4. 4
Due to the negative impact of the global economy, GDP
growth slowed down in all Southern African economies
Zimbabwe registered negative GDP growth for the tenth
consecutive year
Commodity prices weakened significantly in sympathy
with the global economic downturn
Banking assets however continued to grow, albeit at a
slower pace
Botswana boasts the highest GDP per Capita and
highest banking assets per Capita but other countries
are making strides
ECONOMIC ENVIRONMENT
5. 5
Average inflation was in double digit level ( except in
Zimbabwe, where it was well in excess of this)
Generally all currencies weakened particularly in the
second half of 2008
Zimbabwe in a hyperinflationary environment; Last
official inflation at 231m% in July 2008
ECONOMIC ENVIRONMENT
6. 6
Country
Inflation
Rate
Dec-2008
Avg. TB
Yield Rate*
Dec-2008
Avg or
Prime
Lending
Rates 2008
Avg. Prime
Lending
Rates 2007
Botswana 12.6% 12.58% 16.6% 16.2%
Mozambique 10.4% 13.72% 20.1% 20.1%
Tanzania 10.3% 8.11% 13.6% 14.4%
Zambia 12.4% 12.20% 25.2% 25.0%
Zimbabwe 231 m%*** 340%** 3,700% 559.0%
* 90 day
** 1 year
***July 2008
ECONOMIC ENVIRONMENT– Inflation & Interest
Rates
7. 7
ZWD Old Mutual implied rate
ZWD revalued in 2008
To 1 BWP 31 Dec-08 31 Dec-07
United States Dollar 0.13 0.17
Mozambique
Metical
3.38 4.30
South African Rand 1.25 1.13
Tanzania Shilling 174 191
Zambian Kwacha 636 640
Zimbabwe Dollar 88 Quad 0.0001 Quad
ECONOMIC ENVIRONMENT– Exchange Rates
8. 8
•ZWD Old Mutual implied rate
•ZWD revalued in 2008
To 1 US dollar 31 Dec-08 31 Dec-07
Botswana Pula 7.54 6.02
Mozambique
Metical
25.50 25.67
South African
Rand
9.40 6.81
Tanzania Shilling 1 315 1 146
Zambian Kwacha 4 795 3 850
Zimbabwe Dollar 665 Quad* 0.001 Quad
ECONOMIC ENVIRONMENT– Exchange Rates
9. 9
International Equity Market Cap, US$ Trillions
2007 Mkt Cap
2008 Mkt CapNYSE
Nasdaq
Tokyo SE
London Shanghai
9.2
15.6
3.1
4.3
2.4
4
1.9
3.9 3.6
1.4
10. 10
International Banks Market cap
Source: Bloomberg, March 9th
2009
255
215
165
120
108
91
76
49
6
59 60
10
25
7
49
18
0
50
100
150
200
250
Citigroup HSBC JP Morgan RBS BNP
Paribas
Barclays Deutsche
Bank
Morgan
Stanley
US$Bn
Mkt Cap as of Q2 2007 Mkt Cap as of 9-Mar-09
11. 11
Stock Market Cap in Some African Equities
(2007 vs 2008)
-42.1
-35.8
-35
-32.3
-19.3
-14.9
14.7
33.5
36.4
-50 -40 -30 -20 -10 0 10 20 30 40
JSE Ltd.
Nigerian SE
Botswana SE
Zimbabwe SE
Nairobi SE
Lusaka SE
Ghana SE
Malawi SE
Dar-Es Salam SE
%
15. 15
Attributable profit at BWP86m is down from BWP 124m
in prior year
Net asset value up by 39% from BWP 314m to BWP
B438m
Net interest income for financial operations up by 40%
from BWP 127 m to BWP 178 m
Total income up to BWP 401m from BWP 339 million
Return on equity of 23% compared to 42% in 2007
FINANCIAL PERFORMANCE - Overview
16. 16
Balance sheet growth of 38% to BWP 4 billion
Loans and advances up by 80% to BWP 2.2 billion,
reflecting impact of Tier II capital injection
Deposits increased by 40% to BWP 2.8 billion
FINANCIAL PERFORMANCE - Overview
17. 17
BWP Dec 08 %
change
Dec 07
Attributable profits (‘000s) 86,029 -30% 123,523
Basic EPS (Thebe) 60.4 -37 % 95.3
Dividend per Share ( Thebe) 8.00 -43 % 14.00
Cost to income ratio 59% 12 % 47%
Net asset value (‘000s) 437,777 40 % 313,813
NAV per share 3.07 30 % 2.37
Total Assets (‘000s) 3,967,909 35 % 2,930,121
FINANCIAL PERFORMANCE – Salient features
18. 18
Attributable Profit (BWPm) and R O E (%)
124
86
51
46
86
20%
30%
37%
23%
42%
-
20
40
60
80
100
120
140
2004 2005 2006 2007 2008
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Attributable profit R O E
FINANCIAL PERFORMANCE – Five year
earnings overview
19. 19
Net Asset Value (BWPm) and N A V per share (Pula)
438
184 186
272
314
3.07
2.05
1.401.62
2.37
-
100
200
300
400
500
2004 2005 2006 2007 2008
-
1.00
2.00
3.00
4.00
Net asset value Net asset value per share
FINANCIAL PERFORMANCE – Five year NAV
profile
21. 21
All Banking operations profitable, except ABC Zambia
ABC Zambia’s poor performance due to a combination of
high impairments and exchange losses in fourth quarter
Zimbabwe performance adversely affected by reduced
investment income as economy reached meltdown point
Strong growth in total income in Botswana, Mozambique
and Tanzania
Massive depreciation of the Zimbabwe dollar continued
Zimbabwe contribution to total income down to 15% from
35%
Quality of the book has marginally improved
INCOME STATEMENT REVIEW
22. 22
NII increased by 72% to BWP 184m
NII contribution to total income increased from 32% to
42%
NII now covers 78% of total costs, up from 67% in 2007
All banking operations, with the exception of Zimbabwe,
showed significant growth in NII
INCOME STATEMENT REVIEW
23. 23
Non-interest income declined by 7% to BWP 216m.
Investment income in Zimbabwe declined 78% from
BWP 116m to BWP 26m
Impairment charge of BWP 44m up 35% compared to
2007. Botswana and Zambia most affected.
Operating expenditure increased by 48% to BWP 237m
Increased costs are largely due to additional staff for the
new retail business and strengthening of credit
department.
INCOME STATEMENT REVIEW
24. 24
BWP’000s
Dec 08
%
contribution Dec 07
%
contribution
%
change
ABC Botswana 82,934 21% 50,67615% 64%
ABC Mozambique 62,151 16% 41,87512% 48%
ABC Tanzania** 57,928 14% 36,43011% 59%
ABC Zambia 36,612 9% 30,2759% 21%
Microfin Zambia 49,027 12% 28,6478% 71%
ABC Zimbabwe 35,858 9% 39,402 12% (9%)
Total Fin OPS 324,510 81% 227,30567% 43%
Other Operations 76,137 19% 111,72433% (32%)
TOTAL GROUP 400,647 100% 339,029 100% 18%
*Before impairments
**Including TDFL
INCOME STATEMENT REVIEW – Total income*
25. 25
BWP’000s Dec 08
%
contribution
Dec 07 % contribution
%
change
ABC Botswana 41,389 22% 29,48327% 40%
ABC Mozambique 34,295 19% 23,26922% 47%
ABC Tanzania 29,09016% 13,69913% 112%
ABC Zambia 22,782 12% 16,11615% 41%
Microfin Zambia 50,778 28% 28,86827% 76%
ABC Zimbabwe 67 0% 15,429 14% (100%)
Total Fin OPS 178,40197% 126,864118% 41%
Other Operations 6,0113% (19,576)(18%) 131%
TOTAL GROUP 184,412 100% 107,288 100% 72%
*Including TDFL
INCOME STATEMENT REVIEW – Net interest
income
26. 26
Ave. Yield
on IEA
Ave. Cost
Spread
2008
Spread
2007
ABC Botswana 13.0% (10.0)% 3.0% 1.3%
ABC Mozambique 12.3% (5.8)% 6.5% 5.4%
ABC Tanzania 10.4% (6.2)% 4.2% 3.7%
ABC Zambia 15.8% (8.9)% 6.9% 4.9%
ABC Zimbabwe 1.0% 0% 1.0% 20.5%
Microfin Zambia 66.7% (22.1)% 44.6% 43.9%
INCOME STATEMENT REVIEW – Net interest
income
Spread has increased across the board
27. 27
BWP’000s Dec 08
%
contribution
Dec 07 % contribution
%
change
ABC Botswana 41,545 19% 21,1939% 96%
ABC Mozambique 27,856 13% 18,6068% 50%
ABC Tanzania* 28,838 13% 23,62510% 22%
ABC Zambia 13,830 6% 14,1606% -2%
Microfin Zambia (1,752) 1% (222)-% -689%
ABC Zimbabwe 35,791 17% 23,97310% 49%
Total Fin OPS 146,108 68% 101,33544% 44%
ABCH and other 70,127 32% 130,40656% -46%
TOTAL GROUP 216,235 100% 231,741 100% -7%
*Including TDFL
INCOME STATEMENT REVIEW – Other income
28. 28
BWP’000s Dec 08 Dec 07
%
change
Gains investment securities 25,931 101,438 (74%)
Dividends received 3,342 3,113 7%
Fee & commission income 69,827 65,322 7%
Fx trading income & currency
revaluation 29,448 9,658 205%
Fair value gains on investment
properties
45,872 26,408 74%
Fair value adjustment: derivative
instruments
38,585 (10,073) 483%
Rental and other income 3,230 35,875 91%
Total 216,235 231,741 (7%)
INCOME STATEMENT REVIEW – Other income
29. 29
Excluding impairments
Increase in NII contribution due to increase in lending book
NII income covers 78% of costs, up from 67% in 2007
43%
47%
42%
32%
46%
57%
53%
58%
68%
54%
2004
2005
2006
2007
2008
NII
Other income
INCOME STATEMENT REVIEW – Total income
composition
30. 30
Cost to income ratio
75%
66%
49% 47%
59%
2004 2005 2006 2007 2008
Due to retail banking roll out
Cost containment strategy
• Imperative to strengthen cost containment measures
INCOME STATEMENT REVIEW – Operating
expenditure
31. 31
Cost to income ratio up from 47% to 59%
Head count increased from 395 to 484 due to new
retail banking and credit department staff
Employee costs accounted for 50% of total costs
Operating expenditure up 48% to BWP 237m
Marketing costs set to increase in support of
growth targets and retail roll out
INCOME STATEMENT REVIEW – Operating
expenditure
32. 32
Total employee costs up 31% from BWP91m to BWP119 m
Employee costs 50% of total costs
Staff compliment of 484 (2007: 395)
Staff compliment up by 89 people mainly due to retail & credit
43
67
41
54
38
50
109
130
153
161
11
22
Botsw ana Mozambique Tanzania Zambia Zimbabw e ABCH
2007 2008
Head count per Operation
33. 33
Balance sheet growth of 38% to BWP 4 billion
Loans and advances up by 80% to BWP 2.2 billion,
reflecting impact of Tier II capital injection
Deposits increased by 40% to BWP 2.8 billion
Net asset value up by 39% from BWP 314m to BWP
B438m
Zimbabwe FCTR up BWP 95m in 2008
BALANCE SHEET REVIEW
34. 34
Total Assets (BWPm)
1,759,327 1,903,284
2,447,135
2,930,121
3,967,909
2004 2005 2006 2007 2008
38% balance sheet growth compared to December 07
sustained balance sheet growth since 2004
Compound annual growth rate of 23%
BALANCE SHEET REVIEW - Total Assets
35. 35
40% growth in Deposits
Botswana continues to lead with deposits of BWP 1.3 billion
Growth of 118% & 63% in Mozambique & Tanzania respectively; albeit from a low base
Botswana
51%
Mozambique
21%
Tanzania
18%
Zambia
7%
Microfin
3%
Zimbabwe
1%
BALANCE SHEET REVIEW - Geographic split
of deposits
36. 36
80% growth in Loans.
Growth in excess of 48% in all countries except Zimbabwe
Growth shows impact of capital injection in late 2007
Botswana
33%
Mozambique
17%
Tanzania
28%
Zambia
17%
Microfin
4%
Zimbabwe
1%
BALANCE SHEET REVIEW - Geographical
Split of Loans
38. 38
Dec 08 Dec 07
Botswana 16% 18%
Mozambique 28% 44%
Tanzania 15% 28%
Zambia 24% 29%
ABC Zimbabwe 31% 26%
Healthy capital adequacy ratios
BALANCE SHEET REVIEW - Capital Adequacy
39. 39
Rights issue postponed as a result of the turmoil in the
global financial markets
IFC subscription of 13.9 million shares, bringing
shareholding to 10.7% in January 2008
IFC convertible loan still to be drawn down as Group is
in the process of clearing outstanding conditions
precedent. Draw down imminent.
All conditions precedent on the CVCI convertible loan
fulfilled. Drawdown in the coming weeks
CAPITALISATION
40. 40
Retail Banking head office now appropriately
staffed
First few branches to be opened in July 2009
Funds raised from IFC and CVCI to be used
for capitalisation of this business
Largely driven by state of the art technology
RETAIL BANKING
41. 41
Need to strengthen operations in the face of the
uncertainty in global markets
Directors propose that a final divided be passed
DIVIDEND
42. 42
Environment expected to be challenging during
most of 2009 and 2010 due to a deterioration in the
global markets
Major thrust will be consolidation and ensuring
modest growth notwithstanding high costs as a
result of retail banking
Proactive management of the loan book
Support clients in the face of adversity
Introducing fresh thinking and smart banking
OUTLOOK & CHALLENGES
43. 43
Changing the business model –People, processes,
systems and culture
Branch profitability still estimated to be between 12
to 24 months
Deposit mobilization remains a key focus area for
the group, particularly in Zambia
OUTLOOK & CHALLENGES
