BANCABC Zimbabwe contributed almost half of ABC Holdings Limited group’s attributable profit of BWP213 million despite the persistent liquidity challenges affecting the local economy, the company has reported.
Report by Victoria Mtomba
ABC Holdings attributable profit spiked 51% for the year ended December 31, 2012 with the local unit chipping in with BWP103 million.
The financial service group has a primary listing in Botswana.
In a statement accompanying the group’s financial results, ABC Holdings group chief executive officer Douglas Munatsi said BancABC Botswana, Zambia and Zimbabwe recorded double growth digits in attributable profit.
“We are gratified with solid growth experienced in the retail banking business which reached critical mass in Botswana, Zambia and Zimbabwe. While we have experienced limited growth in Mozambique and Tanzania and we are optimistic that overtime we would be able to gain traction in these markets, ” said Munatsi.
“The liquidity situation in Zimbabwe continues to be a source of concern to the group. We expect the liquidity situation to remain tight into the foreseeable future as there is effectively no lender of last resort and imports are higher than exports.”
Net interest income for the group went up 63% to BWP673 million from BWP412million in 2011. Munatsi said all banking operations with the exception of BancABC Tanzania recorded an increase in net interest income on the back of significant growth in balance sheet sizes.
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Business growth in Botswana, Zambia and Zimbabwe, Munatsi said, was on the back of consumer loans with deductions for loan payments predominantly being made at source.
“The growth has not been without its challenges and hence risk management will become the focus point for the group going forward. In order to ensure that this growth is sustained, management has identified credit, liquidity and operational risks as the key risks the group has to closely manage,” he said.
The group recorded a 74% increase of net impairment losses on loans and advances of BWP138million due to a combination of a higher loan book which increased by 50%to BWP9,1 billion as well as increased specific impairments mostly in Tanzania and Zimbabwe.
“The slow legal process in Tanzania has meant that we have to continuously review the value of security downwards, thereby resulting in higher impairments. In Zimbabwe, the liquidity crunch is putting significant strain on a number of corporate and hence their ability to service their facilities as they fall due,” Munatsi said.
He said as a result the non perfoming loans ratio deteriorated to 9,2% from 6,6% in 2011.
Non-interest income was up by 69% to BWP552million due to increased retail outlets and other distribution channels. Operating expenses stood at BWP869million due to increased rollout of retail banking products and increased footprint.
The group’s balance sheet grew by 46% to BWP13,4 billion as at December 31,2012 compared with the same comparative period.
