0 abc holdings ltd interim results to june 2009. 1 highlights bwpjune 09% changejune 08dec 08...
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1
ABC Holdings LtdInterim Results to June 2009
2
HIGHLIGHTS
BWP June 09 % change
June 08 Dec 08
Attributable profits (‘000s)
36,494 50% 73,638 85,818
Basic EPS (thebe) 25.4 50 % 51.2 60.3
Dividend per Share ( thebe)
- - 8.00 8.00
Cost to income ratio (%) 72% 22 % 50%
59%
Net asset value (‘000s) 505,281 22 % 412,852
437,654
NAV per share (thebe) 3.51 22 % 2.87 3.04
Total assets (‘000s) 4,083,081
22 % 3,338,641
3,967,938
3
HIGHLIGHTS
• African Banking Corporation successfully re-branded to BancABC across all operating territories
• Total income 9% up to BWP 235 m (H108: BWP 215 m)
• Cost to income ratio increased to 72% (H108: 50%)
Retail banking development
Dollarisation of the Zimbabwe economy and costs iro strengthening the existing operations
• Attributable profit of BWP 36.5 m (H108: BWP 73.6 m), and EPS of 25.4 thebe (H108: 51.2 thebe)
• Strong operational and financial performance in Mozambique entrenches BancABC’s positioning in that market
• Retail banking development progressing well - branch network to be rolled out H209.
4
ECONOMIC OVERVIEW
5
ECONOMIC OVERVIEW GLOBAL GDP GROWTH
-4
-2
0
2
4
6
8
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
%
Differential between SSA and World Growth World Growth SSA Growth
AsianCrisis
Dot-comCrisis
Source: IMF
6
• Global economy is projected to decline by 1.4% in 2009
• SSA economic growth suffering from the negative impact of global recession but still projected to grow at 1.5% in 2009, outperforming global economy
• Negative growth in Botswana
• Zimbabwe expected to registered GDP growth for the first time in 10 yrs
• Commodity prices weakened significantly in sympathy with the global economic downturn resulting in weak export earnings
• Inflation pressures have generally been low on the backdrop of weak global demand and subdued oil prices
• Zimbabwe burst the inflation bubble following the adoption of multi-currency system – hyperinflation turned to deflation
ECONOMIC OVERVIEW KEY INDICATORS
7
Country
GDP
(USDm)
2009
GDP Growth
rate
2009 est
Banking Deposits (USDm)
Jun 2009
Banking Credit
(USDm)
Jun 2009
Banking Assets
(USDm)
Jun 2009
Population
2009 est (m)
No. of
banks
Botswana 12,200 -10.4% 4,883 2,573 6,580 1.8 12
Mozambique 10,380 4.3% 2,876 1,962 4,109 21.2 12
Tanzania 21,854 2.5% 4,739 4,626 6,770 40.6 36
Zambia 13,931 4.0% 2,059 1,535 2,942 12.9 14
Zimbabwe 3,498 3.7% 706 263 1,009 12.6 28
ECONOMIC OVERVIEW COUNTRY OPPORTUNITY
Source: Central Banks, Ministries of Finance and Central Statistical Offices
8
• SSA currencies are recovering from significant declines against the USD experienced in Q408 and Q109
• Volatility in forex markets higher than previously experienced
• Zimbabwe presents great growth opportunity despite low asset base
• Depreciation of ZMK has reduced deposit base
• Banking assets however continued to grow, albeit at a slower pace
ECONOMIC OVERVIEW COUNTRY OPPORTUNITY
9
ECOMOMIC OVERVIEW INFLATION AND INTEREST RATES
CountryInflation
Rate June-2009
Avg. TB Yield Rate June-
2009
Avg. Prime Lending
Rates 2009
Avg. Prime Lending
Rates 2008
Zimbabwe* 0.6% --- 9.6 % 3,700%
Botswana 7.0 % 11.4 % 15.5 % 16.6%
Mozambique 2.7 % 11.5 % 16.4 % 20.1%
Zambia 14.4 % 14.0 % 20.9 % 25.2%
Tanzania 10.7 % 11.6 % 13.5 % 13.6%
*Monthly inflation
10
COUNTRY OVERVIEW
11
COUNTRY OVERVIEW ATTRIBUTABLE PROFIT
BWP’000sJune 09
% contributio
nJune 08
% contributio
n Dec 08
% contributio
nBancABC Botswana 5,959 41% 5,968 12% 13,193 23%BancABC Mozambique
17,475 120% 7,340 15% 16,644 29%
BancABC Tanzania 1,678 12% 2,666 7% 10,096 17%
ABC Zambia*(12,669)
-87% 4,710 10% (7,223) -13%
BancABC Zimbabwe 2,133 14% 27,613 56% 25,338 44%Banking operations
14,556 100% 48,297 100% 58,048 100%
H.O. and other 21,938 25,341 27,770TOTAL 36,494 73,638 85,818
*includes Microfin Africa
12
COUNTRY OVERVIEW BOTSWANA
• Economy severely impacted by declining diamond prices
• Loan book declined by 9% from Dec 08 but up 17% from June 08
• Impairments contained at prior year levels
• Total income increased by 15% to BWP 39.1 m
• Net interest income marginally down to BWP 16.9 m (H108: BWP 18.2m)
• Other income increased significantly to BWP 22.3 m (H108: BWP 15.8m), predominantly foreign exchange trading income
• Retail expansion and staffing costs impacted profitability
• Attributable profit stable at BWP 6.0m
13
COUNTRY OVERVIEW MOZAMBIQUE
• Impressive performance with attributable profit up 140% to BWP 17.5 m
• Net interest income up 57% to BWP 21.5m
• Loan book grown by 25% from Dec 08 and 75% from June 08
• Other income up 162% to BWP 28.6 m
• Increase in business volumes
• Higher margins owing to high volatility
• Foreign exchange trading income
• Low levels of impairments due to economy’s lesser dependence on commodity prices
• Banc ABC’s strong niche position in market place reinforced
14
COUNTRY OVERVIEW TANZANIA
• Net interest income increased to BWP 14.2 m (H108: BWP 11.6 m)
• Loan book grew 43% YOY but declined 14% since Dec 08
• Other income grew by 32% to BWP 11.9 m
• Impairments significantly higher at BWP 5.6 m (H108: BWP 1.0 m)
• Attributable profit lower at BWP 1.7 m (H108: BWP 2.7 m)
15
COUNTRY OVERVIEW ZAMBIA
• Zambian economy very hard hit by slump in copper prices during 2008, significant lag effect into broader economy and support sectors
• High levels of impairments of BWP 22m due to resulting economic impact
• Net interest income stable at BWP 32.4 m, but other income declined due to limited liquidity
• Management changes implemented
• Merger of Microfin and ABC Zambia operations expected to produce synergistic cost savings
16
COUNTRY OVERVIEW ZIMBABWE
• Overall income down vs. H108, but improved from H208
• Net interest income BWP 2.6 m (H108: BWP 8.6m)
• Other income BWP 12.8m (H108: BWP 32.1m) due to reduced investment property income and tight liquidity
• Attributable profit of BWP 2.1 m (H108: BWP 27.6 m)
• Significant cost increase due to dollarisation
• Decision taken to divest of investment portfolio to fund banking operations
• Promising signs of banking sector recovery in Zimbabwe
• Stabilising Zimbabwe economy presents great growth opportunities off a very low base
17
FINANCIAL OVERVIEW
18
FINANCIAL OVERVIEW INCOME STATEMENT
• Net interest income up 11% to BWP 78.7m
• Non interest income up 8% to BWP 156.5m, driven by forex income
• Total income up 9% to BWP 235 m (H108: BWP 215 m);
• Net interest income contribution to total income stable at 33%
• Cost to income ratio increased to 72% (H108: 50%) due to the retail banking development, dollarisation of the Zimbabwe economy and strengthening of human capital across the Group
• Net interest income covered 47% of costs
• Basic EPS 25.4 thebe (H108: 51.2 thebe);
• Average return on equity remains positive at 16% (H108: 39%);
19
FINANCIAL OVERVIEW INCOME SPLIT
60%39% 33% 33% 33%
40%61% 67% 67% 67%
June 05 June 06 June 07 June 08 June 09
Net interest income Other income
• Income composition consistent for last three years
• Interest income to contribute proportionally more going forward
• Expected return to stability in the global markets
• Redeployment of capital from non-core assets to interest earning assets
20
FINANCIAL OVERVIEW OTHER INCOME
BWP’000s June 09 June 08
%
changeGains from investment activities 71,569 59,040 21%Dividends received 21 1,444 -99 %Fee and commission income 37,033 26,982 37 %Fx trading income and currency revaluation
44,046 17,015 159 %
Fair value gains on investment properties
(12,478) 32,901 -138 %
Fair value adjustment: derivative instruments
9,762 (4,254) 329 %
Rental and other income 6,589 11,693 -44 %Total 156,542 144,821 8 %
• Significant growth in foreign exchange trading volume, especially in Mozambique and Botswana
21
FINANCIAL OVERVIEW 5 YEAR EARNINGS
• Trend shows effect of inflation adjusted accounting in Zimbabwe
• Bar Zambia, all banking operations remain profitable
22
FINANCIAL OVERVIEW BALANCE SHEET
• Deposits increased by 4% from Dec 08 and 26% from June 08 to BWP 1.9 billion
• Region’s high exposure to commodities impacted significantly on business growth and debt servicing
• Group impairments as a result increased by 215% to BWP 41m, with Tanzania and Zambia increasing by 340% and 460% respectively
• Strengthening of Group credit department and systems ongoing
• Group balance sheet grew by 24% from June 08 and 4% from December 08 to BWP 4.1 billion
• Loans and advances up by 38% to BWP 2.2 billion compared to June 08, but declined by 4% since December 08 due to deliberate policy to curtail lending
• NAV per share increased by 15% from December 2008 and 22% from June 2008, to 3.51 thebe per share;
23
FINANCIAL OVERVIEW DEPOSIT GROWTH
1,338
704556
204124
429
1,012
450
276113
Botswana Mozambique Tanzania Zambia Zimbabwe
June 09 June 08
• 26% growth in deposits
• Botswana, Mozambique and Tanzania grew by over 30%
• Zambia recorded a decline
24
FINANCIAL OVERVIEW DEPOSIT BOOK SPLIT
Botswana46%
Mozambique24%
Tanzania19%
Zambia7%
Zimbabwe4%
25
FINANCIAL OVERVIEW LOAN BOOK GROWTH
676
455530
354
100
0
336260
581
361
Botswana Mozambique Tanzania Zambia Zimbabwe
June 09 June 08
• Net loans increased by 38% from June 08
• All subsidiaries registered significant growth with the exception of Zambia which grew marginally
26
FINANCIAL OVERVIEW LOAN BOOK SPLIT
Botswana32%
Mozambique21%
Tanzania25%
Zambia17%
Zimbabwe5%
27
FINANCIAL OVERVIEW 5 YEAR NAV TREND
• NAV per share increased 22%
• Consistent NAV growth over the last 5 years
• Zimbabwe operations positive contribution to capital in 2009
28
FINANCIAL OVERVIEW CAPITAL
BWP’000
Capital*
June 09
FCTR
June 09 CAR
Capital*
June 08
FCTR
June 08
BancABC Botswana
119,950 - 17% 105,810 -
BancABC Mozambique
157,288
(5,514) 20% 113,533 (1,379)
BancABC Tanzania**
130,045 (10,603) 14% 104,044 3,790
ABC Zambia*** 65,596 (2,968) 14% 146,484 26,900
BancABC Zimbabwe
92,922 (197) 45% 103,105(157,05
8)
*including Tier II** including TDFL***including Microfin
29
FINANCIAL OVERVIEW CAPITALISATION
• Mutually agreed not to draw down the proposed US$25 m investment by CVCI
• Zimbabwe investment portfolio of equity and real estate assets to be liquidated to fund banking operations – original capital preservation strategy for Zimbabwe no longer necessary
• The proceeds are expected to meet the Group’s funding needs
• Planned rights issue postponed
• IFC to disburse 50% of US$13.5 m convertible loan
• Balance to be drawn down over the next 12 months
30
RETAIL BANKING
• Significant investment in retail banking made in systems and human capital
• BWP 22 m in direct expenses
• Investment in IT systems of US$3.2 m
• Retail Banking head office now appropriately staffed, but contributed to overall higher employee costs
• 9 branches to be opened by the end of 2009
• Costs expected to continue to increase as project rolls out
• Retail banking expected to contribute meaningfully in 2nd half of 2010
• Branch profitability estimated at between 18 to 24 months
31
OUTLOOK CHALLENGES
• Economies across the region beginning to show signs of recovery
• Strengthening commodity prices especially copper, nickel and diamonds
• Expected improvement in incidence of bad debts
• Major thrust continues to be consolidation and ensuring modest growth notwithstanding high costs as a result of retail banking
• Continued proactive management of the loan book• Merger of Zambia operations should result in cost savings and
turn around• Deposit mobilization remains a key focus area for the group,
particularly in Zambia
• Dollarisation of the Zimbabwe economy brings liquidity challenges, but presents huge opportunities
32
THANK YOU
33
APPENDICES
34
ECONOMIC ENVIRONMENT GRAIN PRICES
0
100
200
300
400
500
Jan-
05M
ay-0
5Se
p-05
Jan-
06M
ay-0
6Se
p-06
Jan-
07M
ay-0
7Se
p-07
Jan-
08M
ay-0
8Se
p-08
Jan-
09M
ay-0
9
Mai
ze &
Whe
at, U
S$/t
0
200
400
600
800
1000
Ric
e, U
S$/m
t
Maize Wheat Rice
International Grain Prices Regional Grain Prices
0
100
200
300
400
500
Jan
-07
Ap
r-0
7
Jul-
07
Oct
-07
Jan
-08
Ap
r-0
8
Jul-
08
Oct
-08
Jan
-09
Ap
r-0
9
Maiz
e P
rice
, US$/t
World
Moz
Kenya
Tanz
Zambia
Source: World Bank
35
ECONOMIC ENVIRONMENT EXCHANGE RATES
70
80
90
100
110
120
130
140
150Jan-0
7
Apr-
07
Jul-
07
Oct-
07
Jan-0
8
Apr-
08
Jul-
08
Oct-
08
Jan-0
9
Apr-
09
Jul-
09
Exch. R
ate I
ndex, Jan 0
7=
100
ZMK/USD
MZN/USD
TZS/USD
BWP/USD
Depre
cia
tion
Appre
cia
tion
70
80
90
100
110
120
130
140
150Jan-0
7
Apr-
07
Jul-
07
Oct-
07
Jan-0
8
Apr-
08
Jul-
08
Oct-
08
Jan-0
9
Apr-
09
Jul-
09
Exch. R
ate I
ndex, Jan 0
7=
100
ZMK/USD
MZN/USD
TZS/USD
BWP/USD
Depre
cia
tion
Appre
cia
tion
70
80
90
100
110
120
130
140
150Jan-0
7
Apr-
07
Jul-
07
Oct-
07
Jan-0
8
Apr-
08
Jul-
08
Oct-
08
Jan-0
9
Apr-
09
Jul-
09
Exch. R
ate I
ndex, Jan 0
7=
100
ZMK/USD
MZN/USD
TZS/USD
BWP/USD
70
80
90
100
110
120
130
140
150Jan-0
7
Apr-
07
Jul-
07
Oct-
07
Jan-0
8
Apr-
08
Jul-
08
Oct-
08
Jan-0
9
Apr-
09
Jul-
09
Exch. R
ate I
ndex, Jan 0
7=
100
ZMK/USD
MZN/USD
TZS/USD
BWP/USD
Depre
cia
tion
Appre
cia
tion
36
ECONOMIC ENVIRONMENT GDP GROWTH
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
8
2007 '08 '09 2007 '08 '09 2007 '08 '09 2007 '08 '09 2007 '08 '09
Initial ProjectionsRevised Projections
Botswana Mozambique
Zimbabwe
Tanzania Zambia
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
8
2007 '08 '09 2007 '08 '09 2007 '08 '09 2007 '08 '09 2007 '08 '09
Initial ProjectionsRevised Projections
Botswana Mozambique
Zimbabwe
Tanzania ZambiaBotswana Mozambique
Zimbabwe
Tanzania Zambia
37
ECOMOMIC ENVIRONMENT EXCHANGE RATES
To 1 BWP30 Jun-09 31 Dec-
0830 June-08
United States Dollar 0.15 0.13 0.15
Mozambique Metical 3.95 3.38 3.96
South African Rand 1.14 1.25 1.20
Tanzania Shilling 193 174 180
Zambian Kwacha 765 636 494
Zimbabwe Dollar - 88 Quad* 24.9 billion*
•ZWD Old Mutual implied rate•ZWD revalued in 2008
38
ECOMOMIC ENVIRONMENT EXCHANGE RATES
To 1 US dollar 30 Jun-09 31 Dec-08 30 June-08
Botswana Pula 7.76 7.54 6.53
Mozambique Metical
27.13 25.50 24.05
South African Rand
7.71 9.40 7.83
Tanzania Shilling 1 303 1 315 1 173
Zambian Kwacha 5 170 4 795 3 225
Zimbabwe Dollar - 665 Quad* 162.6 billion*
•ZWD Old Mutual implied rate•ZWD revalued in 2008
39
FINANCIAL PERFORMANCE: NET INTEREST INCOME
Ave. Yield on
IEAAve. Cost
Spread
2009
Spread
2008
ABC Botswana 12.3% 11.3% 1.0% 1.3%
ABC Mozambique 10.8% 5.1% 5.7% 5.4%
ABC Tanzania 10.9% 7.2% 3.7% 3.7%
ABC Zambia 14.4% 9.3% 5.1% 4.9%
ABC Zimbabwe 21.4% 3.7% 17.7% 20.5%
Microfin Zambia 67.6% 22.3% 45.3% 43.9%
40
ECONOMIC OVERVIEW COMMODITY PRICES
• Commodity prices have recovered significantly from Dec-08 prices
-8.7
5.7
7.7
10.4
13.4
15.9
15.9
26
39.3
39.9
45.9
54.6
64.5
71.3
-20 -10 0 10 20 30 40 50 60 70 80
CoalAluminum
RiceCotton (A-Index)
MaizeWheat
GoldCoffee (Arabica)
SoyabeansPalladiumPlatinum
NickelCopper
Oil
%
Source: World Bank
41
INTERNATIONAL BANKS MARKET CAPITALISATION
• Modest recovery in banks mkt cap indicates that the worst of the banking crisis could be behind us
6
59 60
1025
7
49
1818
187
157
45
82
4656
40
0
50
100
150
200
250
Citigroup HSBC JP Morgan RBS BNPParibas
Barclays DeutscheBank
MorganStanley
US$
BnMkt Cap as of 9-Mar-09 Mkt Cap as of 4-Aug-09
42
INTERNATIONAL EQUITY MARKET CAP US$ BILLIONS
• International equity markets also showing signs of recovery
3,7003,8004,0004,30015,600
1,4001,8002,4003,1009,200
2,1063,3093,1754,04314,413
NYSE
Tokyo SE
NASDAQ
London SE
Shanghai SE
Mkt Cap: Jun-09
Mkt Cap: Dec-08
Mkt Cap: Dec-073,7003,8004,0004,30015,600
1,4001,8002,4003,1009,200
2,1063,3093,1754,04314,413
NYSE
Tokyo SE
NASDAQ
London SE
Shanghai SE
Mkt Cap: Jun-09
Mkt Cap: Dec-08
Mkt Cap: Dec-07
43
STOCK MARKET CAPITALIZATION SSA Countries US$ m
• JSE capitalisation up from US$485bn in Dec 08 to US$667bn in July 09
1,3033,5414,1063,745
10,985
67,790
1,4803,7023,9024,16810,792
54,004
Mkt Cap: Dec 2008
Mkt Cap: Jul 2009
Zim Zambia Botswana TanzaniaKenya
Nigeria