HARARE – Africa-focused financial services group, Atlas Mara, says it has recorded a $2 million loss in the first quarter to March 2016 due to economic headwinds being experienced in Zimbabwe.
The London-listed firm and BancABC Zimbabwe parent company made a $9 million profit in the prior comparable period in 2015.
“The Southern Africa segment reported a net loss of $6,3 million against a profit of $4,7 million in 2015 during the first quarter,” the company said.
“A deliberate policy of managing down lower quality, higher risk revenues coupled with additional credit provisions taken in Zimbabwe, with no recoveries from the non-performing loan portfolio in the quarter, were the principal drivers behind the loss,” Atlas Mara added.
The financial services group, however, believe that most of these new provisions would be reversed over the remainder of the year, with good progress being made in the continued efforts to monetise some of the non-performing loans soon.
“Improving the operating performance of these businesses is a key priority for management and will be achieved through already identified focused revenue growth plans and cost reduction initiatives,” Atlas Mara said.
The group’s East Africa segment reported a profit of $0,7 million, reflecting the strength of its scaled up Rwandan banking franchise.
The West Africa segment, represented by Atlas Mara’s 31,15 percent stake in Union Bank of Nigeria Plc, contributed a net profit of $6,9 million.
Atlas Mara chief executive John Vitalo said the company continues to target for 2016 full-year results to exceed the reported profit of $11,3 million for 2015.
“The result for the first quarter were broadly in line with our expectations and accorded with the indications we gave to the market at our 2015 full year earnings release.
“However, this level of performance is clearly below where we want to be, notwithstanding the challenges of a more difficult economic backdrop and the full impact of weaker exchange rates across our markets,” he said.
“We have clear cost reduction plans and revenue initiatives to ensure that the group is positioned to tackle current headwinds. We remain committed to delivering increased profitability for 2016 relative to 2015, although we expect the year to be one of uneven quarterly performance with improving profitability over the course of the year as we execute on our focused initiatives,” Vitalo added.
Atlas Mara, set up by Bob Diamond to buy African banks as part of his wager on the continent, is dealing with the impact of weaker demand from China and a slump in commodity prices that have damped the outlook for economic growth in most African countries and weighed on currencies in the region.