African Banking Corporation, the pan-African wholesale bank’s Zimbabwe operations defied the hostile economic conditions as it aided the bank to achieved record results of 72 percent headline earnings in the first six month of the year.
According the half year results to end of June this year jumped up to P47.2 million from P 27 million like-on-like as the Zimbabwe operation contributed P 39.4 million despite the economic challenges in that country.
“The problem with Zimbabwe is the politics. There has been massive devaluation of the currency and we have taken a deliberate decision in that market because of the inconsistencies (in policies) in that market.
“Inflation in Zimbabwe has topped 1000, and somehow it has come down to 900 percent but that was due to technical factors and we expect it to go up higher in the remainder of the year,” Chief Financial Officer, Beki Moyo said.
Despite the negative inflation figures in almost all the countries in which it operates African banking Corporation has managed to record some growth with the exception of Zambia where it took some charges to the tune of P16.4 million on its micro-finance’s non performing loans.
The bank operates in Botswana, Mozambique, Tanzania, Zambia and Zimbabwe.
“The net interest income improved in Botswana, Mozambique, Tanzania and Zambia operations but Zimbabwe suffered from the effects of inflation and the depreciation of the Zimbabwe dollar.
“Earnings from Zimbabwe in spite of difficulties did improve due to strong performance of trading portfolio,” Moyo said, adding that the operations were blighted by the losses at the microfinance at Zambia operations.
However, the bank strongly believes that it will joint its peers by coming out strongly in the second half of the year, after the fall off the preferential shares due next month and the propping-up of ABC Tanzania to the tune of US$4 million.
The sentiments are also under pinned by the fact that ABC Botswana, Mozambique and Zambia are scheduled to exceed their estimated earnings for this year- given experiences of the first half.
The bank also managed to slash its income cost ratio from 60 percent to 49 percent ÔÇô an impressive figure by all standardsÔÇöand it is hoping to prone it further to 40 percent in the next two-to-three years.