ABC buoyed by rapid retail banking growth

ABC Holdings’ pre-tax earnings grew 77% in the six month to June buoyed by growth in retail banking.

Chris Muronzi

Group pre-tax profits grew to Botswana pula (P) 169 million from P96 million in the prior comparative period.

Attributable profits were P143 million from P56 million, representing growth of 157% in the comparative period last year.

Announcing the results, BancABC group CEO, Douglas Munatsi said: “We are extremely pleased with an outstanding set of results. They accurately reflect the strength of the group’s operations. The good performance affirms the strategy that was taken a few years ago to convert the business from a purely wholesale bank to a universal bank.”

The group has grown its branch network to 64 from 55 in the prior year.

While total costs at P529 million were 40% higher than P379 million recorded in 2012 mainly due to the group’s continued expansion of its retail business, group revenue grew faster than costs. The cost to income ratio fell to 62% from 75% in the prior year.

The group’s balance sheet grew to P13,7 billion (US$1,6 billion) compared to P13,4 billion (US$1,7 billion) in December 2012 and P10,8 billion (US$1,4 billion) which positions the group to underwrite bigger business.

Loans and advances increased by P710 million to P9,9 billion from P9,1 million as at 31 December 2012. Deposits increased to P10,9 billion from P10,7 billion in December 2012. On regional operations, Munatsi said the only operation in the group that was in the red was BancABC Tanzania.

The Tanzanian operation’s balance sheet was recently restructured with all non-performing loans being warehoused in a non-bank subsidiary, the group said.

In the six months to June, the group raised US$70 million in additional lines of credit while fundraising efforts continue.
BancABC Botswana recorded an increase of 127% in attributable profits.

The group said the performance was driven by an increase in net interest income from the consumer lending and loan schemes in retail banking.

BancABC Mozambique profitability decreased by 32% from P14 million to P9 million in the current period owing to an increase in impairments and higher operating expenses during the current year.

BancABC Zambia had a remarkable six months with profitability growing by 94% from P17 million in the prior year to P33 million in the current period while BancABC Zimbabwe attributable profits of P48 million was 3% lower than P50 million achieved in the prior year.

This was mostly due to P55 million impairment in respect of a customer.

However, net interest income increased by 91% from P95 million in 2012 to P182 million in the current period.

Munatsi said liquidity management and collection of non-performing loans will be the key focus areas going into the future.

The group declared an interim dividend of 14 thebe (about 1,6 US cents) per share was declared.

ABC Holdings is the parent company of a number of banks operating under the BancABC brand in Southern Africa with operations in Botswana, Mozambique, Zambia, Zimbabwe and Tanzania.