With the Hyundai debacle now firmly behind, we believe FNBB to be well positioned to generate strong earnings growth going forward, and to benefit from a re-rating. We have thus upgraded our recommendation on the stock from hold to buy.
ABC Holdings released a good set of maiden interim results for the half year ended 30 June 2000. Net interest income was P60.4m compared to the proforma 12 months to 31 December 2000 of P91.8m. Net operating income for the six months was P51.3m against P57.4m in the previous proforma full year. An exceptional item of P32.6m, consisting largely of additional bad debts provision eroded profit before tax to P18.2m against P57.6m in the previous proforma full year. As a result of these large additional bad debts provisions, net income attributable to shareholders came in at a low P5.8m against P44.7m in the previous proforma full year. Stripping out the exceptional item, attributable income would have been approximately P38.4m. The bank says it deemed it prudent to make a substantial provision for its doubtful debts, in order to implement the agreed provisioning policy throughout the ABCH regional group companies.
The company says that while the economic climate in Zimbabwe is presently unstable, it presents challenges for the group to look for opportunities in the region to hedge against any further diminution in the value of its shareholders investment, and that it is cautiously optimistic of a modest earnings improvement in the second half of the year.
