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BancABC cautious as national elections loom

ABC Holdings has said it would remain cautiously optimistic in local and Tanzanian markets ahead of expected elections in Zimbabwe next year and after posting losses in the East African country.
BancABC Zimbabwe continued its growth trajectory, though at a lower rate compared to 2011, as business growth was hampered by market liquidity challenges.

Group chief operating officer, Francis Dzanya, said recently that although profitability in Zimbabwe increased by 30% to US$6,3 million as a result of higher business volumes, the group took a deliberate decision to cut back on lending to manage associated risks.

“We remain optimistic, as there has been progress on the political front, an upcoming referendum and elections (expected) next year, but there is no significant growth expected this year,” said Dzanya.

The group recorded an overall 46% growth in deposits, largely driven by the Zimbabwe and Botswana subsidiaries and a profit after tax for the six months to June 2012 of US$6,5 million.

However, Zimbabwe’s operating costs significantly shot upwards by 101% to US$15,7 million, largely driven by retail banking expansion.
The group also hopes to leverage on the 5,4% economic growth expected for Sub-Saharan African countries in 2012, as many have embarked on policy easing to support economic growth.

BancABC is the brand name of ABC Holdings Ltd, which has a primary listing on the Botswana Stock Exchange and a secondary listing on the Zimbabwe Stock Exchange.

The group posted a US$635 500 loss in Tanzania compared to an attributable profit of US$1,2 million recorded last year.
The loss was caused by a reduction in net interest income and loan impairments recorded during the period under review, while all income lines were below budget.

“Interest rates in Tanzania moved against us, thereby negatively impacting margins. We were unable to immediately pass on the higher costs of deposits to borrowing clients,” said Beki Moyo, the group chief financial officer.

The Bank of Tanzania recently released a report showing that the spread between 12-months deposit rate and one-year lending rate narrowed to 2,82% as at June this year from a high of 6,82% recorded in June 2011.

Moyo pointed out that BancABC’s Compound Annual Growth Rate grew much faster than the market between 2002 and 2011, while capital increased from US$1 million in 2002 to US$20 million in 2012.

“We are basically taking the long haul in Tanzania as it remains an attractive market,” he said.

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