The African Banking Corporation (ABC), the wholesale banking outfit that came out leasing companies, said last week that it is well positioned to make some forays across the African region, adding that there are plenty of opportunities in the continent.
Speaking at the Botswana Financial Sector Conference, ABC chief executive officer, Douglas Munatsi, said that given the cash injection put in by some of its shareholders and strategic partners, they are now more than ever before in a position “to grow across Africa”.
“Obviously the intention is to grow, particularly in east and West Africa. We have substantial capacity now to grow across Africa,” he said.
The move coincided with the Botswana Stock Exchange listed company’s dazzling results which shot-up 26 percent to the end of December last year to P 77 million.
The results prompted the bank to publicly state that the rainy days were over following the re-capitalisation exercise.
“There are a whole range of reasons why we grow going forward. The big challenge that we see is Zambia but we are going to address it because of the capital injection,” he said. “We are seeing lending opportunities everywhere: mining, agriculture and other sectors.”
Added Munatsi, “The group’s 2006 performance demonstrates our commitment to becoming a leading Pan African provider of world class financial solutions. Having strength in all operations, we are in a solid position to propel the group to top tier status in the medium term.”
Bifm injected US $ 40 million (P246 million) to prepare the bank to face its peers in the regional markets.
“With the new capital injection our challenge is to maintain 40 percent return on equity. All numbers are positive and our short term objective was to maintain 50 percent on cost to income ration, but, we broke that to 49 percent,” he added.
The wholesale bank shaved its income to cost ration from 56 percent in the yesteryear to be in the Ivy League.
The bank’s balance sheet showed that Botswana and Zambia doubled and Mozambique’s nearly doubled. Tanzania was the only black sheep as it missed the breaking even point by P 13,000. Its assets grew from P 1.9 billion to P 2.6 billion.
In Tanzania, the bank is positioning itself to take over a stake in its Tanzanian operations, which it does not already own, following indications by the country’s government that it wants to exit.
“African growth was 5 percent last year and there is major growth potential in Africa (going forward). I think the major challenge is to erase the perception in Botswana that Africa is not a go area,” he told the Botswana Financial Services Sector Conference.
He said the biggest problem in Africa is that most of the institutions, such as the Southern African Development Community, are still very weak. The organization has declared that the SADC region will have a free movement of people by next year, but indications are that this will be unlikely given the difficulties relating to work permits within the region.
“Africa has got a lot going for it but the problem is its institutions because they are very weak,” he added.