, down 27thebe to 650thebe. One million, one hundred and eighteen thousand and four hundred and ninety-two (1,118,492) shares valued at P 3,624,717 were traded during the week.

Two banks released their results with ABCHÕs net interest income for financial operations going up 68 percent to P89.9 million from P53.7 million in the previous period.

Non-interest income increased by 89 percent to P158.2 million on the back of an increase in foreign currency trading volumes, particularly in Botswana, inspite of a reduction in margins as competition intensifies.

Impairment losses on loans and advances went up 168 percent to P12.6 million due to higher portfolio impairment requirements as a result of growth in the lending portfolio and individually impaired accounts. ABC Botswana contributed 65 percent to the overall impairments.

This was largely as a result of one client that was placed under liquidation. On the other hand, Stanchart pushed on 2.4 percent to 1,700thebe following the release of a fair set of financial results for the six months ending 30 June 2008.

Net interest income grew by 22 percent to P255.0 million while non-interest income went up 13percent to P97.1 million on the back of increased transaction volumes, foreign exchange sales and derivative income.

Operating costs registered a growth of 4 percent, which is below the average inflation rate of the period.

This was on the back of cost containment and improvement in internal efficiencies. The impairment charge went up 69 percent to P21.6 million.

The significant increase reflects a more conservative view of the risks in a portfolio of SME assets in a highly inflationary environment.

EPS stands at 54.17thebe, up 18 percent from the previous period. Total assets saw a growth of only 2 percent to P8.2 billion attributable to a sluggish growth of about 1 percent in the loan book.

A drop of 29 percent to P109.4 million in the deposits was registered. An interim gross dividend of 24.30thebe has been declared, payable on or about September 26, 2008.
Source: © MMEGI 2002 - 2008