New retail operations chalk up BancABC income

Brian Benza
Staff Writer | Friday March 12, 2010 00:00

 

BancABC has been a merchant bank until late last year when it opened its first retail outlet in Zimbabwe. Speaking at the unveiling of the group's financial results for the year ended 31 December 2009 in Gaborone on Wednesday, Group CEO Douglas Munatsi said the first Botswana retail outlet would be opened in the early part of the second quarter at The Square Mart at the new CBD while the second branch would be located at the new BancABC head office at Fairgrounds.

Munatsi said BancABC, which operates in five SADC countries, should have 10 retail branches across the region by the end of June and that VISA accreditation had already been acquired for Botswana, Mozambique and Tanzania.

The group, which acquired a commercial banking licence in Botswana last year, also operates in Mozambique and Tanzania, Zambia and Zimbabwe.'Botswana already has a higher bank penetration than any other country in southern Africa and therefore partnerships are going to be the key driver of our growth in this country,' Munatsi said. 'We are not going to invest totally in the brick and mortar channel; we are also looking at other distribution avenues, particulary in this era of new and advancing technology.

'However, we still need to have physical branches, that is why we are initially going to have two branches in Gaborone and one in Francistown. We have already identified a suitable place (for) our branch in the second city.'

On the performance of the group, Munatsi said like other financial institutions, BancABC was affected by the global recession and that Botswana and Zambia were the two worst affected in the region due to the crash in commodity prices.

Although income grew by 10 percent for the period, a 54-percent rise in operating expenses due to the investment in retail banking and the dollarisation of the Zimbabwe economy saw profits after tax fall from P87 million in 2008 to 58 million last year.

Earnings per share thus fell from 60.2 thebe to 40.4 thebe in 2009. Despite the challenges, all operations in the region showed income growth except for Zambia  where the group incurred significant losses as a result of reduced market activity and large impairments, mostly from mining customers. BancABC Botswana recorded an increase in profitability of 32 percent over 2008 to generate a P17 million profit. The balance sheet also grew by 17 percent mainly due to an increased customer base.

Looking ahead, the banks says it expects its retail business to start contributing to the bottom line in the next 18 to 24 months but it will continue to grow its wholesale business. In Zambia, where Munatsi said the bank had 'a nasty year' in 2009, BancABC has already started merging its microfinance business with its banking operations in a bid to reduce costs and cross sell retail products. Apart from losses resulting from mine closures and reduced activity in Zambia, the bank also parted with P36 million in that country as it tried to protect its reputation after a construction deal in which it acted as advisors went bad. As a result, the group will recapitalise its Zambia operations to the tune of US$6 million this month.