Soon after releasing strong half year results, African Banking Corporation (ABC) has secured a capital injection of US$20 million to boost its already expanding regional business.
An upbeat Douglas Munatsi, Group Chief Executive Officer of the Botswana based regional banking group, said ABC has concluded a 10 year loan in a transaction involving the African Development Bank (AfDB) and Botswana’s National Development Bank (NDB).
Using funding provided by AfDB, NDB will provide the funds to enable ABC to increase its transaction capacity by raising the capitalisation of each banking subsidiary up to a minimum of USD10million, with the exception of the Zimbabwe operation which is already compliant.
“Our 2006 first half performance is a clear indication that we are now entering an exciting growth phase. Boosting Tier I capital in our subsidiaries will translate in significant increase in single obligor limits for all subsidiaries. This should enable the group to effectively compete in our chosen space which is the medium to large corporates”, Munatsi said.
“The new capital injection, will allow us to execute much larger transactions and give us the capacity to effectively, securely and profitably leverage third party funds”, he added. “The co-operation among AfDB, NDB and ABC is unique in our region and should mark the beginning of a very fruitful relationship”, Munatsi said.
Turning to the Group’s plans for the future, he said the next drive is to raise Tier II capital from long term funders or capital markets in Botswana and the rest of the region.
The bank announced a 72 percent increase in headline earnings and a 67 percent increase in earnings per share for the half year to June 30, 2006. This headline growth was also underpinned by improvement in the cost to income ratio.
ABC Holdings’ operations in Botswana, Mozambique, Tanzania and Zambia all reported improved net interest income. The additional capital now earmarked will allow significant expansion of the loan book and reinforce the group’s predictions of exceeding fiscal 2005 earnings overall.