Botswana: Absa Bank Botswana to List More Linked Units On BSE

ABSA Bank of Botswana results of offer of scrip in lieu of cash distribution

ABSA Bank of Botswana Limited listed on the Botswana Stock Exchange (BSE) under the Banking sector say they have applied to the BSE to approve the listing of the 13,767,297 new linked units.

It is anticipated the new linked units will be listed on the BSE on November 22, 2022. This means that the number of issued linked units will increase from 460,336,206 to 474,103,503.

The bank is a public company listed on the Botswana Stock Exchange and domiciled in Botswana. The Bank is primarily involved in the provision of commercial retail and wholesale banking and auxiliary services. Absa Insurance Services Proprietary Limited is an insurance agent which earns fees from referral of life and non- life insurance products. Absa Securities Botswana Proprietary Limited is a securities business that provides mergers and acquisition and other investment banking advisory services

The company said this in response to the offer by the company of scrip in lieu of 100 per cent of the distribution (of dividend and interest) on linked units, declared in respect of the year ending June 30, 2022. The offer closed on November 4, 2022.

  • ABSA Bank of Botswana Limited have applied to the Botswana Stock Exchange (BSE) to seek approval for the listing of the 13,767,297 new linked units.
  • This means that the number of issued linked units will increase from 460,336,206 to 474,103,503.
  • It is anticipated the new linked units will be listed on the BSE on November 22, 2022.
  • Absa Bank Botswana Limited condensed consolidated interim financial statements for the period ended June 30, 2022, highlighted that profit before tax grew by 36 per cent year on year, signaling a positive recovery from the June 2021 position.

A scrip dividend is when a company instead of automatically giving their shareholders a cash dividend, gives them the choice of either receiving a cash dividend or the equivalent in additional shares of the company.

For example, let’s say company X’s share price is $10.00. The company pays $3.00 once per year as a dividend. You own 100 shares. If company X has a scrip dividend declared, then you can choose to receive either US$300.00 in cash, or 30 additional shares of company X.

If you elect to receive cash, you can still use the money to buy additional shares in the company, but if you elect to receive additional shares, the scrip dividend just reinvests the dividend for you.

According to a statement released on November 7, 2022, unit holders holding 133,167,204 linked units of ABSA Bank of Botswana, representing 28.93 per cent of the linked units in issue elected to receive linked units (in lieu of cash) of 100 per cent of the distribution

“Unitholders holding 132,717,953 linked units, representing 28.83 per cent of linked unit in issue elected to receive linked units (in lieu of cash) of 50 per cent of the distribution (of dividend and interest).”

“Unitholders holding 194,451,049 linked units representing 42.24 per cent of the issued linked units did not elect to receive linked units (scrip) in lieu of 100 per cent of the distribution payable to them, and will receive the cash distribution net of withholding tax, where applicable,” read the statement.

The firm further added that payment of the distribution will be made on or before November 11, 2022.

The statement stressed that after the calculation of withholding tax payable on the distribution due to each such unitholder which is liable to such tax 13,767,297 new linked units will be issued.

Absa Bank Botswana Limited condensed consolidated interim financial statements for the period ended June 30, 2022, highlighted that profit before tax grew by 36 per cent year on year, signalling a positive recovery from the June 2021 position.These condensed interim financial statements for the six months ended 30 June 2022 comprise the company and its wholly owned subsidiaries Absa Insurance Services Proprietary Limited and Absa Securities Botswana Proprietary Limited.

This performance was achieved by positive trajectory on all material lines of statement of comprehensive income with total revenue improving 11 per cent year on year according to the bank. This is also consistent with recovery in business momentum.

Pre-provision profit also grew year-on-year by 21 per cent leading to annualised Return on Equity (ROE) growing to 24 per cent as at June 30, 2022.

According to Absa Bank, this performance was mainly driven by positive performance of the net interest income and non-funded income lines. Net interest income realised strong performance showing an 8 per cent improvement year on year as a result of positive balance sheet momentum realised on the RBB and CIB sectors, despite the interest expense increasing by 30 per cent from prior period.

Further, expected credit losses saw an improvement year on year decreasing significantly by 72 per cent due to improved and stable portfolio performance, positive movement on macroeconomic inputs.

There was a strong performance in the bank’s recoveries portfolio, contributing to the overall positive performance of expected credit losses. This led to the loan loss ratio improving to 0.16 per cent from 0.59 per cent for period ended June 30, 2022. Operating costs remain relatively under control at P473 million, growing slightly by only 3 per cent, despite the rising inflation seen in the economy.

The bank, in their report, also highlighted that this was achieved by leveraging off the digital enablement put in place which brought some efficiencies, as well as various other cost management initiatives effected. Cost to income ratio fell by 4 per cent and ended at 54 per cent for the period under review, resulting in positive income statement jaws of 7 per cent.

Meanwhile, Barclays sold shares in the Group. This was published on the Johannesburg Stock Exchange on September 1, 2022.

Barclays agreed to sell its entire remaining 7.44 per cent which is 63 072 652 shares of the total ordinary shares of the Group through an accelerated book build placing, at a price of R169 per share. Following the sell, Barclays no longer owns any ordinary shares of the Group.

ABSA closed its last trading day on November 11, 2022, at 5.12 BWP per share on the Botswana Stock Exchange (BSE), recording a 0.2 per cent gain over its previous closing price of 5.11 BWP. According to African Xchange, Absa began the year with a share price of 4.64 BWP and has since gained 10.3 per cent on that price valuation, ranking it eighth on the BSE in terms of year-to-date performance.

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