BancABC profits jump on increased lending
Pauline Dikuelo | Thursday April 13, 2017 13:34
The bank attributed the increase to interest income which rose on the back of significant growth in lending in the last quarter of 2015 with full year impact on interest income being felt in 2016.
According to the bank’s acting managing director, Nomathemba Segage, most income lines were above prior year with the expectation of fees and commission, adding that total assets increased by four percent during the year and return on equity improved from 17% to 20%.
“The bank’s consistent and sturdy financial performance in a subdued economic environment set a very strong platform for future growth. Management would leverage on the good performance to invest further in new delivery channels as well as solutions including digital initiatives to customers,” she said.
In addition, the bank said the recently concluded OPIC
transaction would spur the bank for future growth.
Earlier this month, the bank finalised a $40million Fintech and Financial Inclusion Debt facility provided by OPIC. The facility will be used to provide access to finance SMEs and also support the bank’s efforts to accelerate its digital finance initiatives, which are key areas of the bank’s growth strategy.
Segage said loan impairment charges increased from P5.5 million in prior year to P74.9 million in the current year. There were significant recoveries from the corporate loan book that offset a large portion of the impairment charge in 2015. She said the loan book quality remained strong in 2016 although Non Performing Loans (NPLs) edged up slightly to 4.2% from 3.3% in prior year.
Operating expenses increased by seven percent compared to prior year due to the bank’s continued efforts to invest in governance structures and technology.
“The full benefits of all these initiatives will be reflected in the bank’s future performance. The cost to income ratio improved from 70% in prior year to 57% in 2016 on the back of significant revenue generation and cost containment,” she said.
Further the loans and advances decreased by one percent to P5.6 billion in line with subdued credit growth in the market, response to a review of the bank’s credit risk appetite as well as early settlements of some corporate exposures.
Customer deposits increased by nine percent with most of the increase being invested in financial assets held for trading. The bank is adequately capitalised with a capital adequacy ration of 20%.