Presenting the company’s full- year results to analysts, ABC Holdings CEO Douglas Munatsi said given the group’s strong performance to date and the need to recapitalise all banking operations, a US$50 million rights issue was under way.
The bank intends to further strengthen its Botswana, Zimbabwe and Zambia operations and some of the new capital will also be channeled into Tanzania and Mozambique businesses. ‘’We intend to close the capital raise before the second half of this year, and the rights issue is fully underwritten by ADC (African Development Corporation), although we have also received broad-based support from all our shareholders,’’ Munatsi said, adding that the capital would be used to further expand the bank’s branch network and develop its supporting distribution channels.
Expressing his confidence, Munatsi said the “bank’s balance sheet was strong and positions the group well for growth in 2012 and beyond’’.
BancABC’s total income rose 21% to BWP659 million (US$96,4 million) in 2011, compared to BWP546 million (US$80,5 million) in 2010, driven by a 38% increase in net interest income and a 23% growth in non- interest income. The strong income growth managed to fully absorb the 25% growth in operational expenses, which came in at US$80 million (2010, US$64 million).
Operational expenses were higher in line with expansion of the banks retail banking business across its footprint, whilst significant impairment charges were recorded in Tanzania and Zimbabwe. A charge of BWP29 (US$4,2 million) was also taken in respect of a market to market loss on a derivative loan structure in line with accounting best practices (IAS39).
Overall, profit after tax went up 28% to BWP87,7 million (US$12,8 million) with earnings per share rising 22% in unison from 46,3 thebe (6,35 US cents) in the prior year to 56,6 thebe (7,76 US cents) in 2011, resulting in the group declaring a dividend 10,5 thebe (1,4 US cents) bringing the total dividend for the year to 17,5 thebe(2,4 US cents)
Beki Moyo, the Group’s FD explained that the group had to be consistent in its dividend policy. “We cannot ignore our set dividend policy, we have to be consistent in how we treat our investors so we are paying a dividend in line with our policy,’’ he said in response to an analyst who was curious to know why the company was paying a dividend when the bank was capital-hungry.
The bank’s key performance metrics were strong and trending in the right direction. The cost to income ratio declined three points from 77% in 2010 to 74% in 2011, whilst a key milestone in the bank’s history was achieved as total assets breached the US$1 billion mark at US$1,227 billion. Total deposits grew 29% from US$761 million to US$985 million.
“We are comfortable with the rate of growth in our expenses which average 12% per annum, as this is in line with inflation trends in the markets that we operate in where inflation ranges between 4% to 18%,’’ Moyo said.