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ABC overcomes odds

patriot by patriot
February 8, 2021
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ABC Holdings, the Pan African bank, has endured some difficulties in the financial period ending June 30, 2019 arising from impact of drought, commodity prices, the strengthening US dollar and impact of global trade issues amongst others in the markets in which it operates.

“In most of the countries, the central banks and governments are trying to stimulate the economies by pursuing accommodative monetary and fiscal policies. In general, due to adverse movements in balance of trade and high public debt, exchange rates have been under some pressure although depreciation so far has been relatively moderate with some interventions, except for Zimbabwe which has depreciated steeply,” the company directors reported in a  statement accompanying the results. 

In Botswana, the executives said, gross domestic product growth was revised to 3.9% from 4.2% owing to weak diamond sales amid an uncertain global growth backdrop and lower tourism volumes. Fiscal stimulus measures should provide some support for growth.

Mozambique was adversely affected by the cyclones and uncertainty due to upcoming elections. Possible developments in the natural gas sector (US$25 billion Liquified Natural Gas project) present some optimism.

In Tanzania, a slight downward revision in GDP from initial forecast of 6.5% to 6.0% for 2019 reflected unfavourable weather conditions. Revised GDP growth forecast in Zambia of 2.0% from 4.5% reflects the negative impact of Government’s deteriorating fiscal position, the impact of drought on agriculture and mining sector weakness. The slight uptick in inflation will be due to pass-through effects of kwacha depreciation and rising food price pressures.

Economic volatility in Zimbabwe persisted during the period, resulting in a rapid rise in inflation. For the first time since 2008, Zimbabwe is set to register a contraction in GDP due to persistent foreign currency and fuel shortages as well as the impact of drought. A number of economic reforms have been introduced to address the unfolding economic imbalances, which saw the country introducing its own local currency in June 2019, the Zimbabwean dollar. The positive effect of these reforms is yet to be seen and, in the meantime, the country continues to witness hyperinflation conditions and heavy devaluation of the local currency.

Performance Summary

Excluding IFRS 5 impairment, the Group recorded a profit of US$6.8 million for the six months ended 30 June 2019 compared to the same period prior year profit of US$4.0 million. The impact of the Zimbabwe dollar’s depreciation, by more than 500%, against the US$ since the beginning of the year took its toll on performance. As a result, net interest income of US$39.8 million was 31% down from US$57.9 million in the comparative period. Healthy loan book growth was seen in the Zambia business which made significant strides in public sector lending as well as on the consumer and corporate lending book in Zimbabwe. Non-interest income increased by 40% from US$37.3 million for the six months ended 30 June 2018 to US$52.2 million for the six months up to 30 June 2019 largely due to improved foreign currency trading performance in Zimbabwe, Mozambique and Zambia as focus continued on non-funded income growth.

The Group’s impairment charge reduced from US$3.7 million during the first half of 2018 to US$0.7 million for the six months ended 30 June 2019, an 80% decline. This was due to impairment releases from recoveries made, notably in Zimbabwe, Tanzania and Mozambique as well as continued adherence to the Group’s improved credit monitoring and recovery processes.

Botswana’s first half performance was down from prior year 2018, thereby reducing its contribution to Group performance during the period under review. This was mainly due to slow asset growth and higher cost of funds in the first half of the year. However, the second half of the year is expected to see improved performance as the Bank has revamped its digital platforms and seen more business being underwritten, the impact of which is expected to be seen in the second half of the year. 

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  • We must ‘walk the talk’ July 4, 2022
    We can only save ourselves and our planet by confronting climate change BY COLLEN VIXEN KELAPILE Climate change has become the enemy of human progress and a threat to humanity’s survival. We see its devastating consequences daily. No country is […]
  • Makwinja caught in Minergy saga   June 30, 2022
    Her husband –Leonard, is a Board Member at Minergy Coal ‘She is conflicted, hence she is failing to resolve our disputes with the company’ – Farmers ‘It’s an attempt to score cheap political points’ –Makwinja Minergy Coal proposes a […]
  • CA Sales lists on the JSEJune 29, 2022
    african-markets.com The JSE, Africa’s largest stock exchange, has listed CA Sales Holdings Limited on its main board providing South African investors with exposure in the fast-moving consumer goods (FMCG) company with a footprint in several Southern African countries. CA […]
  • BBS launches insurance agencyJune 28, 2022
    BBS Limited is pleased to inform its current and potential customers as well as stakeholders that it has launched an insurance agency called BBS Insurance Agency Limited; whose purpose is to provide insurance agency services and bespoke insurance products […]
  • MANTSWE JOINS TURNSTAR BOARDJune 28, 2022
    Turnstar Holdings Ltd, is pleased to announce the appointment of Mr Solomon Seoketsi Mantswe, to the Board of Directors, with effect from 1st July 2022. He brings over 30 years’ experience in the public service. He was appointed Deputy […]
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