Atlas Mara Bounces Back, Reports 15% Revenue Growth In Q3

Atlas Mara

Atlas Mara Limited, one of the majority owners of Union Bank PLC said its gross income for the third quarter of the year rose by 15%.

In an email statement made available to PageOne Global Business Desk, the company said the growth in revenue was driven by “increase of 34% in non-interest income (55% ccy). Net interest income decreased by 4% in US$ terms but grew by 9% on a ccy basis”.

According to the disclosure, Union Bank of Nigeria Plc contributed associate income of $15.8 million for the period, reflecting Atlas Mara’s 31.15% shareholding on an equity accounted basis. 

Also, the company noted that Naira (NGN) depreciation of 12% during Q3 has moderated this contribution, with the associate contribution growing by 24% on a ccy basis.

Based on the disclosure, reported profit after tax for the nine months ended 30 September 2016 was $4.0 million, net of an adverse impact of $5.2 million from currency depreciation year-on-year. This compared to a profit after tax of $7.1 million for the comparable period in 2015. Improving business momentum demonstrated by the reported profit after tax for the third quarter of $2.7 million which compares favourably to the $1.2 million reported for H1 2016. 

Expenses grew by 19% year-on-year with acquisitions the principal reason for this increase.  On a constant currency basis, the increase in operating expenses was 33%. Excluding acquisitions, the cost growth was limited to 6.5% ccy, a level below the average rate of inflation ranging between 5% to 15% across our markets of operation. 

Atlas Mara said it continues to focus on delivering cost efficiencies while investing in growth initiatives such as treasury and digital product and service offerings. Relative to our target of $8 million of cost savings identified with the Q2 results, we have already delivered annualized run-rate savings of $6 million in the Shared Service and Centre and a further $4 million in our operating countries.

 On an adjusted operating profit basis (excluding one-off items and M&A transaction expenses), Atlas Mara reported a profit of $14.3 million for the nine months ended (2015: $23.7 million) and an adjusted cost-to-income ratio of 90.7% (2015: 79.9%). The adverse impact of currency depreciation on adjusted operating profit was $4 million.

Deposits increased by 32% on a ccy basis, reflecting the company’s heightened liability management focus to acquire lower cost deposits that are also behaviourally longer term. This resulted in a reduction in cost of funds from 8.8% in Q3 2015 to 6.3% Q3 2016, amidst continued tightening local monetary policies.  Retail deposits now comprise 28% of the total deposit book versus 19% a year ago. 

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