ALLIED Bank has widened its losses to $4,2 million in the half year ended June 30 from $2,4 million in the same period last year attributed to a decline in operating income and a rise in interest expenses.
Operating income nose-dived to $291 001 in the period under review from $2 344 999 in the prior period last year led by declines in net interest income and fees and commission income.
Net interest income was in the red at -$463 874 after the bank got $186 096 in interest paid on loans. It paid out $649 970 as interest on deposits and other investments.
In the same period last year, the bank recorded a net interest income of $120 620.
Fees and commission income fell to $730 070 from $2 168 065 recorded in the prior period last year.
Allied’s return on average assets ratio for the period under review was 1,47%.
The benchmark ratio should be below 1%.
The ratio shows that the bank has not been efficiently utilising assets to generate cash.
The bank cut its operating expenses which came down to
$4 779 235 in the period under review from $5 075 045 in the prior year.
In the statement accompanying the bank’s financial results, board chairman Farai Mutamangira said recapitalisation initiatives would result in the injection of capital into the bank.
“The bank and its shareholders’ efforts initiated in the first quarter of 2014 will see the first tranche of 25% of capital being booked in the third quarter of 2014 with the remaining 75% expected in the fourth quarter of 2014,” Mutamangira said.
“This will be followed up with significant credit lines in the first quarter of 2014.”
Mutamangira said the turnaround strategy embarked on in the first quarter targeting the rationalisation and optimisation of the bank’s resources was on course with early green shoots expected to start showing in the third quarter through to the last leg of the year.
A Mauritian investor is eyeing a controlling stake in the bank
that would reduce the shareholding of Transport and Infrastructural Development minister Obert Mpofu. In 2012, Mpofu’s investment vehicle Trebo & Khays rescued the bank from collapse after moving in an asset-backed transaction.
In his maiden monetary policy statement last week, Reserve Bank governor John Mangudya said Allied, alongside Tetrad, AfrAsia and Metbank, was under the monetary authorities’ watch as the quartet was facing liquidity challenges.
“The board and senior management are working on various capital-raising initiatives including engaging the major shareholder to raise funds to bolster the institution’s capital and liquidity position,” he said.