Pula strengthens against US dollar

Botswana and Zimbabwe are separated by a small, usually dry stream and people along the borders of the two countries even share the same language, but they are worlds apart.

While the Zimbabwe dollar has been playing yo-yo against the United States dollar plunging from just over $300 against the greenback on the parallel market at the beginning of the year, last year, to over $1 500 at the end of the year, the Botswana pula is reported to have firmed by 22 percent against the United States dollar.

According to the dually listed ABC Holdings, the strength of the pula had impacted somewhat on its results for the year ending December which saw it with a net profit of P54.6 million slightly down from P54.7 million the previous year.

In US dollar terms, however, the profit increased from US$7.8 million to US$8.5 million.

The net profit was affected by a goodwill write off of P12.1 million in respect of Edfund which is no longer an active operation.

Headline earnings therefore grew by 22 percent from P58.9 million to P71.6 million and by 47 percent in US dollar terms from US$8.2 million to US$11.5 million.

Interest and other income increased from P124.7 million to P148.9 million but net interest income was down from P58.5 million to P54.5 million.

A reduction in net losses on loans from P25.2 million to P17.8 million saw net interest income drop to P36.7 million but this was an improvement from P33.4 million.

Other income of P168.5 million, up from P135.8 million boosted total income to P205.2 million, up from P169.2 million.

The company had to set aside P4.9 million in goodwill amortisation, up from P4.2 million and write off P12.1 million in goodwill, resulting in a net profit of P54.6 million compared with P54.7 million the previous year.

The company says treasury operations in Botswana and Zambia registered impressive growth while new operations in Mozambique and Tanzania in the second half of the year had made positive contributions.

The corporate and private banking division had also done well in the face of fierce competition and leaner margins especially in Zambia and Tanzania.

The structured trade finance division also made a commendable contribution and completed a number of cross border transactions and should play a more significant role in the future because of an enlarged balance sheet.

Asset management, unit trust and stockbroking units, part of the Investment Banking Services division had a successful year.

The company’s profits were boosted by the sterling performance of the Zimbabwe Stock Exchange and the company says it took steps to replicate the success of wealth management in Zimbabwe through the launch of unit trusts in Zambia.

The advisory services division also did well financing the buy-out of the weekly Mail and Guardian in South Africa, the acquisition of a regional forestry products company in Botswana, and the management buy-out of a sugar business in Zimbabwe.

The company is now planning to raise US$25 million of which US$10 million will be quasi equity and US$15 million in debt.

The fund will be used for new growth initiatives aimed at making the company “a pan-African financial institution providing world class solutions for Africa”.

It says the capital raising exercise will strengthen its operations in Botswana, Zambia, Mozambique and Tanzania.

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