ABC Holdings (ABCH) has recorded a 41% decline in pre-tax profit to 100 million Botswana pula in the half year ended June 30 2014, weighed down by declining income and rising impairments on non-performing loans.
In the same period last year, pre-tax profit stood at BWP169 million.
In August, Atlas Mara completed acquisition of 95,8% shareholding in ABCH, the pan-African banking group with operations in Zimbabwe, Zambia, Botswana, Mozambique and Tanzania.
Atlas Mara — co-founded by ex-Barclays Plc chief executive officer Bob Diamond and billionaire Ashish Thakkar — has made an offer for the remaining 4,2% shareholding to wholly own the group and delist from the Zimbabwe and Botswana stock exchanges.
ABCH’s total income declined to BWP683 670 000 from BWP701 326 000.
Net impairments increased to BWP152 million in the six months to June 30 from BWP146 million in the same period last year as non-performing loans in the group went up.
In a statement according the group’s financial results, ABCH said BancABC Zimbabwe had the lion share of impairment charge.
“The group continued to have an increase in non-performing loans mostly from the Zimbabwean market which has had liquidity constraints that limited the ability of most corporates from repaying their debts on time,” it said.
“BancABC Zimbabwe constituted 42% of the loan impairment charge with the balance shared almost equally among BancABC Botswana, BancABC Mozambique and BancABC Zambia.”
Gross non-performing loans increased to 14,9% as at June 30 2014 from 9,8% as at December 31 2013.
It said non-performing loans were 8,7% as at June 30 2014.
The group said it took a decision to curtail lending in Botswana during the first quarter of this year.
It said tough economic conditions in Zimbabwe meant that it had to be “very conservative on lending, hence the low growth in loans and advances”.
BancABC Zimbabwe’s attributable profit of BWP69 million was 42% higher than BWP48 million achieved in the prior year.
It said the Zimbabwean unit continued growing all its major income streams despite the tough operating environment in that market which has seen the liquidity crunch continue to worsen.
“Despite the challenging operating environment, net interest income increased by 22% from BWP182 million in 2013 to BWP222 million in the current period on the back of the growth in the higher yielding consumer loan book and lower cost of funds as growth in other asset categories was restricted due to increasing bad debts in the economy,” ABCH said.
BancABC Zimbabwe’s loan book declined marginally from BWP3,1 billion in June 2013 to BWP3 billion in June 2014. The loan book was BWP3,1 billion in December 2013.
Deposits, however, increased to BWP3 billion in June 2014 from BWP2,3 billion in June 2013.
Gross non-performing loans peaked to 25% in June 2014 from 9,1% in the same period last year.
The group said the increase was “a reflection of the difficulty that the whole financial services industry is going through”.
Impairment charges increased from BWP57 million in prior year, which was mostly from one client, to BWP64 million in the current period from a diverse number of different clients.
“Management is determined to reduce impairments through both collection on delinquent customers as well as restricting lending primarily to industry leaders in each sector,” ABCH said.
Non-interest income grew by 16% from BWP99 million in the prior year to BWP115 million in the current period from increased volumes of retail transactions.