Fraser Mpofu
17 March 2008
Harare — Gaborone-based African Banking Corporation (ABC) Holdings has posted an impressive performance with attributable profits rising by 44 percent to P123.5 million last year.
Group chairman, Oliver Chidawu said in a statement accompanying ABC Holdings' results for the year ended December 31, 2007, that the massive profit growth was a result of a strong performance by all the financial institution's subsidiaries, save for ABC Zambia.
"With the exception of ABC Zambia, all group subsidiaries recorded profiles in 2007," said Chidawu.
The subsidiaries outside Zimbabwe contributed P32.4 million to attributable profit, a 46 percent increase on the P22.2 million recorded in 2006. It should be noted that this was achieved in spite of the P13 million negative cost of carry on the P250 million debt raised at the end of 2006."
ABC Zambia had a difficult year because of tight interest and foreign currency margins, said Chidawu.
However, the subsidiary is showing signs of recovery after a capital injection in 2006.
Formed in Zimbabwe in 2000, ABC Holdings is a registered company in Botswana with a primary listing on the Botswana Stock Exchange (BSE) and a secondary listing on the Zimbabwe Stock Exchange (ZSE).
ABC Holdings has operations in Zimbabwe, Botswana, Zambia, Tanzania and Mozambique.
Chidawu said ABC Zimbabwe has contributed the largest chunk to attributable profits at P91.2 million despite the continued economic problems in the country and the devaluation of the Zimbabwe dollar.
However, he warned that the operating environment in Zimbabwe remains a challenge. "The 2008 financial year has started on a very positive note particularly for the subsidiaries outside of Zimbabwe," Chidawu said.
"...Sadly, the conditions in Zimbabwe continue to deteriorate with inflation for January 2008 at an all-time high of 100, 580 percent and projected to worsen in the coming months.
"As a result, while Zimbabwe will continue to be a significant part of the business, its overall contribution is expected to reduce over time."
Chidawu said the group's balance sheet remains sound with capital adequacy ratio for all of its banking institutions being significantly higher than minimum regulatory requirements. The balance sheet grew by 21 percent from P2.4 billion to P2.9 billion.
Consumer deposits for ABC Botswana shot up by 28 percent while in Tanzania and Zambia they grew by 78 percent and 49 percent respectively.
Chidawu said the International Finance Corporation (IFC); a member of the World Bank group has increased its shareholding in ABC to 10.7 percent after it subscribed for 13.8 million shares at an overall cost of P37.4 million two months ago.
In addition, Citi Venture Capital International (CVCI) a subsidiary of Citigroup, one of the world's biggest financial institutions, approved an investment of US$25 million through a two-year convertible loan.
Crafted on almost the same lines as the IFC loan deal, the CVCI investment would, on conversion, give the Citigroup subsidiary a 20 percent shareholding in ABC Holdings.
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