BancABC Interim Financial Results 2010 25 August 2010.
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Transcript of BancABC Interim Financial Results 2010 25 August 2010.
BancABC Interim Financial Results 2010
25 August 2010
HIGHLIGHTS
Financial Highlights
› 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%)3
Operational Highlights
› 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
4
ECONOMIC OVERVIEW
Economic Overview
› 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
7
2007
08
09
10
2007
08
09
10
2007
08
09
10
2007
08
09
10
2007
08
09
10
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
8
Average Gr...
%
BotswanaMozam-bique
Tanza-nia Zambia
Zimbabwe
Source: IMF
2010 Monthly Inflation Trends
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.
Source: Central Banks, Ministries of Finance and Central Statistics Offices
Bots Tanz Moz Zamb Zimb SA
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
Jan Feb Mar Apr May Jun
BancABC PRESENTATION 10 MARCH 2010
Interest Rate Profiles
9
Jan-0
6
May-0
6
Sep-0
6
Jan-0
7
May-0
7
Sep-0
7
Jan-0
8
May-0
8
Sep-0
8
Jan-0
9
May-0
9
Sep-0
9
Jan-1
0
May-1
0
6
8
10
12
14
16
18
Bank rate Prime rate 3m BoBC
Botswana
Source: Respective Central Banks
Jan-0
6
May-0
6
Sep-0
6
Jan-0
7
May-0
7
Sep-0
7
Jan-0
8
May-0
8
Sep-0
8
Jan-0
9
May-0
9
Sep-0
9
Jan-1
0
May-1
0
4
8
12
16
2091 day TB Overnight
Jun-0
6
Oct
-06
Feb-0
7
Jun-0
7
Oct
-07
Feb-0
8
Jun-0
8
Oct
-08
Feb-0
9
Jun-0
9
Oct
-09
Feb-1
0
Jun-1
0
0
4
8
12
16
20Overnight rate 91-dy Tbill
Jan-0
6
May-0
6
Sep-0
6
Jan-0
7
May-0
7
Sep-0
7
Jan-0
8
May-0
8
Sep-0
8
Jan-0
9
May-0
9
Sep-0
9
Jan-1
0
May-1
0
0
5
10
15
20
25
30
B.o.Z Rate 91-dy tb
Mozambique
Tanzania Zambia
Exchange Rate Developments
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
11
Banking Sector Total Deposits (US$m)
Banking Sector Loans to the Private Sector (US$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 2,354 313
Dec-09 5,574 3,418 5,476 2,680 1,381
May-10 5,464 3,024 5,537 2,745 1,832
Bots Moz Tanz Zam Zim
Dec-07 2,236 1,306 2,594 1,351 99
Dec-08 2,281 1,795 3,559 1,635 140
Dec-09 2,963 2,597 3,763 1,586 636
May-10 2,908 2,363 3,832 1,524 1,012
Source: Respective Central Banks
› 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
FINANCIAL REVIEW
Income Statement
13
BWP’000s H1-2010 % ∆
H1-200
9 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
Non interest income 121,622 -22% 156,542 265,017
Total income 251,441 29%194,25
7 392,193
Operating expenditure -205,967 -22%
-169,21
1 -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
Tax -5,269 -141% 12,757 15,768
Profit for the year 28,726 -22% 36,890 58,431
Attributable to: - Ordinary
shareholders 28,076 -23% 36,494 58,117
- Minorities 650 64% 396 314
EPS (thebe) 19.5 -23% 25.4 40.4
› 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)
14
USD’ 000’s H1-2010 % ∆
H1-200
9 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
Non interest income 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)
Net income from operations 6,579 93% 3,406 3,740
Share of (loss)/profits of associates (1,661) -1240% (124) 2,281
Profit before tax 4,918 50% 3,282 6,021
Tax (762) -144% 1,735 2,225
Profit for the year 4,156 -17% 5,017 8,246
Attributable to: - Ordinary
shareholders 4,062 -18% 4,964 8,202
- Minorities 94 77% 53 44
EPS (cents) 2.8 -20% 3.5 5.7
› 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
› Lower profit after tax in current year not reflective of real performance– Disposal of profitable investments reduces income from
associates– Prior year tax credit15
Jun-06 Jun-07 Jun-08 Jun-09 Jun-100
1020304050607080
0%5%10%15%20%25%30%35%40%45%
31 23
74
36 28
28%
18%
39%
16%14%
Attributable profit (BWP m) and ROE (%)
Attributable profit (BWP m) ROE (%)
BW
P m
Income Statement – Segmental Analysis
16
Attributable Profit
BWP 000’s 2010 % Cont 2009 % Cont
% chang
e
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%)
TOTAL
28,07
6 100% 36,494 100% (23%)
Income Statement – Segmental Analysis (USD)
17
Attributable Profit
USD 000’s 2010 % Cont 2009 % Cont
% chang
e
BancABC Botswana 1,613 40% 816 16% 98%
BancABC Mozambique 1,932 47% 2,402 48% -20%
BancABC Tanzania 853 21% 231 5% 270
BancABC Zambia 1,092 27% (1,742) -35% 163%
BancABC Zimbabwe 1,067 26% 293 6% 264%
Banking operations 6,556 161% 2,001 40% 228%
Head office (2,494) -61% 3,016 60% -183%
TOTAL 4,062 100% 5,017 100% -19%
Income Statement – Net Interest Income
› 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
Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 -
50,000
100,000
150,000
200,000
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%Net Interest Margin
BW
P '000
Income Statement – Segmental Analysis
19
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%
Banking operations 111,594 87,542 27%
Head office 35,221 -8,858 398%
TOTAL 146,815 78,684 87%
Income Statement – Impairments & NPLs
› Trend of impairments and credit loss ratio is declining
› Net NPLs covered by collateral
› Overall NPLs have now stabilised
20
2006 2007 2008 2009 20100%
2%
4%
6%
8%
10%
12%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%NPL and Credit Loss Ratios
Gross NPL ratio Net NPL ratio Credit loss ratio
NPL
rati
os
Cre
dit
loss
rati
o
Income Statement – Non-Interest Income
› 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 declining21
Jun-06 Jun-07 Jun-08 Jun-09 Jun-100%
20%
40%
60%
80%
100%
Fees & comms Forex trading Gains on investments FV gains - Inv Prop
Income Statement – Cost to Income Ratio
22
› 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%
Jun-
06
Dec-0
6
Jun-
07
Dec-0
7
Jun-
08
Dec-0
8
Jun-
09
Dec-0
9
Jun-
1040%
50%
60%
70%
80%
90%
49% 49% 47% 47%50%
59%
72%
82%77%
Income Statement – Staff Costs
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
Jun
2006
Dec 2
006
Jun
2007
Dec 2
007
Jun
2008
Dec 2
008
Jun
2009
Dec 2
009
Jun
2010
- 100 200 300 400 500 600 700
Staff Complement
Wholesale Retail
Retail Banking Capex
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
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
Balance Sheet
25
BWP '000s Jun-2010 Jun-2009%
change Dec-2009
Cash and short term funds 717,669 615,471 17% 881,884
Financial assets held for trading 1,423,014 748,819 90% 880,740
Financial assets designated at fair value 4,133 72,033 -94% 17,905
Loans and advances 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
TOTAL ASSETS 5,121,523 4,083,081 25%
4,417,745
Deposits 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
Total liabilities 4,685,117 3,560,979 32%
4,001,966
Equity attributable to ordinary shareholders 420,189 505,281 -17% 399,069
Minority interest 16,217 16,821 -4% 16,710
Total equity 436,406 522,102 -16%
415,779
TOTAL EQUITY AND LIABILITIES 5,121,523 4,083,081 25%
4,417,745
Balance Sheet (USD)
26
USD '000s 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
Financial assets designated at fair value 585 10,654 -95% 2,684
Loans and advances 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
TOTAL ASSETS 724,441 603,889 20% 662,219
Deposits 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
Total liabilities 662,711 526,670 26% 599,894
Equity attributable to ordinary shareholders 59,436 74,731 -20% 59,820
Minority interest 2,294 2,488 -8% 2,505
Total equity 61,730 77,219 -20% 62,325
TOTAL EQUITY AND LIABILITIES 724,441 603,889 20% 662,219
Balance Sheet – Overview
27
› Deposits up 41% and 23% relative to H109 and H209 respectively› Growth across all the markets
› BancABC Zimbabwe had highest rate of growth off a low base
› Loans and advances up 8% and 17% relative to H109 and H209 respectively› 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
28
› 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
Bots:28%
Moz:15%
Tnz 21%
Zam 11%
Zim 15%
ABCH 10%
Jun-06 Jun-07 Jun-08 Jun-09 Dec-09 Jun-10 -
500
1,000
1,500
2,000
2,500
766 1,084
1,621
2,163 1,995
2,342 Net Loans and Advances
Balance Sheet – Deposits
29
› Growth in deposits across footprint
› Additional funds generated invested mostly in short-term financial instruments
› BancABC Botswana still the largest contributor
› BancABC Zimbabwe’s contribution to deposits growing
Jun-06 Jun-07 Jun-08 Jun-09 Dec-09
Jun-10 -
1,000
2,000
3,000
4,000
5,000
1,380 1,800
2,281 2,925
3,355 4,132
Deposits (BWP m)
Bots 43%
Moz18%
Tnz 19%
Zam 6%
Zim14%
Balance Sheet – Capital Adequacy
30
Total capital (BWP m)
Capital Adequacy Ratio
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%
BancABC Zambia 83 59 10% 30% 14%
BancABC Zimbabwe 113 98 10% 14% 31%› 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
› 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
32
Mozambique
› 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
33
Tanzania
› 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
34
Zambia
› 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
35
Zimbabwe
› 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
36
Retail Banking Update
› 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
37
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
BancABC PRESENTATION 10 MARCH 2010
Exchange Rate Developments
41
Movement in Exchange Rates vs. the USD (End Period)
Movement in Exchange Rates vs. Botswana Pula (End Period)
Bots Moz Tanz Zam RSA
BWP/US$
MZN/US$
TZS/US$
ZMK/US$ ZAR/US$
Dec-07
6.01 23.66 1,147 3,845 6.80
Dec-08
7.52 25.09 1,280 4,832 9.36
Dec-09
6.67 27.51 1,326 4,641 7.40
Mar-10
6.79 27.79 1,345 4,704 7.37
Apr-10 6.80 34.16 1,358 4,743 7.34
May-10
7.05 33.73 1,390 5,002 7.61
Jun-10 7.06 34.51 1,394 5,156 7.64
Moz Tanz Zam RSA
BWP/MZN BWP/TZS BWP/ZMK ZAR/BWP
Dec-07 3.94 190.85
639.77 0.88
Dec-08 3.34 170.21
642.55 0.80
Dec-09 4.12 198.80
695.80 0.90
Mar-10 4.09 198.09
692.78 0.92
Apr-10 5.02 199.71
697.50 0.93
May-10 4.78 197.16
709.50 0.93
Jun-10 4.89 197.45
730.31 0.92
Source: BancABC
BancABC PRESENTATION 10 MARCH 2010
Banking Sector Deposits and Loans
42
Banking Sector Total Deposits
(US$m)
Banking Sector Loans to the Private Sector (US$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 2,354 313
Mar-09
4,429 2,754 4,739 2,059 400
Jun-09 5,417 2,931 4,902 2,217 710
Sep-09
5,601 3,066 5,300 2,496 970
Dec-09
5,574 3,418 5,476 2,680 1,381
Jan-10 5,462 3,485 5,582 2,663 1,406
Feb-10
5,336 3,455 5,608 2,690 1,546
Mar-10
5,461 3,469 5,608 2,783 1,689
Apr-10
5,678 3,004 5,758 2,873 1,752
May-10
5,464 3,024 5,537 2,745 1,832
Bots Moz Tanz Zam Zim
Dec-07 2,236
1,306 2,594 1,351 99
Dec-08 2,281
1,795 3,559 1,635 140
Mar-09 2,283
1,856 3,498 1,535 118
Jun-09 2,636
1,987 3,585 1,544 267
Sep-09 2,861
2,229 3,675 1,668 455
Dec-09 2,963
2,597 3,763 1,586 636
Jan-10 2,937
2,639 3,732 1,555 759
Feb-10 2,947
2,627 3,759 1,533 802
Mar-10 3,076
2,682 3,810 1,541 940
Apr-10 3,115
2,299 3,929 1,534 937
May-10
2,908
2,363 3,832 1,524 1,012
Source: Respective Central Banks
BancABC PRESENTATION 10 MARCH 2010
Income Statement – Net Interest Margins
43
2006 2007 2008 2009 20100.0%
2.0%
4.0%
6.0%
8.0%
10.0%
BancABC Mozambique
NIM before impairmentsNIM before impairmentsNIM after impairments
2006 2007 2008 2009 20100.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%
BancABC Tanzania
NIM before impairmentsNIM before impairments
2006 2007 2008 2009 20100.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%
BancABC Botswana
NIM before impairmentsNIM before impairments
2006 2007 2008 2009 20100.0%
5.0%
10.0%
15.0%
20.0%
25.0%
BancABC Zambia
NIM before impairmentsNIM before impairments
2006 2007 2008 2009 20100%
10%
20%
30%
40%
BancABC Zimbabwe
NIM before impairmentsNIM before impairments
2006 2007 2008 2009 20100.0%
2.0%
4.0%
6.0%
8.0%
10.0%
Consolidated
NIM before impairmentsNIM before impairments
BancABC PRESENTATION 10 MARCH 2010
Income Statement – Opex by Operation
44
Bots
wan
a
Moz
ambi
que
Tanz
ania
Zam
bia
Zim
babw
e
Head
Office
-
10,000
20,000
30,000
40,000
50,000
60,000
Jun-06 Jun-07 Jun-08 Jun-09 Jun-10
BW
P '000