Freetown, SIERRA LEONE – The dynamic growth observed in Discount Houses throughout 2022 was primarily propelled by burgeoning customer treasury bill holdings, marking a significant upsurge, as per a recent analysis.
According to the Central Bank, these customer treasury bill holdings skyrocketed to NLe24.7 million in 2022, a substantial increase from nil in the preceding year. Remarkably, these holdings accounted for 51% of the total assets. In tandem, the total assets of Discount Houses surged by more than double, reaching NLe48.31 million in 2022.
The Financial Stability Report by the Bank further highlighted nuanced shifts in other areas of Discount House activities. It revealed a notable decline of 13.7% to NLe6.0 million in proprietary investment in government securities. Simultaneously, deposits and placements saw a decrease of 22.3%, amounting to NLe1.35 million.
The Central Bank noted the tentative improvement in the Discount House sector’s performance for 2022, showcasing an upswing in profits, particularly in comparison to its equity.
“The combined pre-tax profit of the Discount Houses surged by 39.5% to NLe0.60 million in 2022,” stated the report. However, it indicated that the Return on Assets (ROA) for the Discount Houses, on a consolidated basis, slightly decreased to 1.25%. This figure fell below the benchmark set by MIX, which stands at a minimum of 2.1%.
Conversely, the aggregate Return on Equity (ROE) exhibited a significant increase, soaring by 1.59 percentage points to 4.34%. This surge in ROE signifies an improved performance in leveraging equity for profitability, showcasing an encouraging aspect amid the financial landscape.
The nuanced movements in investment strategies and the pivotal role played by customer treasury bill holdings elucidate the evolving dynamics within Discount Houses, reflecting an adaptive approach amid changing market conditions. ZIJ/18/12/2023