Regional banking group ABC Holdings had a poor first half with headline earnings dropping from 23 thebe to 14 thebe. It says the decline in earnings could be partially attributed to the appreciation of the reporting currency, the Botswana pula, which had risen by 21 percent against the United States dollar since June 2002.
Other contributors were reduced margins from the Zimbabwe operations, computerisation and start up costs of Iroko Securities, the group’s London-based debt capital markets business.
Interest income increased marginally from P74.7 million to P75.4 million but net interest income plunged from P42.7 million to P11 million. Net operating income stood at P18.2 million, down from P38.9 million.
This was wiped out by exceptional items which cost P18.3 million resulting in the company making a loss of P3.9 million down from a profit of P23 million.
Headline earnings, however, dropped from P25.5 million to P14.4 million. The banking group says the rise in operating costs was largely due to increased expenditure on information technology.
Contribution to headline earnings from the Botswana operation improved from 13 percent to 36 percent while that from the Zambian operation rose from 12 percent to 35 percent.
ABC Botswana had been appointed as a primary dealer for government bonds while ABC Zambia is one of the primary foreign currency dealers for the Bank of Zambia.
Earnings from the Zimbabwe operations dropped from 72 percent to 46 percent while the contribution from Tanzania doubled from 2 percent to 4 percent.
The Mozambican subsidiary contributed 18 percent. The group disposed of the ABC Leasing Mozambique. It had made a loss of P1.3 million in the first quarter while a further P16.9 million was lost on the disposal.
The bank says this was the main contributor to the net loss of P3.9 million. The group also acquired 63 percent of Iroko during the first half.