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Atlas Mara Limited: Q3 Interim Management Statement for 2017

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Atlas Mara Limited: Q3 Interim Management Statement for 2017

Atlas Mara Limited: Q3 Interim Management Statement for 2017

TORTOLA, BRITISH VIRGIN ISLANDS--(Marketwired - Nov 8, 2017) - Atlas Mara Limited (LSE: ATMA)

Atlas Mara Limited Unaudited 3rd Quarter Results - Nine Months Ended 30 September 2017

Atlas Mara Limited ("Atlas Mara" or the "Company" including its subsidiaries, the "Group"), the sub-Saharan African financial services group, today releases unaudited summary year-to-date results for the nine months ended 30 September 2017.

Key highlights for the period

  • Total Group net profit of $15.8 million for the period ended September 2017 compared to $4.0 million for the comparative period in 2016 and $4.3 million reported net profit for the quarter ended September 2017 compared to $2.8 million for the quarter ended September 2016.


  • Completion of previously announced strategic financing transaction with Atlas Mara existing investors and new shareholder Fairfax Africa Holdings through the USD 200 million equity raise, resulting in equity of $757.5 million compared to $559.4 million for the comparative period in 2016 and $573.1 million as at 30 June 2017.


  • Completion of acquisition of an additional 13.4% stake in Union Bank of Nigeria ("UBN") following regulatory approval, thus increasing Atlas Mara's effective shareholding to 44.5%, consistent with the strategic importance of Nigeria and UBN for the Group, effective 1 October 2017.


  • Cost savings objective at the Centre on track and in line with the group's commitment to achieve a total cost savings at the Centre of $20 million on a full year basis.


  • Slow growth in loan and advances in the face of challenging macro conditions mitigated by improvement in the efficiency of the business and asset quality. Group cost to income ratio at 84.8% compared to 99.0% for the same period and Group NPL ratio on a downward trend during 2017 to 11.1% for the period.


  • Secured long term funding with the French and Dutch Development Finance Institutions ("DFIs"), Proparco and FMO closing a $30 million line of credit to support Banque Populaire du Rwanda ("BPR"), part of the Atlas Mara Group in Rwanda. This funding is to support SMEs, corporates and Fintech operations.


  • Rebranding of banking operations in Zambia created by the combination of African Banking Corporation Zambia Limited ("BancABC Zambia") and Finance Bank Zambia Limited ("FBZ") to Atlas Mara Zambia.


  • Consolidated reported profit after tax of $15.8 million, on track to deliver profit growth of >100% for the full year 2017 as compared with full year 2016. The year-to-date earnings are supported by the impact of acquisition related gains and one-off restructuring and integration cost.


Key financial highlights during the period

  • Reported profit after tax for the nine months ended 30 September 2017 of $15.8 million. This compared to a reported profit after tax of $4.0 million for the comparable period in 2016. The profit for the quarter of $4.3 million is lower than the profit after tax reported for the first and second quarter of 2017, primarily due to one-off impairment charges in both the corporate and retail portfolio in Zimbabwe, as well as, the consumer loan portfolio in Zambia and lower income from UBN.


  • Total income increased by 6.7% (6.5% on a constant currency (ccy) basis) largely driven by an increase of 56.2% in net interest income (57.2% ccy). Non-interest income decreased by 30.0% in US$ terms (30.6% ccy), this was mainly due to declines in Botswana, Mozambique and Shared Services and Center, with the performance in Botswana and Mozambique hampered by a decline in trading revenue. The increase in net interest income has been supported by the decrease in the Group's cost of funds from 8.3% reported at September 2016 to 5.2% as at 30 September 2017. This is in line with the Group's continued goal to reduce the cost of funds through the focus on increasing transactional deposits.


  • Expenses declined by 8.6% year-on-year driven by the continued implementation of the Group's previously announced cost saving initiatives as well as a reduction in transaction and restructuring and reorganisation expenses of $11.6 million and significant cost reduction at the Shared Services and Centre ("SS&C"), in line with the Group's commitment of total cost savings of $20 million on a full year basis.


  • The operational NPLs as a percentage of the loan book at 11.1% (Q3 2016: 14.9%) continues to show the commitment of the Group to reducing the NPL ratio. This reflects continuing improvement in the asset quality overall for the Group as seen from the steady decline in this ratio from the 13.3% reported as at 31 December 2016.


  • Deposits decreased by 2.1% on a ccy basis, as a result of the continued liquidity constraints in all markets as well as the Group's focus on reducing the cost of funds. The Group continues to work on changing the deposit mix and growing transactional deposits as a way of funding the banks' operations.


  • Union Bank of Nigeria Plc ("UBN") contributed associate income of $11.6 million for the period, reflecting Atlas Mara's 31.15% shareholding on an equity accounted basis, a decrease of 26.3% and 5.0% on a ccy basis.


  • Reported equity at period end was $757.5 million, an increase of $231.4 million from 31 December 2016, driven mostly by the completion of the $200 million strategic financing transaction and the equity placing concluded during Q3, the continued improved earnings included in retained income and the impact of positive FX translation of $9.1 million. Book value per share was $4.44 at 30 September 2017 (compared to $7.18 at 30 June 2017). Tangible book value per share was $3.58 at 30 September 2017 ($5.31 at 30 June 2017).


Key operational highlights during the period

  • We continue to focus on deployment of our digital initiatives. During the quarter the Group launched Agency banking in Tanzania in partnership with Maxcom through 8,000 Points of Sale nationwide and 80 agents on boarded, and in Mozambique, with the launch of 5 agents.


  • The Group continues to focus on building the existing retail and corporate businesses across all countries of operation. In Botswana the Group introduced Direct Sale Agents with the aim of growing the loan book through new bank clients and focused on increasing the number of point of sale merchants in Mozambique and Zimbabwe.


  • The Markets Offshore trading business commenced in Q3 with an initial focus on group strategic hedging, which has positively impacted the Group's reported earnings by reducing exposure to currency risk. The onshore strategy of income diversification across fixed income, currencies and balance sheet management has borne dividends during the year despite a slow foreign exchange environment in some of our markets. The focus of the onshore markets business continues to be on diversifying both the product range as well the client base.


  • In Zambia, the integration of FBZ is progressing, as staff and operational right-sizing continues. During the quarter we launched a harmonised product set and tariff guide for both Retail and Corporate Banking. On 3 November 2017 Atlas Mara Limited launched its brand name as Atlas Mara Zambia, combining the Group's two Zambian banks (BancABC Zambia and FBZ) under one brand. The launch makes Zambia the first country where the operational entities carry the Atlas Mara brand.


  • As communicated on 3 October 2017, in accordance with the terms of the agreement entered into with Fairfax Africa as part of the Placing and Open Offer (the "Strategic Financing"), the Atlas Mara Board has approved the appointments of Michael Wilkerson, Richard Boucher, Quinn McLean and Hisham Ezz Al-Arab (the "New Directors") to the Board of Directors. Co-founder Ashish J. Thakkar and Tonye Cole, Chair of the Nomination Committee have stepped down from their respective roles on the Board.


Commenting on the results, Bob Diamond: Chairman said

"We are pleased to report a profitable third quarter, and year-to-date net profit of $15.8 million compared to $4.3 million in the similar period for 2016.

We continue to focus on execution in 2017 with all three of our business lines making progress. Banking operations remained stable in a very challenging environment; Markets and Treasury continued to grow; and in Fintech we are focused on increasing our distribution channels. We also closed the previously announced strategic financing with Fairfax Africa and existing shareholders, and completed our acquisition of an additional stake in UBN, thereby increasing our total stake in UBN to about 45%.

"We are on track to achieve our 2017 and long-term goals."

Outlook

Our performance year-to-date is indicative of the Group's focus on driving efficiency and reducing costs, which has enabled us to realise improved profits year-to-date in the face of macro-economic conditions that have been recovering at a slower than expected pace.

There will be continued uncertainty in terms of the economic environment, exchange rates and monetary policies in our markets, however, the Group, expects that it will deliver the projected cost savings and profit forecast of more than double the earnings of 2016.

Contact Details

Investors

Kojo Dufu, +1 212 883 4330

Media

Teneo Blue Rubicon, +44 20 7420 3142

Anthony Silverman

About Atlas Mara

Atlas Mara was listed on the London Stock Exchange in December 2013. Atlas Mara's vision is to create sub-Saharan Africa's premier financial services institution through a combination of its experience, expertise and access to capital, liquidity and funding. Its goals are to combine the best of global institutional knowledge with extensive local insights and to support economic growth and financial inclusion in the countries in which the Company operates.

Summary of Results (Unaudited, unless otherwise noted)

                 
Atlas Mara Limited   Reported

Results
  Reported

Comparative
  Constant Currency(1)   Audited Year End
    30.09.17   30.09.16   Variance   31.12.16
    $'m   $'m   %   $'m
Adjusted operating profit and reconciliation to IFRS profit                
Total income   189.0   177.1   6.5   241.7
Loan impairment charge   (19.4)   (13.3)   (42.6)   (15.4)
Operating expenses   (157.2)   (160.6)   2.3   (217.2)
Share of profit of associates   11.5   15.6   (5.0)   17.9
Adjusted profit before tax   23.9   18.8   58.1   27.0
Adjusted profit attributable to ordinary shareholders   18.1   14.3   58.0   20.8
M&A transaction costs   (0.4)   (6.8)   94.1   (8.8)
Reorganisation/Restructuring costs   (2.7)   (7.9)   65.8   (8.9)
Reported profit before tax
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