ALERT: Atlas Mara posts $30.6 million for Q3

Atlas Mara

One of the largest shareholders of Union Bank of Nigeria, Atlas Mara Limited has released its third quarter result for the third quarter showing it reported $30.6 million as net profit for the period.

See result full details below:

Atlas Mara Limited (“Atlas Mara” or the “Company” and, including its subsidiaries, the “Group”), the sub-Sahara African financial services group, today releases its results for the third quarter ended 30 September 2018.

Group highlights

· Year to date net profit of $30.6 million for the period ended 30 September 2018, compared to $15.8 million for the period ended 30 September 2017. Net profit was $2.0 million for the quarter ended 30 September 2018.

· The Markets and Treasury business continued its growth with total revenue of $39 million year to date compared to $32 million for the comparative period in 2017, driven by a rise in certain interest rates coupled with a relatively stable cost of funds.

· Expenses increased 8.3% year-on-year on a constant currency basis to $170.7 million, primarily due to the impact of local inflation in countries of operation, as well as to some increased expenditure on key IT solutions.

· Reported equity as at 30 September 2018 was $760.2 million, a decrease of $53.0 million from the reported equity of $813.2 million as at 31 December 2017 due mainly to the day 1 impact of IFRS 9 and the negative FX translation impact of converting investments into US dollars as reporting currency. Excluding the day 1 impact of IFRS 9, equity increased by $9.7 million. Including the impact of IFRS 9, book value per share was $4.39 at 30 September 2018 (30 September 2017: $4.44), and tangible book value per share was $3.53 at 30 September 2018 (30 September 2017: $3.58) on the same basis.

BancABC Group and BPR (Rwanda)

· Net interest income year to date was $100.2 million vs $117.9 million in the comparative period, driven by a 10.2% decline in interest income due to flat loan growth and lower interest margins, albeit partially mitigated by improved cost of funds. The decline in loan growth was the result of a more conservative approach towards growing risk-weighted assets in the current environment.

· Non-interest revenue (NIR) improved by 8.9% year on year driven by increases in fees and commissions income and trading revenue in Zimbabwe, Botswana and Zambia.

· A segmental summary is as follows:

· The Southern Africa segment reported a year to date net profit of $19.7 million (2017: profit of $3.2 million). This improvement primarily reflects results from Botswana and Zimbabwe, where the Group continues to see consistent performance. Mozambique and Zambia also improved compared to the prior year, albeit with muted asset growth.

· The East Africa segment reported a loss of $3.3 million (2017: loss $1.9 million). This primarily reflects losses in Tanzania on the back of continued market pressures, partially offset by a profit from Rwanda.

Union Bank of Nigeria (“UBN”)

· Union Bank of Nigeria Plc (“UBN”) contributed associate income of $4.8 million for the third quarter, compared to $2.8 million for the comparative quarter in 2017, and $41.4 million for the year to date ended 30 September 2018, reflecting Atlas Mara’s c. 49% shareholding on an equity accounted basis. UBN reported the following key results:

· Profit before tax up 14%

· Gross earnings up 12%, driven by higher earning assets and a 46% growth in non-interest income

· Interest income up 3%

· Net operating income up 17%

· Operating expenses up 18% driven mostly by a 28% increase in charges due to higher regulatory levies on Nigerian banks

· Gross loans up 5%

· Customer deposits up 10%, with a 37% increase in foreign currency deposits (excluding impact of devaluation) alongside a growing low-cost deposit book

· As a result of UBN’s strong performance, the West Africa segment, i.e. the Company’s c. 49% stake in UBN, contributed a net profit of $22.2 million (2017: $11.6 million).

Subsequent Events

· On December 13, 2018, ABC Holdings Limited (“ABCH”), a wholly-owned subsidiary of the Company, successfully completed the partial Initial Public Offering of BancABC Botswana on the Botswana Stock Exchange, selling 20.5% to institutional and retail investors, raising $28 million in gross proceeds at a multiple of 1.5x book value as at 30 June 2018. The transaction strengthens the bank’s local market connectivity by providing a broad base of more than 450 domestic shareholders, and serves to illustrate the value of the Group’s underlying banking operations not currently reflected in the share price of the Company.

· The Company also announces that the Board of Directors reinstated a previously authorised but lapsed share purchase program, granting authority for the Company to repurchase the Company’s issued share capital up to an aggregate market value equivalent to $10 million. Under the Share Buyback Program, the Company will seek to acquire its ordinary shares in the market by way of its nominated brokers on an ongoing basis. The program will be conducted from time to time within the parameters prescribed by the Board of Directors and applicable regulations.

· Atlas Mara plans to host an Investor Day in 1Q 2019 to provide additional detail on its strategy for the Group, including its investment in UBN, managerial outlook for 2019, and certain growth initiatives. The date, details, and further information will be announced in due course.

FY18 Outlook

The Company expects the prevailing challenges in the macroeconomic environment to continue through the fourth quarter of 2018, resulting in muted operational growth. Management expects full-year results for 2018 to exceed the reported year to date profit of $30.6 million through 30 September 2018.