3. Financial Highlights
› Total income up 29% to BWP251 mill (H109: BWP194 mill)
› Net operating income up 80% to BWP45 mill (H109: BWP25 mill)
› Attributable profit of BWP28 mill (H109: BWP36 mill)
– Share of associate loss
– Tax charge in H110 vs. tax credit in H109
› Impairments down 59% to BWP17 mill (H109: BWP41 mill)
› Cost : income down from 82% at year end to 77% (H109: 72%)
› Deposits up 41% and 23% compared to H109 and H209
› Total assets increased to BWP5.1 billion, 25% and 16% up from
H109 and H209
› Average return on equity positive at 14% (H109: 16%)
3
4. Operational Highlights
› Six Retail Banking branches opened in Dar es Salaam,
Gaborone, Bulawayo, Harare and Chimoio
› Looking at opening an additional eight new branches
before year end
› Zimbabwe head count right sized
› BancABC Zambia now profitable and Microfin merger
yielding synergistic benefits
› Improved credit risk management reduces impairments
4
6. Economic Overview
› IMF projects global GDP growth to reach 4.2% in 2010
(09: -0.8%):
– Growth driven primarily by Asia
– Western economies remain sluggish
› Economic and business environment in SADC region has
improved, growth mainly driven by recovery in commodity
prices
› Down-side risks to global economic recovery still exist due
to:
– Sovereign debt crisis in Europe and Middle-East
– Austerity measures reducing demand in developed
economies
– Asset price bubbles in some emerging markets
6
8. 2010 Monthly Inflation Trends
8
› Relatively stable inflation other than in Mozambique where rate worsened
rapidly from 5% at start of the year to 14.5% by mid-year.
Source: Central Banks, Ministries of Finance and Central Statistics Offices
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
Bots Tanz Moz Zamb Zimb SA
Jan Feb Mar Apr May Jun
10. Exchange Rate Developments
10
› Local currencies in our markets have generally
depreciated against the USD and BWP during the period
› Mozambican Meticais had the worst depreciation of 25%
against the USD and 19% against the BWP
› This had some adverse impact on reported results for the
subsidiary
› Against the USD, the Zambian Kwacha depreciated 11%,
Tanzanian Shilling depreciated by 5% and the Botswana
Pula by 6%
› Against the BWP, the Tanzanian Shilling marginally
appreciated by 1% whilst the Zambian Kwacha
depreciated by 5%
11. Banking Sector Deposits and Loans
11
Banking Sector Total Deposits
(US$m)
Banking Sector Loans to the
Private Sector (US$m)
Bots Moz Tanz Zam Zim
Dec-07 5,214 2,460 4,211 2,435 580
Dec-08 5,046 2,835 4,702 2,354 313
Dec-09 5,574 3,418 5,476 2,680 1,381
May-10 5,464 3,024 5,537 2,745 1,832
Bots Moz Tanz Zam Zim
Dec-07 2,236 1,306 2,594 1,351 99
Dec-08 2,281 1,795 3,559 1,635 140
Dec-09 2,963 2,597 3,763 1,586 636
May-10 2,908 2,363 3,832 1,524 1,012
Source: Respective Central Banks
› The markets continue to be attractive and have generally been growing
in the recent past
› Opportunities exist to enter new market segments in each country
› The Tanzania and Botswana markets continued being the largest
› Zimbabwe has rapidly grown in the 2009-2010 period
13. Income Statement
13
BWP’000s H1-2010 % ∆ H1-2009 FY-2009
Net interest income 146,815 87% 78,684 178,394
Impairment of loans &
advances -16,996 59% -40,969 -51,218
Net interest income
after impairments 129,819 244% 37,715 127 176
Non interest income 121,622 -22% 156,542 265,017
Total income 251,441 29% 194,257 392,193
Operating expenditure -205,967 -22% -169,211 -365,694
Net income from
operations 45,474 82% 25,046 26,499
Share of (loss)/profits
of associates -11,479 -1157% -913 16,164
Profit before tax 33,995 41% 24,133 42,663
Tax -5,269 -141% 12,757 15,768
Profit for the year 28,726 -22% 36,890 58,431
Attributable to:
- Ordinary shareholders 28,076 -23% 36,494 58,117
- Minorities 650 64% 396 314
EPS (thebe) 19.5 -23% 25.4 40.4
› Performance primarily
driven by growth in net
interest income and
reduction in impairments
› Opex increased mainly
because of Zimbabwe
post dollarisation
› Zimbabwe costs up 138%
and accounts for 17% of
the 22% YoY increase in
expenses
14. Income Statement (USD)
14
USD’ 000’s H1-2010 % ∆ H1-2009 FY-2009
Net interest income 21,241 98% 10,703 25,176
Impairment of loans &
advances (2,459) 56% (5,573) (7,228)
Net interest income
after impairments 18,782 266% 5,130 17,948
Non interest income 17,597 -17% 21,294 37,402
Total income 36,379 38% 26,424 55,350
Operating expenditure (29,800) -29% (23,018) (51,610)
Net income from
operations 6,579 93% 3,406 3,740
Share of (loss)/profits
of associates (1,661) -1240% (124) 2,281
Profit before tax 4,918 50% 3,282 6,021
Tax (762) -144% 1,735 2,225
Profit for the year 4,156 -17% 5,017 8,246
Attributable to:
- Ordinary shareholders 4,062 -18% 4,964 8,202
- Minorities 94 77% 53 44
EPS (cents) 2.8 -20% 3.5 5.7
› Performance primarily
driven by growth in net
interest income and
reduction in impairments
› Opex increased mainly
because of Zimbabwe
post dollarisation
› Zimbabwe costs up 138%
and accounts for 17% of
the 22% YoY increase in
expenses
15. Attributable Profit Trends
› Lower profit after tax in current year not reflective of real
performance
– Disposal of profitable investments reduces income from associates
– Prior year tax credit
15
31
23
74
36
28
28%
18%
39%
16%
14%
0%
10%
20%
30%
40%
50%
0
10
20
30
40
50
60
70
80
Jun-06 Jun-07 Jun-08 Jun-09 Jun-10
BWPm
Attributable profit (BWP m) and ROE (%)
Attributable profit (BWP m) ROE (%)
18. Income Statement – Net Interest Income
› Positive trend in net interest income driven by increased margins, better
liquidity and increased balance sheet size
› Recovering economic environment and improved credit risk management
reduced impairments
› Zimbabwe contribution to net interest income growing (12% vs 3% in H1:09)
18
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
-
50,000
100,000
150,000
200,000
Jun-06 Jun-07 Jun-08 Jun-09 Jun-10
BWP'000
Net Interest Margin
Net int BWP'000 NIM before impairments NIM after impairments
19. Income Statement – Segmental Analysis
19
Net Interest Income
2010 2009 % change
BancABC Botswana 23,076 16,871 37%
BancABC Mozambique 15,575 21,475 (27%)
BancABC Tanzania 22,416 14,189 58%
BancABC Zambia 32,512 32,377 0.4%
BancABC Zimbabwe 18,015 2,630 585%
Banking operations 111,594 87,542 27%
Head office 35,221 -8,858 398%
TOTAL 146,815 78,684 87%
20. Income Statement – Impairments & NPLs
› Trend of impairments and credit loss ratio is declining
› Net NPLs covered by collateral
› Overall NPLs have now stabilised
20
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
0%
2%
4%
6%
8%
10%
12%
2006 2007 2008 2009 2010
Creditlossratio
NPLratios
NPL and Credit Loss Ratios
Gross NPL ratio Net NPL ratio Credit loss ratio
21. Income Statement – Non-Interest Income
› Bulk of equity investments disposed of in 2009, hence no mark-to-market gains
› Overall quality of non-interest income improving – greater portion of earnings are
now recurring
› Trading, fee and commission income increasing whilst gains on equity investments
are declining
21
0%
20%
40%
60%
80%
100%
Jun-06 Jun-07 Jun-08 Jun-09 Jun-10
Fees & comms Forex trading Gains on investments FV gains - Inv Prop Other
22. Income Statement – Cost to Income Ratio
22
› Cost to income ratio declining with retail costs stabilising and other expenses
stabilising in Botswana, Mozambique and Tanzania and declining in Zambia
› Zimbabwe costs up post dollarisation - now normalising; hyper-inflation in the past
› Head office no longer charging management fees from 2009
› Retail costs were 13% or BWP27 mill of total expenses (09:10% or BWP18 mill)
› Going forward, Retail Banking to contribute positively, decreasing C:I ratio
› Target C:I ratio remains 50%
49% 49% 47% 47%
50%
59%
72%
82%
77%
40%
50%
60%
70%
80%
90%
23. Income Statement – Staff Costs
23
› Total head count in 2010 of 612 vs 561 in 2009
› Growth in staff numbers in last 12 months mainly attributable to retail
expansion
› BancABC Zambia staff numbers declined from 147 in June 2009 to
125 in June 2010 following Microfin merger
-
200
400
600
800
Staff Complement
Wholesale Retail
24. Retail Banking Capex
24
› Group has incurred bulk of costs on retail roll-out
› All IT systems expected to be in place by year end
› Incremental capital expenditure to be driven by number of branches
opened in subsequent periods
USD ‘000 BWP ‘000
Branch capital expenditure 5,768 40,780
Systems roll-out 4,449 31,454
Data centre centralisation 3,478 24,589
13,695 96,823
25. Balance Sheet
25
BWP '000s Jun-2010 Jun-2009
%
change Dec-2009
Cash and short term funds 717,669 615,471 17% 881,884
Financial assets held for trading 1,423,014 748,819 90% 880,740
Financial assets designated at fair value 4,133 72,033 -94% 17,905
Loans and advances 2,341,744 2,163,487 8% 1,995,325
Property and equipment 302,612 185,245 63% 278,975
Other assets 332,351 298,026 12% 362,916
TOTAL ASSETS 5,121,523 4,083,081 25% 4,417,745
Deposits 4,132,382 2,924,733 41% 3,355,118
Borrowed funds 471,634 553,789 -15% 543,822
Other liabilities 81,101 82,457 -2% 103,026
Total liabilities 4,685,117 3,560,979 32% 4,001,966
Equity attributable to ordinary shareholders 420,189 505,281 -17% 399,069
Minority interest 16,217 16,821 -4% 16,710
Total equity 436,406 522,102 -16% 415,779
TOTAL EQUITY AND LIABILITIES 5,121,523 4,083,081 25% 4,417,745
26. Balance Sheet (USD)
26
USD '000s Jun-2010 Jun-2009
%
change Dec-2009
Cash and short term funds 101,514 91,028 12% 132,194
Financial assets held for trading 201,285 110,750 82% 132,023
Financial assets designated at fair value 585 10,654 -95% 2,684
Loans and advances 331,240 319,980 4% 299,099
Property and equipment 42,805 27,398 56% 41,818
Other assets 47,012 44,079 7% 54,401
TOTAL ASSETS 724,441 603,889 20% 662,219
Deposits 584,525 432,568 35% 502,932
Borrowed funds 66,713 81,905 -19% 81,519
Other liabilities 11,473 12,197 -6% 15,443
Total liabilities 662,711 526,670 26% 599,894
Equity attributable to ordinary shareholders 59,436 74,731 -20% 59,820
Minority interest 2,294 2,488 -8% 2,505
Total equity 61,730 77,219 -20% 62,325
TOTAL EQUITY AND LIABILITIES 724,441 603,889 20% 662,219
27. Balance Sheet – Overview
27
› Deposits up 41% and 23% relative to H109 and H209
respectively
› Growth across all the markets
› BancABC Zimbabwe had highest rate of growth off a low base
› Loans and advances up 8% and 17% relative to H109 and H209
respectively
› Growth significantly from Zimbabwe as economy stabilised
› Cautious approach to lending was exercised in other markets
› Lending in Mozambique constrained by interest rate movements
during the period
› Total assets of BWP5.1 billion, an increase of 25% and 16%
relative to H109 and H209 respectively,
28. Balance Sheet – Loans and Advances
28
› BancABC Botswana continued
being largest contributor to
Group’s loan book
› BancABC Zimbabwe’s
contribution grew rapidly on
back of economic stability
› Loan book is stable
Bots:28%
Moz:15%
Tnz 21%
Zam 11%
Zim 15%
ABCH
10%
766
1,084
1,621
2,163
1,995
2,342
-
500
1,000
1,500
2,000
2,500
Jun-06 Jun-07 Jun-08 Jun-09 Dec-09 Jun-10
Net Loans and Advances
29. Balance Sheet – Deposits
29
› Growth in deposits across
footprint
› Additional funds generated
invested mostly in short-
term financial instruments
› BancABC Botswana still
the largest contributor
› BancABC Zimbabwe’s
contribution to deposits
growing
1,380
1,800
2,281
2,925
3,355
4,132
-
1,000
2,000
3,000
4,000
5,000
Jun-06 Jun-07 Jun-08 Jun-09 Dec-09 Jun-10
Deposits (BWP m)
Bots 43%
Moz18%
Tnz 19%
Zam 6%
Zim14%
30. Balance Sheet – Capital Adequacy
30
Total capital (BWP m) Capital Adequacy Ratio
Subsidiary Jun 10 Jun 09 Min 2010 2009
BancABC Botswana 166 120 15% 22% 17%
BancABC Mozambique 135 157 8% 18% 22%
BancABC Tanzania 133 130 12% 14% 12%
BancABC Zambia 83 59 10% 30% 14%
BancABC Zimbabwe 113 98 10% 14% 31%
› All entities are adequately capitalised
› Zambia re-capitalised by injection of US $6 mill in tier II
capital and conversion of US $5 mill of existing tier II into
tier I capital
32. Botswana
› Economy stabilising and is now growing following
recovery in diamond prices
› PAT improved 84% to BWP11 mill
› Positive performance driven by increased net interest
margins, on a larger balance sheet coupled with reduction
in impairment charge
› Non-interest income declined by 22% to BWP17 mill
following reduction in forex trading volumes and margins
› Operating expenses were flat on prior year
32
33. Mozambique
› Economy experienced high volatility in interest and
exchange rates during the period
› PAT declined by 24% to BWP13 mill on account of
increased tax rate from 16% to 32% following expiry of
fiscal benefits
› Interest rate volatility negatively affected interest margins
leading to reduction in net interest income by 27% to
BWP16 mill
› However, forex trading income increased on the back of
increased volume of transactions
› Operating expenses increased by 7% to BWP29 mill in line
with retail expansion
33
34. Tanzania
› High exchange rate volatility experienced towards period
end, but economy is stable
› BancABC Tanzania’s liquidity position continued to improve
leading to higher net interest income
› Non-interest income also increased 59% to BWP19 mill
from increased forex transactions and bond trading
› Impairment charge increased 77% to BWP10 mill
following classification of a few but large accounts
› Expenses increased 24% to BWP23 mill mostly from retail
expansion related costs
› PAT none-the-less increased 165% to BWP7 mill
34
35. Zambia
› BancABC Zambia has now stabilised and is profitable
› Subsidiary was re-capitalised during the period
› Recorded a PAT of BWP7.5 mill compared to a loss of
BWP13 mill in prior year
› Impairments declined to BWP3 mill from BWP22 mill in
the prior period.
› Operating expenses declined by BWP4 mill as a result of
synergies arising out of the merger of the bank and
microfinance unit
› Subsidiary is now on strong footing to grow business
going forward
35
36. Zimbabwe
› Economy growing following end of hyper-inflation in Feb
2009
› Subsidiary has been able to grow its income by 195% to
BWP59 mill
› Both loans and deposits increased markedly
› However, expenses increased 138% to BWP49 mill largely
due to an increase in staff costs
› PAT increased 246% to BWP7 mill
36
37. Retail Banking Update
› Six new branches opened up to half-year
– One each in Botswana, Mozambique and Tanzania
– Three in Zimbabwe
› Expecting to open a further 8 branches by year-end
› All IT systems to be fully operational by year-end
› Retail has started contributing to the Group’s income
stream
37
39. Outlook
39
› Economies generally stable in operating countries
› Both Retail and Wholesale units expected to do well in the
second half
› Head Office costs continue to be a challenge although
stabilising
› Impairments now under control which bodes well for the
Group going forward
› Would like to start paying dividends in the near term
43. BancABC PRESENTATION 10 MARCH 2010
Income Statement – Net Interest Margins
43
0.0%
5.0%
10.0%
2006 2007 2008 2009 2010
BancABC Mozambique
NIM before impairments
NIM after impairments
NIM before impairments
0.0%
5.0%
10.0%
2006 2007 2008 2009 2010
BancABC Tanzania
NIM before impairments
NIM after impairments
0.0%
2.0%
4.0%
2006 2007 2008 2009 2010
BancABC Botswana
NIM before impairments
NIM after impairments
0.0%
10.0%
20.0%
30.0%
2006 2007 2008 2009 2010
BancABC Zambia
NIM before impairments
NIM after impairments
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
2006 2007 2008 2009 2010
BancABC Zimbabwe
NIM before impairments
NIM after impairments
0.0%
5.0%
10.0%
2006 2007 2008 2009 2010
Consolidated
NIM before impairments
NIM after impairments
44. BancABC PRESENTATION 10 MARCH 2010
Income Statement – Opex by Operation
44
-
10,000
20,000
30,000
40,000
50,000
60,000
BWP'000
Jun-06 Jun-07 Jun-08 Jun-09 Jun-10
