Maputo — Mozambique's largest commercial bank, BIM (International Bank of Mozambique) recorded a 70 per cent increase in its profits last year.

After an Annual General Meeting of shareholders on Thursday, BIM announced that its 2005 profits were 344 billion meticais (about 13.8 million US dollars).

The chairman of the BIM board, former Prime Minister Mario Machungo, told reporters that 50 per cent of this sum will be distributed as dividends to the shareholders.

The shareholding structure of the bank remains unchanged from a year ago. Two thirds of the shares (66.69 per cent) are held by the largest financial group in Portugal, the BCP. The Mozambican state has 23.13 per cent of the shares, the National Social Security Institute (INSS) owns 4.95%, the publicly owned security company EMOSE has 4.15 per cent, and the remaining 1.08 per cent are held by one of the country's most prominent NGOs, the Community Development Foundation (FDC).

The Mozambican government, under dogmatic pressure from the IMF and World Bank, has pledged to pull out entirely from commercial banking. But Machungo said he had no idea when the government would sell off the state's holding in BIM.

The only thing agreed so far, is that 10 per cent of the shares will be sold to BIM staff. Machungo said that some administrative details still had to be put in place, but he expected the transfer of these shares to take place soon.

This would leave the state with around 13 per cent of the shares, which for IMF ideologues is 13 per cent too much (although it is hard to see any good reason for the state pulling out of what is now a profitable institution).

The results from 2005 show that BIM is holding onto its position as by far the largest bank in the country, with 42 per cent of all deposits, and 41 per cent of total net credit. These percentages are much the same as a year ago - which shows that the whole banking system is expanding significantly.

The net credit to BIM clients rose by 75 per cent in 2005 to 7,967 billion meticais. But the bank says it is now keeping tight control over loans. Immediately after the 2001 merger between BIM and the Commercial Bank of Mozambique (BCM), which had been brought to the brink of ruin by reckless lending, overdue loans amounted to an alarming 27 per cent of the total credit portfolio. That figure has now been brought down to just four per cent.

The number of BCM clients rose by 21 per cent in 2005 to reach 328,000. Most of these clients (301,000) now have BIM debit cards, allowing them to withdraw money from automatic cash machines (ATMs).

The number of BIM ATMs rose by 16 per cent to 190, and the number of Points of Sale (POS) - shops and other establishments where payment can be made by BIM debit card - rose by almost 50 per cent to 1,958.

But the bulk of BIM business remains centred in the main cities - in the Maputo-Matola connurbation, followed by Beira and Nampula. 100 of the bank's ATMs are in Maputo city and province, and just 90 are in the other nine provinces.

"The imbalances are evident", said Machungo, "but they were not created by the bank. The financial sector by itself cannot create a balance".

He insisted that setting up BIM branches in districts not yet covered must depend on a level of economic activity there "that justifies the expansion".

Asked to comment on a claim in the weekly paper "Zambeze" that BIM "intends to sell at public auction assets of the Macaloe sawmill for a million dollars", to cover this company's alleged debts to the bank, Machungo pointed out that the bank has no power to sell off debtors' assets.

"BIM doesn't sell off property at public auction", he said.

"The bodies that do that are the courts".

Macaloe is a major timber company in the northern province of Cabo Delgado, largely owned by Portuguese businessman Amadeu da Costa Oliveira. Asked whether the constant claims that Macaloe does indeed owe large sums to the bank are true, BIM directors declined to answer on grounds of the confidentiality of bank- client relations.