zbfh - september 2012 peer group strategic awareness report 1

NAME OF INSTITUTION

STRENGTHS WEAKNESSES RECENT/CURRENT ACTIVITIES

POSSIBLE FUTURE MOVES

OVERALL COMMENT

ZBFH(portfolio

includes ZB Bank, ZB

Building Society, ZB Life

Assurance, ZB Asset

Management, ZB Reinsurance,

ZB Securities and ZB Capital)

Well diversified with easily identified/ recognisable Banking, Asset Management, Building Society, Securities, Re-insurance, and Life Assurance and Short-Term Insurance units.

Wide geographical coverage especially for Bank and Building Society with 55 branches across the country.

188 POS, 47 ATMs which are well networked nationwide and exceptional business environment.

Sound investment in employee training.

Sound infrastructure and IT systems across the Group.

Highly skilled personnel and strong technical expertise.

Group has strategic ties with ZIMRA, Cell Insurance and Alexander Forbes, among other companies.

Increasing delivery channels and product synergies within the

Slow strategy execution. Unable to have a

consistent Group brand message as it focuses on tactical communication only.

No regional presence. Below industry profit

after tax for the HY ended June 2012. Profitability decreased by 82% from US$5 million for HY2011 to US$1 million for HY2012.

Poor branch ambience. Relatively weak capital

base, hence uncompetitive in respect of underwriting business.

Above average and rising operating cost to revenue ratio between HY2011 (78%) and HY2012 (86%).

Below industry average in terms of total comprehensive income for HY 2012.

Relatively small in terms of total assets.

Launched ZB Executive Banking as a replacement of E Class Banking.

Introduced the harmonised rate for the Funeral Cash Cover.

The Bank sponsored the 2012 HIFA Edition.

The Bank embarked on road shows to promote the e-wallet and Stash account for students.

Offering Health Insurance to the formal sector under its ZB Life Assurance subsidiary.

Opening of more branches Continued massive

advertising of e-wallet. Full exploitation of Group

synergies. Harmonisation and/or

culling of some product offerings with more or less same attributes.

Continue with efforts to secure capital.

Merge ZB Bank and ZB Building Society

High potential for growth, on the back of capital injection and improved customer confidence.

© Group Economics & Strategy of 11

ZBFH PEER GROUP STRATEGIC AWARENESS REPORTFOR THE 3rd QUARTER OF 2012

PREPARED IN SEPTEMBER 2012

NAME OF INSTITUTION



OVERALL COMMENT

ZBFH continued

Group and also other organizations e.g. PG Industries.

Good reputation as an indigenous and stable financial services provider.

Recorded above average revenue for HY 2012.

ABC Holdings

(portfolio includes regional

Merchant and Commercial

Banking operations in Botswana,

Mozambique, Zambia,

Tanzania and Asset

Management in Zimbabwe)

Regional presence in Mozambique, Botswana, Tanzania and Zambia.

Strong brand name. Solid Group with well

capitalised Business Units.

Listed on both the Zimbabwe and Botswana Stock Exchanges, hence easy access to domestic and regional capital markets.

Strong appeal to both regional and international investors.

Immaculate branch ambience.

Distinguished service provision; limited waiting times for customers.

Involved in a number of projects thus giving it access to perhaps one of the major sources of

Less diversified business portfolio; more focused on banking operations.

Business Units have small branch network therefore limited geographical spread.

Poor managerial oversight at ABC Zambia - entity continues to be over shadowed by the Zimbabwean division.

Majority owned by foreigners, hence may be affected by Government policies such as the Indigenisation and Empowerment drive.

Foreign owned, thus lacks full autonomy in decision making.

Retail Banking in other countries is recording losses except for

BancABC Zimbabwe was named the best employers for the year 2011 in the private sector company category.

Tanzania division posted an attributable loss during the 1st

half ended 30 June 2012. The Group recently raised

US$50 million through a rights issue, which closed on July 27.

BancABC Botswana is also going to receive US$15 million while Tanzania and Zambia operations will each receive US$7 million. BancABC Mozambique will get US$3.5 million while share issue expenses will take up US$2.5 million.

Set to add more branches in line with its plans to grow its retail business, including more ATMs & POS terminals to boost delivery channels, while maintaining the wholesale banking division as well.

Set to be co-financer of the construction of Netone Head Office.

Set to join the Zimswitch platform.

Solid Group with strong merchant banking background.




NAME OF INSTITUTION



OVERALL COMMENT

ABC Holdings

continued.

steady income and business growth.

On an expansion drive and now has more than 50 representation points in the region enabling it to tap much needed deposits.

Recorded the second highest profit after tax of US$7.4 million for the period ended 30 June 2012.

Biggest in terms of total assets (US$1.4 billion) as at June 2012.

Achieved below average operating cost to revenue ratio (74%) for the HY ended June 2012.

Recorded above average revenue for HY 2012.

Zimbabwe where it is profitable.

FBCH(portfolio

includes FBC Bank, FBC

Building Society, FBC re-

insurance and FBC

Stockbroking)

A well diversified business portfolio; does not rely on one business unit.

Low levels of bureaucracy.

Benefiting from the NSSA strategic partnership

Strong investment in print and electronic advertising.

Business units have small branch network.

Static growth in terms of branch network.

Recorded below average revenue for HY 2012.

Below peer group average in terms of asset base.

The company's board has decided not to declare a dividend until the new capital levels have been achieved.

Opened Chitungwiza Bank Branch with effect from 3 September 2012.

Running the Mazda 3 Scheme, a loan facility to purchase brand new Mazda 3 vehicles form selected authorized dealers in

The Group is set to introduce VisaCard to tap into the international market and possibly benefit from the 2013 UNWTO conference to be co-hosted between Zimbabwe and Zambia.

Merging the bank with the building society into a commercial bank.

Increasing visibility paying off through rising performance indicators.




NAME OF INSTITUTION



OVERALL COMMENT

FBCH continued

Wide range of banking products.

Young and dynamic management.

Sound investment in IT. Relatively wide branch

network with 21 branches, and 47 POS.

Innovative in creating new technological services

Able to adapt to rapid changes in the market due to hierarchal narrow structure.

Regarded by Finance Minister Biti as the best run indigenous bank in Zimbabwe.

Recorded above average profit after tax of US$6.9 million for the period ending 30 June 2012.

Achieved below average operating cost to revenue ratio (67%) for the HY ended June 2012.

Zimbabwe with a repayment period of over 5 months.

OLD MUTUAL(Portfolio

includes Old Mutual Life

Assurance, Old

Invests largely in property development and owns a significant number of building properties in Zimbabwe.

Part of the renowned Old Mutual Plc, which is

Has been affected by Government’s Indigenisation and Empowerment drive where they are being forced to surrender 51% of the equity to

Old Mutual offered to offload a 27% shareholding to employees, 17% to local pension funds and 7% to the National Indigenisation Trust Fund.

Due to its strong performance

Shareholder restructuring and possible employee empowerment in line with the Government’s Indigenisation and Empowerment initiative.

Solid financial institution.




NAME OF INSTITUTION



OVERALL COMMENT

Mutual Properties, Old

Mutual Unit Trust, Old

Mutual Asset Managers)

OLD MUTUALcontinued

multi-listed; including on the ZSE, JSE and LSE, hence has very easy access to international capital markets.

Largest institutional investor on the ZSE.

Strong brand name and renowned business units, including MBCA, CABS, Old Mutual Life Assurance, RM Insurance and Old Mutual Asset Management.

Controls the largest Building Society (CABS) in Zimbabwe.

Benefits from strong Group synergies through the “Link Project”.

Strong Corporate culture focused on social responsibility.

indigenous Zimbabweans.

It has clashed several times the with the indigenous business people over its perceived high rentals.

Foreign owned, thus lacks full autonomy in decision making.

Vulnerable to adverse movements in the global financial markets due to its strong links with Old Mutual Plc.

Faces a huge investment risk as many businesses are rationalising operations and closing businesses from rented premises.

Narrow product line and yet to resume sales of individual life products.

High turnover of tenants leading to 40% shopping centre space being void.

the Group managed to introduce the special dividend, as well as the normal dividend.

Old Mutual set aside a Distressed Industries and Marginalised Areas Fund (Dimaf) of US$40 million to revive companies in Bulawayo.

Old Mutual has increased its shareholding in RioZim from 20% to 29.6% after sub-underwriting the mining company’s US$5 million rights issue. RioZim floated 10 million rights issue shares and shareholders subscribed 60.63% of the shares, resulting in Old Mutual taking up 39.36% of the unsubscribed shares.

CABS, a subsidiary of Old Mutual Zimbabwe, signed a Memorandum of Understanding with the Harare City Council for the establishment of a US$15 million housing fund that will see the construction of over 3,000 housing units in the Budiriro high density suburb.

Its Banking unit, CABS is planning to go commercial.

Set to revise DIMAF conditions which have been cited as a major hindering obstacle to firms in Bulawayo which are in need of the funds.

CABS might venture into commercial banking.

ReNaissance Financial Holdings (Capital Bank Corporation,

Offers a relatively diversified portfolio of financial services.

The Group’s subsidiary, First Mutual Life Medical Aid Society (FLIMLAS)

Damaged corporate image due to the alleged abuse of depositors’ funds by the former Chief Executive Mr. Patterson Timba.

In April 2012, Securities Commission suspended Renaissance Securities for failing to meet minimum capital thresholds. Stockbrokers are required to have at least

The takeover of RFHL by NSSA is set for a dispute as former shareholders led by Mr. Timba are challenging the takeover hence legal

Potential for growth, on the back of capital injection and improved




bdoroh, 09/14/12,

Has the name not changed to CAPITAL Financial Holdings?

NAME OF INSTITUTION



OVERALL COMMENT

ReNaissance Merchant Bank, ReNaissance

Securities, Afre Corporation.

Portfolio includes African

Actuarial Consultants,

Tristar Insurance

Company, First Mutual Life,

Pearl Properties, FMRE Property and Casualty, FMRE Life and

Health)

has strategic ties with Netcare of South Africa. Netcare is the largest private hospital network in South Africa and UK.

Strong capital base to support operations and broader access to investment funds due to the ZSE listing of AFRE and Pearl Properties.

Offers high quality health insurance, with a considerable market share of high net worth individuals.

The Group’s banking arm posted US$4.5 million profit for HY2012.

Depositors flight due to the placement of the bank under the curatorship.

Low level of business being experienced by the bank has resulted in the bank failing to meet all operating costs.

US$150,000 in liquid capital. Confederation of Zimbabwe

Industries President Joseph Kanyekanye was appointed Chairperson of Renaissance Merchant Bank

In June 2012, the High Court ruled that the board led by Professor Chetsanga, which sold the Bank to NSSA was no longer in office a move that puts in quandary the acquisition of the RFHL by NSSA.

Curatorship ended in February 2012.

ReNaissance Merchant Bank was renamed Capital Bank Corporation. ReNaissance Financial Holdings now owns 16% of Capital Bank.

challenges may emanate. Intensive marketing to

restore customer confidence in the Group.

Rebranding. Set to introduce advisory

services on debt restructuring, mergers, acquisitions and equity disposals.

customer confidence.

CBZH(Portfolio

includes CBZ Bank, Datvest

Asset Management,

CBZ Properties, CBZ Building

Society, Optimal Insurance Company)

Strong strategic ties with the Government and Government institutions.

Well-diversified business portfolio.

Banking Division, CBZ Bank is the largest deposits taking and lending institution in Zimbabwe.

Banking Division, CBZ Bank remains the country's biggest bank in terms of assets.

Some business units have different brand names and cannot be easily identified i.e. Datvest Asset Management and Optimal Insurance.

Potential loss of Government related business.

Face huge credit risk due to its investment in unsecured lending.

Vulnerable to global

The Group declared a dividend of 0,132 US cents per share for HY2012 from a total dividend of US$903 071. The total dividend declared was up 10% from the comparative period last year.

Zimbabwe Revenue Authority has partnered with CBZ Bank Limited to develop an online based payment platform, as the tax collector intensifies efforts to upgrade its systems.

CBZ bank was given a line of

Set to be co-financer of the construction of Netone Head Office.

CBZ Bank is expected to be the first big corporate to build a modern banking hall in a 15-storey complex worth US$ 300 million.

CBZ Asset to implement property-linked products.

Diversifying its income streams

Making inroads into

Diversified group with strong strategic ties with Government and Government Institutions.




NAME OF INSTITUTION



OVERALL COMMENT

CBZHcontinued

Huge capital base to support operations.

Has good reputation. Most organizations prefer to do business with them.

Subsidiary, CBZ Bank has strategic alliance with Pinnacle Properties for the purchase and sale of properties.

Is in partnership with Radar Holdings retail division, United Builders Merchants (UBM), in a deal that would see CBZ Bank providing loans to anyone willing to buy building materials from UBM.

Wide branch network with 52 branches with 3 being for premier banking, 42 ATMs and 250 POS facilities.

Recorded the highest profit after tax of US$18.3 million for the period ended 30 June 2011.

Achieved the lowest operating cost to revenue ratio for the HY ended June 2012.

Second largest in terms of total assets as at June 2012.

volatilities. The asset management

business posted a US$130 thousand loss during the HY 2012.

credit worth US$60 million for on- lending to small-to-medium enterprises by PTA Bank.

CBZ Bank Chief Operating Officer, Peter Zimunya was appointed the new Managing Director. He takes over from John Mangudya, who was appointed the holding company’s Group Chief Executive following the early retirement of Nyasha Makuvise.

Co-financial advisors of the multimillion-dollar Beverly Hills Golf Estate in Borrowdale Brooke. The project is worth US$ 250 million.

CBZ Bank secured a US$15 million revolving loan facility from Asian Bank Badea to support small and medium enterprise in the agriculture, agro-processing, manufacturing and service industries.

Shareholders approved the Group’s plans to embark on a share buy-back and to revive its employee share option scheme (Esos). The shareholders also approved the declaration of a final dividend at an annual general meeting held on May 30, 2012.

long- term insurance.




NAME OF INSTITUTION



OVERALL COMMENT

Well capitalized – already met the new 2014 minimum bank capital requirements.

Has a higher ROE of 27% for HY June 2012.

Recorded higher and above average revenue for HY2012.

Lifestyle Holdings

(Former TN Holdings)

(Portfolio includes TN

Bank, TN Asset Management, TN Medical

Benefit Funds,TN Financial Services, TN

Harlequin Laxuire, TN Mart

and TN Grill)

The Group is very innovative in cost reduction through its Banking Malls.

Young and vibrant management team well known for good business practices.

Immaculate branch ambience.

Focused on a niche market of high net-worth individuals.

Huge investment potential through its strategic links with Econet Wireless Holdings, the country’s largest telecommunications company.

Offering its products on credit so as to counter the liquidity crisis currently prevailing in the market.

Invests largely in

As at 30 June 2012 the Group had 27 banking halls, relatively small as compared to other competitors.

TN Bank (Group back bone) is a fairly new entrant into the market; hence little market/brand visibility.

TN Bank has a limited branch network and geographical spread though it’s increasing its branch network.

The Group is still to fully expand into rural areas hence access is still limited.

Low deposits from individuals.


Opened a furniture shop in Zambia.

The Group concluded and reached an agreement with a South African company to supply furniture in more than 30 outlets in South Africa.

Changed the composition of TN Bank’s board to include international board members such as Metallon Corporation chief financial officer, Kwaku Akosah-Bempah, Canadian-born Guy Pearce from Global Banking Group and Nelson Mandela’s daughter, Makaziwe Mandela.

TN Bank received a US$20 million cash injection from Econet Wireless Zimbabwe.

The bank continues to tap into Econet’s strong subscriber base to spur growth in non-interest income through the Ecocash offering resulting in

Penetrate the regional market as the Group gears to increase revenue streams and unlock shareholder value.

The Group is expected to start a transport business mainly to complement TN Mart.

The furniture production side is set to establish furniture export market.

The strategic focus will now be on increasing non-funded income lines such as launching ATMs for Ecocash products and the upgrading of the TN Cash card this year

It is hoped the distribution network will expand through the acquisition of Pelhams.

Opening more TN Grills outside Harare.

Diversified Group with strategic alliance with Econet hence it is able to benefit from every move done by Econet.




bdoroh, 09/14/12,

Update as at 30 June 2012?

NAME OF INSTITUTION



OVERALL COMMENT

TN Holdings (now Lifestyle

Holdings) Continued

aggressive marketing strategy (billboard advertising, advertising through sponsored links).

Benefits from group synergies and large distribution network through Tedco retail outlets.

Well diversified business Group with access to operating subsidiary customers and also cutting costs through shared human resources.

Increasing capacity utilisation of the manufacturing subsidiary.

Well-positioned to lure more clients through cash back facility agreements with TM & OK Supermarkets.

Below industry profit after tax for the HY ended June 2012.


Has a relatively low asset base.

improved transaction volumes. Entered into long term supply

agreements with an Eastern highlands based timber supplier for the extraction of raw materials used by TN Harlequin Luxaire.

Acquisition of the Wood Industries assets comprising a timber processing facility in Bulawayo.

The Group is pushing for board representation at Pelhams Ltd following the diversified group’s acquisition of around 58% of the listed furniture company’s total issued share capital.

The Group and Rufaro Marketing sealed an US$845,900 deal for leasing Rufaro Marketing beer halls for the next 12 years. Meanwhile, the Group revised downwards the number of outlets to be leased from 25 outlets to 14.

The Group re-branded to Lifestyle Holdings.

TN Bank un-bundled from the Holdings Company and listed separately on the ZSE.

Launching Livestock Trusts.

AfrAsia Kingdom Financial

Has discounted its undercapitalisation through innovative products and a strong

Delays in re-listing on ZSE limiting its capital base and investment opportunities.

Kingdom Asset Management (Pvt) Ltd has launched the Zimbabwe Stock Exchange Tracker Fund. The fund is an

AfrAsia will inject fresh capital into local operations.

The Group is expected

Rebuilding Corporate Image.




NAME OF INSTITUTION



OVERALL COMMENT

Holdings(Portfolio includes

Kingdom Bank Limited,

Kingdom Asset Management,

Kingdom Stock Brokers,

MicroKing Finance, FDH

Malawi, Kingdom Bank Africa Limited Botswana).

brand. Well diversified Group

with regional presence in Malawi and Botswana.

Highly innovative in product development and sound e-banking platform.

Vibrant and dynamic leadership with low levels of bureaucracy.

Strong marketing initiatives as witnessed by online advertising, appearing as sponsored links and electronic and print media advertising.

Renowned for its support to SMEs through Micro-King Finance.

Introduced a mobile cell card unit which is proving to be popular and efficient.

Strong ICT base. Wide Branch network

with 19 branches and 2 being premier branches. 1,500 POS and 25 ATMs utilised for ads.

No prospects of offering a one stop shop.

Still suffering from the after effects of the demerger with Meikles Limited. Loss of deposits from Meikles related companies.


Below industry average in terms of revenue for the HY2012.

Below industry profit after tax for the HY ended June 2012.


Relatively smaller asset base.

open-ended, unit trust that is expected to track the performance of the ZSE Industrial Index.

Shareholders at the annual general meeting held in Harare this May 2012 gave directors, the go-ahead to raise US$200 million.

Won the ICT supporting bank award in 2011.

Shareholders authorised the Group to acquire a controlling stake in Kingdom Bank Africa Limited Botswana, Amara Tech, a switching company based in South Africa and a private equity firm listed on the Stock Exchange of Mauritius.

Kingdom Cell Card shone brilliantly as it was crowned 2011's Outstanding New Market Entry at a dinner hosted by CBZ Bank.

Introduced the MasterCard following its collaboration with MasterCard Worldwide.

Introduced the new online system of opening personal accounts online.

The Group changed its name to AfrAsia Kingdom Financial Holdings.

Launched an upgraded core banking system - Globus R10.

raise US$200 million in debt capital and offshore lines of credit to further capitalise its operations.

Relisting on the Zimbabwe Stock Exchange.

Listing on the Johannesburg Securities Exchange and the Stock Exchange of Mauritius (SEM).

Kingdom Financial Holdings Limited is set for major transformation in product diversity, operations and brand identity after the equity investment by Mauritius-based AfrAsia Bank Limited.

Rebranding some of its business units.




zbfh - september 2012 peer group strategic awareness report 1

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