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BancABC Annual Financial Results 2009
10 March 2010
OVERVIEW
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Financial Highlights
› Total income increased 10% to BWP 392 million
› Solid income growth across all operations except BancABC
Zambia
› Significant investment in Retail Banking and Zimbabwe
dollarisation increased operating expenses 54% to BWP
366 million
› Impairment charges increased 15% to BWP 51 million
› Basic EPS down 33% to 40.4 thebe
› RoE of 14% (2008:23%) and NAV of BWP 399 million
(2008: BWP 438 million)
› Balance sheet grew 11% to BWP 4.4 billion
› Customer deposits grew 19% to BWP 3.4 billion
3
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Operational Highlights
› Microfinance operation successfully integrated into
BancABC Zambia and customer base expanded
› Retail Banking commenced business with first branches
opened in Harare and Dar es Salaam
› Credit function strengthened
› New products successfully introduced in Tanzania and
Mozambique boosted non-interest income
› Business rapidly expanded at BancABC Zimbabwe post
economic stabilisation
4
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Economic Overview - 2009
› Economic deterioration experienced in late 2008, cont’d
into 2009
› Regional GDP growth slowed to 1.5% in 2009, from 5.4%
in 2008
› Zimbabwe economy grew for first time in 10 years post
formation of GNU and dollarisation
› Botswana and Zambia hardest hit by declining commodity
prices
› Policy interest rates declined across all territories
– Associated margin pressure for banks
› Credit growth declined significantly across all territories
except Mozambique
5
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Economic Overview – GDP Growth
6
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Economic Overview – Loan & Deposit levels
7
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Economic Overview – Credit Growth
8
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Economic Overview – 2010 Outlook
9
› The worst of the recession appears
to be over but economic recovery
remains fragile
› Growth in employment levels lagging
private sector economy growth
› Central Banks remain focused on
restoring credit growth to the
productive sectors of the economy
› Rising commodity prices supports
recovery in Group’s markets
› Improved growth prospects are
envisaged in 2010 in all of Group’s
markets
FINANCIAL REVIEW
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Income Statement - Overview
60.240.4Earnings per share (thebe)
87,93158,431Profit for the year
-33,64215,768Tax
121,57342,663Profit before tax
2,30016,164Share of results of associates
119,27326,499Net income from operations
-236,941-365,694Operating expenditure
356,156392,193Total income
216,126265,017Non interest income
140,030127 176
Net interest income after
impairments
-44,365-51,218Impairment of loans and advances
184,395178,394
Net interest income before
impairments
20082009BWP’000s
11
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Income Statement – Interest Income
› Margins on interest income
generally declining due to change
in asset mix
› Margins widened in 2008 due to
aggressive loan growth
› Decreased demand for credit in
2009, resulted in excess cash being
invested in low yielding money
market and t-bills
› Lower policy rates resulting in a
squeeze in banking margins
12
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Income Statement – Impairments and NPL’s
› Overall NPL’s and credit loss ratio
is declining
› 2009 increase attributable to
economic circumstances
› Quality of loan book is improving
13
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Income Statement – Non-interest Income
› NI income increasing overall and as
a % of total income
– 2009 NI % increased to 68%
(08: 61%)
› Trading activities, esp in forex are
primary source of growth
› Introduction of Retail Banking
expected to increase net interest
income going forward
14
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Income Statement – Segmental analysis
% change20082009
(3%)184,395178,394TOTAL
(249%)4,147(6,180)Head office
2%180,248184,574Banking operations
-6314,339Zimbabwe
(16%)73,56161,632Zambia incl Microfin
14%30,94135,178Tanzania
13%34,29538,594Mozambique
(16%)41,38934,831Botswana
Net Interest Income
15
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Income Statement – Segmental analysis
% change20082009
(32%)85, 81858,117TOTAL
(30%)27,77019,488Head office
(33%)58,04838,629Banking operations
(24%)25,33819,362Zimbabwe
(365%)(7,223)(33,567)Zambia incl Microfin
(49%)10,0965,155Tanzania
82%16,64430,266Mozambique
32%13,19317,413Botswana
Attributable Profit
16
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Income Statement – Cost to Income Ratio
› Target C:I ratio of 50% over the
medium to long term
› Once off costs associated with
Pyramid Plaza pushed ratio from
77% to 82%
› Dollarisation of Zimbabwean
economy brought in BWP 62 mill of
costs vs. nil for 2008
› Significant investment in Retail
Banking; people, systems and
processes the bulk of which were
expensed
› Retail head count now at 89 (08: 35)
17
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Income Statement – Staff costs
› Total head count in 2009 of 592 vs. 484 in 2008
› Growth in ABCH portion attributable to Retail Banking
18
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Balance Sheet - Overview
19
3,967,938
456,508
437,654
3,511,430
599,814
2,822,352
3,967,938
216,942
2,249,903
26,100
659,587
513,050
2008
11%
(9%)
(9%)
14%
(9%)
19%
11%
29%
(11%)
(31%)
34%
72%
% change
4,417,745TOTAL EQUITY AND LIABILITIES
415,779Total equity
399,069Equity attributable to ordinary shareholders
4,001,966Total liabilities
543,822Borrowed funds
3,355,118Deposits
4,417,745TOTAL ASSETS
278,975Property and equipment
1,995,325Loans and advances
17,905Financial assets designated at fair value
880,740Financial assets held for trading
881,884Cash and short term funds
2009BWP '000s
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Balance Sheet – Capital Adequacy
20
Capital Adequacy Ratio
20%
10%
23%
17%
23%
2009
19%
22%
16%
32%
16%
2008
10%Zimbabwe
10%Zambia
12%Tanzania
8%Mozambique
15%Botswana
MinCountry
› Botswana recapitalised to the extent of BWP 35 mill in H209
› All entities now adequately capitalised
› Zambia to be reacapitalised in 2010
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Balance Sheet – Loans and Advances
› Active decision taken to curtail
lending due to poor economic
circumstances
› Liquidity constraints precluded further
lending in Tanzania and Zambia in
H109
› Excluding Zambia, impairments across
Group reduced from BWP 34 mill in
2008 to BWP 27 mill in 2009
› Actively support good clients in
difficult economic environment
21
Loans and
advances per
country to
follow
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Balance Sheet - Deposits
› Customer deposits increased over the
year by 19% to BWP 3.4 bill
– Zimbabwe increased BWP 158 mill
due to economic stability
– Mozambique increased BWP 200
mill as client base grew
– Tanzania increased BWP 132 mill
with deposit mobilisation
› Excess cash invested in t-bills and
money market instruments
› Resulting squeeze on margins with
consolidated spreads reducing from
5.9% in 2008 to 5.1% in 2009
22
OPERATIONAL REVIEW
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Botswana
› Economic activity sharply declined in 2009 as diamond
revenues remained subdued
› Management decision to curtail lending in light of poor
economic circumstances
› Impairments well managed down to BWP 9 mill (08: BWP
22 mill)
› Increased customer deposits and capital injection from
ABCH positions Balance Sheet well for 2010
› Forex trading volumes and associated non-interest income
increased
› Expenditure tightly controlled with only 10% increase
› Overall PAT improvement of 32% to BWP 17 million
24
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Mozambique
› Slow down in commitments to long term projects across
the economy reduced demand for credit from corporates
› Interest income increased in line with increased customer
deposits, despite lack of growth in loan portfolio, as cash
was invested in t-bills and money market
› Significant growth in non-interest income, predominantly
from forex trading
› Operating expenditure increased 32%, bulk of which was
on Retail Banking
› PAT up 82% to BWP 30 million
25
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Tanzania
› Lending restricted early on in the year as liquidity
constraints kicked in
› This plus increased impairments of BWP 13 mill (08: nil)
contributed to decline in net interest income after
impairments to BWP 22 mill (08: BWP 31 mill)
› Increased customer deposits by year end of 24% to
BWP 677 mill
› Non-interest income increased 29% with introduction of
bond trading providing new income stream
› Operating expenditure increased 17% to BWP 40 mill
› PAT decline of 49% to BWP 5 mill
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Zambia - BancABC
› BancABC experienced significant loss in 2009
– Reduced market activity
– Large impairments mostly from mining customers
› Economy hard hit by declining copper price in 2008 and
recovery of spot price slow to impact the real economy
› Loan book declined 45%, interest income down 19% to BWP
11 mill
› Accordingly Balance Sheet shrunk 37% to BWP 286 mill,
customer deposits were down 10% to BWP 176 mill
› Impairments were BWP 24 mill vs. BWP 10 mill in 2008
› New management team making progress in addressing credit
controls and reputational issues
› Recapitalisation planned for 2010
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Zambia - Microfin
› Microfin, BancABC Zambia’s microloans business, made
good progress with loan book increasing to BWP 104 mill
(08: BWP 90 mill)
› Impairments drastically reduced from BWP 9 mill to
BWP 3 mill
› Average yield on IEA however declined to 35% from 47%
› Decision taken to integrate BancABC and Microfin
operations to reduce costs and cross sell retail products
› Merger successfully concluded and brand integration
planned for 2010
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Zambia – write offs
› BancABC Zambia was advisor to the financing of
construction project
› Construction ran over budget resulting in significant loss
for investors
› To protect BancABC reputation, board took the decision to
reimburse investors
› Total reimbursements of BWP 36 million paid out over
2008/ 09
› Building taken over by the Group
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Zimbabwe
› Significant economic improvement on the back of
formation of GNU and dollarisation
› Positive economic trend for first time in 10 years
› Lack of liquidity in the banking sector still problematic
– Limited capacity of lender of last resort
– Inactive interbank market
– Limited FDI
› Net interest income of BWP 14 mill vs. nil in 2008
› Expenses of BWP 62 mill vs. nil in 2008
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Retail Banking - Update
› IT systems largely in place and testing has commenced
across territories
› First branches opened in Harare and Dar es Salaam
– Branches to open in Mozambique in March
– Botswana to follow in Q2 and Zambia Q3
– Total of 10 branches to be opened by half year
› Visa accreditation acquired in Botswana, Mozambique and
Tanzania
› Partnerships remain key driver of growth
INVESTMENT CASE
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Investment Case
› NAV per share of 273 thebe vs.
share price of 130 thebe
› Historic PE multiple of 3.2.
› Only regionally diversified bank listed
in Botswana/ Zimbabwe – reduced
country risk
› Traditionally valuing assets in
Zimbabwe was a challenge, this has
changed following dollarisation
STRATEGY & OUTLOOK
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Strategy – Vision and Mission
BancABC is realising this vision by building profitable,
lifelong customer relationships through the provision of a
wide range of innovative financial products and services;
to the benefit of all our stakeholders
BancABC’s vision is to offer world class financial solutions
that make it Africa ’s preferred banking partner
› Balanced Scorecard introduced as the Group’s performance
management strategy implementation tool
› Setting and reviewing the performance targets to become a more
transparent process
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Strategy – Key Objectives 2010
Grow & Diversify
Customer Base
Increase Non-Interest
Income
Boost Net Interest
Income
Control Operating
costs
Reduce cost of
Funding
Manage investment in
Growth
› Merge Microfin and Zambian operations and cross sell
› Convert wholesale banking customers to retail bank
› Expand Retail Banking business
› Cross sell products to borrowing customers
› Improved credit management
› Managed growth of the loan portfolio
› Costs driven by incremental revenue they can generate
› Improve turnaround times
› Expansion of Retail Banking footprint
› Invest in human capital
› Retain a substantial amount of Group‘s earnings
BancABC 2009 ANNUAL RESULTS 10 MARCH 2010
Outlook
› Continue to grow wholesale business
› Bed down merger in Zambia, recapitalise this operation
› Use Microfin branch network to leverage Retail Banking
growth in Zambia
› Retail Banking coming on stream – cash flow positive and
profitable in next 18-24 months
› Revisit capital raising initiatives in H210
› Draw down on AfDB loan of US$30 million in Q210
› Balance sheet positions bank well to grow all operations
as regional economy improves
› Year started well, sustained profit growth expected for
remainder of 2010
THANK YOU
www.bancabc.com

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Dec 2009 results

  • 1. BancABC Annual Financial Results 2009 10 March 2010
  • 3. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Financial Highlights › Total income increased 10% to BWP 392 million › Solid income growth across all operations except BancABC Zambia › Significant investment in Retail Banking and Zimbabwe dollarisation increased operating expenses 54% to BWP 366 million › Impairment charges increased 15% to BWP 51 million › Basic EPS down 33% to 40.4 thebe › RoE of 14% (2008:23%) and NAV of BWP 399 million (2008: BWP 438 million) › Balance sheet grew 11% to BWP 4.4 billion › Customer deposits grew 19% to BWP 3.4 billion 3
  • 4. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Operational Highlights › Microfinance operation successfully integrated into BancABC Zambia and customer base expanded › Retail Banking commenced business with first branches opened in Harare and Dar es Salaam › Credit function strengthened › New products successfully introduced in Tanzania and Mozambique boosted non-interest income › Business rapidly expanded at BancABC Zimbabwe post economic stabilisation 4
  • 5. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Economic Overview - 2009 › Economic deterioration experienced in late 2008, cont’d into 2009 › Regional GDP growth slowed to 1.5% in 2009, from 5.4% in 2008 › Zimbabwe economy grew for first time in 10 years post formation of GNU and dollarisation › Botswana and Zambia hardest hit by declining commodity prices › Policy interest rates declined across all territories – Associated margin pressure for banks › Credit growth declined significantly across all territories except Mozambique 5
  • 6. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Economic Overview – GDP Growth 6
  • 7. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Economic Overview – Loan & Deposit levels 7
  • 8. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Economic Overview – Credit Growth 8
  • 9. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Economic Overview – 2010 Outlook 9 › The worst of the recession appears to be over but economic recovery remains fragile › Growth in employment levels lagging private sector economy growth › Central Banks remain focused on restoring credit growth to the productive sectors of the economy › Rising commodity prices supports recovery in Group’s markets › Improved growth prospects are envisaged in 2010 in all of Group’s markets
  • 11. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Income Statement - Overview 60.240.4Earnings per share (thebe) 87,93158,431Profit for the year -33,64215,768Tax 121,57342,663Profit before tax 2,30016,164Share of results of associates 119,27326,499Net income from operations -236,941-365,694Operating expenditure 356,156392,193Total income 216,126265,017Non interest income 140,030127 176 Net interest income after impairments -44,365-51,218Impairment of loans and advances 184,395178,394 Net interest income before impairments 20082009BWP’000s 11
  • 12. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Income Statement – Interest Income › Margins on interest income generally declining due to change in asset mix › Margins widened in 2008 due to aggressive loan growth › Decreased demand for credit in 2009, resulted in excess cash being invested in low yielding money market and t-bills › Lower policy rates resulting in a squeeze in banking margins 12
  • 13. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Income Statement – Impairments and NPL’s › Overall NPL’s and credit loss ratio is declining › 2009 increase attributable to economic circumstances › Quality of loan book is improving 13
  • 14. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Income Statement – Non-interest Income › NI income increasing overall and as a % of total income – 2009 NI % increased to 68% (08: 61%) › Trading activities, esp in forex are primary source of growth › Introduction of Retail Banking expected to increase net interest income going forward 14
  • 15. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Income Statement – Segmental analysis % change20082009 (3%)184,395178,394TOTAL (249%)4,147(6,180)Head office 2%180,248184,574Banking operations -6314,339Zimbabwe (16%)73,56161,632Zambia incl Microfin 14%30,94135,178Tanzania 13%34,29538,594Mozambique (16%)41,38934,831Botswana Net Interest Income 15
  • 16. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Income Statement – Segmental analysis % change20082009 (32%)85, 81858,117TOTAL (30%)27,77019,488Head office (33%)58,04838,629Banking operations (24%)25,33819,362Zimbabwe (365%)(7,223)(33,567)Zambia incl Microfin (49%)10,0965,155Tanzania 82%16,64430,266Mozambique 32%13,19317,413Botswana Attributable Profit 16
  • 17. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Income Statement – Cost to Income Ratio › Target C:I ratio of 50% over the medium to long term › Once off costs associated with Pyramid Plaza pushed ratio from 77% to 82% › Dollarisation of Zimbabwean economy brought in BWP 62 mill of costs vs. nil for 2008 › Significant investment in Retail Banking; people, systems and processes the bulk of which were expensed › Retail head count now at 89 (08: 35) 17
  • 18. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Income Statement – Staff costs › Total head count in 2009 of 592 vs. 484 in 2008 › Growth in ABCH portion attributable to Retail Banking 18
  • 19. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Balance Sheet - Overview 19 3,967,938 456,508 437,654 3,511,430 599,814 2,822,352 3,967,938 216,942 2,249,903 26,100 659,587 513,050 2008 11% (9%) (9%) 14% (9%) 19% 11% 29% (11%) (31%) 34% 72% % change 4,417,745TOTAL EQUITY AND LIABILITIES 415,779Total equity 399,069Equity attributable to ordinary shareholders 4,001,966Total liabilities 543,822Borrowed funds 3,355,118Deposits 4,417,745TOTAL ASSETS 278,975Property and equipment 1,995,325Loans and advances 17,905Financial assets designated at fair value 880,740Financial assets held for trading 881,884Cash and short term funds 2009BWP '000s
  • 20. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Balance Sheet – Capital Adequacy 20 Capital Adequacy Ratio 20% 10% 23% 17% 23% 2009 19% 22% 16% 32% 16% 2008 10%Zimbabwe 10%Zambia 12%Tanzania 8%Mozambique 15%Botswana MinCountry › Botswana recapitalised to the extent of BWP 35 mill in H209 › All entities now adequately capitalised › Zambia to be reacapitalised in 2010
  • 21. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Balance Sheet – Loans and Advances › Active decision taken to curtail lending due to poor economic circumstances › Liquidity constraints precluded further lending in Tanzania and Zambia in H109 › Excluding Zambia, impairments across Group reduced from BWP 34 mill in 2008 to BWP 27 mill in 2009 › Actively support good clients in difficult economic environment 21 Loans and advances per country to follow
  • 22. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Balance Sheet - Deposits › Customer deposits increased over the year by 19% to BWP 3.4 bill – Zimbabwe increased BWP 158 mill due to economic stability – Mozambique increased BWP 200 mill as client base grew – Tanzania increased BWP 132 mill with deposit mobilisation › Excess cash invested in t-bills and money market instruments › Resulting squeeze on margins with consolidated spreads reducing from 5.9% in 2008 to 5.1% in 2009 22
  • 24. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Botswana › Economic activity sharply declined in 2009 as diamond revenues remained subdued › Management decision to curtail lending in light of poor economic circumstances › Impairments well managed down to BWP 9 mill (08: BWP 22 mill) › Increased customer deposits and capital injection from ABCH positions Balance Sheet well for 2010 › Forex trading volumes and associated non-interest income increased › Expenditure tightly controlled with only 10% increase › Overall PAT improvement of 32% to BWP 17 million 24
  • 25. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Mozambique › Slow down in commitments to long term projects across the economy reduced demand for credit from corporates › Interest income increased in line with increased customer deposits, despite lack of growth in loan portfolio, as cash was invested in t-bills and money market › Significant growth in non-interest income, predominantly from forex trading › Operating expenditure increased 32%, bulk of which was on Retail Banking › PAT up 82% to BWP 30 million 25
  • 26. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Tanzania › Lending restricted early on in the year as liquidity constraints kicked in › This plus increased impairments of BWP 13 mill (08: nil) contributed to decline in net interest income after impairments to BWP 22 mill (08: BWP 31 mill) › Increased customer deposits by year end of 24% to BWP 677 mill › Non-interest income increased 29% with introduction of bond trading providing new income stream › Operating expenditure increased 17% to BWP 40 mill › PAT decline of 49% to BWP 5 mill
  • 27. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Zambia - BancABC › BancABC experienced significant loss in 2009 – Reduced market activity – Large impairments mostly from mining customers › Economy hard hit by declining copper price in 2008 and recovery of spot price slow to impact the real economy › Loan book declined 45%, interest income down 19% to BWP 11 mill › Accordingly Balance Sheet shrunk 37% to BWP 286 mill, customer deposits were down 10% to BWP 176 mill › Impairments were BWP 24 mill vs. BWP 10 mill in 2008 › New management team making progress in addressing credit controls and reputational issues › Recapitalisation planned for 2010
  • 28. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Zambia - Microfin › Microfin, BancABC Zambia’s microloans business, made good progress with loan book increasing to BWP 104 mill (08: BWP 90 mill) › Impairments drastically reduced from BWP 9 mill to BWP 3 mill › Average yield on IEA however declined to 35% from 47% › Decision taken to integrate BancABC and Microfin operations to reduce costs and cross sell retail products › Merger successfully concluded and brand integration planned for 2010
  • 29. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Zambia – write offs › BancABC Zambia was advisor to the financing of construction project › Construction ran over budget resulting in significant loss for investors › To protect BancABC reputation, board took the decision to reimburse investors › Total reimbursements of BWP 36 million paid out over 2008/ 09 › Building taken over by the Group
  • 30. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Zimbabwe › Significant economic improvement on the back of formation of GNU and dollarisation › Positive economic trend for first time in 10 years › Lack of liquidity in the banking sector still problematic – Limited capacity of lender of last resort – Inactive interbank market – Limited FDI › Net interest income of BWP 14 mill vs. nil in 2008 › Expenses of BWP 62 mill vs. nil in 2008
  • 31. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Retail Banking - Update › IT systems largely in place and testing has commenced across territories › First branches opened in Harare and Dar es Salaam – Branches to open in Mozambique in March – Botswana to follow in Q2 and Zambia Q3 – Total of 10 branches to be opened by half year › Visa accreditation acquired in Botswana, Mozambique and Tanzania › Partnerships remain key driver of growth
  • 33. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Investment Case › NAV per share of 273 thebe vs. share price of 130 thebe › Historic PE multiple of 3.2. › Only regionally diversified bank listed in Botswana/ Zimbabwe – reduced country risk › Traditionally valuing assets in Zimbabwe was a challenge, this has changed following dollarisation
  • 35. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Strategy – Vision and Mission BancABC is realising this vision by building profitable, lifelong customer relationships through the provision of a wide range of innovative financial products and services; to the benefit of all our stakeholders BancABC’s vision is to offer world class financial solutions that make it Africa ’s preferred banking partner › Balanced Scorecard introduced as the Group’s performance management strategy implementation tool › Setting and reviewing the performance targets to become a more transparent process
  • 36. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Strategy – Key Objectives 2010 Grow & Diversify Customer Base Increase Non-Interest Income Boost Net Interest Income Control Operating costs Reduce cost of Funding Manage investment in Growth › Merge Microfin and Zambian operations and cross sell › Convert wholesale banking customers to retail bank › Expand Retail Banking business › Cross sell products to borrowing customers › Improved credit management › Managed growth of the loan portfolio › Costs driven by incremental revenue they can generate › Improve turnaround times › Expansion of Retail Banking footprint › Invest in human capital › Retain a substantial amount of Group‘s earnings
  • 37. BancABC 2009 ANNUAL RESULTS 10 MARCH 2010 Outlook › Continue to grow wholesale business › Bed down merger in Zambia, recapitalise this operation › Use Microfin branch network to leverage Retail Banking growth in Zambia › Retail Banking coming on stream – cash flow positive and profitable in next 18-24 months › Revisit capital raising initiatives in H210 › Draw down on AfDB loan of US$30 million in Q210 › Balance sheet positions bank well to grow all operations as regional economy improves › Year started well, sustained profit growth expected for remainder of 2010