Abch analyst presentation 2011

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Abch analyst presentation 2011

  1. 1. BancABC Half Year Financial Results 201117 August 2011<br />
  2. 2. AGENDA<br /><ul><li>Highlights
  3. 3. Economic overview
  4. 4. Financial review
  5. 5. Operational overview
  6. 6. Strategy and outlook</li></li></ul><li>HIGHLIGHTS<br />Beki Moyo<br />
  7. 7. Financial Highlights<br />4<br />Total income increased by 24 % to BWP311 million<br />Cost to income ratio down to 72% from 77% in prior year <br />Operating expenses up by 18%<br />Operating profit increased by 48% to BWP67 million<br />Pre-tax profit up by 84% to BWP63 million<br />Attributable profit to shareholders increased by 33% to BWP37 million<br />Basic earnings per share improved by 33% to 25.9 thebe from 19.5 thebe in 2010<br />BancABC Half Year Financial Results 2011<br />
  8. 8. Financial Highlights (cont’d)<br />5<br />Balance sheet grew by 23% from BWP6 billion in Dec 2010 to BWP7.4 billion (US$1.1 billion)<br />Loans and advances increased by 31% from BWP3.1 billion in Dec 2010 to BWP4 billion<br />Customer deposits grew by 23% from BWP4.9 billion in Dec 2010 to BWP6 billion<br />Net asset value per share up from BWP2.87 to BWP3.09<br />Return on average equity was 17% compared to 14% in 2010<br />BancABC Half Year Financial Results 2011<br />
  9. 9. Total retail branches increased to 21 as of now compared to 13 in June 2010<br />US $50 million line of credit approved by Afrexim board<br />Operational Highlights<br />Draw-down of IFC convertible loan of US$13.5m on 13th May 2011<br />NPLs down from 9.4% in June 2010 to 5.5%<br />6<br />BancABC Half Year Financial Results 2011<br />
  10. 10. ECONOMIC OVERVIEW<br />Beki Moyo<br />
  11. 11. 8<br />Economic Overview<br />High oil & food prices<br />Rising demand pressures<br />Multi-speed global economic recovery continuing amid increasing risks<br />Increased Inflation<br />
  12. 12. Economic Overview<br />9<br />Devastating earthquake & Tsunami in Japan<br />Multi-speed global economic recovery continuing amid increasing risks<br />Unrest in the MENA region – war in Libya<br />Debt crisis in Eurozone & US<br />Negative Surprises<br />
  13. 13. 10<br />Economic Overview<br />Multi-speed global economic recovery continuing amid increasing risks<br />In developed countries<br /><ul><li>Economic growth somewhat subdued
  14. 14. Unemployment remains high
  15. 15. Worries over debt sustainability & contagion effect</li></li></ul><li>11<br />Economic Overview<br />Multi-speed global economic recovery continuing amid increasing risks<br />In emerging markets<br /><ul><li>Capital inflows have been strong
  16. 16. Currencies have appreciated
  17. 17. Strong signs of overheating</li></li></ul><li>12<br />Economic Overview<br />Multi-speed global economic recovery continuing amid increasing risks<br />In sub-Saharan Africa (SSA)<br /><ul><li>Economic growth has been strong
  18. 18. High commodity prices a boon to regional countries
  19. 19. Inflation pressures building</li></li></ul><li>13<br />US was downgraded by S&P from a top-notch AAA rating to AA+<br />Economic Overview<br />Fears of Eurozone debt crisis Spreading to Italy & Spain – threat stability of €<br />Looming Financial Crisis due to Identical US - EU Debt Challenges<br />Market jittery resulting in sell-off of risky assets<br />Investors have been seeking refuge in safe havens – Gold, Swiss Franc, etc.. <br />Developments similar to the start of the 2008-2009 credit crisis<br />
  20. 20. 14<br />Economic Overview<br />GDP Growth by Region<br />
  21. 21. 15<br />Commodity Prices<br />% Change Jun-10 to Jun-11<br />Firm commodity prices providing impetus to growth in commodity-driven Economies<br />
  22. 22. 16<br />Economic Growth (%) & Size (USD m)<br />Economic growth from crisis induced slowdown is underway<br />Growth in most countries is fairly close to high levels of the mid-2000s<br />
  23. 23. 17<br />Economic Overview - Inflation<br />International food prices have doubled<br />Fuel prices have surged<br />Inflation pressures are elevated<br />
  24. 24. 18<br />GDP, Deposits & Credit Per Capita<br />* As of Dec-10<br />
  25. 25. 19<br />Policy Interest Rates<br />Monetary<br />Policy Tightening<br />Monetary policies broadly accommodative except in Moz<br />
  26. 26. 20<br />On annual basis the following currencies appreciated vs USD:<br /><ul><li>MZN: 16.9%
  27. 27. ZAR: 11.2%
  28. 28. BWP: 7.5%
  29. 29. ZMK: 6.1%</li></ul>Exchange Rate Movement vs. USD<br />TZS depreciated vs USD by 14.7%<br />Continued weakening of TZS a major cause of concern – imported inflation <br />
  30. 30. 21<br />Exch. Rates Movement vs. Pula<br />Jun-10 to Jun-11<br />Depreciation<br />Appreciation<br />
  31. 31. 22<br />Banking Sector Status as of Apr-11<br />
  32. 32. FINANCIAL REVIEW<br />Beki Moyo<br />23<br />
  33. 33. Performance primarily driven by growth in net interest income and non-interest income<br />Income Statement<br />Impairments up due to loan growth and downgrading of security in Tanzania<br />Opex increased in line with increased span of activity<br />However, cost to income ratio down from 77% in 2010 to 72%<br />24<br />
  34. 34. Income Statement (USD)<br />Performance primarily driven by growth in net interest income and non-interest income<br />Impairments up due to loan growth and continued impairment of security for NPLs in Tanzania<br />Opex increased in line with increased span of activity<br />However, cost to income ratio down from 77% in 2010 to 72%<br />25<br />
  35. 35. Attributable Profit Trends<br />Improvement in sustainable earnings (NII, fees and commissions)<br />Current period profitability driven by:<br /><ul><li>Higher net interest income from better margins and higher asset base
  36. 36. Higher transactional and bond trading income</li></ul>Profitability was negated by:<br /><ul><li>Lower trading income in Zambia and Mozambique
  37. 37. Higher effective tax rate compared to prior year</li></ul>26<br />
  38. 38. Income Statement – Segmental Analysis<br />27<br />
  39. 39. Income Statement – Segmental Analysis (USD)<br />28<br />
  40. 40. Income Statement – Segmental Analysis<br />Strong growth in income other than for Mozambique and head office entities<br />29<br />
  41. 41. Income Statement – Segmental Analysis<br />Income growth from both the retail and wholesale lines of business<br />30<br />
  42. 42. Positive trend in net interest income driven by better liquidity and increased balance sheet size<br />Slight reduction in net interest margins although still high at 6.5%<br />Income Statement – Net Interest Income<br />31<br />
  43. 43. Net interest margins by entity<br />Net Interest Margin Before Impairments <br />Net Interest Margin After Impairments<br />32<br />
  44. 44. Income Statement – Segmental Analysis<br />Strong growth in NII other than from head office entities<br />33<br />
  45. 45. Impairment and credit loss ratios declined due to improved credit risk management processes <br />Tanzania net NPLs down to 1.3% from 5.3% in prior year due to increase in provisions<br />Zimbabwe impairments increased from an increased book<br />Net NPLs now 1.9% from 2.9% in prior year <br />Income Statement – Impairments & NPLs<br />34<br />
  46. 46. Substantial growth in fees and commissions as customer transactions increased<br />Income Statement – Non-Interest Income<br />Bond trading income also increased, but trading income down in Mozambique and Zambia<br />Zimbabwe and Tanzania were main contributors to growth in non-interest income<br />35<br />
  47. 47. Income Statement – Cost to Income Ratio<br />36<br />
  48. 48. Income Statement – Opex by entity<br />37<br />
  49. 49. Income Statement – Segmental Analysis<br />Growth in costs mostly driven by expansion into the retail and SME market segment<br />38<br />
  50. 50. Balance Sheet <br />39<br />
  51. 51. Balance Sheet (USD)<br />40<br />
  52. 52. 23% growth in balance sheet during the last six months from BWP6bn to BWP7.4bn<br />Deposits up 23% during the last six months<br /><ul><li>Growth across all the markets
  53. 53. Significant growth from BancABC Zimbabwe</li></ul>Balance Sheet – Overview<br />Loans and advances up 31% during the period<br /><ul><li>Significant growth in Zimbabwe
  54. 54. Quality of the book has improved - NPL ratio declined</li></ul>41<br />
  55. 55. BancABC Zimbabwe is largest contributor to Group’s loan book<br />Balance Sheet – Loans and Advances<br />Growth experienced in all markets other than Tanzania<br />42<br />
  56. 56. Balance Sheet – Segmental Analysis<br />Retail contribution has significantly grown in the last 12 months<br />43<br />
  57. 57. Balance Sheet – Deposits<br />Growth in deposits experienced across the footprint<br />Funds raised predominantly used to fund loans & advances and short-term placements<br />Botswana still largest contributor to Group deposits<br />Zimbabwe second largest contributor<br />44<br />
  58. 58. Balance Sheet – Segmental Analysis<br />Retail now contributing 15% of total deposits (June 2010: 1%) <br />45<br />
  59. 59. All entities are adequately capitalised<br />Balance Sheet – Capital Adequacy<br />46<br />
  60. 60. OPERATIONAL OVERVIEW<br />Francis Dzanya<br />47<br />
  61. 61. Operations Summary<br />21 Retail branches as of now<br />Staff compliment now <br />48<br />ABCH Group<br />736 Employees<br />Botswana<br />Mozambique<br />Tanzania<br />Zambia<br />Zimbabwe<br />South Africa<br />BancABC Botswana<br />118 Employees<br />BancABC Mozambique<br />103 Employees<br />BancABC Tanzania<br />92 Employees<br />BancABC Zambia<br />152 Employees<br />BancABC Zimbabwe<br />219 Employees<br />BancABC South Africa<br />52 Employees<br />100%<br />100%<br />100%<br />100%<br />94%<br />100%<br />
  62. 62. 49<br />Retail rollout continuing with a Group target of at least 30 branches by year-end<br /><ul><li>Technology has been a challenge slowing down implementation
  63. 63. Issues being addressed and rollout of key functionality to continue</li></ul>In-roads made into the wholesale market in all markets and microfinance in Zambia<br />Operations Summary<br />Significant reduction in Consumer Lending (“Microfin”) rates following introduction of 48 months loans<br />
  64. 64. Total head count in 2011 of 736 vs 612 in June 2010<br />Operations Overview – Head Count<br />Growth in staff numbers in last 12 months due to retail expansion<br />50<br />
  65. 65. <ul><li>Revenue increased significantly by 27%:
  66. 66. Net interest income up 29% - stable margins and increased interest earning assets
  67. 67. Non-interest income up 18% - higher transaction and trading income
  68. 68. Opex up 47% from increased activity around retail expansion
  69. 69. Tax optimisation measures reduced overall tax bill shielding impact of higher costs on profitability
  70. 70. Customer deposits increased 1% since Dec 2010 to BWP2 billion;
  71. 71. loans and advances increased 6% since Dec 2010 to BWP0.8 billion</li></ul>Botswana Highlights<br />PAT flat at BWP11 million<br />Balance sheet increased 9%<br />51<br />BancABC Full Year Financial Results 2010<br />
  72. 72. <ul><li>Total income down 12%:
  73. 73. Net interest income up 31% - improved margins and increased interest earning assets
  74. 74. Non-interest income down 27% - lower foreign exchange trading income due to lower margins and volumes
  75. 75. Opex up 13% from increased activity around retail expansion
  76. 76. Deposits up 17% since Dec 2010 to BWP1 billion
  77. 77. Loans and advances increased by 27% since Dec 2010 to BWP0.5 billion</li></ul>Mozambique Highlights<br />PAT of BWP8m, 41% lower than prior year<br />Total Balance Sheet up 24%<br />52<br />
  78. 78. <ul><li>Net interest income up 10% owing to higher balance sheet
  79. 79. Non-interest income increased by 72% - bond trading income major driver of growth
  80. 80. However, impairments up 17% to BWP11.5 million
  81. 81. Total income therefore only 45% ahead of prior year
  82. 82. Opex increased by 35% - expansion into Retail and SME segment
  83. 83. Deposits up 24% since Dec 2010 to BWP1 billion
  84. 84. Loan book declined 1% since Dec 2010 to BWP0.4 billion – efforts focused more into stabilisation of book to control NPLs
  85. 85. Funds raised mostly invested in money market investments</li></ul>Tanzania Highlights<br />Attributable profit of BWP10 million, 69% ahead of prior year<br />Balance sheet remained highly liquid and grew by 19% since Dec 2010 <br />53<br />
  86. 86. <ul><li>Total income up 11% driven primarily by growth in the microfinance net interest income
  87. 87. NII increased by 17% - growth driven by introduction of new microfinance products and restructuring of the existing ones
  88. 88. Wholesale banking division business growth subdued
  89. 89. Opex increased 18% from retail footprint expansion
  90. 90. Deposits increased 56% since Dec 2010 to BWP0.4 billion on back of improved market confidence in the bank
  91. 91. Loan book grew in the microfinance division but was down on wholesale – overall growth 23% since Dec 2010 to BWP0.3 billion</li></ul>Zambia Highlights<br />PAT of BWP6 million down 18% from <br />prior year<br />Balance sheet now more liquid<br />54<br />
  92. 92. <ul><li>Deposits increased 57% since Dec 2010 to BWP1.7 billion
  93. 93. Loans and advances increased 68% since Dec 2010 to BWP1.5 billion
  94. 94. Net interest income grew 3.5 times on back of similar growth in loans and advances
  95. 95. Non-interest income up 29% from increased transactions
  96. 96. Portfolio impairments up from BWP1 million to BWP8 million in the current period – loan book growth
  97. 97. Opex increased 25% due to continued expansion into the retail space</li></ul>Zimbabwe Highlights<br />PAT up 5 fold to BWP38 million<br />Balance sheet continues growing significantly<br />55<br />
  98. 98. Zimbabwe: Share of Loans by Banking Institution<br />56<br />
  99. 99. Zimbabwe: Share of Deposit as of Jun-10 <br />57<br />
  100. 100. 58<br />Zimbabwe: Share of Deposit as of Jun-11 <br />
  101. 101. Zimbabwe: Banks’ Capitalization Status as of 30 June 2011<br />59<br />
  102. 102. STRATEGY AND OUTLOOK<br />Francis Dzanya<br />
  103. 103. Short to medium term objectives<br />61<br />Grow the microfinance book in Zambia<br />Open additional branches across the footprint<br />Additional capital required in all subsidiaries, but BancABC Zimbabwe and BancABC Tanzania are priority<br />Additional capital raise being explored including private placement to raise additional Tier I capital<br />
  104. 104. Dividend declaration<br />62<br />
  105. 105. Outlook<br />63<br />Short-term prognosis points to a tough banking environment<br /><ul><li>Sovereign debt problems in EU and US
  106. 106. Increasing competition</li></ul>However, operating countries relatively stable politically and economically<br />Operating markets are growing and new opportunities exist<br />Medium term outlook positive for Group<br />BancABC Full Year Financial Results 2010<br />
  107. 107. THANK YOU<br />

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