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BancABC Half Year Financial Results 2011 17 August 2011

BancABC Half Year Financial Results 2011 17 August 2011. AGENDA. Highlights Economic overview Financial review Operational overview Strategy and outlook. HIGHLIGHTS. Beki Moyo. Financial Highlights. Total income increased by 24 % to BWP311 million.

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BancABC Half Year Financial Results 2011 17 August 2011

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  1. BancABC Half Year Financial Results 201117 August 2011

  2. AGENDA Highlights Economic overview Financial review Operational overview Strategy and outlook

  3. HIGHLIGHTS Beki Moyo

  4. Financial Highlights • Total income increased by 24 % to BWP311 million • Cost to income ratio down to 72% from 77% in prior year • Operating expenses up by 18% • Operating profit increased by 48% to BWP67 million • Pre-tax profit up by 84% to BWP63 million • Attributable profit to shareholders increased by 33% to BWP37 million • Basic earnings per share improved by 33% to 25.9 thebe from 19.5 thebe in 2010 BancABC Half Year Financial Results 2011

  5. Financial Highlights (cont’d) • Balance sheet grew by 23% from BWP6 billion in Dec 2010 to BWP7.4 billion (US$1.1 billion) • Loans and advances increased by 31% from BWP3.1 billion in Dec 2010 to BWP4 billion • Customer deposits grew by 23% from BWP4.9 billion in Dec 2010 to BWP6 billion • Net asset value per share up from BWP2.87 to BWP3.09 • Return on average equity was 17% compared to 14% in 2010 BancABC Half Year Financial Results 2011

  6. Operational Highlights • Total retail branches increased to 21 as of now compared to 13 in June 2010 • US $50 million line of credit approved by Afrexim board • Draw-down of IFC convertible loan of US$13.5m on 13th May 2011 • NPLs down from 9.4% in June 2010 to 5.5% 6 BancABC Half Year Financial Results 2011

  7. ECONOMIC OVERVIEW Beki Moyo

  8. High oil & food prices • Rising demand pressures Economic Overview • Multi-speed global economic recovery continuing amid increasing risks • Increased Inflation

  9. Economic Overview • Devastating earthquake & Tsunami in Japan • Multi-speed global economic recovery continuing amid increasing risks • Debt crisis in Eurozone & US • Unrest in the MENA region – war in Libya • Negative Surprises

  10. Economic Overview • Multi-speed global economic recovery continuing amid increasing risks • In developed countries • Economic growth somewhat subdued • Unemployment remains high • Worries over debt sustainability & contagion effect

  11. Economic Overview • Multi-speed global economic recovery continuing amid increasing risks • In emerging markets • Capital inflows have been strong • Currencies have appreciated • Strong signs of overheating

  12. Economic Overview • Multi-speed global economic recovery continuing amid increasing risks • In sub-Saharan Africa (SSA) • Economic growth has been strong • High commodity prices a boon to regional countries • Inflation pressures building

  13. US was downgraded by S&P from a top-notch AAA rating to AA+ Looming Financial Crisis due to Identical US - EU Debt Challenges Economic Overview • Fears of Eurozone debt crisis Spreading to Italy & Spain – threat stability of € • Market jittery resulting in sell-off of risky assets • Investors have been seeking refuge in safe havens – Gold, Swiss Franc, etc.. • Developments similar to the start of the 2008-2009 credit crisis

  14. Economic Overview GDP Growth by Region

  15. Commodity Prices % Change Jun-10 to Jun-11 Firm commodity prices providing impetus to growth in commodity-driven Economies

  16. Economic Growth (%) & Size (USD m) Economic growth from crisis induced slowdown is underway Growth in most countries is fairly close to high levels of the mid-2000s

  17. Economic Overview - Inflation • International food prices have doubled • Fuel prices have surged • Inflation pressures are elevated

  18. GDP, Deposits & Credit Per Capita * As of Dec-10

  19. Policy Interest Rates Monetary Policy Tightening Monetary policies broadly accommodative except in Moz

  20. On annual basis the following currencies appreciated vs USD: • MZN: 16.9% • ZAR: 11.2% • BWP: 7.5% • ZMK: 6.1% Exchange Rate Movement vs. USD TZS depreciated vs USD by 14.7% Continued weakening of TZS a major cause of concern – imported inflation

  21. Exch. Rates Movement vs. Pula Jun-10 to Jun-11 Depreciation Appreciation

  22. Banking Sector Status as of Apr-11

  23. FINANCIAL REVIEW Beki Moyo 23

  24. Income Statement • Performance primarily driven by growth in net interest income and non-interest income • Impairments up due to loan growth and downgrading of security in Tanzania • Opex increased in line with increased span of activity • However, cost to income ratio down from 77% in 2010 to 72% 24

  25. Income Statement (USD) • Performance primarily driven by growth in net interest income and non-interest income • Impairments up due to loan growth and continued impairment of security for NPLs in Tanzania • Opex increased in line with increased span of activity • However, cost to income ratio down from 77% in 2010 to 72% 25

  26. Attributable Profit Trends • Improvement in sustainable earnings (NII, fees and commissions) • Current period profitability driven by: • Higher net interest income from better margins and higher asset base • Higher transactional and bond trading income • Profitability was negated by: • Lower trading income in Zambia and Mozambique • Higher effective tax rate compared to prior year 26

  27. Income Statement – Segmental Analysis 27

  28. Income Statement – Segmental Analysis (USD) 28

  29. Income Statement – Segmental Analysis Strong growth in income other than for Mozambique and head office entities 29

  30. Income Statement – Segmental Analysis Income growth from both the retail and wholesale lines of business 30

  31. Income Statement – Net Interest Income • Positive trend in net interest income driven by better liquidity and increased balance sheet size • Slight reduction in net interest margins although still high at 6.5% 31

  32. Net interest margins by entity Net Interest Margin Before Impairments Net Interest Margin After Impairments 32

  33. Income Statement – Segmental Analysis Strong growth in NII other than from head office entities 33

  34. Income Statement – Impairments & NPLs • Impairment and credit loss ratios declined due to improved credit risk management processes • Tanzania net NPLs down to 1.3% from 5.3% in prior year due to increase in provisions • Zimbabwe impairments increased from an increased book • Net NPLs now 1.9% from 2.9% in prior year 34

  35. Income Statement – Non-Interest Income • Substantial growth in fees and commissions as customer transactions increased • Bond trading income also increased, but trading income down in Mozambique and Zambia • Zimbabwe and Tanzania were main contributors to growth in non-interest income 35

  36. Income Statement – Cost to Income Ratio 36

  37. Income Statement – Opex by entity 37

  38. Income Statement – Segmental Analysis Growth in costs mostly driven by expansion into the retail and SME market segment 38

  39. Balance Sheet 39

  40. Balance Sheet (USD) 40

  41. Balance Sheet – Overview • 23% growth in balance sheet during the last six months from BWP6bn to BWP7.4bn • Deposits up 23% during the last six months • Growth across all the markets • Significant growth from BancABC Zimbabwe • Loans and advances up 31% during the period • Significant growth in Zimbabwe • Quality of the book has improved - NPL ratio declined 41

  42. Balance Sheet – Loans and Advances • BancABC Zimbabwe is largest contributor to Group’s loan book • Growth experienced in all markets other than Tanzania 42

  43. Balance Sheet – Segmental Analysis Retail contribution has significantly grown in the last 12 months 43

  44. Balance Sheet – Deposits • Growth in deposits experienced across the footprint • Funds raised predominantly used to fund loans & advances and short-term placements • Botswana still largest contributor to Group deposits • Zimbabwe has second largest contribution 44

  45. Balance Sheet – Segmental Analysis Retail now contributing 15% of total deposits (June 2010: 1%) 45

  46. Balance Sheet – Capital Adequacy • All entities are adequately capitalised 46

  47. OPERATIONAL OVERVIEW Francis Dzanya 47

  48. Operations Summary • 21 Retail branches as of now • Staff compliment now • ABCH Group • 736 Employees • Botswana • Mozambique • Tanzania • Zambia • Zimbabwe • South Africa • BancABC Botswana • 118 Employees • BancABC Mozambique • 103 Employees • BancABC Tanzania • 92 Employees • BancABC Zambia • 152 Employees • BancABC South Africa • 52 Employees • BancABC Zimbabwe • 219 Employees 100% 100% 100% 100% 94% 100%

  49. Retail rollout continuing with a target of at least 30 branches by year-end for the Group • Technology has been a challenge slowing down implementation • Issues being addressed and rollout of key functionality to continue • In-roads made into the wholesale market in all markets and microfinance in Zambia Operations Summary • Significant reduction in Microfin rates following introduction of 48 months loans

  50. Operations Overview – Head Count • Total head count in 2011 of 736 vs 612 in June 2010 • Growth in staff numbers in last 12 months due to retail expansion 50

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