BancABC bellied the effects of the global economic crunch as revenue piled up by nine percent in the first six months to the end of June this year while at the same time it made some crawling move to become a full-fledged retail bank.
The new developments are largely seen as a vote of confidence by investors on the Botswana-Zimbabwe listed company whose half year financial results were driven by Botswana and Mozambique operations.
“Total income grew by a solid 9 percent to P235 million but profits were curtailed by dollarisation of Zimbabwe economy and the cost implication thereof,” the bank said, adding that the rolling-out of the retail banking division led to a spike in cost-to income ratio rising from 50 to 72 percent.
As a result, the company failed to declare dividends but remained strongly capitalized.
However, BancABC’s Chief Executive Officer, Douglas Munatsi, showered the Mozambique operation with some praises where the bank has risen from nothing to one of the top five banks in the former Portuguese colony. The bank’s market penetration was aided by the rolling-out of the retail division, where it is envisaged it will end up with five branches at the end of the initial exercise.
Further, the bank’s loan book was flat at P 2.2 billion with deposits growing 22 percent in the last six months to P 2.9 billion. The development took place during the first half of the year when the global recession was thought to be about hitting the bottom and lifting hopes of a steady recovery.
The recessionary period hit hard on the mineral dependent countries such as Botswana and Zambia thus limiting appetite for borrowing and re-payment in the negatively affected countries.
“Accordingly, impairments of loans increased by P 41 million. In order to limit further impairments and to strengthen the overall loan book, the Group took a deliberate policy decision to curtail lending from the third quarter of 2008 onwards, as well as continuing to strengthen credit management capabilities,” the bank said.
Going forward, the bank said it would like to concentrate on its growth opportunities ÔÇö namely the expansion into retail banking ÔÇö by rolling out the plan across the region in the second half of this year.
“The move will see BancABC operating three branches in Botswana,” he said, adding that the bank operations is Zambia are being streamlined to ensure that they deliver good results in future.
In Zambia, the bank’s strength is being supported by MicrofinÔÇöits micro lending outfitÔÇöwhere it has 18 branches of which six are going to be turned into retail branches of BancABC.
“In Botswana, we’ve a branch that we are already renovating. We believe that Zambia is going to take most of our time and think that there are some opportunities there,” Munatsi said.
Munatsi was optimistic about the growth potential of Zimbabwe but said, currently, the bank is working around the clock to dispose of some assets, which are not in their core business in a bid to strengthen their balance-sheet. That includes the selling of some equities in some listed companies and non strategic property in that country.
BancABC is the former African Banking Corporation (ABC) which has a strong shareholding from Botswana entities, including Botswana Insurance Fund Management (BIFM) and Debswana Pension Fund while the rest are foreign entities.