BSP adjusts direction

 By SHIRLEY MAULUDU

Bank South Pacific (BSP) Ltd is taking necessary measures to withstand a period of drop in profit, deputy chief executive and chief financial officer Johnson Kalo said.    

He said the drop in profit was anticipated after the Central Bank made its decision three months ago to limit margins on foreign exchange transactions to a maximum of 75 basis points above and 75 basis points below the official (inter-bank) rate, within which authorised foreign exchange dealers can trade currency.

Kalo said the bank’s profitability growth will be impacted as a result, in the second half of this year, but with more significant impact next year. 

“What we think is that the effect of foreign exchange band and the new regulations, the effect of that will be to limit the profitability or reduce the profitability – that’s the impact that we are talking about,” he said. 

As such, the management has introduced additional cost saving initiatives in the second half of this year, with the full impact of these measures to be delivered next year. 

Kalo said cost saving measures include lending, among others. 

“We have to do more lending, which is another form of revenue, to help us make up for what we are going to lose from foreign exchange. Lending is one. We’re looking at other business opportunities as well.”

BSP chief executive officer Robin Flemming said the bank had embarked on cost saving initiatives months ago.

He said to cut down on expense, the bank has looked at how to deal with its properties.

“We’ll get greater efficiency by more people in one property and not having everyone spread in a number of properties which overtime will reduce cost base.”

Meanwhile, Kalo said “since the beginning of June, regulations have come in which limits the margins that banks can take on foreign exchange transactions and that has caused foreign exchange earnings to reduce.”