Botswana sparkles as BancABC profits soar

MBONGENI MGUNI
Staff Writer | Friday August 17, 2012 00:00

 

Botswana, one of BancABC's five locations on the continent, underpinned a good half-year for the group in which it expanded its retail footprint to 55 from 35 last June and boosted retail customers by 144 percent to 155,763 over the same period.

Across all indicators, BancABC Botswana was robust in the group, with its assets growing 89 percent year-on-year to P3.6 billion, as the awarding of a government payroll code anchored retail sector growth. At that level, BancABC Botswana's assets made up 36 percent of the group's total assets as at 30 June 2012.

Driven by net interest income, the subsidiary's attributable profits more than tripled to P35.7 million, while the quality of loans on its books was generally in tandem with the growth in loans and advances. 'Botswana has enjoyed its fastest first six months and it was the best performing unit,' said the group's chief operating officer, Francis Dzanya.

'Looking at the overall terms, we could compare it with our Olympic silver medallist. 'The growth in deposits at group level is a good opportunity for us to do very well this year especially from the strong demand for consumer and home loans.'

Stressing the notability of BancABC Botswana's figures, chief financial officer, Beki Moyo noted that attributable profits for the six months ended June 30, 2012 were P35.7 million, compared to the attributable profits for the full year 2011 at P28 million.

'We believe the second half of the year in Botswana will be much higher (in performance) than last year, looking at the fact that already, for the first six months, attributable profits are higher than the whole of last year,' he said. BancABC recently pumped in US$53 million in additional capital in its Botswana subsidiary in order to keep pace with the phenomenal growth, with another US$52 million for Zimbabwe, US$32 million for Mozambique, US$26 million for Zambia and US$20 million for Tanzania.

The group plans to raise a further US$100 million through tier II equity to bolster its operations as the bank expands its retail-banking network. Growth along its young retail network powered the BancABC group to its fifth year of strong performances, with a compound annual growth rate of 48 percent over the period.

The group's loan book rose 95 percent year-on-year to P7.8 billion, while net interest income jumped 43 percent to P274 million, with the major growth accelerator being the fast expanding retail sector. 'People always ask us whether this growth is sustainable, looking at figures such as 95 percent rise in the loan book since last June and 29 percent since December 2011,' Moyo said.

'I would say that this growth rate is sustainable although it may taper off at some stage.' Group CEO, Douglas Munatsi said the forthcoming US$100 million fundraising was part of a multi-pronged strategy to sustain and power growth across the bank's operations.

One factor to iron out, he said, would be to shift the funding of retail loans from the bank's flagship wholesale deposits, a trend associated with a higher interest expense.  'The challenge is to mobilise sufficient resources in terms of capital, which we have already started, and to also improve liquidity,' he said.

'We have committed ourselves to continuing growth in retail through consumer lending and also expanding the retail deposits, which improves our margins and reduces costs of funds.'We will continue to expand our wholesale division as well'.

Historically, BancABC was a merchant bank offering a diverse range of services such as wealth management,corporate banking, treasury services, leasing, asset management and stock broking.