African Export-Import Bank (“Afreximbank” or the “Group”) has released the consolidated financial statements of the Bank and its subsidiaries, for the half year ended 30 June 2023. The results demonstrate a strong and resilient performance, which was ahead of expectations.
Afreximbank Group’s total balance sheet assets grew by 8% from US$27.9 billion as of 31 December 2022 (FY-2022) to approximately US$30.1 billion as of 30 June 2023. The growth was driven by the increase in loans and advances to customers, which grew by 13% to close the period at US$26 billion. The liquidity position remained strong at US$3 billion, representing 11% of total assets and achieving a Liquidity Coverage ratio of 310%
Due to increased volume of interest-earning assets, particularly loans and advances and higher interest rates, total interest income recorded a strong growth of 107.1% to reach $1.1 billion for the half-year (H1-2023) period compared to $540.8 million for the same period in 2022.
Net interest income amounted to $663.6 million, up 76% from the prior year, mainly due to continuous effective management of interest expenses. Net Interest Margin as a result increased to 4.77%, compared to 3.47% last year.
The Group’s shareholders’ funds rose by 7.63% to US$5.6 billion as of 30 June 2023 compared to FY-2022. The growth was largely attributable to the $261 million fresh equity contributions from existing and new shareholders who have supported the ongoing General Capital Increase exercise which aims to raise US$2.6 billion paid-in equity by 2026. In addition, the growth in shareholders’ funds was also underpinned by $125.5 million internally generated net earnings after taking into account the approved dividend and other appropriations which amounted to US$209 million.
Mr. Denys Denya, Afreximbank’s Executive Vice President, Finance, Administration and Banking Services, commented:
“During the period in which the Bank celebrated its 30th Anniversary, we have delivered a strong set of results, driven largely by a focused execution of our mandate as a countercyclical lender which generated increased volume of interest-earning assets, particularly loans and advances and benefited from a rising interest rate environment. The Bank continued to make progress on its strategy implementation, carefully balancing the need to be profitable and sustainable, while maintaining sufficient liquidity, capital, and a quality portfolio of assets. “
He further highlighted that despite the continued challenges caused by the Ukraine crisis, ongoing geo-political tensions and persistently high inflation, the half-year period saw some headwinds receding, including relatively lower energy and food prices, reduced supply bottlenecks and the re-opening of China, Africa’s biggest trading partner.
Mr. Denya pointed out that Global Credit Rating (GCR) and Japanese Credit Rating (JCR) respectively affirmed Afreximbank’s international scale long and short-term issuer ratings of A/A2 and A-, with a “Stable” Outlook, while Moody’s maintained the Bank’s credit rating at Baa1. In addition, African Banker recently bestowed on Afreximbank, the 2023 African Bank of the Year and the DFI of the Year awards in recognition of the Bank’s contributions to the continent’s Trade and Development. Significant progress was made during the first half of the year with the Bank’s subsidiary FEDA generating profit after only two years of operation and AfrexInsure generated premium income on assets valued at over $2 billion.
“We began the second half of 2023 well and are confident that Afreximbank’s strong financial position will provide a solid base for the Group to continue assisting its clients and African countries in expanding trade and investments, meet trade finance obligations, boost production especially of food and export value added products, as well as alleviate supply chain constraints and enable the continent to adapt sustainably to the challenging effects of climate change.”
Highlights of the results for the Group are shown below:
|Financial Metrics||Group, H1 2022($ million)||Group, H1 2023($ million)||Change, %|
|Net Interest Income||377.3||663.6||+75.9%|
|Net Fee and Commission Income||39.7||53.5||+35.0%|
|Total Assets||27,863 (Dec)||30,119||+8.1%|
|Loans and advances||22,966 (Dec)||26,015||+13.3%|
|Guarantees and Letters of Credit||3,243 (Dec)||2,404||-25.9%|
|Jun 23||Dec 22||Jun 22|
|ProfitabilityReturn on average assets (ROAA)Return on average equity (ROAE)||2.36% 12%||1.87% 10%||1.52% 8.52%|
|Operating EfficiencyNet interest marginCost -to -income ratio||4.77%16%||n/a22%||3.47%22%|
|Asset QualityNon-performing loans ratio (NPL)Loan loss coverage ratio||3.60% 90%||3.40% 100%||3.45% 116%|
|Liquidity and capital adequacyCash/Total assetsCapital Adequacy ratio (Basel II)||11%25%||15%28%||14%26%|
African Export-Import Bank (Afreximbank) is a Pan-African multilateral financial institution mandated to finance and promote intra-and extra-African trade. For 30 years, the Bank has been deploying innovative structures to deliver financing solutions that support the transformation of the structure of Africa’s trade, accelerating industrialization and intra-regional trade, thereby boosting economic expansion in Africa. A stalwart supporter of the African Continental Free Trade Agreement (AfCFTA), Afreximbank has launched a Pan-African Payment and Settlement System (PAPSS) that was adopted by the African Union (AU) as the payment and settlement platform to underpin the implementation of the AfCFTA. Working with the AfCFTA Secretariat and the AU, the Bank is setting up a US$10 billion Adjustment Fund to support countries to effectively participate in the AfCFTA. At the end of 2022, Afreximbank’s total assets and guarantees stood at over US$31 billion, and its shareholder funds amounted to US$5.2 billion. The Bank disbursed more than US$86 billion between 2016 and 2022. Afreximbank has investment grade ratings assigned by GCR (international scale) (A), Moody’s (Baa1), Japan Credit Rating Agency (JCR) (A-) and Fitch (BBB). Afreximbank has evolved into a group entity comprising the Bank, its impact fund subsidiary called the Fund for Export Development Africa (FEDA), and its insurance management subsidiary, AfrexInsure, (together, “the Group”).