'Zim economic meltdown impacts BancABC'

HARARE - London-listed financial services group, Atlas Mara, says Zimbabwe’s economic challenges continue to put negative pressure on business performance.

The group’s chief executive, John Vitalo, said in the absence of strong economic policies, the slowdown in economic activity in the southern African country is expected to continue throughout 2015.

“BancABC Zimbabwe’s results were negatively impacted by liquidity challenges that continue to worsen, exacerbated by persistent trade deficits.  Reducing BancABC Zimbabwe’s cost of funding remains a key focus and will be achieved through an intense focus on deposit mobilisation,” he said.

Atlas Mara — co-owned by British tycoon Bob Diamond and Ugandan billionaire Ashish Thakkar — in April last year acquired a majority stake in ABC Holdings, the parent company of BancABC Zimbabwe, with operations in other regional countries such as Botswana, Tanzania Mozambique and Zambia.

Vitalo said a decrease in BancABC Zimbabwe’s loan book had a corresponding impact on interest income as the bank focused on a low-risk lending strategy in a competitive market in a challenging business environment.

“The positive impact of the special operations unit, tasked with the restructuring, resolution and recovery of nonperforming loans, was evident in various asset recoveries at BancABC Zimbabwe during the first half 2015 and is expected to continue to positively impact results.

“Furthermore, various cost reduction and optimisation initiatives have been put in place by management to weather the current challenging market conditions,” he added.

Meanwhile, the Atlas Mara group reported a profit in the first half of the year after impairments dropped to $6,1 million from $17,2 million a year earlier.

Net income was $4,1 million for the six months ended June, from a loss of $17,3 million a year earlier.

The financial services group reported a total nonperforming loan ratio of 10,7 percent, a meaningful decline from the 13,4 percent level reported at December 2014.

The coverage ratio increased to 45 percent at June 30, 2015 from 32,5 percent at December 30, 2014.

The group’s total deposits increased to $1,46 billion in the six months to June, representing growth of 10,8 percent compared to last year on a constant currency basis.

Atlas Mara, which recently won $200 million in funding from the United States government’s Overseas Private Investment Corporation, is keen on increasing acquisitions in Africa.

“The prospects for the growth of financial services in sub-Saharan Africa remain robust and there is scope for a newly-established financial institution with access to capital, liquidity and funding to rapidly build scale, attract talent, earn attractive returns and make a positive impact,” said the company.

Comments (1)

The cost of borrowing BancABC money is exorbitant to say the least. The entity shall continue to lose clients in a hurr

norman mtasa - 31 August 2015

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