Harare – BancABC, a which is the banking arm of Atlas Mara posted a profit of $4 million for the period ended June 30, 2018 compared to $2.4 million in the prior year which is a 67 percent increase.

The Group said profitability was mainly driven by a decrease in the impairment charges and an increase in fee and commission income by 38.1 percent.

In the period under review, the Group said net interest income of $57.9 million was down from $66.3 million in the comparative period, and was affected by shrinking margins in most countries operations coupled with minimal growth in the loan book than prior year.

“Whilst Botswana, Mozambique and Tanzania experienced low consumer lending growth, corporate loan utilisation in Zimbabwe was in some instances impacted as clients waited for foreign currency allocations.

“The application of cautious lending policies across our markets also impacted loan book growth. Interest income from investment securities increased during the period under review, particularly in Zambia and Zimbabwe,” it said.

The Group said its non-interest grew by 2.4 percent from $36.4 million prior year to $37.3 million for the period ended June 30 2018.

It said whilst lending related fees remained unchanged, good foreign currency trading performance was recorded by Zimbabwe and significant recovery in foreign currency trading income in Botswana, Mozambique and Zambia.

The Group said it recorded pleasing digital performance overall.

“Zimbabwe’s digital banking income grew by 102 percent year on year, whilst in Mozambique, point of sale (POS) terminals increased from 73 in June 2017 to 404 in June 2018, and POS merchants increased from 31 to 283 in the same period in support of the digital thrust that the Group is pursuing.

“Significant work is being done to revamp the digital offering in Zambia and Botswana, which will improve digital performance going forward.”

The Group’s impairment charges reduced from $7.5 million for the period ended June 30 2017 to $3.7 million for the period ended June 30, 2018 which is a 51 percent decrease.

BancABC said the decrease was due to impairment recoveries in Botswana, Mozambique and Tanzania as well as continued adherence to the Group’s improved credit monitoring and recovery processes.

Operating expenses decreased by 7.3 percent from $87.4 million last year to $81 million this year.

“Cost reduction remains as a key focus area across the Group. Administrative expenses decreased year on year by 31.1 percent. Staff costs increased by 18.3 percent as some subsidiaries hired critical skills required to meet strategic initiatives.”

BancABC said gross loans and advances increased slightly from $1.218 billion to $1.223 billion this year.

“Whilst on average, the rate of amortisation on the loan book exceeded the rate of growth on the book, in Zambia the book grew by $40 million, mainly in the corporate and public sector space for the six month period, whilst Zimbabwe grew by $90 million in the same period. Impairment allowance grew by 57 percent year on year mainly as a result of the day one impact of IFRS 9 taken through equity.”

On the outlook the Group said more accommodative policy environments will likely remain in place so as to boost private sector credit growth and stimulate economic activities.

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