Bob Diamond’s Atlas Mara profit tanked by 26% in 2016

Atlas Mara

Bob Diamond’s Atlas Mara, the majority shareholder in Union Bank of Nigeria said its full year net profit for 2016 fell by 25.7%.

The fall in its net profit was expected as Union Bank, one of its major portfolio companies saw a crash in its net profit as well.

Net profit for the year dell to USD8.4 million compared to USD11.3 million reported in 2015.

On a year on year basis, total income rose by 17% to USD241.7 million compared to USD205.1 million.

The major hole in its books comes from the group’s Loan impairment charge which rose to USD15.4 million versus USD12.0 million in 2015.

The group also reported a huge growth in total expenses (excluding one-off) which rose to USD217.2 million compared to USD 174.2 million posted in 2015.

Atlas Mara seems to be simmering down on its acquisition spree as M&A transaction expenses fell to USD8.8 compared to USD11.9 million in the previous year.

The company noted that the value of its 31% equity stake in Union Bank of Nigeria has fallen to USD291.4 million compared to USD395.9 million in 2015. This was attributed to “Naira devaluation executed by the Central Bank of Nigeria during June 2016, with the Naria losing value from December 2015 close at NGN 199, to NGN 250 in June 2016, to a December 2016 official closing rate of NGN 304 vs the US$”.

Commenting on the result, Bob Diamond, the group’s Chairman said:

“The macroeconomic environment in 2016 has been challenging, to say the least. With soft commodity prices and weak currencies, it is little wonder that we saw continued withdrawal from Africa by international banks. Nigeria presented particular challenges given the reduction in the value of the Naira. Although our growth was slower than we hoped, we remained solidly profitable for the year. Even more notable, we completed two more acquisitions, cementing top-tier market positions in Rwanda and Zambia”.

“At the same time, we sharpened our focus on costs. With our 2016 half year results, we announced plans to reduce non-staff costs and headcount by 30-35% across our Shared Services and Centre in Dubai and Johannesburg. Since becoming Chairman I have overseen a redoubling of these efforts. We reduced costs further in the centre and decided to close our Johannesburg office to increase focus in our operating banks. These changes will ensure our cost base is more aligned with the current operating environment, and yield savings of more than $20 million on an annualized basis. To achieve greater alignment with our shareholders, our executive team has also agreed to a shift in compensation structure, which includes a substantial reduction in current cash compensation in exchange for deferred equity participation”.

“Over the course of 2016, we placed greater emphasis on both our Markets and Fintech businesses to drive faster organic growth. For the year, Markets and Treasury grew net income from derivative and foreign exchange transactions from $16.8 million in 2015 to $35.9 million in 2016, showing strong momentum which will continue into 2017 and beyond”.

“We also remained focused on operational improvements in our countries. Our integrations in Rwanda and Zambia went well and were both completed ahead of schedule and below budget, and we have several targeted initiatives focused on growth and quality in our core banking operations that will continue throughout 2017”.

Atlas Mara is a sub-Saharan financial services group with focus on acquiring banks that have sustainable growth.