MBABANE: As safe as houses – is the ancient adage that founders of the Swaziland Building Society (SBS) strongly believed. But next Friday, after 62 years, the business that has been associated with funding mortgage loans that has seen thousands of people build and own homes around the Kingdom, is taking a leap forward in search of growth and sustainability as a commercial bank.
SBS has solid public confidence as the Kingdom’s oldest privately owned financial institution. That confidence is reflected in a E3.4 billion asset base – built largely on the back of small and micro depositors.
But times change. Ways of working that enabled SBS to satisfy the 1962-era customer are obviously now out of date. The signs of strain are becoming obvious. In their 2024 financial report published in July, the mortgager stumbled. Total income declined by 4% to E313 million. The Directors report showed 2024 operating income before tax was E45.6 million, down from E88.0 in 2023.
The chairman, Elijah Simelane reported an impairment loss on loans and advances of E13 million, compared with an impairment gain of E21 million in the previous financial year. This result is attributed to deterioration of the performance of the loan book, specifically residential and commercial loans – the core business of the Building Society.
There is little doubt the Building Society is a solid business. It’s loans and advances at year end increased to E2.49 billion, up from E2.23 billion in 2023 whilst total assets at year-end increased to E3.43 billion (2023: E3.12 billion). Reserves at the year-end totalled to E1.65 billion, up from E1.58 billion in 2023, declaring E66.7 million in dividends in 2024. But digitization has brought great instability and uncertainty in the money business that has a new dominating player. Mobile telephone companies now move the bulk of person to person funds transfers worth billions by day and night 7 days a week. To stay relevant and competitive, the institution is forced to leave the safety of the mortgage market, and try their hand in commercial banking.
In the oast three months, the Building Society managers have crisscrossed the country to try and meet with as many of their 12,500 permanent shares owners and ask for their support for the change into a commercial bank.
Next Friday, the Building Society will convenne a mass meeting of shareholders to ask for a resolution authorizing the conversion of the Building Society. That decision will clear the way for the lender to be registered as a company and thereafter, seek approval from the Financial Services Regulatory Authority (FSRA) and the Ministry of Finance in terms of the Build Societies Act of 1962, before lodging their application with the Central Bank, seeking a banking licence.
jm/today/7.11.2024
