DUAL-LISTED Pan African banking group, BancABC, which this week reported a 28 percent rise in post-tax profit to 87,7 million Botswana Pula for the year to December 31, 2011, from 68,6 million pula during the 12 months to December 31, 2010, wants to expand to high-return, oil-rich African markets.
Chief executive officer (CEO), Douglas Munatsi, who spoke to The Financial Gazette after a presentation of financial results on Tuesday, said investments into the new markets were part of a long-term plan, which fitted well into the group's long cherished goal to spread its footprint.
Oil-rich but under-banked Angola and South Sudan, together with Uganda, are among Munatsi's targets.
BancABC, which turned over 659 million Pula during the review period from 546 million Pula in 2010, is listed on the Botswana and Zimbabwe stock exchanges. The banking group has its primary listing in Botswana and so presents its financial statements in Botswana Pulas.
"We are looking at Angola, South Sudan and Uganda," BancABC said.
"The Return on Equity (ROE) in these markets is high, we are deploying US$50 million of shareholder money and we want good returns. These are markets with significant potential. South Africa is over-banked, Kenya is over-banked," said Munatsi, who has led the group, valued at 9,2 billion Pula by assets, into Botswana, Zambia, Tanzania, Mozambique and Zimba-bwe.
Angola and South Sudan have attracted significant international interest, especially from China, the world's second largest economy.
The former Portuguese colony has registered at least 15 percent growth rates in the past three years, the highest in Africa, since oil dollars started flowing in.
New independent state South Sudan's potential has been re-ignited by a semblance of political stability since gaining autonomy from the north last year.
It has already attracted regional banking giants like Kenya Commercial Bank, with its rich oil reserves being the key attraction.
Munatsi's immediate task would be beefing up BancABC's balance sheet, which has been strained by an aggressive retail banking rollout, through a US$50 million rights offer.
BancABC, which previously skirted retail banking, added 18 branches to 49 and increased its staff complement to 1 008 in 2011, from 668 in 2010.
Operating expenses climbed by 25 percent to 546 million Pula during the review period, from 435 million Pula in 2010.
Munatsi plans to inject proceeds of the rights offer to ensure the bank's capital adequacy ratios in Zimbabwe, Botswana and Tanzania are in line with regulatory requirements.
"We are aiming to build on our market share in each of the five countries to 10 percent, and then we (focus on expansion)," Munatsi said.
"The balance sheet of the group has significantly increased...it would not be possible to grow any further without additional capital injection," he said in his statement to shareholders.
"BancABC Botswana, BancABC Tanzania and BancABC Zimbabwe are now at a stage where their capital adequacy levels are very close to regulatory minimums. BancABC Mozambique is no longer able to fully support its very good clients as they have grown faster than the bank," said Munatsi.
During the review period, the financial institution's earnings per share climbed to 56,6 thebe, from 46,3 thebe during the 12 months to December 31, 2010.
Deposits were up 50 percent to 7,4 billion Pula from 4,9 billion Pula in 2010 while loans and advanced doubled to 6,1 billion Pula from 3,1 billion Pula at the end of 2010.
Average ROE remained flat at 16 percent.
In Zambia, where the US$100 million capital requirement for foreign banks had triggered a sector-wide instability, Munatsi said BancABC had initiated discussions with that country's central bank to re-look at the implementation process.
"We have advised them politely," he said.
"We have a number of scenarios that we are looking at but certainly US$100 million minimum capital by December 2012 is something we will not agree to even if we had the money," Munatsi told analysts in Harare.
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