Dec 2008 results

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Dec 2008 results

  1. 1. ABC HOLDINGS LIMITEDResults Presentationfor the year ended 31 December 2008
  2. 2. 2Economic EnvironmentFinancial PerformanceOverviewIncome statement reviewBalance sheet reviewOutlookChallenges & outlookCapitalisationDividendAGENDA
  3. 3. 3CountryGDP(USDm)2008GDPGrowthrate2008BankingDeposits(USDm)2008BankingCredit(USDm)2008BankingAssets(USDm)2008Population2008 est(m)No. ofbanksBotswana 11,728 3.3% 4,991 2,251 6,449 1.8 12Mozambique 10,100 6.5% 2,965 1,631 4,235 21.2 12Tanzania 21,346 7.5% 4,680 3,201 6,325 40.1 36Zambia 13,484 5.8% 2,354 1,685 3,363 12.3 14Zimbabwe* 2,000 -10.5% 377 50 945 12.4 28ECONOMIC ENVIRONMENT & INDUSTRYATTRACTIVENESSSources: - IMF – World economic outlook database: October 08-Central Banks statistics*Estimates
  4. 4. 4Due to the negative impact of the global economy, GDPgrowth slowed down in all Southern African economiesZimbabwe registered negative GDP growth for the tenthconsecutive yearCommodity prices weakened significantly in sympathywith the global economic downturnBanking assets however continued to grow, albeit at aslower paceBotswana boasts the highest GDP per Capita andhighest banking assets per Capita but other countriesare making stridesECONOMIC ENVIRONMENT
  5. 5. 5Average inflation was in double digit level ( except inZimbabwe, where it was well in excess of this)Generally all currencies weakened particularly in thesecond half of 2008Zimbabwe in a hyperinflationary environment; Lastofficial inflation at 231m% in July 2008ECONOMIC ENVIRONMENT
  6. 6. 6CountryInflationRateDec-2008Avg. TBYield Rate*Dec-2008Avg orPrimeLendingRates 2008Avg. PrimeLendingRates 2007Botswana 12.6% 12.58% 16.6% 16.2%Mozambique 10.4% 13.72% 20.1% 20.1%Tanzania 10.3% 8.11% 13.6% 14.4%Zambia 12.4% 12.20% 25.2% 25.0%Zimbabwe 231 m%*** 340%** 3,700% 559.0%* 90 day** 1 year***July 2008ECONOMIC ENVIRONMENT– Inflation & InterestRates
  7. 7. 7ZWD Old Mutual implied rateZWD revalued in 2008To 1 BWP 31 Dec-08 31 Dec-07United States Dollar 0.13 0.17MozambiqueMetical3.38 4.30South African Rand 1.25 1.13Tanzania Shilling 174 191Zambian Kwacha 636 640Zimbabwe Dollar 88 Quad 0.0001 QuadECONOMIC ENVIRONMENT– Exchange Rates
  8. 8. 8•ZWD Old Mutual implied rate•ZWD revalued in 2008To 1 US dollar 31 Dec-08 31 Dec-07Botswana Pula 7.54 6.02MozambiqueMetical25.50 25.67South AfricanRand9.40 6.81Tanzania Shilling 1 315 1 146Zambian Kwacha 4 795 3 850Zimbabwe Dollar 665 Quad* 0.001 QuadECONOMIC ENVIRONMENT– Exchange Rates
  9. 9. 9International Equity Market Cap, US$ Trillions2007 Mkt Cap2008 Mkt CapNYSENasdaqTokyo SELondon Shanghai9.215.63.14.32.441.93.9 3.61.4
  10. 10. 10International Banks Market capSource: Bloomberg, March 9th2009255215165120108917649659 60102574918050100150200250Citigroup HSBC JP Morgan RBS BNPParibasBarclays DeutscheBankMorganStanleyUS$BnMkt Cap as of Q2 2007 Mkt Cap as of 9-Mar-09
  11. 11. 11Stock Market Cap in Some African Equities(2007 vs 2008)-42.1-35.8-35-32.3-19.3-14.914.733.536.4-50 -40 -30 -20 -10 0 10 20 30 40JSE Ltd.Nigerian SEBotswana SEZimbabwe SENairobi SELusaka SEGhana SEMalawi SEDar-Es Salam SE%
  12. 12. 12International Commodity Prices  Gold Platinum Palladium Copper Nickel Oil Aluminum  US$/oz US$/oz US$/oz US$/t US$/tUS$/barrel US$/tDec-07 805 1,488 351 6,638 26,143 91 2,379Mar-08 964 2,046 489 8,398 30,997 106 2,988Jun-08 889 2,038 450 8,260 22,531 134 2,958Sep-08 833 1,223 248 6,990 17,791 104 2,525Dec-08 816 835 175 3,066 9,678 43 1,582Jan-09 859 950 189 3,164 11,142 45 1,420Feb-09 943 1,036 206 3,314 10,406 39 1,330
  13. 13. 13International Commodity Prices9642049450147816835175439431036206390 500 1000 1500 2000 2500GoldPlatinumPalladiumOilUS$Peak price in 2008 Dec 08 PriceFeb 09 Price
  14. 14. 14OverviewIncome Statement ReviewBalance Sheet ReviewFINANCIAL PERFORMANCE
  15. 15. 15Attributable profit at BWP86m is down from BWP 124min prior yearNet asset value up by 39% from BWP 314m to BWPB438mNet interest income for financial operations up by 40%from BWP 127 m to BWP 178 mTotal income up to BWP 401m from BWP 339 millionReturn on equity of 23% compared to 42% in 2007FINANCIAL PERFORMANCE - Overview
  16. 16. 16Balance sheet growth of 38% to BWP 4 billionLoans and advances up by 80% to BWP 2.2 billion,reflecting impact of Tier II capital injectionDeposits increased by 40% to BWP 2.8 billionFINANCIAL PERFORMANCE - Overview
  17. 17. 17BWP Dec 08 %changeDec 07Attributable profits (‘000s) 86,029 -30% 123,523Basic EPS (Thebe) 60.4 -37 % 95.3Dividend per Share ( Thebe) 8.00 -43 % 14.00Cost to income ratio 59% 12 % 47%Net asset value (‘000s) 437,777 40 % 313,813NAV per share 3.07 30 % 2.37Total Assets (‘000s) 3,967,909 35 % 2,930,121FINANCIAL PERFORMANCE – Salient features
  18. 18. 18Attributable Profit (BWPm) and R O E (%)1248651468620%30%37%23%42%-204060801001201402004 2005 2006 2007 20080%5%10%15%20%25%30%35%40%45%Attributable profit R O EFINANCIAL PERFORMANCE – Five yearearnings overview
  19. 19. 19Net Asset Value (BWPm) and N A V per share (Pula)438184 1862723143.072.051.401.622.37-1002003004005002004 2005 2006 2007 2008-1.002.003.004.00Net asset value Net asset value per shareFINANCIAL PERFORMANCE – Five year NAVprofile
  20. 20. 20BWP’000s Dec 08%contributionDec 07%contribution% changeABC Botswana 13,193 22% 7,769 14% 70%ABC Mozambique 16,644 27% 13,301 23% 25%ABC Tanzania* 13,171 21% 11,804 21% 12%ABC Zambia (12,168) -20% (3,584) -6% (240%)ABC Zimbabwe 25,490 42% 27,861 49% (9%)Microfin Zambia 4,945 8% 210 0% 2257%Financial institutions 61,275 100% 57,361 100% 7%Other Operations 24,754 66,162 (63%)TOTAL 86,029 123,523 (30%)*Adjusted for minority interest & includes TDFLFINANCIAL PERFORMANCE: Attributable Profitper Subsidiary
  21. 21. 21All Banking operations profitable, except ABC ZambiaABC Zambia’s poor performance due to a combination ofhigh impairments and exchange losses in fourth quarterZimbabwe performance adversely affected by reducedinvestment income as economy reached meltdown pointStrong growth in total income in Botswana, Mozambiqueand TanzaniaMassive depreciation of the Zimbabwe dollar continuedZimbabwe contribution to total income down to 15% from35%Quality of the book has marginally improvedINCOME STATEMENT REVIEW
  22. 22. 22NII increased by 72% to BWP 184mNII contribution to total income increased from 32% to42%NII now covers 78% of total costs, up from 67% in 2007All banking operations, with the exception of Zimbabwe,showed significant growth in NIIINCOME STATEMENT REVIEW
  23. 23. 23Non-interest income declined by 7% to BWP 216m.Investment income in Zimbabwe declined 78% fromBWP 116m to BWP 26mImpairment charge of BWP 44m up 35% compared to2007. Botswana and Zambia most affected.Operating expenditure increased by 48% to BWP 237mIncreased costs are largely due to additional staff for thenew retail business and strengthening of creditdepartment.INCOME STATEMENT REVIEW
  24. 24. 24BWP’000sDec 08%contribution Dec 07%contribution%changeABC Botswana 82,934 21% 50,67615% 64%ABC Mozambique 62,151 16% 41,87512% 48%ABC Tanzania** 57,928 14% 36,43011% 59%ABC Zambia 36,612 9% 30,2759% 21%Microfin Zambia 49,027 12% 28,6478% 71%ABC Zimbabwe 35,858 9% 39,402 12% (9%)Total Fin OPS 324,510 81% 227,30567% 43%Other Operations 76,137 19% 111,72433% (32%)TOTAL GROUP 400,647 100% 339,029 100% 18%*Before impairments**Including TDFLINCOME STATEMENT REVIEW – Total income*
  25. 25. 25BWP’000s Dec 08%contributionDec 07 % contribution%changeABC Botswana 41,389 22% 29,48327% 40%ABC Mozambique 34,295 19% 23,26922% 47%ABC Tanzania 29,09016% 13,69913% 112%ABC Zambia 22,782 12% 16,11615% 41%Microfin Zambia 50,778 28% 28,86827% 76%ABC Zimbabwe 67 0% 15,429 14% (100%)Total Fin OPS 178,40197% 126,864118% 41%Other Operations 6,0113% (19,576)(18%) 131%TOTAL GROUP 184,412 100% 107,288 100% 72%*Including TDFLINCOME STATEMENT REVIEW – Net interestincome
  26. 26. 26Ave. Yieldon IEAAve. CostSpread2008Spread2007ABC Botswana 13.0% (10.0)% 3.0% 1.3%ABC Mozambique 12.3% (5.8)% 6.5% 5.4%ABC Tanzania 10.4% (6.2)% 4.2% 3.7%ABC Zambia 15.8% (8.9)% 6.9% 4.9%ABC Zimbabwe 1.0% 0% 1.0% 20.5%Microfin Zambia 66.7% (22.1)% 44.6% 43.9%INCOME STATEMENT REVIEW – Net interestincome Spread has increased across the board
  27. 27. 27BWP’000s Dec 08%contributionDec 07 % contribution%changeABC Botswana 41,545 19% 21,1939% 96%ABC Mozambique 27,856 13% 18,6068% 50%ABC Tanzania* 28,838 13% 23,62510% 22%ABC Zambia 13,830 6% 14,1606% -2%Microfin Zambia (1,752) 1% (222)-% -689%ABC Zimbabwe 35,791 17% 23,97310% 49%Total Fin OPS 146,108 68% 101,33544% 44%ABCH and other 70,127 32% 130,40656% -46%TOTAL GROUP 216,235 100% 231,741 100% -7%*Including TDFLINCOME STATEMENT REVIEW – Other income
  28. 28. 28BWP’000s Dec 08 Dec 07%changeGains investment securities 25,931 101,438 (74%)Dividends received 3,342 3,113 7%Fee & commission income 69,827 65,322 7%Fx trading income & currencyrevaluation 29,448 9,658 205%Fair value gains on investmentproperties45,872 26,408 74%Fair value adjustment: derivativeinstruments38,585 (10,073) 483%Rental and other income 3,230 35,875 91%Total 216,235 231,741 (7%)INCOME STATEMENT REVIEW – Other income
  29. 29. 29Excluding impairmentsIncrease in NII contribution due to increase in lending bookNII income covers 78% of costs, up from 67% in 200743%47%42%32%46%57%53%58%68%54%20042005200620072008NIIOther incomeINCOME STATEMENT REVIEW – Total incomecomposition
  30. 30. 30Cost to income ratio75%66%49% 47%59%2004 2005 2006 2007 2008Due to retail banking roll outCost containment strategy• Imperative to strengthen cost containment measuresINCOME STATEMENT REVIEW – Operatingexpenditure
  31. 31. 31Cost to income ratio up from 47% to 59%Head count increased from 395 to 484 due to newretail banking and credit department staffEmployee costs accounted for 50% of total costsOperating expenditure up 48% to BWP 237mMarketing costs set to increase in support ofgrowth targets and retail roll outINCOME STATEMENT REVIEW – Operatingexpenditure
  32. 32. 32Total employee costs up 31% from BWP91m to BWP119 mEmployee costs 50% of total costsStaff compliment of 484 (2007: 395)Staff compliment up by 89 people mainly due to retail & credit4367415438501091301531611122Botsw ana Mozambique Tanzania Zambia Zimbabw e ABCH2007 2008Head count per Operation
  33. 33. 33Balance sheet growth of 38% to BWP 4 billionLoans and advances up by 80% to BWP 2.2 billion,reflecting impact of Tier II capital injectionDeposits increased by 40% to BWP 2.8 billionNet asset value up by 39% from BWP 314m to BWPB438mZimbabwe FCTR up BWP 95m in 2008BALANCE SHEET REVIEW
  34. 34. 34Total Assets (BWPm)1,759,327 1,903,2842,447,1352,930,1213,967,9092004 2005 2006 2007 200838% balance sheet growth compared to December 07sustained balance sheet growth since 2004Compound annual growth rate of 23%BALANCE SHEET REVIEW - Total Assets
  35. 35. 35 40% growth in Deposits Botswana continues to lead with deposits of BWP 1.3 billion Growth of 118% & 63% in Mozambique & Tanzania respectively; albeit from a low baseBotswana51%Mozambique21%Tanzania18%Zambia7%Microfin3%Zimbabwe1%BALANCE SHEET REVIEW - Geographic splitof deposits
  36. 36. 36 80% growth in Loans. Growth in excess of 48% in all countries except Zimbabwe Growth shows impact of capital injection in late 2007Botswana33%Mozambique17%Tanzania28%Zambia17%Microfin4%Zimbabwe1%BALANCE SHEET REVIEW - GeographicalSplit of Loans
  37. 37. 37BWP’000Capital*Dec-08FCTRDec-08Capital*Dec-07FCTRDec-07ABC Botswana 114,012 - 99,856 -ABC Mozambique 157,774 13,951 104,712 (7,789)ABC Tanzania** 143,015 117 96,601 7,231ABC Zambia 81,952 5,021 83,725 3,316Microfin Zambia 20,868 2,110 15,275 2,686ABC Zimbabwe 143,484 (500,857) 110,035 (405,766)*Including Tier II**Including TDFLZimbabwe FCTR up BWP 95m since Dec 07BALANCE SHEET REVIEW - Capital
  38. 38. 38Dec 08 Dec 07Botswana 16% 18%Mozambique 28% 44%Tanzania 15% 28%Zambia 24% 29%ABC Zimbabwe 31% 26%Healthy capital adequacy ratiosBALANCE SHEET REVIEW - Capital Adequacy
  39. 39. 39Rights issue postponed as a result of the turmoil in theglobal financial marketsIFC subscription of 13.9 million shares, bringingshareholding to 10.7% in January 2008IFC convertible loan still to be drawn down as Group isin the process of clearing outstanding conditionsprecedent. Draw down imminent.All conditions precedent on the CVCI convertible loanfulfilled. Drawdown in the coming weeksCAPITALISATION
  40. 40. 40Retail Banking head office now appropriatelystaffedFirst few branches to be opened in July 2009Funds raised from IFC and CVCI to be usedfor capitalisation of this businessLargely driven by state of the art technologyRETAIL BANKING
  41. 41. 41Need to strengthen operations in the face of theuncertainty in global marketsDirectors propose that a final divided be passedDIVIDEND
  42. 42. 42Environment expected to be challenging duringmost of 2009 and 2010 due to a deterioration in theglobal marketsMajor thrust will be consolidation and ensuringmodest growth notwithstanding high costs as aresult of retail bankingProactive management of the loan bookSupport clients in the face of adversityIntroducing fresh thinking and smart bankingOUTLOOK & CHALLENGES
  43. 43. 43Changing the business model –People, processes,systems and cultureBranch profitability still estimated to be between 12to 24 monthsDeposit mobilization remains a key focus area forthe group, particularly in ZambiaOUTLOOK & CHALLENGES
  44. 44. THANK YOU

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