Atlas Mara Limited Announces 2018 Year-End Results

Atlas Mara


Atlas Mara Limited Announces 2018 Year-End Results

Tuesday, April 30, 2019 8:30 AM

Atlas Mara provides audited results for the year ended 31 December 2018

TORTOLA / ACCESSWIRE / April 30, 2019 / Atlas Mara Limited ("Atlas Mara" or the "Company" including its subsidiaries, the "Group"), the sub-Saharan African financial services group, releases its consolidated audited financial results for the year ended 31 December 2018. The results represent an extract from the audited summarised financial statements.

Principal financial highlights:

  • Reported net income of $39.7 million (2017: $45.4 million)
  • Underlying bank operating results include outperformance vs. 2017 in Nigeria and Zimbabwe, in-line performance in Botswana, Mozambique, and Rwanda, and underperformance in Tanzania and Zambia
  • In Nigeria, Union Bank of Nigeria ("UBN") contributed associate income of an estimated $56.5 million for the period (2017: $38.4 million), which reflects the Company's share of income on an equity accounted basis of $27.8 million (2017: $17.8 million), as well as the impact of the gain on acquisition of $28.7 million
  • EPS of 23 cents compared to 26 cents in 2017 pro forma for the 12 month impact of the 2017 equity issuance (2017 reported EPS: 42 cents)
  • Both the statement of financial position and profits of the Group were adversely impacted by the implementation of IFRS 9. This is consistent with the position reported by most banks across EMEA
  • Executed on Nigeria strategy by increasing stake in Union Bank of Nigeria ("UBN") from approximately 44.5 percent in Q4 2017 to 49.0 percent in Q4 2018 and 49.7 percent as at 30 April 2019
  • The Group's book value was adversely impacted by $59.1 million compared to 2017 and 1H 2018 due to the impact of the currency change in Zimbabwe
  • Post IFRS 9 impact, all operating banks maintained adequate capital adequacy ratios, reflecting stable balance sheets
Continued focus on deposit growth, loan book quality, and growth business lines:
  • Launched a deposit drive across Retail, Corporate and Institutional segments through innovative campaigns to lower cost of funds and generate sustainable funding for balance sheet growth
  • Reduction in non-performing loan ("NPL") ratio to 11.1% at year-end (2017: 11.8%)
  • Digital channels volumes and revenues increasing month-on month across all channels, especially mobile banking (all countries), mobile push/pull (Zimbabwe) and POS (Mozambique and Zimbabwe)
  • Markets & Treasury pivoted to onshore, aligned to client demand, and continued expansion of product catalogue and client roster

Events Subsequent to Period End

  • The Group also announced today that it has entered into a binding term sheet with Equity Group Holdings Plc ("EGH") for the exchange of certain banking assets of the Company in four countries for ordinary shares in EGH (the "Proposed Transaction"). The Proposed Transaction is subject to confirmatory due diligence, definitive transaction documentation, relevant regulatory approvals, and other conditions precedent customary for transactions of this nature. This transaction will result in the deconsolidation of the referenced entities effective 30 April 2019. Further information on the Proposed Transaction is included in the announcement issued by the Company today.
  • Following the announcement relating to the Proposed Transaction, the Company announces that John Staley has determined to step down as Chief Executive Officer effective 30 April 2019 to pursue other interests. The Board and the Company wish him well in his future endeavours. The Company's executive leadership team will report directly to Executive Chairman Michael Wilkerson.
  • Credit impairments reduced to $0.2 million, driven by recoveries in Mozambique and Zambia and the overall improvement in credit quality compared to the IFRS 9 Day 1 position
  • 2018 reported profit benefitted from a gain of $28.7 million associated with the acquisition of additional shares in UBN, as a result of the fair value of the shares acquired exceeding the purchase consideration paid. It relates to both the additional shares allocated from the rights issue during January 2018 and the share purchase reported on 26 June 2018
  • Total revenue decreased by 11.2%, attributable to the decline in interest income on loans, as a result of contraction of the loan book, the impact of IFRS 9 on the accounting for interest in suspense, lower margins and tight market liquidity. Trading income declined due to lower trading volumes
  • Operating expenses increased by 7.6% driven by increases in the cost base of operating banks in most countries, most notably Zimbabwe which also saw a double-digit increase in inflation during 2018
  • The Group's continued focus of managing down higher risk portfolios in certain countries where we had a cautious credit risk appetite has resulted in a further improved NPL ratio, but combined with the impact of IFRS 9 the total loan book contracted by 13.2%
  • Asset recoveries totalled $6.0 million for the year reflecting continued focus to deliver shareholder value through managing the asset portfolio
Financial highlights from the UBN results included:
  • Profit after tax increased by 39% to 18 billion Nigerian Naira ($59 million)
  • Returns on average tangible equity at the bank increased from 5.9% to 11.3%
  • NPL ratio declined from 20.8% to 8.1% resulting from loan book clean-up, improved collections and collateral management, and adoption of IFRS 9
  • Total expenses increased by 12%, largely due to higher AMCON/Nigerian Deposit Insurance Corporation (NDIC) premium, increased depreciation and maintenance expenses, staff costs and business promotion expenses
  • Loans and advances reduced by 8% mainly as a result of write-off of some fully provisioned non-performing loans
  • Deposits increased by 7%, reflecting the success of the bank's mobilization efforts
  • BVPS declined to ₦7.75, a decline of 36.1% from 2017, which resulted primarily from loan book clean-up including IFRS 9 adoption

Key operational highlights during the period:

  • Continued focus on strengthening the existing retail and corporate business platform across all countries of operation. In 2018 we increased focus on operational and IT improvements, and talent acquisition in the banks
  • Launched a deposit drive across Retail, Corporate and Institutional segments through innovative campaigns across the franchise to lower cost of funds and generate sustainable funding
  • Launched improved corporate transaction platforms and improved mobile banking applications for USSD, Android and iOS in Mozambique, Rwanda, Tanzania and Zambia. The POS offering was enhanced in Zimbabwe to include mobile money while MPOS was introduced for the SME clients
  • Digital channels volumes and revenues, though on a small scale relative to total revenues, have been increasing month-on-month across all channels, especially mobile banking (all countries), mobile push/pull (Zimbabwe) and POS (Mozambique and Zimbabwe)
  • Strong performance in the Markets & Treasury Business in Zambia, Rwanda and Tanzania. In Mozambique we led the first ever secondary market transaction on fixed income trading and executed the issuance of BancABC Mozambique corporate paper
  • Completed an IPO for 20.5% of the shares in issue, raising $28.1 million for ABCH Holdings, a portion of which has been reinvested in the ongoing efforts to develop and enhance the Group's IT infrastructure and banking platforms
  • Raised $15 million from the market to refinance Tier 2 Capital
  • Renegotiated a three-year retail savings and loans scheme with two of the largest employee unions with a combined membership of 80,000 members
  • Officially launched a prepaid Pula card to public service employees. If we achieve our goal of 200,000 cards issued in the next 24 months our Botswana franchise will become the largest card issuer in the market
  • Partnered with one of the biggest telecom companies for the issuance of the telco's mobile wallet prepaid card
  • Launched an online cash management solution with an automatic banking machine at client premise for Corporate and SME customers
  • Initiated a micro-credit pilot with 19,000 mobile wallet subscribers of one of the biggest telecoms companies in Mozambique with a planned market-wide launch in 2019
  • Launched a new Corporate and Retail online transactional platform with enhanced functionality and client experience

Rwanda:

  • Participated in a $50 million syndicated loan for a large MNO as lead arranger and extended financing ($11 million) for infrastructure expansion and modernization
  • Participated in the funding of a Corporate client contracted to construct a new Airport
  • Launched a new pre-export value chain financing in the country's coffee sector
  • Obtained VISA license and commenced integration process
  • Launched a virtual card in partnership with the leading Mobile Network Operator in the market and Mastercard. This is the first of its kind in the Tanzanian market. The virtual card will allow MNO mobile wallet holders to make payments on any local or international website
  • Launched an improved mobile banking application and a mobile wallet for both savings and micro-credit with multi-lingual functionality to support the Bank's financial inclusion drive
  • Strong performance in Corporate Banking with new advances to our Corporate clients rising 150% compared to 2017
  • Commenced rollout of 90 new ATMs with upgraded functionality. The ATMs are bringing new features like card-less transactions and cash deposit facilities
  • Successfully completed the rebranding of the merged bank and was awarded second place for brand equity conducted by IPSOS, a global market research and a consulting firm
  • Executed on our liability-led strategy which resulted in Current and Savings accounts contribution to total liabilities improving to 57% from 50% in 2017
  • Introduced new Agribusiness unit to take advantage of potential growth in the Agricultural sector, expected to become a major contributor to the country's GDP. New products specifically suited to small scale farming customers have been developed with a significance increase in funding to our agri-finance clients
  • Raised large funding facility as the second tranche of the Public sector road infrastructure programme
  • Renewed significant stock financing facility with one of the biggest players in the agricultural sector
  • Utilized partnership with one of the strongest insurance players in the market to serve the Retail& SME segments better through the issuance of zero-deposit mortgage advance and performance bonds and bid bonds
  • Partnered with World Remit, a global leader in international transfers to mobile money accounts, to enable the bank to participate in diaspora remittances processing

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About Atlas Mara

Atlas Mara Limited (LON: ATMA) is a financial services institution founded by Bob Diamond and listed on the London Stock Exchange. With a presence in seven sub-Saharan countries, Atlas Mara aims to be a positive disruptive force in the markets in which we operate by leveraging technology to provide innovative and differentiated product offerings, deliver excellent customer service and accelerate financial inclusion. For more information, visit www.atlasmara.com.

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SOURCE: Atlas Mara


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