AfrAsia Bank’s strategic focus and business model boost its operating profit by 49%
Operating profit for the Bank reached MUR 506m for the year ended 30 June 2014, a 49% increase on MUR 340m it reported in the previous year. The strong increase in operating profit was driven by a 80% increase in net interest income and a 86% increase in net trading income. Net Operating Income after credit provision crossed the MUR 1bn mark, an increase of 50% over previous year.
The Bank has grown significantly whilst pursuing regional expansion across its core business lines of Corporate Banking, Private Banking & Wealth Management and International Banking.
Its strong growth is derived partly from the level of service the Bank offers and the unique competitive advantage the Mauritian market offers to investors locally and internationally.
As at 30 June 2014, AfrAsia had customer loans and advances at MUR 17,4bn and customer deposits at MUR 41,1bn, a 24% increase and 51% increase from the previous year, respectively. Total assets grew to MUR 47bn which is a 50% increase over the previous year.
To support its rapid growth, AfrAsia raised additional capital totaling MUR 1,39bn in the form of Class A shares from a broad range of investors. This capital raising has helped to strengthen the Bank’s capital base with AfrAsia posting a Capital Adequacy Ratio of 13,1% as at 30 June 2014. It also positions AfrAsia for continued growth in the future.
“AfrAsia Bank continues its ‘bank different’ strategy as we gain strength while looking for opportunities to invest more in African countries. Our figures prove once again the tenacity and strong-will of our bank and we will continue to steer in this direction,” comments James Benoit, AfrAsia Bank CEO.
There have been challenges however mostly in its Zimbabwe operations following the unfavorable liquidity situation the country’s banking sector has been facing for some time. AfrAsia Bank is working closely with the regulatory authorities who have shown their support to the Bank’s initiatives. Various options are being studied by both AfrAsia Zimbabwe Holdings Limited and AfrAsia Bank Limited in its quest to find the best possible solution to stem this issue.
Most importantly, the local operations have not been affected by the issues faced in Zimbabwe and AfrAsia Bank remains solid on its own grounds and regional activities. AfrAsia had to take an impairment charge related to its investment in Zimbabwe of MUR 325m (split between impairment loss on subsidiary and credit impairment) which ultimately adversely impacted the net profit of both AfrAsia Bank and the Group. The net profit after tax declined from MUR 303m in 2013 to MUR 223m.
Record results from AfrAsia’s wholly owned subsidiaries, AfrAsia Corporate Finance and AfrAsia Capital Management helped to increase net income at the Group level from MUR 206m in 2013 to MUR 323m, a 57% increase. Excluding exceptional items, Group net profit before tax would have been MUR 419m, up from net profit before tax pre-exceptional items of MUR 241m in 2013.
The Bank continues to invest in consolidating its brand, investing in its people and in IT infrastructure to ensure that growth is done in a conservative and disciplined manner. In line with its growth strategy, AfrAsia Bank has decentralized part of the back office operations to Ebene and work is under way for the opening of a new branch there to better service its customer base.
“Our strategy to be the reference bank and right platform to serve the increasing capital and trade flows linking Asia and Africa is paying off and being acknowledged by both our private and corporate clients. Regional and international growth remain the essential pillars in AfrAsia Bank’s growth strategies and our performance during the last few years, along with our increased and diversified capital base, is presenting many expansion opportunities. There are still countless opportunities to exploit in the Asia-Africa trade corridor, hence the decision for the Bank to look closely at the COMESA and SADC markets” concludes Arnaud Lagesse, Chairman of the Bank.
Click here to view the condensed audited financial statements for the year ended 30 June 2014.