Download BWP `000s Jun-2010 Jun-2009 % change Dec-2009

BancABC Interim Financial Results 2010
25 August 2010
HIGHLIGHTS
Financial Highlights
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3
Total income up 29% to BWP251 mill (H109: BWP194 mill)
Net operating income up 80% to BWP45 mill (H109: BWP25 mill)
Attributable profit of BWP28 mill (H109: BWP36 mill)
– Share of associate loss
– Tax charge in H110 vs. tax credit in H109
Impairments down 59% to BWP17 mill (H109: BWP41 mill)
Cost : income down from 82% at year end to 77% (H109: 72%)
Deposits up 41% and 23% compared to H109 and H209
Total assets increased to BWP5.1 billion, 25% and 16% up from
H109 and H209
Average return on equity positive at 14% (H109: 16%)
Operational Highlights
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4
Six Retail Banking branches opened in Dar es Salaam,
Gaborone, Bulawayo, Harare and Chimoio
Looking at opening an additional eight new branches
before year end
Zimbabwe head count right sized
BancABC Zambia now profitable and Microfin merger
yielding synergistic benefits
Improved credit risk management reduces impairments
ECONOMIC OVERVIEW
Economic Overview
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IMF projects global GDP growth to reach 4.2% in 2010
(09: -0.8%):
– Growth driven primarily by Asia
– Western economies remain sluggish
Economic and business environment in SADC region has
improved, growth mainly driven by recovery in commodity
prices
Down-side risks to global economic recovery still exist due
to:
– Sovereign debt crisis in Europe and Middle-East
– Austerity measures reducing demand in developed
economies
– Asset price bubbles in some emerging markets
6
Economic Growth Trends
%
Zimbabwe
8
6
4
2
0
10
09
08
2007
10
09
08
2007
10
09
08
2007
10
09
08
2007
10
09
08
2007
-2
-4
-6
Botswana
Mozambique
Tanzania
Zambia
-8
-10
Average…
-12
-14
7
Source: IMF
2010 Monthly Inflation Trends
20.0
15.0
10.0
5.0
0.0
-5.0
Bots
Tanz
Moz
Zamb
Zimb
SA
Apr
May
Jun
-10.0
Jan
Feb
Mar
Source: Central Banks, Ministries of Finance and Central Statistics Offices
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8
Relatively stable inflation other than in Mozambique where rate worsened
rapidly from 5% at start of the year to 14.5% by mid-year.
9
BancABC PRESENTATION 10 MARCH 2010
16
20
12
15
8
10
4
5
0
0
Source: Respective Central Banks
May-10
B.o.Z Rate
Jan-10
Zambia
30
91-dy tb
May-10
Jan-10
Sep-09
May-09
Jan-09
Sep-08
91 day TB
Sep-09
May-09
Jan-09
Sep-08
May-08
Jan-08
Sep-07
May-07
20
May-08
25
Jan-08
Sep-07
91-dy Tbill
May-07
Tanzania
Jan-07
6
Jan-07
3m BoBC
Sep-06
10
Sep-06
12
May-06
16
May-06
18
Jan-06
May-10
Jan-10
Sep-09
May-09
Botswana
Jan-06
Jun-10
Feb-10
Overnight rate
Oct-09
Jun-09
Jan-09
Sep-08
May-08
Prime rate
Feb-09
Oct-08
20
Jun-08
Jan-08
Sep-07
May-07
Jan-07
Bank rate
Feb-08
Oct-07
Jun-07
Sep-06
May-06
Jan-06
8
Feb-07
Oct-06
Jun-06
Interest Rate Profiles
Mozambique
Overnight
16
14
12
8
4
Exchange Rate Developments
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10
Local currencies in our markets have generally
depreciated against the USD and BWP during the period
Mozambican Meticais had the worst depreciation of 25%
against the USD and 19% against the BWP
This had some adverse impact on reported results for the
subsidiary
Against the USD, the Zambian Kwacha depreciated 11%,
Tanzanian Shilling depreciated by 5% and the Botswana
Pula by 6%
Against the BWP, the Tanzanian Shilling marginally
appreciated by 1% whilst the Zambian Kwacha
depreciated by 5%
Banking Sector Deposits and Loans
Banking Sector Total Deposits
(US$m)
Banking Sector Loans to the
Private Sector (US$m)
Bots
Moz
Tanz
Zam
Zim
Dec-07
2,236
1,306
2,594
1,351
99
313
Dec-08
2,281
1,795
3,559
1,635
140
2,680
1,381
Dec-09
2,963
2,597
3,763
1,586
636
2,745
1,832
May-10
2,908
2,363
3,832
1,524
1,012
Bots
Moz
Tanz
Zam
Zim
Dec-07
5,214
2,460
4,211
2,435
580
Dec-08
5,046
2,835
4,702
2,354
Dec-09
5,574
3,418
5,476
May-10
5,464
3,024
5,537
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11
The markets continue to be attractive and have generally been growing
in the recent past
Opportunities exist to enter new market segments in each country
The Tanzania and Botswana markets continued being the largest
Zimbabwe has rapidly grown in the 2009-2010 period
Source: Respective Central Banks
FINANCIAL REVIEW
Income Statement
BWP’000s
H1-2010
%∆
H1-2009
FY-2009
Net interest income
146,815
87%
78,684
178,394
Impairment of loans &
advances
-16,996
59%
-40,969
-51,218
Net interest income
after impairments
129,819
244%
37,715
127 176
121,622
-22%
156,542
265,017
Total income
251,441
29%
194,257
392,193
Operating expenditure
-205,967
-22%
-169,211
-365,694
Net income from
operations
45,474
82%
25,046
26,499
Share of (loss)/profits
of associates
-11,479
-1157%
-913
16,164
Profit before tax
33,995
41%
24,133
42,663
-5,269
-141%
12,757
15,768
28,726
-22%
36,890
58,431
28,076
-23%
36,494
58,117
- Minorities
650
64%
396
314
EPS (thebe)
19.5
-23%
25.4
40.4
Non interest income
Tax
Profit for the year
Attributable to:
- Ordinary shareholders
13
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Performance primarily
driven by growth in net
interest income and
reduction in impairments
Opex increased mainly
because of Zimbabwe
post dollarisation
Zimbabwe costs up 138%
and accounts for 17% of
the 22% YoY increase in
expenses
Income Statement (USD)
USD’ 000’s
H1-2010
%∆
H1-2009
FY-2009
Net interest income
21,241
98%
10,703
25,176
Impairment of loans &
advances
(2,459)
56%
(5,573)
(7,228)
Net interest income
after impairments
18,782
266%
5,130
17,948
17,597
-17%
21,294
37,402
Total income
36,379
38%
26,424
55,350
Operating expenditure
(29,800)
-29%
(23,018)
(51,610)
6,579
93%
3,406
3,740
(1,661)
-1240%
(124)
2,281
4,918
50%
3,282
6,021
(762)
-144%
1,735
2,225
4,156
-17%
5,017
8,246
4,062
-18%
4,964
8,202
- Minorities
94
77%
53
44
EPS (cents)
2.8
-20%
3.5
5.7
Non interest income
Net income from
operations
Share of (loss)/profits
of associates
Profit before tax
Tax
Profit for the year
Attributable to:
- Ordinary shareholders
14
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Performance primarily
driven by growth in net
interest income and
reduction in impairments
Opex increased mainly
because of Zimbabwe
post dollarisation
Zimbabwe costs up 138%
and accounts for 17% of
the 22% YoY increase in
expenses
Attributable Profit Trends
BWP m
Attributable profit (BWP m) and ROE (%)
80
70
60
50
40
30
20
10
0
40%
28%
18%
31
15
74
16%
30%
14%
20%
28
10%
36
23
0%
Jun-06
›
50%
39%
Jun-07
Jun-08
Attributable profit (BWP m)
Jun-09
Jun-10
ROE (%)
Lower profit after tax in current year not reflective of real
performance
– Disposal of profitable investments reduces income from associates
– Prior year tax credit
Income Statement – Segmental Analysis
Attributable Profit
BWP 000’s
2010
% Cont
2009
BancABC Botswana
11,147
40%
5,939
16%
88%
BancABC Mozambique
13,350
47%
17,475
48%
(24%)
BancABC Tanzania
5,893
21%
1,678
5%
251%
BancABC Zambia
7,547
27%
(12,669)
-35%
160%
BancABC Zimbabwe
7,374
26%
2,133
6%
246%
Banking operations
45,311
161%
14,556
40%
211%
Head office
(17,235)
-61%
21,938
60%
(179%)
28,076
100%
36,494
100%
(23%)
TOTAL
16
% Cont % change
Income Statement – Segmental Analysis (USD)
Attributable Profit
USD 000’s
2010
% Cont
2009
BancABC Botswana
1,613
40%
816
16%
98%
BancABC Mozambique
1,932
47%
2,402
48%
-20%
853
21%
231
5%
270
BancABC Zambia
1,092
27%
(1,742)
-35%
163%
BancABC Zimbabwe
1,067
26%
293
6%
264%
6,556
161%
2,001
40%
228%
(2,494)
-61%
3,016
60%
-183%
4,062
100%
5,017
100%
-19%
BancABC Tanzania
Banking operations
Head office
TOTAL
17
% Cont % change
Income Statement – Net Interest Income
BWP '000
Net Interest Margin
200,000
10.0%
150,000
8.0%
6.0%
100,000
4.0%
50,000
-
2.0%
Jun-06
Jun-07
Jun-08
Jun-09
Jun-10
0.0%
Net int BWP'000
NIM before impairments
NIM after impairments
› Positive trend in net interest income driven by increased margins, better
liquidity and increased balance sheet size
› Recovering economic environment and improved credit risk management
reduced impairments
› Zimbabwe contribution to net interest income growing (12% vs 3% in H1:09)
18
Income Statement – Segmental Analysis
Net Interest Income
2010
2009
% change
BancABC Botswana
23,076
16,871
37%
BancABC Mozambique
15,575
21,475
(27%)
BancABC Tanzania
22,416
14,189
58%
BancABC Zambia
32,512
32,377
0.4%
BancABC Zimbabwe
18,015
2,630
585%
111,594
87,542
27%
35,221
-8,858
398%
146,815
78,684
87%
Banking operations
Head office
TOTAL
19
Income Statement – Impairments & NPLs
12%
3.0%
10%
2.5%
8%
2.0%
6%
1.5%
4%
1.0%
2%
0.5%
0%
0.0%
2006
2007
Gross NPL ratio
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20
2008
Net NPL ratio
2009
2010
Credit loss ratio
Trend of impairments and credit loss ratio is declining
Net NPLs covered by collateral
Overall NPLs have now stabilised
Credit loss ratio
NPL ratios
NPL and Credit Loss Ratios
Income Statement – Non-Interest Income
100%
80%
60%
40%
20%
0%
Jun-06
Fees & comms
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Jun-07
Forex trading
Jun-08
Gains on investments
Jun-09
Jun-10
FV gains - Inv Prop
Other
Bulk of equity investments disposed of in 2009, hence no mark-to-market gains
Overall quality of non-interest income improving – greater portion of earnings are
now recurring
Trading, fee and commission income increasing whilst gains on equity investments
are declining
21
Income Statement – Cost to Income Ratio
90%
82%
80%
72%
77%
70%
60%
50%
59%
49% 49%
47%
47%
50%
40%
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Cost to income ratio declining with retail costs stabilising and other expenses
stabilising in Botswana, Mozambique and Tanzania and declining in Zambia
Zimbabwe costs up post dollarisation - now normalising; hyper-inflation in the past
Head office no longer charging management fees from 2009
Retail costs were 13% or BWP27 mill of total expenses (09:10% or BWP18 mill)
Going forward, Retail Banking to contribute positively, decreasing C:I ratio
Target C:I ratio remains 50%
22
Income Statement – Staff Costs
800
Staff Complement
Wholesale
Retail
600
400
200
-
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23
Total head count in 2010 of 612 vs 561 in 2009
Growth in staff numbers in last 12 months mainly attributable to retail
expansion
BancABC Zambia staff numbers declined from 147 in June 2009 to
125 in June 2010 following Microfin merger
Retail Banking Capex
USD ‘000
BWP ‘000
Branch capital expenditure
5,768
40,780
Systems roll-out
4,449
31,454
Data centre centralisation
3,478
24,589
13,695
96,823
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24
Group has incurred bulk of costs on retail roll-out
All IT systems expected to be in place by year end
Incremental capital expenditure to be driven by number of branches
opened in subsequent periods
Balance Sheet
Jun-2010
Jun-2009
%
change
Dec-2009
717,669
615,471
17%
881,884
1,423,014
748,819
90%
880,740
4,133
72,033
-94%
17,905
2,341,744
2,163,487
8%
1,995,325
Property and equipment
302,612
185,245
63%
278,975
Other assets
332,351
298,026
12%
362,916
5,121,523
4,083,081
25%
4,417,745
4,132,382
2,924,733
41%
3,355,118
Borrowed funds
471,634
553,789
-15%
543,822
Other liabilities
81,101
82,457
-2%
103,026
4,685,117
3,560,979
32%
4,001,966
420,189
505,281
-17%
399,069
16,217
16,821
-4%
16,710
436,406
522,102
-16%
415,779
5,121,523
4,083,081
25%
4,417,745
BWP '000s
Cash and short term funds
Financial assets held for trading
Financial assets designated at fair value
Loans and advances
TOTAL ASSETS
Deposits
Total liabilities
Equity attributable to ordinary shareholders
Minority interest
Total equity
TOTAL EQUITY AND LIABILITIES
25
Balance Sheet (USD)
Jun-2010
Jun-2009
%
change
Dec-2009
Cash and short term funds
101,514
91,028
12%
132,194
Financial assets held for trading
201,285
110,750
82%
132,023
585
10,654
-95%
2,684
331,240
319,980
4%
299,099
Property and equipment
42,805
27,398
56%
41,818
Other assets
47,012
44,079
7%
54,401
724,441
603,889
20%
662,219
584,525
432,568
35%
502,932
Borrowed funds
66,713
81,905
-19%
81,519
Other liabilities
11,473
12,197
-6%
15,443
662,711
526,670
26%
599,894
59,436
74,731
-20%
59,820
2,294
2,488
-8%
2,505
61,730
77,219
-20%
62,325
724,441
603,889
20%
662,219
USD '000s
Financial assets designated at fair value
Loans and advances
TOTAL ASSETS
Deposits
Total liabilities
Equity attributable to ordinary shareholders
Minority interest
Total equity
TOTAL EQUITY AND LIABILITIES
26
Balance Sheet – Overview
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Deposits up 41% and 23% relative to H109 and H209
respectively
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Loans and advances up 8% and 17% relative to H109 and H209
respectively
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27
Growth across all the markets
BancABC Zimbabwe had highest rate of growth off a low base
Growth significantly from Zimbabwe as economy stabilised
Cautious approach to lending was exercised in other markets
Lending in Mozambique constrained by interest rate movements
during the period
Total assets of BWP5.1 billion, an increase of 25% and 16%
relative to H109 and H209 respectively,
Balance Sheet – Loans and Advances
›
ABCH
10%
Bots:28%
Zim 15%
›
Zam 11%
Moz:15%
›
Tnz 21%
BancABC Botswana continued
being largest contributor to
Group’s loan book
BancABC Zimbabwe’s
contribution grew rapidly on
back of economic stability
Loan book is stable
Net Loans and Advances
2,500
2,163
2,000
1,995
1,621
1,500
1,000
2,342
1,084
766
500
28
Jun-06
Jun-07
Jun-08
Jun-09
Dec-09
Jun-10
Balance Sheet – Deposits
›
Deposits (BWP m)
5,000
4,132
4,000
3,000
2,000
1,380
1,800
2,281
2,925
3,355
›
1,000
Jun-06 Jun-07 Jun-08 Jun-09 Dec-09 Jun-10
Zim14%
Zam 6%
Bots 43%
Tnz 19%
29
Moz18%
›
›
Growth in deposits across
footprint
Additional funds generated
invested mostly in shortterm financial instruments
BancABC Botswana still
the largest contributor
BancABC Zimbabwe’s
contribution to deposits
growing
Balance Sheet – Capital Adequacy
Total capital (BWP m)
Subsidiary
Jun 10
Jun 09
Min
2010
2009
BancABC Botswana
166
120
15%
22%
17%
BancABC Mozambique
135
157
8%
18%
22%
BancABC Tanzania
133
130
12%
14%
12%
83
59
10%
30%
14%
113
98
10%
14%
31%
BancABC Zambia
BancABC Zimbabwe
›
›
30
Capital Adequacy Ratio
All entities are adequately capitalised
Zambia re-capitalised by injection of US $6 mill in tier II
capital and conversion of US $5 mill of existing tier II into
tier I capital
OPERATIONAL OVERVIEW
Botswana
›
›
›
›
›
32
Economy stabilising and is now growing following
recovery in diamond prices
PAT improved 84% to BWP11 mill
Positive performance driven by increased net interest
margins, on a larger balance sheet coupled with reduction
in impairment charge
Non-interest income declined by 22% to BWP17 mill
following reduction in forex trading volumes and margins
Operating expenses were flat on prior year
Mozambique
›
›
›
›
›
33
Economy experienced high volatility in interest and
exchange rates during the period
PAT declined by 24% to BWP13 mill on account of
increased tax rate from 16% to 32% following expiry of
fiscal benefits
Interest rate volatility negatively affected interest margins
leading to reduction in net interest income by 27% to
BWP16 mill
However, forex trading income increased on the back of
increased volume of transactions
Operating expenses increased by 7% to BWP29 mill in line
with retail expansion
Tanzania
›
›
›
›
›
›
34
High exchange rate volatility experienced towards period
end, but economy is stable
BancABC Tanzania’s liquidity position continued to improve
leading to higher net interest income
Non-interest income also increased 59% to BWP19 mill
from increased forex transactions and bond trading
Impairment charge increased 77% to BWP10 mill
following classification of a few but large accounts
Expenses increased 24% to BWP23 mill mostly from retail
expansion related costs
PAT none-the-less increased 165% to BWP7 mill
Zambia
›
›
›
›
›
›
35
BancABC Zambia has now stabilised and is profitable
Subsidiary was re-capitalised during the period
Recorded a PAT of BWP7.5 mill compared to a loss of
BWP13 mill in prior year
Impairments declined to BWP3 mill from BWP22 mill in
the prior period.
Operating expenses declined by BWP4 mill as a result of
synergies arising out of the merger of the bank and
microfinance unit
Subsidiary is now on strong footing to grow business
going forward
Zimbabwe
›
›
›
›
›
36
Economy growing following end of hyper-inflation in Feb
2009
Subsidiary has been able to grow its income by 195% to
BWP59 mill
Both loans and deposits increased markedly
However, expenses increased 138% to BWP49 mill largely
due to an increase in staff costs
PAT increased 246% to BWP7 mill
Retail Banking Update
›
›
›
›
37
Six new branches opened up to half-year
– One each in Botswana, Mozambique and Tanzania
– Three in Zimbabwe
Expecting to open a further 8 branches by year-end
All IT systems to be fully operational by year-end
Retail has started contributing to the Group’s income
stream
OUTLOOK
Outlook
›
›
›
›
›
39
Economies generally stable in operating countries
Both Retail and Wholesale units expected to do well in the
second half
Head Office costs continue to be a challenge although
stabilising
Impairments now under control which bodes well for the
Group going forward
Would like to start paying dividends in the near term
APPENDIX
Exchange Rate Developments
Movement in Exchange Rates vs.
the USD (End Period)
Movement in Exchange Rates vs.
Botswana Pula (End Period)
Bots
Moz
Tanz
Zam
RSA
Moz
Tanz
Zam
RSA
BWP/US$
MZN/US$
TZS/US$
ZMK/US$
ZAR/US$
BWP/MZN
BWP/TZS
BWP/ZMK
ZAR/BWP
Dec-07
6.01
23.66
1,147
3,845
6.80
Dec-07
3.94
190.85
639.77
0.88
Dec-08
7.52
25.09
1,280
4,832
9.36
Dec-08
3.34
170.21
642.55
0.80
Dec-09
6.67
27.51
1,326
4,641
7.40
Dec-09
4.12
198.80
695.80
0.90
Mar-10
6.79
27.79
1,345
4,704
7.37
Mar-10
4.09
198.09
692.78
0.92
Apr-10
6.80
34.16
1,358
4,743
7.34
Apr-10
5.02
199.71
697.50
0.93
May-10
7.05
33.73
1,390
5,002
7.61
May-10
4.78
197.16
709.50
0.93
Jun-10
7.06
34.51
1,394
5,156
7.64
Jun-10
4.89
197.45
730.31
0.92
Source: BancABC
41
BancABC PRESENTATION 10 MARCH 2010
Banking Sector Deposits and Loans
Banking Sector Total Deposits
Banking Sector Loans to the
Private Sector (US$m)
(US$m)
Bots
Moz
Tanz
Zam
Zim
Dec-07
5,214
2,460
4,211
2,435
580
Dec-08
5,046
2,835
4,702
2,354
Mar-09
4,429
2,754
4,739
Jun-09
5,417
2,931
Sep-09
5,601
Dec-09
Bots
Moz
Tanz
Zam
Zim
Dec-07
2,236
1,306
2,594
1,351
99
313
Dec-08
2,281
1,795
3,559
1,635
140
2,059
400
Mar-09
2,283
1,856
3,498
1,535
118
4,902
2,217
710
Jun-09
2,636
1,987
3,585
1,544
267
3,066
5,300
2,496
970
Sep-09
2,861
2,229
3,675
1,668
455
5,574
3,418
5,476
2,680
1,381
Dec-09
2,963
2,597
3,763
1,586
636
Jan-10
5,462
3,485
5,582
2,663
1,406
Jan-10
2,937
2,639
3,732
1,555
759
Feb-10
5,336
3,455
5,608
2,690
1,546
Feb-10
2,947
2,627
3,759
1,533
802
Mar-10
5,461
3,469
5,608
2,783
1,689
Mar-10
3,076
2,682
3,810
1,541
940
Apr-10
5,678
3,004
5,758
2,873
1,752
Apr-10
3,115
2,299
3,929
1,534
937
May-10
5,464
3,024
5,537
2,745
1,832
May-10
2,908
2,363
3,832
1,524
1,012
Source: Respective Central Banks
42
BancABC PRESENTATION 10 MARCH 2010
Income Statement – Net Interest Margins
BancABC Botswana
4.0%
BancABC Mozambique
10.0%
10.0%
5.0%
2.0%
BancABC Tanzania
5.0%
0.0%
2006
0.0%
2006
2007
2008
2009
2010
2008
2009
2010
BancABC Zambia
2006
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
20.0%
10.0%
0.0%
2007
2008
2009
2010
NIM before impairments
NIM after impairments
BancABC PRESENTATION 10 MARCH 2010
2007
2008
2009
2010
NIM before impairments
NIM after impairments
BancABC Zimbabwe
30.0%
2006
0.0%
NIM before impairments
NIM after impairments
NIM before impairments
NIM before impairments
NIM after impairments
43
2007
Consolidated
10.0%
5.0%
0.0%
2006
2007
2008
2009
NIM before impairments
NIM after impairments
2010
2006
2007
2008
2009
NIM before impairments
NIM after impairments
2010
Income Statement – Opex by Operation
60,000
50,000
BWP '000
40,000
30,000
20,000
10,000
-
Jun-06
44
Jun-07
BancABC PRESENTATION 10 MARCH 2010
Jun-08
Jun-09
Jun-10