Absa vs FNBB: Which Bank Delivers More For Your Money?

When you buy shares in a bank, it’s like buying a cow. You hope it grows in value, but what really matters is how much milk (or cash) it gives you every year. But not all cows are created equal—some give you more milk for less money. So, which bank offers the best deal for you? Let’s break it down with Absa and FNBB.

If you bought a dairy cow for P10,000 and every year, that cow gives you milk worth P1,000, you would be pretty happy, yeah?

Think of buying shares like buying a dairy cow. You don’t just hope the cow grows in value—you want milk every day. In monetary terms, the milk is called a dividend.

So, if your cow gives you P1,000 worth of milk every year, and you bought it for P10,000, you’re getting a 10% return every year. In finance, that’s called a dividend yield.

The dividend yield is simply the milk (P1,000) divided by what you paid for the cow (P10,000), which gives you:

• Dividend Yield = 10% (P1,000 ÷ P10,000)

In other words, you’re getting 10% of your money back in cash every year in cash just because you own the cow.  

In investing, this is a simple way to see how much you can milk your cow, which is sort of like interest on your money.

If you wanted to buy shares of a bank on the Botswana Stock Exchange (BSE), two names stand out:

• Absa Bank Botswana and

• First National Bank Botswana (FNBB).

The question is, which one gives you more value for your money? Imara Capital Securities, a local licensed broker, said both are worth buying.

If you buy shares of Absa Bank Limited and First National Bank Botswana for P10,000 in each bank:

1. ABSA – a share costs P7.11 (as at May 2, 2025)

• With P10,000, you get about 1,406 shares (P10,000 ÷ P7.11)

2. FNBB – a share costs P5.20 (as at May 2, 2025)

• With P10,000, you get about 1,923 shares (P10,000 ÷ P5.20)

You own more shares of FNBB because the share price is lower compared to Absa. How much cash do you earn each year just for owning the shares?

Warren Buffett once said:

“Price is what you pay, value is what you get."

Let’s use the dairy cow and milk analogy to see how much cash income you’d earn from each bank.

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