BancABC profits up

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SUSTAINABLE returns from retail banking helped steer BancABC’s earnings in the year to December 2012. Pre-tax profits almost doubled, to BWP212 million (US$25,6 million) from BWP108 million the previous year, while attributable profits rose 60% to BWP133 million from BWP83 million in 2011. Basic earnings per share (EPS) were 72.1 thebe (2011: 56.6 thebe).

Driven by the group’s concerted expansion in the retail banking sectors of Botswana, Mozambique, Tanzania, Zambia, Zimbabwe total income surpassed the BWP1 billion mark for the first time (BWP1,087 million against BWP659 million in 2011). Total deposits rose by 45% to BWP10.7 billion from BWP7.4 billion. Loans and advances increased by 50% to BWP9.1 billion.

Announcing the results, BancABC Group CEO, Douglas Munatsi said the significant investments made in retail banking in recent years were now generating substantial, sustainable returns. He described the 2012 results as “landmark” and said they reflected “an excellent all-round performance, one that proves that our strategy and investments have been prudent, appropriate and effective”.

The number of branches had grown to 61 from 49, Munatsi said.

“BancABC has now achieved critical mass in retail banking in Botswana, Zambia and Zimbabwe. Certainly, some challenges remain in Tanzania and to a lesser extent Mozambique but the Group is confident of gaining traction in these markets also.”

Total income grew by 65%, boosted by an improvement in net interest income of 63% and growth of non-interest income of 69%. Operating expenses, at BWP869 million, were 59% higher than those for 2011. This was largely related to the group’s expansion into retail and SME banking.

Munatsi noted a modest but encouraging decline in the overall cost-to-income ratio to 71% from 74% the prior year. He said BancABC remained on track to achieve a target cost-to-income ratio of around 50%. Attainment of a cost-to-income ratio below 50% during 2012 by the Botswana subsidiary underscored management’s belief that a group target of around 50% was achievable.

In 2012 the Zimbabwe operation increased its contribution to attributable profits to BWP103 million, 88% higher than the BWP55 million recorded the previous year. This was largely attributable to the significant inroads made by the bank into the group loan scheme product.

BancABC Botswana performed exceptionally well. Attributable profit, at BWP94 million, was 237% ahead of the 2011 performance of BWP 28 million. Net interest income improved by 218% to BWP252 million, are improved margins and a rise in the total loan portfolio.

BancABC Zambia also returned a most satisfactory performance, growing attributable profit 13% to BWP36 million despite incurring a tax expense of BWP19 million against a tax credit of BWP10 million in 2011. Profit before tax rose 159% to BWP55 million from BWP21 million, due to increased activity in both wholesale and retail banking.

BancABC Mozambique grew income by 17% but a 43% rise in expansion-related operating expenses resulted in attributable profits of BWP 18 million, 39% lower than 2011. BancABC Tanzania experienced a decline in net interest income and increased impairments (which rose 17% from BWP33 million to BWP38 million). The net result was a worsened attributable loss of BWP39 million, against a much lower loss of BWP3 million the prior year.

At the end of 2012 the Group’s balance sheet had grown from BWP9.2billion in December 2011 to BWP13.4 billion. During the year the bank successfully concluded a US$50 million rights offer. Proceeds have been deployed to strengthen the subsidiaries’ capital bases in line with anticipated growth in business volumes.

Impairments increased by 74% from BWP80 million in 2011 to BWP138 million, during the period under review, due to a combination of a higher loan book and higher NPL’s in Tanzania and to a lesser extent in Zimbabwe. As a result, the non-performing loans ratio deteriorated to 9.2% from 6.6%. Munatsi said management has now adopted a regimented credit process which should result in lower NPL’s going forward.

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