Despite higher income from its retail banking division, operating costs limited profit margins
The focus now is on improving profitability through lower-cost, high-margin business
Investors are keen to see how the sale of the retail banking division impacts future dividends
In 2023, StanChart rewarded investors with P202 million
As Standard Chartered Bank Botswana (StanChart) moves to sell its Wealth and Retail division (formerly Consumer, Private & Business Banking (CPBB) division) in Botswana, investors are wondering: will this move make the bank stronger and more profitable, or does it mean bigger changes that could affect future earnings and dividends?
The Revenue vs. Profitability Dilemma
Data analysis by Investor Mail reveals that while wealth and retail has consistently generated more income, it has struggled with profitability due to high operating expenses.
In contrast, the Corporate, Commercial and Institutional Banking (CCIB) division, though smaller in revenue, has delivered stronger profit margins.
Income Generation: Wealth and Retail Dominates Revenue Share
While Wealth & Retail has been the bank’s primary income driver, its cost structure tells a different story.
Expense Patterns: Profitability Under Pressure
Wealth & Retail expenses consistently consumed 70-76% of its income
CCIB’s expenses were lower, ranging from 48-77% of its income
This means retail, despite bringing in more revenue, struggled to convert that income into profit.
Profitability: Wealth & Retail vs. CCIB
In 2023, Wealth & Retail brought in more money but barely converted it into profits:
The leaner cost structure of CCIB allowed it to extract more profit from less revenue, making it a more efficient segment. Wealth and Retail high operating costs have diluted its contribution to the bottom line.
CPBB Sale:
Global Trend:
Global banks are shifting focus from regular customers (retail banking) to corporate clients, who tend to bring in more profits and have bigger needs. HSBC is reportedly considering a sale of its Australian consumer banking operation.
StanChart’s Strategy:
StanChart is redirecting its resources from everyday banking to target wealthier and international clients.
Their goal is to provide specialised services for global businesses that need help with financing, risk management, and advice across regions like Asia, Africa, and the Middle East.
Why the Shift?
Chris Egberink, StanChart's CEO in South Africa explained in an interview with the Financial Mail that local banks are all competing for the same small pool of domestic corporate loans, which means the profits aren’t as big. So, StanChart is focusing on bigger, more profitable opportunities.
“We will sharpen our focus on serving the cross-border needs of larger global corporate clients who need financing, risk management and sector advisory expertise across Asia, Africa and the Middle East,” he was quoted as saying.
“I must look for business which provides appropriate returns. The local banks are all chasing the same pool of domestic corporate loans, so the margins are often much too thin for us.”
“It makes sense for us to invest in this area and compete with institutions like JP Morgan and HSBC,” local CEO Mpho Masupe said.
A big opportunity is involvement with the African Continental Free Trade Area (AfCFTA). The local bank has already started engaging with companies around the AfCFTA.
“But we’re looking for something larger. We don’t want to overcrowd the space; we want to focus on the higher end,” Masupe said recently.
What’s Next?
For investors, the sale of Wealth & Retail raises an interesting dilemma—does this make Standard Chartered a leaner, more profitable bank poised for long-term gains? Or does it signal a retreat from an important growth market? Either way, the bank is making a decisive shift, and the market will be watching closely.
StanChart's rally
Best-Performing Bank Stock (2022-2024):
StanChart has been the top-performing bank stock on the Botswana Stock Exchange (BSE) from 2022 to 2024, according to its CFO Tapiwa Butale whose article last year showed this:
Share Price Growth:
Since 2021, StanChart’s share price has grown 55.4% per year on average.
This growth was much higher than the general market growth (DCI index), which was only 9.2% per year.
2023 Performance:
StanChart's share price jumped by 84.7% in 2023, going from P2.87 in January to P5.30 by the end of the year.
2024 Update:
In 2024, the share price rose by 31.3%—ranking third and ahead of all banks, according to data by the BSE.
Current Status (2025):
As of February 17, 2025, StanChart’s share price stands at P7.01, with a market value of P2 billion, according to the BSE.
Why the Growth?
Butale previously said the growth could be due to:
The Digital Bank launched in 2019, which attracted investors.
A focus on long-term stability and constant innovation, even if it means ignoring short-term market ups and downs.
“This could be a reaction to our growing financial performance; an appreciation of our strategy to become a truly digital bank following the launch of our “Digital Bank” in 2019 or just what we do; reward those investors who understand vintage, long term stability and the need for continuous innovation even at the cost of short-term market sentiments”.
In 2023, StanChart paid P202 million as dividends, reaping from both divisions. The sale of this division and its impact on profit and dividend is something to keep an eye on.
Read more: Stanchart Sweats Out Returns
Comments