BancABC reviews credit system

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ATLAS Mara and BancABC have engaged external consultants to review the credit process amid rising default rates at the pan-African banking group.

ATLAS Mara and BancABC have engaged external consultants to review the credit process amid rising default rates at the pan-African banking group.

BUSINESS REPORTER

The move is meant to enhance profitability of BancABC which has operations in Zimbabwe, Zambia, Botswana, Mozambique and Tanzania.

In August, Atlas Mara — co-founded by ex-Barclays Bob Diamond and entrepreneur billionaire Ashish Thakkar — completed the acquisition of a controlling shareholding in the banking group as it laid the foundation to establish a premier financial services institution in sub-Saharan Africa.

Atlas Mara currently holds 98,7% in BancABC as it pursues plans to establish a premier financial services group in sub-Saharan Africa.

“Atlas Mara and BancABC have engaged external consultants to undertake an extensive analysis of BancABC’s credit processes,” Atlas Mara said in an update to investors.

“NPLs (non-performing loans) and recoveries are a clear focus.”

BancABC has seen its NPLs quickening to 14,9% as at June 30 from 8,7% in the same period last year.

An NPL is when payments of interest and principal are past due date by 90 days or more, or at least 90 days of interest payments have been capitalised, refinanced or delayed by agreement.

In the half-year ended June 30 2014, BancABC saw its net impairments increasing by 4% to P152 million from P146 million charged in the prior year.

BancABC said it continued to experience an increase in NPLs mostly from the Zimbabwean market which has had liquidity constraints that limited the ability of most corporates from repaying their debts on time.

It said BancABC Zimbabwe constituted 42% of the loan impairment charge with the balance shared almost equally among BancABC Botswana, BancABC Mozambique and BancABC Zambia.

Atlas Mara said it had been working with BancABC together with external consultants to identify opportunities for additional revenue through various customer segmentation initiatives.

“The diagnostics phase of this exercise has been completed and Atlas Mara is moving onto implementation,” it said.

Atlas Mara said it was actively evaluating “fill-in opportunities in countries where BancABC can become a top three to five player through inorganic growth”.

In Zimbabwe and Botswana, BancABC is in the top five in terms of market share. It is sixth and seventh in Zambia and Mozambique, respectively, and a distant 13th in Tanzania.

Atlas Mara said it would continue engagement with development finance institutions to secure competitive funding to reduce average cost of funding.