HARARE – BancABC, the local unit of African Banking Corporation, says its net profit doubled in the year ended December 31, 2018 to $11 million from $5.18 million in 2017, largely on efficient assets and liability management, lower credit loss provisions, digital volumes growth and cost management measures.
African Banking Corporation, the parent company of BancABC, was acquired by Atlas Mara, an investment group founded by former Barclays boss Bob Diamond.
It has operations in Botswana, Mozambique, and Tanzania, Zambia and Zimbabwe and a group service office in South Africa.During the period the bank generated, a net interest income of $30.7 million, representing an 18% from $26.1 million in the previous period.
“The increase reflects a more productive balance sheet re-aligned to maximise on higher margins through efficient deployment of funding resources and the benefit of improving the loan book quality,” the bank’s chairman, Alvord Mabhena, said in a statement accompanying the results on Tuesday.
Provisions for credit losses amounted to $100 000, reflecting a 104% decline from the previous reporting period. This is attributed to the significant improvement in asset quality and work to recover on previous written off debt. However, the progress was recognized after adoption of IFRS 9 at the beginning of the financial year.
Due to improved, fees and commission income, foreign exchange dealing income and other operating income – noninterest revenue went up 57% to $23 million.
Fees and commission income was up 31%, backed by a growth in transactional revenues while the bank will continue to improve the digital offering as it is its medium term goal.
Foreign exchange dealing income was up 24% on the back of growth in foreign exchange volumes.Operating expenses increased by 30% to $40.1 million.
“The increase was primarily due to higher employee related expenses and investments in technology modernization and customer- focused initiatives. The bank also saw rapid increases in other administrative costs with suppliers citing inflationary pressures after a period of relative stability in the first half of the year,” he said, adding that improvements in topline, however, saw the cost to income ratio stabilise at levels of 76%.
The bank reported more than US$50 million in deposit capture in Zimbabwe for the year ended December 31, 2017 backed by a strong agency banking programme.
The group said the agency banking programme continues to be a strong driver of customer growth and deposit capture. As at December 31, 2018, the bank is sitting on $392 million worth of deposits, representing a 2 percentage points from $385 million in 2017 – as market liquidity continued to improve.
Growth in deposits saw the bank’s total assets increasing by the same to $539 million from $529.5 million previously.Loan book rose 18% to $217 million, Mabhena said the growth was achieved despite a “wait and see approach” that prevailed, associated with elections, as well as acute shortages of foreign currency for importing clients.
Nearly 6 years ago, the central bank increased the minimum capital requirements for commercial and merchants banks to $100 million from $12.5 million and $10 million previously.
So far, a few of the commercial banks have surpassed the minimum capital requirements ahead of the 2020 deadline. However, BancABC’s regulatory capital position in the year rose to $94 million from $83 million. This attributed to the retained profits.
Capital adequacy ratio stood at 39.1%, down from 40.4% previously due to growth in risk weighted assets.Mabhena said the past financial period was characterised by a lot of uncertainty which inadvertently hampered business progress.
“Our hope is that since the currency issues have been and continue to be addressed, stability should return enabling businesses to move forward. Our objective, going into the coming year, is to further strengthen our business together with our suite of product offerings and take advantage of impending business recovery to further boost our revenues and increase shareholder value,” he said.BancABC has 23 branches in the southern African nation.