ABCH posts impressive results

Chris Muronzi

AFRICAN Banking Corporation Holdings (ABCH) reported a pre-tax profit of BWP96 million in the six months to June 2012, up 53% up from BWP63 million in the corresponding period last year.
The group’s non-interest income was BWP235 million, up 61% from the prior year, helped by solid growth in almost all markets — Zambia, Zimbabwe, Botswana, Tanzania and Mozambique.

 
Non-interest income was BWP43 million. The group said the quality of the loan book continued to improve.
BancABC Zimbabwe’s profitability rose 30% from BWP38 million to BWP50 million, helped by growth in all income lines. The retail branch network grew from six in June 2011 to 19 in the current financial year.

 
Net interest income increased by 45% to BWP95 million, while non-interest income increased by 77% to BWP97 million. Loans and advances grew 63% from BWP1,5 billion in June 2011 to BWP2,4 billion in the current financial year.

 
Operating expenses increased by 101% to BWP124 million due to business expansion.
BancABC Botswana’s attributable profit rose 228% to BWP36 million.

 
Total income rose 126% to BWP109 million from BWP36 million, driven largely by an increase in interest income from increased consumer lending and group schemes.
The quality of the Botswana loan book improved significantly, with non-performing loans down to 1,8% from 5,9% as at June 30.

 
Impairments, however, increased from BWP2 million to BWP15 million, largely due to portfolio impairments and an increased loan book. Operating expenses rose 73% to BWP64 million.
BancABC Mozambique’s profitability increased by 77% to BWP14 million.

 
“This was mainly due to an increase in net interest income, as the balance sheet size and margins increased during the current year,” ABCH said in a statement attached to its financial results.

 
“Market interest rates have been on a downward trend and this has lowered the subsidiary’s cost of funds, which improved margins.”
Net interest income was BWP46 million, 127% up on the prior year.

 
Gross non-performing loans increased from 4,3% in the same period last year to 7,4%, a development that led to the higher impairment charges.
Non-interest income was BWP33 million, up 32%, largely driven by growth and finance fees as well as an increase in foreign currency trading profits.

 
BancABC Tanzania posted an attributable loss of BWP5 million from a profit of BWP10 million in the prior year, owing to a reduction in net interest income and loan impairments recorded in the period. Net interest income tumbled 38% to BWP15 million due to low interest margins.

 
“Market interest rates rapidly increased towards the end of 2011 and this has adversely impacted on margins. On the other hand, the higher costs of deposits could not be fully passed on to clients,” the company said.

 
While an impairment charge of BWP10 million was very high, it reflected a 13% reduction from the prior year charge of about BWP12 million. Non-interest income was BWP28 million. The group said it was optimistic about the Tanzanian operation after it obtained a government payroll deduction code, which positions the business well for the future.

 
BancABC Zambia’s profit rose from BWP6 million in 2011 to BWP17 million on the back of increased consumer lending and non-funded income — commissions and fees.

 
The group said it took the decision to split income earned on consumer loans between interest income and loan management fees. The move was necessitated by the need to properly price its loan book and related services.

 
“This led to a reduction of 11% in net interest from BWP38 million to BWP34 million in the current period. However, this was more than compensated for by the 346% increase in non-interest income from a combination of the increased loan management fees on consumer loans coupled with increased trade finance transaction fees,” the group said.

 

Highlights

 

  • Total income up by 53% from BWP311 million to BWP476 million
  • Cost to income ratio increased to 75% (H111: 72%)
  •  Net operating income is 45% up from BWP67 million to BWP97 million
  • Pre-tax profit 53% up from BWP63 million to BWP96 million
  • Attributable profit to shareholders of BWP56 million (H111: BWP37 million)
  • Basic EPS of 37.2 thebe (H111: 25.9 thebe) and diluted EPS of 31.1 thebe (H110: 24.6 thebe)
  •  Total assets increased by 18% since December 2011 and by 47% from June 2011 to BWP10.8 billion