HomeBusinessNo plans for commercial banking at ABC Holdings

No plans for commercial banking at ABC Holdings

Staff Writer

THE African Banking Corporation (ABC) says it has no plans to venture into mainstream commercial banking.

s-serif”>ABC chief executive officer Douglas Munatsi said the group had decided against the issue after some lengthy debate.

He said most financial institutions that had ventured into the commercial banking sector had failed to realise significant returns.

“Most, if not all, have failed to make any money in commercial banking,” said Munatsi.

He said the use of technology and innovative banking was enabling his bank to access deposits from customers, a situation which commercial banking might not add value to.”We feel money comes from technology and innovation, not from bricks and mortar,” Munatsi said.

He said the group’s operations were encouraging especially its Zimbabwe operations which contribute a significant share to the group’s overall earnings.

He said Zimbabwe operation earnings were commendable in light of the current micro-economic situation in the country.

“The Zimbabwean operations have posted significant improvement in terms of results in pula terms compared to the first half of 2003 and this was more commendable considering the challenges brought by the micro-environment in the country,” Munatsi said.

He said the falling interest rates in Zambia had adversely affected the company’s operations in that country.

“Group treasury income was adversely affected by falling interest rates and low foreign exchange trading margins in Zambia and Mozambique,” Munatsi said.

He said ABC, in its regional expansion drive, had managed to increase business activity in the Tanzanian market where the company acquired the Tanganyika Development Finance Ltd (TDFL) and saw it contributing BWP3 million in net interest income.

“The acquisition of TDFL has been completed, bestowing a much stronger balance sheet on the Tanzanian operations that has already led to increased business activity,” said Munatsi.

He said the company’s ability to become profitable mainly hinged on its ability to secure lines of credit, mostly for expansion of its business.

Munatsi said the group’s subsidiaries in this regard had managed to secure a total of US$22 million in credit lines from international institutions, including US$5 million from Norsad.

The financial concern managed attributable profits of BWP16,1 million which translates to an annual return of 23,4% on opening shareholders equity which is in direct contrast to a net loss of BWP756 000 in the first half of 2003.

Recent Posts

Stories you will enjoy

Recommended reading