03 Sep 2015

Botswana Insurance Holdings Limited (BIHL) group has released financial results for the six months ended 30 June 2015, indicating a significant growth. Speaking during the BIHL group financial results presentation held in Gaborone, group chief executive officer, Mr Gaffar Hassam said the environment has been difficult to trade due to some challenges making it hard in the market.

“If you look at the markets worldwide how they are performing, it is very turbulent and also if you look here locally, we have got a couple of challenges because we are not immune to the world system,” he said.

He said looking at the key economic drivers, inflation at the moment is within the target range of the Bank of Botswana. He added that there has been a recent reduction in bank rate, stating that the prime lending rate in most banks is at 7.5 per cent.   Furthermore he said the projected GDP growth sits at 4.6 per cent.

He added that as a result, it is difficult to find some meaningful returns, highlighting that if shareholder money is put in a bank account, the reality is that, it will be out of luck to get 3 or 4 per cent on that deposit. He however said despite the challenges, BIHL group has managed to perform well over the past six months through its subsidiaries. 

The group registered profits after tax of P288 million, a 21 per cent increase over the same period last year. Core earnings increased by 27 per cent to P215 million, while profit attributable to equity increased by 23 per cent to P288 million.

Mr Hassam stated that with these results, there will be a good pay out to shareholders. He stressed that operating profit before tax has increased by about 25 per cent, and as a result the board resolved to declare an interim dividend of about P154 million to shareholders.

“This is a great milestone for us within the group, we have been operating now for over 40 years and that is not by any means an insignificant achievement,” he said.

He said in terms of the BIHL overall strategy, it is all about delivering sustainable returns to shareholders.

In addition, he said as a contributory strength factor within BIHL group, there are subsidiaries which include Botswana Life which is a 100 per cent owned subsidiary. He also mentioned Legal guard, Bifm and Letshego of which BIHL holds 23 per cent of Letshego shares.

He stressed that the significant contributor of the result comes from Botswana Life and Letshego coming as the second contributor. Furthermore, he stressed that the business in Zambia has contributed positively even though Zambia economy is going through a number of challenges.

“Our strategy is really all about partnership. 

We believe that we cannot do everything on our own. But if we bring partners to the table, we can work on solutions and bring our various friends to the table that deliver meaningful solutions to our clients,” he said.

Mr Hassam stated that within the group, the overall measure is return on embedded value. He said in 2015 for the first 6 months, BIHL has been able to generate a return of 20 per cent. He said that is down on the previous year which was 27 per cent.  However, Mr Hassam said as compared to 27 per cent recorded previously, 20 per cent is still a significant number looking at where interest rate and inflation rate is sitting at, stating that BIHL is well above those two numbers combined. Ends