Sunday, September 27, 2020

ABC Holdings shows resilience in global recession

A decline in mining activities in the jurisdictions where BancABC operates has affected the bank’s margins.

Most affected countries in the group’s footprint were Botswana and Zambia because of the two’s over reliant on the mineral sector, although by the end of 2009 stability was being restored.

Despite BancABC Botswana’s profit after tax rising 32 percent, the bank curtailed lending as the industry came under pressure because of less economic activity.

Zambia was the major challenge as copper prices fell with banking operations impacting on the group’s overall performance.

“In Zambia most of the customers there were service providers around the mines and most of the mines were closed,” Douglas Munatsi, the group’s Chief Executive Officer told analysts and journalists this week.

“The business experience in Zambia was nasty,” he added.

The bank’s audited results for the year ended December 31, 2009 showed that the Zambian operations generated a loss of P45 million after impairments of P24 million.

However, BancABC Botswana recorded an increase in profitability of 32 percent over 2008 to P17 million with the balance sheet growing by 17 percent due to increased customer deposits.

Despite other poor results, BancABC Mozambique realised a profit increase 82 percent to P30 million with the balance sheet growing by 30 percent to P844 million.

The Tanzania operations was hit by impairments which led to a reduced profit to P5 million with Zimbabwe recording a profit of P19 million.

The group’s balance sheet grew by 11 percent to P4.4 billion with customer deposits increasing 19 percent to P3.4 billion.

The loan book declined by 11 percent to P1.9 billion as the bank curtailed lending and focusing on collections.

“Our financial performance was good across all BancABC operations, with the exception of BancABC Zambia. Despite challenging economic conditions, the bank’s balance sheet grew considerably and this positions the group well to bolster earnings in 2010 and beyond,” said an upbeat Munatsi.

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Sunday Standard September 27 – 3 October

Digital copy of Sunday Standard issue of September 27 - 3 October, 2020.