London-Dubai investment company Atlas Mara has engaged external consultants to review the credit process of BancABC, its recently acquired pan-African banking group, amid rising defaults rates in its markets of Zimbabwe, Botswana, Zambia, Mozambique and Tanzania.
Atlas Mara Co-Nvest acquired a majority stake in Botswana’s ABC Holdings (BancABC) in March, but raised the stake to 98.7% just this last month through a mandatory public offer to its minority shareholders in Botswana and Zimbabwe, as the bank is dual-listed.
“Atlas Mara and BancABC have engaged external consultants to undertake an extensive analysis of BancABC’s credit processes. Non-performing loans (NPLs) and recoveries are a clear focus,” the group told its investors in a statement.
BancABC has seen its NPLs — instances where payments of interest are past due date by 90 days or more, or at least 90 days of interest payments have been refinanced or delayed by agreement — quickening to 14.9% as at June 30 from 8.7% in the same period last year.
This increase in NPLs is mostly from the Zimbabwean market, where liquidity constraints have limited the ability of most corporates from repaying their debts on time.
In the first half of 2014, BancABC also witnessed a 4% year-on-year increase in its net impairments, from a value of $15.91m in the first half of 2013 to one closer to $16.57m.
Zimbabwe constituted 42% of the loan impairment charges, with the balance shared almost equally among BancABC Botswana, BancABC Mozambique and BancABC Zambia.
In response, Atlas Mara has been working with the external consultants to identify additional revenue opportunities for BancABC in cross-selling and customer segmentation.
“The diagnostics phase of this exercise has been completed and Atlas Mara is moving onto implementation,” it noted.
In addition to these stabilising tactics, the investment company also reported that it is actively evaluating “fill-in opportunities in countries where BancABC can become a top three to five player through inorganic growth”.
BancABC is already in the top five in terms of market share in Zimbabwe and Botswana, but sixth and seventh in Zambia and Mozambique, respectively, and thirteenth in Tanzania.