BancABC 2010 Group Results Please In Watershed Year
15-03-2011

BancABC, the Banking Group with operations in Botswana,Mozambique, Tanzania, Zambia and Zimbabwe, today announced strong full year audited results for the year ended December 31,2010.

Commenting on the results, Mr. Doug Munatsi, Group CEO for the BancABC Group, said, "2010 was a year of major achievement for the BancABC Group because our operating profit increased fourfold to BWP111 million up from BWP26 million and for the first time in our history, all our banking subsidiaries recorded strong profits. Even the Zambian operation which stumbled in 2009 was successfully turned-around and posted solid profits. The quality of earnings improved, with the majority of income generated from core banking activities. This contrasted strongly to 2009 and prior years when non-recurrent income contributed significantly to the profitability of the business."

Net interest income increased 67% to BWP298 million as both loans and advances and net interest margin improved. All operations, with the exception of BancABC Mozambique recorded an improvement in net interest income. Non-interest income was flat, notwithstanding the fact that in 2009 interest-income was boosted by non-recurring income as a result of significant gains realised on disposal of the equity portfolio in Zimbabwe. Income from money market and foreign exchange trading together with fees and commissions increased significantly during the year, while non-recurrent income reduced significantly.

The Group has been successful in reigning-in loan impairments which reduced by 69% to BWP16 million. This was largely on the back of improved credit monitoring as well as the improved economic environment across the foot print. Cost to income ratio was down by 5 percentage points from 82% to 77%. However, operating expenses increased by 19% to BWP435 million following dollarization in Zimbabwe as well as an increase in retail expenses as the Group continues to expand this segment.

The overall balance sheet size increased by 36% from 4.4 billion, with deposits increasing 46% to BWP4.9 billion and loans and advances increasing 54% during the year to BWP3.1 billion. Deposit growth was across all the markets with  accelerated growth in BancABC Botswana and BancABC Zimbabwe. All banking subsidiaries registered growth in loans and advances, with the exception of BancABC Tanzania, as management focused on collections and rehabilitation of non-performing loans. Group-wide the quality of the loan book continues to improve as evidenced by the reduction in non-performing loans from 10% to 8%.

The Group has moved steadily towards its objective of becoming a universal bank offering a full range of banking services to clients. It continued expanding and strengthening its presence, and has to date setup 17 retail branches across its foot print. In Zimbabwethe retail business, which has been open for just over 12 months, is profitable. This compares favourably with internal targets which had envisaged a branch becoming profitable 18 to 24 months after establishment.

"What is also gratifying is that we have funded the retail expansion entirely from our own resources. All indications are that our market share in our operating markets will increase on the back of our retail expansion," Mr. Munatsi said.

Notwithstanding the share of loss from associates of BWP20 million, the Group's attributable profit at BWP67 million was 15% ahead of the BWP58 million achieved during the prior financial year.

Turning to the operating environment, Mr. Munatsi said that BancABC had benefitted from the widespread recovery experienced in Sub-Sahara Africa as the economic woes of 2008 and 2009 receded. The countries in which the Group operates benefitted from increased exports as commodity prices recovered strongly during the year.

The Group's well-established wholesale banking business continues to consistently generate higher numbers. The progressive investment in the retail banking space should yield higher returns and positive contributions within the next two to three years, strategically positioning the BancABC Group to achieve its ambitions. The outlook is bright, and to raise the Group's operations to the next level, the Board and Management are actively seeking to raise additional capital. In this regard, further announcements will be made in due course.

The Board also advised that after the end of the financial year,African Development Corporation (ADC), a Mauritius-registered company had acquired a 20% stake in the Company. The Group should benefit from ADC's extensive European investor network.

The Directors declared a final dividend of 10 thebe per share.

About BancABC

BancABC's parent company is ABC Holdings Limited. The company is registered in Botswana, has a primary listing on the Botswana Stock Exchange and a secondary listing on the Zimbabwe Stock Exchange. BancABC operates in Botswana, Mozambique, Tanzania, Zambia and Zimbabwe and has a group services office located in Johannesburg, South Africa.

Historically, BancABC was a merchant bank offering a diverse range of services. These included wealth management, corporate banking, treasury services, leasing, asset management and stock broking. The Group is now expanding into the retail space.

BancABC's vision is to become Africa's preferred banking partner by offering world-class financial solutions.