The African Banking Corporation (ABC), the wholesale banking outfit, rose up by over four percent on half year results thanks to Botswana operations but at the same time warned the markets about its war chest aimed at giving it a human face.
Some of the measures about to be introduced in the early year include the retail banking facilities, branch networking, e-banking, mortgage lending and the introduction of debit, credit scheduled for the beginning in the year.
Douglas Munatsi, Chief Executive Officer of ABC, said Botswana’s attributed results shoot up 41 percent adding that Mozambique’s profitability was negatively affected by the adverse asset quality which is expected to be in line by full year.
Munatsi got his comfort from the stable inflationary rate situation across the region and currency stability against both the US dollar and Botswana Pula save for Zimbabwe.
“We are now entering a period of stable exchange rate. And countries like Zambia, which have not been known for building their own reserves, are beginning to do so. Economies like those of Zambia are going to be different in the next five to 10 years from now. And that is what gives some comfort,” he added.
“Whilst Zimbabwe continues to be a significant contributor to the group profits, it is pertinent to note that its contribution to the total assets has declined. Whereas in 2006 Zimbabwe contributed 8 percent to the group assets, it only contributed 4 percent during the current year, and its net assets value declined from 37 percent to 17 percent. Profitability in Zimbabwe is unlikely to go up materially, as any gains will be somewhat negated by the depreciation of the currency,” Munatsi said.
Further, it blamed the group net income interest slip on Zimbabwe as it slowed down 14 percent to P 56.6 million.
The wholesale outfit, which is at pains to change its colours, has managed to change its cost-to- income ratio from 80 percent in 2003 to 47 percent ÔÇöahead of its target announced last year of 50 percent in the medium to 40 percent in the long term.
Further, its attributable profits were at P 47.2 slightly ahead of last year.
“The results are pleasing particularly when viewed against the massive depression of the Zimbabwean dollar, coupled with considerable pressure in lending and foreign exchange in most of the subsidiaries, Munatsi said.
However, he noted that Botswana has been the key driver in the foreign exchange drive and the deposit mobilization where it contributed about 51 percent of the P 1.6 billion.
“We are doing better here in Botswana and we expect to continue to be the case. We do a lot of foreign exchange here,” he added.
As part of the face-lift for the bank, he said they are embarking on a number of products to come in the next year as they are still trying to upgrade their IT systems. The move will be empowered by the agreement between the ban and IFC which was signed on Friday night.
As part of its regional expansion and deepening the markets, the banking is expected to embark on rights issue and, at the same time, look at the possibility of developing other lines of credit.
“With the IFSC agreement we are expecting the institutions to be coming our way with the view of raising credit or debt,” Munatsi said.