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ABC Holdings Limited Audited Group Results for the year ended 31 December 2012

ABC Holdings Limited Audited Group Results for the year ended 31 December 2012. 26 March 2013. Agenda. - Highlights - Economic review - Operational overview - Financial review - Strategy and outlook. Highlights. Douglas Munatsi. Financial highlights.

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ABC Holdings Limited Audited Group Results for the year ended 31 December 2012

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  1. ABC Holdings Limited Audited Group Results for the year ended31 December 2012 26 March 2013

  2. Agenda - Highlights- Economic review- Operational overview- Financial review- Strategy and outlook

  3. Highlights Douglas Munatsi

  4. Financial highlights • Strong underlying Group performance • Improving capital base and NAV per share • Successfully raised BWP364 million by way of rights issue in July 2012

  5. Financial highlights Growth in profitability from increased business volume Retail expansion Cost to income ratio down due to higher revenues

  6. Financial highlights Strong growth in volumes across the board Diversification into retail lending Successful rights issue in July 2012

  7. Operational highlights

  8. Economic overview Douglas Munatsi

  9. Global economic development

  10. GDP growth in selected leading economies

  11. Egypt renewed economic/Political deterioration Risks to global economy • US Severe Fiscal Stand-off • Japan escalation of tensions with China over islands • Renewed Euro Area Stress • Oil price instability • Global Economy

  12. Economic growth in selected African countries

  13. Economic growth in selected African economies

  14. Inflation developments in selected markets in 2012 Low inflation environment in Zimbabwe & Mozambique Double digit YoY inflation level in Tanzania Above target inflation in Botswana & South Africa Inflation breached 7% mark in Dec-12 in Zambia

  15. Monetary policy rates

  16. Lending and deposit interest rates

  17. Lending and deposit interest rates

  18. Lending and deposit interest rates Quoted lending rates vary widely in Zimbabwe This is a reflection of different cost structures among banks in mobilising deposits The Central Bank recently introduced caps and floors on interest rates

  19. Exchange rate movement US$ vs. ZAR ZAR volatility persisted in 2012 influenced by both domestic & global factors In 2013, ZAR broadly trading in the 8.75 – 9.25 range vs. USD

  20. Exchange Rate Movement vs. USD • Dec-11 to Dec 12, currencies depreciated vs. USD: • MZN (9%) • ZAR (3.7%) • BWP (3.3%) • ZMK (0.6%) • TZS was broadly stable supported by Central Bank intervention

  21. Exchange Rate Movement per Pula • ZMK & TZS appreciated against the BWP over the period Dec-11 to Dec-12 • MZN weakened by 5.5% vs. BWP • ZAR has dominant weight in BWP basket of currency • ZAR weakness transmitted to BWP

  22. Financial inclusion levels in selected African countries

  23. Financial intermediation – Credit to GDP Ratio

  24. Banking assets and deposits

  25. Market share Growing market share, especially in Botswana and Zimbabwe Need to grow to critical mass in other markets as well

  26. Operational overview Francis Dzanya

  27. Income statement • Loans and Deposits • Outlook BancABC Botswana highlights • Outstanding Performance • NII: 218% higher • Balance sheet growth – consumer lending • Non-interest income: up 57% from increased customer transactions • Loans: up BWP1.7bn to BWP3.4bn • Payroll deduction loans • NPLs: down from 2.2% in Dec-11 to 1.2% in Dec-12 • Deposits: up BWP1.7bn to BWP4.3bn • Consolidation of growth to date • Consumer lending and home loans • Increased cross-sell of retail products • Risk management (credit, liquidity and operational)

  28. Revenue • Loans and Deposits • Outlook BancABC Mozambique highlights • Below Expectation • NII: +52% • Balance sheet growth • Higher margins • Impairments: up from BWP5m to BWP18m • Non-interest income: +3% lower Fxtrading income • Loans: +BWP115m to BWP877m • Gross NPLs increased from 4.5% to 8.4% • Deposits: + BWP139m to BWP1.2bn • Retail roll out – cards, internet banking, group loan schemes • Manage NPLs • IFC SME Program

  29. Revenue • Loans and Deposits • Outlook BancABC Tanzania highlights • Below Par Performance • NII: -42% from BWP51m to BWP29m • High cost of funds and larger NPL book • Higher impairments • Non Interest Income: +42% - high bond and Fxtrading volumes • Loans: +BWP174m to BWP573m • NPLs up from 15% to 33% • Deposits: +BWP87m to BWP1.bn • Consumer Lending following acquisition of payroll deduction code • Increased transactions with small traders association • Embed rollout of retail products

  30. Revenue • Loans and Deposits • Outlook BancABC Zambia highlights • Solid Performance • NII: +6% despite cap on interest rates • Non-interest income: +224% increased transaction volumes • Growth in consumer loans • Increased trade finance transactions • Loans: +BWP0.5bn to BWP1.0bn • Growth mostly on consumer lending book • NPLs: down from 4.5% to 3.3% in Dec-12 • Deposits:+ BWP0.3bn to BWP0.8bn • Consolidate growth and improve funding mix • Grow deposit base • Continue growing wholesale business • Embed rollout of retail products – increase cross-sell

  31. Revenue • Loans and Deposits • Outlook BancABC Zimbabwe highlights • Robust Performance • NII: 87% higher • Balance sheet growth - group scheme loans • Impairments up 32% • Non-interest income: up 65% from increased customer transactions • Loans: +BWP1bn to BWP3bn • Liquidity crunch • NPLs: up from 5.8% in Dec-11 to 14.2% • Deposits:+ BWP1.1bn to BWP3.1bn • Banc Easy Group loan schemes • Mortgage loans and VAF, • Embed rollout of retail products – increase cross-sell • Risk management (credit, liquidity and operational)

  32. Financial review Beki Moyo

  33. Income statement Strong performance driven by growth in consumer lending in Botswana, Zambia and Zimbabwe Higher impairments – growth in loan book and higher NPLs in Tanzania and Zimbabwe Expansion generated higher costs, but cost to income ratio declined Dividends lower due to increased no of shares

  34. Income statement Strong performance driven by growth in consumer lending in Botswana, Zambia and Zimbabwe Higher impairments – growth in loan book and higher NPLs in Tanzania and Zimbabwe Expansion generated higher costs, but cost to income ratio declined Dividends lower due to increased no of shares

  35. Profitability trends Growth in core earnings as retail contribution increases 2009 dip in line with commencement of retail rollout ROE marginally down – higher capital base and loss in Tanzania

  36. Income statement – segmental analysis High profit growth in Botswana and Zimbabwe – consumer lending Zambia growth despite tax charge in current year – prior year tax credit Challenges in Tanzania and to a lesser extent Mozambique

  37. Income statement – segmental analysis Retail income almost tripled from growth in Botswana and Zimbabwe – retail now contributing 39% (2011: 22%) Wholesale income growth, except in Tanzania

  38. Income statement – segmental analysis Growth in Botswana, Mozambique and Zimbabwe – higher volumes and better margins Zambia – restrictions on interest rate Tanzania – high cost of funds and higher NPLs

  39. Income statement – net interest income Improving margins despite setback in Tanzania Consumer lending improved margins in Botswana, Zambia and Zimbabwe Mozambique had lower cost of funds NII trending upwards – higher volumes

  40. NPLs and credit losses Gross NPL ratio higher at 9.2% (2011: 6.6%) – Tanzania and Zimbabwe Net NPLs at 6.1% compared to 3.3% in prior year Credit loss ratio consequently higher – 1.8% (2011: 1.7%)

  41. Contingent liability

  42. Income statement – non-interest income Fees and commissions growth from increased transaction volumes Trading income mostly from Tanzania and Mozambique With introduction of retail, composition of non-interest income skewed more towards fees/commissions

  43. Operating expenses per entity Increase in operating expenses across the board due to Retail & SME Banking expansion

  44. Income statement – cost to income ratio Introduction of Retail Banking and dollarisation in Zimbabwe increased cost to income ratio in 2009 Retail contribution to income increasing thereby resulting in lower cost to income ratio

  45. Income statement – opex per entity • Retail expense now 45% of total operating expenses compared to 32% in prior year • Wholesale expenses up 27%, retail expenses up 127%

  46. Balance sheet overview

  47. Balance sheet

  48. Balance sheet

  49. Balance sheet – loans & deposits 50% YoY increase in loans 42% CAGR 45% YoY increase in deposits 39% CAGR

  50. Deposits per entity Strong growth in deposits especially in Botswana and Zimbabwe

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