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Dec 2009 results
 

Dec 2009 results

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    Dec 2009 results Dec 2009 results Presentation Transcript

    • BancABC Annual Financial Results 200910 March 2010
    • OVERVIEW
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Financial Highlights› Total income increased 10% to BWP 392 million› Solid income growth across all operations except BancABCZambia› Significant investment in Retail Banking and Zimbabwedollarisation increased operating expenses 54% to BWP366 million› Impairment charges increased 15% to BWP 51 million› Basic EPS down 33% to 40.4 thebe› RoE of 14% (2008:23%) and NAV of BWP 399 million(2008: BWP 438 million)› Balance sheet grew 11% to BWP 4.4 billion› Customer deposits grew 19% to BWP 3.4 billion3
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Operational Highlights› Microfinance operation successfully integrated intoBancABC Zambia and customer base expanded› Retail Banking commenced business with first branchesopened in Harare and Dar es Salaam› Credit function strengthened› New products successfully introduced in Tanzania andMozambique boosted non-interest income› Business rapidly expanded at BancABC Zimbabwe posteconomic stabilisation4
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Economic Overview - 2009› Economic deterioration experienced in late 2008, cont’dinto 2009› Regional GDP growth slowed to 1.5% in 2009, from 5.4%in 2008› Zimbabwe economy grew for first time in 10 years postformation of GNU and dollarisation› Botswana and Zambia hardest hit by declining commodityprices› Policy interest rates declined across all territories– Associated margin pressure for banks› Credit growth declined significantly across all territoriesexcept Mozambique5
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Economic Overview – GDP Growth6
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Economic Overview – Loan & Deposit levels7
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Economic Overview – Credit Growth8
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Economic Overview – 2010 Outlook9› The worst of the recession appearsto be over but economic recoveryremains fragile› Growth in employment levels laggingprivate sector economy growth› Central Banks remain focused onrestoring credit growth to theproductive sectors of the economy› Rising commodity prices supportsrecovery in Group’s markets› Improved growth prospects areenvisaged in 2010 in all of Group’smarkets
    • FINANCIAL REVIEW
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Income Statement - Overview60.240.4Earnings per share (thebe)87,93158,431Profit for the year-33,64215,768Tax121,57342,663Profit before tax2,30016,164Share of results of associates119,27326,499Net income from operations-236,941-365,694Operating expenditure356,156392,193Total income216,126265,017Non interest income140,030127 176Net interest income afterimpairments-44,365-51,218Impairment of loans and advances184,395178,394Net interest income beforeimpairments20082009BWP’000s11
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Income Statement – Interest Income› Margins on interest incomegenerally declining due to changein asset mix› Margins widened in 2008 due toaggressive loan growth› Decreased demand for credit in2009, resulted in excess cash beinginvested in low yielding moneymarket and t-bills› Lower policy rates resulting in asqueeze in banking margins12
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Income Statement – Impairments and NPL’s› Overall NPL’s and credit loss ratiois declining› 2009 increase attributable toeconomic circumstances› Quality of loan book is improving13
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Income Statement – Non-interest Income› NI income increasing overall and asa % of total income– 2009 NI % increased to 68%(08: 61%)› Trading activities, esp in forex areprimary source of growth› Introduction of Retail Bankingexpected to increase net interestincome going forward14
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Income Statement – Segmental analysis% change20082009(3%)184,395178,394TOTAL(249%)4,147(6,180)Head office2%180,248184,574Banking operations-6314,339Zimbabwe(16%)73,56161,632Zambia incl Microfin14%30,94135,178Tanzania13%34,29538,594Mozambique(16%)41,38934,831BotswanaNet Interest Income15
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Income Statement – Segmental analysis% change20082009(32%)85, 81858,117TOTAL(30%)27,77019,488Head office(33%)58,04838,629Banking operations(24%)25,33819,362Zimbabwe(365%)(7,223)(33,567)Zambia incl Microfin(49%)10,0965,155Tanzania82%16,64430,266Mozambique32%13,19317,413BotswanaAttributable Profit16
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Income Statement – Cost to Income Ratio› Target C:I ratio of 50% over themedium to long term› Once off costs associated withPyramid Plaza pushed ratio from77% to 82%› Dollarisation of Zimbabweaneconomy brought in BWP 62 mill ofcosts vs. nil for 2008› Significant investment in RetailBanking; people, systems andprocesses the bulk of which wereexpensed› Retail head count now at 89 (08: 35)17
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Income Statement – Staff costs› Total head count in 2009 of 592 vs. 484 in 2008› Growth in ABCH portion attributable to Retail Banking18
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Balance Sheet - Overview193,967,938456,508437,6543,511,430599,8142,822,3523,967,938216,9422,249,90326,100659,587513,050200811%(9%)(9%)14%(9%)19%11%29%(11%)(31%)34%72%% change4,417,745TOTAL EQUITY AND LIABILITIES415,779Total equity399,069Equity attributable to ordinary shareholders4,001,966Total liabilities543,822Borrowed funds3,355,118Deposits4,417,745TOTAL ASSETS278,975Property and equipment1,995,325Loans and advances17,905Financial assets designated at fair value880,740Financial assets held for trading881,884Cash and short term funds2009BWP 000s
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Balance Sheet – Capital Adequacy20Capital Adequacy Ratio20%10%23%17%23%200919%22%16%32%16%200810%Zimbabwe10%Zambia12%Tanzania8%Mozambique15%BotswanaMinCountry› Botswana recapitalised to the extent of BWP 35 mill in H209› All entities now adequately capitalised› Zambia to be reacapitalised in 2010
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Balance Sheet – Loans and Advances› Active decision taken to curtaillending due to poor economiccircumstances› Liquidity constraints precluded furtherlending in Tanzania and Zambia inH109› Excluding Zambia, impairments acrossGroup reduced from BWP 34 mill in2008 to BWP 27 mill in 2009› Actively support good clients indifficult economic environment21Loans andadvances percountry tofollow
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Balance Sheet - Deposits› Customer deposits increased over theyear by 19% to BWP 3.4 bill– Zimbabwe increased BWP 158 milldue to economic stability– Mozambique increased BWP 200mill as client base grew– Tanzania increased BWP 132 millwith deposit mobilisation› Excess cash invested in t-bills andmoney market instruments› Resulting squeeze on margins withconsolidated spreads reducing from5.9% in 2008 to 5.1% in 200922
    • OPERATIONAL REVIEW
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Botswana› Economic activity sharply declined in 2009 as diamondrevenues remained subdued› Management decision to curtail lending in light of pooreconomic circumstances› Impairments well managed down to BWP 9 mill (08: BWP22 mill)› Increased customer deposits and capital injection fromABCH positions Balance Sheet well for 2010› Forex trading volumes and associated non-interest incomeincreased› Expenditure tightly controlled with only 10% increase› Overall PAT improvement of 32% to BWP 17 million24
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Mozambique› Slow down in commitments to long term projects acrossthe economy reduced demand for credit from corporates› Interest income increased in line with increased customerdeposits, despite lack of growth in loan portfolio, as cashwas invested in t-bills and money market› Significant growth in non-interest income, predominantlyfrom forex trading› Operating expenditure increased 32%, bulk of which wason Retail Banking› PAT up 82% to BWP 30 million25
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Tanzania› Lending restricted early on in the year as liquidityconstraints kicked in› This plus increased impairments of BWP 13 mill (08: nil)contributed to decline in net interest income afterimpairments to BWP 22 mill (08: BWP 31 mill)› Increased customer deposits by year end of 24% toBWP 677 mill› Non-interest income increased 29% with introduction ofbond trading providing new income stream› Operating expenditure increased 17% to BWP 40 mill› PAT decline of 49% to BWP 5 mill
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Zambia - BancABC› BancABC experienced significant loss in 2009– Reduced market activity– Large impairments mostly from mining customers› Economy hard hit by declining copper price in 2008 andrecovery of spot price slow to impact the real economy› Loan book declined 45%, interest income down 19% to BWP11 mill› Accordingly Balance Sheet shrunk 37% to BWP 286 mill,customer deposits were down 10% to BWP 176 mill› Impairments were BWP 24 mill vs. BWP 10 mill in 2008› New management team making progress in addressing creditcontrols and reputational issues› Recapitalisation planned for 2010
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Zambia - Microfin› Microfin, BancABC Zambia’s microloans business, madegood progress with loan book increasing to BWP 104 mill(08: BWP 90 mill)› Impairments drastically reduced from BWP 9 mill toBWP 3 mill› Average yield on IEA however declined to 35% from 47%› Decision taken to integrate BancABC and Microfinoperations to reduce costs and cross sell retail products› Merger successfully concluded and brand integrationplanned for 2010
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Zambia – write offs› BancABC Zambia was advisor to the financing ofconstruction project› Construction ran over budget resulting in significant lossfor investors› To protect BancABC reputation, board took the decision toreimburse investors› Total reimbursements of BWP 36 million paid out over2008/ 09› Building taken over by the Group
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Zimbabwe› Significant economic improvement on the back offormation of GNU and dollarisation› Positive economic trend for first time in 10 years› Lack of liquidity in the banking sector still problematic– Limited capacity of lender of last resort– Inactive interbank market– Limited FDI› Net interest income of BWP 14 mill vs. nil in 2008› Expenses of BWP 62 mill vs. nil in 2008
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Retail Banking - Update› IT systems largely in place and testing has commencedacross territories› First branches opened in Harare and Dar es Salaam– Branches to open in Mozambique in March– Botswana to follow in Q2 and Zambia Q3– Total of 10 branches to be opened by half year› Visa accreditation acquired in Botswana, Mozambique andTanzania› Partnerships remain key driver of growth
    • INVESTMENT CASE
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Investment Case› NAV per share of 273 thebe vs.share price of 130 thebe› Historic PE multiple of 3.2.› Only regionally diversified bank listedin Botswana/ Zimbabwe – reducedcountry risk› Traditionally valuing assets inZimbabwe was a challenge, this haschanged following dollarisation
    • STRATEGY & OUTLOOK
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Strategy – Vision and MissionBancABC is realising this vision by building profitable,lifelong customer relationships through the provision of awide range of innovative financial products and services;to the benefit of all our stakeholdersBancABC’s vision is to offer world class financial solutionsthat make it Africa ’s preferred banking partner› Balanced Scorecard introduced as the Group’s performancemanagement strategy implementation tool› Setting and reviewing the performance targets to become a moretransparent process
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Strategy – Key Objectives 2010Grow & DiversifyCustomer BaseIncrease Non-InterestIncomeBoost Net InterestIncomeControl OperatingcostsReduce cost ofFundingManage investment inGrowth› Merge Microfin and Zambian operations and cross sell› Convert wholesale banking customers to retail bank› Expand Retail Banking business› Cross sell products to borrowing customers› Improved credit management› Managed growth of the loan portfolio› Costs driven by incremental revenue they can generate› Improve turnaround times› Expansion of Retail Banking footprint› Invest in human capital› Retain a substantial amount of Group‘s earnings
    • BancABC 2009 ANNUAL RESULTS 10 MARCH 2010Outlook› Continue to grow wholesale business› Bed down merger in Zambia, recapitalise this operation› Use Microfin branch network to leverage Retail Bankinggrowth in Zambia› Retail Banking coming on stream – cash flow positive andprofitable in next 18-24 months› Revisit capital raising initiatives in H210› Draw down on AfDB loan of US$30 million in Q210› Balance sheet positions bank well to grow all operationsas regional economy improves› Year started well, sustained profit growth expected forremainder of 2010
    • THANK YOUwww.bancabc.com