ABC Holdings Limited, a diversified lender, says it will reduce its holdings of financial instruments to increase loans and advances in the second half of the year.
The dual-listed financial services company closed the first period with a highly liquid balance sheet after it channelled 2,2 billion pula to treasury bills and other money market instruments, restricting lending.
The balance sheet grew 25% to $5,1 billion pula from 4 billion at the end of last year, driven by a robust expansion in group deposits in all its five regional markets.
Deposits rose 41% to 4,1 billion pula from 2,925 billion pula at the end of the same period last year. Despite this surge, loans and advances rose modestly, notching 8% and 17%, respectively, depressed by the company’s strategy to contain impairments.
“Deposits grew loans satisfactorily, but loans and advances were not so high. Additional funds generated were invested mostly in short-term financial instruments,” Beki Moyo, ABC chief financial officer, said.
“We deliberately maintained a liquid balance sheet. But we expect the numbers (of loans and advances) to increase in the second half.”
The restricted lending policy saw ABC’s impairments declining 59% to 17 million pula from 41 million pula the year before.
Credit loss ratios dropped sharply during the review period, as net non-performing loans (NPL) stabilised in all markets. Overall NPL ratio fell to about 3% from
nearly 4% last year.
BancABC Botswana accounted for the bulk of the group’s loan book, contributing 28%, followed by Tanzania with 21%, Zimbabwe and Mozambique with 15%, Zambia with 11% and ABC Holdings with 10%.
“BancABC Zimbabwe grew rapidly on the back of economic stability,” Moyo said, adding the subsidiary was on course to overtake Mozambique and Botswana in terms of profitability.
“Even as early as this year, we’ll not be surprised if Zimbabwe becomes the most profitable given how the second half has started and the prospects for growth in this economy.”
Net operating income surged 80% to 45 million pula from 25 million the year before. Performance was driven by a growth in net interest income and a reduction in impairments.
Net interest income before impairments and advances rose 87% to 146 815 pula from 78 684 pula, but was 244% higher after factoring in impairments, which fell to -16 996 pula from 40 969 the previous year.
Non-interest income fell 22% to
121 622 pula from 156 542.