2014 sets firm base in place for future solid growth and achievement, says ABC Holdings Limited.

Group related article

March 30, 2015

Although the audited financial results for the year ended 31 December 2014 were marked by mixed performances across the countries in which BancABC operates, several significant events that occurred during 2014 will place the bank in a more favourable position for strong growth during the current financial year and beyond, ABC Holdings said today 30thMarch 2015.

Announcing the results, Dr Blessing Mudavanhu, Acting Group Chief Executive Officer, said the Group recorded an attributable loss of BWP 438 million compared to an attributable profit of BWP198 million in 2013. This was largely due to increased impairments, reduced margins and increased operating expense.

The bulk of the credit impairment charges incurred during 2014 were, however, primarily once-off and should be seen as part of the Group's conservative approach towards managing credit risk.  The bank continues to focus on improving its credit management processes and building a quality loan portfolio across all business segments. A dedicated team of highly experienced staff was also set to collect on non-performing loans. Changes undertaken to date are already bearing fruit and it can be expected that going forward, the Group's credit impairments will be brought in line with its peers.

The Group's balance sheet remains strong.  Customer deposits, increased by 16% and this extra funding was deployed mostly into liquid assets and to a lesser extent loans and advances.  Cash and short-term funds increased by 40%, which reflects the increased liquidity of the Group's balance sheet.

Attributable profit

Banking subsidiaries recorded an attributable loss of BWP65 million compared to an attributable profit of BWP310 million registered in 2013, with all entities registering a decline in profitability largely due to higher impairments.

The loss in head office entities together with consolidation adjustments increased from BWP112 million to BWP372 million in the current year. This was on account of several factors including a BWP85 million increase in credit impairments charges on a handful of loans in Tanzania that are centrally managed, increased interest expense on funding used to bolster capital positions in subsidiaries towards the end of 2013, BWP69 million in fair value losses on financial investments and write-off of deferred tax assets amounting to BWP44 million. Termination benefits to the previous executive management also increased the loss at head office in 2014.

Operational performance

BancABC Botswana's attributable profit of BWP71 million was 53% lower than what was achieved in 2013. Performance was impacted by a decline net interest margins as well impairments which increased from BWP42 million in 2013 to BWP110 million in 2014.  However, the quality of the loan book remained relatively stable with the gross NPL ratio of 3.9% (2013: 2.9%) and net NPL ratio of 0.7% (2013: 1.2%).

BancABC Mozambique recorded an attributable loss of BWP14 million compared to an attributable profit of BWP9 million in 2013, largely due to growth in operating expenses which emanated from BancABC's strategy of expanding its reach throughout the country.

BancABC Tanzania posted an attributable loss of BWP123 million.  This was higher than the loss for prior year of BWP20 million largely due to a mix of higher impairments, lower trading income as well as increased operating expenses in the year under review.  The subsidiary's loan book grew by 13% from BWP575 million to BWP650 million with the retail portion of the loan book growing from 27% in 2013 to 47% in 2014.  Deposits marginally declined from BWP1,299 million to BWP1,284 million in the current year.

BancABC Zambia's attributable profit declined from BWP50 million in 2013 to BWP4 million in 2014. The major causes of the decline in profitability were the reduction in interest margins as well as increased impairments.  The entity's loan book marginally declined by 3% from BWP1.39 billion to BWP1.35 billion.  However customer deposits increased by a substantial 58% from BWP1.1 billion to BWP1.8 billion.

BancABC Zimbabwe posted an attributable loss of BWP3 million compared to an attributable profit of BWP118 million in 2013.  This was due to increased impairments due to a tough operating environment.

Setting a positive base for growth in 2015 and beyond

The highlight of the year under review was the acquisition of the majority of BancABC's shares by Atlas Mara Limited (ATMA), which now holds 98.7% of the shares in the Group.  Since the close of the transaction ATMA has injected a total of US $100 million into the Group.  The major benefits of this transaction include access to more funding, management depth and a stronger technology platform.  BancABC will benefit from being a part of a larger Group which is poised to be a significant player in the sub-Saharan landscape.

The ATMA relationship is already beginning to bear fruit as evidenced by the Group's closing of the following funding arrangements:

  • The European Investment Bank loan facility of €65 million.
  • The African Development Bank loan facility for US $50 million facility for on-lending to SMEs and small corporates.
  • The World Business Capital provision of a facility of US $7.5 million to BancABC Zambia to support the increasing demand in the country for SME lending.

ATMA Chief Executive Officer, John F Vitalo, stated that it is both challenging and exciting to be part of a visionary business. "Our goal is to be a top 5 player in the markets in which we operate. To do this we need the best talent, the right systems, and the right products. We seek to be a positive disruptive force in our markets." He said.

Working with ATMA, ABCH expects to close further significant funding arrangements in 2015, to support its business expansion whilst lengthening the depth of the funding base.

About ABC Holdings

ABC Holdings Limited is the parent company of a number of banks operating under the BancABC brand in Southern Africa, with operations in Botswana, Mozambique, Tanzania, Zambia and Zimbabwe. A representative office as well as group management support services company is located in Johannesburg, South Africa.

Our vision is to be Africa's preferred banking partner by offering world class financial solutions. We will realise this by building profitable, lifelong customer relationships through the provision of a wide range of innovative financial products and services to benefit all our stakeholders.

The Group offers a diverse range of products in corporate banking, treasury services, Retail & SME Banking, asset management and stockbroking.

For more information visit www.bancabc.com or please contact:

Wallace Siakachoma BancABC- Acting Group Chief Financial Officer: wsiakachoma@bancabc.com

Leah Banda: BancABC-Group Head-Marketing & Communications: lbanda@bancabc.com

+27117225300

South Africa

About Atlas Mara

Atlas Mara was formed by Bob Diamond, CEO and Founder of Atlas Merchant Capital LLC and Ashish J. Thakkar, Founder of Mara Group Holdings Limited, and listed on the main market of the London Stock Exchange in December 2013.

Atlas Mara Vision is to create Sub-Saharan Africa's premier financial services institution through a combination of its experience, expertise and access to capital, liquidity and funding. The goals are to combine the best of global institutional knowledge with extensive local insights and experience and to support economic growth and financial inclusion in the countries in which the

Company operates.

 

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