Tuesday, December 31, 2013

AfrAsia Recovers, Eyes Growth

AfrAsia recovers, eyes growth

December 31, 2013 Business
Golden Sibanda Senior Business Reporter
Zimbabwe Herald

AFRASIA Holdings Zimbabwe Limited says it is now well positioned to turnaround the group’s fortunes, especially its flagship banking unit after cleaning up the bank’s balance sheet by writing off non-performing loans.Significant liquidity and loan guarantee support injection post equity restructuring following the exit of founding director Mr Nigel Chanakira has allowed the financial services group to also target top end clients.

The group floundered to a US$16,1 million after tax loss for the 18 months to June 2013 largely weighed down by non-performing loans, but says it is starting on a new slate after fully provisioning for the bad loans.

Acting chairman Mr Charles Lawrence Wawn told the company’s annual general meeting yesterday that other factors that weighed down profitability included a staff voluntary separation exercise and the liquidity crunch in the economy.

He said AfrAsia’s results reflected the strain the group endured on the back of non-performing loans, a staff voluntary separation exercise implemented during the period as well as the liquidity crunch pervading the economy.

“The key driver of the bank losses is non-performing loans, a staff voluntary separation exercise implemented during the period as well as the liquidity crunch pervading the economy,” Mr Wawn told shareholders.

In an interview after the AGM group chief executive Mrs Lynn Mukonoweshuro said unlike many financial services companies AfrAsia had decided against rolling over non-performing loans in order to clean up its books.

She said the group took the lead from a market perspective as one of only two institutions that decided that “if you have rolled over a loan, you do need to roll over again, so we made a decision to folly provision and cleaned up.”

AfrAsia Bank has a US$100 million loan book, but Mrs Mukonoweshuro would not reveal the percentage of bad loans, but the national rate stands at 16 percent.

While cleaning up, AfrAsia said it has been underwriting quality loans to ensure it starts performing after poor economic conditions eroded gains since dollarisation.

The AfrAsia CEO said the high rate of non-performing loans did not imply management had been careless, rather she said this reflected the confidence in the new environment at both company and national level at dollarisation.

The group contends it is now well placed to with stand any future turbulence while capitalising on opportunities following some extensive restructuring in terms of both management and internal structural make up.

Major restructuring in the group, unanimously approved by shareholders yesterday, includes appointment of Mrs Jill Penelope, Mr Ritesh Anand, Mr Fungai Ruwende, Mr Henry Nemaire as non-executive directors. Mr Savious Mushosho (Group FD) and Mr Deshmukh (Group deputy CEO) were appointed executive directors.

Mr Calisto Jokonya, Mr Wawn and Mr Simplicius Chihambakwe who were due to retire by rotation, but eligible for re-election opted for another term, were re-elected by a unanimous decision of the shareholders. The full AfrAsia board Zimbabwe will also comprise Mr James Benoit and Mr Kamben Padayachy from AfrAsia Bank.

Exiting the AfrAsia board were nine directors namely outgoing chairperson Ms Sibusisiwe Bango, Mr Brian George Roderick, Mr Anthony Renfric Rowland, Mr Sure Kamhunga, Mr Nigel Chanakira, Mr Frank Kufa, Mr Elfas Chimbera and Mr Clement Ruzengwe stepped down from the board after either retiring or having resigned.

Among the changes has been centralisation of group credit and wider risk control measures after total revamp and centralisation group risk processes to tighten credit management across the new look financial group.

Delivery channels have been rationalised across the group, which resulted in mothballing of branches in Kingdom Bank (renamed AfrAsia Bank) while the group disposed of the licence for stock broking unit.

AfriAsia Holdings Zimbabwe now only operates micro finance, asset management and commercial banking units. The group went through a US$2 million upgrade of its core banking system and stabilisation has now been achieved.

After shareholders approved a US$100 million capital raising initiative by way of a private placement and right issues, Mrs Mukunoweshuro said the initiative, which will raise an initial US$20 million was already underway.

This involves raising of US$5 million through rights issue and the remainder by private placement.

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