A truly African bank 2013 ANNUAL REPORT ANNUAL ABC HOLDINGS LIMITED ABC Holdings Limited ANNUAL REPORT 2013 6.2% (2012) AVERAGE GDP GROWTH ACROSS THE AFRICAN CONTINENT* The roots of BancABC are firmly Increasing penetration of chosen embedded in the soil of Southern markets has been supported by Africa. It is a financial services the Group’s strong and increasing provider that was conceived in geographical footprint, which is Africa, grew to maturity in Africa underpinned by a strong local and is focused on serving Africans. presence in these markets and It is through its heritage, history a thorough understanding of the and operations, that it can claim diverse financial markets within to be a truly African bank. the region – knowledge that has been accumulated and The ongoing dedication to creating strengthened over decades profitable, lifelong partnerships in Southern Africa. with clients saw BancABC entering the challenging retail Offering a range of services that sector in 2009. The provision cover personal, business and of competitively structured and corporate banking requirements priced products and services as well as asset management, offered through well-placed stockbroking and treasury services, branches was well received by BancABC takes considerable consumers. Since their inception, pride in the achievements of its these retail branches have provided professional people who on a daily the impetus for the exponential basis display their commitment to growth that has seen BancABC the bank and its clients through opening 73 retail branches in the delivery of quality services 4 years. It is intended that this and products. network will grow to 100 branches within the next 3 years. It is these people, many of whom have many years of service with BancABC, who will drive the bank to new heights and achievement within the continent that is, and will always be, home to BancABC. RETAIL BRANCHES 5 INCREASED TO SADC COUNTRIES 73 2012: 61 * Excluding South Africa About BancABC ABC Holdings Limited is the parent company of a number of banks operating under the BancABC brand in Sub-Saharan Africa, with operations in Botswana, Mozambique, Tanzania, Zambia and Zimbabwe. A group services office is located in South Africa. Our vision is to be Africa’s preferred banking partner by offering world-class financial solutions. We will realise this by building profitable, lifelong customer relationships through the provision of a wide range of innovative financial products and services – to the benefit of all our stakeholders. The Group offers a diverse range of services, including but not limited to the following: Corporate Banking, treasury services, Retail & SME Banking, asset management and stockbroking. ABC Holdings Limited is registered in Botswana. Its primary listing is on the Botswana Stock Exchange, with a secondary listing on the Zimbabwe Stock Exchange. CONTENTS ifc Our values 1 Highlights 2 Five-year financial highlights 3 Salient features 6 Chairman’s report 14 Chief Executive Officer’s report Attributable profit to shareholders 23 Corporate social responsibility report increased by 49% from BWP133 million to 29 Risk and governance report 39 Directors and Group management BWP198 million 43 Directors’ responsibility statement Cost to income ratio decreased to 66% (2012: 71%) 44 Directors’ report 47 Annual financial statements Operating expenses up 29% from BWP869 million to 16 4 Analysis of shareholders BWP1,116 million ibc Contact information from continued expansion into Retail & SME Banking market segment 15% 39% 18% 20% AVERAGE RETURN INCREASE IN TOTAL INCOME INCREASE IN NET INCREASE IN ON EQUITY BEFORE IMPAIRMENTS OPERATING INCOME PRE-TAX PROFIT 2013: BWP1,702 million 2013: BWP258 million 2013: BWP254 million 2012: 15% 2012: BWP1,225 million 2012: BWP218 million 2012: BWP212 million Is a key value of the Describes our people- Group which is the ability focused, accessible, to be reliable, ethical, personal and customised credible, and trustworthy approach, anchored to with a great sense of vital African energy. In heritage. Our cast iron short, we are passionate ethics underpin our because we believe in and unquestionable character love what we do. and business practices. OUR VALUES Our core values centre on five Embodies the key traits distinct areas. They remain the Entails being of being visionary, guiding principles by which we uncompromising, dynamic, energetic, operate and form the basis of focused, and challenging and agile. confident in offering In practical terms, our corporate personality. world-class products adoption of this core and services. We value means devotion strive for excellence to driving change by in what we do, and provoking new ideas are always seeking and always doing things to improve our differently. performance. Are the essence of our existence. Our world- class staff, customers, clients, shareholders and stakeholders define our ambitions, success and passion. Our passion for people makes us customer-centric. Basic EPS of 79.6 thebe Loans and advances increased (2012: 72.1 thebe) and diluted EPS of by 15% from BWP9.1 billion to 79.0 thebe BWP10.6 billion (2012: 66.5 thebe) Deposits increased by 14% Total assets increased by 18% from BWP10.7 billion to from BWP13.4 billion to BWP12.2 billion BWP15.8 billion MOZAMBIQUE • US$15.8 GDP in billions • 7.0% Growth in GDP • 139 Ease of doing business ranking • 23.4 million country population BOTSWANA • US$14.6 GDP in billions • 5.5% Growth in GDP • 56 Ease of doing business ranking • 2.1 million country population ZAMBIA Economic growth in regional markets (GDP growth% vs Ease of doing business ranking) • US$28.1 GDP in billions • 6.0% Growth TANZANIA in GDP • US$31.9 GDP • 83 Ease of in billions doing business ranking ZIMBABWE • 7.0% Growth STAFF NUMBERS in GDP • US$13.1 GDP • 14.8 million in billions country INCREASED TO Ease of • 145 population doing business • 3.4% Growth ranking in GDP • 47.8 million • 170 Ease of 1,501 country doing business 2012: 1,310 population ranking • 13.3 million country population ABC HOLDINGS LIMITED ANNUAL REPORT 2013 1 Five-year financial highlights ON A HISTORICAL COST BASIS IN US$’000s 31 Dec 13 31 Dec 12 31 Dec 11 31 Dec 10 31 Dec 09 US$’000s US$’000s US$’000s US$’000s US$’000s Income statement Net interest income after impairment 80,655 70,388 48,692 41,542 17,948 Non-interest revenue 81,805 72,604 47,692 38,930 37,402 Total income 162,460 142,992 96,384 80,472 55,350 Operating expenditure (131,965) (114,316) (79,873) (64,089) (51,610) Net income from operations 30,495 28,676 16,511 16,383 3,740 Share of (losses)/profits of associates and joint venture (473) (741) (757) (2,966) 2,281 Profit before taxation 30,022 27,935 15,754 13,417 6,021 Taxation (9,413) (10,147) (2,924) (3,314) 2,225 Profit for the year 20,609 17,788 12,830 10,103 8,246 Attributable to Equity holders of parent 23,457 17,473 12,143 9,827 8,202 Non-controlling interests (2,848) 315 687 276 44 Profit for the year 20,609 17,788 12,830 10,103 8,246 Balance sheet Cash and cash equivalents 262,688 239,288 166,122 154,997 132,194 Financial assets held for trading 143,646 131,643 86,980 173,375 134,707 Financial assets designated at fair value 29,817 24,414 29,563 14,400 – Derivative assets held for risk management 3,151 4,346 4,320 6,516 1,195 Loans and advances to customers 1,203,236 1,176,838 811,940 477,415 299,099 Investments 7,749 7,014 6,721 6,098 7,387 Investment in associates and joint venture 1,518 1,442 2,343 5,405 6,138 Other assets and investment property 46,433 37,894 32,774 34,048 32,123 Property and equipment 86,279 84,792 68,788 51,217 41,818 Intangible assets 14,820 17,908 17,417 8,903 7,558 1,799,337 1,725,579 1,226,968 932,374 662,219 Shareholders’ equity 165,034 148,788 81,839 67,911 62,325 Deposits 1,391,836 1,373,887 985,260 761,083 502,932 Derivative liabilities held for risk management 4,291 2,911 6,288 162 293 Borrowed funds 200,563 156,079 131,167 89,868 81,519 Other liabilities and taxation 37,613 43,914 22,414 13,350 15,150 1,799,337 1,725,579 1,226,968 932,374 662,219 Shares in issue 256,885,694 232,805,464 149,472,131 146,419,524 146,419,524 Cost to income ratio 66% 71% 74% 77% 82% Average shareholders’ equity 156,911 115,313 74,875 65,118 61,449 Return on average shareholders’ equity 15% 15% 16% 15% 13% Net asset value per share (cents) 64.3 63.0 53.0 45.0 41.0 Closing exchange rates to US$ Botswana Pula 8.78 7.77 7.49 6.45 6.67 Euro 0.73 0.76 0.77 0.75 0.69 Mozambican Metical 30.08 29.75 27.31 32.58 29.19 Tanzanian Shilling 1,587.01 1,585.01 1,590.01 1,505.01 1,339.51 Zambian Kwacha 5.52 5,195.01 5,110.01 4,800.00 4,650.00 2 ABC HOLDINGS LIMITED ANNUAL REPORT 2013 Salient features 2013 2012 % change Income statement (BWP’000s) Profit attributable to ordinary shareholders 198,454 132,774 49% Balance sheet (BWP’000s) Total assets 15,783,655 13,407,765 18% Loans and advances 10,554,699 9,144,042 15% Deposits 12,209,087 10,675,111 14% Net asset value 1,449,557 1,137,044 27% Financial performance (%) Return on average equity 15% 15% Return on average assets 1.2% 1.2% Operating performance (%) Non-interest income to total income 50% 51% Cost to income ratio 66% 71% Impairment losses on loans and advances 3.2% 1.8% to gross average loans and advances Effective tax rate 31% 36% Share statistics (000s) Number of shares in issue 256,886 232,806 10% Weighted average number of shares 249,344 184,194 35% Share statistics (thebe) Basic earnings per share 79.6 72.1 10% Diluted earnings per share 79.0 66.5 19% Dividend per share