Atlas Mara’s Zimbabwe unit BancABC says its after tax profit fell by a quarter to $1.8 million on the back of declining operating income.
Operating income declined by 13.3 percent from $47.99 million in the previous year to $41.6 million on account of narrowing risk appetite leading to margin pressures and a fall in credit volumes.
Net interest income declined by 35 percent from $38 million in the previous year to $26.3 million on the back of the bank’s cautious lending approach and interest rate caps.
Operating profit improved from $3.3 million previously to $3.97 million on the back of a reduction in operating expenditure.
On a positive note, impairment losses on credit exposures declined from an expense of $7.3 million in the previous year to a net reversal of $1.6 million as a result of prudent underwriting standards and controlled risk appetite.
“The reduced impairment charges also reflects success in our NPL collection efforts as well as net benefits from NPL disposals to the Zimbabwe Asset Management Corporation (ZAMCO),” said chairman Alvord Mabhena.
Zamco is a special purpose vehicle set up by government in 2014 to purchase non-performing loans from banks and clean their balance sheets. As at December 31 last year ZAMCO had bought bad loans worth $813 million resulting in a decline in the market NPL ratio to 7.9 percent by end of 2016.
BancABC’s deposits from customers fell 10.5 percent from $282 million in the previous year to $252.4 million.
Total asset value dropped by 14.4 percent to $419.4 million in the period from $490.2 million recorded in the previous year. Loan and advances fell by a quarter from $316 million in the preceding year to $233 million due to bank’s efforts to mitigate credit risk by reducing lending.
The bank’s core capital increased by 6 percent to $71.6 million with a capital adequacy ratio of 21 percent ahead of the regulatory minimum of 12 percent. – The Source