Afreximbank Grows Total Interest Income by 107.1% in H1’23
By Adedapo Adesanya
The African Export-Import Bank (Afreximbank) recorded a 107.1 per cent growth in total interest income to $1.1 billion for the half-year of 2023 versus $540.8 million in the same period of 2022.
This was contained in the consolidated financial statements of the bank and its subsidiaries for the half year ended 30 June 2023, which demonstrates a strong and resilient performance, which was ahead of expectations due to global headwinds.
The growth in its total interest income came as a result of increased volume of interest-earning assets, particularly loans and advances and higher interest rates.
Afreximbank Group’s total balance sheet assets grew by 8 per cent from $27.9 billion as of December 31 2022, to approximately $30.1 billion as of June 30, 2023. The growth was driven by the increase in loans and advances to customers, which grew by 13 per cent to close the period at $26 billion.
The bank’s liquidity position remained strong at $3 billion, representing 11 per cent of total assets and achieving a Liquidity Coverage ratio of 310 per cent.
Net interest income amounted to $663.6 million, up 76 per cent from the prior year, mainly due to continuous effective management of interest expenses. Net Interest Margin, as a result, increased to 4.77 per cent, compared to 3.47 per cent last year.
The Group’s shareholders’ funds rose by 7.63 per cent to $5.6 billion during the period 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 $2.6 billion paid-in equity by 2026.
In addition, the growth in shareholders’ funds was also underpinned by $125.5 million in internally generated net earnings after taking into account the approved dividend and other appropriations, which amounted to $209 million.
Speaking on the results, Mr Denys Denya, Afreximbank’s Executive Vice President for Finance, Administration and Banking Services, said 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.
“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 an increased volume of interest-earning assets, particularly loans and advances and benefited from a rising interest rate environment.“
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.
“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, meeting trade finance obligations, boosting 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.”
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.
Also, 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.