ABC Holdings Limited, the Botswana Stock Exchange quoted pan African banking house trading as BancABC, said its local subsidiary was a shining star following the roll-out of retail products in the country.
The group’s results for the six months ended June 30 showed BancABC Botswana contributed significantly to group’s income and profitability.
The local subsidiary recorded an increase of 127 percent in attributable profits from P36 million earned in the prior year to P81 million and contributed 47 percent to the group’s bottom line. The Botswana performance was largely driven by an increase in net interest income from the consumer lending and loan schemes in retail banking.
“Botswana performed very well,” ABC Holdings chief operating officer, Francis Dzanya, said, adding that he hopes they will be able to carry that forward.
The loan book grew by P244 million to P1.4 billion with the composition of the retail loans increasing by 64 percent.
Total income increased by 98 percent from P109 million in the prior year to P216 million in the current year mainly driven by an increase in net interest income and commissions relating to consumer lending and group loan schemes in the retail segment.
Net interest income increased by 111 percent from P90 million for the six months to 30 June 2012 to P191 million in the current year. This was on the back of an increase in loans and advances which grew from P2.8 billion in June 2012 to P3.8 billion in June 2013.
Zimbabwe, which is operating under difficult conditions, was second best to Botswana in a period characterised by the tightening of liquidity in March and low investor confidence on the pre-election anxieties. Investors jittery led to depositors taking out P800 million out of the country’s banking system.
BancABC Zimbabwe contributed 28 percent to ABC’s profit after taxation with attributable profit of P48 million being 3 percent lower than P50 million achieved in the prior year. This was largely due to P55 million impairment in respect to one bank customer.
“Zimbabwe could be higher than Botswana, if was it was not for the P55 million provision,” said Dzanya.
However, net interest income increased by 91 percent from P95 million in 2012 to P182 million in the current period. The rise was attributed to growth in higher yielding consumer loan book.
The loan book increased by 30 percent to P2.4 billion in June 2012 to P3.2 billion in June 2013, but deposits, however, declined by 7 percent from P2.4 billion in June 2012 to P2.3 billion in June 2012 ÔÇô the deposits were P3.1 billion in December 2012.
“This reflects the liquidity crunch the Zimbabwean financial market has been experiencing over the last few years which has worsened with time.”
BancABC Zambia had a remarkable six months with profitability growing by 94 percent from P17 million in the prior year to P33 million in the current period.
BancABC Tanzania, which is being restructured, remains a ‘working progress’ according to Dzanya. The division posted an attributable profit of P0.6 million from the attributable loss of P5 million recorded in prior year. Income is on an upward trajectory and impairments reduced from a charge of P10 million in prior year to a recovery of P2 million in the current period.
The growth in deposits was mostly placed in the interbank market as the subsidiary was not lending for much of the period under review due to a low capital adequacy ratio. Deposits increased by 21 percent from P975 million in June 2012 to BWP1, 181 million in
June 2013. Deposits were BWP1, 148 million in December 2012.
In a bid to strengthen the balance sheet of the bank, the loan portfolio was split into a “good bank” and a “bad bank” and all the non-performing loans were transferred to a non-banking subsidiary TDFL. Additional provisions of P64 million were processed in respect of this portfolio.
“Consequently, the combined business for our operations in Tanzania posted a loss of P44 million……we are cautiously optimistic that the combined business in Tanzania will break even in the second half of the year and should be profitable going forward,” the bank said.
“We are really happy of what we are able to achieve in the first half,” Beki Moyo, BancABC Chief Financial Officer added.
However, Moyo said credit losses were a concern coming out of accounts in Zimbabwe, Tanzania and Mozambique. Total group expenses were up 40 percent (at P529 million), but the CFO said they were not worrying as total revenues were up 67 percent.
The total income from ABC Holdings for the period increased by 47 percent to P701 million from P476 million with growth being recorded in all major income lines. The Retail banking business provided the major impetus for the results.
BancABC Group CEO, Douglas Munatsi said the performance affirms the strategy that was taken a few years ago to convert the business from a purely wholesale bank to a universal bank,” said in a statement accompanying the results. “We can sustain the growth we saw in the first half, but there are challenges,” Munatsi said. “There are still liquidity challenges globally”.
The group’s balance sheet grew to P13.7 billion compared to P13.4 billion in December 2012 and 10.8 billion as at 30 June 2012.
Total equity now stands at P 1.4 billion which positions the group to underwrite bigger ticket business. Loans and advances increased by P710 million to P9.9 billion from P9.1 billion as at 31 December 2012. Deposits increased to P10.9 billion from P10.7 billion in December 2012.
During the period, the group successfully raised US $70 million in additional lines of credit during the period.┬á